12.13.2022

Market Insights – 12/13/2022

Wholesale Prices, Week Ending December 10th

Overall, the Canadian used wholesale market saw prices decline once again for the week (-0.37%). Both Car and Truck/SUV segments performed similarly, with Car segment prices declining (-0.30%) and Truck/SUV segment prices declining (-0.44%) last week. One of the 22 segments had values increase for the week, which was Minivans at (+0.05%) followed by Prestige Luxury cars at (-0.01%).

Car Segments

• Overall car segments decreased last week by -0.30%.
• All segments had decreases last week. Those with the largest declines were Mid-Size Car (-1.16%), followed by Near-Luxury Car (-0.61%) and Sporty Car (-0.47%).
• Full-Size Car (-0.25%) and Luxury Car (-0.31%) also had notable decreases.

Truck Segments

• Overall truck segments decreased on average by -0.44% last week.
• Segments with the largest declines last week were Full-Size Crossover (-1.29%), followed by Small Pickup (-0.88%), Sub-Compact Luxury Crossover (-0.75%).
• A few other segments with notable declines were Sub-Compact Crossover (-0.55%) and Full-Size Pickup (-0.52%).

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 $36,600. 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 back to 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 similar to last week. Some observed sell rates were as high as 83% but most were in the 20-40% range. Last week we saw less sellers dropping floors, which has been contributing to lanes with lower sell rates.

Canadian Black Book’s Market Insights

Economics & Government

• Canada’s trade surplus widens to 1.2 billion in October from 0.6 billion the previous month. This was fueled by exports increasing 1.5% month over month in October.
• The Bank of Canada increased interest rates by 50 bps. This increase was higher than market expectations of 25 bps and puts the overnight rate at 4.25%
• Canadian 10 Year bond yields fell to 2.74%, the lowest level in four months. The drop was caused by the Bank of Canada’s interest rate increase.
• The Canadian dollar increase last Thursday to $0.737, and has since fallen to $0.731 this Monday.

U.S. Market

In the U.S., overall, Car and Truck segments decreased -0.88% last week; the prior week decreased by -0.72%.

Volume-weighted Car segments decreased -0.86%, compared to the prior week’s decrease of -0.87%:

• All nine Car segments decreased last week, with three of the nine reporting declines greater than 1% (Sub-Compact, -1.20%; Prestige Luxury, -1.14%; Compact, -1.13%).
• Sub-Compact Car has averaged a decline of -1.21% per week over the past six weeks.
• In sharp contrast to the Sub-Compact Car segment with large declines, the Premium Sporty Car segment has averaged a weekly depreciation of -0.48% over the past six weeks.

Volume-weighted Truck segments decreased by -0.90%; the previous week had a decrease of -0.65%:

• All thirteen Truck segments reported declines last week, but only one reported a decline over 1% (Compact Crossover at -1.20%.
• Full-Size Pickup depreciation increased last week to -0.95%, after averaging -0.49% per week over the past six weeks.
• Full-Size Van (-0.41%) had the largest depreciation for the segment since the third week of July (-0.55%).

Industry News

• The Vancouver International Auto Show has been cancelled citing that ongoing global supply chain issues have hampered the ability for manufacturers and distributors to commit to participating this year.
• Canadian Electric Vehicle charging manufacturer, FLO has agreed to supply GM’s network of Canadian and US dealers with 40,000 EV chargers to help bring a reliable source for EV charging to market in urban and rural areas as the “largest deployment of public Level 2 chargers in North America”, says FLO CEO Louis Tremblay.
• Prices for EV battery production has been consistently dropping over the last decade, but BloombergNEF recently reported on the cost of EV batteries increasing 7% due to rising material costs in pack assembly, with an expectation for prices to start to fall again in 2024.
• Swedish EV maker, Polestar has begun offering software upgrades for increased performance on its Polestar 2 EV, payable as a one-time fee of $1,595 as the industry tries to ignite the subscription approach to content and upgrades in the luxury market.