04.04.2023

Market Insights – 4/4/2023

Wholesale Prices, Week Ending April 1st

The Canadian used wholesale market saw a slight decline in prices for the week (-0.03%). The Car segment pulls up ahead of Truck/SUV’s with Car prices increasing by (+0.15%) while Truck/SUVs’ segment prices declined (-0.20%). There were 9 out of 22 segments to have values increase for the week. Full-Size Cars lead with (+0.84%) and Sporty Cars follow behind at (+0.72%). The segments with the largest declines were Sub-Compact Luxury Crossovers at (-0.73%) and Compact Vans at (-0.60%).

Car Segments

• Overall car segments increased on average last week by +0.46%.
• There were five segments with a price surge. The two with the largest were Full-Size Car (+0.84%) and Sporty Car (+0.72%).
• Three segments had slight decreases. Sub-Compact Car (-0.12%), Compact Car (-0.09%) and Prestige Luxury Car (-0.04%).

Truck Segments

• Overall truck segments decreased on average last week by -0.20%.
• Segments with the largest declines were Compact Luxury Crossover/SUV (-0.73%), Compact Van (-0.60%), Sub-Compact Crossover (-0.47%) and Full-Size Van (-0.44%).
• Three segments had increases. Small Pickup (+0.27%), Minivan (+0.22%) and Compact Crossover/SUV (+0.15%).

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 $36,000. 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. More segments saw increases this week as the market continues to strengthen.

Conversion rates were quite varied. Some observed sell rates were as low as 32% but most were in the 35-50% 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

• Canada recorded a CAD 0.91 billion budget deficit in January of 2022, narrowing from a CAD 5.17 billion budget gap in the corresponding month of the previous year.
• The Canadian economic activity likely increased by 0.3% over a month earlier in February 2023, as increases in the mining, quarrying, and oil and gas extraction, manufacturing, and finance and insurance sectors were slightly offset by decreases in construction, wholesale trade, and accommodation and food services.
• The S&P Global Canada Manufacturing PMI dropped to 48.6 in March 2023 from a seven-month high of 52.4 in February.
• The Canadian dollar is around $0.743 this Monday morning showing strong gains from $0.728 a week prior.

U.S. Market

In the U.S., overall, Car and Truck segments increased +0.51% last week; the prior week increased by +0.51%.

Volume-weighted Car segments increased +0.62%, compared to the prior week’s increase of +0.61%:

• Eight of the nine Car segments increased last week.
• Compact Car had the largest gain last week at +0.90%, consistent with the prior week’s increase of +0.88%.
• Prestige Luxury Car reported the forty-third consecutive week of declines, but the rate of decline was very minimal at only -0.03%. This is the lowest decline for the segment since June 2022.

Volume-weighted Truck segments increased by +0.46%; the previous week had an increase of +0.46%:

• Eleven of the thirteen Truck segments reported increases last week.
• The Minivan segment had another week with a large gain, up +1.31% after the prior week’s increase of +1.66%.
• Compact (-0.24%) and Full-Size (-0.10%) Van continued to decline, but the rate of depreciation is slowing down.

Industry News

• The 2023 Federal Budget was released last week, and results in support for automotive investment to maintain momentum in Canada by offering tax credits equal to 30% of the cost of investments in new machinery and equipment used to manufacture or process key clean technologies and to extract, process, or recycle critical minerals.
• EV charging company Swtch Energy Inc. is moving into energy management through a new system called “Swtch Control”, that will monitor a building’s energy consumption enabling it to dynamically optimize energy consumption as the market for charging EVs develops to manage electricity by building a better and more efficient EV charging infrastructure.
• Volkswagen’s development of a battery plant in St. Thomas Ontario will support at least 5 electric models across Volkswagen, Audi, and the Group’s newly introduced Scout motors EV brand.
• Ford Motor Co. announced its plans to end sales of the Transit Connect in North America after the 2023 model year; and adding to model discontinuations, Volkswagen announced it will be phasing out gas-versions of the Golf after this generation as it moves to electrified powertrains.
• As the Semiconductor shortage continues, Auto Forecast Solutions cites North American plants have cut 29,315 vehicles out of production this week as well as 15,906 dropped by European production numbers as well; but the overall annual estimate for production cuts remains at 2.8 million globally.