Insights Through March 2019 J o n a t h a n S m o k e & Z o - PowerPoint PPT Presentation

Wholesale Market Insights Through March 2019 J o n a t h a n S m o k e & Z o R a h i m 1

T R A N S F O R M I N G T H E W AY T H E W O R L D B U Y S , S E L L S & O W N S C A R S

3 Manheim Used Vehicle Value Index Concept: A single measure of used vehicle price change that is independent of underlying segment shifts in the characteristics of vehicles being sold Steps: All Manheim U.S. sales Classify by market segment Account for differences in mileage Weight to provide smoother segment mix Seasonally adjust

Used Vehicle Values Rebound with Start of Spring Bounce Prices in March increased 0.58% versus February 2019 and were up 4.0% compared to March 2018 145 140 136.0 135 130 125 120 115 110 105 100 95 90 Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-13 Jan-16 Jan-19 Source: Manheim/Cox Automotive 4

Used Vehicle Values Continue to Stay Above Average Year-over-year price performance has been much stronger than average over the last 24 months 25% 20% 15% 10% 4.0% 5% 0% -5% -10% -15% Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14 Jan-17 Source: Manheim/Cox Automotive 5

Manheim Index versus Mix & Quality Adjusted New Vehicle Price with 3 ½ year Lag Used vehicle prices back closer to historical new vehicle price relationship trend 60% 55% 50% 45% 40% 35% 30% Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Source: Bureau of Labor Statistics, Manheim/Cox Automotive 6

Wholesale Used Vehicle Prices vs. New Vehicle Prices $14,500 $39,000 $14,000 $37,000 $13,500 $35,000 $13,000 $12,500 $33,000 $12,000 $31,000 $11,500 $11,000 $29,000 $10,500 $27,000 $10,000 $9,500 $25,000 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 Manheim Non-Adjusted Price (LHS) Average new vehicle transaction price per KBB (RHS) Source: Manheim/Cox Automotive 7

2019 Weekly Price Trend Started Weak But Now Moving Up Much higher than normal depreciation for start of year led to lower prices but prices have since turned 3-Year-Old Model MMR Index by Week 2014 2015 2016 2017 2018 2019 110.0% 105.0% 100.0% 95.0% 90.0% 85.0% 80.0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Source: Manheim/Cox Automotive 8

Spring Bounce Most Pronounced in Non-Luxury Much higher than normal depreciation for start of year but now also improving Non-Luxury 3YO Model MMR Index by Week 2014 2015 2016 2017 2018 2019 115.0% 110.0% 105.0% 100.0% 95.0% 90.0% 85.0% 80.0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Source: Manheim/Cox Automotive 9

Luxury Seeing Far Less Bounce Much higher than normal depreciation for start of year but now also improving Luxury 3YO Model MMR Index by Week 2014 2015 2016 2017 2018 2019 105.0% 100.0% 95.0% 90.0% 85.0% 80.0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Source: Manheim/Cox Automotive 10

2019 Weekly Price Trend Less Severe On One-Year-Old Vehicles One-year-old vehicles saw less pronounced depreciation with much lower volumes and now on up trend 1-Year-Old Model MMR Index by Week 2014 2015 2016 2017 2018 2019 110.0% 105.0% 100.0% 95.0% 90.0% 85.0% 80.0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Source: Manheim/Cox Automotive 11

Retention Values Trended Lower to Start the Year Adjusting for MSRP and fixing the basket of vehicles by what was sold now just above last year 63% 61% 59% 57% 55% 53% 51% 49% 47% CY 2017 CY 2018 CY 2019 45% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (1 to 3 year old models) Source: Kelley Blue Book/Cox Automotive 12

Tax Refunds by Week in Recent Years Amount of Refunds (Cumulative) 2014 2015 2016 2017 2018 2019 $300.0 $250.0 $200.0 Billions $150.0 $100.0 $50.0 $0.0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Source IRS 13

Percent Change in Wholesale Prices for Major Market Segments Most major segments saw year-over-year gains in March 1 year 30% 2 years 3 years 25% 4 years 20% 15% 10% 7.2% 5% 4.0% 3.4% 2.2% 2.0% 1.8% 0% -1.5% -5% Industry Compact cars Midsize cars Luxury cars Pickups SUV/CUV Vans Source: Manheim/Cox Automotive 14

Shifting Consumer Preferences Not Reflected in Wholesale Market Volumes The SUV reigns supreme in new vehicle sales while cars still dominated the used car market New Vehicle Sales by Category Manheim Sales by Category CAR PICKUP SUV VAN CAR PICKUP SUV VAN 60% 60% 50% 50% 48% 47% 40% 40% 36% 30% 30% 32% 20% 20% 16% 11% 10% 10% 5% 5% 0% 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Manheim/Cox Automotive 15

Average Auction Price – Rental Risk Units Average price for rental risk units sold in March down 1% y/y and up 2% m/m 17,000 2015 2016 16,500 2017 2018 2019 16,000 15,500 15,000 14,500 14,000 13,500 13,000 1 2 3 4 5 6 7 8 9 10 11 12 Source: Manheim/Cox Automotive 16

Average Mileage – Rental Risk Units Sold at Auction Average mileage for rental risk units in March was up 0.4% compared to a year ago and up 1% m/m 60,000 55,000 50,000 45,000 45,256 40,000 35,000 30,000 25,000 20,000 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Source: Manheim/Cox Automotive 17

Distribution of Rental Risk Vehicles 2017 Q1 2018 Q1 2019 Q1 Number of unique year, make, model, 2,736 3,005 3,030 body configurations sold Share accounted for top 10 YMMB 13.4% 13.1% 11.7% Share accounted for top 25 YMMB 25.1% 23.3% 22.0% Number of YMMB to reach 50% share 82 108 114 Source: Manheim/Cox Automotive 18

Rental Risk Units Sold by Condition 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 0 - 1.9 2.0 - 2.9 3.0 - 3.9 4.0 - 4.9 5.0 Source: Manheim/Cox Automotive 19

Rental Risk Units Sold by Make 100% 90% 80% All other 70% Mazda Kia 60% Jeep VW Chrysler 50% Hyundai Dodge 40% Toyota Nissan 30% Ford Chevrolet 20% 10% 0% 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 Source: Manheim/Cox Automotive 20

Rental Risk Units Sold by Segment 100% 90% 80% 70% Van 60% SUV Sports Car 50% Pickup Luxury Car 40% Midsize Car Compact Car 30% 20% 10% 0% 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 Source: Manheim/Cox Automotive 21

Manheim Market Report (MMR) Vehicle Insights Top selling vehicles in March at Manheim saw mixed levels of depreciation in the last 30 days (March 2 – April 1) as non-luxury vehicles appreciated while luxury saw high depreciation rate. Prices year-over-year were more comparable but luxury remained the worst performer. Source: Manheim/Cox Automotive 22

Millions 33 34 35 36 37 38 39 40 Used Vehicle Sales Plateau Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 Source: Cox Automotive estimates based on IHS Markit Registrations May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 23