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1 August 2014 — Automotive Monitor
1 Trend Tracker
NOLVs: Values for OEM parts were
mixed, due to certain gross margin de-
clines and changes in inventory mix.
NOLVs: Despite improved gross margins,
as well as an increase in selling prices as a
result of better overall market conditions,
NOLVs for aftermarket replacement parts
remained consistent.
NOLVs: Values increased for aftermarket
accessories due to rising sales and an in-
crease in new products offered at higher
gross margins.
2 August 2014 — Automotive Monitor
2 Overview
Consistent sales increases set the tone for the
overall automotive industry, as a higher
number of new vehicles on the road translates
into higher demand for various OEM parts
and tires.
Additionally, as research continues to show
that the average age of cars on the road
hovers near peak levels, demand for
aftermarket parts is strong as well. As
consumers continue to hold onto cars longer,
the need for replacement and repair parts
increases.
Due to the discretionary nature of many
aftermarket accessories, demand for these
items are traditionally linked to disposable
incomes.
Recent reports indicate that consumer
spending in June 2014 witnessed modest
growth, following a similar increase in May.
Personal income exhibited a slight increase as
well, which bodes well for the U.S. economy
as a whole.
After getting off to a slow start in 2014 amid freezing winter
weather, the domestic automotive industry has proved to be a
consistently strong sector of the U.S. economy, with sales
continuing to rebound. In the first half of 2014, unit sales totaled
8.2 million vehicles, an increase of approximately 4.3% from the
same period of 2013. Experts originally projected sales to reach
16 million by year-end, yet are now projecting even higher totals.
3 August 2014 — Automotive Monitor
3 Overview
Following tepid winter sales, the U.S. auto
industry witnessed renewed growth in
spring, with May 2014 representing a third
straight month of sales increases following
March and April. Sales in May increased
approximately 11.3% from the same month
in 2013, with the annual sates rate of 16.8
million vehicles representing the strongest
witnessed since prior to the 2008 recession.
The strength continued through June, with
sales increasing 1.2% over 2013 levels. The
month marked yet another milestone in the
automotive sector, with the annual sales
rate of 17.0 million representing the best
experienced since June 2006. In the first half
of 2014, the U.S. automotive industry sold
approximately 8.2 million vehicles, an
increase of 4.3% over the same period in
2013.
July’s performance was softer than
predicted, as sales for the month increased
approximately 9% over the prior year,
falling short of the 11% gain projected by
industry analysts. However, as summer
sales incentives are expected to continue to
lift sales in the coming months, experts
assert 2014 will post growth overall.
Electric cars continue to be a growing
segment, with nearly 55,000 plug-in vehicles
sold thus far in 2014, a 35% increase as
compared to the same period of 2013.
1,000,000
1,100,000
1,200,000
1,300,000
1,400,000
1,500,000
1,600,000
1,700,000
U.S. Auto Sales12 Months Ended July 2014 versus 2013
(in Units Sold)
This Year Last Year
4 August 2014 — Automotive Monitor
4 Overview
According to a recent press release, Ford
sold over 212 thousand vehicles in July 2014,
which is a 10% increase from the previous
year and the company’s best performance in
eight years. The increase was attributed to
strong sales for its Ford Explorer and Ford
Fusion models, which posted gains of 32%
and 17% respectively. Its F-Series line of
pickup trucks continued to be popular
items, with sales increasing 5% at 63
thousand trucks sold for the month.
General Motors reported that unit sales
totaled 256,160 vehicles in July, which
represents a 9% increase from 2013 and its
best performance since 2007. Retail sales
increased 4%. Performance was strong
across the company’s brands, with every
GMC nameplate posting sales growth for
the month. Chevrolet-branded vehicles
witnessed an increase in deliveries of 8% in
July.
Chrysler Group reported its best July since
2005 with sales of 167,667 vehicles for the
month, representing a 20% increase from
2013. Jeep was the group’s strongest brand,
with sales increasing 41% from the same
month in 2013, representing the brand’s best
July sales in the company’s history. Ram
also performed well for the month, with
sales increasing 14%.
0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000
Suzuki
Ferrari
Maserati
Tesla
Porsche
Volvo
Jaguar-Land Rover
Mitsubishi
Mazda
Daimler
BMW
Subaru
Volkswagen
Kia
Hyundai
Nissan
Honda
Chrysler
Toyota
Ford
General Motors
U.S. Light Vehicle Retail SalesYear-to-Date July 2014 versus 2013
Year-to-Date - July 2013Year-to-Date - July 2014
Source: Autodata Corporation
5 August 2014 — Automotive Monitor
5 Recent Appraisal Trends
Manufacturers and distributors in the OEM parts
sector have posted strong performances in the second
quarter of 2014, with sales increasing an average of
10% to 20% as a result of increased business with
existing customers.
Gross margins tend to fluctuate based on market
prices, as well as the number of new contracts added
or lost per year and the gross margin associated with
the lost or gained contact. Overall, GA’s
engagements exhibited mixed gross margins,
fluctuating five percentage points in either direction.
Inventory levels for those companies supplying the
OEM market have been mixed, with changes driven
by the number of new contacts entering the market
and old contacts expiring.
NOLVs for OEM parts were mixed in the second
quarter of 2014. Gains were driven by increased
sales as well as improved management of obsolete
inventories. Improvements were partially offset by
the increases in lower-recovering raw materials and
work-in-process inventory.
Sales of aftermarket replacement parts were steady
on an annual basis for GA’s recent engagements.
Gross margins increased slightly, in a shift from
previous monitors, with GA noting a gain in gross
margins of approximately one point. Gains were
aided by stronger market conditions, as well as the
introduction of slight price increases on some
industry products.
In general, inventory levels have remained consistent
since the previous monitor. Inventory levels for
products that perform well have increased, yet this
was offset by companies improving their inventory
management and therefore maintaining minimal
levels of slow-moving products.
The aforementioned factors have led to relatively
consistent NOLVs for participants in the aftermarket
replacement parts sector.
Aftermarket accessories consist of both cosmetic and
performance-enhancing products. These items are
typically discretionary in nature and, as a result,
industry performance is often dependent upon the
greater economy.
6 August 2014 — Automotive Monitor
6 Recent Appraisal Trends
In general, sales increased on an annual basis,
approximately 5% to 10% year-over-year. The
increased sales can be attributed to an overall
improvement in market conditions, as well as a
rise in the number of new products offered.
Along with increased sales, gross margins
increased zero to two percentage points.
Margins were positively impacted by the
aforementioned improvement in market
conditions. Additionally, some industry
participants have introduced new products at
higher price points, which has positively
impacted margins.
Inventory levels for thus far in 2014 have
increased, with companies maintaining higher
inventory levels for those products which
perform well.
As a result of improvements in sales, gross
margins, and inventory mix, NOLVs for
aftermarket accessory parts increased for the
second quarter of 2014. However, the amount of
increased varied by participant, anywhere from
zero to five percentage points.
7 August 2014 — Automotive Monitor
7 Experience
GA has worked with and appraised numerous companies within the automotive industry.
While our clients remain confidential, they include companies throughout the automotive
supply chain, including manufacturers, importers, distributors, and retailers of aftermarket,
performance, replacement, and OEM parts and accessories.
GA’s extensive list of appraisal experience includes:
A remanufacturer and distributor of alternators
and starters for imported and domestic vehicles
with over $170 million in sales and over $60 mil-
lion in inventory, including $20 million of core
inventory.
A U.S.-based producer and recycler of automo-
tive and industrial lead acid batteries, with loca-
tions throughout North American and the world,
an inventory of approximately $200 million, and
sales of $1.2 billion.
An Internet retailer of aftermarket replacement
automotive parts, including auto body and en-
gine parts, as well as accessories, to customers
worldwide. The company’s $50 million of inven-
tory includes approximately 1.8 million types of
aftermarket auto parts for nearly all makes and
models of domestic and foreign cars and
trucks. The company’s nearly $300 million in
sales are primarily generated via hundreds of
websites.
OEM parts suppliers to the “big three” U.S. au-
tomakers, which includes manufacturers of
transmission, interior, wheel, and accessory
products.
A distributor of replacement passenger, light
truck, and commercial truck tires, including win-
ter, four-season, and high-performance tires.
A wholesale distributor and retailer of aftermar-
ket automotive parts and accessories, including
engine and exhaust components such as fuel in-
jectors, steering and suspension parts, oil and air
filters, performance parts, shock absorbers, chas-
sis parts, gaskets, water/fuel pumps, brake
drums and rotors, and other related aftermarket
automotive replacement parts.
A designer, manufacturer, and distributor of spe-
cialty products for the performance automotive
aftermarket, specializing in motorcycles and
boats, with products including fuel, air, and in-
ternal engine management systems, which are
designed to enhance vehicle performance
through generating increased horsepower and
torque.
GA has also liquidated a number of manufacturers and distributors of OEM
and aftermarket parts, including Midas Corporation, Trak Auto, Smittybilt
Outland Automotive Group, Inc., and American Products Company, Inc. In
addition to our vast liquidation and appraisal experience, GA maintains con-
tacts within the automotive industry that we utilize for insight and perspective
on recovery values.
8 August 2014 — Automotive Monitor
8 Monitor Information
The Automotive Monitor relates information covering most automotive products, including
industry trends, market pricing, and their relation to the valuation process. GA provides our
customer base with a concise document highlighting the automotive industry. GA strives to
contextualize important indicators in order to provide a more in-depth perspective of the
market as a whole. This publication will provide you with market value and industry trends
for a variety of products within the automotive sector.
GA internally tracks recovery ranges for parts, but we are mindful to adhere to your request
for a simple reference document. Should you need any further information or wish to discuss
recovery ranges for a particular segment, please feel free to contact your GA Business
Development Officer.
GA’s Automotive Monitor provides market value and industry trend information for a
variety of automotive products. The information contained herein is based on a composite
of GA’s industry expertise, contact with industry personnel, liquidation and appraisal
experience, and data compiled from a variety of well-respected sources believed to be
reliable. We do not guarantee the completeness of such information or make any
representation as to its accuracy.
9 August 2014 — Automotive Monitor
9 Appraisal & Valuation Team
Mark Weitz
President
(818) 884-3737
Ken Bloore
Chief Operating Officer
(818) 884-3737
Thomas Mitchell
Project Manager, Automotive Parts/Petroleum Specialist
(818) 746-9356
About Great American Group
Great American Group is a leading provider of asset disposition solutions and valuation and appraisal services to
a wide range of retail, wholesale, and industrial clients, as well as lenders, capital providers, private equity
investors, and professional services firms. In addition to the Automotive Monitor , GA also provides clients with
industry expertise in the form of monitors for the chemicals and plastics, metals, food, and building products
sectors, among many others. GA offers the European Automotive Monitor via its subsidiary, GA Europe
Valuations Limited.
Headquarters
21860 Burbank Blvd. Suite 300 South
Woodland Hills, CA 91367 800-45-GREAT www.greatamerican.com
Mike Marchlik
National Sales & Marketing Director
(818) 746-9306
David Seiden
Executive Vice President, Southeast Region
(770) 551-8114
Ryan Mulcunry
Executive Vice President - Northeast Region, Canada & Europe
(617) 692-8310
Bill Soncini
Senior Vice President, Midwest Region
(312) 777-7945
Drew Jakubek
Managing Director, Southwest Region
(972) 265-7981
Jennie Kim
Vice President, Western Region
(818) 746-9370
Dan Williams
Managing Director, New York Region
(646) 381-9221