01.31.2023

Market Insights – 1/31/2023

Wholesale Prices, Week Ending January 28th

The Canadian used wholesale market saw prices decline for the week (-0.39%). The Car segment continues to outperform the SUV/Truck segment, with Car prices declining (-0.35%) and Truck/SUV segment prices in behind with a decline of (-0.58%). All but 2 of the 22 segments had values decrease for the week. The segments with the largest declines were Compact Van (-1.35%) and Near Luxury Car with (-0.60%). The 2 segments with price increases were Sub-Compact Luxury Crossover (+0.14%) and Sporty Cars’ slight increase of (+0.04%).

Car Segments

• Last week, overall car segments decreased on average by -0.35%.
• Segments with the largest declines were Near Luxury Car (-0.60%), Premium Sporty Car (-0.53%), Full-Size Car (-0.40%) and Luxury Car (-0.37%).
• One segment had a slight increase. That segment was Sporty Car (+0.04%).

Truck Segments

• Last week, overall truck segments decreased on average by -0.44%.
• Segments with the largest declines were Compact Van (-1.35%), Minivan (-0.59%), Small Pickup (-0.57%) and Compact Crossover/SUV (-0.55%).
• One segment had an increase. That segment was Sub-Compact Luxury Crossover (+0.14%).

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 high 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 75% 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 federal government budget deficit grew to 3.4 billion in November from 1.4 billion the year before.
• Consumer confidence has fallen slightly from 49.34 in December to 48.81 in January according to an IPSOS survey.
• The Bank of Canada has announced an increased interest rates 25 bps in February which puts the overnight rate to 4.5%.
• The Canadian dollar remains around $0.747 this Monday afternoon after falling from an earlier day peak of $0.752.

U.S. Market

In the U.S., overall, Car and Truck segments decreased –0.50% last week; the prior week decreased by -0.56%.

Volume-weighted Car segments decreased -0.50%, compared to the prior week’s decrease of -0.69%:

• Seven of the nine Car segments decreased last week, with only one reporting a decline greater than 1% (Prestige Luxury, -1.77%).
• Sporty Car increased for a second consecutive week, up +0.11% after the prior week’s increase of +0.03%.
• Full-Size Car (+0.06%) increased after thirty-two weeks of declines that averaged -0.76% depreciation per week during that time.

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

• All thirteen Truck segments reported declines last week, with only two reporting declines greater than 1% (Sub-Compact Luxury, -1.11%; Mid-Size Luxury, -1.13%).
• Compact Crossover (-0.13%) reported the smallest decline for the segment since last June.
• Full-Size Van had a second consecutive week of larger than average depreciation for the segment. Last week’s depreciation was -0.37% compared with the prior six weeks that averaged -0.17% decline per week.

Industry News

• Toyota Motor Corp. has announced Koji Sato as its new Global CEO, succeeding Akio Toyoda as he moves to sit atop Toyota’s Board of Directors; Sato has led the Lexus brand as well as Toyota’s Gazoo Racing unit.
• Q3 ZEV registrations have been tallied and they amounted to a new high of 8.7% nationally, led by B.C. (17.6%), Quebec (12.5%) and Ontario (7.2%); these 3 provinces account for 91.8% of all registrations as EV adoption continues to increase.
• After the Bank of Canada increased interest rates again 0.25% to 4.5%, Car Dealers have expressed that its effects have influenced dealership operations more than it has sales volume, especially due to the increased inventory that has seen higher levels than the past 2 years.
• Honda will be creating a new global division to help speed up its electric vehicle development as it recognizes the position it has in the EV market.