CBB Weekly Automotive Market Update 4/6/2021

April 06 2021
CBB

“CBB Weekly Automotive Market Update 3/2/2021” is locked CBB Weekly Automotive Market Update 3/2/2021

Wholesale Prices, Week Ending April 2nd

Again this past week, the Canadian used vehicle market experienced 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. The Car segments saw record-breaking week-over-week price increases, while the Truck/SUV segments again lead the strong market performance. Compared to the prior weeks, Truck/SUV segments performed very well, however, the week-over-week price increases were not as strong as the prior week.

Car Segments

• Used cars posted another record-breaking weekly change of +0.52%, an increase compared to the preceding week’s increase of +0.39%.
• Most car segments showed a weekly increase, with Full-Size Cars (+1.42%) and Near Luxury Cars (+1.14%) leading the Car segments.
• Mid-Size Cars (+0.80%), Sub-Compact Cars (+0.79%), Compact Cars (+0.67%), and Sporty Cars (+0.65%) also had strong performances with above average increases.
• The Prestige Luxury Car (-0.15%) segment was the only segment that saw a weekly softening in prices.

Truck Segments

• Trucks posted a near record-breaking weekly performance, showing a weekly increase in values of +0.68%, following the prior week’s increase of +0.76%.
• All segments had positive weekly changes, with the Sub-Compact Luxury Crossovers leading the Truck/SUV segments (and the market) with the largest weekly increase at +1.87%, followed by Sub-Compact Crossovers (+1.32%), Small Pickups (+1.17%), and Full-Size Luxury Crossover/SUVs (+1.06%) – all top 4 segments, again, with weekly changes exceeding 1%.
• Full-Size Vans (+0.16%) and Compact Luxury Crossover/SUVs (+0.24%) had the weakest performance this week but still showed week-over-week improvements.

Monthly Retention Index

The Canadian Black Book Used Vehicle Retention Index has set yet another new all-time record in March 2021. The Index, which tracks the retained value performance of 2- to 6-year-old vehicles, increased to 118.6 in March, up +4.6 points from February (114.0). This new record is up 4.1% from February and up 10.6% from March of last year. Used vehicle prices in the wholesale market have been strengthening the past several weeks; when measured relative to the when-new price (equipped MSRP) and adjusted for seasonality, our Index clearly reflects that Canadian wholesale used vehicle prices are at an all-time high.

Used Retail Prices & Listing Volumes

Mirroring the wholesale side of the market, average listing prices continued strengthening this past week (14-day moving average, now ~$25,080). The 28-day moving average also continues to see increases, catching up to the daily and 14-day trends which have been experiencing an upswing for the past few weeks. Analysis is based on approximately 130,000 vehicles listed for sale on Canadian dealer lots.

Active listing volume declined again this past week (14-day and 28-day moving average), with the 14-day moving average now at around 127,300, down from the prior week figure of ~128,500. The weekly decline in listing volume was steeper than last week’s decline, and combined with the increase in demand, the drop in listing volume continues to have a positive impact on prices.

Volume

Used Retail

Listing volume continued to decline this past week, with the CBB Listing Volume Index showing a decrease to 0.992 from 0.998 the prior week. The index is now showing that overall listing volume is approaching levels similar to this time last year. The decline in listing volume is just another indication of the challenges the industry is facing with a supply shortage in both the new and used sides of the market. Tight used vehicle inventory levels, relative to demand, will continue to be a key factor in the near-term.

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.

Sell rates remain strong this week as buyers continue to demand inventory and are appearing more willing to adjust to sellers' expectations especially in the Truck segment. Some observed sell rates were as high as 95% 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 as supply is struggling to keep up with overall demand at auctions. The Canadian dollar stabilized 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 has been recording approximately 100,000 new COVID-19 cases every three to four weeks, surging past the 900,000 mark on March 13th. Canada has recorded more than a million cases of COVID-19 since the onset of the global pandemic and is currently facing its third wave of increased cases. With daily case counts rising at an alarming rate in many provinces, we can expect governments to impose further restrictions until case counts fall again.
• Consumer Confidence in Canada increased to 50.25 points in March from 46.34 points in February 2021 as reported by Ipsos. The rise in confidence occurred while case counts remained low and vaccine rollouts pushed forward at a slower pace than our American neighbours.
• The Canadian dollar held at 0.799 USD in the first week of April, still near a 3-week high of 0.806 USD on March 16, as traders monitored resurging COVID-19 infections in the country. 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.
• After edging up 0.1% at year-end, real GDP rose 0.7% in January, supported by increases in wholesaling, manufacturing, and resource extraction. January's headline gain marked the ninth consecutive monthly increase in economy-wide output since the historic declines recorded in March and April 2020. Total economic activity in January remained about 3% below pre-COVID levels.

U.S. Market

• All U.S. Car and Truck segments reported increases exceeding 1%, with the overall market gaining +1.82%, compared to +1.49% the week prior.
• Car segments increased their gains this past week, up +1.99%, compared to +1.58% the week prior.
o All nine Car segments had gains exceeding +1.00%, with Compact (+2.45%) and Mid-Size (+2.62%) Car segments exceeding 2%.
o Two weeks ago, the Premium Sporty Car experienced the smallest Car segment gains at +0.32%, but this past week the rate of gain rose to +1.48%.
• Truck segment gains are growing each week, with this last week seeing an increase of +1.73%, compared to +1.44% the week prior.
o All thirteen truck segments reported gains over 1%, with Sub-Compact Crossovers (+2.64%) and Minivans (+2.46%) exceeding 2%.
o The Full-Size Truck segment continues to gain momentum, with another substantial increase of +1.91%, compared to the prior week’s +1.62%.

Industry News

• Canadian retail sales were up just over 15% in Q1 compared to 2020, despite the supply chain struggles that impacted most OEMs.
• The global microchip shortage continues to present challenges for many OEMs.
o Up until now, Hyundai had not faced any impacts as a result of the shortage, but last week they announced plans to suspend production at their South Korea plant this week.
o Ford continues to see production struggles, the latest being their top-selling F-150 full-size truck production in Dearborn and Kansas City where planned suspensions start this week and planned overtime cancellations extend into June.

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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