Vehicle Market Insights Manheim Used Vehicle Value Index Call - - - PowerPoint PPT Presentation

Vehicle Market Insights

Manheim Used Vehicle Value Index Call - July 8, 2020

J o n a t h a n S m o k e & Z o R a h i m S p e c i a l G u e s t : W h i t n e y G e r k i n

1

INVENTORY RETAIL FINANCIAL MOBILITY

COVID-19 Market Update

4

Covid-19 Local Impact Assessment

Source: Cox Automotive

5

Continuing Claims At 19.3 Million Nationally

Source: U.S. Department of Labor

6

114.23 113.8 81.23 86.81 60 70 80 90 100 110 120

ICS Value (7-Day Average)

Consumer Sentiment Moves Down Again

Source: Morning Consult

Morning Consult’s Index of Consumer Sentiment on Monday was down 23.4% since February 29

7

New Vehicle Sales Down But Recovering

Source: BEA

• 50%
• 40%
• 30%
• 20%
• 10%

0% 10% 20% 30% 40% Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Dec-13 May-14 Oct-14 Mar-15 Aug-15 Jan-16 Jun-16 Nov-16 Apr-17 Sep-17 Feb-18 Jul-18 Dec-18 May-19 Oct-19 Mar-20 Total New % Change y/y

8

New Vehicle Market Share Performance – 1H 2020

Source: Cox Automotive

0.02 0.05 0.06 0.07 0.12 0.12 0.14 0.17 0.17 0.22 0.28 0.29 0.36 0.47 0.59 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 LAND ROVER LEXUS VOLKSWAGEN VOLVO SUBARU LINCOLN GMC TOYOTA JEEP RAM TESLA HYUNDAI MAZDA KIA CHEVROLET 0.00

• 0.01
• 0.01
• 0.02
• 0.02
• 0.02
• 0.05
• 0.07
• 0.08
• 0.10
• 0.10
• 0.19
• 0.19
• 0.65
• 1.65
• 2.00
• 1.50
• 1.00
• 0.50

0.00 ACURA HONDA JAGUAR FORD AUDI FIAT MINI CADILLAC CHRYSLER INFINITI MITSUBISHI BMW BUICK DODGE NISSAN

9

New Vehicle Market Share Performance – 1H 2020

Source: Cox Automotive

0.00 0.01 0.03 0.07 0.17 0.22 0.68 1.12 1.36 2.41 0.00 0.50 1.00 1.50 2.00 2.50 3.00 Electric Vehicle High-end Luxury Car Luxury Full-size SUV/Crossover Compact SUV/Crossover Luxury Mid-size SUV/Crossover Luxury Compact SUV/Crossover Mid-size Pickup Truck Subcompact SUV/Crossover Mid-size SUV/Crossover Full-size Pickup Truck

• 0.20
• 0.24
• 0.27
• 0.30
• 0.44
• 0.53
• 0.62
• 0.80
• 0.82
• 1.83
• 2.20
• 1.70
• 1.20
• 0.70
• 0.20

0.30 Hybrid/Alternative Energy Car Full-size SUV/Crossover Entry-level Luxury Car Van Luxury Car Full-size Car Minivan Subcompact Car Mid-size Car Compact Car

10

Retail Sales Recovery Estimates

Source: Cox Automotive

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

0.0% 10.0% 20.0% 30.0% 1/6 1/10 1/14 1/18 1/22 1/26 1/30 2/3 2/7 2/11 2/15 2/19 2/23 2/27 3/2 3/6 3/10 3/14 3/18 3/22 3/26 3/30 4/3 4/7 4/11 4/15 4/19 4/23 4/27 5/1 5/5 5/9 5/13 5/17 5/21 5/25 5/29 6/2 6/6 6/10 6/14 6/18 6/22 6/26 6/30 7/4

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

New Used

Update: Manheim’s Shift to All-Digital

Whitney Gerkin Digital Marketplace Director Manheim

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ACCESSING MANHEIM INVENTORY TODAY

MANHEIM.COM OVE / PRIVATE STORES MANHEIM EXPRESS SIMULCAST DIGITAL BLOCKS (In-Lane Bidding)

13

OPERATIONAL UPDATES SINCE GOING ALL-DIGITAL Welcomed sellers back on the block at all locations. Welcomed buyers to preview vehicles on the lot at all locations. Piloting in-lane bidding "Digital Blocks" at select locations.

14

DIGITAL WHOLESALE IS STRONG Manheim’s sales rates are now higher than pre-COVID levels. January through June, Manheim experienced 1.5+ million digital transactions, which is more than 20% higher than the same period in 2019. OVE sales were up nearly 70 percent in June compared to last year.

Source: Manheim Data

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23,000

SIMULCAST SALES OCCURRED ON A SINGLE DAY IN JUNE, A RECORD ON THE PLATFORM

~40%

IS THE INCREASE IN USAGE OF SIMULCAST REMOTE SELLER SINCE MARCH 16

8200+

VEHICLES SOLD IN A WEEK AT MANHEIM PA IN JUNE, 900 HIGHER THAN SAME WEEK 2019

6 in 10

DEALERS SAY THAT SIMULCAST IS WORKING AS A REPLACEMENT BUYERS MADE FIRST TIME PURCHASES ON SIMULCAST

8300+

STATS:

MANHEIM DIGITAL MARKETPLACE

MANHEIM DIGITAL COVID-19 SNAPSHOT

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SIMULCAST ATTENDANCE & BIDDING ARE ON THE RISE

Source: Manheim Data

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 50 100 150 200 250 300 350 400

Simulcast Attendance & Bidding in 2020

Attendees Per Lane Bids Per Unique Offer Attendees Per Lane Bids Per Unique Offer

“The system is really easy and I really enjoy it. I'll be honest. I was

• ne of the biggest skeptics

against it because I really hadn't tried it and I couldn't get

• ver the idea of bidding online.

But since I've done it the last few weeks I do like it. The more I use it, the more I like it.”

• Manheim Dealer Client

• Wholesale will remain heavily digital for the

foreseeable future. New vehicle tracking technologies will make it easier to locate and preview inventory. We’re going all-in on vehicle imaging. In-lane bidding is contingent on safety first.

WHAT’S NEXT FOR WHOLESALE?

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

19 Steps:

A single measure of used vehicle price change that is independent of underlying segment shifts in the characteristics of vehicles being sold

Concept:

20

Record-Setting Rebound In Wholesale Prices

Source: Manheim/Cox Automotive

149.3 90 95 100 105 110 115 120 125 130 135 140 145 150 155 Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-13 Jan-16 Jan-19

January 1995 = 100

Prices in June increased 8.95% from May 2020 and were up 6.3% compared to June 2019

21

Used Vehicle Values Back to Pre-Covid Strength

Year-over-year price performance stronger than average

6.3%

• 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 Jan-20

Source: Manheim/Cox Automotive

22

Manheim Index versus Mix & Quality Adjusted New Vehicle Price with 3 ½ year Lag

Used vehicle prices back 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

23

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 $41,000 $9,500 $10,500 $11,500 $12,500 $13,500 $14,500 $15,500 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Manheim Non-Adjusted Price (LHS) Average new vehicle transaction price per KBB (RHS)

24

2020 Weekly Price Trend More Than Recovered

2020 spring bounce ended abruptly as COVID-19 pandemic hit the US but prices more than recovered in weeks since

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

2014-2016 2017 2018 2019 2020

25

Retention Values Ended June Up 1.9% Relative to 2019

Relative to MSRP and fixing the basket of vehicles by what was sold leaves residuals following similar pattern

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 2018 CY 2019 CY 2020

26

Percent Change in Wholesale Prices for Major Market Segments

Most major segments saw year-over-year gains in June

Source: Manheim/Cox Automotive

6.3% 4.0% 1.8% 9.7% 5.9% 4.6%

• 3.5%
• 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

27

Average Auction Price – Rental Risk Units

Average price for rental risk units sold in June up 3.4% y/y and up 8.9% 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

2016 2017 2018 2019 2020

28

Distribution of Rental Risk Vehicles

Source: Manheim/Cox Automotive

2018 Q2 2019 Q2 2020 Q2

Number of unique year, make, model, body configurations sold

3,023 3,337 3,090

Share accounted for top 10 YMMB

13.5% 12.0% 14.0%

Share accounted for top 25 YMMB

22.9% 22.3% 25.9%

Number of YMMB to reach 50% share

109 106 86

29

Average Mileage – Rental Risk Units Sold at Auction

Average mileage for rental risk units in June was down 7% compared to a year ago and down 6% m/m

Source: Manheim/Cox Automotive

43,473

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

30

Rental Risk Units Sold by Condition

Source: Manheim/Cox Automotive

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2015 Q4 2016 Q2 2016 Q4 2017 Q2 2017 Q4 2018 Q2 2018 Q4 2019 Q2 2019 Q4 2020 Q2 5.0 4.0 - 4.9 3.0 - 3.9 2.0 - 2.9 0 - 1.9

31

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 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 All other Mazda Kia Jeep VW Chrysler Hyundai Dodge Toyota Nissan Ford Chevrolet

32

Rental Risk Units Sold by Segment

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 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 Van SUV Sports Car Pickup Luxury Car Midsize Car Compact Car

33

Manheim Market Report (MMR) Vehicle Insights

Source: Manheim/Cox Automotive

All top selling vehicles in June at Manheim saw higher prices over the last 30 days (June 1 – July 1). Prices year-

• ver-year saw mostly lower than normal depreciation, but a few vehicles sold for more than year-ago prices.

Rank Source(Rank) Category Subcategory Vehicle 1-Jul Past 30 Days Last Year Current Dep L12M Dep/Mo 1 All SUV SUV Midsize 2017 NISSAN ROGUE AWD 4D SUV 2.5L SV $15,800 $15,550 $16,000 1.6%

• 0.1%

2 All Compact Car Compact Car Premium 2017 HYUNDAI ELANTRA 4D SEDAN SE $9,925 $9,750 $10,700 1.8%

• 0.6%

3 All SUV SUV Entry 2017 FORD ESCAPE FWD 4D SUV 1.5L SE $13,450 $13,250 $13,950 1.5%

• 0.3%

4 All Compact Car Compact Car Premium 2017 NISSAN SENTRA 4D SEDAN SV $9,875 $9,675 $10,400 2.1%

• 0.4%

5 All Pickup Pickup Heavy Duty Full 2019 RAM 2500 4WD V8 CREW CAB 6.4L BIG HORN $38,500 $37,800 $36,800 1.9% 0.4% 1 Dealer Dealer Midsize Car Midsize Car Premium 2014 VOLKSWAGEN PASSAT 4C TDSL 4D SEDAN TDI SE $9,600 $9,425 $9,525 1.9% 0.1% 1 Lease Lease SUV SUV Midsize 2017 NISSAN ROGUE AWD 4D SUV 2.5L SV $15,800 $15,550 $16,000 1.6%

• 0.1%

1 Rental Rental Midsize Car Midsize Car Entry 2018 CHEVROLET MALIBU 4D SEDAN LT $12,950 $12,650 $13,900 2.4%

• 0.6%

34

Sales Impact Varies by DMA As Evidenced By Unique Credit Apps

Source: Cox Automotive

April 5th July 5th

Appendix

35

36

Weekly Price Trend Similar For Non-Luxury

Slightly stronger declines followed by stronger recovery

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

Non-Luxury 3-Year-Old Model MMR Index by Week

2014-2016 2017 2018 2019 2020

37

Weekly Price Trend Less Severe For Luxury

Luxury vehicles have outperformed by not declining as much and now seeing similar strength

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 3-Year-Old Model MMR Index by Week

2014-2016 2017 2018 2019 2020

38

Weekly Price Trend Now Strong for One-Year-Old Vehicles

One-year-old vehicle prices were very stable throughout most of 2019 but had a rough March and April

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

1-Year-Old Model MMR Index by Week

2014-2016 2017 2018 2019 2020

39

Luxury Prices Move Higher Than Non-Luxury In June

Source: Manheim/Cox Automotive

Luxury prices in June were up 7% compared to June 2019, while non-luxury prices increased 6%

January 2000 = 100

124.4 146.2

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 Jan-20 Luxury Non-Luxury

40

107.5

20 40 60 80 100 120 140 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Electric Car

Electric Car Prices Improve In June

Source: Manheim/Cox Automotive

Electric car prices in June were up 5% compared to June 2019

January 2015 = 100

41

Rise of SUV Not Yet Fully Reflected in Wholesale Market

The SUV reigns supreme in new vehicle sales while cars still dominated the used car market

Source: Manheim/Cox Automotive

44% 12% 39% 5% 0% 10% 20% 30% 40% 50% 60% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Manheim Sales by Category

CAR PICKUP SUV VAN 25% 20% 50% 5% 0% 10% 20% 30% 40% 50% 60% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

New Vehicle Sales by Category

CAR PICKUP SUV VAN

42

Thank You

Jonathan Smoke & Zo Rahim

Economic Industry Insights jonathan.smoke@coxautoinc.com zohaib.rahim@coxautoinc.com @SmokeonCars @autosanalyst