CBB Weekly Automotive Market Update 4/27/2021

April 27 2021
CBB

Wholesale Prices, Week Ending April 23

The upswing in the Canadian used vehicle wholesale market continues, although the pace of weekly increases is slightly lower than prior weeks. Although not as strong as the weekly increases seen in recent weeks, the Truck/SUV segments continued to lead the market with above average week-over-week price increases. Cars also had another strong week with a solid up-tick in prices well above historical average increases.

  This Week Last Week 2017-2019 Average
(Same Week)
Car segments +0.34% +0.37% +0.04%
Truck & SUV
segments
+0.46% +0.53% -0.27%
Market +0.40% +0.45% -0.12%

Car Segments

• Used cars posted another positive performance with an above historical average weekly change of +0.34%, which is a slightly lower increase compared to the preceding week’s increase of +0.37%.
• Most car segments showed a weekly increase, with Premium Sporty Cars (+0.85%) leading the Car segments.
• Mid-Size Cars (+0.72%), Sub-Compact Cars (+0.66%), Full-Size Cars (+0.60%), and Compact Cars (+0.54%) also had strong performances with above average increases.
• The Near Luxury Car (-0.11%) and the Luxury Car (-0.04%) segments were the only Car segments with a weekly decline in prices.

Truck Segments

• Trucks posted another strong weekly performance, showing a weekly increase in values of +0.46%, again losing some of the momentum from the prior 2 weeks’ increases.
• All Truck/SUV segments saw positive weekly changes, with Minivans leading the Truck/SUV segments (and the market) with the largest weekly increase at +1.21%, followed by Mid-Size Crossover/SUVs (+0.81%), and Full-Size Pickups (+0.70%).
• Sub-Compact Luxury Crossovers (+0.10%) and Full-Size Luxury Crossovers/SUVs (+0.10%) had the weakest performances this week on the Truck/SUV side of the market.

Used Retail Prices & Listing Volumes

Used vehicle average listing prices continued their upward trajectory this past week, with the14-day moving average now at ~$25,340. The 28-day moving average also continued to see strong increases, closely mirroring the daily and 14-day trends, which have been experiencing a strong upswing in prices since late February.

Analysis is based on approximately 130,000 vehicles listed for sale on Canadian dealer lots. Active listing volume continued showing positive movement this past week, with the 14-day moving average now at around 132,500, up from the prior week’s figure of ~128,500. Active listing volume actually began to show positive movement in recent weeks when looking at the daily and weekly trends, and we are now seeing the trend continuing.

Volume

Used Retail

Listing volume saw a solid increase this past week, with the CBB Listing Volume Index increasing to 1.059 from 1.014 the prior week. The index is now showing that overall listing volume is at levels slightly higher than this time last year, although still following a similar trend to what we experienced at the same time last year.

Wholesale

The Canadian wholesale market strengthened further this week with overall Truck/SUV and Car values in positive week-over-week territory. While still in positive territory, the increases seen this week were less than the previous week. Supply remains low with demand extremely high on both sides of the boarder. Upstream channels continue to tap supply before it can be available to wholesale markets.

Sell rates remain strong this week as buyers continue to demand inventory. They are willing to adjust to sellers' expectations, especially in the Truck segment. Some observed sell rates were as high as 75% 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 lack of new vehicle supply continues to increase demand for used vehicles.

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 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

• Bank of Canada is expecting interest rate hikes to occur in the second half of 2022 to keep to the inflation target of 2%.
• The Canadian dollar increased slightly by half a cent to 0.805. 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.
• The 2021 Federal budget has many initiatives with a few highlights listed below:
o A new $15 federal minimum wage.
o Extension of maximum period of employment insurance sickness benefits, from 15 weeks to 26 weeks.
o Projection of 1 million new jobs created by end of the year.
o New tax of 10-20% for luxury cars and aircrafts worth more than $100,000 and luxury boats over $250,000.
o $4.4 billion to help homeowners with green retrofits through interest-free loans of up to $40,000.

U.S. Market

• All U.S. Car and Truck segments reported increases this past week, with the overall market gaining +1.28%, compared to +1.34% the week prior.
• Car segments continued to have large gains this past week (+1.71%), and the rate of increase grew compared to the week prior (+1.60%).
o All nine Car segments had another week of gains exceeding +1%, with Compact (+2.33%) Cars exceeding 2% for the fourth week in a row.
o Sub-Compact Cars (+1.88%) did not break the 2% mark this past week, but the last 4 weeks has averaged a weekly increase rate of +1.98%.
• Truck segment gains continued this past week (+1.07%), but it was at a slightly lower level than the previous week (+1.20%).
• All thirteen truck segments reported gains last week, with nine exceeding 1%.
o Sub-Compact Crossovers led the Truck segment gains again this past week with an increase of +2.13%, compared with +2.14% the previous week.
o Full-Size Trucks (+1.25%) have slowed their rate of weekly gains but are still exceeding 1% each week.

Industry News

• Supply chain struggles, specifically the chip shortage, continue to wreak havoc on new car production. Ford announced more production disruptions. Mitsubishi also said they will cut roughly 16,000 global units in May. Stellantis is laying off employees at their Jeep factory in Detroit as the chip shortage has production at a halt until the end of May.
• Electrification is top of the list for most OEMs recently. Honda has released their timeline for electrification; they would like for EVs (and fuel cell vehicles) to account for 40% of all their sales by 2030. Toyota announced their plans for an EV sub-brand that will contain 15 electric models, one of which will be a pickup truck; their first planned EV model will be an all-electric crossover concept called the bZ4X. Cadillac announced that pricing for the 2023 LYRIQ, an all-electric crossover, will start under $70,000, including the destination charge.