Strong demand for both new and used vehicles among consumers combined with low inventory levels is driving weekly price increases for the Canadian used vehicle market, according to Canadian Black Book.
In its weekly automotive market update, the week ending on April 13 saw record-breaking wholesale price increases even as the auto sector continues to struggle with new vehicle production shortages, lighter new and used supply levels, and strong demand for both.
“Cars had a strong weekly up-tick in prices, although not as strong as the weekly increase seen the prior week, but well above historical average increases,” said CBB. “The Truck/SUV segments led the market with record-breaking week-over-week price increases.”
Used cars managed an above historical average weekly change of +0.39%, slightly down from the previous week, which was 0.52%. However, all car segments showed a weekly increase, with mid-size cars (+1.03%) leading the way, followed by compact cars (+0.67%), subcompact cars (+0.64%), full-size cars (+0.58%), and near-luxury cars (+0.47%).
Sports cars managed +0.17%, and the luxury car category was up 0.23%. These segments trailed the rest of the car market, but their performances were still in the positive.
For trucks, the segment posted a new record-breaking weekly performance, with a weekly increase in values of +0.84%. (For the previous week, the segment recorded +0.68%.)
All Truck/SUV segments experienced positive weekly changes, with the sub-compact luxury crossovers leading the way and the market, thanks to a large weekly increase of +1.76%. This was followed by full-size luxury crossover/SUVs (+1.54%), small pickups (+1.08%), and mid-size luxury crossover/SUVs (+1.02%).
Full-size pickups (+0.30%) and compact luxury crossover/SUVs (+0.36%) delivered the weakest performance this week, even as they revealed positive weekly upticks.
On the wholesale side, CBB said supply remains low with demand extremely high on both sides of the border.
“Sell rates remain strong this week as buyers continue to demand inventory and they are willing to adjust to sellers’ expectations, especially in the truck segment,” said CBB. “Some observed sell rates were as high as 85% this week — low supply and high demand keeps any saleable vehicle from returning to the auction block a second time. This high demand at auctions is expected to continue this week as the warmer weather increases consumer demand, causing dealers to continue to replenish used inventory.”
CBB said the U.S. market exchange rate is still favourable for exportation; buyers exporting vehicles to the U.S. are placing pressure on Canadian vehicles, while supply is struggling to keep up with the overall demand at auctions.
“The Canadian dollar remained fairly constant this past week; however, this will have little effect on demand, with rising prices on both sides of the border,” said CBB.
Read the full report.