Canadian wholesale vehicle prices for cars and trucks declined again last week — now for the fifth week in a row, according to Canadian Black Book’s latest COVID-19 update.
However, CBB did note that the price adjustments were smaller than what is typical at this time of year; the car segment was down 0.16% on average in wholesale value, while trucks were down 0.21%. In comparison, U.S. wholesale used vehicle prices fell much more significantly — down 0.82% for cars and 0.35% for trucks.
“For the past five weeks, both car and truck segments have, on average, seen declines in values,” said CBB in its report. “The average weekly decline during the last month has been -0.14% for cars and -0.11% for trucks. Compared to the same period last year, these declines are much smaller in magnitude.”
Year-over-year, the average weekly decline for cars is 0.39% and 0.29% for trucks.
CBB said the fundamental rules of supply and demand are to be blamed, as shorter supply means prices are not experiencing the seasonal decline typical of this time of year and are therefore showing smaller levels of depreciation.
“Looking back at the past eight weeks, the prices of cars have only changed on average by -0.09% per week, compared back to 2019 when prices changed by -0.33%, which is a large difference,” said CBB. “On the Truck side the average weekly change for the past two months is -0.04% and last year it was -0.25%.”
The changes over the past five weeks in wholesale vehicle value prices are small and are weekly changes, but these variations do add up over time. CBB said it expects wholesale used values to experience more significant declines when supply levels improve, and also as the economy continues to struggle to recover from the pandemic.
As it stands, the cases are rising significantly in Canada and that could lead to more restrictions on consumers and commerce much like in some European countries. And although there is news of a promising vaccine from Pfizer — which Canada has reportedly secured 20 million doses of — the task of immunizing the entire population will take time.
“Some estimates are that it will take the better part of two years, after a viable vaccine is available, to inoculate most of the population,” said CBB. “Recently, the International Air Transport Association estimated it would take the cargo capacity equivalent of 8,000 Boeing 747 jets to transport vaccines globally. In the meantime, interruptions of new vehicle production are expected.”
In the meantime, as COVID-19 case counts continue to rise as consumer confidence continues to decline after an initial rebound.
“It will be interesting to see if the news of a promising vaccine gives consumers a boost in sentiment in the coming weeks,” said CBB.
The full report can be viewed here.
