Wholesale vehicle prices in Canada show largest drop of 2023, fall over 6 times historical average
Wholesale vehicle price declines in Canada accelerated last week, with the larger segments seeing an over 3% drop.
According to Canadian Black Book weekly wholesale data, prices fell for the week by an average of 1.56%. Cars were down by 0.88%, while trucks and SUVs dropped by 2.23%.
“The Canadian market continued to decrease, and the overall decrease was the largest seen this year and more than six times the historical average,” CBB analysts reported in the company’s weekly report.
None of the 22 segments CBB tracks saw any type of price increase.
Larger segments both saw the biggest drops, with luxury compact crossover/SUVs down by 3.57% and compact crossover/SUVs declining by 3.56%.
Two other segments for trucks and SUVs saw declines greater than 3% as well: Full-size luxury crossover/SUVs (down by 3.42%) and mid-size crossover/SUVs (down by exactly 3%). And although the small pickup segment holds strong most weeks, last week it saw a drop in price of 2.30%.
For cars, the average decline came to 0.88%, and declines happened in all segments. Midsize cars showed the most significant decrease at 3.11%, followed by near-luxury cars (down 1.20%) and sporty cars (down 1.13%). Luxury compact cars performed the best, falling 0.31%.
“Supply remains low with decreasing demand for vehicles at auction on both sides of the border,” CBB said. “Upstream channels continue to tap supply before it can be available to wholesale markets.”
Most all segments saw a change in value of more than $100 last week, with trucks and SUVs once again dropping the most.
“We see that smaller vehicles have been outperforming their larger alternatives as possibly both Canadian consumers’ budgets tighten and arbitrage risk to exporters continues to rise,” CBB said.
Conversion rates continue to remain low. According to CBB, some observed sell rates were as low as 9% and as high as 49%, but most were less than 30%.
“Last week we saw less sellers dropping floors, which has been contributing to lanes with lower sell rates,” CBB said.
The average retail price on the lots for used vehicles in Canada was down, as well, week-over-week. The 14-day moving average was at roughly $37,870.
In the U.S., car and truck segments decreased 1.86% last week; the prior week they decreased by 1.49%.
CBB also offers global insight on big moves in the auto sector, and offered some insight into the future of Ford last week, recovering from recent strikes and consequent new ratified agreements with unions.
According to CBB, cutting profits by $1.7 Billion USD was one sizeable implication to the strike, and the new contract will cost Ford $8.8 Billion USD or $900 per vehicle in 2028.
“With efforts to offset vehicle prices from rising any further, the brand will be hard-pressed to compete profitably,” CBB analysts said.