Affordability Matters

In the current climate rising costs are having a major impact

One theme that seems to be consistent within the last few years is affordability. The cost of goods and services is up significantly and that is having an impact on both consumers and businesses. In this issue, Daniel Rufiange raises an interesting question on Page 10: Where have the affordable vehicles gone? He notes that between 2019 and 2026 the average cost for a new vehicle in Canada has nearly doubled, and this will have a significant impact going forward. In many cases we’ve seen more consumers becoming underwater on car loans, owing more than the vehicle is worth. Additionally payment terms are becoming longer and longer. There was a time when a 36-month payment term was the norm in the industry, today, it’s closer to 72 months. If vehicle prices continue to increase significantly what happens? It’s difficult to say but as time goes by, I for one, certainly feel there is a growing business case for building simple, affordable entry level vehicles again.

“For decades, the automotive industry has represented a key backbone of our economy and that’s not just the manufacturing and sale of new and used vehicles, but also the businesses that service and repair them.”

– Huw Evans

Getting back to these kinds of fundamentals requires real collaboration from government, regulators and OEMs and their supply chains to make this feasible, but I do feel it is not beyond the realm of possibility. For decades, the automotive industry has represented a key backbone of our economy and that’s not just the manufacturing and sale of new and used vehicles, but also the businesses that service and repair them. This includes those that perform collision repairs, do mechanical work, recycle end of life vehicles, and those that provide a whole host of other services, including raw materials to manufacture vehicles and components, tires, not to mention financing and leasing entities. Having a pool of simple and affordable vehicles has proven to build a solid foundation for our industry, providing jobs, and strengthening economic growth and opportunity across the country. And I hope we can continue that.