At the midpoint of June, we continue to see wholesale prices in Canada decline slowly. All Car segments for 2-8-year-old vehicles fell by 0.58%, almost the same as last week’s 0.60% decline.
Over the last eight weeks, wholesale car values have seen a 0.54% decline on average each week.
The Truck/SUV/Crossover segments fell by 0.68%, which is a smaller drop than last week’s 0.85% decline. On average over the past eight weeks, the truck segments have declined by 0.61%. Please note that these are weekly adjustments, so when you consider how much of a decline this would be over 52 weeks over a year, the numbers are daunting.
The Canadian Black Book Value Index for 2-6-year-old vehicles fell an additional 3.20 points for May, very close to April’s record decline of 3.58. There is still half of June to come, however directionally we areseeing a similar decline, perhaps even slightly steeper for the month.
It remains our outlook that wholesale prices will continue to decline until we reach a total decline of 17% industry-wide. We have not yet seen retail asking prices follow the wholesale trends, but that is to be expected in the coming months.
In the past week, the Organization for Economic Cooperation and Development (OECD) released its global economic outlook. The view was quite stark when compared to the relatively positive view that existed only a few months ago.
The report expects that output (GDP) will contract by 9.4% in 2020 if there is a second wave of COVID-19. If the nation escapes a resurgence of the virus, the reduction in economic output would “only” be 8%.
The recovery of the Canadian economy will likely not get back to pre-pandemic levels until the end of 2021 or beyond. During that time period, it isexpected that unemployment will remain high.