Wholesale Market InsightsThrough December 2019
J o n a t h a n S m o k e & Z o R a h i m
1
INVENTORY
RETAIL
FINANCIAL
MOBILITY
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:
4
Wholesale Prices Rebound To End The Year
Source: Manheim/Cox Automotive
141.1
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
January 1995 = 100
Prices in December increased 1.54% versus November 2019 and were up 2.5% compared to December 2018
5
Used Vehicle Values Bounce Back From Lows
Year-over-year price performance now stronger than average
2.5%
-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 stay above the 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
Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Feb-19
Manheim Non-Adjusted Price (LHS) Average new vehicle transaction price per KBB (RHS)
8
2019 Weekly Price Trend Ended 2019 Stable
Depreciation accelerated to start the fall, but end of year trend normalized
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
Weekly Price Trend Was Strong For Non-Luxury
Accelerating depreciation in the fall transitioned to stabilized values to end the year
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
Weekly Price Trend Weaker For Luxury
Luxury vehicles saw steep depreciation in first quarter and again in fall but ended stable
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
Weekly Price Trend Strong for One-Year-Old Vehicles
One-year-old vehicle prices were very stable with little depreciation until the fall and ended stable
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 Ended 2019 Down 1.6% Relative to 2018
Relative to MSRP and fixing the basket of vehicles by what was sold leaves residuals flat with 2017
Source: Kelley Blue Book/Cox Automotive
(1 to 3 year-old models)
45%
47%
49%
51%
53%
55%
57%
59%
61%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
CY 2017 CY 2018 CY 2019
13
Percent Change in Wholesale Prices for Major Market Segments
Only three major segments saw year-over-year gains in December
Source: Manheim/Cox Automotive
2.5%
-1.2%
4.8%
1.8%
-0.4%
1.8%
-3.0%
-8%
-3%
2%
7%
12%
17%
22%
Industry Compact cars Midsize cars Luxury cars Pickups SUV/CUV Vans
1 year
2 years
3 years
4 years
14
Luxury Ends Year on Upward Trend
Source: Manheim/Cox Automotive
Luxury prices in December were up 3.1% compared to Dec 2018, while non-luxury prices increased 1.9%
January 2000 = 100
117.8
138.0
80
90
100
110
120
130
140
150
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18
Luxury Non-Luxury
15
110.3
0
20
40
60
80
100
120
Jan-15 Jan-16 Jan-17 Jan-18 Jan-19
Electric Car
Electric Car Prices Improved in 2019
Source: Manheim/Cox Automotive
Electric car prices in December were up 15.5% compared to December 2018
January 2015 = 100
16
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
47%
12%
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
29%
17%
49%
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
17
Average Auction Price – Rental Risk Units
Average price for rental risk units sold in December up 3.5% y/y and up 1.5% 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
18
Distribution of Rental Risk Vehicles
Source: Manheim/Cox Automotive
2017 Q4 2018 Q4 2019 Q4
Number of unique
year, make, model,
body configurations
sold
3,014 2,623 3,054
Share accounted for
top 10 YMMB 11.9% 12.0% 13.3%
Share accounted for
top 25 YMMB 22.5% 23.7% 23.1%
Number of YMMB to
reach 50% share 110 112 109
19
Average Mileage – Rental Risk Units Sold at Auction
Average mileage for rental risk units in December was up 6% compared to a year ago and up 5% m/m
Source: Manheim/Cox Automotive
51,395
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
20
Rental Risk Units Sold by Condition
Source: Manheim/Cox Automotive
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
2018Q2
2018Q3
2018Q4
2019Q1
2019Q2
2019Q3
2019Q4
5.0
4.0 - 4.9
3.0 - 3.9
2.0 - 2.9
0 - 1.9
21
Rental Risk Units Sold by Make
Source: Manheim/Cox Automotive
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
2018Q2
2018Q3
2018Q4
2019Q1
2019Q2
2019Q3
2019Q4
All other
Mazda
Kia
Jeep
VW
Chrysler
Hyundai
Dodge
Toyota
Nissan
Ford
Chevrolet
22
Rental Risk Units Sold by Segment
Source: Manheim/Cox Automotive
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
2018Q2
2018Q3
2018Q4
2019Q1
2019Q2
2019Q3
2019Q4
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 December at Manheim saw broad range of depreciation rates in the last 30 days
(December 3 – January 2) as the top selling vehicles were again heavy in luxury vehicles. Prices year-over-year
also saw quite a range from appreciation to higher than normal depreciation.
Rank Source(Rank) Category Subcategory Vehicle 2-Jan Past 30 Days Last Year Current Dep L12M Dep/Mo
1 All Compact Car Compact Car Premium 2017 HYUNDAI ELANTRA 4D SEDAN SE $9,750 $9,725 $9,625 0.3% 0.1%2 All SUV SUV Entry 2017 FORD ESCAPE 4WD 4D SUV 1.5L SE $13,950 $13,800 $14,350 1.1% -0.2%
3 All Luxury Car Luxury Car Premium 2017 MERCEDES-BENZ E CLASS 4D SEDAN E300 $25,200 $25,700 $35,300 -1.9% -2.4%
4 All Midsize Car Midsize Car Premium 2017 TOYOTA CAMRY 4C 4D SEDAN SE $13,850 $13,750 $13,100 0.7% 0.5%5 All Luxury Car Luxury Car Premium 2016 MERCEDES-BENZ C CLASS 4D SEDAN C300 4MATIC $16,550 $17,000 $22,400 -2.6% -2.2%
1 Dealer Dealer Midsize Car Midsize Car Premium 2015 NISSAN ALTIMA 4C 4D SEDAN S $6,450 $6,450 $9,025 0.0% -2.4%
1 Lease Lease Compact Car Compact Car Premium 2017 HYUNDAI ELANTRA 4D SEDAN SE $9,750 $9,725 $9,625 0.3% 0.1%
1 Rental Rental Midsize Car Midsize Car Premium 2018 NISSAN ALTIMA 4C 4D SEDAN SL $12,650 $12,500 $14,850 1.2% -1.2%
24
Retail Sales Continue to Grow As Used Vehicle Sales Plateau
Source: Cox Automotive estimates based on IHS Markit Registrations
39.6
25
28
31
34
37
40
43
46
200
0
200
2
200
4
200
6
200
8
201
0
201
2
201
4
201
6
201
8
202
0
USED VEHICLE SALES OUTLOOK (MILLIONS)
COX AUTOMOTIVE
FULL-YEAR FORECASTS
2018
39.42019
39.62020*
39.4COX AUTOMOTIVE
USED RETAIL FORECASTS
2018
19.52019
20.02020*
20.3
25
Retail Inventory Trend Slide
Source: Cox Automotive/vAuto
60
65
70
75
80
85
90
95
January February March April May June July August September October November December
Average Used Days In Inventory
2017 2018 2019
26
Q4 2019 Cox Automotive Dealer Sentiment Index
According to the Q4 2019 Cox Automotive Dealer
Sentiment Index (CADSI), the current U.S. auto market
is mostly unchanged from Q3 and remains negative,
with an index score of 47. The slight decrease from
Q3’s 48 was not statistically significant.
Year-over-year, the current market index is up by three
points, a statistically significant improvement, but the
index remains below 50, which is considered negative.
The current market sentiment skews more positive for
franchised dealers compared to independents. The gap
narrowed this quarter, however, as franchised dealers
became less positive—decreasing from 56 in Q3 to 51
in Q4—while independents dealers remained negative
at 46, unchanged from Q3.
Franchised dealers’ lower current market sentiment is
likely tied to perceptions of used-vehicle sales, which
saw a statistically significant decline from last quarter,
dropping from 73 to 66. The new-vehicle market is
stable according to franchised dealers, down just one
point from Q3 and still in positive territory at 56.
When it comes to views of the future, franchised and
independent dealers moved closer together in Q4 as
well. Franchised dealers scored 54, down from Q3,
while independents increased from 49 to
51. Independents have seen a statistically significant
increase in their outlook for the future compared to last
year. The improvement likely relates to improved used-
vehicle inventory and increasing profits.
The factors holding back the business across all
dealers remained consistent in Q4, although “The
Economy” entered the Top 5 and pushed “Expenses” to
number 6. “Market Conditions” remained in the top
spot, with 35% of dealers citing it as holding back their
business, down from 38% in Q3. “Competition”
remained in second place, followed by “Credit
Availability for Consumers” and “Limited Inventory.”
“The Economy” rounded out the Top 5.
Notably, compared to last quarter, “Consumer
Confidence” and “The Political Climate” both saw
significant increases as factors holding back the
business.
27
Growth of Off-Lease Has Reached Its Peak
Source: Cox Automotive
1.5
1.8
2.2
2.5
3.0
3.4
3.9
4.1 4.1
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2012 2013 2014 2015 2016 2017 2018 2019F 2020F
Millio
ns o
f V
eh
icle
s
Estimated Off-Lease Maturities
28
2020 Tax Season Should Be Similar to Last Year in Timing
Source: Cox Automotive Analysis of IRS Data
In week 9, cumulative refunds approach 50%; by week 16 refunds are above 90%
0
20000
40000
60000
80000
100000
120000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Cumulative Tax Refunds by Calendar Week and Year
2018 2019
29
2020 Weekly Used Sales Should Also Look Like Last Year
Source: Cox Automotive
Weekly sales peak during peak tax refund season each year
0%
20%
40%
60%
80%
100%
120%
140%
160%
Week 1
Week 2
Week 3
Week 4
Week 5
Week 6
Week 7
Week 8
Week 9
Week 1
0
Week 1
1
Week 1
2
Week 1
3
Week 1
4
Week 1
5
Week 1
6
Week 1
7
Week 1
8
Week 1
9
Week 2
0
Week 2
1
Week 2
2
Week 2
3
Week 2
4
Week 2
5
Week 2
6
Week 2
7
Week 2
8
Week 2
9
Week 3
0
Week 3
1
Week 3
2
Week 3
3
Week 3
4
Week 3
5
Week 3
6
Week 3
7
Week 3
8
Week 3
9
Week 4
0
Week 4
1
Week 4
2
Week 4
3
Week 4
4
Week 4
5
Week 4
6
Week 4
7
Week 4
8
Week 4
9
Week 5
0
Week 5
1
Week 5
2
Used Retail Weekly Sales Index
Refunds 2018 2019
30
2020 Should See a More Normal Depreciation Pattern
Source: Manheim
A stable start to year, a normal spring bounce, stronger than normal summer, and a steadier fall expected
80%
85%
90%
95%
100%
105%
110%
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 and Forecast by Week
Ave 2014-2016 2017 2018 2019 2020 Forecast Rev
31
Thank You
Jonathan Smoke & Zo RahimEconomic Industry Insights
@SmokeonCars
@autosanalyst