CBB Weekly Automotive Market Update 5/25/2021

May 26 2021
CBB

Wholesale Prices, Week Ending May 21st

The Canadian used vehicle wholesale market had yet another positive performance with an overall weekly increase of +0.35%, down compared to the prior week’s +0.51%. 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 (+0.37%) which were lower weekly increases than the prior week; similarly, Truck/SUVs had another positive week, but slight momentum slowdown in weekly increases at +0.33%.

Car Segments

• Used cars posted a solid performance with a weekly change of +0.37%, down compared to the preceding week’s increase of +0.55%.
• Most car segments showed a weekly increase, with Premium Sporty Cars (+0.76%) leading the Car segments.
• Sporty Cars (+0.74%), Compact Cars (+0.62%), and Prestige Luxury Cars (+0.59%) also had strong performances with above average increases.
• The Near Luxury Car and the Luxury Car segments, both showing a -0.10% weekly change, had the weakest performances out of the Car segments and were the only Car segments showing a weekly decline in prices.

Truck Segments

• Trucks posted a positive weekly performance, showing a weekly increase in values of +0.33%, slightly weaker performance than the preceding week’s +0.47%.
• Most Truck/SUV segments saw positive weekly changes, with Full-Size Pickups leading all segments with a weekly increase of +1.29%, followed by Small Pickups (+1.08%).
• Sub-Compact Luxury Crossovers (-0.51%) 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 ~$26,140. 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 140,000 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 139,100, up from the prior week’s figure of ~138,180. Active listing volume began showing positive movement in early April and we are still seeing the trend continue.

Volume

Used Retail

Listing volume saw another slight increase this past week, with the CBB Listing Volume Index increasing to 1.090 from 1.084 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
slightly lower than 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 82% 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 was similar to the previous week and 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 the past week. Strong commodity prices have contributed to the strengthening Canadian dollar.
• Consumer Confidence in Canada is expected to be 51.90 points by the end of this quarter, according to Trading Economics global macro models and analysts' expectations. Looking forward, they estimate Consumer Confidence in Canada to stand at 52.00 in 12 months' time. In the long-term, Canada Consumer Confidence is projected to trend around 55.00 points in 2022.
• The Consumer Price Index (CPI) rose 3.4% on a year-over-year basis in April, up from a 2.2% gain in March. A significant proportion of this increase can be attributed to a steep decline in prices in April 2020, as the monthly CPI rose 0.5% in April 2021. On a seasonally adjusted monthly basis, the CPI rose 0.6% in April. Excluding energy, the CPI was up 1.6% year over year in April, following a 1.1% increase in March.

U.S. Market

All U.S. Car and Truck segments reported increases this past week with the overall market gaining +1.01%, compared to +1.18% last week.

Car segment gains (+1.17%), while above historical trends, were slightly lower when compared to the week prior (+1.30%).
• Six of the nine car segments had gains exceeding +1.00%.
• Compact Cars (+1.40%) have consistently had a higher growth rate than the overall car segment average for 10-consecutive weeks.
• For the first time since mid-January, Prestige Luxury Cars (+1.28%) had a larger weekly increase than the car segment average.
• Sporty Cars (+1.61%) had the largest weekly gain, followed closely by the Luxury Car segment (+1.49%).

Similar to Car segments, the Truck segment gains (+0.93%) were slightly below the previous week’s +1.12%.
• All truck segments reported gains last week, with seven exceeding +1.00%.
• Sub-compact Luxury Crossovers (+1.67%) led the gains this past week, followed closely by Sub-compact Crossovers (+1.54%) which have increased more than the truck-segment average for 15-consecutive weeks.

Industry News

• Electrification is top of mind for a majority of OEMs and major announcements continue to come out every few weeks about new models to come; Ford recently announced plans for two dedicated EV platforms: one for full-size trucks and SUV’s, the other for cars and crossovers.
• Nearly every automotive manufacturer has been adversely affected by the chip shortage, with plants and factories limited or shut down temporarily. Roughly 2 million cars—or about 10% of quarterly global automotive production—weren’t built in the first quarter because of the shortage. The ongoing semiconductor chip shortage is now expected to cost the global automotive industry $110 billion in revenue in 2021.
• Most recently, Tesla, Daimler (Mercedes), and Hyundai have made announcements about the lack of semiconductor chips. Audi is the latest affected OEM, and they have put 10,000 German workers on part time hours due to chip shortage.