01.18.2023

Market Insights – 1/18/2023

Wholesale Prices, Week Ending January 14th

The Canadian used wholesale market saw prices decline for the week (-0.41%). The Car segment continues to outperform the SUV/Truck segment, with Car prices declining (-0.36%) and Truck/SUV segment prices declining (-0.45%) last week. All 22 segments had values decrease for the week. Mid-Size Cars had a (-0.04%) decrease followed by Compact Car at (-0.06%). The segments with the largest declines were Compact Van (-1.49%) and Full-Size Car at (-1.36%).

Car Segments

• Last week, overall car segments decreased on average by -0.36%.
• All segments had decreases. Those with the largest declines were Full-Size Car (-1.36%), Sporty Car (-0.66%) and Near Luxury Car (-0.58%).
• Other segments with notable declines were Premium Sporty Car (-0.40%) and Sub-Compact Car (-0.26%).

Truck Segments

• Last week, overall truck segments decreased on average by -0.45%.
• Segments with the largest declines were Compact Van (-1.49%), and Small Pickup (-0.77%) followed by Mid-Size Luxury Crossover (-0.64%) and Minivans (-0.61%).
• Other segments with notable declines were Sub-Compact Luxury Crossover (-0.56%), and Full-Size Pickup (-0.53%).

Used Retail Prices & Listing Volumes

The average listing price for used vehicles was consistent week-over-week, as the 14-day moving average was at roughly $36,500. Analysis is based on approximately 200,000 vehicles listed for sale on Canadian dealer lots.

Wholesale

The Canadian wholesale market decreased further last week. The overall decreases were larger than the historical average. Supply remains low with demand for more recent and clean condition vehicles on both sides of the border. Upstream channels continue to tap supply before it can be available to wholesale markets.
Conversion rates were quite varied. Some observed sell rates were as high as 61% but most were in the 20-45% range. Last week we saw more sellers dropping floors, which has been contributing to lanes with higher sell rates.

Canadian Black Book’s Market Insights

Economics & Government

• Natural resource GDP rose 1.1% in the third quarter of 2022 which was a decrease from the second quarter at 2.1%.
• Investment in residential building construction was down 2.0% to $14.9 billion in November. Single family homes fell for the fourth consecutive month down 3.9% to $7.8 billion
• Mild recession still likely according to bank economists
• The Canadian dollar remains steady around $0.747 this Monday.

U.S. Market

In the U.S., overall, Car and Truck segments decreased –0.79% last week; the prior week decreased by -0.71%.

Volume-weighted Car segments decreased -0.88%, compared to the prior week’s decrease of -0.67%:

• All nine Car segments decreased last week, with three of the nine reporting declines greater than 1% (Prestige Luxury, -1.76%; Near Luxury, -1.28%; Compact, -1.18%).
• Compact Cars reported the largest decline for the segment since the first week of November last year when the segment declined -1.45%.
• Sporty Car depreciation has been slowing in the new year, only declining -0.19% last week, compared with an average weekly decline of -0.60% during December.

Volume-weighted Truck segments decreased by -0.75%; the previous week had a decrease of -0.73%:

• All thirteen Truck segments reported declines last week, with three of those reporting a decline of over 1% (Sub-Compact Luxury, -1.42%; Full-Size, -1.09; Sub-Compact, -1.04%).
• Full-Size Truck (-0.49%) depreciation has slowed, consistently declining less than half of a percent over the past three weeks.
• Sub-Compact Luxury Crossover/SUV has reported the largest Truck segment declines over the last two weeks, -1.42% last week compared with -1.12% the week prior.

Industry News

• Hyundai has achieved the highest volume of any brand in receiving 12,777 electric and plug-in vehicle rebates under the Federal iZEV program, surpassing Tesla as the previous and only leader in volume since the program’s inception in 2019.
• Taiwan Semiconductor Manufacturing Co. (TSMC) has released a statement from their CEO, stating that they “expect the shortage to be relaxed quickly” as chip delivery times will begin to shrink.
• Tesla has significantly reduced pricing across all 4 of its electric models globally to increase demand and sales volume; this has requalified the brands most inexpensive model, the Model 3, for eligibility of the federal EV incentive of $5,000 in Canada.
• The North American Car & Truck of the Year awards have been announced for 2023, and the winners are the Ford F-150 Lightning for Truck of the Year, Kia EV6 for SUV of the Year and Acura Integra for Car of the Year.