wholesale market insights · 4 wholesale prices decline to lowest level in 4 months source:...

Wholesale Market InsightsThrough September 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 A Y 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

Wholesale Prices Decline to Lowest Level in 4 Months

Source: Manheim/Cox Automotive

139.9

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 September decreased 1.04% versus August 2019 and were flat compared to September 2018

5

Used Vehicle Values Fade From Highs

Year-over-year price performance now weaker than average

-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

0.0%


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 Less Like Last Two Years

Another strong spring and summer, but summer and fall trend not like last two years as depreciation picks up


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 Had Been Strong For Non-Luxury

Despite weak start of the year, prices remain above January levels but now showing more depreciation


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

Weekly Price Trend Keeps Changing For Luxury

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

depreciation again


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

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

One-year-old vehicle prices have been very stable with little depreciation until recently


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 Now Down 1.5% Relative to Last Year

Relative to MSRP and fixing the basket of vehicles by what was sold leaves residuals down year-over-year

Source: Kelley Blue Book/Cox Automotive

(1 to 3 year old models)

45%

47%

49%

51%

53%

55%

57%

59%

61%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

CY 2017 CY 2018 CY 2019

13

Percent Change in Wholesale Prices for Major Market Segments

Only two major segments saw year-over-year gains in September


0.0%

-4.9%

-0.8%

1.2%

-0.1%-0.9%

0.3%

-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

14

2019 Stronger For Non-Luxury Until September


Luxury prices in September were down 0.1% compared to Sep 2018, while non-luxury prices declined 0.3%

January 2000 = 100

116.7

137.5

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

Luxury Non-Luxury

15

106.2

0

20

40

60

80

100

120

Jan-15 Jan-17 Jan-19

Electric Car

Electric Car Prices Improving in 2019


Electric car prices in September were up 14.8% compared to September 2018

January 2015 = 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


47%

12%

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

29%

17%

49%

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 September down 0.7% y/y and down 0.9% 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 September was up 6% compared to a year ago but down 2% m/m


46,943

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 Q3 2018 Q3 2019 Q3

Number of unique

year, make, model,

body configurations

sold

2,404 2,980 3,496

Share accounted for

top 10 YMMB 11.8% 11.1% 12.7%

Share accounted for

top 25 YMMB 21.2% 20.6% 23.6%

Number of YMMB to

reach 50% share 117 132 106

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 2019 Q3

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%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Van

SUV

Sports Car

Pickup

Luxury Car

Midsize Car

Compact Car

23

Manheim Market Report (MMR) Vehicle Insights


Top selling vehicles in September at Manheim mostly saw higher levels of depreciation in the last 30 days

(September 1 – October 1) as the top selling vehicles were also largely unchanged. Most top selling vehicles saw higher than normal depreciation in September. Prices year-over-year saw lower than normal depreciation for

most and even appreciation in the case of the Elantra.

24

Used Vehicle Sales Plateau

Source: Cox Automotive estimates based on IHS Markit Registrations

39.4

25

28

31

34

37

40

43

46

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

20

18

20

20

USED VEHICLE SALES OUTLOOK (MILLIONS)

COX AUTOMOTIVE

FULL-YEAR FORECASTS

2018

39.42019

39.22020*

39.0COX AUTOMOTIVE

USED RETAIL FORECASTS

2018

19.52019

19.82020*

20.0

25

Retail Inventory Trend Slide

Source: Cox Automotive/vAuto

60

65

70

75

80

85

90

95

January February March April May June July August September October November December

Average Used Days In Inventory

2017 2018 2019

26

Q3 2019 Cox Automotive Dealer Sentiment Index

According to the Q3 2019 2019 Cox Automotive Dealer

Sentiment Index (CADSI), U.S. automobile dealers view the current market as negative, with an index score of 48. The slight decrease from Q2’s score of 49 was not

statistically significant. The index reading of 48 indicates that slightly more dealers feel that the current

market is weak compared to the number who feel the current market is strong.

Expectations for the next quarter fell in the Q3 survey as well, but remain in positive territory with an index

score of 51. The decline in expectations was statistically significant from last quarter’s score of 55, and it was driven by a decline in expectations by both

franchised and independent dealers.

Year-over-year comparisons reveal an important contrast among dealers in expectations for the next quarter.

Franchise dealers saw a decline, but remained in

positive territory. Independent dealers, on the other hand, saw a larger decline, and their expectations score fell below 50 for only the second time since the CADSI

began in Q2 2017.

For franchises, the current new-vehicle sales index was also down compared to last year, but stable compared to last quarter. The new-vehicle sales index remains

above 50 indicating a good market. Franchises continue to see the used-vehicle sales as stronger than

new. They also report both new- and used- vehicle inventory continues to grow.

For independents, the used-vehicle sales index in Q3 was negative at 49, a score slightly lower than last

quarter and Q3 2018. Factors influencing a pessimistic view of the current market are the perception of a weakening economy, consumers being less interested

or more cautious about purchasing vehicles, and having a hard time to find inventory or having a lack of used-

vehicle inventory.

27

Growth of Off-Lease Has Reached Its Peak

Source: Cox Automotive

1.5

1.8

2.2

2.5

3.0

3.4

3.9

4.1 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

of

Ve

hic

les

Estimated Off-Lease Maturities

28

Total Wholesale Volumes Also Reaching Peak

Source: Cox Automotive

29

Thank You

Jonathan Smoke & Zo RahimEconomic Industry Insights

[email protected]

[email protected]

@SmokeonCars

@autosanalyst

wholesale market insights · 4 wholesale prices decline to lowest level in 4 months source:...

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