05.23.2023

Market Insights – 5/23/2023

Wholesale Prices, Week Ending May 20th

The Canadian used wholesale market saw a decline in prices for the week at -0.06%. The Car segment fell by -0.06% while Truck/SUVs’ segment prices declined -0.06%. 8 out of 22 segments’ values have increased for the week. Compact Van leads with +2.42% and Full-Size Van follows behind at +0.51%. The segments with the largest declines were Full Size Car (-1.01%) and Minivan (-0.44%).

Car Segments

• Car segment prices decreased overall once again by -0.06% last week.
• Five of the nine segments showed an increase in pricing. The largest increase being Luxury Cars at (+0.15%), followed by both Sporty Car & Compact Car at (+0.11%).
• The segments with the largest decline in pricing were Full-Size Car at (-1.01%) followed by Prestige Luxury Cars with (-0.54%) and Sub-Compact Cars (-0.10%).

Truck Segments

• Truck segments decreased on average last week overall by -0.06%.
• Segments with the largest declines were Mini Van (-0.44%), Mid-Size Luxury Crossover/SUV (-0.33%) and Full-Size Pickup (-0.32%).
• Three segments experienced increases. Those segments were Compact Van (+2.42%), Full-Size Van (+0.51%) and Compact Luxury Crossover/SUV (+0.05%).

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 $35,800. 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 similar to 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 25% 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

• Inflation increased in Canada to 4.4% in April from 4.3% in prior month. Market expectations was for inflation to decrease to 4.1% and now with the increase it has sparked fears of future Bank of Canada rate hikes.
• Canadian 10-year bond yields increased to 3.05% in mid-May after CPI inflation numbers were higher than expected.
• Foreign investors reduced their exposure to Canadian securities by $19.1 billion in March 2023, the largest divestment since September 2022, compared with market expectations of an acquisition of $5.22 billion.
• The Canadian dollar is around $0.741 this Monday morning relatively stable from $0.741 a week prior.

U.S. Market

In the U.S., overall, Car and Truck segments decreased -0.13% last week; the prior week decreased by -0.15%.

Volume-weighted Car segments decreased -0.16%, compared to the prior week’s -0.15% decrease:

• Only two of the nine Car segments increased last week but increases were minimal with Compact Car increasing +0.03% and Sporty Car gaining +0.01%.
• Sub-Compact Car reported the largest decline last week, down -0.47%. This is the largest decline for the segment since the second week of February.
• Sporty Cars continue to increase, but the rate of gain was the lowest since early January of this year.

Volume-weighted Truck segments decreased by -0.12%; the previous week decreased -0.16%:

• Ten of the thirteen Truck segments reported decreases last week.
• Full-Size Crossover (+0.29%), Minivan (+0.13%), and Full-Size Pickup (+0.09%) were the only Truck segments to report gains last week.
• Compact Van (-0.46%) and Compact Crossover (-0.43%) had the largest declines.
• Small Pickup declined for the first time in fourteen weeks.

Industry News

• Executives from Ford Motor Company shared their outlook on sales and profit expectations from their ICE’s and show an increased level of profit from their Ford Blue (ICE vehicles only) line of business, stating the expectation for internal combustion engine vehicles to grow for at least the next 2 years before the transition of electric vehicles takes over.
• The Ontario government has offered more money to help keep Stellantis and LG Energy Solution’s $5 Billion EV plant construction moving forward, as the carmaker stated earlier this month that the Federal government did not live up to the initial project’s agreement. Ontario Premier Doug Ford confirmed more money is now on the table in the goal of saving numerous potential jobs that would otherwise leave southwestern Ontario.
• With suppliers balancing higher material costs and heavily cut-back assembly schedules they seek more visibility into automakers long-term vehicle electrification plans and with the 2023 North American Automotive OEM-Supplier Working Relations Index Study highlighting the top 6 automakers’ supplier sentiment, Nissan and Stellantis showed improvement while Ford showed a big drop.
• Toyota officially released the redesigned 2024 Tacoma late last week as the midsize pick-up truck now offers an optional hybrid powertrain, design cues from the bigger Tundra, improved ride and overall tech upgrades, as well as retaining the exclusive manual transmission. Offering 6 total trims Tacoma introduces a new Offroad showcase through its top-of-the-line Trailhunter edition.