Vehicle Market Insights Manheim Used Vehicle Value Index Call - - PowerPoint PPT Presentation

Vehicle Market Insights Manheim Used Vehicle Value Index Call - July 8, 2020 J o n a t h a n S m o k e & Z o R a h i m S p e c i a l G u e s t : W h i t n e y G e r k i n 1

INVENTORY RETAIL FINANCIAL MOBILITY

COVID-19 Market Update

Covid-19 Local Impact Assessment Source: Cox Automotive 4

Continuing Claims At 19.3 Million Nationally Source: U.S. Department of Labor 5

Consumer Sentiment Moves Down Again Morning Consult’s Index of Consumer Sentiment on Monday was down 23.4% since February 29 ICS Value (7-Day Average) 120 114.23 113.8 110 100 90 86.81 80 81.23 70 60 Source: Morning Consult 6

-50% -40% -30% -20% -10% New Vehicle Sales Down But Recovering 10% 20% 30% 40% 0% Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Total New % Change y/y Apr-12 Sep-12 Feb-13 Jul-13 Dec-13 May-14 Oct-14 Mar-15 Aug-15 Source: BEA Jan-16 Jun-16 Nov-16 Apr-17 Sep-17 Feb-18 Jul-18 Dec-18 May-19 Oct-19 Mar-20 7

New Vehicle Market Share Performance – 1H 2020 CHEVROLET 0.59 NISSAN -1.65 KIA 0.47 DODGE -0.65 MAZDA 0.36 BUICK -0.19 HYUNDAI 0.29 BMW -0.19 TESLA 0.28 MITSUBISHI -0.10 RAM 0.22 INFINITI -0.10 JEEP 0.17 CHRYSLER -0.08 TOYOTA 0.17 CADILLAC -0.07 GMC 0.14 MINI -0.05 LINCOLN 0.12 FIAT -0.02 SUBARU 0.12 AUDI -0.02 VOLVO 0.07 FORD -0.02 VOLKSWAGEN 0.06 JAGUAR -0.01 LEXUS 0.05 HONDA -0.01 LAND ROVER 0.02 ACURA 0.00 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 -2.00 -1.50 -1.00 -0.50 0.00 Source: Cox Automotive 8

New Vehicle Market Share Performance – 1H 2020 Full-size Pickup Truck Compact Car 2.41 -1.83 Mid-size SUV/Crossover 1.36 Mid-size Car -0.82 Subcompact SUV/Crossover Subcompact Car 1.12 -0.80 Mid-size Pickup Truck 0.68 Minivan -0.62 Luxury Compact SUV/Crossover Full-size Car 0.22 -0.53 Luxury Mid-size SUV/Crossover 0.17 Luxury Car -0.44 Compact SUV/Crossover Van 0.07 -0.30 Luxury Full-size SUV/Crossover 0.03 Entry-level Luxury Car -0.27 High-end Luxury Car Full-size SUV/Crossover 0.01 -0.24 Electric Vehicle 0.00 Hybrid/Alternative Energy Car -0.20 0.00 0.50 1.00 1.50 2.00 2.50 3.00 -2.20 -1.70 -1.20 -0.70 -0.20 0.30 Source: Cox Automotive 9

Retail Sales Recovery Estimates Y/Y % Change in 7-Day Moving Average of Retail Sales New Used 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0% -50.0% -60.0% -70.0% 1/6 1/10 1/14 1/18 1/22 1/26 1/30 2/3 2/7 2/11 2/15 2/19 2/23 2/27 3/2 3/6 3/10 3/14 3/18 3/22 3/26 3/30 4/3 4/7 4/11 4/15 4/19 4/23 4/27 5/1 5/5 5/9 5/13 5/17 5/21 5/25 5/29 6/2 6/6 6/10 6/14 6/18 6/22 6/26 6/30 7/4 Source: Cox Automotive 10

Update: Manheim’s Shift to All-Digital Whitney Gerkin Digital Marketplace Director Manheim

ACCESSING MANHEIM INVENTORY TODAY DIGITAL BLOCKS SIMULCAST (In-Lane Bidding) MANHEIM.COM OVE / PRIVATE STORES MANHEIM EXPRESS 12

OPERATIONAL UPDATES SINCE GOING ALL-DIGITAL Welcomed sellers back on the block at all locations. Welcomed buyers to preview vehicles on the lot at all locations. Piloting in-lane bidding "Digital Blocks" at select locations. 13

DIGITAL WHOLESALE IS STRONG Manheim’s sales rates are now higher than pre-COVID levels . January through June, Manheim experienced 1.5+ million digital transactions , which is more than 20% higher than the same period in 2019. OVE sales were up nearly 70 percent in June compared to last year. 14 Source : Manheim Data

MANHEIM DIGITAL COVID-19 SNAPSHOT 6 in 10 8300+ DEALERS SAY THAT SIMULCAST IS WORKING AS A BUYERS MADE FIRST REPLACEMENT TIME PURCHASES ON SIMULCAST STATS: MANHEIM DIGITAL 23,000 MARKETPLACE SIMULCAST SALES ~40% OCCURRED ON A SINGLE DAY IN JUNE, A RECORD ON THE 8200+ PLATFORM IS THE INCREASE IN USAGE OF SIMULCAST REMOTE SELLER SINCE VEHICLES SOLD IN A MARCH 16 WEEK AT MANHEIM PA IN JUNE, 900 HIGHER THAN SAME WEEK 2019 15

SIMULCAST ATTENDANCE & BIDDING ARE ON THE RISE Simulcast Attendance & Bidding in 2020 400 10.0 9.0 350 8.0 Bids Per Unique Offer Attendees Per Lane 300 7.0 250 6.0 200 5.0 4.0 150 3.0 100 2.0 50 1.0 0 0.0 Attendees Per Lane Bids Per Unique Offer 16 Source : Manheim Data

“The system is really easy and I really enjoy it. I'll be honest. I was one of the biggest skeptics against it because I really hadn't tried it and I couldn't get over the idea of bidding online. But since I've done it the last few weeks I do like it. The more I use it, the more I like it.” -Manheim Dealer Client

• Wholesale will remain heavily digital for the foreseeable future. We’re going all -in on vehicle imaging. WHAT’S NEXT FOR WHOLESALE? New vehicle tracking technologies will make it easier to locate and preview inventory. In-lane bidding is contingent on safety first.

19 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

Record-Setting Rebound In Wholesale Prices Prices in June increased 8.95% from May 2020 and were up 6.3% compared to June 2019 155 149.3 150 145 140 135 130 125 120 115 110 105 100 95 January 1995 = 100 90 Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-13 Jan-16 Jan-19 Source: Manheim/Cox Automotive 20

Used Vehicle Values Back to Pre-Covid Strength Year-over-year price performance stronger than average 25% 20% 15% 10% 6.3% 5% 0% -5% -10% -15% Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14 Jan-17 Jan-20 Source: Manheim/Cox Automotive 21

Manheim Index versus Mix & Quality Adjusted New Vehicle Price with 3 ½ year Lag Used vehicle prices back above the 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 22

Wholesale Used Vehicle Prices vs. New Vehicle Prices Manheim Non-Adjusted Price (LHS) Average new vehicle transaction price per KBB (RHS) $15,500 $41,000 $39,000 $14,500 $37,000 $13,500 $35,000 $12,500 $33,000 $31,000 $11,500 $29,000 $10,500 $27,000 $9,500 $25,000 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Source: Manheim/Cox Automotive 23

2020 Weekly Price Trend More Than Recovered 2020 spring bounce ended abruptly as COVID-19 pandemic hit the US but prices more than recovered in weeks since 3-Year-Old Model MMR Index by Week 2014-2016 2017 2018 2019 2020 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 24

Retention Values Ended June Up 1.9% Relative to 2019 Relative to MSRP and fixing the basket of vehicles by what was sold leaves residuals following similar pattern 63% 61% 59% 57% 55% 53% 51% 49% 47% (1 to 3 year-old models) CY 2018 CY 2019 CY 2020 45% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Kelley Blue Book/Cox Automotive 25

Percent Change in Wholesale Prices for Major Market Segments Most major segments saw year-over-year gains in June 22% 1 year 2 years 3 years 17% 4 years 12% 9.7% 6.3% 7% 5.9% 4.6% 4.0% 1.8% 2% -3% -3.5% -8% Industry Compact cars Midsize cars Luxury cars Pickups SUV/CUV Vans Source: Manheim/Cox Automotive 26

Average Auction Price – Rental Risk Units Average price for rental risk units sold in June up 3.4% y/y and up 8.9% m/m 17,000 2016 2017 16,500 2018 2019 2020 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 27

Distribution of Rental Risk Vehicles 2018 Q2 2019 Q2 2020 Q2 Number of unique year, make, model, 3,023 3,337 3,090 body configurations sold Share accounted for top 10 YMMB 13.5% 12.0% 14.0% Share accounted for top 25 YMMB 22.9% 22.3% 25.9% Number of YMMB to reach 50% share 109 106 86 Source: Manheim/Cox Automotive 28

Average Mileage – Rental Risk Units Sold at Auction Average mileage for rental risk units in June was down 7% compared to a year ago and down 6% m/m 60,000 55,000 50,000 45,000 43,473 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 29

Rental Risk Units Sold by Condition 100% 90% 80% 70% 60% 5.0 4.0 - 4.9 50% 3.0 - 3.9 2.0 - 2.9 40% 0 - 1.9 30% 20% 10% 0% 2015 Q4 2016 Q2 2016 Q4 2017 Q2 2017 Q4 2018 Q2 2018 Q4 2019 Q2 2019 Q4 2020 Q2 Source: Manheim/Cox Automotive 30

Rental Risk Units Sold by Make 100% 90% 80% All other 70% Mazda Kia 60% Jeep VW 50% Chrysler Hyundai 40% Dodge Toyota 30% Nissan Ford 20% Chevrolet 10% 0% 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Source: Manheim/Cox Automotive 31