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  • TOP INSIGHTS

    SHAPING THE AUTOMOTIVE INDUSTRY

    ISABELLE HELMS, VP, RESEARCH & MARKET INTELLIGENCE

    JONATHAN SMOKE, CHIEF ECONOMIST

  • THE ECONOMY

  • 3.02.8 2.32.2

    4.2 3.5

    -10.0

    -8.0

    -6.0

    -4.0

    -2.0

    0.0

    2.0

    4.0

    6.0

    8.0

    10.0

    Real Gross Domestic Product (SAAR) % Growth by Quarter

    ECONOMIC EXPANSION ACCELERATED IN 2018

    Source: United States Bureau of Economic Analysis

    GROWTH SLOWED IN Q3 FROM VERY STRONG Q2; BEST 2 QUARTERS SINCE 2014

  • STRONG JOB GROWTH AND NEW LOWS IN UNEMPLOYMENT

    Source: BLS

    2018 SAW 2.6 MILLION JOBS CREATED OR 220K VS. 182K AVERAGE IN 2017 AND 195K AVERAGE IN 2016

    -1000

    -800

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    Monthly Job Creation

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

  • $51,630

    $(6,241)

    $(901)

    $44,488

    $53,430

    $(6,243)

    $(1,008)

    $46,179

    $(10,000)

    $-

    $10,000

    $20,000

    $30,000

    $40,000

    $50,000

    $60,000

    Income Taxes Interest Payments Buying Power

    Per Capita Income and Buying Power 2017 2018

    TAX REFORM BOOSTED DISPOSABLE PERSONAL INCOME

    Source: US Bureau of Economic Analysis Personal Income and Consumption

    LOWER TAX RATES EFFECTIVELY ALLOWED AVERAGE INCOME GAINS TO TRANSLATE INTO EQUIVALENT GAINS IN SPENDING

  • NEW VEHICLE SALES

  • NEW VEHICLE SALES MANAGED A SLIGHT GAIN IN 2018

    Source: Cox Automotive, January 2019

    17.2

    8

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    10

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    18

    19 68

    19 70

    19 72

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    19 96

    19 98

    20 00

    20 02

    20 04

    20 06

    20 08

    20 10

    20 12

    20 14

    20 16

    20 18

    LIGHT VEHICLE SALES OUTLOOK (MILLIONS)

  • 7% FLEET SALES UP

    OEMS PULLED THE FLEET LEVER IN 2018

    RETAIL SALES DOWN VS.

    1%

    Source: Bobit // Kelly Blue Book // Autodata

    THE MARKET’S RELATIVE STRENGTH HAS BEEN

    SUPPORTED BY GROWTH IN FLEET SALES

    FLEETING STRATEGY

  • USED VEHICLE SALES

  • 33

    34

    35

    36

    37

    38

    39

    40

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    M ill io n s

    USED SALES REACHED A NEW PEAK

    Source: Cox Automotive Estimates based on IHS Markit Registrations

    USED VEHICLE REGISTRATIONS (ANNUALIZED VOLUME)

  • DECLINE OF CARS NOT REFLECTED IN WHOLESALE MARKET VOLUMES

    Source: Autodata, Manheim

    THE SUV REIGNS SUPREME IN NEW VEHICLE SALES WHILE CARS STILL DOMINATED THE USED CAR MARKET

    50%

    11%

    33%

    6%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

    Manheim Sales by Category CAR PICKUP SUV VAN

    30%

    16%

    49%

    5%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

    New Vehicle Sales by Category CAR PICKUP SUV VAN

  • INTEREST RATES AND PAYMENTS

  • 0

    1

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    %

    Interest Rates New Auto 60 Mo New Auto 48 Mo Used Auto 36 Mo US 10 Year Treasury Fed Discount Rate

    “BEST AVAILABLE” AUTO RATES AT SEVEN-YEAR HIGH

    Source: Bankrate.com, US Federal Reserve, Bloomberg

    THE DISCOUNT RATE ENDED 2018 UP 1% WHILE BEST AVAILABLE AUTO RATES WERE UP MORE AND UP 2.4% FROM ABSOLUTE LOW

  • PAYMENT INFLATION IMPACTED CONSUMERS

    Source: Cox Automotive/Dealertrack

    $350

    $400

    $450

    $500

    $550

    $600

    2014 2015 2016 2017 2018

    Lease Loan Used

    MONTHLY PAYMENT PAYMENT DIFFERENCES

    $20

    $40

    $60

    $80

    $100

    $120

    $140

    $160

    2014 2015 2016 2017 2018

    Lease VS. Used New Loan VS. Lease New Loan VS. Used

  • AUTO LENDING

  • 0.0%

    5.0%

    10.0%

    15.0%

    20.0%

    25.0%

    30.0%

    35.0%

    $0.0

    $20.0

    $40.0

    $60.0

    $80.0

    $100.0

    $120.0

    $140.0

    $160.0

    $180.0

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    3

    Bi llio

    ns

    Auto Loan Origination $ by Credit Score

  • USED CAR PRICES

  • 4.3%

    -15%

    -10%

    -5%

    0%

    5%

    10%

    15%

    20%

    25%

    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

    USED VEHICLE VALUES SAW ANOTHER ABOVE AVERAGE YEAR

    Source: Manheim

    YEAR-OVER-YEAR PRICE PERFORMANCE ON MANHEIM USED VEHICLE VALUE INDEX HAS BEEN STRONGER THAN AVERAGE

    Monthly Average = 1.3%

  • 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

    THREE-YEAR-OLD VEHICLES SAW ABNORMAL SUMMER APPRECIATION

    Source: Manheim

    11 WEEKS OF APPRECIATION IN THE SUMMER BROUGHT PRICES TO A NEW EQUILIBRIUM REFLECTING AN AVERAGE 2% INCREASE IN VALUE

  • AFFORDABLE CARS OUTPERFORMED THE USED CAR MARKET

    Source: Manheim

    PERCENT CHANGE IN MANHEIM INDEX YEAR-OVER-YEAR IN 2018

    4.7%

    5.8%

    4.2%

    0.9%

    3.5% 4.0%

    6.7%

    0%

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