02.21.2023

Market Insights – 2/21/2023

Wholesale Prices, Week Ending February 4th

The Canadian used wholesale market saw prices decline for the week (-0.29%). The Truck/SUVs’ segment pulls in front of Cars with Car prices declining (-0.33%) and Truck/SUV segment prices declining (-0.25%). 3 of the 22 segments had values increase for the week. Sporty Cars took the lead with an increase of (+0.53%) and Full-Size Vans followed behind with an increase of (+0.19%). The segments with the largest declines were Compact Vans at (-1.00%) and Near Luxury car (-0.87%).

Car Segments

• Last week, overall car segments decreased on average by -0.31%.
• All segments had decreases. Those with the largest declines were Premium Sporty Car (-0.43%), Sub-Compact Car (-0.38%), Mid-Size Car (-0.36%) and Compact Car (-0.34%).
• Near Luxury Car and Luxury Car depreciated the same amount (-0.32%).Truck Segments
• Last week, overall truck segments decreased on average by -0.52%.
• Segments with the largest declines were Full-Size Crossover/SUV (-0.81%), Sub-Compact Crossover (-0.70%) and Full-Size Luxury Crossover/SUV (-0.68%).
• Compact Crossover/SUV and Minivans depreciated the same amount (-0.58%).

Truck Segments

• Last week, overall truck segments decreased on average by -0.52%.
• Segments with the largest declines were Full-Size Crossover/SUV (-0.81%), Sub-Compact Crossover (-0.70%) and Full-Size Luxury Crossover/SUV (-0.68%).
• Compact Crossover/SUV and Minivans depreciated the same amount (-0.58%).

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 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 80% 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

• The yield on Canada’s 10-year government bond rose past the 3.35% mark in February, tracking the rise for global bond yields to a three-month high as strong economic data and hawkish signals by Fed officials ramped up expectations of higher interest rates for longer by the US central bank.
• Canada’s annual inflation rate fell to 5.9% in January of 2023, the least since February 2022 and below market expectations of 6.1%, slowing from the 6.3% in the previous month amid base-year effects.
• In December Canada reported a trade deficit of 160 million dollars in December 2022
• The Canadian dollar is around $0.741 this Monday morning after falling from peak of $0.750 a week ago.

U.S. Market

In the U.S., overall, Car and Truck segments increased +0.14% last week; the prior week increased by +0.03%.

Volume-weighted Car segments increased +0.19%, compared to the prior week’s increase of +0.00%:

• Six of the nine Car segments increased last week.
• Sporty Car and Full-Size Car reported the largest increases last week, of +0.57% and 0.52%, respectively. This was the fifth consecutive week of increases for the Sporty Car segment for an average weekly increase of +0.31%.
• Prestige Luxury Car reported the largest decline, -0.41%. This is the smallest decline for this segment since last July.
  Volume-weighted Truck segments increased by +0.11%; the previous week had an increase of +0.04%:
• Seven of the thirteen Truck segments reported increases last week.
• Sub-Compact Luxury reported the largest decline with a change of -0.37%, but Compact Van was not far behind with a decline of -0.36%.
• Compact Crossover had the largest increase for a second consecutive week, with a gain of +0.42%, compared with the prior week’s increase of +0.34%.

Industry News

• After much deliberation the Canadian International Auto Show, held in Toronto, opened on Friday, February 17th and has already set records for the highest 2-day attendance totaling 49,383 guests.
• Canadian Black Book has announced Daniel Ross as Senior Manager Industry Insights and Residual Value Strategy; his new responsibilities will revolve around representing CBB to the industry and media, through providing his expert insights while building the business development portfolio, supporting the sales team and various CBB partners.
• The Hyundai Ioniq 5 and BMW i4 win the Canadian Utility and Car of the year awards, presented by AJAC at the Canadian International Auto Show in Toronto late last week.
• Project Arrow is already seeing fruits of the APMA’s labour, as 14 global manufacturers are scheduling time to run through the cutting-edge technology built into the electric vehicle platform with Flavio Volpe (President of the APMA) and suppliers involved with the project.
• The ongoing battle for semiconductors shows the situation improving but not for all OEMs as the latest numbers on shortages find another 35,000 vehicles cut from global production this week.
• A new KPMG Poll shows results for a greener alternative transportation in Canada with 6 in 10 consumers planning to purchase a “greener” vehicle in 5 years or less, but likely not following through citing higher financing costs, delays in delivery, and concerns over battery range and charging reliability as key barriers to entry.