After months of bad news and hints of good to come, Canadian Black Book’s COVID-19 market update for August 5, 2020 finally offers information and insights auto retailers can appreciate.
July, for example, was an impressive month for new car sales — the automotive industry reported a mere 4.9% loss of sales, month-over-month, based on data from DesRosiers Automotive Consultants (DAC).
“This is a stellar result, considering new car sales are down by an astonishing 34% so far this year,” said CBB. “These strong July results build the positive trend after April’s -75% sales low water mark, preceded by a -44% result for May sales and a much better -16% for June.”
CBB maintains its outlook that 2020 will end with a 25% decrease in new vehicle retail sales, and that the negative impact on used car sales will be less than perhaps previously forecasted or thought, since used vehicles represent a more affordable option for consumers during this period.
On vehicle segments, trucks are up 0.37% — its largest weekly wholesale value increase in the past two years. Cars revealed a smaller increase of 0.06%, and full-size luxury crossovers demonstrated the biggest gain in wholesale value across all segments of 1.47%. For cars, the largest increase came from the sub-compact car segment, at 0.80%.
“General feedback from the market remains consistent. New and used car sales results are strong, especially considering the recessionary status of our economy,” said CBB. “Overall, vehicle supply is tight, which is the primary factor for such strong pricing trends.”
CBB said it has noticed a decline of 19% in the volume of vehicles listed for sale by dealers in Canada — this, since mid-May. It has also noted that the number of days to turn used vehicles in the market has dropped by 15 within the last 60 days.
Its Used Vehicle Retention Index, which tracks the retained value of two- to six-year-old vehicles in Canada, increased by 3.2% in July — the largest increase in the Index’s nearly fifteen-year history. The second largest increase was in May 2009, which came as the industry was rebounding from the financial crisis.
CBB said the Index remains down by 8.8% year-over-year, and down by 7.5% from January. Overall though, CBB said increases in sales and values are a very welcome and positive sign.
“Our team still expects growing supply in the later part of this year,” said CBB. “The economy has been hammered persistently by the crisis; however, the auto sector’s vital signs are positive.”
