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Soft Dollar, Low Fuel Costs Spark High Wholesale Prices

Pushed by the Canadian dollar hitting its weakest level against the U.S. dollar in more than a year and gas prices reaching a seven-month low, wholesale values in Canada moved upward in October on both a year-over-year and month-over-month basis, according to the RVI Group.

The RVI Used Car Price Index for Canada last month was 1.050, up 1.3 percent from September and a 4.9-percent hike from October 2010.

"The Canadian dollar continued to weaken against the U.S. dollar, dropping to its lowest level since September 2010," RVI's Wayne Westring explained to Auto Remarketing Canada.

"This has led to less activity in the grey market, leading to higher used-car prices," he continued. "Gas prices also continued a downward track, down to its lowest level since March 2011."

More specifically, gas prices were at $1.25/liter in October and the U.S.-to-Canadian dollar ratio was 0.9804.

When asked what other factors are affecting Canadian wholesale prices, Westring added: "The weakening Canadian dollar will increase new-car pricing, also playing a role in used-car prices. Auction supply will also decline as long as exchange values continue to move downward."

Breaking down used prices by vehicle category, four of the 10 volume segments in RVI's analysis saw month-over-month decreases during October. The most significant was in the luxury small sedan class (down 5 percent), followed by the compact segment (down 4.6 percent). Small sedans weren't far behind with a 4.1-percent dip.

The luxury SUV class was off 1.8 percent from September.

Conversely, minivans showed the strongest uptick among volume segments (increasing 4.7 percent), while small SUVs were next in line at 4.1 percent.

"When gas prices increased, the value of smaller segments became inflated while larger vehicles saw values stay low," Westring pointed out. "With gas prices trickling downward, this helps the value of larger segments come back to life and smaller segment values deflate some."

On a year-over-year basis, the biggest increase was for subcompacts, which jumped 19.9 percent. Showing the biggest drop was the midsize SUV segment, which fell 6 percent.

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