Canadian wholesale used vehicle prices are now beginning to decline, ending a five-week run of positive values for cars and an eight-week increase in value for the truck segments, according to Canadian Black Book’s latest COVID-19 update.
The car segment decreased in value by 0.02% and trucks by 0.07% — small weekly changes that may pave the way for a shift in the market direction. On the U.S. side, wholesale used vehicle prices this past week also declined: cars fell by 0.38% and trucks by 0.02%.
CBB said the shift in the Canadian market appears to be following the recent declines in values observed in the U.S. That decline began three weeks ago for the car segment, and two weeks ago for trucks.
“Our conclusion, generally speaking, is that heading into the final quarter of the year there is less confidence in the market, which is reflected in the prices for the inventory offered for sales,” said CBB. “Our team feels that many consignors are keeping prices high and the price floors may see significant adjustment in the coming weeks.”
On used vehicle supply, levels remain tight as demand for both export and domestic sale remains strong. The average days to turn for used car inventory was at a 14-day moving average of 50 days, which is three days less than the previous week and is still lower than what is typical of this period in the year.
The Canadian dollar, which has been on a decline this month and lost approximately $0.01 in value, remained flat this past week. A weaker dollar will have the effect of making Canadian used vehicles more desirable to acquire for export to the U.S., according to CBB.
On new models, concern remains that there will be a shortage of these vehicles as OEMs switch from 2020 to 2021 model-year sales over the next 60-90 days. Separately, and yet tied to this issue are the negotiations between the Detroit Three and Unifor union. Their contracts expired September 21, which means the potential for a strike is very real and could impact new vehicle production.
“Given the global nature of the auto business, a strike here in Canada could affect production operations in other nations,” said CBB. “With shortages of new cars already a real issue, any stoppage of production could not come at a worse time for the automakers. Perhaps this may be the push needed to settle matters, without job action by the unions.”
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