covid-19 market update - cox automotive inc. · leading indicators and outlook source: cox...
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COVID-19 Market UpdateE c o n o m i c & I n d u s t r y I n s i g h t s Te a m
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COVID-19 STATE IMPACT VARIES PER COUNTY (CASES AND PER CAPITA CONCENTRATION)
Source: CDC 2
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WEEKLY INITIAL CLAIMS HIT RECORD LEVELS
Source: U.S. Department of Labor 3
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CONSUMER SENTIMENT PEAKED IN FEBRUARY, DECLINED STEEPLY IN MARCH
Source: Morning Consult 4
Morning Consult’s Index of Consumer Sentiment on Monday was down 22% since March 1
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ICS Value (7-day average)
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1/3 OF SHOPPERS NOW ANTICIPATE VEHICLE PURCHASE DELAY; MAJORITY LOOKING FOR ALTERNATIVES TO AVOID VISITING DEALERSHIPS IN-PERSON
Source: 2020 Cox Automotive COVID-19 Consumer Impact Study 5
Delaying Vehicle Purchase/Lease* Impact on Likelihood to
Visit the Dealership*
*Among 6-month auto intendersQ10. Have you done, or do you think you will do any of the following because of the coronavirus? *Note: Added “have done” in Wave 4 Q15. How, if at all, would the spread of coronavirus impact your likelihood to visit a car dealership in-person?.
7%17%
28% 35%
March 5-6 March 13-14 March 20-22 March 27-28
17% 17% 17% 16%
52% 47%28% 29%
31% 37%55% 55%
March 5-6 March 13-14 March 20-22 March 27-28
Not sure No impact Much/Somewhat less likely↑
↑
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OVER 1/3 OF OWNERS ARE NOW LOOKING TO DELAY VEHICLE SERVICE OR MAINTENANCE
Source: 2020 Cox Automotive COVID-19 Consumer Impact Study 6
Delay Vehicle Service/Repair(% consumers that said “Yes”)
5%13%
29%37%
March 5-6 March 13-14 March 20-22 March 27-28
↑
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Q10. Do you think you will do any of the following over the next few months because of the coronavirus? *Note: Added “have done” in Wave 4 Q18a. You said you have delayed or may delay taking your vehicle in for service/maintenance. What makes you say that?.
*Among vehicle owners
Top Reasons for Delaying Service(among those who would delay)
62% Concerned about having contact with staff/other people
65% Prefer to stay home/under quarantine
34% Concerned about the cost/my financial situation
19% Preferred using service location that is not open for business
↑
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INTEREST RATES HAVE BEEN VOLATILE BUT NOT CONSISTENTLY LOWER
Source: US Federal Reserve, Dealertrack 7
Average auto loan not reflecting big decline in rates
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Subp
rime
%
10-Year Treasury Superprime - New Subprime - New
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RETAIL TREND ESTIMATE - NEW
Source: Cox Automotive 8
-63.5%
-70.0%
-60.0%
-50.0%
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DAILY NEW RETAIL % CHG YoY vs SAME DAY OF WEEK
YoY % Chg 2019 YoY % Chg 2020
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RETAIL TREND ESTIMATE - USED
Source: Cox Automotive 9
-50.4%
-60.0%
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DAILY USED RETAIL % CHG YoY vs SAME DAY OF WEEK
YoY % Chg 2019 YoY % Chg 2020
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2020 WEEKLY PRICE TREND CONTINUES DOWNARD CHANGE
Source: Cox Automotive 10
Stable beginning of 2020 and strong start of spring bounce; week 11 was the peak, and prices fell 0.6% in aggregate last week
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3-Year-Old Model MMR Index by Week2014-2016 2017 2018 2019 2020
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LEADING INDICATORS AND OUTLOOK
Source: Cox Automotive 11
Shopping took a big hit two weeks ago but started to improve in the middle of last week.Autotrader and Kelley Blue Book saw key traffic metrics improve this past weekend over the prior weekend.Dealer.com saw continued deceleration in traffic is now almost recovered in New Vehicle Detail Page Views.
Shoppers are returning and looking at cars, and new vehicle incentives are working!
Same-store unique credit applications were down 57% y/y last week; trending has been getting worse.
The impact of the immediate downturn will see vehicle sales fall over the next few months but could recover later in the year. The impact of the immediate downturn will see new vehicle sales fall below 16 million in 2020 and used fall below 38 million. If the shutdowns last longer, new vehicle sales could fall to 14 million or less for the full year and used could fall to 36 million.
Xtime saw 59% decrease y/y on Saturday in consumers having their cars serviced
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COMPARISON TO THE GREAT RECESSION: DECEMBER 2007 – JUNE 2009
Source: BEA, The University of Michigan 12
Consumer sentiment almost always leads in sharp downturns and in the recoveries that follow
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New Vehicle SAAR
SAAR Confidence
Consumer Sentiment
Cash For Clunkers
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SEGMENT VULNERABILITY GRID
Source: Cox Automotive/KBB Data CY2019 13
High Prices Impacted By Economic Loss, High APR Customers Impacted By Credit Tightening
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“GUARANTEED DEMAND” EXPIRING LEASES PROVIDE SALES OPPORTUNITY
Source: Cox Automotive/KBB Data CY2019 14
Volume lease OEMs will peak over summer months – successful transition critical
0
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TOYOTA
HONDA
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NISSANJE
EP
HYUNDAI
VOLKSWAGEN KIA
SUBARUGMC
MAZDARAM
DODGE
CHRYSLER
Expiring Lease CY2020
January February March April May June July August September October November December
2020 = 4.1 Million Maturities
Consistent 340K per month