09.20.2022

Market Insights – 9/20/2022

Wholesale Prices, Week Ending September 16th

The Canadian used wholesale market saw prices decline for the week (-0.29%). Both Car and Truck segments had a decline of (-0.29%). Of the 22 segments, 3 values had increased for the week. The Full-Size Car segment takes the lead with a (+0.42%) increase, followed by Sub-Compact Crossover at (+0.04%) and Sub-Compact Car at (+0.01%). Canada’s wholesale market continues to slow down as markets cool on both sides of the border.

Car Segments

• Car segments decreased on average -0.29% last week.
• Segments with the largest depreciation were Mid-Size Car (-0.70%), Luxury Car (-0.48%), Near Luxury Car (-0.40%) and Sporty Car (-0.34%).
• Two had increases, these were Full-Size Car (+0.42%) and Sub-Compact Car (+0.01%).

Truck Segments

• Truck segments decreased on average -0.29% last week.
• Sub-Compact Luxury Crossover had the largest drop (-1.71%), followed by Full-Size Van (-0.71%), and Mid-Size Luxury Crossover/SUV (-0.40%).
• The only Segment with an increase was Sub-Compact Crossover (+0.04%).

Used Retail Prices & Listing Volumes

The average listing price for used vehicles increased slightly week-over-week, as the 14-day moving average remains stable at roughly $37,500. Analysis is based on approximately 120,000 vehicles listed for sale on Canadian dealer lots.

Wholesale

The Canadian wholesale market decreased further last week. The overall decreases were similar to the prior week’s declines. Supply remains low with 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.

Conversion rates continued to improve last week. Some observed sell rates were as high as 85% but most were in the 60-65% range. Last week we saw less sellers holding floor prices higher than buyers are willing to go, which has been contributing to lanes with improved sell rates.

The U.S. market exchange rate remains favourable for exportation when price and demand are taken into consideration. Arbitrage opportunities have continued to bring in U.S. buyers, causing a steady flow of vehicles to exit Canada’s wholesale market but slowing as markets cool on both sides of the boarder.

Canadian Black Book’s Market Insights

Economics & Government

• Housing starts in Canada decreased by 3.0 percent over a month earlier to 267,443 units in August of 2022, still above market expectations of 265,000 units, according to the Canada Mortgage and Housing Corporation (CHMC). Urban starts fell by 3.0 percent to 246,771 units, as multi-unit urban starts went down 4.0 percent to 187,602 units, while single-detached urban starts rose 1.0 percent to 59,169 units. Rural starts were estimated at a seasonally adjusted annual rate of 20,672units.
• The date of Queen Elizabeth’s funeral will be marked in Canada with a national holiday, Prime Minister Justin Trudeau said Tuesday. “We have … chosen to move forward with a federal holiday on Monday (Sept. 19),” Trudeau said in New Brunswick, where he is attending a Liberal caucus retreat.
• Canadian home prices fell sharply once again, continuing to erode massive gains made over the past few months. The price of a typical home fell to $760,400 in August, down 2.80% ($21,900) from a month before. Prices remain 7.05% ($50,100) higher than last year, but at this rate, those gains can disappear quickly.

U.S. Market

In the U.S., overall, Car and Truck segments decreased -0.90% last week; the prior week decreased by -0.93%.

Volume-weighted Car segments decreased -0.89%, compared to the prior week’s decrease of -0.84%:

• As fuel prices continue to drop, the Compact Car segment, that experienced large gains when fuel prices were increasing, has now had twelve consecutive weeks of declines. The segment had the largest Car segment decline last week with a depreciation of -1.17%.
• Sub-Compact Car (-0.62%) reported the largest single week decline for the segment since the middle of August 2021.

Volume-weighted Truck segments decreased by -0.91%; the previous week had a decrease of -0.97%:

• Full-Size Crossover/SUV (-1.59%) and Small Pickup (-1.46%) reported the largest declines.
• Full-Size and Compact Vans had another week of very minimal declines, -0.07% and -0.16%, respectively.
• For the first time in eight weeks the Full-Size Luxury Crossover/SUV (-0.44%) segment reported declines under 1%.

Industry News

• Bloomberg reports that the price of Lithium, a heavily used EV battery manufacturing material, just set a new record of US$71,315/tonne, that’s 3 times higher than a year ago and is anticipated to increase again this quarter.
• After 3 years of pandemic-related cancellations, Canada’s auto show circuit is set to resume in-person shows in 2023. But it’s unclear how many automakers will exhibit amid inventory shortages and the growing popularity of direct business-to-consumer marketing events.
• Canada’s early headway in building an electric vehicle battery supply chain could lead to an industry worth nearly $50 billion supporting about 250,000 domestic jobs by 2030.
• 2024 Ford Mustang looks to broaden gas power appeal as competitors exit. Biggest changes to 2024 Mustang unveiled at Detroit auto show are with the interior, which now offers an optional “digital cockpit” with two connected, customizable screens.
• Electric vehicles, hybrids, longtime top-sellers and new models from upstarts such as Lordstown and Rivian dominate the list of 26 semifinalists for 2023 North American car, truck and utility vehicle of the year.
• VinFast to start Canadian deliveries; says it will ship about 5,000 vehicles to customers in the U.S., Canada and Europe in early November.