© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
27 November 2012
John C. Humphrey Senior Vice President & General Manager
Global Automotive Division J.D. Power and Associates
Staying Ahead of the Curve
Understanding Key Trends in
California’s Automotive Marketplace
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
2
Total Sales
Retail Sales
Sources: J.D. Power and Associates and LMC Automotive, November 2012
Strong 2012 and Moderately Optimistic for 2013
U.S. Light Vehicle Sales In Millions of Units
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
3
California’s Recovery in Sales is Impressive
Source: Power Information Network® (PIN)
California Share of
National Retail Sales
YOY Growth
(2012 Trend)
10%
11%
12%
2010 2011 2012 YTD
13%
23%
0%
10%
20%
30%
California US
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
4
More Product: More Consumer Interest and Competition
Products in Market
248 243 240
220
228
240
271
2007 2008 2009 2010 2011 2012E 2013F
Sources: J.D. Power and Associates and LMC Automotive, November 2012
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
5
Source: Power Information Network® (PIN)
Recovery Seen in Leasing and Credit Availability Retail Sales by FICO:
2012 YTD Trend vs. 2011
9%
14%
19%
24%
29%
19%
24%
31%
39%
44%
A+ (720 - 999)
A (680 - 719)
B (650 - 679)
C (625 - 649)
D (0 - 624)
Nation California
Lease Penetration
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
6
Source: Power Information Network® (PIN)
Record Transaction Prices And Less Incentives…
$3,018 $2,968 $2,871
$2,686 $2,721
$25,505
$26,317
$27,644 $28,337 $28,318
2008 2009 2010 2011 2012 YTD
Incentives / Unit Transaction Price
Total Industry
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
7
16.5 16.1
13.2
10.4
11.6
15.0
12.7
14.4
17.0
…Leading to A Much Healthier Industry
Consumer Expenditure on New Vehicles ($Billions)
$341 $340 $340
$270
$227
$254
$292
$324
$341
2005 2006 2007 2008 2009 2010 2011 2012
FORECAST
2013
Total Sales (In Millions of Units)
Flat vs. 2005
Sources: J.D. Power and Associates and LMC Automotive, November 2012
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
8
Risks to US Forecast
Dealing with the fiscal cliff - real & psychological impact
Geopolitical tensions in the gulf region
Spreading of Euro debt crises
Pace of recovery in employment
Economic slow down in China
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
9
The Changing Face of California
California Market Trends:
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
10
32.8
20.418.1
15.4
11.39.7
45.1
25.9
19.3 19.3
11.710.1
0
10
20
30
40
50
California Texas New York Florida Ohio Michigan
2001 2020
California: Continued Rapid Population Growth, But…
Population in millions
Source: Rand Corporation / U.S. Census Bureau
Total US:
2001: 281m 2020: 341m
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
11
51.2
29.5
11.06.8
39.7 38.1
13.6
6.6
0
10
20
30
40
50
60
White Hispanic Asian Black
2000 2010
…A Rapid Diversification in Population
2010 % California USA
White 39.7 63.4
Hispanic 38.1 16.7
Asian 13.6 5.0
Black 6.6 13.1
Language other
than English
Spoken at home
43.0 20.1
Source: U.S. Census Bureau
California Demographics Trend
(percent)
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
12
Understanding Gen Y Will be Imperative
80
57
76
45
30
40
50
60
70
80
90
Gen Y Gen X Boomer Pre-Boomer
18159
2422
20
0
10
20
30
40
50
2005 2010 2015
Gen Y Gen X
US Estimated 2012 Population (2012 Total USA Population: 313 Million)
Proportion of New-Vehicle Buyers
in the USA (Percent)
Sources: U.S. Census Bureau ; J.D. Power and Associates Sales Satisfaction Index (SSI) StudySM
Population in millions Percent
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
13
Attitudes, Values and Behavior
California Market Trends:
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
14
Rethinking How to Engage with Younger Consumers
33%
30%
22%
10%
15%
20%
25%
30%
35%
40%
Gen Y Gen X Boomer
Most Influential Reason: Why I did
Not Purchase from This Dealer?
Dealer Treatment
% Intending to Use Non-Franchised
Dealer for Service
Source: J.D. Power and Associates Sales Satisfaction Index (SSI) StudySM
47%
43%
38%
20%
25%
30%
35%
40%
45%
50%
Gen Y Gen X Boomer
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
15
Trend Continues Towards Conservation / Environment
32% 31%
34%36%
41%
20%
25%
30%
35%
40%
45%
50%
CA NY FL IL TX
% Indicating Engaging in
"Green" Activities
36 Month Average
Retail Price Chart
4.70
4.52
4.34
4.16
3.98
3.80
3.61
3.43
3.25
3.07
2.89
Regular Gas
Price (US $/G) Los Angeles Regular Gas
Price (US $/G)
4.70
4.52
4.34
4.16
3.98
3.80
3.61
3.43
3.25
3.07
2.89
Date (Month/Day) 1
1/2
0
12
/28
2/4
3/1
4
4/2
1
5/2
8
7/5
8/1
2
9/1
9
10
/27
12
/3
1/1
0
2/1
7
3/2
7
5/4
6/1
0
7/1
8
8/2
5
10
/2
11
/9
12
/16
1/2
3
3/1
4/8
5/1
6
6/2
2
7/3
0
9/6
10
/14
11
/20
2010 2011 2012
Source: ©2012 GasBuddy.com; J.D. Power Research
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
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California Car Buyers: A Greater Interest in Fuel Efficiency
California % of National Sales
Sources: J.D. Power and Associates 2012 Automotive Media and Marketing ReportSM; Power Information Network® (PIN)
Most Influential Purchase Reason
12%
20%
41%
Industry Retail Hybrid Electric
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
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A Significant Shift To Smaller Vehicles
Source: Power Information Network® (PIN)
Segment Share of California Retail Sales
17% 14% 12% 12% 12% 10%
43% 42% 42% 39% 38% 38%
40% 44% 47% 49% 51% 52%
2007 2008 2009 2010 2011 2012 YTD
Large Midsize Sub/Compact
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
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Technology’s Impact on Retailing & Product
California Market Trends:
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
19
Are You Confident in Your Digital Strategy?
82%79% 79%79%
75%
70%68%67%
64%
54%
60% 60%64%
40%
50%
60%
70%
80%
90%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Pe
rce
nt
AIU
s
Automotive Internet Usage (AIU)
Source: J.D. Power and Associates New Autoshopper.com Study,SM 2000-2008 and Sales Satisfaction Index (SSI) Study,SM 2009-2011
* Preliminary data from the J.D. Power and Associates 2012 Sales Satisfaction Index (SSI) StudySM
*
Gen Y – 87%
Boomers – 79%
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
20
Less Traditional Control of Content / Message
73%
98%
81%
0%
25%
50%
75%
100%
Dealer
Sites
OEM
Sites
Third
Party
Sites
Pe
rce
nt
Vis
itin
g
Buyers Visiting an Auto Site
29%
24%
0%
10%
20%
30%
40%
CA Non CA
% of New Vehicle Buyers Indicating “Ratings Site” Influenced Dealer Selection
Sources: J.D. Power and Associates 2012 New Auto Shopper Study
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
21
111
115
125
132
100 105 110 115 120 125 130 135
Contacting to ask a
question or resolve a
problem
Finding coupons,
promotions and deals
Posting a comment about
an experience
Getting information or
recommendation
Index Auto vs. Overall
Auto Consumers Use Social Media More Frequently
Source: J.D. Power and Associates 2012 Social Media Benchmarking StudySM
Automotive Consumer Social Media Usage: Activities
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
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21%
12%
23%
13%
30%
38%
18%
85%
89%
43%
44%
44%
47%
51%
55%
59%
70%
74%
0% 25% 50% 75% 100%
Recreational activities
Shopping/Running errands
Relative/Friend's house
Waiting in line
Traveling/Commuting
Work
At the dealership
At home while watching TV
At home while only accessing smartphone/tablet
Tablet Smartphone
Salesperson or Shopper: Who Has More Information?
Source: J.D. Power and Associates 2012 New Autoshopper.com StudySM
Content Accessed at Dealership
23%
26%
37%
50%
Compare
vehicles
Search
inventory
Model
information
Vehicle
pricing
Location While Accessing Auto Content
© 2012 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. J.D. POWER AND ASSOCIATES PROPRIETARY AND CONFIDENTIAL—FOR INTERNAL USE ONLY
23
Increasing Desire for Technology…
71%
65%
62% 67%
61%
59%
61%
59%
56%
55%
52%
47%
48%
43%
33%
32%
35%
16% 26%
82%
75%
74%
68%
72%
68%
66%
68%
61%
60%
60%
62%
54%
55%
54%
55%
52% 56%
45%
0%
20%
40%
60%
80%
100%
Devic
e S
cre
en
/A
pplicatio
n/F
un
ction
Lin
k
LE
D H
ea
dligh
ts
Natu
ral L
an
gua
ge
Vo
ice
-Activa
tion
Next
Ge
nera
tio
nH
ea
d-U
p D
ispla
y
Wir
ele
ss C
onn
ectivity
Syste
m
Rem
ote
Ve
hic
leD
iag
no
stics
En
ha
nced
Co
llisio
nM
itig
atio
n S
yste
m
Su
rrou
nd R
ea
r V
iew
Cam
era
Syste
m
HD
Ra
dio
Pe
rson
al A
ssis
tan
ce
Sa
fety
Se
rvic
es
En
ha
nced
Ad
aptive
Cru
ise
Con
tro
l
Mo
bile R
ou
ter
Lan
e D
ep
art
ure
Pre
ven
tio
n S
yste
m
Bio
me
tric
s
Clo
ud O
nlin
e D
ata
Sto
rage
Syste
m
Au
tom
atic P
ara
llel
Pa
rkin
g S
yste
m
Ve
hic
le C
om
mu
nic
ation
Syste
m
Rea
r S
ea
t M
on
itori
ng
Syste
m
Au
tono
mo
us D
rivin
gM
ode
Baby Boomers Generation Y
Emerging Technology Interest - Pre Price
Source: JD Power Emerging Tech Study
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24
Buyer’s Preferred Method to Learn More about Features and Controls Post-Sale
Source: J.D. Power and Associates Sales Satisfaction Index (SSI) StudySM
30% 33% 43%
62%
25% 25%
28%
31%
51% 49% 43%
38%
Gen Y Gen X Boomer Pre-Boomer
Online Video
Phone Call to Salesman
Return to Dealer for "Live"Explanation
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25
Summary
• Rate of LV sales growth will slow, but overall more
healthy industry
• In a period of rapid demographic change
• We are only in the beginning of how new consumers
will change the way in which we market/communicate
• New consumers/technology causing amplification of
product/dealer advocacy
