wholesale market insights · 2020-05-15 · 4 used vehicle values rebound with start of spring...

Wholesale Market InsightsThrough March 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

Used Vehicle Values Rebound with Start of Spring Bounce

Source: Manheim/Cox Automotive

136.0

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

Prices in March increased 0.58% versus February 2019 and were up 4.0% compared to March 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

4.0%

-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 back closer to 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

Jan-1

2

Ma

r-1

2

Ma

y-1

2

Jul-1

2

Sep-1

2

No

v-1

2

Jan-1

3

Ma

r-1

3

Ma

y-1

3

Jul-1

3

Sep-1

3

No

v-1

3

Jan-1

4

Ma

r-1

4

Ma

y-1

4

Jul-1

4

Sep-1

4

No

v-1

4

Jan-1

5

Ma

r-1

5

Ma

y-1

5

Jul-1

5

Sep-1

5

No

v-1

5

Jan-1

6

Ma

r-1

6

Ma

y-1

6

Jul-1

6

Sep-1

6

No

v-1

6

Jan-1

7

Ma

r-1

7

Ma

y-1

7

Jul-1

7

Sep-1

7

No

v-1

7

Jan-1

8

Ma

r-1

8

Ma

y-1

8

Jul-1

8

Sep-1

8

No

v-1

8

Jan-1

9

Ma

r-1

9

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

8

2019 Weekly Price Trend Started Weak But Now Moving Up

Much higher than normal depreciation for start of year led to lower prices but prices have since turned


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

Spring Bounce Most Pronounced in Non-Luxury

Much higher than normal depreciation for start of year but now also improving


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 Seeing Far Less Bounce

Much higher than normal depreciation for start of year but now also improving


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 Less Severe On One-Year-Old Vehicles

One-year-old vehicles saw less pronounced depreciation with much lower volumes and now on up trend


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 Trended Lower to Start the Year

Adjusting for MSRP and fixing the basket of vehicles by what was sold now 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

Bill

ions

Amount of Refunds (Cumulative)

2014 2015 2016 2017 2018 2019

14

Percent Change in Wholesale Prices for Major Market Segments

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


4.0%

1.8%

7.2%

2.0%

3.4%2.2%

-1.5%

-5%

0%

5%

10%

15%

20%

25%

30%

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

1 year

2 years

3 years

4 years

15

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

32%

16%

47%

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

16

Average Auction Price – Rental Risk Units

Average price for rental risk units sold in March down 1% y/y and up 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

17

Average Mileage – Rental Risk Units Sold at Auction

Average mileage for rental risk units in March was up 0.4% compared to a year ago and up 1% m/m


45,256

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

18

Distribution of Rental Risk Vehicles


2017 Q1 2018 Q1 2019 Q1

Number of unique

year, make, model,

body configurations

sold

2,736 3,005 3,030

Share accounted for

top 10 YMMB 13.4% 13.1% 11.7%

Share accounted for

top 25 YMMB 25.1% 23.3% 22.0%

Number of YMMB to

reach 50% share 82 108 114

19

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

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

20

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 2018 Q2 2018 Q3 2018 Q4 2019 Q1

All other

Mazda

Kia

Jeep

VW

Chrysler

Hyundai

Dodge

Toyota

Nissan

Ford

Chevrolet

21

Rental Risk Units Sold by Segment


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

Van

SUV

Sports Car

Pickup

Luxury Car

Midsize Car

Compact Car

22

Manheim Market Report (MMR) Vehicle Insights


Top selling vehicles in March at Manheim saw mixed levels of depreciation in the last 30 days (March 2 – April 1)

as non-luxury vehicles appreciated while luxury saw high depreciation rate. Prices year-over-year were more

comparable but luxury remained the worst performer.

23

Used Vehicle Sales Plateau

Source: Cox Automotive estimates based on IHS Markit Registrations

33

34

35

36

37

38

39

40

Jan-13

Mar-13

May-13

Jul-13

Sep-13

Nov-13

Jan-14

Mar-14

May-14

Jul-14

Sep-14

Nov-14

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

Jan-16

Mar-16

May-16

Jul-16

Sep-16

Nov-16

Jan-17

Mar-17

May-17

Jul-17

Sep-17

Nov-17

Jan-18

Mar-18

May-18

Jul-18

Sep-18

Nov-18

Jan-19

Mar-19

Millions

24

Q1 2019 Cox Automotive Dealer Sentiment Index

Overall dealer sentiment rebounded this quarter

according to the CADSI, but the current market index

stayed in negative territory with a score of 48.

The improvement from last quarter’s more negative

score of 44 was statistically significant. Year-over-year,

the current market index was down only one point.

Expectations for the next quarter also rebounded, more

than reversing decline in dealer optimism in Q4 of

2018.The increase in expectations was statistically

significant from last quarter, but the expectations index

remains significantly lower than year-ago levels, when

optimism was at an all-time high for the study.

Dealers cited the government shutdown, concerns

about tax refunds and auto tariffs, and winter weather

as all influencing their sentiment. Market conditions,

consumer confidence, and interest rates are the key

measurable differences relative to this time last year

when peak optimism was based largely on expectations

of strong demand fueled by tax reform.

“We’ve seen a turnaround in dealer sentiment and the

outlook for the future this quarter compared to the

fourth quarter,” said Cox Automotive Chief Economist

Jonathan Smoke. “However, gone is the euphoria we

saw this time last year as views of new and used sales

are lower.”

The top 5 factors holding back the business across all

dealers remained the same in Q1 2019 as Q4 2018, but

relative positions changed.

Market Conditions held the top spot as the most cited

negative factor. Competition moved into second place,

pushing Credit Availability for Consumers into third.

Expenses moved into the fourth place as Limited

Inventory slid to fifth.

25

Growth of Off-Lease Is Decelerating and Nearing a Peak

Source: Cox Automotive

2.2

2.5

3.1

3.5

3.9

4.13.9

3.7 3.63.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Mill

ion U

nits

Estimated Lease Maturities

26

TARIFF ACTIONS & KEY DATES

Ratification of USMCA (Report on April 19)

Section 232 Tariff on Imported Autos and Parts

(Details by May 18; 15 days to implement)

China Trade Deal (March 1; TBD)

EU Trade Deal

Japan Trade Deal

UK Trade Deal?

27

Thank You

Jonathan Smoke & Zo RahimEconomic Industry Insights

[email protected]

[email protected]

@SmokeonCars

@autosanalyst

wholesale market insights · 2020-05-15 · 4 used vehicle values rebound with start of spring...

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