Above-average declines persist in used car market

The wholesale market as a whole continues to decline at a higher-than-average rate. This week is down -0.32%, more than the 2017-2019 average, which was -0.23%, according to Canadian Black Book. The Canadian wholesale market for used cars improved a bit, down -0.18% and trucks were down quite a lot at -0.46%. The overall volume-weighted used vehicle segment continues the downward trend down overall by -0.32% compared to being down -0.37% last week.

Only two segments of the car market made modest gains, with compact cars up 0.12%, and subcompact cars up 0.03%. Luxury cars and full-size cars were both down substantially, with luxury cars down the most, at -0.51%, sporty cars down -0.38% and full-sized cars down -0.29%.

For trucks/SUVs, there were two segments with price increases: compact vans, up 0.88% from last week, when they were down the most, and sub-compact luxury crossovers, which were up 0.16%. Full sized vans declined the most, down a full -1.07%, followed by mid size luxury crossovers, which were down -0.65% for the week.

The US market exchange rate remains favourable for exportation, leading to a continuous stream of vehicles south across the border. Gas prices are still an influence on buyer behaviour, leading cars to outperform trucks and SUVs, says the report. “Supply remains low while demand is high on both sides of the border. Upstream channels continue to tap supply before it can be made available at physical auctions.”

The average listing price for used vehicles increased slightly week over week, as the 14-day moving average is just above $37,500. Analysis is based on approximately 120,000 vehicles listed for sale on Canadian dealer lots.

Canada recorded a government budget surplus of CAD 4.88 billion in June of 2022, swinging from a deficit of CAD 12.71 billion in the corresponding month of the previous year. Revenues rose by CAD 22.2% on the year to CAD 36.22 billion, reflecting broad-based improvements across multiple revenue streams. At the same time, program expenses excluding net actuarial losses were 28.4% lower at CAD 28.04 billion, due to lower transfers for individuals and business.

Research from JLL Canada shows that, compared to the US, Europe and China, economic momentum in Canada was strong in Q2 2022. In fact, an advance estimate for real GDP revealed a 1.1% quarter-over-quarter expansion in Canada. This was in spite of high inflation, commodity scarcity, rapid monetary tightening, and financial market turbulence — all of which are weighing heavily on global markets.

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