Post on 22-May-2020
transcript
Wholesale Market InsightsThrough 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 A Y 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
Manheim Used Vehicle Value Index
All Manheim U.S. sales
Classify by market segment
Account for differences in mileage
Weight to provide smoother segment mix
Seasonally adjust
3
Steps:
A single measure of used vehicle price
change that is independent of underlying
segment shifts in the characteristics of
vehicles being sold
Concept:
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Used Vehicle Values Rebound with Start of Spring Bounce
Source: Manheim/Cox Automotive
136.0
90
95
100
105
110
115
120
125
130
135
140
145
Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-13 Jan-16 Jan-19
Prices in March increased 0.58% versus February 2019 and were up 4.0% compared to March 2018
5
Used Vehicle Values Continue to Stay Above Average
Year-over-year price performance has been much stronger than average over the last 24 months
4.0%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14 Jan-17
Source: Manheim/Cox Automotive
6
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
30%
35%
40%
45%
50%
55%
60%
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
7
Wholesale Used Vehicle Prices vs. New Vehicle Prices
Source: Manheim/Cox Automotive
$25,000
$27,000
$29,000
$31,000
$33,000
$35,000
$37,000
$39,000
$9,500
$10,000
$10,500
$11,000
$11,500
$12,000
$12,500
$13,000
$13,500
$14,000
$14,500
Jan-1
2
Ma
r-1
2
Ma
y-12
Jul-1
2
Sep
-12
Nov-1
2
Jan-1
3
Ma
r-1
3
Ma
y-13
Jul-1
3
Sep
-13
Nov-1
3
Jan-1
4
Ma
r-1
4
Ma
y-14
Jul-1
4
Sep
-14
Nov-1
4
Jan-1
5
Ma
r-1
5
Ma
y-15
Jul-1
5
Sep
-15
Nov-1
5
Jan-1
6
Ma
r-1
6
Ma
y-16
Jul-1
6
Sep
-16
Nov-1
6
Jan-1
7
Ma
r-1
7
Ma
y-17
Jul-1
7
Sep
-17
Nov-1
7
Jan-1
8
Ma
r-1
8
Ma
y-18
Jul-1
8
Sep
-18
Nov-1
8
Jan-1
9
Ma
r-1
9
Manheim Non-Adjusted Price (LHS) Average new vehicle transaction price per KBB (RHS)
8
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
Source: Manheim/Cox Automotive
80.0%
85.0%
90.0%
95.0%
100.0%
105.0%
110.0%
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
3-Year-Old Model MMR Index by Week
2014 2015 2016 2017 2018 2019
9
Spring Bounce Most Pronounced in Non-Luxury
Much higher than normal depreciation for start of year but now also improving
Source: Manheim/Cox Automotive
80.0%
85.0%
90.0%
95.0%
100.0%
105.0%
110.0%
115.0%
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
Non-Luxury 3YO Model MMR Index by Week
2014 2015 2016 2017 2018 2019
10
Luxury Seeing Far Less Bounce
Much higher than normal depreciation for start of year but now also improving
Source: Manheim/Cox Automotive
80.0%
85.0%
90.0%
95.0%
100.0%
105.0%
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
Luxury 3YO Model MMR Index by Week
2014 2015 2016 2017 2018 2019
11
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
Source: Manheim/Cox Automotive
80.0%
85.0%
90.0%
95.0%
100.0%
105.0%
110.0%
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
1-Year-Old Model MMR Index by Week
2014 2015 2016 2017 2018 2019
12
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
Source: Kelley Blue Book/Cox Automotive
(1 to 3 year old models)
45%
47%
49%
51%
53%
55%
57%
59%
61%
63%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
CY 2017 CY 2018 CY 2019
13
Tax Refunds by Week in Recent Years
Source IRS
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Bill
ions
Amount of Refunds (Cumulative)
2014 2015 2016 2017 2018 2019
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Percent Change in Wholesale Prices for Major Market Segments
Most major segments saw year-over-year gains in March
Source: Manheim/Cox Automotive
4.0%
1.8%
7.2%
2.0%
3.4%2.2%
-1.5%
-5%
0%
5%
10%
15%
20%
25%
30%
Industry Compact cars Midsize cars Luxury cars Pickups SUV/CUV Vans
1 year
2 years
3 years
4 years
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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
Source: Manheim/Cox Automotive
48%
11%
36%
5%
0%
10%
20%
30%
40%
50%
60%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Manheim Sales by Category
CAR PICKUP SUV VAN
32%
16%
47%
5%0%
10%
20%
30%
40%
50%
60%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
New Vehicle Sales by Category
CAR PICKUP SUV VAN
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Average Auction Price – Rental Risk Units
Average price for rental risk units sold in March down 1% y/y and up 2% m/m
Source: Manheim/Cox Automotive
13,000
13,500
14,000
14,500
15,000
15,500
16,000
16,500
17,000
1 2 3 4 5 6 7 8 9 10 11 12
2015
2016
2017
2018
2019
17
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
Source: Manheim/Cox Automotive
45,256
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
60,000
Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19
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Distribution of Rental Risk Vehicles
Source: Manheim/Cox Automotive
2017 Q1 2018 Q1 2019 Q1
Number of unique
year, make, model,
body configurations
sold
2,736 3,005 3,030
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
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Rental Risk Units Sold by Condition
Source: Manheim/Cox Automotive
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
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
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Rental Risk Units Sold by Make
Source: Manheim/Cox Automotive
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
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
All other
Mazda
Kia
Jeep
VW
Chrysler
Hyundai
Dodge
Toyota
Nissan
Ford
Chevrolet
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Rental Risk Units Sold by Segment
Source: Manheim/Cox Automotive
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
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
Van
SUV
Sports Car
Pickup
Luxury Car
Midsize Car
Compact Car
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Manheim Market Report (MMR) Vehicle Insights
Source: Manheim/Cox Automotive
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.
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Used Vehicle Sales Plateau
Source: Cox Automotive estimates based on IHS Markit Registrations
33
34
35
36
37
38
39
40
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
Millions
24
Q1 2019 Cox Automotive Dealer Sentiment Index
Overall dealer sentiment rebounded this quarter
according to the CADSI, but the current market index stayed in negative territory with a score of 48.
The improvement from last quarter’s more negative score of 44 was statistically significant. Year-over-year,
the current market index was down only one point.
Expectations for the next quarter also rebounded, more
than reversing decline in dealer optimism in Q4 of 2018.The increase in expectations was statistically
significant from last quarter, but the expectations index remains significantly lower than year-ago levels, when optimism was at an all-time high for the study.
Dealers cited the government shutdown, concerns
about tax refunds and auto tariffs, and winter weather as all influencing their sentiment. Market conditions, consumer confidence, and interest rates are the key
measurable differences relative to this time last year
when peak optimism was based largely on expectations
of strong demand fueled by tax reform.
“We’ve seen a turnaround in dealer sentiment and the
outlook for the future this quarter compared to the fourth quarter,” said Cox Automotive Chief Economist
Jonathan Smoke. “However, gone is the euphoria we saw this time last year as views of new and used sales are lower.”
The top 5 factors holding back the business across all
dealers remained the same in Q1 2019 as Q4 2018, but relative positions changed.
Market Conditions held the top spot as the most cited negative factor. Competition moved into second place,
pushing Credit Availability for Consumers into third. Expenses moved into the fourth place as Limited Inventory slid to fifth.
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Growth of Off-Lease Is Decelerating and Nearing a Peak
Source: Cox Automotive
2.2
2.5
3.1
3.5
3.9
4.13.9
3.7 3.63.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Mill
ion U
nits
Estimated Lease Maturities
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TARIFF ACTIONS & KEY DATES
Ratification of USMCA (Report on April 19)
Section 232 Tariff on Imported Autos and Parts(Details by May 18; 15 days to implement)
China Trade Deal (March 1; TBD)
EU Trade Deal
Japan Trade Deal
UK Trade Deal?
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Thank You
Jonathan Smoke & Zo RahimEconomic Industry Insights
jonathan.smoke@coxautoinc.com
zohaib.rahim@coxautoinc.com
@SmokeonCars
@autosanalyst