Retail Light Vehicle Outlook Fifteenth Annual Automotive Outlook - PowerPoint PPT Presentation

Retail Light Vehicle Outlook Fifteenth Annual Automotive Outlook Symposium Detroit, Michigan June 6, 2008 Paul Taylor, NADA Chief Economist National Automobile Dealers Association www.nada.org 1

U.S. Retail New & Used Unit Sales 18 16 Millions of Units 14 New 12 Used - Retail 10 8 2006 = 11.5 million units ( Used at Retail ) 6 2007 = 11.4 million units ( Used at Retail ) 4 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 Year 2 Source: Ward’s Automotive, NADA Industry Analysis

Crossovers: Only Segment with Strong Growth in 2007 2007 Crossovers: Only Segment with Strong Growth in Small Car Sales Up 0.8 Percent in 2007 Small Car Sales Up 0.8 Percent in 2007 Crossover Utility Vehicles Small Cars Midsize Cars Luxury Cars Pickups YTD Dec 2007 Truck-based SUVs YTD Dec 2006 Large Cars Minivans, Vans -20% -15% -10% -5% 0% 5% 10% 15% 20% Source: Ward’s Automotive 3

Crossovers,Small and Midsize Cars: ,Small and Midsize Cars: Crossovers Growth in Sales, Year- -to to- -Date Date April April, , 2008 2008 Growth in Sales, Year Small Cars Crossover Utility Vehicles Midsize Cars Luxury Cars Pickups YTD April 08 Minivans, Vans YTD April 07 Large Cars Truck-based SUVs -35% -30% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% Source: Ward’s Automotive 4

What’s Ahead? Two Sources of Continued Headwinds for the Economy • 1. Energy Prices and “Food at Home” Prices Drain Money from Consumer Budgets in Gasoline Costs, Home Heating and Cooling Costs and Food Costs • Result: Less Profitable Mix of Light Vehicle Sales with Fewer Large Light Trucks. CAFÉ and State Regulations Speed These Changes • 2. Residential Real Estate Slowdown Induces Slowdown in Spending by Consumers as Net Household Wealth Falls for Homeowners • Result: New Light Vehicle Sales Levels Drop Below 16 Million Annual Units in 2008 and Used Truck Prices and Sales Soften

Is the Longterm Trend of Falling Real Gas Prices Over ? term Trend of Falling Real Gas Prices Over ? Is the Long Real Gasoline Pump Price: Annual Average 1919- 2009 Projections 400 350 Real Price 300 250 Cents per 200 Gallon 150 Nominal Price 100 50 0 1919 1923 1927 1931 1935 1939 1943 1947 1951 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 Short Term Energy Outlook-May 2008

Petroleum: World Supply and Consumption Barrels per day in millions Consumption 90 Supply 80 2004 2005 2006 2007 2008 2009 7 Source: Energy Information Administration

U.S. Retail New SUV & CUV Sales Crossovers were Only Sales Segment with Double Digit Growth in 2007 4,600,000 4,100,000 3,600,000 SUV (Truck-based, Body-0n-Frame) 3,100,000 Units 2,600,000 2,100,000 1,600,000 1,100,000 CUV (Unibody construction) 600,000 100,000 1997 1999 2001 2003 2005 2007 Year 8 Source: Ward’s Automotive

New Hybrid Vehicle Sales: New Hybrid Vehicle Sales: Over 350,000 Units Sold in 2007 Over 350,000 Units Sold in 2007 GM 400,000 Nissan Ford 350,000 Honda Toyota 300,000 250,000 Units 200,000 150,000 100,000 50,000 0 2000 2001 2002 2003 2004 2005 2006 2007 9 Source: Ward’s Automotive

Annual National Unemployment Rate vs. Real GDP Percentage Change From Preceding Year 8 7.5 7 6.9 6.8 6.1 6 6 5.8 5.6 5.6 Unemployment rate 5.5 5.4 5.1 5 4.9 4.7 4.6 4.6 4.5 4.5 4.5 4.2 4.2 Percentage 4 4 4 3.7 3.7 3.6 3.3 3.1 3 2.9 2.7 2.5 2.5 2.2 2 1.9 1.6 GDP % change 1 0.8 0 -0.2 -1 -2 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 10 Source: BEA U.S. Department of Commerce, BLS

Case Study: Florida Residential R.E. Foreclosure Filings Monthly, January 2005 to May 2008 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 5 5 5 6 6 6 7 7 7 8 8 5 6 7 5 6 7 5 6 7 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - - - - - - - - n y n y n y n y l v l v l v r p r p r p r u u u a a a a a a a a a o a o a o a e e e J J J M M M M M M M M J N J N J N J S S S 11 Source: RealtyTrac, Inc.

Monthly Volume of Repossessed Light Vehicles Purchased Monthly Volume of Repossessed Light Vehicles Purchased at Wholesale Auctions in the AuctionNet Database at Wholesale Auctions in the AuctionNet Database 10,000 9,000 8,000 Transaction Volume (Units) 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Jan-06 May-06 Jul-06 Jan-07 May-07 Jul-07 Jan-08 Sep-06 Nov-06 Sep-07 Nov-07 Mar-06 Mar-07 Mar-08 Repossessions 2006-07 Average Volume Source: AuctionNet ( NADA Guides and NAAA )

AuctionNet Wholesale Used Car Prices and Gas Prices AuctionNet Wholesale Used Car Prices and Gas Prices All Light Vehicles All Light Vehicles $15,000 $4.00 $3.50 $14,500 $3.00 $14,000 Average Price $2.50 Gas Price $13,500 $2.00 $1.50 $13,000 ALL LIGHT VEHICLES $1.00 Gas Price $12,500 $0.50 $12,000 $0.00 5 5 6 6 7 7 8 5 5 6 6 7 7 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - r l t r l t r l t r n n n n u c u c u c p p p p a a a a O O O J J J A A A A J J J J Source: AuctionNet ( NADA Guides and NAAA ) and EIA, regular gasoline price

AuctionNet Wholesale Used Car Prices and Gas Prices AuctionNet Wholesale Used Car Prices and Gas Prices Light Trucks Light Trucks $17,000 $4.00 $3.50 $16,500 $3.00 $16,000 Average Price $2.50 Gas Price $15,500 $2.00 $1.50 $15,000 $1.00 $14,500 LIGHT TRUCKS $0.50 Gas Price $14,000 $0.00 5 5 5 5 6 6 6 6 7 7 7 7 8 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - n r l t n r l t n r l t n r u c u c u c p p p p a a a a J O J O J O A A A A J J J J Source: AuctionNet ( NADA Guides and NAAA ) and EIA, regular gasoline price

AuctionNet Wholesale Used Car Prices and Gas Prices AuctionNet Wholesale Used Car Prices and Gas Prices Ward’ ’s s Pickup Pickup Segment Segment Ward $16,000 $4.00 $3.50 $15,500 $3.00 $15,000 Average Price $2.50 Gas Price $14,500 $2.00 $1.50 $14,000 $1.00 PICKUPS $13,500 $0.50 Gas Price $13,000 $0.00 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Source: AuctionNet ( NADA Guides and NAAA ) and EIA, regular gasoline price

AuctionNet Wholesale Used Car Prices and Gas Prices AuctionNet Wholesale Used Car Prices and Gas Prices Ward’ ’s s SUV SUV Segment Segment Ward $18,000 $4.00 $3.50 $17,500 $3.00 $17,000 Average Price $2.50 Gas Price $16,500 $2.00 $1.50 $16,000 $1.00 SUVs $15,500 $0.50 Gas Price $15,000 $0.00 5 5 6 6 7 7 8 5 5 6 6 7 7 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - r t r t r t r n l n l n l n u c u c u c p p p p a a a a O O O J J J A A A A J J J J Source: AuctionNet ( NADA Guides and NAAA ) and EIA, regular gasoline price

AuctionNet Wholesale Used Car Prices and Gas Prices AuctionNet Wholesale Used Car Prices and Gas Prices Passenger Cars Passenger Cars $14,000 $4.00 $3.50 $13,500 $3.00 $13,000 Average Price $2.50 Gas Price $12,500 $2.00 $1.50 $12,000 $1.00 PASSENGER CARS $11,500 Gas Price $0.50 $11,000 $0.00 5 5 6 6 7 7 8 5 5 6 6 7 7 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - n r l t n r l t n r l t n r u c u c u c p p p p a a a a O O O J J J A A A A J J J J Source: AuctionNet ( NADA Guides and NAAA ) and EIA, regular gasoline price

AuctionNet Wholesale Used Car Prices and Gas Prices AuctionNet Wholesale Used Car Prices and Gas Prices Ward’ ’s s Small Car Small Car Segment Segment Ward $10,000 $4.00 $3.50 $9,500 $3.00 $9,000 Average Price $2.50 Gas Price $8,500 $2.00 $1.50 SMALL CARS $8,000 $1.00 Gas Price $7,500 $0.50 $7,000 $0.00 5 5 6 6 7 7 8 5 5 6 6 7 7 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - r l t r l t r l t r n n n n u c u c u c p p p p a a a a O O O A J A J A J A J J J J Source: AuctionNet ( NADA Guides and NAAA ) and EIA, regular gasoline price

AuctionNet Wholesale Used Car Prices and Gas Prices AuctionNet Wholesale Used Car Prices and Gas Prices Ward’ ’s s Middle Car Middle Car Segment Segment Ward (4 Cylinder Domestic) (4 Cylinder Domestic) $10,000 $4.00 $3.50 $9,500 $3.00 $9,000 Average Price $2.50 Gas Price $8,500 $2.00 $1.50 $8,000 MID 4 DOM $1.00 $7,500 Gas Price $0.50 $7,000 $0.00 5 5 5 5 6 6 6 6 7 7 7 7 8 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - n r l t n r l t n r l t n r u c u c u c p p p p a a a a J O J O J O A A A A J J J J Source: AuctionNet ( NADA Guides and NAAA ) and EIA, regular gasoline price