A closer look at how the industry is shaping up so far this year reveals a steeper decline in wholesale used vehicle prices compared to the seasonal norm for cars, as the category declined 0.62% this week and 0.67% last week, according to Canadian Black Book.
The 24-month average for the car category is -0.22%. The decline for trucks was milder when compared to historical averages, down 0.18% this week (and 0.51% last week) for a 24-month average of -0.21%. For the overall market, the average is 0.22%.
“This marks fourteen weeks of declines for both segment groups,” said CBB in its weekly COVID-19 update. “Cars continue to show weak results, while trucks have rebounded this week after a very sharp decline last week, the largest since mid-June 2020.”
CBB said car segments continue to struggle with retaining their value compared to their truck counterparts, as not a single one of the nine segments revealed a positive result this week. The largest losses came from the full-size car segment (-1.22%), followed by the near-luxury car category (-0.92%) and the sports car segment (-0.91%).
For trucks, only the full-size luxury crossover SUVs managed a gain — of 0.20%. The largest decline came from full-size crossovers, with -0.39%. Sub-compact luxury crossovers declined -0.36%, while the more mainstream sub-compact crossovers were down -0.32%.
On used vehicles, CBB said 2020 concluded with retained values at their highest level in the history of Canadian Black Book’s Used Vehicle Retention Index. It is worth noting that values plateaued before the decline that stemmed from the COVID-19 pandemic.
“Initially, there was a spring decline of 7%, unprecedented in size, followed by a rebound of 11% to December,” said CBB. “Looking forward, how market demand is impacted by the strength of the spring selling season, coupled with the lack of used supply, will be key factors influencing wholesale prices in the first half of the year.”
As for used vehicle prices, expect asking prices of lightly used models to remain high thanks to uncertainty in future demand and supply, and shortages of new vehicles due to production challenges — such as the semiconductor (chip) issue that has impacted vehicle production for numerous OEMs.
“This past week, the global shortage of semiconductors (chips) has caused multiple manufacturers to pause or reduce vehicle output,” said CBB. “This shortage now impacts various plants and products around the world, including FCA’s Brampton Ontario assembly plant.”
Read the full CBB report.
