Dealerships feeling the pinch as interest rates rise
Posted July 12, 2023 4:25 pm.
Last Updated July 12, 2023 8:03 pm.
As the Bank of Canada hikes interest rates again Wednesday — it’s a tough time to finance a big purchase — Edmonton’s car dealerships are starting to feel the pinch.
“The biggest thing that I’ve noticed is people wanting to buy cash for under $5,000,” said Jamal Kemaldean, a finance manager with Alberta Wholesale Motors. “Also, of course, the prices have inflated almost 30 per cent.”
The used vehicle market is not immune to inflationary pressures. With the Bank of Canada raising key interest rates to five per cent — financing even a used vehicle becomes more costly.
“We don’t have anything under $18,000 on our lot because everything is so inflated. The more expensive you go, you typically get a more allowable vehicle. It’s just easier to finance,” Kemaldean explained.
The most recent data from Statistics Canada shows just under 150,000 new vehicles were sold across the country in April.
Kemaldean says even parents hoping to buy that first vehicle for their 16-year-old are taking a hit.
“Typically, we would get first vehicles up to $10,000 to 15,000 for their kids. Now it’s $3,000 to $5,000. And today’s $5,000 is the new $1,000.”
Kemaldean adds in his experience, it could take three to five years for prices to cool down.
