05.16.2023

Market Insights – 5/16/2023

Wholesale Prices, Week Ending May 13th

The Canadian used wholesale market saw a decline in prices for the week at -0.04%. The Car segment fell by 0.04% while Truck/SUVs’ segment prices declined -0.05%. 7 out of 22 segments’ values have increased for the week. Full-Size Cars lead with +1.56% and Full-Size Pickups follow behind at +0.71%. The segments with the largest declines were Prestige Luxury Car (-0.71%) and Compact Van (-0.33%).

Car Segments

• Last week, Car segments prices decreased overall by -0.04%
• There were four of nine segments with a price increase. The largest being Full-Size Car at (+1.56%), followed by Sporty Car (+0.20%).
• The segments with the largest decreases in pricing were Prestige Luxury Cars at (-0.71%), Sub-Compact Car at (-0.18%) and Mid-Size Car with (-0.15%).

Truck Segments

• Truck segments decreased on average last week overall by -0.05%.
• Segments with the largest declines were Compact Van (-0.33%), and Sub-Compact Crossover (-0.30%).
• Three segments experienced increases. Those segments were Full-Size Pickup (+0.71%), Small Pickup (+0.10%) and Compact Crossover/SUV (+0.07%).

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 $35,500. Analysis is based on approximately 175,000 vehicles listed for sale on Canadian dealer lots.

Wholesale

The Canadian market continued to decrease, and the overall decrease was slightly 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. Many segments saw a change in average value of less than $65 this week as the market continues to stabilize.

Conversion rates were quite varied. Some observed sell rates were as low as 15% but most were in the 40-60% 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

• Prime Minister Justin Trudeau will join other G7 leaders in Japan later this week after he first makes his first official visit to South Korea.
• Housing starts in Canada rose by 22% over a month earlier to 261,600 units in April of 2023, above market expectations of 224,600 units, according to the Canada Mortgage and Housing Corporation.
• Canada Wholesale Sales Contraction Revised Lower Wholesale sales in Canada eased by 0.1% month-over-month to CAD 86.5 billion in March of 2023, less than previous estimates of a 0.4% contraction but extending the 1.7% decline in the previous month.
• The Canadian dollar is around $0.741 this Monday morning showing a slight decline from $0.749 a week prior.

U.S. Market

In the U.S., overall, Car and Truck segments decreased -0.15% last week; the prior week decreased by -0.10%.

Volume-weighted Car segments decreased -0.15%, compared to the prior week’s -0.06% decrease:

• Only two of the nine Car segments increased last week.
• Sporty Car reported the largest increase last week, but the rate of increases is slowing; the segment increased +0.32% last week, the smallest single week gain in eight weeks.
• Sub-Compact Car had the largest decline last week, at -0.41%. The last time this segment had a decline this large was in early February.

Volume-weighted Truck segments decreased by -0.12%; the previous week decreased -0.12%:

• Four of the thirteen Truck segments reported increases last week.
• The Pickup segments, Small and Full-Size, continue to increase, but the rate of gains each week are slowing compared to what we’ve seen throughout most of this year.
• Full-Size Van (-0.59) had the largest decline for the segment since July 2022, when the segment decreased -0.55%.

Industry News

• Roughly 45% of consumers are financing their used vehicles for 84-month terms, which is up from 38% in 2022 and 25% in 2021, reports J.D. Power; signifying the effort for most buyers to bring car payments down amidst increased interest rates.
• The Midsize Pick-up truck market continues to heat up with Ford releasing details of its redesigned 2024 Ranger while the redesigned 2024 Toyota Tacoma images leak online. These two models will go toe-to-toe with each other along with the recently redesigned Chevrolet Colorado/GMC Canyon.
• Linamar Corp., SK Innovation, as well as Stellantis accompanied by LG Energy Solutions have all expressed high interest in laying foundations in Ontario for possible EV battery and assembly plants.
• After recent news highlighting GM’s intention to remove Apple CarPlay from its upcoming electric vehicles, the company has announced that Apple Cloud Services Executive, Mike Abbott will lead GM’s effort to digitize its vehicles and bring in software-defined platforms as Executive Vice President of Software.