RVI Sees Canadian Wholesale Strength Lasting for Years
It appears the hearty used values in the Canadian market are here to stay for a while.
Canadian wholesale prices for full-year 2011 are projected to climb almost 8 percent on a year-over-year basis before jumping close to 3 percent in 2012 and then staying solid for years to come, according to the RVI Group.
Specifically, the projected RVI Used Car Price Index for full-year 2011 is 1.005, up 7.9 percent year-over-year. That is expected to grow to 1.034 for 2012, a 2.9-percent hike.
“Used-car prices in Canada are expected to strengthen in 2012 because of the decline in the RVI Used Vehicle Stock Index,” RVI’s Wayne Westring explained to Auto Remarketing Canada.
Specifically, the used-car stock index is expected to plunge 12.2 percent next year, following a 1.5-percent drop for 2011.
Looking at circumstances impacting the pricing forecast for 2012 and beyond, RVI is projecting robust exchange rates during the three upcoming years, in addition to year-over-year improvements in new-car sales each year until 2016.
Competition levels are expected to go up, RVI noted. In fact, the RVI Competitive Index is forecasted to grow 5.8 percent next year and then jump another 4.4 percent in 2013. A 3.4-percent hike is on tap for 2014, followed by a 3.5-percent increase in 2015 and a 1.2-percent gain in 2016.
RVI said "within these factors" there will likely be increases in used prices for 2012 and 2013 from where they stood in August 2011. However, the increases will be modest (up 1 percent in 2012, up 0.9 percent in 2013).
While used prices are expected to stay robust for several years, RVI does expect wholesale value to dip slightly (0.1 percent ) in 2013 compared to 2012.
“The slight decline in used-car prices after 2012 could be attributed to a couple of things. The RVI Used Vehicle Stock Index turns and begins to increase. Secondly, the new-car side sees continued pressure from increasing competition in the market,” Westring noted.
“Also, exchange rates, although declining slightly year-over-year in 2013, remain historically high, keeping downward pressure on used-car prices,” he added.
Of course, used prices for 2014 are then projected to climb 0.5 percent and then climb 0.3 percent the next year. Wholesale prices for 2016 are expected to fall slightly (down 0.3 percent) on a year-over-year basis.