Nearly four years after the COVID-19 pandemic launched the used car market into a record-setting boom, prices remain high and inventory levels are low. But recent economic trends have led to speculation that the market is moving away from these highs and that the “new normal” may be no more.
Although the market is constantly changing, it can be hard to keep track of what’s speculation and what’s real alongside day-to-day business activities.
The Signal Market Guide helps you keep a pulse on the market so you can best predict what’s next—and what’s best—for your export business.
Let’s dive into what’s happening right now.
UAW strike poised to have ripple effect on market
On October 11, the United Auto Workers (UAW) union strike expanded to include the Ford Kentucky Truck Plant, the largest truck plant in the world. The strike now encompasses more than 34,000 workers at all three of Detroit's major automakers: Ford, General Motors, and Stellantis.
Automakers have responded with numerous layoffs, including 2,730 workers at various Ford plants in Michigan, Ohio, and Illinois, and 700 workers at Stellantis.
Negotiations between the UAW and the automakers are ongoing with no clear signs of progress. The union is seeking better wages, benefits, and working conditions, as well as assurances that new electric vehicle battery plants will be unionized.
The strike is expected to have a significant impact on the US auto industry. It could lead to yet more shortages of parts and vehicles and is likely to have a ripple effect on the broader vehicle economy.
It is unclear when the strike will end. The UAW has said that it is prepared to strike for as long as it takes to reach a fair contract.
Current Black Book market updates
Black Book expects used vehicle prices to remain relatively stable over the next few months.
Demand for used vehicles is expected to remain strong, as consumers continue to favor used vehicles over new vehicles due to lower prices and shorter wait times. However, with the UAW strikes, we expect new vehicle volumes to decrease, resulting in an increase in demand on the used car market.
Rising interest rates could also put some downward pressure on used vehicle prices in the coming months.
Overall US market trends for the weeks ending September 16 to October 7, 2023:
- Used vehicle prices have remained relatively stable, with an average weekly price change of less than 0.5%.
- The average used vehicle retail price is currently $28,750, which is up 10.2% year-over-year.
- The average used vehicle wholesale price is currently $26,000, which is up 11.4% year-over-year.
- Demand for used vehicles remains strong, with retail sales up 2.5% year-over-year in September.
Segment-specific US trends for the weeks ending September 16 to October 7, 2023:
- Luxury used vehicle prices have increased slightly, with an average weekly price change of 0.3%. The average luxury used vehicle retail price is currently $55,000, which is up 12.5% year-over-year.
- Truck and SUV used vehicle prices have remained relatively stable, with an average weekly price change of 0.2%. The average truck and SUV used vehicle retail price is currently $35,000, which is up 10.8% year-over-year.
- Car used vehicle prices have decreased, with an average weekly price change of -0.4%. The average car used vehicle retail price is currently $25,000, which is up 9.5% year-over-year.
Source: Black Book. (2023). Market insights.
Retrieved from https://www.blackbook.com/market-insights/
Leveraging data into successful bids
In a changing market, it’s as important as ever to ensure you’re accurately appraising the vehicles you wish to export.
FX (foreign exchange) rate: The FX rate can have a significant impact on your profits, so it's important to use a realistic rate when calculating your bid.
US wholesale pricing: The US wholesale price is a good starting point for determining the value of a vehicle. Go-to tools for determining the wholesale value of Canadian vehicles in the U.S. are MMR prices and guidebooks like the Black Book and Kelley Blue Book. It's also important to factor in other factors such as the vehicle's condition and competition.
Target Gross Profit per Unit (GPU): This is the amount of profit you want to make on each vehicle and is typically a percentage of a vehicle’s purchase price or a fixed dollar amount per transaction.
Fixed costs of getting the car shipped and prepped, as well the required documentation, customs, and RI fees: These costs can vary depending on the vehicle and the destination market, so it's important to factor them into your bid.
How Signal Market Guide can help your bids
Signal Market Guide (SMG) is now readily available to all Signal Export users.
When you are looking to purchase a vehicle for export, simply login to Signal Export and enter the vehicle’s VIN and trim level. SMG will automatically populate the desired vehicle in Signal Export.
SMG then provides 4 pieces of valuable information about this vehicle:
- The current wholesale value
- Value change over the last 4 weeks
- Trendline of pricing changes over past 4 months
This gives you the most precise pricing information available in one location, allowing you to accurately prepare your offer or seek financing.
You can also take SMG information and input it directly in our Export Calculator to automatically calculate depreciation and determine expected selling cost. This data helps you make a decision that takes into account your profit target.
Should you wish to use Signal Financing, the Signal Export Calculator will also let you know details on eligible financing.
Description: Signal Market Guide automatically determines the wholesale value, displays the vehicle price changes, and gives you a visual trendline of the value of the vehicle.
Description: Leverage the SMG directly into your Export Calculator to determine your offer price, financing amount, and estimated costs.
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