TORONTO, Nov. 8, 2012 /CNW/ - Used car prices continue to move higher across
Canada, despite a stronger-than-expected performance in the new vehicle market
in 2012, according to the Scotiabank Global Auto Report released today. The
improvement reflects a 4% increase in purchases of pre-owned models so far
this year, as well as the dwindling supply of vehicles coming off-lease.
"Canadian used car prices have consistently gained momentum since bottoming in
early 2009, just before the start of the global economic recovery," said
Carlos Gomes, Scotiabank's Senior Economist and Auto Industry Specialist. "In
contrast, new vehicle prices in Canada have been flat since 2010, as
automakers have enhanced incentives over the past two years to spur sales."
According to the report, the net result of these diverging trends is that
Canadian used car prices are at record highs relative to the price of new
models. The Scotiabank Used Car Price Index advanced 4% year over year (y/y)
in October, alongside strengthening demand and a sharp reduction in the number
of vehicles coming onto the resale market. The supply shortfall is the direct
result of a plunge in fleet and leasing volumes since 2008.
"The number of vehicles coming off-lease in Canada will drop to less than
400,000 units in 2013 - the lowest level in more than a decade, and roughly
35% below the average of the past five years," said Mr. Gomes. "The net result
is that the appreciation in Canadian used car prices will likely gain momentum
Looking at the new vehicle market, sales in Canada accelerated to an 8% y/y
increase last month, climbing to a record high for the month of October.
Purchases jumped back above an annualized 1.7 million units for the first time
since May. The improvement reflects a further increase in incentives to clear
out the 2012 models, as well as the introduction of popular new fuel-efficient
vehicles. In particular, car sales advanced 16% y/y last month, while truck
purchases were largely flat.
In the United States new passenger vehicle sales remained healthy last month
despite the impact of Hurricane Sandy, which reduced overall volumes by an
annualized 300,000 units. U.S. purchases totalled an annualized 14.2 million
units in October, in line with the year-to-date average. However, a sales
acceleration is likely in coming months as U.S. consumer confidence is
currently at the highest level since February 2008.
Globally, growth in new car sales stalled in September, with volumes unchanged
from a year ago. The slowdown reflects a sharp fall-off in sales of Japanese
models in China due to a territorial dispute between Beijing and Tokyo over
two uninhabited islands in the East China Sea, and further deterioration in
Western Europe - especially Spain.
Scotiabank Economics provides clients with in-depth research into the factors
shaping the outlook for Canada and the global economy, including macroeconomic
developments, currency and capital market trends, commodity and industry
performance, as well as monetary, fiscal and public policy issues.
Scotiabank is one of North America's premier financial institutions and
Canada's most international bank. With more than 81,000 employees, Scotiabank
and its affiliates serve some 19 million customers in more than 55 countries
around the world. Scotiabank offers a broad range of products and services
including personal, commercial, corporate and investment banking. With assets
of $670 billion (as at July 31, 2012), Scotiabank trades on the Toronto (BNS)
and New York Exchanges (BNS). For more information please visit
Carlos Gomes, Scotiabank Economics, (416)
866-4735,email@example.com; or Devinder Lamsar, Scotiabank Media
Communications, (416) 933-1171,firstname.lastname@example.org.
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-0- Nov/08/2012 12:30 GMT
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