CBB Weekly Automotive Market Update 5/4/2021

May 04 2021
CBB

Wholesale Prices, Week Ending April 30th

The Canadian used vehicle wholesale market continued its strong performance with an overall weekly increase of +0.48%, up slightly compared to the prior week (+0.40%). Although not a record-setting week, 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 with a strong up-tick in prices (+0.54%), while Truck/SUVs had a slight momentum slowing in weekly increases (+0.42%); both segments, however, performed well above historical average increases.

  This Week Last Week 2017-2019
Average
(Same Week)
Car segments +0.54% +0.34% -0.14%
Truck & SUV segments +0.42% +0.46% -0.15%
Market +0.48% +0.40% -0.15%

Car Segments

• Used cars posted a record setting weekly performance with a weekly change of +0.54%, up significantly compared to the preceding week’s increase of +0.34%.
• All car segments showed a weekly increase, with Premium Sporty Cars (+0.77%) leading the Car segments.
• Sub-Compact Cars (+0.71%), Prestige Luxury Cars (+0.67%), Full-Size Cars (+0.63%), and Sporty Cars (+0.58%) also had strong performances with above average increases.
• The Compact Car (+0.13%), the Luxury Car (+0.33%), and the Mid-Size Car (+0.44%) segments had the weakest performance out of the Car segments but still managed to have a weekly increase in prices.

Truck Segments

• Trucks posted another strong weekly performance, showing a weekly increase in values of +0.42%, but again losing some of the momentum from the prior 3 weeks’ increases.
• All Truck/SUV segments saw positive weekly changes, with Mid-Size Crossover/SUVs leading the Truck/SUV segments (and the market) with the largest weekly increase at +0.80%, followed by Small Pickups (+0.71%), Compact Crossover/SUVs (+0.52%), and Full-Size Crossovers/SUVs (+0.51%).
• Mid-Size Luxury Crossover/SUVs (+0.22%), Sub-Compact Luxury Crossovers (+0.26%), Compact Luxury Crossover/SUVs (+0.28%) and Full-Size Luxury Crossovers/SUVs (+0.28%) 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 ~$25,525. 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 also continued increasing this past week, with the 14-day moving average now at around 137,230, up from the prior week’s figure of ~132,500. 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 solid increase this past week, with the CBB Listing Volume Index increasing to 1.078 from 1.059 the prior week. The index is now showing that overall listing volume is at levels almost identical to this time last year.

Wholesale

The Canadian wholesale market strengthened further this week. 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 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 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 strengthened this past week; however, this will have little effect on demand with supply levels so low.

Canadian Black Book’s Market Insights

Economics & Government

• Canada’s economy likely grew by 6.5% on an annualized basis in the first quarter, Statistics Canada advised on Friday, though economists warned that the current third wave of COVID-19 infections will weigh on the second quarter.
• The Canadian dollar increased by a cent to 0.815. The Canadian dollar has been making some big gains against the U.S. dollar over the last year. It ended April up 2.3% against the U.S. dollar, following a year of strong gains. A little over a year ago, the Canadian dollar was worth just US$0.67.
• Retail trade activity jumped 4.5% in February, following two months of decreases, as 10 of the 12 subsectors were up. In February, many provinces lifted or eased the lockdown measures that had largely contributed to the sector's declines in December and January. Stores more dependent on in-store traffic experienced the largest rebound in activity.
• The manufacturing sector contracted 0.9% in February, following 1.5% growth in January, continuing the sequence of increases alternating with small declines seen since September 2020. Both durable and non-durable manufacturing were down in February.

U.S. Market

• All U.S. Car and Truck segments reported increases this past week, with the overall market gaining +1.00%, compared to +1.28% the week prior.
• Car segment gains slowed this past week (+1.17%) compared to the week prior (+1.71%).
o For the first time since mid-March, all nine Car segments did not have gains exceeding 1% and none broke the 2% mark.
o Despite Compact Cars (+1.74%) having a lower week of increases last week, the average weekly increase for the past seven weeks is a staggering +2.17%.
• Truck segment gains continued this past week (+0.89%), but it was at a lower level compared to the previous week (+1.07%).
o All thirteen truck segments reported gains last week, with four exceeding 1%, compared to nine segments increasing more than 1% the week prior.
o Sub-Compact Crossovers had five consecutive weeks of increases exceeding 2%, but this past week the rate of gains slowed to +1.62%.
o Small Pickups broke their streak of eight continuous weeks of increases exceeding 1% with this past weeks’ gains slowing to +0.94%. However, Full-Size Truck increases (+1.11%) are still exceeding 1%.

Industry News

• The global microchip shortage has now idled Ford plants in Mexico, one of which produces the newly released Bronco Sport compact crossover; this closure is just one of many that are plaguing the manufacturer with the overall shortage threatening to potentially force Ford to cancel half of their Q2 production plans. General Motors is also being forced to idle production of one of their top-selling models, the Equinox, at its manufacturing facility in Ontario for two months. Up until now, BMW has remained relatively safe from the microchip shortage, but they’ve recently had temporary closures at both their Oxford factory and Regensburg plant, where several models are produced including the popular X1 and X2. Jaguar Land Rover is shutting down two of their main manufacturing plants in Castle Bromwich and Halewood.
• The chip shortage isn’t the only ongoing threat to production. Toyota has recently halted Rav4 and Lexus RX production at their facility in Ontario due to a COVID-19 outbreak at a supplier’s plant.