wholesale market insights - manheim auctions...used vehicle sales plateau source: cox automotive...
TRANSCRIPT
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%
Source: Manheim/Cox Automotive
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
Source: Manheim/Cox Automotive
$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
Source: Manheim/Cox Automotive
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
Source: Manheim/Cox Automotive
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
Source: Manheim/Cox Automotive
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
Source: Manheim/Cox Automotive
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
Source: Manheim/Cox Automotive
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
Source: Manheim/Cox Automotive
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
Source: Manheim/Cox Automotive
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
Source: Manheim/Cox Automotive
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
Source: Manheim/Cox Automotive
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
Source: Manheim/Cox Automotive
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
Source: Manheim/Cox Automotive
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
Source: Manheim/Cox Automotive
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
Source: Manheim/Cox Automotive
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
All other
Mazda
Kia
Jeep
VW
Chrysler
Hyundai
Dodge
Toyota
Nissan
Ford
Chevrolet
22
Rental Risk Units Sold by Segment
Source: Manheim/Cox Automotive
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
Van
SUV
Sports Car
Pickup
Luxury Car
Midsize Car
Compact Car
23
Manheim Market Report (MMR) Vehicle Insights
Source: Manheim/Cox Automotive
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
@SmokeonCars
@autosanalyst