CBB Weekly Automotive Market Update 5/18/2021

May 18 2021
CBB

Wholesale Prices, Week Ending May 14th

The Canadian used vehicle wholesale market had yet another impressive performance with an overall weekly increase of +0.51%, up slightly compared to the prior week’s +0.46%. The weekly increases seen in both the Car and the Truck/SUV segments were well above average week-over-week price increases. Cars led the market again with a strong up-tick in prices (+0.55%) which were stronger weekly increases than the prior week; similarly, Truck/SUVs had another slight momentum up-tick in weekly increases at +0.47%.

Car Segments

• Used cars posted a strong weekly performance with a weekly change of +0.55%, up compared to the preceding week’s increase of +0.49%.
• Most car segments showed a weekly increase, with Full-Size Cars (+1.25%) leading the Car segments.
• Premium Sporty Cars (+0.92%) and Prestige Luxury Cars (+0.69%) also had strong performances with above average increases.
• The Sub-Compact Car (-0.10%) segment had the weakest performance out of the Car segments and was the only Car segment showing a weekly decline in prices. The Compact Car segment (+0.11%) also had a relatively slow week, trailing the rest of the Car segments.

Truck Segments

• Trucks posted a strong weekly performance, showing a weekly increase in values of +0.47%, slightly stronger performance than the preceding week.
• Most Truck/SUV segments saw positive weekly changes, with Full-Size Crossover/SUVs leading all segments with a weekly increase at +1.60%, followed by Minivans (+0.92%), Full-Size Pickups (+0.62%), and Small Pickups (+0.61%).
• Sub-Compact Crossovers (-0.37%) had the weakest performance this week out of all segments and was the only Truck/SUV segment showing a decline in prices.

Used Retail Prices & Listing Volumes

Used vehicle average listing prices continued their upward trend this past week, with the 14-day moving average now at ~$25,890. 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 had another slight increase this past week, with the 14-day moving average now at around 138,180, up from the prior week’s figure of ~138,025. Active listing volume began showing positive movement in early April and we are still seeing the trend continue.

Volume

Used Retail

Listing volume saw a slight increase this past week, with the CBB Listing Volume Index increasing to 1.084 from 1.078 the prior week. The index is now showing that overall listing volume is at higher levels than this time last year.

Wholesale

The Canadian wholesale market strengthened further this week. While still in positive territory, the increases seen this week were similar to the previous week. Supply remains low with extremely high demand 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. 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 lack of new vehicle supply continues to increase demand for used vehicles.

The U.S. market exchange rate tightened but remains favourable for exportation when price and demand are taken into consideration. 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.

Canadian Black Book’s Market Insights

Economics & Government

• The Canadian dollar stayed in the $0.83 range in the second week of May, amid higher oil prices. Crude futures, one of Canada’s major exports, rose above $65 per barrel after a cyber-attack forced the shutdown of fuel supply pipelines in the U.S., specifically the southeastern areas.
• Manufacturing sales rose 3.5% to $57.8 billion in March, the highest level since June 2019 with higher sales in 17 of 21 industries, led by the motor vehicle, petroleum and coal, and food product industries. These were also the contributing industries from a volume perspective as constant dollar manufacturing sales rose 2.3% to $50.2B.
• Housing starts in Canada fell 19.8% from the previous month to 268,631 units in April of 2021, below market expectations of 280,000 units, according to Canada Mortgage and Housing Corporation (CMHC). The SAAR of urban starts decreased by 16.9% to 251,504 units, as multiple urban starts slipped by 22.8% to 251,504 units while single-detached urban starts decreased a slight 0.1% to 78,918 units. Rural starts were estimated at a seasonally adjusted annual rate of 17,127 units.

U.S. Market

All U.S. Car and Truck segments reported increases this past week with the overall market gaining +1.18%, compared to +1.07% last week.

Car segment gains ticked up slightly this past week (+1.25%) compared to the week prior (+1.17%).
• Seven of the nine car segments had gains exceeding +1.00%.
• Compact Cars are no longer experiencing weekly gains exceeding 2%, but the nine-week average increase is +2.04%.
• Sporty Cars continue to see large gains (+1.24%), compared to +0.36% during this same week in 2019.

Truck segment gains increased this past week (+1.12%) compared to the previous week (+0.98%).
• All thirteen truck segments reported gains last week, with six over +1.00%.
• Compact Crossovers led the gains at +1.86% this past week. In comparison, this same week in 2019, the segment had a decline of -0.08%.
• Most of the Luxury segments have seen value increases decline in magnitude, but by comparison, in 2019, all these segments were experiencing declining values. For example, Full-Size Luxury declined by -0.59% during this same week in 2019.

Industry News

• General Motors announced price increases on their base MSRP of 2021 GMC models with most of the increases ranging from $50 to $800.
• Electrification is in the plans for most OEMs now with major announcements coming out every few weeks about new models to come:
o On May 19th, Ford will unveil their electric Full-Size Pickup, to be called F-150 Lightning.
o Porsche announced their plans for an all-electric Macan variant in 2023, after a refreshed gasoline powered Macan release in 2022.
• The global microchip shortage continues to wreak havoc on production levels across several manufacturers.
• Nissan recently announced they are expecting to see a reduction of 500,000 units in 2021.