Download - Wholesale Market Insights Through March 2018 · 2018-05-08 · 1 Lease Lease Midsize Car Midsize Car Premium 2015 NISSAN ALTIMA 4C 4D SEDAN S $10,800 $10,550 $11,300 2.4% -0.4% 1

Wholesale Market InsightsThrough March 2018

J o n a t h a n S m o k e & Z o R a h i m - C o x A u t o m o t i v e

T R A N S F O R M I N G T H E W AY 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 unchanging 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:

130.8

90

95

100

105

110

115

120

125

130

135

Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-13 Jan-16

Manheim Used Vehicle Value Index Down From Record Levels

4Source: Manheim, Cox Automotive

January 1995 = 100

March was down slightly versus February but saw a 5.4% increase from March 2017

5.4%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%


Manheim Used Vehicle Value Index – Y/Y Trend


The year-over-year trend saw improvement in March from 4.9% and 5.1% in two prior months

Wholesale Used Vehicle Prices vs. New Vehicle Prices

6Source: Manheim, Kelley Blue Book, Cox Automotive

Y/Y new prices now up 2% while wholesale up 5% and inflation up 2%

$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

Jan

-12

Mar

-12

May

-12

Jul-

12

Sep

-12

No

v-1

2

Jan

-13

Mar

-13

May

-13

Jul-

13

Sep

-13

No

v-1

3

Jan

-14

Mar

-14

May

-14

Jul-

14

Sep

-14

No

v-1

4

Jan

-15

Mar

-15

May

-15

Jul-

15

Sep

-15

No

v-1

5

Jan

-16

Mar

-16

May

-16

Jul-

16

Sep

-16

No

v-1

6

Jan

-17

Mar

-17

May

-17

Jul-

17

Sep

-17

No

v-1

7

Jan

-18

Mar

-18

Manheim Non-Adjusted Price (LHS) Average new vehicle transaction price per KBB (RHS)

Weekly Tax Refunds (in billions)

7

$0

$10

$20

$30

$40

$50

$60

$70

$80

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9

2014 2015 2016 2017 2018

Week ending 2/16/18

Source: IRS

3-Year-Old Vehicles Saw Abnormal Depreciation Pattern in 2017

8Source: Manheim Manheim Market Report (MMR) 3 Year Old Model Weekly Trend, Cox Automotive

2018 started softer but price level of 3YO Models now stronger

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 Index by Week

2015 2016 2017 2018

Retention Values Now Slightly Up From Last Year

9Source: Kelley Blue Book Auction Values as a % of MSRP and New Vehicle Sales Weighted

(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

Reta

ined

Valu

e a

s a

% o

f M

SR

P

CY 2016 CY 2017 CY 2018

5.4% 5.4%

0.9%

4.1%5.5% 5.1%

13.4%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Industry Compact cars Midsize cars Luxury cars Pickups SUV/CUV Vans

1 year2 years3 years4 years

Percent Change in Wholesale Prices for Major Market Segments


All major segments saw year-over-year gains in March

Cars still dominate the wholesale market, while the SUV reigns supreme in new

Shifting Consumer Preferences Not Reflected in Used Volumes

11Source: Motor Intelligence/Autodata, Manheim, Cox Automotive

33%

16%

46%

5%

0%

10%

20%

30%

40%

50%

60%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

New Vehicle Sales by Category

CAR PICKUP SUV VAN

51%

11%

32%

6%

Manheim Sales in March

Car

Pickup

SUV

Van

$13,500

$14,000

$14,500

$15,000

$15,500

$16,000

$16,500

$17,000

$17,500

1 2 3 4 5 6 7 8 9 10 11 12

2015201620172018

Average Auction Price – Rental Risk Units

(mix and mileage adjusted)

Source: Manheim, Cox Automotive

Average price for rental risk units sold in March up 7% y/y and up 4% m/m

12

45,081

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000


Average Mileage – Rental Risk Units Sold at Auction


Average mileage for rental risk units sold in March was 13% above a year ago

13

Distribution of Rental Risk Vehicles

Source: Manheim, Cox Automotive 14

2016 Q1 2017 Q1 2018 Q1

Number of unique

year, make, model,

body configurations

sold

3,481 2,736 3,005

Share accounted

for top 10 YMMB 18.3% 13.4% 13.1%

Share accounted

for top 25 YMMB 30.0% 25.1% 23.3%

Number of YMMB

to reach 50% share 74 82 108

Rental Risk Units Sold by Condition


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

0-1.9 2.0-2.9 3.0-3.9 4.0-4.9 5

Rental Risk Units Sold by Make


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

All other

Mazda

Kia

Jeep

VW

Chrysler

Hyundai

Dodge

Toyota

Nissan

Ford

Chevrolet

Rental Risk Units Sold by Market Segment


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

Van

SUV

Sports Car

Pickup

Luxury Car

Midsize Car

Compact Car

Manheim Market Report (MMR) Vehicle Insights


Most top selling vehicles in March at Manheim showed appreciation in the

last 30 days (Mar 5- April 4), while depreciation over the last 12 months

has been normal to below normal.

18

Rank Source(Rank) Category Subcategory Vehicle 4-Apr Past 30 Days Last Year Current Dep L12M Dep/Mo

1 All Midsize Car Midsize Car Premium 2015 NISSAN ALTIMA 4C 4D SEDAN S $10,800 $10,550 $11,300 2.4% -0.4%2 All Van Van Compact 2017 CHRYSLER PACIFICA 4D WAGON TOURING-L $21,900 $22,100 $24,900 -0.9% -1.0%

3 All Luxury Luxury Car Premium 2015 MERCEDES-BENZ C CLASS 4D SEDAN C300 4MATIC $9,350 $9,175 $9,200 1.9% 0.1%

4 All Midsize Car Midsize Car Premium 2013 VOLKSWAGEN PASSAT 5C 4D SEDAN SE $15,100 $15,100 $16,700 0.0% -0.8%5 All Compact Car Compact Car Premium 2017 HYUNDAI ELANTRA 4D SEDAN SE $11,000 $10,900 $12,100 0.9% -0.8%

1 Dealer Dealer Midsize Car Midsize Car Premium 2015 NISSAN ALTIMA 4C 4D SEDAN S $10,800 $10,550 $11,300 2.4% -0.4%

1 Lease Lease Midsize Car Midsize Car Premium 2015 NISSAN ALTIMA 4C 4D SEDAN S $10,800 $10,550 $11,300 2.4% -0.4%

1 Rental Rental Midsize Car Midsize Car Entry 2017 CHEVROLET MALIBU 4D SEDAN 1LT $13,850 $13,650 $16,350 1.5% -1.3%

While Used Sales Continue to Climb

19Source: Cox Automotive estimates based on IHS Markit Registrations

33,000,000

34,000,000

35,000,000

36,000,000

37,000,000

38,000,000

39,000,000

40,000,000

Annualized Used Vehicle Sales

Cox Automotive’s Q1 2018 Dealer Sentiment Index indicated that dealers are more positive about the current market than they were in Q4, but their expectations for the next quarter (2Q 2018) were up even more substantially. The index for the next three months was 70, indicating substantially more dealers expect conditions to be strong in the future compared to those who believe conditions will be weak.Other significant improvements include a decline in pressure to lower prices, an increase in dealers’ ability to get credit, and increases in new- and used-vehicle inventory levels.The Q1 2018 CADSI also included questions about impact of tax reform. The majority of dealers expect the 2018 tax reform plan to have a positive impact on their business, as their customers will have more disposable income.Franchises were the most positive about tax reform and were more likely to cite tax reform as an opportunity to invest more in employees.

Dealer Sentiment Points to a Strong Spring

Source: Q1 Dealer Sentiment Research, March 2018 20

Growth of Off-Lease Is Decelerating

21

1.82.0

2.1

2.5

3.1

3.6

3.9

4.2 4.3

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

2012 2013 2014 2015 2016 2017 2018F 2019F 2020F

Milli

ons

of V

ehic

les

Source: Cox Automotive

The Composition Gets Richer

22Source: Cox Automotive

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2016 2017 2018 2019 2020

SHARE OF LEASE MATURITIES

CAR CUV SUV PICKUP VAN

The Top Growing Vehicles Are Trucks and SUVs



25

Jonathan Smoke & Zo RahimEconomic Industry [email protected]@coxautoinc.com