02.07.2023

Market Insights – 2/7/2023

Wholesale Prices, Week Ending February 4th

The Canadian used wholesale market saw prices decline for the week (-0.37%). The Truck/SUV segment outperformed the Car segment, with Car prices declining (-0.39%) and Truck/SUV segment prices with a decline of (-0.35%). 2 of the 22 segments had values increase for the week. The segments with the largest declines were Near Luxury Car with (-0.87%) and Minivan with (-0.66%). The 2 segments with price increases were Sub-Compact Luxury Crossover (+0.34%) and Compact Vans’ increase of (+0.11%).

Car Segments

• Last week, overall car segments decreased on average by -0.39%.
• All segments had decreases. Those with the largest declines were Near Luxury Car (-0.87%), Luxury Car (-0.67%) and Mid-Size Car (-0.53%).
• Other segments with notable declines were Compact Car (-0.31%) and Prestige Luxury Car (-0.24%).

Truck Segments

• Last week, overall truck segments decreased on average by -0.35%.
• Segments with the largest declines were Mini Van (-0.66%), Compact Crossover/SUV and Small Pickup (-0.48%), Mid-Size Luxury Crossover/SUV (-0.45%).
• Two segments had increases. Those were Sub-Compact Luxury Crossover (+0.34%) and Compact Van (+0.11%).

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 70% but most were in the 45-55% 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

• Canada’s GDP slowed in December only increasing by 0.1%. Early figures suggest the economy grew by 0.4% quarter over quarter in Q4.
• The Canadian Housing Statistics Program published an article stating that residential real estate investors in 2020 varied among provinces at 20.2% in Ontario to 31.5% in Nova Scotia.
• The Bank of Canada will be publishing a summary of deliberations later this week on its decision to rase interest rates 25 bps.
• The Canadian dollar is around $0.744 this Monday morning after falling from peak of $0.754 on Thursday.

U.S. Market

In the U.S., overall, Car and Truck segments decreased –0.25% last week; the prior week decreased by -0.50%.

Volume-weighted Car segments decreased -0.30%, compared to the prior week’s decrease of -0.50%:

• Eight of the nine Car segments decreased last week, with only one reporting a decline greater than 1% (Prestige Luxury, -1.17%).
• Mid-Size (-0.12%) and Full-Size (-0.14%) Car reported the smallest declines of the Car segment. Full-Size Car was in positive territory last week (+0.06%), but the segment has few players left so it is very sensitive to the movements of only a few models.
• Sport Cars increased for a third consecutive week for an average weekly increase of +0.12%.

Volume-weighted Truck segments decreased by -0.23%; the previous week had a decrease of -0.50%:

• Twelve of the thirteen Truck segments reported declines last week, with only one reporting a decline greater than 1% (Compact Van, -1.34%).
• Compact Crossovers (+0.14%) went positive last week for the first time since early June 2022. The segment has averaged a weekly rate of decline of -0.84% over the past 33 weeks.
• Full-Size Trucks reported minimal depreciation last week, only decline -0.02%.

Industry News

• Sales are in for January and 2023 is off to a stronger start as sales were up 7.5% at 98,259 compared to last year; citing improved vehicle availability for a growing number of manufacturers, as reported by Desrosiers Automotive Consultants.
• EV carmaker, VinFast has laid off 30 of its roughly 100 person staff within its Canadian operations as it looks to consolidate its efforts for the Canadian and U.S. business into a singular North American team.
• After Tesla’s recent and significant price cuts, Ford has fired shots back by reducing the price of its Mustang Mach-E electric SUV by as much as $8,500 in Canada as it plans to increase production of the EV by as much as 67% in 2023.
• Mazda will soon be offering a new flagship SUV named the CX-90, a midsize SUV that will offer an all-new powertrain that highlights an inline 6-cylinder engine and trims that will incorporate its first plug-in hybrid technology as it looks to replace the aging CX-9.
• Toyota has offered up its research and findings of how an EV strategy should be more efficiently rolled out to provide the most improved carbon dioxide emissions by blending EVs with hybrids and other green technologies instead of investing everything into fully electric vehicles.