03.14.2023

Market Insights – 3/14/2023

Wholesale Prices, Week Ending March 11th

The Canadian used wholesale market saw prices decline for the week (-0.22%). The Car segment pulls in front of Truck/SUV’s once again with Car prices declining (-0.21%) while Truck/SUVs’ segment prices declined (-0.22%). Last week 3 of the 22 segments had values increase. Compact Vans led with (+0.91%) and the Compact Luxury Crossover/SUVs followed with (+0.04%). The segments with the largest declines were Minivans at (-1.57%) and Sub-Compact Luxury Crossover at (-0.92%).

Car Segments

• Overall car segments decreased on average last week by -0.62%.
• All segments except one had decreases. Those with the largest were Sub-Compact Car (-0.58%), Compact Car (-0.45%), and Mid-Size Car (-0.40%).
• Two segments had the same depreciation (-0.25%). Those segments were Near Luxury Car and Sporty Car.

Truck Segments

• Overall truck segments decreased on average last week by -0.22%.
• All segments except two had decreases. Those with the greatest declines were Minivans (-1.57%), Sub-Compact Luxury Crossover (-0.92%) and Sub-Compact Crossover (-0.34%).
• Two segments had increases. Those were Compact Van (+0.91%) and Compact Luxury Crossover/SUV (+0.04%).

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 $36,200. Analysis is based on approximately 200,000 vehicles listed for sale on Canadian dealer lots.

Wholesale

In contrast to the U.S (United States) market, the Canadian market has been behaving more “normal” in the past year, with average depreciation closely following a pre-pandemic trendline. The Canadian wholesale market decreased further last week. The overall decrease was similar 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. Less segments saw increases this week as the market continues to stabilize.

Conversion rates were quite varied. Some observed sell rates were as high as 80% but most were in the 30-50% range. Last week we saw some sellers dropping floors, which has been contributing to lanes with higher sell rates.

Canadian Black Book’s Market Insights

Economics & Government

• The Canadian unemployment rate remained stable at 5% in February which exceeded market expectations of a 5.1% rate. 21,800 jobs were added in the month in total.
• Bank of Canada held its overnight rate at 4.5% in March as it was previously signaling.
• Canadian 10-year government bond yields rose eased to below the 3% as investors look to the US market.
• The Canadian dollar is around $0.725 this Monday morning down from $0.738 a week prior.

U.S. Market

In the U.S., overall, Car and Truck segments increased +0.44% last week; the prior week increased by +0.35%.

Volume-weighted Car segments increased +0.46%, compared to the prior week’s increase of +0.46%:

• Seven of the nine Car segments increased last week.
• Sporty Cars had been on a hot streak with seven consecutive weeks of increases that averaged +0.47% gain each week. However, last week the rate of gains finally slowed down to +0.14%.
• Sub-Compact Car was the only segment to have a gain exceeding 1%, this is the first time this segment has had more than a 1% increase in a single week since May 2021.
• Prestige Luxury Car depreciation has slowed down to the lowest the segment has seen since July 2022.

Volume-weighted Truck segments increased by +0.43%; the previous week had an increase of +0.30%:

• Eleven of the thirteen Truck segments reported increases last week.
• Compact Crossover has been increasing for six consecutive weeks now for an average weekly gain of +0.46%. Last week the segment far exceeded that with a single week increase of +0.92%.
• Full-Size Trucks are still in positive territory, but the rate of gain did slow last week to +0.10%, compared with the week prior at +0.15%.

Industry News

• Georgian College hosted Tier Six Solutions and its inaugural Dealer Huddle Industry Conference last week at their Barrie campus, where content was focused on Dealership marketing analytics and trends as well as growth within the industry for new Graduates entering the sector.
• Purolator is purchasing BrightDrop Zevo 600 and Ford e-Transit electric commercial vans to begin electrifying its fleet as it looks to spend $1 billion over the next 7 years electrifying its terminals and fleet vehicles.
• Tesla has made significant price reductions on its vehicle lineup recently and looks to take an even more competitive edge in the electric vehicle space as it scales up its manufacturing to reduce costs by half, in hopes of enabling more intenders to better afford the purchase of Tesla vehicles.
• As Canada looks to remain competitive and continue to attract investment in the EV landscape, the Canadian Government looks to counteract the Inflation Reduction Act (IRA) put in place by the U.S. in the 2nd half of 2022; already possible OEM EV investments have passed up on Canadian soil in favour of the U.S. due to its advantageous tax incentives.
• North American new car production cancellations more than tripled last week as OEMs scale down for the first half of 2023 due to shortages, as they anticipate things to improve over the 2nd half of the year and intend on ramping up production then.