Wholesale Prices, Week Ending October 22nd

 

 

The Canadian used wholesale market continues to be red-hot, as prices increase for the 11th straight week. 21 of 22 vehicle segments saw prices rise for the week, as lack of inventory continues to drive wholesale prices higher. Overall, prices increased +0.60% for the week, with Car segments up +0.69% and Truck/SUV segments up +0.51%. The Near Luxury Car segment had the largest price increase (+1.80%) for the week, followed by Sub-Compact Luxury Crossover (+1.37%).

	This Week	Last Week	2017-2019 Average (Same Week)
Car segments	+0.69%	+0.68%	-0.44%
Truck & SUV segments	+0.51%	+0.59%	-0.30%
Market	+0.60%	+0.64%	-0.37%

 

 

 

 

 Car Segments

 

 

• Overall, volume-weighted wholesale used car prices increased +0.69% for the week, continuing the positive trend for the 11th straight week.
• 8 of 9 car segments had prices increase – with only Prestige Luxury Car seeing prices decline for the week, down -0.16% from last week.
• The Near Luxury Car segment had the largest price increase for the week (+1.80%) followed by the Compact Car (+1.16%), and Sporty Car (+1.01%).

 

 

 

 

Truck Segments

 

 

• For the 8th consecutive week, all 13 Truck/SUV segments saw prices increase. Collectively, the Truck/SUV segments were up +0.51% for the week.
• The Sub-Compact Luxury Crossover segment had the largest price increase for Truck/SUV segments at +1.37%, followed by Sub-Compact Crossovers (+0.97%) and Compact Crossover/SUVs (+0.90%).
• Compact Luxury Crossovers/SUVs (+0.13%) had the smallest increase for the week.

 

 

 

 

Used Retail Prices & Listing Volumes

 

 

The average listing price for used vehicles continues to hit historic highs week-over-week, as the 14-day moving average now sits above $29,700. Analysis is based on approximately 120,000 vehicles listed for sale on Canadian dealer lots.

 

 

The number of used active listings continues to fall and now sits below 112,000 — the lowest point in the last 3 years. The 14-day moving average has now sits at ~111,800 units. Days-to-turn remains stable at ~48 days (unchanged from last week).

 

 

 

 

 

 

Volume

 

 

Used Retail

 

 

The CBB Listing Volume Index for used vehicles remained flat for the week. Currently the index sits at 0.87; dealers continue to deal with depleting inventory levels on both New and Used vehicles. Over the past 18 weeks, the used vehicle listing volume has seen significant declines.

 

 

 

 

Wholesale

 

 

The Canadian wholesale market continues to increase yet again. This past week, nearly all segments reported increasing values.
Supply remains low while demand continues to be strong on both sides of the border. Upstream channels continue to tap supply before it can be available at physical auctions.

 

 

Conversion rates remained strong this past week. Rates were observed into the 75% range on some lanes last week, with the few low kilometer, good condition units garnering high levels of bidding activity and premium pricing. In general, the quality of vehicles at auction remains somewhat below average as the supply of better-quality vehicles continues to be bought upstream.

 

 

The U.S. market exchange rate is similar compared to the previous week and remains favorable for exportation when price and demand are taken into consideration.

 

 

Canadian Black Book’s Market Insights

 

 

Economics & Government

 

 

• The Consumer Price Index rose 4.4% on a year-over-year basis in September, the fastest pace since February 2003 and up from a 4.1% gain in August.
• Year over year, consumers pay more for gasoline in September. Prices at the gas pump rose 32.8% compared to September last year.
• The Canadian dollar remains stable around the $0.81 to finish the week.

 

 

Industry News

 

 

• Toyota will spend $3.4 billion through 2030 to make automotive batteries in the U.S.
• Kia teases redesigned Sportage ahead of US debut next week.
• Polestar and Electrify America announced an agreement that will result in free fast charging over a period of two years for all Polestar 2 sold in the U.S.

 

 

U.S. Market

 

 

In the U.S., overall Car and Truck segments (+0.63%) increased for an eighth week; the prior week increased by +0.61%.

 

 

Volume-weighted Car segments increased +0.87%, compared to the prior week’s increase of +0.67%:

 

 

• All nine car segments reported gains again last week.
• Mid-Size Cars increased for a tenth week in a row with a gain of +1.29% last week, an increase from the prior week’s already large gain of +1.11%.
• Compact Cars have also now reported ten consecutive weeks of increases for an average weekly increase of +0.68%.

 

 

Volume-weighted Truck segments increased +0.52%; the previous week had an increase of +0.58%:

 

 

• All thirteen truck segments reported gains last week.
• Full-Size Van values continue to push higher, now reporting increases thirty-eight out of the last thirty-nine weeks. The average weekly increase is +0.56%.
• Compact Vans have also had consistent week-over-week increases, with gains reported in thirty-six out of the last thirty-eight weeks, for an average weekly gain of +0.65%.

 

 

 

CBB Weekly Automotive Market Update 10/26/2021. Canadian Black Book. (2021, October 26). Retrieved October 29, 2021, from https://www.canadianblackbook.com/blog/cbb-weekly-automotive-market-update-10-26-2021/.

Eighty per cent of Canadian car shoppers expect to receive their new vehicle within a month, while 20% expect to wait more than a month, according to a new national survey conducted by AutoTrader.ca. 

The survey was conducted during the ongoing global microchip shortage to better understand the importance of new vehicle delivery timeframes. That may be an issue for dealers who hope to meet consumer demands and sell more vehicles, but the situation is not without opportunity—as they can still focus on targeted marketing. 

“The survey set out to gauge just how long consumers are willing to wait for that perfect car, and if they are now more open to the influence of advertising for another automotive brand or model if the vehicle they want is out of stock or delayed,” said AutoTrader.ca in a news release. 

Key findings from the survey indicate that two out of three Canadian consumers believe the vehicle delivery timeframe and availability are either “important” or “very important.” And while they are willing to extend wait times, many consumers would consider switching manufacturer or model preferences if they find the time between vehicle purchase and delivery is too long.

AutoTrader.ca said new car buyers must wait anywhere from a few weeks to six months or more to have their vehicle delivered. Of the consumers they surveyed, 16% of respondents would consider switching to another vehicle if their first choice was not immediately available, even if the alternative option is actually their second or third choice.

Forty-two per cent are willing to wait until a later date to buy the vehicle they want if it is out of stock or its delivery is significantly postponed. However, for car shoppers that cannot immediately get their preferred vehicle, 22% would hold off on buying a new vehicle, and instead wait until the overall market has more available inventory.

“This indicates that 64% of car shoppers would rather wait at least some time for inventory to become available rather than compromise on their preferred vehicle,” said AutoTrader.ca, adding that “18% would consider buying a used model of their top car choice and get it right away versus switch models or cross shop competing manufacturers.”

How long are consumers willing to wait? According to the study, if the vehicle is not immediately available then 43% would be willing to wait less than three months, 31% would be willing to wait between four to six months, and 25% said they would wait more than six months. 

AutoTrader.ca said the situation can create opportunities for a variety of marketing efforts by dealers, “including developing ways to gauge—and potentially influence—a prospect’s shift in purchase intent while they wait for their preferred vehicle to become available or, in contrast, reinforce that decision for when the vehicle does eventually become available.”

The company said more than 52 percent of “brand loyalists” who would be willing to hold on for their preferred vehicle would still be open to changing brands or models while they wait. And 24% said they may be open to advertising and options from an alternative automaker. 

“This 24 percent could even be an under-representation given consumers typically underestimate the influence (of) advertising overall,” said AutoTrader.ca.

The update, they said, is that dealers should feel confident that “a strong, proactive marketing and communications plan” that addresses vehicle delivery challenges, in addition to offering top-notch customer service, can be a winning strategy.

They advise focusing on the following elements:

• Maintaining advertising efforts. “Keep your ad dollars working for you, so you can act on opportunities to move prospective customers into an alternate nameplate, (particularly the case with network dealerships), into another model, or even used inventory”;
• Ramp up your customer service, with a focus on flexibility—as in, a willingness to adapt your processes to keep the customer happy and informed; and
• Create a strategic communications plan that includes the moment a purchase contract is signed up to the moment the keys are handed over.

 

canadianautodealer.ca/2021/10/theres-opportunity-for-new-car-dealers-even-with-delivery-delays/

 

The findings of a recent automotive study by a reputation experience management (RXM) company points to the importance of reviews for nearly 80% of consumers—with 41% saying they will read at least five reviews before visiting a dealership. 

In its annual automotive industry report released on October 11, Reputation also found that inventory shortages are top-of-mind for customers, with online reviews mentioning shortages increasing 32.6 times from January 2021 to July 2021.

“The automotive industry has seen it all over the past year, from huge spikes in sales to inventory challenges,” said Joe Fuca, CEO of Reputation. “Through it all, dealers and manufacturers have embraced digital tools and customer feedback to create a smooth car buying experience for all.”

The company said reviews and star ratings drive customer leads—with 64% of consumer respondents saying they would travel more than 20 miles (about 32 kilometres) to a top-rated dealership.

As for what is helping dealership ratings, Reputation said customer service is the main driver of positive ratings. And that despite the increase in digital activity, purchasing a vehicle remains a largely “human-centred, face-to-face experience”—with 65% of consumers indicating that they are influenced “significantly” by in-person visits. That said, online remains the preferred choice during COVID.

The report also found a significant increase in electric vehicle (EV) reviews since 2020, and notes that the uptick can be tied to an increase in EV sales and heightened public interest.

What is not helping dealerships is the sticker price challenge. If customer service is the main driver for positive ratings, price is the opposite—the main driver for negative dealership ratings. 

“Dealerships need to manage consumers’ expectations about prices during the inventory shortage when demand is outstripping supply,” said the company in a news release. “Eighty-two per cent of consumers we surveyed with YouGov said price is an important consideration, more than any other factor.”

Reviews mentioning shortages are also around twice as likely to be negative compared to reviews about the industry in general, which can impact a dealership’s online standing.

“So, it’s not that customers are necessarily upset about a chip shortage but how dealerships are communicating with them about the ramifications of the shortage,” Reputation writes in its report. “That includes the impact on the vehicle’s price and elimination of rebates or other incentives.”

 

 

 

 

 

Reviews are key for consumers, inventory shortage top-of-mind. Canadian auto dealer. (2021, October 13). Retrieved October 15, 2021, from https://canadianautodealer.ca/2021/10/reviews-are-key-for-consumers-inventory-shortage-top-of-mind/.