Canadian Black Book is reporting the first year-over-year decline in used vehicle values since the summer of 2020.
Granted, it’s not a big decline, but a signal nevertheless of where prices look to be headed.
Canada Black Book’s Used Vehicle Retention Index for December came in at 157.6, a 0.7 per cent drop from November and 0.6 per cent decrease year-over-year.
It’s the first year-over-year decrease since July 2020 when the index sat at 100.5 points — that’s when Canadian wholesale vehicle values began a historic climb that didn’t stop until March 2022. Since then, it has been on a decline, down 4.5 per cent overall.
“Increasing interest rates and slowly improving new vehicle supply has had a cooling effect on the wholesale market but the overall lack of used supply has offset much of those pressures,” said David Robins, principal automotive analyst and head of Canadian vehicle valuations at Canadian Black Book.
With an index score of 157.6 points, that means used vehicle values are 57.6 per cent above the baseline established by Canadian Black Book in January 2005. March 2022 saw the peak of the index at 165 points.
Manheim, the vehicle auction company, expects used vehicle values to continue to depreciate — and at an above-normal rate. It added that this will particularly happen in the first half of 2023. It saw its own used vehicle value index drop 14.9 per cent year-over-year in the U.S.
“Price trends should normalize in the year’s second half as constrained wholesale supply supports used values and used retail prices fall into a normal relationship with new prices,” it said, adding that it expects its own value index to drop 4.3 per cent year-over-year in December 2023.