The Value – Issue #8: July 2018 Used Vehicle Retention Index

Welcome to The Canadian Black Book – The Value. Our goal is to provide our clients and partners with news, event updates, new initiatives and opinions from Canada’s trusted source for vehicle values and automotive insights. In this edition we cover:

The Canadian Black Book Used Vehicle Retention Index is mirroring the hot summer weather much of Canada has had recently! The July industry index of 103.3 is only 0.01 off the record high mark from April of this year. This is an excellent indicator of how strong values continue to be, despite growing used car supply in Canada and the U.S.. The July index is up 0.3 points from last month and a strong 2.4% from the same time last year.

Surveying the different segments, we see that compact car has posted a significant lift from July of last year with a 7.5% gain. Compact car prices had previously fallen in 2016, so the current increase is partially a price correction, and we expect renewed interest in smaller cars given higher gasoline prices. Sub-compact cars are following a similar course with gains of 11.1% since last year and 5.1% from last month. Smaller cars are one of the most active segments in the market at the moment and will be one to watch in the coming months.

Full size pick-up trucks are down 3.1% from last year, but up 1.1% from last month. Small pick-ups are also down almost 1% this month, and down by 1% from the same time last year. We expect more headwinds for truck pricing in the coming months as more supply comes back from leases ending, both in the USA and Canada.

Mid-Size Luxury CUV/SUV are also slowing with drops of 0.8% this month and 2.2% from last year. Minivans are only off 0.3% from last month but theare in a pretty significant slide of 6.7% versus 2017.

So far the index does not show any response to suggestions of coming import tariffs from the U.S. administration, and that is another positive observation for a sunny month for the industry.

To download the July 2018 Index Click Here.

The Value – Issue #7: Bordering On Chaos? – By Brian Murphy

Welcome to The Canadian Black Book – The Value. Our goal is to provide our clients and partners with news, event updates, new initiatives and opinions from Canada’s trusted source for vehicle values and automotive insights. In this edition we cover:

Tariffs and the Canadian Used Car Market

By now, many of you have likely had at least a few sleepless nights pondering the possible grief U.S. vehicle tariffs could create for the Canadian auto industry.  I certainly have in recent weeks. I’m writing this article, just days after Canada Day 2018 and our government’s imposition of reciprocal tariffs on steel, aluminum and a menu of other products, so nothing has happened yet with respect to vehicle tariffs.

Brian Murphy
Brian Murphy, VP Research & Editorial, Canadian Black Book

I’m hoping (perhaps praying) that nothing will happen, other than a new NAFTA deal fair to all parties.  The impact of new tariffs would be devastating.  I recently read that John White, President of the CADA, described the potential damage, before the House of Commons Standing Committee on International Trade, as “tsunami-like” and that is the most concise explanation I have seen yet.

Much has been covered about possible impacts of these terrible tariffs on new cars, but I would like to steer the narrative towards the impact on our used car market and values.

Currently there are a large number of used cars exported to the U.S. from Canada each year.  Since 2015, it has been reported by many to be in the 200,000 – 350,000 unit range.  This has primarily been driven by a weaker Canadian dollar and a historical shortage of used cars in the U.S.

When the Canadian dollar passed below $0.80 in 2015 it triggered the opportunity to profit by exporting cars south.  Given the current exchange rate, and even with falling U.S. used car prices, this model is still a profitable practice.  This exodos of cars and trucks of all stripes has helped keep Canadian used car prices at record high levels.

The Canadian Black Book Used Vehicle Retention Index, which tracks the value of two to six-year-old vehicles, continues to set month over month all-time records.  This strong value storyline is partially due to this export activity and our generally healthy economy, both of which create strong demand and raise prices.

Stronger used car values have rocket-propelled new car sales numbers, as retailers and OEM’s pull delighted customers out of leases and loans early and put them into new vehicles.  A 25% tariff would derail all this export activity and have a massive impact on the Canadian used car landscape.

The specific impact a tariff will have has a great deal to do with the actual terms and conditions written into the policy.   It’s difficult to anticipate exactly what that fine print would look like.  I’ve assumed that any tax imposed by our southern friends on new cars would also be applied to used cars.  This would avoid games being played with shipping a new car with 50km on it and calling it a used car.

If a used tariff does come true, it would matter if it was applied to all cars regardless of country of origin or just cars produced outside of the U.S. market.  It could also depend greatly on how and if the U.S. redefine their content rules for what constitutes a U.S. car vs a foreign car.  There are lots of “what-ifs” and “it depends” that exist at this point in time.

If we assume a tariff is applied only to vehicles manufactured outside of the U.S., we could reasonably expect the values of those specific vehicles to fall sharply at Canadian auctions almost immediately after the tariff is implemented.  Buyers for the U.S. market would simply no longer purchase these at Canadian auction.

If tariffs are more broadly applied to all cars coming from Canada, regardless of origin, the result for used vehicles that are being exported today would be a fall in value.  Lower prices for some vehicles would then spill over, as other vehicles fall in value due to competitive market pressure.  Over time we expect that some ‘made in U.S.A.’ vehicles may then see a nice rebound in prices.

So, why would there be this up and down roller coaster?

Presumably the Canadian government would respond to a U.S. tax buy imposing a similar 25% duty on new U.S. made cars.  Canadian consumers would likely (over time) look to the used market to buy that vehicle that was now much more expensive as a new model, due to the import tax.  How long this may take depends on how much inventory dealers and OEM’s have, which always varies from car to car and region by region.  For some higher-end SUVs and trucks some cost of the tariff could be absorbed by OEMs, but they would likely lower incentives, making for much higher monthly payments.

With a lot fewer U.S. built new cars coming into the Canada, given lower demand, supply for those vehicles would be very tight and used prices might be almost “like new” for lightly used units.

On top of everything, dealers would be affected greatly as well.  If certain used car prices fall at auction, this would mean retail prices would also be affected forcing dealers to “reprice” their used inventory, resulting in much lower prices.  How big the impact is depends on how fast consumers substitute used cars for new.

No matter how I look at this situation, I see no “winning” on either side of the border, only painful losses!  Retaliatory tariffs by Canada and other nations to any U.S. action will create lower demand for U.S. product instantly.  Without that export demand, many U.S. auto sector workers will subsequently be out on the street, and their Canadian cousins will be right there with them, talking about how great things used to be in the old days.  I beg for cooler heads to prevail, the economies of both countries and this great auto business of ours are counting on it.

The Value – Issue #7: Used Vehicle Operations Getting Technical. Let’s Talk Software. – By Cole Reiken

Welcome to The Canadian Black Book – The Value. Our goal is to provide our clients and partners with news, event updates, new initiatives and opinions from Canada’s trusted source for vehicle values and automotive insights. In this edition we cover:

Software really is at the heart of most of the business operations at today’s dealership.  I’m not discounting the importance of good people, great thinking and hard work, but the fact remains that technology is integral in the selling of vehicles today.  Software is deployed to manage marketing of new and used, accounting, sales, inventory, HR, and I could continue down the long list of specific tactical elements where software helps dealers do business.

Cole Reiken, Vice President, Digital Strategy & Product Management, Canadian Black Book

The focus here will be on used vehicle operations and what I see as constituting best practices for the used business unit to concentrate on.  As you know, there is much to consider.

Off the top, it is critical for used car managers to understand which vehicles to purchase, pricing trends in the market and how much they should be paying for those vehicles.  The right vehicle valuation software is crucial to help provide this knowledge.

When selecting your valuation tool, it is important to know what type of data is provided.  For instance, auction reporting data provides insights on what used vehicles sold for at auction versus data sourced from retail listing prices from vehicles posted online.  Dealerships should hone in on tools that provide more comprehensive value and trend data that includes auction results, industry sales data and upstream OEM sales from across Canada.

Okay, now that we (hypothetically) have that knowledge in place, how and where are the best tech methods to source those vehicles?  Using the power of the internet to leverage online auctions and participating in simulcasts work best.  They help increase reach by covering a larger geographic distance, as opposed to attending actual auctions themselves.  On top of that, transporting vehicles is relatively inexpensive.  This can all be done at a desk in the dealership.  In doing so you may identify regional opportunities to find specific pricing on specific types of vehicles.  The best case scenario would be to couple this technique with your newly installed valuation tool to help recognize the best vehicles to purchase.

It’s also wise to pay close attention to vehicle appraisal tools employed in your used car department.  You want your appraisal tool to allow you to review the vehicle at auction or during the trade-in process.  The best versions of this software capture vital details about the vehicle’s current condition.  The most sophisticated will offer photo capture options, to record vehicle condition regarding its general state, any damage and to document features or equipment.

Now that you’ve sourced the right vehicles and purchased them, they begin to add up on the lot.  Deploying an inventory management system can help organize, monitor, and drive efficiencies.

Inventory management software goes further than your standard DMS which track the likes of your floor plans and interest costs.   Although a basic feature, tracking vehicle time on lot and turn times is vital reporting data for your operation.  Further to that, most systems will identify the units on the lot that sell fastest, helping you with some marketing and sales decisions.

Good inventory tools will generate templated used vehicle listings that can be syndicated to your website as well as the major listings websites, like  Needless to say, this is a major time saver and can bring consistency to the marketing plan.

All of the above are considerations when tooling your used vehicle team with software, however, the most important piece of deploying (any form of) software or technology is the process or workflow.  Quite frankly, it can be a culture shock.  Determining the composition of a dealership’s workflow is the most important task when trying to optimize this system.  If your software solution does not fit or you have to adopt a new workflow to fit the system, then the full feature set and ROI, will certainly not be realized.

The key is training.  I’m not talking about training that shows you to ‘click here and…do that’.  No, proper team training that puts the focus not just on the clicks but ties that back to YOUR process.  Training ensures that all team members understand the functionality and how it can help them day-to-day.

After all, the growth of software within any dealership equates to a cultural shift that’s not always easy.  It’s a cultural shift that we need to embrace, but only if the solutions chosen actually fix existing problems or inefficiencies.  The right software in you used car operation can do both.

The Value – Issue #7: June 2018 Used Vehicle Index Commentary

Welcome to The Canadian Black Book – The Value. Our goal is to provide our clients and partners with news, event updates, new initiatives and opinions from Canada’s trusted source for vehicle values and automotive insights. In this edition we cover:

The Canadian Black Book (CBB) Wholesale Used Vehicle Retention saw a small decline of 0.4 per cent for June, the first decline since January of this year.  The index remains at a very high level overall and reflects that vehicle retained values are still at some of the highest levels since the tracking began in 2005.  Compared to June of last year the index is still a strong 3.9 percent ahead.

Looking across the segments in greater detail, the Subcompact and Compact Cars have shown impressive growth of 8 per cent and 7.4 per cent respectively since the same time last year.  Subcompact cars are up 0.6 percent from last month alone.  No doubt some higher fuel prices are helping these two segments stay strong.

Compact crossovers continue to strengthen their values, not surprising the Canadian market’s love for this type of vehicle.  The popular segment is up by 4.4% from last year and 0.5% from last month alone.

Mid-size car shows a surprising gain of 7.4 per cent from June of last year, posting one of the biggest year over year increases of any segment, but still down 1.4 per cent from the beginning of the year.

On the negative side of the ledger, full size pickup trucks are down 2.2% from last year and down 0.7% just this month.  Luxury cars are down 1.5% from the same time last year, as are minivans which showed a decrease of 3.9% year to date and 1.3% from last month.

To download the Index for June 2018 CLICK HERE

The Value – Issue #6: May 2018 Index Commentary

Welcome to The Canadian Black Book – The Value. Our goal is to provide our clients and partners with news, event updates, new initiatives and opinions from Canada’s trusted source for vehicle values and automotive insights. In this edition we cover:


Once again we have hit an all-time record high for the value retention of 2-6 year old vehicles in Canada. The 103.4 mark is the highest level, on average over the 21 segments, we monitor since the index began with 2005 data. The impressive May 2018 mark of 103.4 ties with the new benchmark set last month.

The compact cars segment has set an all time record at 107.1, up 8 points from May of last year and up 0.5 from last month. The sub compact cars segment also had a strong showing, posting a 7.4 per cent gain from last year and a 1.2 per cent gain from last month, placing it amongst the biggest movers. Higher fuel prices could be helping bring some life these two segments.

Full-size pickups were among the biggest gainers this month, with a rise of one point. This is down 2.2 from the same month last year. The full-size pick-up market peaked in August 2016 and since then has dropped off by about 6 per cent. Conversely small pick-ups were up 1.3 per cent, making them one of the stronger segments this month.

Mid-size cars advanced 7.4 per cent from last year and 0.3 from last month, for an all-time record for that segment, despite the fact that consumers continue to shift their preferences to SUVs.

Sporty cars also hit an all-time high, which is not surprising given the overall index and we are entering the prime selling season for this truly fun vehicles.

To download the Index for May 2018 CLICK HERE

The Value – Issue #5: 2018 TalkAUTO Set for November 7 With Registration Opening Mid-June

Welcome to The Canadian Black Book – The Value. Our goal is to provide our clients and partners with news, event updates, new initiatives and opinions from Canada’s trusted source for vehicle values and automotive insights. In this edition we cover:

Canadian Black Book and J.D. Power together are pleased to announce the upcoming 2018 TalkAUTO, the seventh annual edition.   This year’s highly anticipated event will take place on Wednesday, November 7 at the Universal EventSpace in Vaughan, Ontario.

Registration for around 400 attendees, for the high profile Canadian auto industry conference, is set to open in mid-June.   TalkAUTO has grown into a top-tier networking destination for Canada’s auto industry key influencers and decision makers, who include many dealers, OEM executives, industry suppliers, finance and banking experts, trade media and more.

For 2018, the theme for TalkAuto is ‘Who Moved My Keys? Adapting to Change in a New Marketplace’, a play on the popular motivational business fable and New York Times Bestseller – ‘Who Moved My Cheese’.

An impressive line-up of guest and keynote speakers will support this year’s theme, headlined by Sheryl Connelly, manager of Global Consumer Trends and Futuring, Ford Motor Company.  Serving as Ford’s Futurist now for over a decade, and well known for identifying global trends and how they might impact the auto industry, she will certainly provide the TalkAUTO audience with an informative and memorable address.

“Each year, now our seventh, TalkAUTO gains credibility as a must attend event,” says Brad Rome, President at Canadian Black Book.  “Attracting a high profile speaker like Sheryl Connelly is a testament to how this event is perceived by the industry.”

“Last year’s event was an overwhelming success and our conversations since that day, with dealers, OEMs and industry people alike all point towards another exciting and enlightening day for Canada’s auto sector,” says J.D Ney, Country Manager, Canadian Automotive Division, J.D. Power.

Organizers urge you to keep the November 7th date saved and look out for the opening of registration in Mid-June. As in previous years, if history is any indication, seats will fill quickly.


For additional comments or more information, please contact:

Conrad Galambos
Media Relations
Canadian Black Book

The Value – Issue #4: March’s Used Vehicle Retention Index

Welcome to The Canadian Black Book – The Value. Our goal is to provide our clients and partners with news, event updates, new initiatives and opinions from Canada’s trusted source for vehicle values and automotive insights. In this edition we cover:

The Canadian Black Book Used Vehicle Retention Index for March 2018 index tied the all time high set back in December 2017 of 103.0. The industry wide wholesale value index is up by +3.2% from the same time last year, and up +0.5% from last month’s mark.

CBB Used Vehicle Retention Index - March 2018
March 2018 Canadian Black Book Used Vehicle Retention Index

This Index serves to offer unbiased and accurate insights and statistics regarding the health of the used wholesale vehicle market in Canada.

It is important to note that the Canadian dollar started the month at just under 78 cents, but then it promptly fell to 76.5 cents.  The weaker dollar helped to keep Canadian vehicles affordable for export for at least a portion of yet another month.

Looking though the various segments the biggest value gainers from last year are compact cars (+7.8%) and mid-size cars (+6.5%).  The most significant increases from last month are compact crossover/SUV and full -size car which are both up +1.8% from February.

On the loss side the full-size pickups show some softening at -1.9% and minivans at -4.7% compared to March of 2016.  The full-size crossovers, luxury cars and full-size vans shared the same decline of -0.6% since last month’s index.

The Canadian Black Book Used Vehicle Retention Index is calculated using Canadian Black Book’s published Wholesale Average value on two- to six-year-old used vehicles, as a percent of original typically-equipped MSRP. Canadian Black Book’s Wholesale Average is a benchmark value for used vehicles selling in the wholesale auctions with the vehicle quality in average condition. The index is weighted based on used vehicle sales volume and adjusted for seasonality, vehicle age, mileage, condition, and inflation (MSRP).

Aggregated from daily vehicle value updates, and captured throughout thousands of wholesale vehicle transactions across the country, the Canadian Black Book Used Vehicle Retention Index represents data across all regions of Canada. The Index is based on a comprehensive list of vehicles included in the Canadian Black Book wholesale database, and includes no bias toward any brand, data source or region, ensuring an accurate report of the used vehicle market.

The Index is posted monthly on and distributed to automotive media for wider industry consumption.



For interview requests or more information, please contact:
Conrad Galambos, 905-979-7039,

The Value – Issue #4: CBB Connect is New and Improved

Welcome to The Canadian Black Book – The Value. Our goal is to provide our clients and partners with news, event updates, new initiatives and opinions from Canada’s trusted source for vehicle values and automotive insights. In this edition we cover:


Canadian Back Book is proud to introduce the all new and enhanced CBB Connect.  Phase 1 went live earlier this year with a more contemporary design and improved functionality. Phase 2 is now ready to launch with new features that truly make this an end-to-end remarketing solution. The new interface is easy to use and boasts cross-device sync, proprietary CBB industry data, local market insight, a vehicle appraisal tool with a new VIN scanner, and much more.

To learn more about the newly upgraded CBB Connect, see the video above and contact us at 800-562-3150 to upgrade today.

The Value – Issue #4: Tell the Whole Story in Your Digital Remarketing

Welcome to The Canadian Black Book – The Value. Our goal is to provide our clients and partners with news, event updates, new initiatives and opinions from Canada’s trusted source for vehicle values and automotive insights. In this edition we cover:


Cole Reiken
Cole Reiken, VP Digital & Product Development, Canadian Black Book

By: Cole Reiken, VP Digital & Product Development, Canadian Black Book

Although many suggest that the used car industry has stayed stagnant over time, it’s hard to refute the business innovations witnessed over the past 5 years, inherently driving change in dealerships.  Today, running a successful used car business requires a nimble manager who wears many hats.  This manager must be versed in procurement, marketing, sales, administration and be able to wade through the art and science of determining the best business strategy.

From a marketing perspective, what we know is that the most cost efficient channel to market your inventory is digital.  What some may, or may not know, is that digital advertising can be extremely challenging.  What is the right mix, the right site(s), the right words, price, images, timing and more?

Instinctively and unfortunately, too many managers determine their used car marketing strategy based on price.  Price on its own will not convert an average browser into a lead or a buyer for the most part.

If you examine the most popular listing sites, such as Kijiji, AutoTrader or Canadian Black Book, we would be remiss not to recognize how well many operators nail down their pricing strategies, ensuring their inventory is priced correctly.  Available inventory management tools have made this process more streamlined.

But it’s not all about price, right.  Each used vehicle is unique, and requires a unique written and visual story to be told, to optimize its potential to sell.

The industry has greatly improved and accepted the cliché that “a picture is worth a thousand words”.  Photo capture has significantly developed over the past few years to help frame these stories.

However, a far too commonly overlooked portion of the used car story for a third-party website is the need to answer the question “why do business with me?”  Perhaps this is not a new concept.  Frankly, you’ve likely read many articles about this topic, but take a few moments and look at listing out there now.  Few dealerships put much thought into answering that key question, on their own site listings.  Even fewer do so on vehicle details pages on websites that are not their own!

In today’s age of reviews for everything under the sun (yes, there are even review sites for rating the best review sites), making the answer to “why do business with me” part of the story can be as important as how you merchandise your cars.

A friend of mine in the venture capital space always encourages his founders to have a thirty second “elevator pitch”, ready to go on a moment’s notice.   You never know when or where you will find the need to impress someone, they come from all angles at any time.

So, I would ask you to consider, what’s your elevator pitch that answers “why do business with me?”  Do you have one?  If so, do you leverage it optimally?  If not, get one!

What are the elements that make you unique and a top choice to deal with?  Cars at a great price, is not enough.   Perhaps it’s your location, years in business, experienced staff, previous customers, ratings and reviews, distinctive services, worry free return periods, or what makes the cars you carry special…I could go on and on.

Write this on a napkin, brainstorm it with your team, get your agency to do it for you, but get this done.  It may alter or completely change overtime, but take the first step and produce this part of the story.

Next you figure out how to use it online, because your entire team has by now committed this to memory.  Is this part of all your vehicle descriptions or spelled out on your imagery or perhaps if allowed provide via link to it on your own website?  Those answers will come after assessing your marketing mix and a bit of trial and error.

That’s a column for another day. Tell the whole story.

The Value – Issue #4: Ten Things That Really Matter in Canada’s Used Vehicle Market

Welcome to The Canadian Black Book – The Value. Our goal is to provide our clients and partners with news, event updates, new initiatives and opinions from Canada’s trusted source for vehicle values and automotive insights. In this edition we cover:


Brian Murphy
Brian Murphy, VP Research & Editorial, Canadian Black Book

By Brian Murphy

When analyzing today’s auto industry, we can argue about any number of given factors that touch any given number of areas inside Canada’s auto sector.  That said, from our estimation at Canadian Black Book, we can narrow that long list of potential topics down to ten subjects that really matter and form the crux of how our used vehicle market functions in Canada.

The following ten areas all pose direct impact on vehicle prices today (wholesale values), vehicle prices in the future (residual values) and the potential proceeds from vehicle remarketing efforts.  How this relates to an appraisal of our future is a complex equation of how these ten ‘things’ interact with each other.

First – The Canadian Dollar: The Canadian Dollar has a profound and swift effect on the value of used cars in our domestic marketplace.  As our Dollar weakens there is a direct correlation to an increase in exported used supply to the States.  As you can imagine, on the contrary, as our currency gains value against the greenback, we begin to see a net reduction in in the volume of used vehicles exported from Canada.   Eventually if the dollar strengthens enough, and supply permits, used vehicles will again en masse be imported from the U.S. to Canada.

Enter ‘arbitrage economics’, which is the act of buying something at a low price in one market and then selling it a higher price in another market.  Currently, the Canadian Dollar is around $0.77, the lowest it’s been since June 2017.  For example, a particular large SUV sells for $42,500 in Canada at wholesale, while the same unit goes for $54,500 in the U.S.  While our dollar is low, there is a lot of money to be made.  The exchange rate is the key that determines if the ‘export dam’ is open or closed.

Second – Supply:  The supply of used vehicles in the U.S. and Canada, plays a huge roll in dictating both current and future values.   The simple concept of supply and demand really does drive remarketing cycles.   In short, demand has been great, while supply of late has been tight, bringing prices up.  However, we are on the verge of getting a lot of supply!

Between 2013 and 2017, we’ve seen an average of 225k units return to market off lease per year.  That number is projected to breach the 400k mark, between 2019 to 2021.  We don’t expect used vehicle demand can keep pace with such a supply, causing prices to lower.

Third – Lease Penetration:  Leasing has become Canada’s used car factory.   As an industry we keep ‘making’ more used vehicles.  Last year, about 450k vehicles were leased, with around 400k of those to consumers.  Therefore, in three to four years, we will have ‘made’ that number of used vehicles which are purchased by the lessor, by the retailer or sent to auction then purchased by a retailer.

All the while, we sit in an environment of record new car sales, which inevitably will lead to record used car supply.  But at what price?  Lower prices? Yes!

Fourth – The Economy:  Auto sales are a leading indicator for the economy, as we can see a direct relationship between softening sales and an economic slowdown.  Simply put, if consumers are not secure in their financial future, they will postpone the purchase of big ticket items.

Currently we are experiencing the lowest unemployment rate this century, coupled with high consumer confidence and amazing GDP growth.  If we simplified the economy to green light, yellow light, red light, then we are very much…green light.

Fifth – Retained Value Trends: What goes up often comes down!  Our business is a cyclical one and it’s helpful to understand where that cycle sits.  From 2005 through 2009 Canada experienced a steep decline in retained values, due to poor economic factors, too much leasing, and a strong dollar ($1.26 in March 2009).  However, since mid-2010 we have seen a steady rise in used values.  When values fall, leasing is less attractive and used vehicles become more appealing, and obviously when values rise, leasing again becomes very alluring.

On average, across all segments over the last seven years, values have increased a remarkable 3.7 per cent.  We expect this market is turning, primarily driven by the coming boost in supply.

Sixth – Consumer Tastes: A major contributor to both supply and demand, are consumer tastes.  It is this force that dictates OEMs investments in new product lines, face-lifting existing ones and mega marketing campaigns.

Today, Canadian consumer tastes have moved away from cars with only a 32 per cent share of sales and falling, while trucks and SUV sales grow.  Some car models will soon be extinct.  EV sales are growing, yet still make up a tiny portion of the overall marketplace and offer weak residual values.  These tastes have a significant impact on how vehicles depreciate, the more desirable the vehicle the more desirable the value retention!

Seventh – Rental Cars: Ten per cent of the market (200k) vehicles are rentals, making another large source of used product.  However, around 20 models make up over 33 per cent of rental car fleets.  These models typically do not win Canadian Black Book Best Retained Value Awards and are therefore difficult to lease to consumers.  OEMs target the rental buyers with these, depressing their resale value; and the cycle repeats.

Eighth- New Vehicle Incentives: Although positive for the new car buyer, incentives are not always a good thing.  Incentives that are persistent over a many months, especially large cash incentives have a cooling effect on resale values.  Let’s say a brand new $60k vehicle is 25 per cent off, then right off the bat that vehicle’s resale value is $15k less than normal.   Another effect is that these programs can keep consumers in a negative equity positon longer, which can place demand at a lower price point.

Ninth – Is the Product Any Good?: At Canadian Black Book, we evaluate 90 plus vehicles annually.  So, we get out and drive them and experience them in the same way a new car buyer would.  Our goal is to determine if the vehicle is competitive in the marketplace today; who the real competitors are and is it better or worse; and how is it priced?  One thing we do know is that if the vehicle is not competitive now, it surely will not be in three to four years when it comes back to market as a used vehicle.  Typically in our opinion, eight out of ten rides we test are quite good.  The obvious bottom line is that weaker vehicles will result in more residual value risk for the lessor.

Tenth – New Technology: The market tends to be skeptical when it comes to value for technology.  What will a given technology be worth in five years?  Often the answer is zero, as it may be obsolete, become standard equipment, or the value has come way down for that particular technology (think DVD players).   Technology on a new vehicle is profitable for the OEMs, yet remarketers will struggle to get much value back for many newer high-tech features.

Understanding or explaining the dynamics and trends of used vehicle values is far from simple.  It could be broken out into a plethora of economic, political, social and cultural factors.  But, when it really comes down to it, these ten ‘things’, all have direct impact and can provide the foundation of information that really matter, when it comes to used vehicle values in Canada.