The Canadian used wholesale auto market continued its slow and slight slump, while remaining near record high valuations. This week is down -0.33%, quite a bit more than the 2017-2019 average, which was -0.24%, according to Canadian Black Book. The Canadian wholesale market for used cars declined, down -0.34%, and trucks up from last week at -0.33%. The overall volume-weighted used vehicle segment continues on a relatively flat trajectory, down overall by -0.33% compared to being down -0.32% last week.
This week, five segments of the car market made modest gains, with near luxury cars up the most at 0.23%, followed by sub-compact cars, up 0.22%. Premium sporty cars cars were down substantially at -1.09%, with luxury cars the next biggest losers at -0.62%, and sporty cars down -0.44%.
For trucks/SUVs, there were two segments with price increases, sub-compact luxury crossovers, which were up 0.37%, and full sized pickups, which were up -0.06%. Compact vans declined the most, down a full -1.80%, followed by full size crossovers/SUVs, which were down -0.69% for the week.
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. 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.”
The Bank of Canada monetary policy meeting later this week has markets expecting another mammoth rate hike as the central bank seeks to tame sky-high inflation. Money markets are now pricing in a 75 bps rate increase, bringing borrowing costs to 3.25%. The aggressive tightening from the BoC combined with a high level of business and household debt in the economy has made the hope of a soft landing more elusive.
Labour productivity for Canadian businesses rose 0.2% in the second quarter, after falling 0.5% in the previous quarter. This was the first increase in productivity since the second quarter of 2020, as the lifting of public health measures in almost all regions of the country during the second quarter led businesses to carry out their economic activities without any pandemic-related restrictions. For the first time since the beginning of the pandemic, business output rose faster than hours worked, but productivity is still 1.3% below pre-pandemic levels. Hours worked in the business sector rose 0.7%, much less than in each of the three previous quarters.
