04.18.2023

Market Insights – 4/18/2023

Wholesale Prices, Week Ending April 15th

The Canadian used wholesale market saw a decline in prices for the week at (-0.05%) once again. The Car segment pulled ahead of Truck/SUV’s with Car prices increasing by (+0.05%) while Truck/SUVs’ segment prices declined (-0.14%). 10 out of 22 segments’ values have increased for the week. Compact Vans lead with (+3.08%) and Full-Size Cars follow behind at (+0.43%). The segments with the largest declines were Compact Luxury Crossovers/SUVs at (-0.83%) and sub-Compact Crossovers at (-0.69%).

Car Segments

• Overall car segments increased on average last week by +0.05%.
• There were five segments with a price increase. Those with notable upswings were Full-Size Car (+0.43%), Sporty Car (+0.22%) and Mid-Size Car (+0.16%).
• Only two segments had slight decreases. Prestige Luxury Car (-0.05%) and Compact Car (-0.03%).

Truck Segments

• Overall truck segments decreased on average last week by -0.14%.
• Segments with the largest declines were Compact Luxury Crossover/SUV (-0.83%), Sub-Compact Crossover (-0.69%) and Full-Size Van (-0.34%).
• Three segments had increases. Only one had a noticeable uptick. That was Compact Van (+3.08%).

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 $35,950. Analysis is based on approximately 180,000 vehicles listed for sale on Canadian dealer lots.

Wholesale

The Canadian market continued to decrease, and the overall decrease was less 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. Most segments saw a change in average value of less than $50 this week as the market continues to stabilize.

Conversion rates were quite varied. Some observed sell rates were as low as 20% but most were in the 40-50% 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

• The Bank of Canada held the target for its overnight rate unchanged at 4.5% in its April 2023 meeting, as previously signaled, and stated that it will continue to monitor the latest economic data for future decisions on the policy rate.
• Canada’s 10-year government bond yield consolidated around 2.9%, above its March lows of roughly 2.6%, as investors continued to assess the outlook for monetary policy and growth.
• Manufacturing sales in Canada shrank by 3.6% month-over-month in February 2023, compared to the preliminary estimate of a 2.8% decline and following an upwardly revised 4.5% rise in the prior month.
• The Canadian dollar is around $0.746 this Monday morning showing a slight increase from $0.741 a week prior.

U.S. Market

In the U.S., overall, Car and Truck segments increased +0.31% last week; the prior week increased by +0.43%.

Volume-weighted Car segments increased +0.41%, compared to the prior week’s increase of +0.52%:

• Eight of the nine Car segments increased last week.
• Once again, in a sign of the time of year, the Sporty Car segment reported the largest gain last week, at +0.88%. The segment has averaged an increase of +0.93% over the last five weeks.
• Prestige Luxury Car (-0.41%) was the only segment to report a decline. The segment had been reporting slowing in depreciation in recent weeks, averaging only -0.04% per week over the last month, so last week’s decline was larger than the recent average.

Volume-weighted Truck segments increased by +0.27%; the previous week had an increase of +0.39%:

• Eleven of the thirteen Truck segments reported increases last week.
• Continuing the trend in recent weeks, Minivan reported the largest increase at +0.78%, but far less than the average of the prior three weeks of +1.36%.
• Small Pickup continues to gain momentum, reporting +0.72% last week, with an average weekly increase of +0.59% over the past four weeks.

Industry News

• The U.S. EPA proposed new standards for EV sales last week that will require 67% of all vehicles sold by 2032 to be electric; this new standard level compares to the Canadian mandate of 83% by the same time frame and inherently suggests that the Canadian Federal Government rethink its ZEV sales mandate.
• Chevrolet gives its heavy-duty pick-up line the ZR2 treatment for the first time, adding greater off-road capability and performance to its line of heavy-duty trucks.
• Acura releases images and performance figures for its all-new and eagerly anticipated Integra Type S; a performance version of Acura’s entry-level passenger car that enhances on the Civic Type R formula. Offering 320HP through a 6-speed manual transmission and the same 2.0T 4-cylinder found in the Honda. Pricing has not yet been released.
•  Canada Drives sells its remaining stock of 133 vehicles to Edmonton’s Go Auto for $2.9 million as it gears down to fully exit its sales operation of used vehicles.
• Canadian Black Book’s Senior Manager of Industry Insights & Residual Value Strategy is interviewed by Canadian Auto Dealer on the 2nd annual Residual Value Awards and what they mean to the industry – https://canadianautodealer.ca/2023/04/cbbs-daniel-ross-talks-residual-value-awards/