[PPT] - LANE CHANGE Navigating What's Next Jonathan Smoke Agenda P R E S PowerPoint Presentation

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LANE CHANGE

Navigating What's Next

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Jonathan Smoke VP / Chief Economist, Cox Automotive Dale Pollak Executive Vice President, Cox Automotive Founder, vAuto Chris Hanna Performance Manager vAuto Chase Abbott Dealer Software Solutions

P R E S E N T E R S

Agenda

COVID-19 Market Update Essential things dealers should do with inventory Essential digital capabilities dealers should have in place Essential things dealers should do with new vehicle inventory

Lance Helgeson Moderator

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Housekeeping

Listen only mode Submit questions via Questions panel Recording available tomorrow on coxautoinc.com

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COVID-19 Market Update

Economic & Industry Insights

Jonathan Smoke VP / Chief Economist, Cox Automotive

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NEW AND USED VEHICLE SALES INCREDIBLE RECOVERY

Source: vAuto /Cox Autom

tive VMA Database

USED MARKET AGAIN RUNNING ABOVE 2019 LEVELS WHILE NEW SALES ARE STILL MUTED IN LAST WEEKEND OF JULY

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17.1%

21.3%

70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%

0.0% 10.0% 20.0% 30.0%

Y/Y % Change in 7-Day Moving Average of Retail Sales

New Used

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SUPPLY BUILT UP BUT IS NOW BELOW NORMAL

Source: Cox Automotive/vAuto 6

0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 200.0

Market Days' Supply

Used New

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ZERO PERCENT FINANCING DECREASES

Source: Cox Automotive 7

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20

0% APR Finance Share

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BANK DEPOSITS SOARED BY $2.3 TRILLION FOLLOWING THE CARES ACT

Source: Federal Reserve Board Deposits at Commercial Banks 8

$- $2,000.00 $4,000.00 $6,000.00 $8,000.00 $10,000.00 $12,000.00 $14,000.00 $16,000.00 $18,000.00

Weekly Deposits at Commercial Banks

Bank Deposits (SA) Savings Deposits (SA)

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PURCHASE INTENTION PEAKED IN APRIL

Source: 2020 Cox Automotive COVID-19 Consumer Impact Study 9

22% 15% 0% 5% 10% 15% 20% 25% Mar 5-6 Mar 13-14 Mar 20-22 Mar 27-28 Apr 3-4 Apr 10-11 Apr 17-18 Apr 24-25 May 1-3 May 15-16 May 29-30 June 12-13 June 26-27 July 10-11 July24-25

Plans to Purchase/Lease a Vehicle in the Next 6 Months

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USED PRICES NOW AT NEW HIGH POINTS

Source: Cox Automotive 10

80% 85% 90% 95% 100% 105% 110% 115% 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

MY 2017 Retail and Wholesale Price Indices (wk1=100)

2019 Retail Index 2020 Retail Index 2019 Wholesale Index 2020 Wholesale Index

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COVID-19 OUTBREAKS LEADING TO HIGHER RISK IN MOST REGIONS

Source: Cox Automotive 11

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NEW SALES NOW HAMPERED BY SUPPLY — 2.5 MILLION UNITS AT END OF JUNE

Source: Cox Automotive 12

2,000,000 2,200,000 2,400,000 2,600,000 2,800,000 3,000,000 3,200,000 3,400,000 3,600,000 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

Active New Vehicle Inventory by Week

2019 Active Inventory 2020 Active Inventory

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Source: BLS

14.7 MILLION NET JOBS LOST SINCE FEBRUARY, MAY AND JUNE ADDED 2.7 AND 4.8 MILLION RESPECTIVELY; UNEMPLOYMENT RATE 11.1%

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0.0 5.0 10.0 15.0 20.0 25.0 Jan-56 Jan-57 Jan-58 Jan-59 Jan-60 Jan-61 Jan-62 Jan-63 Jan-64 Jan-65 Jan-66 Jan-67 Jan-68 Jan-69 Jan-70 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20

Unemployment Rates

Headline Unemployment % (U3) Underemployment Rate % (U6)

MAY STARTED THE JOBS RECOVERY; HOW FAST WILL IT BE?

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114.23 113.8 81.23 85.87 60 70 80 90 100 110 120

ICS Value (7-Day Average)

CONSUMER SENTIMENT DOWN AGAIN LAST WEEK

Source: Morning Consult

MORNING CONSULT’S INDEX OF CONSUMER SENTIMENT ON MONDAY WAS DOWN 24.2% SINCE FEBRUARY 29

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155.9

90 95 100 105 110 115 120 125 130 135 140 145 150 155 160 Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-13 Jan-16 Jan-19

January 1995 = 100

CONTINUED RECORD-SETTING PERFORMANCE IN WHOLESALE PRICES

Source: Manheim

PRICES IN THE FIRST 15 DAYS OF JULY INCREASED 4.4% FROM JUNE 2020 AND WERE UP 11% COMPARED TO JULY 2019

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Balancing your inventory equation in transition

…as the year progresses

Dale Pollak

Executive Vice President, Cox Automotive Founder, vAuto

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Balancing your inventory equation in transition

Period Sales Pace Current Stock Need (+/-) 30 days 94 79 15 14 days 85 79 6 10 days 87 79 8 7 days 95 79 16

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Top 5 essential things dealers should do with new vehicle inventory

…as the year progresses

Chris Hanna

Performance Manager vAuto

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Top 5 essential moves to make with your new car inventory

#1: Recognize no one is going to run out

f cars

#2: Track dealer days supply #3: Address your “unwants” #4: Manage sales rate #5: Focus on your best price: manage sales rate

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#1: Recognize No One Is Going to Run Out of Cars

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1. Inventory levels/pipeline vary by OEM 2. Every store has inventory that isn’t selling (frozen capital) 3. Unsold cars reduce ability to get right cars

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#2: Track Dealer Days Supply

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1. Calculation (How many you sold, how many you have) 2. Identifies vehicles you’re selling too quickly or too slowly 3. Helps shape attack plan for unsold inventory

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#3: Add ss You “Unwants”

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1. Make sure merchandising is ship-shape 2. Be creative (Banners, payments, etc.) 3. Offer “unwants” as alternatives/switch cars

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#4: Manage Sales Rate

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1. Market doesn’t stop selling when you run out 2. Use DDS to know when to be more/less aggressive in model/trim configurations 3. Focus on in-market customers

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#5: Focus on Your Best Price

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1. OEM covenants have moved pricing offline (to lead management process) 2. Use DDS to set best price (sell aggressive/fast if you must, not because you can) 3. Offer best price based on in vs. out-of-market customers

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Top 5 essential moves to make with your new car inventory

#1: Recognize no one is going to run out

f cars

#2: Track dealer days supply #3: Address your “unwants” #4: Manage sales rate #5: Focus on your best price: manage sales rate

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Essential digital deal-making capabilities dealers should have in place

Take-away checklist

Chase Abbott

Dealer Software Solutions

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Essential digital deal-making capabilities

✓ Get the online merchandising right ✓ Tell the world about your digital retailing

experience

✓ Connect online to in-store ✓ Fly your F&I flag ✓ Dial in to the digital data ✓ Bonus: be social, and kind

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Get Online Merchandising Right

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1. Elemental step that goes beyond good photos, descriptions (360s, videos, etc.) 2. Make sure rates, incentives are accessible, accurate

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Tell the World About Your Digital Retailing Experience

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1. If you build it, they come faster - if you tell them 2. Be clear, complete about what you offer (hybrid or all-digital) 3. Set expectations for choice, experience (FaceTime, Zoom)

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Connect Online to In-store

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1. Get your team on board—culture, responsibilities, roles change 2. Start where customers stop online 3. Beware of the pitfalls—systems don’t talk, double-entry deals

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Fly Your F&I Flag

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1. Provide opportunity to self-explore and select 2. Put your people out there 3. Work faster with lenders, partners (e.g. approvals, titles)

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Dial In to Digital Data

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1. Be aware of AI opportunities 2. Use insights to prioritize cars, customers 3. Develop pre-conversion market

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Bonus: Be Social, and Kind

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Essential digital deal-making capabilities

✓ Get the online merchandising right ✓ Tell the world about your digital retailing

experience

✓ Connect online to in-store ✓ Fly your F&I flag ✓ Dial in to the digital data ✓ Bonus: be social, and kind

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Q&A

Navigating What's Next

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Thank You

Dale Pollak Executive Vice President, Cox Automotive Founder, vAuto Dale.Pollak@coxautoinc.com dalepollak.com Jonathan Smoke Chief Economist, Cox Automotive Jonathan.Smoke@coxautoinc.com @SmokeonCars

VISIT COXAUTOINC.COMFOR THE LATEST COVID-19 BUSINESS UPDATES & RESOURCES

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Balanced Inventory Report Instructions

1. From your vAuto app, Select Pricing, View Inventory 2. On the menu bar, select Filters 3. Select Condition – Used, Disposition – Retail 4. In the Left Inventory section, select either a preset number of days or enter a date range (necessary to obtain a 10-day period) 5. Select Search 6. Your Vehicle Inventory window will now display the vehicles sold in the specified time period and the number of vehicles will be displayed in the bottom right corner 7. You can save this report by selecting Saved Filters, Save (or Save As) and naming the report for future use

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