January experienced its first decline in nearly a decade, according to the Canadian Black Book Used Vehicle Retention Index, which provides insights and statistics about the health of the used car market in Canada.
Based on the report, the industry benefited from a 3 per cent gain in January, year-over-year, but succumbed to a 0.7 per cent decline when compared to December 2017. January’s values represent the first decline in the index since 2009, when values fell by 1.2 per cent.
“When you consider how many years it’s been, that’s pretty significant. But I’m not concerned so much because our business is a cyclical one. For the large part, the values have been going pretty much continuously up since 2009,” said Brian Murphy, Vice President of Research and Editorial for Canadian Black Book, in an interview with Canadian auto dealer.
The most significant decreases in the retention index were found in the full-size car segment with a 2.2 per cent decrease, the compact crossover/SUV group with a 1.5 per cent decline, and the sub-compact car segment, which experienced a 1.6 per cent reduction. However, gains were seen in the full-size luxury CUV/SUC category with an increase of 0.3 per cent, and the full-size van and premium luxury car group benefited from a 0.5 per cent and 0.4 per cent increase, respectively.
Further impacting the used vehicle market is the dollar, which closed the month 1.5 cents higher than it started — slightly diminishing the attractiveness of Canadian used vehicles for export.
“The values in the Canadian market have a lot to do with exchange rates to the U.S., as well as U.S. market supply and our supply too. The exchange rate is one of the key things we watch, because over the last few years the exports of hundreds of thousands of used cars in Canada have made quite a difference in the retained values,” said Murphy. “This graph is about prices, but it’s also a function of good old fashion supply and demand. As so much Canadian supply has been sort of siphoned off the market and exported to the U.S., that’s helped to keep prices higher.”
View the Canadian Black Book Used Vehicle Retention Index here.
