With car lots noticeably bare these days, a local dealership owner is offering his take on why the vehicle market has become so thin in Canada.

Coltyn Watchman, owner of AMP Motors LTD. says there are a couple factors at play, beyond the usual pandemic challenges.

"One being the chip shortage is definitely taking a hit on new inventory, and other markets, other than just Canada, has been in demand a lot greater," Watchman said. "So places like the United States have been in big demand for vehicles which results in Canadian distribution of used vehicles which also lowers the inventory for Canada on used (vehicles)."

"I would say there's definitely more exporting from Canada into the United States than there is importing from the Unites States into Canada."

Watchman added that the Canada-US dollar heavily favours American buyers in Canada over Canadian buyers in the United States, with essentially a 20 per cent discount.

By chip shortage, Watchman is referring to chips that are built into new vehicles - part of the AI and electronic control system that controls the commands of a vehicle, such as remote start or heated seats.

"There's a worldwide chip shortage basically for all of the options that are in new vehicles nowadays, there's been some plants that have shut down," Watchman said.

Watchman added that the chip shortage has slowed the production of new cars as well. And if there are less new cars, that means more and more people are driving their older cars for longer.

"Kilometres are getting driven up, which results in less desired cars...which drives up the desirability of good low kilometre used cars, which people are trying to snag up and acquire them as soon as possible," he said.

With the shortage of vehicles, Watchman says his shop has had to source vehicles from all over Canada, something they normally wouldn't do.

"Definitely looking in avenues that we never looked at before."

As for the future, don't expect prices to go down any time soon, Watchman says.

"New vehicles are going up every year...it's pretty tough for manufactures and big companies to lower their prices after people have already been buying them. If new car prices keep on going up, then I would say the used market is going to at least stabilize, or continue to rise."