ADESA Canada Price Index

The ADESA Canada Used Vehicle Price Index

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].

June 2010

The ADESA Canada Used Vehicle Price Index has been updated through June. The index strengthened by approximately 0.6pts from May, seasonally adjusted. True to ALG’s forecast, auction prices continue to show weakness; but, not at the level seasonally expected, causing the Index to climb.

While auction levels held, price weakening across all vehicle segments was felt in June with the largest declines registering in the Midsize SUV, Minivan and Fullsize Pick-Up Segments with each experiencing a 5% ($675), 7% ($446) and 4% ($611), MoM decline, respectively.

There were two main driving factors behind such decline: off-lease volume/inventory and the new vehicle market.

The attractiveness to the Canadian consumer of the new vehicle market with incentives/price adjustments of approximately $14k (the Fullsize Pick-up segment) made it impossible for some consumers to sit on the sidelines any longer in hopes of a better deal later in the year. It also made the affordability in the used vehicle arena take a back seat, if you will, to the allure of a new vehicle with substantial price adjustments.

As off lease volume continues to heat up for a number of manufacturers, the new model year retail launch timeframe change is not helping. New model year launches are spread throughout the year as opposed to historically when new model year launches typically occurred in the August/September timeframe. This yields further, untimely price pressure as the resale market is inundated with prior model years that are continually competing with new model year/major redesigns coming to market throughout the year. Add to this, the material price adjustments and rate programs in the market today – a rebalancing is near.

Expectation remains unadjusted - July will see further softening as both new vehicle incentives are expected to remain ramped up continuing to apply price pressure on the Canadian resale market, as dealers/wholesalers continue to source used inventory state side and as some buyers exit the market on vacation.