MARKHAM, Ontario -

Auction sales volumes in the Canadian wholesale vehicle market are back to being at roughly 70% of where they would normally be, following another round of “significant growth” last week, according to Canadian Black Book.

And further gains are likely over the next few weeks, CBB said in its weekly COVID-19 Market Update released Tuesday.

“We continued to see significant growth in the wholesale marketplace last week. As the auctions recall more staff nationally, this will increase the capacity for sales,” CBB said in the report.

“Previously, the throughput of wholesale auctions was very limited by the closure of all physical auctions and temporary reductions in staff,” it added. “Total volume has yet to return to prior year levels.”

At the market’s worst point, auction sales were off 80% year-over-year, which happened during March’s widespread physical auction sale closures, CBB said.

Sales rates at auctions are also gaining steady ground each week. There were sales rates spotted above 80% and even around 90% last week, CBB said, with the latter beating pre-pandemic rates.

“The weeks of rock bottom, in some cases single-digit sales rates at auction, are now behind us,” CBB said. “Rates have been slowly climbing each week with some instability isolated to certain auctions along the way.”

In terms of supply coming into the wholesale arena, for the next months, that is likely to be “dramatically higher,” CBB said.

Driving that spike are the once-delayed lease returns coming back into the market, rental companies de-fleeting amid slower retail demand and climbing repossessions amid a tough economy.

Also driving that supply: there was a delay in vehicles coming back into wholesale in March-May amid the auctions scaling back, CBB said. However, those cars “will still be arriving for sale, albeit later than originally planned.”

Sharing more context on the off-lease impact, CBB said that even before the pandemic, lease maturities for 2020 were forecasted above 400,000 for the year, which would have been a record.

The pandemic, however, certainly had a big impact.

“Once the pandemic was underway and most manufacturing stopped, OEMs worked to facilitate lease extensions in order to push returns further into 2020 and to be able to reliably provide replacement vehicles,” CBB said. “As a result, we project at least 60% more additional units in the second part of 2020 (compared to the pre-COVID-19 estimates) due to a slowdown in sales in March/April/May, along with expected turn-ins of the lease extensions.”

Looking at a chart in the CBB data set, it was anticipated that the third quarter of this year would have about 90,000 lease returns. The revised forecast has it above 140,000 units. The Q4 2020 and Q1 2021 revised forecasts are on par with their respective original forecasts.

Q1 2020 and Q2 2020 actuals were less than original forecasts.