Cana­dian used car prices up

The Pak Banker - - Front Page -

TORONTO

Used car prices continue to move higher across Canada, de­spite a stronger-than-expected per­for­mance in the new ve­hi­cle mar­ket in 2012, ac­cord­ing to the Sco­tia­bank Global Auto Re­port re­leased to­day. The im­prove­ment re­flects a 4% in­crease in pur­chases of pre-owned mod­els so far this year, as well as the dwin­dling sup­ply of ve­hi­cles com­ing off-lease.

Cana­dian used car prices have con­sis­tently gained mo­men­tum since bot­tom­ing in early 2009, just be­fore the start of the global eco­nomic re­cov­ery, said Car­los Gomes, Sco­tia­bank's Se­nior Econ­o­mist and Auto In­dus­try Spe­cial­ist. In con­trast, new ve­hi­cle prices in Canada have been flat since 2010, as au­tomak­ers have en­hanced in­cen­tives over the past two years to spur sales.

Ac­cord­ing to the re­port, the net re­sult of these di­verg­ing trends is that Cana­dian used car prices are at record highs rel­a­tive to the price of new mod­els. The Sco­tia­bank Used Car Price In­dex ad­vanced 4% year over year (y/y) in Oc­to­ber, along­side strength­en­ing de­mand and a sharp re­duc­tion in the num­ber of ve­hi­cles com­ing onto the re­sale mar­ket. The sup­ply short­fall is the di­rect re­sult of a plunge in fleet and leas­ing vol­umes since 2008. The num­ber of ve­hi­cles com­ing of­flease in Canada will drop to less than 400,000 units in 2013 - the low­est level in more than a decade, and roughly 35% be­low the av­er­age of the past five years, said Mr. Gomes. The net re­sult is that the ap­pre­ci­a­tion in Cana­dian used car prices will likely gain mo­men­tum in 2013. Look­ing at the new ve­hi­cle mar­ket, sales in Canada ac­cel­er­ated to an 8% y/y in­crease last month, climb­ing to a record high for the month of Oc­to­ber.

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