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Canadian Used Prices Rise as 2012 Comes to a Close

RVI: Canadian Used Prices Rise as 2012 Comes to a Close; Smaller Segments Lead Price Increases

As 2012 wrapped up, wholesale values finished off at high rates for dealers, who saw increases spotted across the segments, most noticeable in the smaller car segments.

According to the latest RVI Market Update, wholesale values (seasonally adjusted on two- to five-year-old vehicles) went up 3.4 percent when compared to November.

Moreover, this number was up a whole 2 percent from December 2011 rates.

And RVI's Rene Abdalah gave Auto Remarketing Canada a little more insight into where uses prices are headed in the near future:

"Used-car prices are expected to decline from current levels. The Canadian dollar is expected to strengthen in 2013, which is a negative factor for used prices, and used-vehicle supply, which has been declining for the last couple of years, will level out in 2013," Abdalah said. "Dealers will face the same challenges as they have in the U.S.; vehicles will become only slightly easier to find."

And the smaller vehicle segments saw the most noticeable rises this past month, RVI officials explained.

Small sedan prices rose 6 percent from November, and compacts rose by 4.9 percent. These two segments led the wholesale market for December.

Explaining this trend in more detail, Abdalah said, "Similar to the USA, low supply continues to be the main factor positively impacting prices on used small cars, particularly in the compact segment."

On the other hand, midsize sedans saw the greatest decline in the market, falling 2 percent from November's rates.

Also, included in the Market Update was information on the Canada economy, with some good news for dealers and consumers, alike.

Gas prices, after resting at significantly high rates for much of 2012 decreased to $1.21 a liter in December.

"We've seen gas prices continuing to decline in Canada, but we expect them to increase over the next month or so. Large segments, such as the midsize SUV and full-size pickup, will be affected negatively while smaller segments, like compacts, will be positively impacted," Abdalah predicted.

Also, the Canadian dollar strengthened against the U.S. dollar in December, coming to rest at a ratio of 1.0101 (US:Can). This could bode well for dealers traveling to the U.S. auctions to secure used inventory.

"It will have an effect on used-car prices. Since the Canadian dollar will remain strong, dealers will find it advantageous to come over the border (to the USA) and purchase vehicles," Abdalah said.

"This has become quite popular over the last few years. The Canadian dollar is expected to remain over parity through 2016," he added.