CBB Research Amid Pandemic Shows Effects on Car Buying Trends

March 03 2021
CBB

Three Quarters of Canadians  Driving Less; Spend Half as much Time Behind
Wheel

Canadian Black Book is revealing the results of its annual Ipsos research looking into the car buying habits of Canadians. The 2021 study reveals some stunning numbers and stark contrasts when compared to the 2020 edition, which was conducted prior to the pandemic becoming widespread in Canada. CBB’s 2021 study illustrates how the COVID-19 pandemic and its economic repercussions have had a significant impact on how Canadians drive, travel, and approach buying a car.

The prominent catalyst and perhaps most significant change, directly connected to the effect of the pandemic, is that Canadians are driving less. The study shows three in four (76%) respondents agree that they are driving less, since the pandemic began. This is exemplified for those 55 years of age or older, where 86% say they are driving less, as well as 82% of those in Canadian households that make over $100K per year. Alberta is the region where most respondents said they were driving less, at 84%.

“This reduction in total kilometers driven by Canadians, brought on by the pandemic, has certainly had an impact on the industry, which our research clearly shows,” says David Robins, Principal Automotive Analyst and Head of Canadian Vehicle Valuations at Canadian Black Book. “The resultant differences in automotive buying and shopping trends and attitudes over the past twelve months are considerable, which perhaps goes without saying. However, they are very interesting to note and may help some industry people think differently about 2021 and beyond,” he/she adds.

Driving Less Means Buying Less

Those spending less time on the road due to working from home or remote learning, have cut back on their driving by nearly 50% on average, compared to before the pandemic. The research suggests that nearly half (48%) agree that they are working from home more often. Other lockdown/stay at home or restrictive public health related measures surely also contribute to the decline in kilometers driven. The result is a reduced sense of urgency when it comes to buying a new vehicle.
Nearly three in four (74%) of those who are getting behind the wheel less often agree (20% strongly/54% somewhat) they will not need to replace their vehicle as quickly, given that they are driving it less or shorter distances than usual. Those in Atlantic Canada feel stronger as 80% feel they will not be car shopping as soon due to less travel.

When asked if respondents intend to purchase a new vehicle in the next 24 months, 44% said they were likely, compared to significantly more in 2020 at over half (52%) suggesting a vehicle purchase over the next two years. The likely group to purchase in that timeframe are those 55+ at 36% versus 47% intention to by last year. The group which showed the most likely intent to buy is the 18 to 34 age group at 51%, which is a positive number, yet still substantially down from 57% last year. Households with earnings over $100k saw the largest drop in purchase intent at 45% in 2021 compared to 62% in 2020, before the pandemic. Regionally those in Alberta are the most likely to buy over the next 2 years at 54%. In comparison to last year Ontarians are 45% likely versus 56% last year; and British Columbians are have the lowest likelihood at 36% this year compared to 50% last year.

“Over the last three or four years of this survey, the trend was that roughly 50% of Canadians, on average, intended to buy new vehicles within two years,” says Robins. “The drop to 44% is well over the margin of error for this study and is a significant shift in intention to buy attitudes across Canada,” he adds.

Uncertainty brought on by the pandemic and recession has caused some Canadians to put the brakes on buying a vehicle. Two in ten (20%) say they have had to put off, delay or postpone their purchase as a result. This includes Canadians who wanted to buy a new (4%) or used (4%) car in 2020, and also those who planned on buying a new (8%) or used (6%) car in 2021. Nearly all (88%) of those who have put off their decision to buy expect to postpone their purchase by a minimum of six months, including two in ten (19%) who plan to push back their purchase by two years or more.

EVs Flattening

With many Canadians feeling no great need to buy a new vehicle any time soon, it follows that intent to buy alternative energy vehicles in the near term has also decreased. Three in ten (30%) say it’s likely they would buy a BEV (Battery Electric Vehicle) or a PHEV (Plug-In Hybrid Electric Vehicle) in the next five years (9% very/21% somewhat). This number is significantly down from last year, when 37% expressed intent to by an EV. Those in Quebec (35%) and Ontario (31%) are most likely to buy EVs in that timeframe, while the Prairie Provinces are less likely with Saskatchewan/Manitoba at 21% and Alberta at 22% respectively.

Those who say they are strongly considering purchasing a new vehicle in the next two years are also the most likely to say they are going to be in the market for a BEV or PHEV in the next five years (47% likely, including 30% very likely). Those aged 18-34 at most likely to buy EVs at 40%, which is still down 5 points from last year. Men are far more likely to consider an EV at 36% versus females at 24% and university graduates are another group who show strong interest in EVs at 41%. These university graduates are also more inclined to say they are likely to purchase an alternative energy vehicle in the next five years.

How do Public Transit and Ride Sharing Fare?

Currently, nearly one in ten (8%) Canadians say they rely on ride sharing services instead of owning a vehicle, and though these services remain popular, shifts in the market both before and during the pandemic means near-term growth remains unclear. When compared to last year, 11% of respondents in 2020 suggested reliance on ride sharing. Nearly two in ten (17%) rely on transit instead of owning a vehicle, with those aged 18-34 most likely to use transit as their primary means of getting where they need to go (25%).

As they look ahead to 2021 through the lens of the pandemic and an economic recession, it seems that not only will many Canadians be driving less, but they will also be less likely to use other means of getting around – especially those that involved shared spaces. Nearly half (45%) say they will be less likely (29% much less/15% somewhat less) to use public transit in 2021, rising to 50% of those aged 18-34. Meanwhile, more than four in ten (42%) say they will be less likely (30% much less/12% somewhat less) to use ride-sharing services over the next 12 months.

The survey finds that ride-sharing services such as Uber or Lyft are at significant risk as the pandemic drags on. Asked to consider the pandemic and economic recession, nearly half of Canadians (46%) say they are less likely (36% much less/11% somewhat less) to use ride-sharing services. Women (43%) and those aged 55 and over (43%) are most likely to avoid sharing rides as the pandemic drags on. About as many (47%) say their likelihood to use ride-share services won’t change, while 7% expect their use of ride-share services to increase.

Given concerns around COVID-19, some (15%) have taken the step of buying a car to avoid the use of public transit or ride-sharing service (7%) or are considering it (7%). Younger Canadians aged 18-34 are most likely to have already invested in a car (17%) or to be considering a purchase (13%).

Buying During a Pandemic

Though the current climate has unquestionably had a huge impact on how Canadians approach major purchases, some decisions are less likely to be affected. When it comes to buying their next vehicle, three in four Canadians (75%) say that the current economic situation has no impact on whether they are more likely to buy new or used. Those who do feel an impact from the economic climate are more likely to say they would lean more toward buying a used vehicle (16%) than a new one (10%).

About one in four Canadians (26%) agree (6% strongly/20% somewhat) that the pandemic has made them more willing to shop for and purchase a vehicle completely online, though a majority (74%) disagree, preferring to see in-person what they’re buying. Atlantic Canada has the highest propensity to buy online with 30% of those respondents being open to it. This DIY online approach is most popular among those who say they are very likely to purchase a vehicle in the next two years (42% vs. 14% not likely), those under 35 (35% vs. 19% 35-54, 13% 55+) and men (32% vs. 11% women). Indeed, a majority (81%) agree (27% strongly/54% somewhat) they would feel safe going into an auto dealer to shop for a car in person, provided the dealer adheres to public health guidelines specific to their area.

Among current vehicle owners/lessees, over half (55%, up 2 points) say they purchased or leased a new vehicle, as opposed to used (45%, down 2 points). Looking to future vehicle purchases, Canadians are more likely to say they’ll buy new (54%, down 1 point) compared to used (46%, up 1 point). Parents (64%), and those with incomes over $60K (61% $60K-<$100K; 60% $100K+) are all more likely to say their next vehicle will be new.

Does the Carbon Tax Change Purchase Behaviour?

The federal government has recently announced that the carbon tax will be increased over the next decade, which will cause fuel prices to increase by 38 cents a litre. It’s a move that could potentially spur movement toward more fuel-efficient cars, less car ownership, and increased use of shared transit methods. The survey finds that though intentions toward more environmentally friendly modes of transit are lukewarm in 2021 (due in large part to the ongoing uncertainty caused by the pandemic), when made aware of the looming rise in fuel prices, Canadians’ resolve to become more fuel-efficient in the next five years strengthens significantly:

  More Likely
  In 2021 In the Next 5 Years
Buy smaller or more fuel-efficient vehicles 25% 52%
Buy alternative-fuel vehicles 18% 45%
Reduce the number of vehicles your household owns 14% 29%
Use public transit 11% 30%
Use ride-sharing services 9% 21%

About the Study

These are some of the findings of an Ipsos poll conducted between January 6 and 8, 2021, on behalf of Canadian Black Book. For this survey, a sample of 1,000 Canadians (who own or lease a car/truck or who are looking to purchase in the next two years) aged 18+ were interviewed. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±3.5 percentage points, 19 times out of 20, had all Canadians aged 18+ been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.

About Canadian Black Book

For 60 years, Canadian Black Book has been the trusted and unbiased Canadian automotive industry source for vehicle values. Today the company has grown into a leading data provider of vehicle valuations, residual value forecast solutions and VIN decoding. Canadian Black Book tools and information are considered ‘The Authority’ for vehicle values not only by car dealers and manufacturers, but also the leasing, finance, insurance, and wholesale sectors. In 2021, Canadian Black Book is bringing to market its Enhanced Vehicle Matching (EVM) solution, which will allow the industry to more consistently decode 17-digit VINs down to a specific trim package, allowing a more precise vehicle valuation.