IAA : The COVID-19 Pandemic’s Effect on the Salvage Market in Canada

The COVID-19 pandemic affected industries around the world in varying degrees, causing ebbs and flows that still exist more than a year later. In the salvage vehicle market, the pandemic produced a perfect storm of record-high demand coupled with reduced supply, leading to increased seller returns.

Pandemic-related lockdowns forced 71% of American workers into remote positions in 2020, according to Pew Research Center. A Labour Force Survey noted that in Canada, 30% of the workforce maintained they were still working from home as of June of this year, compared to 4% in 2016. That meant far fewer cars on the road, leading to fewer accidents and claims, naturally resulting in a reduced supply of salvage vehicles. Using Toronto as an example, the police department noted from March 23 to April 27, 2020, there were 1,535 collision reports compared to 7,309 during the same period in 2019.

With virtual work environments becoming standard, more people began leaving urban areas for suburban and rural living. Public transit ridership fell 62.16% in U.S. and 65.83% in Canada in 2020, according to Mitchell - mpower, and ride-sharing services like Uber had its customer base drop in half due to fewer work commutes, lockdowns and fear of contracting the virus. Demand for personal vehicles increased exponentially, while at the same time, the pandemic forced shortages of car parts and the number of new vehicles being produced.

Canadian auto suppliers are still feeling those affects. The Canadian Press noted in an Aug. 15, 2021, article that Magna International Inc. expects 1.6 million fewer vehicles will be built this year due to a pandemic-related chip shortage. Those chips that help electronic vehicle enhancements function instead are going to personal electronics with the influx of work-from-home practices, forcing auto makers to cut back despite the increased demand for personal vehicles.

These circumstances have led to thriving used and salvage vehicle markets. Manheim's Used Vehicle Value Index notes an 18.8% increase year-over-year and prices for used cars increasing 19.9% during that same period due to the shortage of new vehicles. New buyers are flocking to online auctions to find used and salvage vehicles with conversion rates reaching record levels.

Impact's digital merchandising platform, Impact Interact™, and online research tools within can be a great resource for buyers to purchase salvage stock confidently. Finding salvage vehicles to rebuild, sometimes using parts from other salvage vehicles, through Impact's auctions have helped buyers operate more efficiently to meet the demand for quality working used vehicles. Dealers are also sourcing salvage stock from Impact's auctions to repair and sell vehicles to the public to fill the lack of inventory.