03.07.2023

Market Insights – 3/7/2023

Wholesale Prices, Week Ending March 4th

The Canadian used wholesale market saw prices decline for the week (-0.18%). The Car segment pulls in front of Truck/SUV’s once again with Car prices declining (-0.16%) and Truck/SUV segment prices declining (-0.20%). 7 of the 22 segments had values increase for the week. Sub-Compact Luxury Crossover/SUVs led with (+1.21%) and the Full-Size Vans followed with (+0.38%). The segments with the largest declines were Minivans at (-2.05%) and Luxury cars at (-0.53%).

Car Segments

• Overall car segments decreased on average last week by -0.16%.
• Five segments had decreases. Those with the largest were Luxury Car (-0.53%), Sub-Compact Car (-0.37%), Compact Car (-0.32%).
• Four segments had increases. The two with the largest were Full-Size Car (+0.33%) and Sporty Car (+0.17%).

Truck Segments

• Overall truck segments decreased on average last week by -0.20%.
• Segments with the largest declines were Minivans (-2.05%), Full-Size Pickups (-0.46%) and Full-Size Luxury Crossover/SUV (-0.42%).
• Three segments had increases. Those were Sub-Compact Luxury Crossover/SUV (+1.21%) Full-Size Van (+0.38%) and Compact Van (+0.26%).

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 $36,350. 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 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. Some segments saw increases this week and the market showed more strength of a spring selling season.

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 some sellers dropping floors, which has been contributing to lanes with higher sell rates.

Canadian Black Book’s Market Insights

Economics & Government

• Labour productivity in Canadian business fell by 0.5% in the fourth quarter extending the decline seen in the second and third quarters.
• Canadian building permits fell 4% month over month from $9.8 billion in January.
• Canadian 10-year government bond yields rose past the 3.47% mark for a 16-week high.
• The Canadian dollar is around $0.734 this Monday morning remaining relatively stable over the last week.

U.S. Market

In the U.S., overall, Car and Truck segments increased +0.35% last week; the prior week increased by +0.21%.

Volume-weighted Car segments increased +0.46%, compared to the prior week’s increase of +0.27%:

• Seven of the nine Car segments increased last week.
• For the first time since November 2021 a Car segment increased more than 1% in a single week. Last week the Sporty Car segment increased +1.35%, marking the seventh consecutive week of increases for the segment.
• After forty-one weeks of declines, the Luxury Car segment reported an increase of +0.14%. The previous forty-one weeks averaged a weekly decline rate of -0.67%.

Volume-weighted Truck segments increased by +0.30%; the previous week had an increase of +0.18%:

• Ten of the thirteen Truck segments reported increases last week.
• The Compact Crossover and Small Pickup segments had the largest Truck segment gains last week, both with an increase of +0.52%.
• Full-Size Vans had a record streak of increases in 2021 and most of 2022 but have been on a downward trend since late July 2022 for an average decline of -0.21% over the past thirty-four weeks.

Industry News

• The 2023 Canadian International Auto Show held in Toronto late last month has concluded, and the attendance numbers are in; it stands as the 3rd largest crowd in the shows 50-year history at 350,214 and has been deemed a success after a 2-year hiatus in wake of the global pandemic.
• With the downturn in wholesale values on the Canadian Used Vehicle market, AutoCanada reported Q4 earnings significantly lower than at this time last year, citing overall used vehicle write-downs and an increased cost to floorplan financing as interest rates have climbed severely. Even though net income was down, AutoCanada reported record Q4 earnings, highlighting the resounding interest still echoed in the car market.
• As New car sales momentum shows positivity, the market witnessed its 2nd worst February in the last 10 years; though still up year-over-year 5.1%. Manufacturers such as Hyundai and Toyota saw gains in February, bolstered by significant sales improvement in both their luxury brands, while Honda and Acura showed opposite trends.
• Tesla has taken pricing action for the 2nd time this year as it now slashes prices overnight on its Model X in Canada (both Model X and S in the U.S.) by $7,000.