RVI says used prices up in Canada, but it won't last

STAMFORD, Conn. - 

Used-car prices were up year-over-year in August, but it’s not expected to continue.

And while RVI Group predicts that used prices will be up 0.2 percent in 2017 relative to current levels, a meaningful drop in prices is expected to start in 2018.

In its September Risk Outlook report, RVI predicted that a growing supply of off-lease vehicles coupled with a strengthening Canadian dollar would push used-car prices down 10.5 percent below current levels by 2020.

The exchange rate in August was $0.77 USD/CAD, unchanged from the prior month, but up almost 10 cents from an early year low.

Real used-car prices (adjusted for inflation) increased 0.3 percent year-over-year in August, but they decreased 2.8 percent compared to July.

Of the 17 segments RVI tracks in Canada, seven saw a year-over-year price decrease; five of those were high-volume segments. Of those higher volume segments, small SUVs saw the sharpest year-over-year price drop at 7.1 percent. Minivan prices, on the other hand, increased 11.1 percent year over year.

And of those 17, 12 saw a monthly decrease; seven of those were high-volume segments. Of those higher volume segments, small SUVs saw the sharpest monthly price drop at 11.3 percent. Compact car prices, on the other hand, were up 3.3 percent over July.

A lower-volume segment — small pickup trucks — saw the steepest month-to-month and year-over-year declines at 38.2 percent and 26.5 percent, respectively. Prices for full-size sedans, however, were up 3.9 percent and 15.5 percent, respectively.

For its Canadian forecast, RVI focuses on supply of off-lease vehicles in the North American market. In August, its Lease Supply Index increased by 23.7 percent from a year ago.

The report noted that new vehicle sales have been strong thus far in 2016, with an average 1.93 million units (SAAR) sold per month.