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B Y S I G N A L T E C H N O L O G I E SQ4 2023 Automotive Import/Export Market Trends Report

03 Introduction04 Canadian and US Vehicle Market Trends05 Trends in Data07 Strategic Approach to Pricing & Depreciation09 Retail Days of Supply 10 Pricing Strategies in a Buyer’s Market13 Enhancing Buying Decisions16 Summaries18 Adapting to Market Changes for Optimal ResultsTable of Contents

IntroductionWelcome to the 'Q4 2023 Automotive Import/Export Market Trends Report,' a comprehensive digest of the pivotal trends Signal Technologies has identified in the Canada-to-US vehicle export market. This report encapsulates key insights from our recent webinar, presented on November 15, 2023, to provide vehicle exporters with top-level data and analysis needed to strategically navigate these dynamic times. For vehicle exporters and importers alike, It’s critical to stay ahead of the ever-evolving economic and regulatory environment of the US to maximize profitability and make the most informed vehicle buying decisions possible. Tane JillingsCo-founder & PresidentSignal Technologies 3Tane Jillings

Canadian and US Vehicle Market TrendsThe dynamics of the Canada-to-US vehicle export market are closely tied to the fluctuations of the US economy. Notably, the recent downturn in US inflation, which has marked its slowest growth since September 2021, has beneficially impacted the stock market. Additionally, the current strength of the US dollar, valued at approximately $1.365 against the Canadian dollar, plays a pivotal role in shaping vehicle export market trends.4

6.7%US Weekly Wholesale Value IndexTrends in DataWe have access to an extensive pool of vehicle auction transaction data, powered by the National Auto Auction Association (NAAA) in the US, which encompasses about 6 million wholesale transactions annually. With this data, we've developed the Weekly Wholesale Value Index, a robust indicator of US auto industry trends. Recently, we observed a 6.7% price drop in this index over the last six weeks, however, when we compared these last six weeks over the past two years, wholesale values are still higher than the majority of 2022. Canadian vehicle exporters need to remain cautious and strategic in their approach, closely monitoring these trends for potential impacts on their profit margins and adjusting their buying and pricing strategies accordingly. 5

Signal Wholesale Index: Zoomed Out6

$40,000$37,400Strategic Approach to Pricing and DepreciationIt’s critical to understand the importance of vehicle depreciation when it comes to Canadian vehicle export pricing strategies. This is especially important when purchasing vehicles, as overlooking depreciation can significantly impact profitability. For example, we saw a 6.27% market-wide depreciation over the past six weeks, which means a $2,600 drop on a vehicle valued at $40,000 in a little over a month. We’ve also seen average turnaround times in the 60-day range, in some cases. If you don’t account for these factors in the buying process, you could erase all potential profits. 7

Price Vehicles RightSignal Market Guide (SMG) uses machine learning on top of millions of wholesale transactions to predict the wholesale value of a vehicle.Keep a pulse on the market with insights for:• Current wholesale value• Value change over the last 4 weeks• Trendline in the last 4 months8

Retail Days of Supply: Navigating the Market's Current StateStarting from January 2022, Retail Days of Supply has seen used vehicle inventory reach its highest levels in the past two years. Simultaneously, the retail days' supply is also nearing its peak. With the highest level of supply and extended days on the market, buyers are increasingly selective in their purchases. This trend is particularly evident at auctions and other sales channels. Buyers are not just looking for vehicles in general; they’re especially choosy when seeking the right vehicles at the right price – those that align with their specific needs and market demands. 9

Pricing Strategies in a Buyer's MarketGiven current market fluctuations, exporters and dealers must price their vehicles competitively. This situation presents a delicate balance – pricing needs to be attractive enough to appeal to discerning buyers, yet sufficient to ensure profitability. Further, there is an inverse relationship between days’ supply and wholesale volume. As days' supply increases, indicating a slower movement of vehicles, we see a decrease in wholesale volume. Conversely, when days' supply decreases, indicating a quicker turnover of inventory, wholesale volume increases. This relationship is a vital indicator for our clients, as it helps to anticipate market shifts and adjust buying strategies simultaneously. 10

Retail Trends11

Wholesale Transaction Volume: Year-to-Date12

Enhancing Buying DecisionsThe ability to make informed buying decisions is job one in vehicle exporting. A comprehensive approach involves integrating real-time depreciation rates and live foreign exchange data into the decision-making process. By efficiently tracking vehicle bids and accounting for all market variables, exporters can achieve more accurate vehicle pricing and make purchase decisions that are both precise and reflective of the current economic landscape. 13

Price Vehicles RightOn top of the market wholesale value of the vehicle, Signal’s Export Calculator helps you appraise vehicles by taking into consideration:• Pack costs• Target GPU• Weekly depreciation rate• FX rates14

Data-Driven Marketability Insights15Signal Marketability provides real-time marketability data reflecting US vehicle demand by tracking market trends and regional buyer interests. • Extensive database of weekly wholesale transactions• Tracks Retail Days of Supply by comparing inventory against sales rates per YMM• Spans multiple US regions• Categorized by Year, Make, and Model (YMM)

Trends Summary• US inflation is cooling.• The US dollar remained strong, at $1.365 against the CAD.• Q3 experienced a 6.7% price drop in the US Weekly Wholesale Value Index. This means the price of cars sold in the US has decreased.• In a YOY comparison, the US Weekly Wholesale Value Index is higher than 2022.• Used vehicle inventory reached its highest levels compared to the last two years.• Retail days’ supply has also neared its peak.• Buyers are particularly selective with the type of inventory they’re acquiring.• Prices have resulted in a slower movement of vehicles, resulting in decreased wholesale volume. 16

Recommendations Summary• Closely monitor US trends, including marketability, for any impact on profit margins!• Adjust pricing strategies to compensate for market shifts.• Factor depreciation and marketability into your pricing strategies.• Monitor not only current wholesale values but also how vehicles are trending over the last 4 weeks/4 months to accurately predict the best pricing.• We are in a selective buyers’ market – one where inventory and prices result in a slower movement of vehicles and decreased wholesale volume. Adjust your strategies accordingly. • Exporters can achieve more accurate vehicle pricing by efficiently tracking bids and accounting for all market variables. 17

Adapting to Market Changes for Optimal ResultsStaying ahead of the curve in the rapidly evolving Canada-to-US vehicle export/import market is mission-critical for success. Our platform, particularly when it comes to automation and data utilization, speeds up and simplifies the export process while maximizing the visibility of your vehicles before they ever reach auction.At Signal Technologies, we provide you with the tools, insights, and support required to navigate the complexities of the vehicle export market. Our goal is to ensure Canadian vehicle exporters have the best resources they need to adapt to market changes and maximize profits. 18

To learn how Signal Technologies can help your business, contact:info@signal.vin19