Used vehicle values have trended downward on both sides of the border in recent months. A recent analysis expects pricing to remain high.

Canada Black Book’s Used Vehicle Retention Index reported values in November at 150.2, meaning used vehicles aged two to six years were 50.2 per cent higher than its benchmark. The index peaked at 165 in March 2022 and hasn’t been this low since it was 152.6 in November 2021. The index sat at 155.2 in October.

In the U.S., values are higher. J.D. Power reported its Used Vehicle Value Index at 197.2 in November, down from a peak of 223.8 in December 2021.

“With our expectation that the OEMs will be disciplined in matching future production levels with demand, we anticipate that the economic difference between new and used vehicle values will remain at levels that will drive sound demand for used vehicles and, in turn, spur sustained elevated pricing,” noted rating agency DBRS Morningstar.

The agency also anticipates higher levels of new vehicle supply and pent-up demand to be sustained for both new and used vehicles for the year. It believes affordability issues around new vehicles will temper growth in this area, which will be a corresponding tailwind for used vehicles.

Meanwhile, leasing volumes are expected to improve as new vehicle inventory builds.

“Overall, we anticipate recovering levels of leases will be driven by improved OEM production and higher inventory, as well as due to OEMs having improving visibility into used vehicle values,” DBRS observed. “Additionally, with growing inventory levels, we anticipate OEMs increasing the use of incentives to drive new vehicle sales, including lease programs.”

Malik, A. (2024, January 25). What will be the story for used vehicles in 2024?. Auto Service World. https://www.autoserviceworld.com/what-will-be-the-story-for-used-vehicles-in-2024/

There’s been a bit of an up and down with Canadian used wholesale market prices, with declines ranging from steep to less steep. Last week was notable at -1.06%, but this week the decline in prices is -0.51% for the period ending on Jan. 13, 2024.

The 2017-2019 average of the same week was -0.36%. The car segment fell by -0.59% this past week (compared to the prior week’s -0.67%). And truck/SUV segment prices were down -0.42% (compared to the previously steep -1.45%). Not a single segments’ values increased for the week.

“The Canadian market continued to decrease, with declines around 50% more than the historical average,” said Canadian Black Book in its latest Market Insights report. “Supply is building with decreasing demand for vehicles at auction on both sides of the border.”

In the United States, the overall car and truck segments decreased -0.63% last week and -0.68% the prior week. The volume-weighted car segments were down -0.39% (versus the previous -0.49%), while trucks decreased by -0.73% (compared to the prior week’s -0.77%).

In the Canadian market, and specifically the car segment, luxury cars showed a minimal decline (-0.02%) in pricing, along with premium sports cars (-0.33%). The most significant decrease came from compact cars (-1.11%), followed closely by prestige luxury cars (-1.01%).

For trucks/SUVs, the largest declines were sub-compact crossovers (-1.74%), sub-compact luxury crossovers (-1.23%) and minivans (-1.03%). As for the smallest decreases, the segments worth noting include full-size vans (-0.09%) and compact vans (-0.12%).

The average listing price for used vehicles, as per the 14-day moving average, was approximately $37,600. The analysis is based on approximately 210,000 vehicles listed for sale on Canadian dealer lots, according to CBB.

The full report is available here.

dealer, C. auto, dealer, C. auto, & Lefko, P. (2024, January 17). Used car market price declines still more than historical average. Canadian Auto Dealer. https://canadianautodealer.ca/2024/01/used-car-market-price-declines-still-more-than-historical-average/

Dealers can expect similar demand for new and used vehicles in the months ahead.

As we near the end of the year, it is clear that used vehicles remain the go-to option for many consumers. And yet, new vehicle inventory is expected to continue to move forward in the new year as demand remains, giving dealers a ray of hope for 2024.

In an interview with Canadian auto dealer, Daniel Ross, Canadian Black Books’ Senior Manager of Industry Insights & Residual Value Strategy, said he expects new vehicle inventory and new sales volume to be higher in 2024. On the flip side, he does not see used vehicle supply as sufficient enough to support the demand coming its way.

“We’re probably seeing more of a stagnant or maybe a leveling off of MSRP increases on the new car side. So that might be a better story for new cars as they come back to the market. But used cars, we’ve already had three-plus years of less-than-perfect new car sales and that’s going to infiltrate on the returning vehicles to today’s market — or tomorrow’s market if you will,” said Ross.

He expects this issue will hamper supplies even more, while the used vehicle supply is anticipated to be a smaller portion of the overall volume in the market than it is today. This, in turn, should result in better retention on value and, possibly, still high residual values — particularly in the short term.

“That’s kind of going to illustrate what happens next year in terms of new cars moving forward in sales volume, but still incremental versus used cars being even more hampered on inventory, keeping those prices relatively high,” said Ross.

He suggested that dealers keep an eye on wholesale prices and how used vehicle volume will play out next year. Used vehicle supply is anticipated to worsen before it improves.

Ross also noted that new vehicle sales, lease trade-ins or lease maturities are not coming back to the market nearly in the fashion they used to.

“If a dealer is looking for good used vehicles to fill their lot, it’s going to be tough to do that next year as well. They can rely a little bit more on the new car side of things, but lots of consumers are looking for used vehicles. Two-to-six-year-old vehicles are predominantly what they’re looking for,” he said, adding that the result may create a tougher opportunity to buy, especially in open auctions.

A slow decline is also expected in 2024, though nothing extreme; it will be segment-specific due to changing consumer trends in favour of cars and smaller SUVs. “That’s kind of what I would incentivize dealers to sort of look at more carefully, in terms of their inventory levels and where they want to focus.”

As for electric vehicles, the demand appears to be weakening — slightly. But as EVs remain in the early stages of adoption, Ross said it will be interesting to see how the market fares in 2024, knowing that some key players will be introducing vehicles in certain segments of the Canadian market that are expected to sell well. “So that’ll be good,” said Ross.

Lefko, P., dealer, C. auto, Ockedahl, C., dealer, C. auto, & Lefko, P. (2023, December 21). Sales, trends and predictions for 2024. Canadian Auto Dealer. https://canadianautodealer.ca/2023/12/sales-trends-and-predictions-for-2024/