ADESA Canada Price Index

Download the ADESA Commentary May 2022

ADESA Canada is the largest provider of wholesale used vehicle auctions in Canada. The Index is calculated from millions of pieces of sales data from ADESA Canada’s live open bidding auctions.

May 2022

The ADESA Canada Used Vehicle Price Index has been updated through May 2022.  The index decreased after being adjusted for seasonality. Wholesale prices decreased on average by 1.4% M-o-M.

The semiconductor chip shortage continues to wreak havoc on Canadian Auto Sales. Sales were off more that 8% in May, continuing the slide of sales that began in February. Gas prices are still high, and the outlook suggests that the prices may have peaked, but ALG sees the long-term gas forecast higher than what was experienced by Canadians in the late 2010’s. Production is still lagging and being outpaced by demand; potentially it will take at least until 2024 before inventory will return to a healthier level. Used vehicles continue to see a much stronger demand due to the lack of new inventory, with the used vehicles acting as a substitute for new vehicles.

ALG current outlook suggests that 2022 and 2023 will have historical high demand for used vehicles as the industry struggles to ‘right’ itself, but as we near the end of 2023, new vehicle inventories will improve, and as we move through 2024 and 2025, we should see a ‘normal and healthier market’. ALG does predict that even as we return to that normal state – vehicle values will still be higher that they were in 2019.

Price movements by segment were mostly negative in May. Fullsize Pickups showed the only increase at 1.0% ($331). Midsize vehicles showed the most drastic decrease at -6.0% ($1,303), followed by Midsize SUVs at -3.7% ($1,031), Mid Compacts at -2.0% ($368), Minivans at -1.2% ($280), and Compact SUVs at -.3% ($74).

 

How ADESA calculates the UVPI

ADESA Canada is the largest provider of wholesale used vehicle auctions in Canada. The Index is calculated from millions of pieces of sales data from ADESA Canada’s live open bidding auctions with the addition of used vehicle auction sales data purchased through the National Auto Auction Association [NAAA]. The data is adjusted for a large number of variables, including type of vehicle, mileage, age and season. A two-step statistical filtering process excludes extreme values in the raw data. The resulting Index provides a picture of the Canadian used vehicle market and depicts the trend of used vehicle prices in Canada.

ADESA Canada notes that the index provides insight into the economy as a whole and consumer spending patterns. It also points to the direction of the used vehicle market and, by implication, of the new vehicle market, as there is a complex relationship between the prices of used and new vehicles which is reflected in the adage ‘Today’s new vehicle is tomorrow’s used vehicle’. Typically, used vehicle prices respond to many macro variables, such as the health of the overall economy, financing available to new versus used vehicles; the volume of vehicles in the pipeline, the age of vehicles on the road, the U.S. dollar exchange rate, incentives and the number of vehicles coming off lease.

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