Wholesale prices continue to tumble this year as consumer confidence rebounds, according to Canadian Black Book’s latest COVID-19 update.
Wholesale prices for both car and truck segments experienced a much steeper decline last week compared to previous weeks.
“The month of December 2020 closed at a high point for retained values of 2–6-year-old used vehicles,” said CBB in its report, adding that its Used Vehicle Retention Index reached 111.5 Index points — up 0.8 points from the previous record high mark set in November 2020.
However, “the weekly raw value adjustments for car segments, which are not adjusted for seasonality, declined by 0.67% last week,” which is a steep drop from recent weeks, according to CBB. Truck wholesale values declined 0.51% during the same period, representing the largest decrease since mid-May 2020.
The Canadian dollar posted a new two-year high, helping to lower wholesale prices in the country.
Employment fell for the first time since last spring by 0.3% or 63,000 jobs, due to increased restrictions across the country amid a second wave of COVID-19.
“The LFS (Labour Force Survey) noted that the number of Canadians working from home has again increased to 29% in December,” said CBB. “These large work-from-home numbers will reduce the number of kilometres being driven, adversely affecting the service/repair aspect of the industry, and deferring the replacement demand for some vehicles.”
At the same time consumer confidence has rebounded to pre-pandemic levels, according to the Bloomberg-Nanos Canadian Consumer Confidence Index.
Looking back at 2020, new light vehicles sales were down 19.7% based on data from DesRosiers Automotive Consultants (DAC), while used car sales have fully recovered from October 2019 — and are now up 220% from last spring.
“With restrictions in a number of provinces, as well as continued interruptions to the flow of new vehicles, 2021 is expected to have a slow start, from a sales perspective,” said CBB.
Read the full report.
