Dealers say they have too many ZEVs

The Canadian automotive market has grappled with a significant lack of new vehicle inventory since early 2021. While these shortages have largely eased and inventory levels are beginning to normalize, the full story is more nuanced.

Specifically, dealers say they have too many zero-emission vehicles and not enough internal combustion engine ones, according to a survey of Canadian Automobile Dealers Association members by DesRosiers Automotive Consultants.

When surveyed about ICE vehicle inventory, 43.1% of dealers reported insufficient inventory. Meanwhile, 32.6% indicated that they had the right amount of inventory, and 24.3% stated that they had too much ICE inventory.

In contrast, 31.4% of dealers reported sufficient ZEV inventory, but a larger group, 44.4%, felt they had too much ZEV inventory. Only 24.3% cited a lack of ZEVs.

“While dealer inventory is not the sole determinant of sales success, the opinions on ZEV and ICE stock levels are certainly revealing,” said Andrew King, Managing Partner at DesRosiers. “Consumers are increasingly resistant to higher-priced vehicles. As the market focus shifts from early adopters to a more hesitant general public, the road ahead for ZEVs will be challenging.”

Overall, dealers reported an average inventory level at 88.4% of their normal pre-pandemic baseline.

However, reaching 100% of pre-pandemic inventory levels may not be the goal going forward. Many automakers have expressed a preference for maintaining lower inventory levels compared to pre-pandemic practices. Whether they can sustain this approach as the market dynamics shift remains uncertain, DesRosiers noted.