01.24.2023

Market Insights – 1/24/2023

Wholesale Prices, Week Ending January 21st

The Canadian used wholesale market saw prices decline for the week (-0.44%). The Car segment continues to outperform the SUV/Truck segment, with Car prices declining (-0.28%) while Truck/SUV segment prices declined (-0.58%). There were 2 of the 22 segments that had values increase for the week. Compact Van prices increased by (+1.18%) followed by Mid-Size Car with a (+0.10%) increase. The segments with the largest declines were Minivans (-0.92%) decrease and Mid-Size Luxury Crossover/SUV with (-0.91%).

Car Segments

• Last week, overall car segments decreased on average by -0.28%.
• Segments with the largest declines were Full-Size Car (-0.74%), Sporty Car (-0.40%) and Prestige Luxury Car (-0.39%).
• One segment had a slight increase. That segment was Mid-Size Car (+0.10%).

Truck Segments

• Last week, overall truck segments decreased on average by -0.58%.
• Segments with the largest declines were Minivans (-0.92%), Mid-Size Luxury Crossover/SUV (-0.91%), Sub-Compact Luxury Crossover (-0.86%) and Full-Size Luxury Crossover/SUV (-0.76%).
• One segment had an increase. That segment was Compact Vans (-1.18%).

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 slightly 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 58% but most were in the 40-50% 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

• Canadian new home prices declined 0.2% in December matching the previous months decline. This was the fourth consecutive monthly decline.
• 10-year Canadian government bond yield increases to 2.9% from a five-month low of 2.7% earlier in January.
• The price of food increased 10.1% year over year as of December 2022 which was down from a 41 year high of 10.3% in November.
• The Canadian dollar remains steady around $0.747 this Monday.

U.S. Market

In the U.S., overall, Car and Truck segments decreased –0.56% last week; the prior week decreased by -0.79%.

Volume-weighted Car segments decreased -0.69%, compared to the prior week’s decrease of -0.88%:

• Eight of the nine Car segments decreased last week, with two reporting declines greater than 1% (Prestige Luxury, -2.16%; Near Luxury, -1.04%).
• Prestige Luxury Car and Near Luxury Car average segment declines were pulled down due to large declines of the Tesla Model S and Model 3 wholesale values as a result of the new vehicle pricing cuts that Tesla took the week prior.
• For the first time since June, Sporty Cars moved back into positive territory with an increase of +0.03%.

Volume-weighted Truck segments decreased by -0.50%; the previous week had a decrease of -0.75%:

• All thirteen Truck segments reported declines last week, but for the first time in seven weeks, none of the declines exceeded 1%.
• Tesla Model Y and Model X also experienced large declines last week, but the large Truck segment sizes prevented the overall segment averages from being impacted. Despite the large drops for Tesla, the Compact Luxury (-0.53%) and Mid-Size Luxury (-0.65%) Crossover/SUV segments reported smaller declines compared to the week prior.

Industry News

• After a reign of 24 consecutive years as the #1 passenger car in Canada, the Honda Civic was bested by the Toyota Corolla in 2022, some reasoning behind the new order are supply chain issues for Honda and the fact that the Corolla now offers many more iterations to complement consumer demand in the segment while starting at a lower entry price.
• The Chevrolet Corvette has released an all-new trim that enhances the 2023 lineup with the new E-Ray that introduces first-ever AWD as well as electrification to the platform and brings increased acceleration to the already quick C8 generation.
• Canadian Prime Minister, Justin Trudeau will not commit to increasing the Federal ZEV rebate as pressure increases on supporting the mandated ZEV requirement of all vehicles sold in Canada being zero-emissions by 2035.
• Canadian Online Used car retailer, Clutch, is laying off 65% of its staff and will exit operations in provinces west of Ontario as the downturn in the tech sector heavily affects the current round of investor funding that the company has been looking to secure.