CBB Weekly Automotive Market Update 4/13/2021

April 13 2021
CBB

Wholesale Prices, Week Ending April 9th

The Canadian used vehicle market experienced another week of record-breaking wholesale price increases as the industry continues to feel the impact of new vehicle production shortage, light new and used inventory levels, and strong new and used vehicle demand. Cars had a strong weekly up-tick in prices, although not as strong as the weekly increase seen the prior week, but well above historical average increases. The Truck/SUV segments led the market with record-breaking week-over-week price increases.

Car Segments

• Used cars posted another strong, above historical average weekly change of +0.39%, which is a slight decrease compared to the preceding week’s increase of +0.52%.
• All car segments showed a weekly increase, with Mid-Size Cars (+1.03%) leading the strong Car segment performance.
• Compact Cars (+0.67%), Sub-Compact Cars (+0.64%), Full-Size Cars (+0.58%), and Near Luxury Cars (+0.47%) also had strong performances with above average increases.
• The Sporty Car (+0.17%) and the Luxury Car (+0.23%) segments trailed the rest of the car market but still had a positive weekly performance.

Truck Segments

• Trucks posted a new record-breaking weekly performance, showing a weekly increase in values of +0.84%, following the prior week’s increase of +0.68%.
• All Truck/SUV segments saw positive weekly changes, with the Sub-Compact Luxury Crossovers again leading the Truck/SUV segments (and the market) with the largest weekly increase at +1.76%, followed by Full-Size Luxury Crossover/SUVs (+1.54%), Small Pickups (+1.08%), and Mid-Size Luxury Crossover/SUVs (+1.02%) – all top 4 segments, again, with weekly changes exceeding 1%.
• Full-Size Pickups (+0.30%) and Compact Luxury Crossover/SUVs (+0.36%) had the weakest performance this week but still showed positive weekly upticks.

Used Retail Prices & Listing Volumes

Very similar to the wholesale market, average listing prices continued strengthening this past week (14-day moving average now $25,168). The 28-day moving average also continued to see increases, catching up to the daily and 14-day trends which have been experiencing an upswing in prices since late February. Analysis is based on approximately 130,000 vehicles listed for sale on Canadian dealer lots. Although active listing volume declined again this past week, when looking at the 14-day and 28-day moving average (14-day moving average now at around 127,100, down from the prior week figure of ~127,300), active listing volume actually began to show some positive movement when looking at the daily and weekly trends (see next page).

Used Retail

Listing volume saw a small increase this past week, with the CBB Listing Volume Index showing an uptick to 0.996 from 0.992 the prior week. The index is now showing that overall listing volume is at levels similar to this time last year, which shows how the challenges we are facing as a result of the pandemic, and now further impacted by production challenges, are still disrupting current used inventory levels.

Wholesale

The Canadian wholesale market strengthened further this week with Truck/SUV and Car values all moving further in the positive week-over-week territory. Supply remains low with demand extremely high on both sides of the boarder. Demand for Cars were not quite as strong as the Truck and SUV segments however with supply also low, prices moved upward as well.

Sell rates remain strong this week as buyers continue to demand inventory and they are willing to adjust to sellers' expectations, especially in the Truck segment. Some observed sell rates were as high as 85% this week - low supply and high demand keeps any saleable vehicle from returning to the auction block a second time. This high demand at auctions is expected to continue this week as the warmer weather increases consumer demand, causing dealers to continue to replenish used inventory.

The U.S. market exchange rate remains favourable for exportation. Buyers exporting vehicles to the U.S. continue to place pressure on Canadian vehicles and supply is struggling to keep up with overall demand at auctions. The Canadian dollar remained fairly constant this past week; however, this will have little effect on demand, with rising prices on both sides of the boarder.

Canadian Black Book’s Market Insights

Economics & Government

• Canada’s economy added 303,000 jobs in March, once again ahead of expectations and closing the gap from pre-COVID levels. Currently Canada is now only 296,000 jobs short of the pre-pandemic mark; however, with government-imposed restrictions constantly changing, the employment numbers are still expected to be in flux. The unemployment rate for March was 7.5%; Statistics Canada reported that it would have been 9.7% had it included Canadians who wanted to work but didn’t search for a job.
• Consumer Confidence in Canada increased to 51 points by the end of the quarter according to Trading Economics global macro models and analysts' expectations. This continues the upward trend throughout the pandemic, despite challenges that Canada has been facing.
• The Canadian dollar held at 0.80 USD in the second week of April, under renewed lockdown measures in the country due to the third wave of COVID the country is facing. The Canadian Dollar is expected to trade at 0.80 USD by the end of this quarter, according to Trading Economics global macro models and analysts' expectations.
• Oil prices rose and are now topping $60 USD per barrel for the first time in a week after the US Fed chair said that the outlook on the U.S. economy had “brightened substantially.”

U.S. Market

• All U.S. Car and Truck segments reported increases this past week, with the overall market gaining +1.59%, compared to +1.82% the week prior.
• Car segments this past week continued to have large gains (+1.79%), but the rate of increase slowed compared to the week prior (+1.99%).
o All nine Car segments had another week of gains exceeding +1.00%, with Compact (+2.54%) and Sub-Compact (+2.04%) Car segments exceeding 2%.
o Compact Cars set a record for the segment with an increase of +2.54%. It is expected for this segment to increase this time of year, but not by this amount. This same week in 2019 had an increase of +0.53%.
• Large Truck segments continued their gains this past week (+1.48%), but they were at a lower level compared to the record setting previous week’s gains of +1.73%.
o All thirteen truck segments reported gains, with ten exceeding 1.00%.
o Compact (+2.23%) and Sub-Compact (2.07%) Crossovers exceeded 2%, this is the second week in a row of weekly gains increasing greater than 2% for the Sub-Compact Crossover segment.

Industry News

• The highly anticipated Hyundai Santa Cruz is expected to debut this week on April 15th. The all-new model will be the mixt between a crossover and truck; in addition, it will be built on a unibody platform.
• GMC announced the future expansion of the Hummer EV line-up. This time it will be a family-oriented SUV, set to begin production in 2023.
• Chip-shortage related production delay announcements have become the norm each week recently. GM, Ford, and Hyundai were just some of the recent OEMs to announce new disruptions to production. Ford announced they will not have their normal summer shutdowns at a majority of their plants due to the shortage that has plagued them for months.

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.

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