wholesale market insights - d2n8sg27e5659d.cloudfront.net · 16 shifting consumer preferences not...

Wholesale Market InsightsThrough June 2019

J o n a t h a n S m o k e & Z o R a h i m

1

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 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

Spring Bounce Fading

Source: Manheim/Cox Automotive

140.5

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 June increased 0.61% versus May 2019 and were up 4.1% compared to June 2018

5

Used Vehicle Values Continue to Stay Above Average

Year-over-year price performance has been much stronger than average over the last 24 months

4.1%

-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


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


$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 Looking Like Last Two Years

Much higher than normal depreciation for start of year, then strong spring bounce, and now low appreciation


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 Up in Non-Luxury

Despite weak start of the year, prices remain above January levels and trending higher


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

Luxury Now Seeing Improving Trend

Luxury vehicles saw steep depreciation in first quarter, then stabilization, and now appreciation


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

2019 Weekly Price Trend Stable on One-Year-Old Vehicles

One-year-old vehicle prices have been very stable with little to no depreciation


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 Holding Up Relative to Last Year

Adjusting for MSRP and fixing the basket of vehicles by what was sold remain just above last year

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 2017 CY 2018 CY 2019

13

Tax Refunds by Week in Recent Years

Source IRS

$0.0

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Billi

ons

Amount of Refunds (Cumulative)

2014 2015 2016 2017 2018 2019

14

Percent Change in Wholesale Prices for Major Market Segments

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


4.1%

0.4%

4.8%4.1%

5.3%

2.5%

1.2%

0%

5%

10%

15%

20%

25%

30%

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

1 year2 years3 years4 years

15

Spring Bounce Stronger In Non-Luxury


Luxury prices in June were up 2.5% compared to June 2018, while non-luxury prices increased 4.2%

115.8

138.5

80

90

100

110

120

130

140

Jan-00 Jan-03 Jan-06 Jan-09 Jan-12 Jan-15 Jan-18

Luxury Non-Luxury

January 2000 = 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


48%

11%

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

30%

17%

48%

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 June up 4% y/y and down 0.2% m/m


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

Average Mileage – Rental Risk Units Sold at Auction

Average mileage for rental risk units in June was up 9% compared to a year ago and up 3% m/m


46,621

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

19

Distribution of Rental Risk Vehicles


2017 Q2 2018 Q2 2019 Q2

Number of unique

year, make, model,

body configurations

sold

2,624 3,023 3,337

Share accounted for

top 10 YMMB 16.0% 13.5% 12.0%

Share accounted for

top 25 YMMB 29.6% 22.9% 22.3%

Number of YMMB to

reach 50% share 70 109 106

20

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 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2

0 - 1.9 2.0 - 2.9 3.0 - 3.9 4.0 - 4.9 5.0

21

Rental Risk Units Sold by Make


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


All other

Mazda

Kia

Jeep

VW

Chrysler

Hyundai

Dodge

Toyota

Nissan

Ford

Chevrolet

22

Rental Risk Units Sold by Segment


0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%


Van

SUV

Sports Car

Pickup

Luxury Car

Midsize Car

Compact Car

23

Manheim Market Report (MMR) Vehicle Insights


Top selling vehicles in June at Manheim saw mixed levels of low depreciation and appreciation in the last 30 days (June 3 – July 2) as sedans dominated and saw low depreciation to slight appreciation, and luxury vehicles again were not represented in top volume list. Prices year-over-year were also quite varied but generally lower

than normal.

Rank Source(Rank) Category Subcategory Vehicle 2-Jul Past 30 Days Last Year Current Dep L12M Dep/Mo

1 All SUV SUV Midsize 2016 NISSAN ROGUE AWD 4D SUV 2.5L SV $14,450 $14,500 $16,150 -0.3% -0.9%2 All Compact Car Compact Car Premium 2017 HYUNDAI ELANTRA 4D SEDAN SE $10,700 $10,700 $10,500 0.0% 0.2%

3 All Midsize Car Midsize Car Premium 2016 NISSAN ALTIMA 4C 4D SEDAN S $10,650 $10,600 $10,900 0.5% -0.2%

4 All Compact Car Compact Car Premium 2016 HONDA CIVIC 4D SEDAN LX $11,750 $11,800 $12,050 -0.4% -0.2%5 All SUV SUV Midsize 2016 NISSAN ROGUE AWD 4D SUV 2.5L S $13,200 $13,200 $14,450 0.0% -0.7%

1 Dealer Dealer Pickup Pickup Lite Duty Fulls 2016 FORD F150 4WD V8 FFV CREW CAB 5.0L XLT $27,400 $27,500 $28,900 -0.4% -0.4%

1 Lease Lease SUV SUV Midsize 2016 NISSAN ROGUE AWD 4D SUV 2.5L SV $14,500 $14,500 $16,150 0.0% -0.9%

1 Rental Rental Van Van Compact 2018 CHRYSLER PACIFICA MINIVAN TOURING L $21,700 $21,800 $24,600 -0.5% -1.0%

24

Used Vehicle Sales Plateau

Source: Cox Automotive estimates based on IHS Markit Registrations

39.4

25

28

31

34

37

40

43

46

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

USED VEHICLE SALES OUTLOOK (MILLIONS)

COX AUTOMOTIVEFULL-YEAR FORECASTS

2018

39.42019

39.22020*

39.0COX AUTOMOTIVEUSED RETAIL FORECASTS

2018

19.52019

19.82020*

20.0

25

Q2 2019 Cox Automotive Dealer Sentiment Index

U.S. auto dealer sentiment in Q2 2019 remained similar to Q1, as the overall current market index remained in negative territory on the Cox Automotive Dealer Sentiment Index (CADSI). The index reading of 49 indicates that slightly more dealers feel that the current market is weak compared to the number who feel that the current market is strong.

The slight increase from last quarter’s 48 was not statistically significant. Year-over-year, the current market index was down two points, which was also not statistically significant.

Improvements in key drivers supported the slight upturn in the current market view. The customer traffic index and profit index both saw statistically significant gains from Q1. At the same time, the costs index saw a decline. Both the traffic and profit indexes are at their highest readings ever, dating back to the start of the quarterly survey in Q2 2017. The cost index is at its lowest point.

Based on the way dealers describe the market, used-vehicle sales saw gains in Q2 from Q1 but remained similar to last year. The index on used-vehicle inventory, however, fell and was noted as declining, which was a reversal from the growth trend last quarter. That trend draws into question whether strong used-vehicle sales can continue as inventories tighten.

Expectations for the next quarter fell but remained in positive territory at 55. The decline was driven by a big drop in expectations by independent dealers. By contrast, expectations for the next 90 days was unchanged among franchise dealers.

The top 5 factors holding back the business across all dealers remained the same in Q2 as Q1, but relative positions changed. Market Conditions remained in the top spot as the most cited negative factor. Competition remained in second place. Limited Inventory jumped up to number 3, moving ahead of Credit Availability for Consumers, now number 4, and Expenses, which dropped to fifth place.

26

Growth of Off-Lease Has Reached Its Peak

Source: Cox Automotive

1.5

1.8

2.2

2.5

3.0

3.4

3.94.1 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

Mil

lio

ns o

f V

eh

icle

s

Estimated Off-Lease Maturities

27

TARIFF ACTIONS & KEY DATES

Ratification of USMCA (ITC Report Delivered)

Immigration Related Tariffs on Mexico

Section 232 Tariff on Imported Autos and Parts(Action on EU and Japan Postponed to Nov. 18)

China Trade Deal (March 1; TBD)

EU Trade Deal

Japan Trade Deal

UK Trade Deal Post Brexit?

28

Thank You

Jonathan Smoke & Zo RahimEconomic Industry Insights

[email protected]@coxautoinc.com

@SmokeonCars

@autosanalyst

wholesale market insights - d2n8sg27e5659d.cloudfront.net · 16 shifting consumer preferences not...

Documents