(CANADA) ZEV Adoption in Canada Grows Despite Industry Delays and Consumer Skepticism
Despite delays in automakers' electrification plans and skepticism among consumers, zero-emission vehicle (ZEV) adoption in Canada continues to grow. In the second quarter of 2024, ZEVs accounted for 12.9% of vehicle registrations, a record high, with over 65,000 ZEVs registered, reflecting a 37.9% increase year-over-year. While the rapid growth of past years has slowed, brands like Hyundai continue to expand their EV offerings, whereas others, like Ford, have scaled back or delayed certain BEV models to focus on hybrids. Although consumer interest in BEVs has declined, with recent studies showing lower willingness to consider them compared to 2023, ZEV sales remain strong, driven by incremental progress rather than the explosive growth initially expected. The high upfront costs of EVs remain a key barrier for many Canadian buyers, despite the potential for lower long-term ownership costs.
Wholesale Used-Vehicle Prices Rise Slightly in Early October Amid Mixed Market Trends
In the first half of October, wholesale used-vehicle prices saw a modest increase of 0.3% from September, according to the Manheim Used Vehicle Value Index, which reached 203.5, down 2.8% from October 2023. The seasonal adjustment reduced the overall price change, while non-adjusted prices fell 1.7% month-over-month and 3.5% year-over-year. Market trends indicate that depreciation is softer than usual for October, with MMR prices in the Three-Year-Old Index declining by 1% instead of the typical 1.3%. Segment performance varied, with compact and midsize cars showing small gains, while luxury vehicles and SUVs declined. Electric vehicles experienced significant depreciation, down 12.4% from last year. The wholesale supply increased slightly to 28 days as of mid-October, while consumer sentiment showed mixed trends, with slight declines in overall sentiment but improved views on vehicle buying conditions. Gas prices remained stable at $3.20 per gallon, down 11% year-over-year.
(CANADA) Shift in Consumer Preferences: Surge in Small Utility Vehicle Sales Amid Declines in Luxury and Large Pickup Markets
In the third quarter, Canadian buyers increasingly turned to small, affordable utility vehicles, with subcompact SUV sales rising by 27.8% and compact SUVs by 21.8%, as larger pickups and luxury SUVs saw significant declines. Overall new vehicle sales increased by 3.5% to 472,808 units, but inventory for subcompact and compact SUVs is in high demand, often selling within 22 days of arrival, compared to 74 days for full-size pickups. As vehicle prices continue to rise due to inflation, consumers are opting for more budget-friendly options, impacting the market dynamics. General Motors has notably benefited from this trend, with a 93.3% increase in Chevrolet Trax sales and profitability in entry-level segments, while luxury vehicle sales declined by 2.8%. Analysts suggest that the shift towards smaller, more affordable vehicles may signal a longer-term change in consumer preferences, particularly as high interest rates affect purchasing decisions. Scotiabank forecasts new vehicle sales to reach 1.78 million in 2024, with a slight recovery expected in 2025 as interest rates stabilize.