Increase in used car supply continues exerting downward force on prices

After a light rebound and slightly elevated prices last week, the Canadian used wholesale auto market continued its slow and slight slump, while remaining near record high valuations. This week is down -0.31%, the 2017-2019 average was -0.28%, according to Canadian Black Book. The Canadian wholesale market for used cars declined, down -0.18%, and trucks were also down slightly more from last week at -0.43%. The overall volume-weighted used vehicle segment continues on a relatively flat trajectory, down overall by -0.31% compared to being down -0.30% last week.

This week again, three segments of the car market made very slight gains, with subcompact cars up the most at 0.19%, with luxury cars up 0.08%. Premium sporty cars were up at 0.02%. Mid-size cars were down the most, at -0.64%, followed by prestige luxury cars, down -0.45%.

For trucks/SUVs, there were three segments with price increases. Full-size pickups wer up 0.22%, sub-compact luxury crossovers were up 0.13% and small pickups were up 0.08%. Mid size crossovers/SUVs declined the most, down a full -1.74%, followed by compact crossovers/SUVs, which were down -0.90% for the week and compact luxury crossovers/SUVs, down -0.77%.

The average listing price for used vehicles increased slightly week-over-week, as the 14-day moving average declined to $37,000. Analysis is based on approximately 120,000 vehicles listed for sale on Canadian dealer lots. The US market exchange rate remains favourable for exportation, leading to a continuous stream of vehicles south across the border. “Supply remains low while demand is high on both sides of the border. Upstream channels continue to tap supply before it can be made available at physical auctions.”

Consumer confidence dropped to 48.51 in October from 50.14 in September as reported by an IPSOS survey. High inflation and quickly increasing interest rates are the driving factor. The Canadian dollar strengthened over the past week from a low of $0.719 to $0.728. U.S. Market

OEMs are beginning to make cuts to their 2023 production numbers, as supply issues continue to wreak havoc on the industry; Sam Fiorani of AFS says, “Chips are moving to the industry, just not enough to ensure production of even the most popular models”. Another 25,900 units were just added to the annual global tally of production units lost to the chip shortage in 2022.

ZEV registrations in Canada have hit a record quarterly high as of Q2 this year, at 29,832 units, ZEVs represent 6.9% market share. Of that, battery-electrics represent the largest portion at 21,764.

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