High dollar and consumer debt are contributing factors
The ADESA Canada Used Vehicle Price Index fell for the fourth consecutive month in February, although its rate of decline was lower than during the past three months. It currently sits about where it was a year ago, although it is heading in the opposite direction.
Seasonally adjusted, the index weakened by approximately 0.5 points from January – a period where we would normally expect to see a seasonal improvement according to ADESA. As has been the case for several months, this further monthly decline in resale prices is a reflection of continuing high levels of new- and used-vehicle inventory on dealers’ lots.
Canadians continue to carry high levels of consumer debt and the situation was not helped by the still-high Canadian unemployment rate in January, in spite of a slight decline to 8.3 percent, or by the continued strength of the Canadian dollar, which makes cross-border shopping attractive for some Canadians.
Every segment experienced a price drop in February, according to ADESA, with mid-size cars and mid-size SUVs showing the greatest declines.
OPENLANE’s Canadian Market Index confirmed the same pattern. It was down nine percentage points from January, continuing a decline that began in November. Minivan prices increased slightly through February; trucks remained relatively stable; SUVs dropped slightly; and cars fell by 12 percentage points.
Dealer interest in minivans was up slightly, as was that in trucks but interest remained flat for cars and dropped 10 percentage points for SUVs.
