The Canadian used wholesale auto market continued its slow and slight slump, while remaining near record high valuations. This week is down -0.27%, similar to the 2017-2019 average, which was -0.26%, according to Canadian Black Book. The Canadian wholesale market for used cars declined, down -0.09%, and trucks down from last week at -0.45%. The overall volume-weighted used vehicle segment continues on a relatively flat trajectory, down overall by -0.27% compared to being down -0.33% last week.
This week, three segments of the car market made gains, with near full size cars up the most at 0.91%, with compact cars up 0.06%. Luxury cars were down at -0.46%, and sporty cars down -0.22%.
For trucks/SUVs, there were two segments with price increases, minivans up 0.16%, and compact vans up -0.02%. Full size vans declined the most, down a full -2.51%, followed by sub compact luxury crossovers/SUVs, which were down -0.79% for the week.
The average listing price for used vehicles increased slightly week-over-week, as the 14-day moving average remains stable at roughly $37,500. Analysis is based on approximately 120,000 vehicles listed for sale on Canadian dealer lots. The US market exchange rate remains favourable for exportation, leading to a continuous stream of vehicles south across the border. “Supply remains low while demand is high on both sides of the border. Upstream channels continue to tap supply before it can be made available at physical auctions.”
The unemployment rate in Canada rose to 5.4% in August of 2022 from the record-low of 4.9% observed in the previous two months, well above market expectations of 5%. It was the first increase in the jobless rate in seven months, as the number of unemployed individuals rose by 105,900 to 1,113,000 and long-term unemployment rose by 22,000 to make up for the decline in July. On top of that, employment in Canada fell by 39,700 to 19,536,800, marking the third consecutive monthly decline.
The Bank of Canada raised the target for its overnight rate by 75bps to 3.25% in September 2022, in line with market forecasts. It is the fifth consecutive rate hike, pushing borrowing costs to the highest since 2008. Also, policymakers said interest rates will need to rise further given the outlook for inflation, with surveys suggesting that short-term inflation expectations remain high. The central bank also said it will continue its policy of quantitative tightening.
The Canadian dollar weakened past the $0.76 mark last week, a level not seen since November 2020, as lingering concerns about slowing economic growth domestically and in the United States, Canada’s primary trade partner, continued to weigh. The market movement came despite another jumbo interest rate hike from the Bank of Canada.
