Background
The Consumer Price Index (CPI) measures the rate at which the prices of representative goods and services change over time in a fixed consumer basket. Statistics Canada periodically reviews and updates the concepts and methods applied to the various components of the CPI program to ensure it accurately reflects changes in the market and in the behavior of consumers.
The Passenger Vehicle Parts, Maintenance and Repairs Index, part of the CPI, has been updated with the April CPI release on May 17, 2013. The Passenger Vehicle Parts, Maintenance and Repairs Index component accounts for 1.8% of the 2011 CPI basket and belongs to the Transportation Index, a major component of the CPI.
The market structure for the Passenger Vehicle Parts, Maintenance and Repairs Index has experienced relatively important changes over the past few years. For example, as a result of quality improvements, some vehicle parts are not replaced as often for newer vehicles, which may potentially affect product classification and weights. The methodological review of the Passenger Vehicle Parts, Maintenance and Repairs Index was conducted in order to have an index that captures these changes in the classification of products and services, as well as in their relative importance.
The Passenger Vehicle Parts, Maintenance and Repairs Index Review
The following changes have been made to the index:
- The sample and the classification of the Passenger Vehicle Parts, Maintenance and Repairs Index has been updated to represent the most important parts and repair services purchased by Canadian automobile drivers during the life cycle of their passenger vehicles. The new classification includes two categories of vehicle parts and three categories of repair services. Prices are collected for 17 different parts and services that belong to these five categories and for various popular models/years of vehicles aged four to eight years. This represents an important simplification to the product sample as compared to the previous product sample, while maintaining the same level of representativeness. Prices were previously collected for 40 different parts and services to calculate this index, a process which created a high response and processing burden. The five categories of the classification have been selected as the most important and representative ones based on industry data over a 5-year period.
- New representative products (RPs) have been defined for the five categories of parts and repair services and for two types of vehicles (cars as opposed to trucks, vans or SUVs). For some categories of parts and services, there is more than one representative product. This aims at taking into account the potential differentiation of price movements by type of vehicle or by product quality. Prices are collected for these new representative products for a number of popular vehicles. Popular vehicles were identified using a database on counts of new car sales available at the provincial/territories level from 2004 to 2009.
- The price collection frequency has been increased from twice a year (April and November) to four times a year (January, April, July and October).
- The outlet sample has been reviewed to ensure it is more representative and to reduce response burden. The new outlet sample is selected from a target population which consists of all relevant locations on Statistics Canada's Business Register (BR). Those locations are classified by industry, using the North American Industry Classification System (NAICS 2012), along with the revenues from the sales by commodity group (Passenger Vehicle Parts, Maintenance and Repairs) derived from Statistics Canada's Quarterly Retail Commodity Survey (QRCS) as well as the Annual Survey of Service Industries: Repair and Maintenance Service. The NAICS codes included in the target population are 4411 (Automobile dealers), 4413 (Automotive Parts, Accessories and Tire Stores), 4471 (Gasoline Stations), 4521 (Department stores), 4529 (Other general merchandise stores) and 8111 (Automotive Repair and Maintenance).
- The outlet sample review involved a reduction in the number of outlets along with a geographic rebalancing to ensure that there is adequate coverage across the regions. previously collected. Another important consideration was adequate diversification in the types of outlets that would be surveyed. There is now a better mix of outlets that is more representative of where consumers purchase parts and services for their vehicles.
The updated methodology will contribute to making the CPI a better reflection of changing consumption patterns and product characteristics. In future, parts and services classes, the samples of products, model/year vehicles and outlets will also be updated more frequently. This regular update process will more effectively capture product substitutions. As well, new products or new varieties of existing products will be introduced into the classification and product sample in a more timely fashion than in the past.