CBB Weekly Automotive Market Update 6/1/2021

June 01 2021
CBB

Wholesale Prices, Week Ending May 28th

The Canadian used vehicle wholesale market had another positive performance with an overall weekly increase of +0.20%, a decrease compared to the prior week’s increase of +0.35%. The weekly increases seen in both the Car and the Truck/SUV segments were well above average week-over-week price increases. Truck/SUVs led the market with a solid up-tick in prices (+0.24%) which were lower weekly increases than the prior week; similarly, Cars had another positive week, but a definite slowdown in the rate of the weekly increases (+0.16%).

Car Segments

• Used cars posted a positive performance with a weekly change of +0.16%, down compared to the preceding week’s increase of +0.37%.
• Roughly half of the Car segments showed a weekly increase, with Sporty Cars (+0.52%) leading the Car segments.
• Mid-Size Cars (+0.30%), Prestige Luxury Cars (+0.28%), and Luxury Cars (+0.27%) also had strong performances with above average increases.
• The Sub-Compact Car (-0.33%) segment had the weakest performance out of the Car segments, followed by the Compact Car segment (-0.29%), the only two segments showing overall declines.

Truck Segments

• Trucks posted a positive weekly performance, showing a weekly increase in values of +0.24%, slightly weaker performance than the preceding week’s +0.33%.
• Most Truck/SUV segments saw positive weekly changes, with Full-Size Crossover/SUVs leading all segments with a weekly increase of +0.87%, followed by Small Pickups (+0.42%), Sub-Compact Crossovers (+0.40%), and Full-Size Pickups (+0.36%).
• Sub-Compact Luxury Crossovers (-0.31%) and Compact Crossover/SUVs (-0.26%) had the weakest performances this week on the Truck/SUV side of the market, showing a decline in prices.

Used Retail Prices & Listing Volumes

Used vehicle average listing prices continued their upward trend this past week when looking at both the 14-day moving average (now at ~$26,300) and the 28-day moving average; however, the daily average listing prices are now showing a slight leveling off in prices. Analysis is based on approximately 140,000 vehicles listed for sale on Canadian dealer lots.

Active listing volume had a slight decrease this past week, with the 14-day moving average now at around 139,100. Active listing volume began showing positive movement in early April and we are now seeing what appears to be a slowdown of the trend.

Volume

Used Retail

Listing volume saw a decrease this past week, with the CBB Listing Volume Index decreasing to 1.081 from 1.090 the prior week. The index continues to show 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.  This continues the trend seen over the last four weeks. 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 75% this week. 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.  We are seeing more sellers setting floors higher than the current market will bear which has been contributing to lower then previous week sell rates.

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 continued in the $0.83 range the past week. With little movement the last few weeks the momentum of the strengthening Canadian dollar has stalled out for now.
• GDP Annual Growth Rate in Canada is expected to be 14.00% by the end of this quarter, according to Trading Economics global macro models and analysts' expectations. Looking forward, they estimate GDP Annual Growth Rate in Canada to stand at 3.00% in 12 months' time. In the long-term, the Canada GDP Annual Growth Rate is projected to trend around 3.10% in 2022 and 3.00% in 2023, according to their econometric models.
• Canada tightens mortgage qualification in a bid to cool real-estate markets. With the changes, homebuyers will have to show they can afford a minimum rate of 5.25%. The current threshold, based on posted rates of Canada’s six largest lenders, is 4.79%. Economists have been estimating the tighter qualification restrictions would reduce the buying power of households by about 5%.

U.S. Market

All U.S. Car and Truck segments reported increases this past week with the overall market gaining +0.9%, compared to +1.01% last week.

Car segment gains (+0.9%), while above historical trends, were lower when compared to the week prior (+ 1.17%).
• All nine car segments reported gains last week, with two exceeding +1%.
• Sub-compact and Compact segments had the largest weekly gains at 1.55% and 1.2%, respectively.
• Compact Cars have had a higher growth rate than the overall car segment average for 11-consecutive weeks.

Similar to Car segments, the Truck segment gains (+0.9%) were slightly below the previous week’s +0.93%.
• All 13 truck segments reported gains last week, with five exceeding +1%.
• Mid-size Luxury Crossover/SUV and Compact Luxury Crossover/SUV segments had the largest weekly gains at 1.37% and 1.25%, respectively.
• Mid-size Luxury Crossover/SUV segment has had six-straight week-over-week gains, followed by Compact Luxury Crossover/SUV segments with five week-over-week gains.

Industry News

• General Motors Co announced Thursday that they will soon be restarting production at five assembly plants around the world that have been idled due to a global semiconductor chips shortage.
• Mazda has announced that it will discontinue the Mazda6 midsize sedan and CX-3 subcompact crossover after the 2021 model year.
• The Electric Circuit, in partnership with Québec’s municipalities, will be rolling out 4,500 standard charging stations by 2028, to meet the needs of electric vehicle drivers who do not have access to home charging.