TORONTO -

Amid what ALG Canada has found to be country’s “most turbulent economic times in recent history,” Canadian wages have actually remained strong. And this is helping residual vehicle values.

In fact, the firm says the current lift in wages has positively impacted 48-month residual values in Canada by 0.2 percent.

“Wage growth can have a significant impact on residual values. More money in consumers’ pockets leads to increased residual values, as the demand for all vehicles increases,” Geoff Helby — regional director, ALG Canada — noted in the latest Industry Report from the company.

“Conversely when wages are declining, residual values can be negatively impacted as would-be buyers hold on to existing vehicles for longer,” he continued. “Because the forecasts for this edition are completely in line with the past as well as previous editions, there is only a minimal impact from wages on residual values.”

In addition to looking at the effects of wage growth on Canadian residuals, the analysis also delved into how gas and home prices are impacting residuals.
Starting with fuel costs, ALG has found that these are expected to hit $1.44 per liter within five years. The impact of the increased cost at the pump has downwardly affected 48-month residuals by 0.9 percent.

But there’s a caveat: the residual impact changes from segment to segment.

Helby said that “microcars and subcompacts receive a boost in value, each rising by approximately 1.3 percent, while full-size utility, premium full-size utility and full-size pickups each decline in value by approximately 4.0 percent."

Turning to home prices, these are on the upswing, as well. In fact, ALG is calling for nearly a 2-percent hike each year. As far as their impact on residuals, it’s a positive one, says Helby

Individual segments are seeing their four-year residuals being lifted anywhere from 0.3 percent to 1.3 percent.

“Rising home prices boost the wealth of most consumers, and consequently have a positive impact on residuals,” Helby shared.