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July 15, 2014

Auction Industry Leaders, Class III, Spokane, WA

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Your HomeworkThe wholesale market was strong and active and

climbing in April when we last met. Has it turned, when did it turn and by how much? Relate this to values, consignment and conversion.

Do you think the wholesale market is better or worse today than one year ago in 2013: values and volumes of offerings?

Gas prices are getting the headlines. What do you feel they will peak at? What effects/reactions do you expect?

The Broad View

A solid spring: Strong tax season activity

Later beginning of strength: Winter delayed

Lasted longer on the calendar: Solid through 2nd week of May

Is the market better or worse?

Most recent market changes

Previous month market changes

Previous year ago period market changes

Better than previous 3 month period

Year ago 3 month period

Better than annual forecast

Year ago 12 month market changes

Is the Market Better or Worse?

This Month, Quarter or Year over Year?

In each comparable periodThe answer is lower depreciation

today:Except May to June 2014

NAAA physical auction volume:

2013 marked the second consecutive year of increase in unit volume since 2007.

The number of units entered increased 4.3 percent to 15.2 million.

The number sold grew 4.2 percent to 8.2 million for a conversion rate of 54.2 percent.

Dealer-consigned vehicles represented the largest number of units sold at 58.8 percent.

Financial/fleet accounted for 34.3 percent.

Supply Levels Growing

NAAA physical auction volume: Increased consignment and sales volume 2013 over 2012

Expect the same increase in 2014

Total new sales levels 15.6M in 2013 16.1M in 2014 projected 16.5M in 2015 projected

Off lease increasing Part of trade-ins: just know when and sometimes where

Supply Levels Growing

High penetration of lease in New England

Creates a tough remarketing area

Online and Upstream to distribute the volume

Transportation services

Extra Reconditioning: Front Line Ready

EOT Oversupply?

2011: -7.7%

2012: -12.4%

2013: -12.8%

2014: -13.5% projected

2015: 15.5%

Annual Depreciation Trends

3 segments increased during June

MPT, MVC & FPT show strength

Greater than traditional depreciation:All Cars, mostly small

14 increased in last month of 1st Qtr

Solid Annual Market Changes

Only the Prestige Luxury Cars over pre-recession annualdepreciation

7 under 10% depreciation: All truck related

End of 1st Qtr Results

If history repeats, second qtr could be better. Must overcome strong March.

1st Qtr Results

End of 2nd Qtr Results

History did repeat, second qtr was better as spring market extended into May.

-5.2% -3.3%

2nd Qtr Results

Truck Market Continues Better Depreciation2nd Qtr market changes

1st Qtr market changes

Cars and Trucks almost identical change for quarter

Mazda activity

Spring market seasonality is prevalent in the compact cars

Mazda activity

Mazda5 also affected by the spring market strength

Mazda activity

As the volumes have increased the seasonality spikes have leveled out somewhat

Mazda activity

CX-7 closing gap to segment in 2014

Mazda activity

Smoother movement in this segment in 2013 & 2014

Land Rover activity

Model fairing better than segment in 2014

BMW activity

Increased supply of 2010 EOT in current wholesale market?

Mix in segment varied

Toyota Activity

Spring market seasonality is prevalent in the compact cars

Every March there is a climb

Toyota Activity

Combination of Hybrid, Electric and Plug-in reached 3.7%: Wards

Toyota Activity

2014 brings better retention in relation to segment average

Seasonality variations

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0.9500

0.9600

0.9700

0.9800

0.9900

1.0000

1.0100

1.0200

Prestige Luxury Cars

Seasonality variations

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0.9400

0.9600

0.9800

1.0000

1.0200

1.0400

1.0600

Compact Cars

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0.9600

0.9800

1.0000

1.0200

1.0400

1.0600

1.0800

Compact Crossovers

Seasonality variations

Seasonality variations

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0.9700

0.9800

0.9900

1.0000

1.0100

1.0200

1.0300

1.0400

1.0500

1.0600

Full-size Pickups

Gas prices

Heading up!

Gas prices

$.21 over year ago

Less volatility in 2014, but lower overall points

Will the current price trend continue?

Gas prices

Notice the level pricing of diesel throughout the year:Does this encourage more diesel products, car and truck?

What do you expect?

Are there certain concerns?

Any additional questions or comments?

Heading to the 3rd quarter

Is your mobile app setup?

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Set Up Academy Members w/Mobile App?Complementary mobile app for each of you throughout the

Auction Academy program.Auto and specialty markets: iPhone or Android

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Set Up Academy Members w/Mobile App?

Values

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Just call or emailRicky Beggs VP, Managing Editor770.533.5221 w, 404.915.4215 c

Rbeggs@BlackBookUSA.comTim West, VP, North American Auction Director

770.533.5230 w, 404.915.2428 cTwest@BlackBookUSA.com

Questions?