Canadian Black Book & Fitch Ratings Release 2022 Joint Vehicle Depreciation Report
FOR IMMEDIATE RELEASE
Annual Depreciation Forecast for –6.1%; ABS Performance Supported by Low Vehicle Supply With Some Normalization Expected in 2022
MARKHAM, On (September 29, 2022) – Canadian Black Book, the leading provider of Canada’s used vehicle valuation data and residual value forecast solutions, announced today the publication of the first ever joint Canadian Vehicle Depreciation and Auto Asset Backed Securities (ABS) report with Fitch Ratings, Inc. (also a division of Hearst).
The 2022 Vehicle Depreciation Report takes an in-depth look at car and truck segment depreciation trends in 2021, as well as delivers insight into the outlook and forecast for depreciation in 2022.
The jointly issued report can be downloaded by clicking here.
Among the Report Highlights:
- Canadian Black Book anticipates that vehicle prices will soften and seasonal depreciation of -6.1% is anticipated.
- Fitch’s Rating Outlooks for loan and lease for 2022 are Positive, given the stable to improved performance,
- While wholesale market values may soften, as per the Canadian Black Book’s forecast for 2022, the elevated wholesale values are expected to continue to support the recoveries for auto loan transactions in the near-term due to the ongoing parts shortage impacting production levels, which Fitch expects to continue at least through 2022.
- Forecasted Values of 4-year-old vehicles are anticipated to remain above pre-pandemic levels, as the new vehicle supply shortage, switches to a used vehicle supply shortage in 2024-2026.
- A look at Electrification and what it means for vehicle value retention
2021 Depreciation Trends
Canadian Black Book expect 2021 to have been the peak for used vehicle prices. With supply of new vehicles anticipated to be high in 2022 (but still below current demand) the projection for 2022, is that vehicle prices will soften and seasonal depreciation of ~6.1% is anticipated. However, uncertainties remain around the impact that the war in Ukraine will continue to have on the supply chain, fuel prices, and consumer confidence.
A Look Ahead at 2022 Trends
Between 2020-2022, The Canadian New Vehicle Market lost about 1 million vehicle sales due the pandemic and microchip shortage. Additionally, due to the severe shortage of New & Used Vehicles in the USA, an increase in the number of vehicles exported from Canada to USA increased significantly in 2021. With New Vehicle supply not expected to return to normal until 2nd half of 2023, at the earliest. Forecasted Values of 4-year-old vehicles are anticipated to remain above pre-pandemic levels, as the new vehicle supply shortage, switches to a used vehicle supply shortage in 2024-2026.
Canadian Auto ABS Outlook for 2022
Fitch’s Rating Outlooks for loan and lease for 2022 are Positive, given the stable to improved performance, Fitch’s conservative establishment of transaction base case loss proxies, and the build in credit enhancement (CE) as the transactions amortize, which support rating upgrades for subordinate classes in 2022. Loss frequency may increase modestly in 2022 due to the risks noted above, though severity is expected to remain below pre-pandemic levels as a result of the continued strength in wholesale vehicle prices, as per Canadian Black Book.
The Black Book-Fitch Vehicle Depreciation Report is available for download by clicking here.
About Canadian Black Book
For 60 years, Canadian Black Book has been the trusted and unbiased Canadian automotive industry source for vehicle values. Today the company has grown into a leading data provider of vehicle valuations, residual value forecast solutions and VIN decoding. Canadian Black Book tools and information are considered ‘The Authority’ for vehicle values not only by car dealers and manufacturers, but also the leasing, finance, insurance and wholesale sectors. In 2020 Canadian Black Book is bringing to market its Enhance Vehicle Matching (EVM) solution, which will allow the industry to more consistently decode 17 digit VINs down to a specific trim package allowing a more precise vehicle valuation.
About Fitch Ratings
Fitch Ratings is a leading provider of credit ratings, commentary and research. Dedicated to providing value beyond the rating through independent and prospective credit opinions, Fitch Ratings offers global perspectives shaped by strong local market experience and credit market expertise. Fitch Ratings is part of Fitch Group, a global leader in financial information services. Fitch Group is majority owned by Hearst Corporation.
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