Lane Talk: 2021 The Year Used Values Grew Exponentially
December 17 2021
2021 has witnessed the highest rate of used vehicle value growth ever
In fact, since September of 2020 the Canadian Black Book Used Vehicle Retention Index, has experience 14 all time record months for value growth (up to November 2021). The latest version of the Index, in November, saw the index spike to 152.6 Index points, the highest ever, which was also the largest ever month-over-month gain of 9.5% and the record year-over-year increase of an astounding 37.8%.
October of 2021 had just shattered the previous monthly Index record at 139.4, the month-over-month mark at 26.1% and year-over-year record of 26.1% growth. The next month of November numbers really say it all, with all records being broken in significant fashion. Every month of 2021 saw values rise accept July, which declined by a miniscule 0.3% from June and is essentially flat.
Another barometer used by Canadian Black Book to measure overall growth in values, in any given year, is calculated while tabulating the annual Canadian Black Book Best Retained Value Awards. The 2021 edition of the awards was the 15th annual celebration of used vehicles that hold their value best after four years. This year’s CBB Awards announced a new record for used values averaged among all models in Canada, at a staggering 64% of MSRP after four years. The new record breaks the existing record of 61.5% set earlier this year when the awards were last announced in March of 2021. These latest awards featured models holding value over 88% of original MSRP, a feat never before reached.
This phenomenon is a result of low supply in both used and new inventory across North America. The current supply crisis leads back to the beginning of the pandemic when manufacturing was disrupted globally; to global supply chain and logistical hang ups; to global semi-conductor and microchip shortage; to shortages in various raw materials.
The decreased supply of new units has increased demand for used, which consequently is depleting the supply of used and therefore forcing values up. Compounding this in Canada, is that given the relative stability of the CDN at around $0.80 USD, the US auto market still has a voracious appetite for Canadian used units, which contributes greatly to the loss of supply.
To exaggerate this value growth further, is that in general, demand for vehicles has also grown in 2021. Not to pre pandemic levels, but since the summer of 2020. After last summer pent up demand after lock downs, hit the market and ran into the beginning of 2021. More recently, with loosening restriction and people getting back to work and onto roadways again, demand has risen. As basic economics dictates, this strong demand with low supply will result in higher prices.
Currently there is no end in sight, however, with new COVID variants all bets are off in making concrete predictions.