MARKHAM, Ontario –
The Canadian Black Book Wholesale Used Vehicle Retention Index, which covers vehicles 2 to 6 years old, was down 5.0% year-over-year in May and fell 3.1% month-over-month, according to an update from the company this week.
The index’s reading was at 100.5 in May. In the last three months, it has dropped 7.8 points since reaching 108.3 in February. That streak includes a record 3.58-point dip in April and last month’s 3.2-point decline.
“It is our expectation that there are approximately 10 more points of potential decline before values begin to trend upwards towards the end of 2020,” Canadian Black Book said in a news release.
The CBB used index has remained above 100 for nearly three straight years, according to data from the company. In June 2017, it was at 99.9. Then beginning with July 2017, the index has been above 100 each month.
May’s reading was the lowest since June 2017.
As far as the rest of this year, the used-vehicle market is likely to see several more months of soft prices, CBB said, as additional vehicle supply hits the market. Then, look for an improvement in the economy and used-vehicle prices.
Such reflects the “very strong cyclical nature” of the car business.
“We fully expect that once some of the extra supply we are expecting over the next 5-6 months has run through the market and the economy starts to strengthen that prices will start to rebound,” CBB said. “Until that time, it is a buyer’s market, and there are deals to be had out there in the lanes.”
Looking at more recent data, wholesale prices of cars ages 2 to 8 years old were down 0.58% last week. The week before, they dropped 0.6%, according to the latest COVID-19 Automotive Market Weekly Update from Canadian Black Book.
The average weekly decline the past eight weeks for cars has been 0.54%.
As for trucks, their wholesale prices were off 0.68% last week and 0.85% the week before. The weekly average the past eight weeks has been a 0.61% drop.
“Please note that these are weekly adjustments, so when you consider how much of a decline this would be over 52 weeks over a year, the numbers are daunting,” CBB said in a release.
Going back to the monthly index, CBB said June’s decline could be larger than May’s 3.2-point drop.
“It remains our outlook that wholesale prices will continue to decline, until we reach a total decline of 17% industry wide,” CBB said. “We have not yet seen retail asking prices follow the wholesale trends, but that is to be expected in the coming months.”