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Exchange Rate, Supply Trends Push Up CAN Used Prices

Pushed in part by Canada's new-vehicle sales kicking off 2012 with a bang, the country's used-vehicle prices experienced a month-over-month dip in April, according to analysis from the RVI Group.

However, thanks to lower exchange rates and used supply trends, Canadian used values still increased more than 2 percent from a year ago, explained manager of RVI Analytical Services Wayne Westring.

Specifically, the RVI Used Car Price Index for April was 1.006, down 3.3 percent from March. But this was a 2.6-percent year-over-year uptick.

"Month-over-month used-car prices saw a decline because consumers have shifted to new vehicles," Westring shared with Auto Remarketing Canada. "New-vehicle sales have been strong to start the year and have contributed to lower used-car prices."

He added: "Year-over-year strength can be attributed to lower exchange rates from a year ago. In April 2011, the U.S. dollar/Canadian dollar exchange rate was 1.045.

"This April, it was closer to parity, helping used-car prices increase from a year ago," Westring continued. "Also, a decline in the RVI Used Vehicle Stock Index from a year ago has help with the increase."

Breaking pricing trends down by segments, RVI's analysis specifically pointed out the month-over-month used price declines in subcompacts and compacts during April. These were down 5 percent and 4.6 percent, respectively, from March. Their drop-offs trailed only the declines in luxury small sedan prices (down 11.5 percent) and luxury SUV values (down 10.4 percent) among the volume segments.

Take that with a grain of salt, however.

"The decline in sub-compacts and compacts is mainly due to how high the used-car prices have been compared to the market. Prices for those vehicles remain high relative to the market," Westring explained.

He went on to note the impact of gas prices have played for these segments. April fuel costs jumped to $1.36 per liter, RVI indicated.
"Gas prices have played a role in used-car prices on a segment level. Sub-Compacts and Compacts, although they declined this month, have been performing at some of the highest levels in our index," Westring stressed.

Moving along, RVI's data indicates that just three volume segments showed increases in price from March: small sedans (up 1 percent), small SUVs (up 0.7 percent) and full-size pickups (up 0.6 percent).

"Small SUVs are a good option for a four-wheel drive vehicle while gas prices are high. Also, gas mileage has become much better for this segment over the last couple of years," Westring pointed out. "Small sedans have been one of the lower segments, so a correction to the total market as well as lower gas prices helped with the segments increase."