month s 14.1M seasonally adjusted annual rate (SAAR) 14.1M was the best non-cfc result seen in

Transcription

1 Guidelines February 2012 NADA Used Car Guide Industry Update IN THIS ISSUE: NADA Official Used Car Guide Update ATD/NADA Official Commercial Truck Guide Update 2012 Used Price Forecast (Light Vehicles) NADA Returning Used Supply Forecasts Retail Market Indicators Fuel Prices Economic Drivers NADAguides.com Consumer Site Trends AuctionNet Wholesale Market Trends Guidebook Value Trends At NADA Used Car Guide NADA Official Used Car Guide Update NEW VEHICLES MARKET SUMMARY January saw the year off to a phenomenal start as the New vehicle sales in January grew by 11.5% relative to last year and the month s SAAR of month s 14.1M seasonally adjusted annual rate (SAAR) 14.1M was the best non-cfc result seen in was the highest seen in a non-clunkers month since May almost four years All told, more than 911k units were sold equating January s month-end new vehicle days supply increased by 16 days to 67. to an 11.5% improvement over the prior year. Continuing to benefit from a lineup of freshly redesigned Overall incentive spending for the month models, Chrysler brand led the way with sales gains of decreased by -9% on a month-over-month 81%. basis to reach an industry average of $2,435 per unit. Following closely behind was Mazda with the brand recording a 68% sales increase on the strength of subcompact Mazda2 and compact Mazda3 sales (combined sales on a month-over-month basis in January AuctionNet wholesale prices increased by 1% (mileage-and-mix adjusted). were up 123%). February s edition of the Official Used Car Mazda also saw Mazda6 sales rise by 118%, but a 41% Guide saw average trade-in values for 60% of year-over-year increase in average incentive spending (to all NADA segments equal to or greater than $2744) means that the jump in sales was due in part to January s figures. the deal and not natural demand. In addition, the 6 s rental penetration rate over the past few months has been significantly above the industry mean so it s highly likely that sales to rental fleets also played a large role in the model s performance for the month. Rounding out the top five non-luxury brand performers for the month were Volkswagen (48%), Smart (39%), and Jeep (37%). At 9%, Honda enjoyed its first annual bump in sales since April of last year on solid gains by the redesigned Civic (50%) and its utility cousin the CR-V (16%). Toyota notched its third straight month of growth by also recording a 9% improvement in sales. The Camry (56%) and the Yaris (64%) both reworked for the 2012 model year spearheaded the brand s success for the month. January s advancements make it clear that Japanese OEMs, hard pressed for most of the year last year, are now fully back to fighting shape and that their customer base is reengaged, none of which is news welcomed by the competition. 1

2 Official Used Car Guide Update (continued ) Considering this, perhaps it s no coincidence that both Ford and GM had their worst sales performances since the spring of last year. Although sales at the blue oval brand were up by 8%, January was the first month since May 2011 that new deliveries didn t improve by double-digits. General Motors is finding it more difficult to catch traction in the New Year as every one of the manufacturer s brands posted negative results last month. Starting from the bottom, sales at Cadillac fell by -29%, Buick -23%, GMC -10%, and Chevrolet -1%. In terms of luxury brands, Land Rover (41%), Mercedes-Benz (24%), and Audi (20%) all posted double-digit gains. BMW, last year s luxury sales leader, saw deliveries increase a slight 3%, while sales for former champ Lexus fell by -5% making January the fourteenth red month out of the last eighteen for the brand. Per Autodata, average incentive spending fell from December to January by -9% to reach $2,435 per unit (spending was also down 5.6% on an annual basis). It s worth noting that over the last five years, incentives have fallen by roughly -7% over this period of time, but this year spending fell by an additional two points. Moreover, the majority of mainstream brands including Chrysler, Hyundai, Toyota, and Chevrolet all reduced incentive spending significantly relative to last year. In fact, not one GM brand increased spending on an annual basis (a fact that may have contributed to sales performances for the month) and total spending for Toyota is now higher than only five other brands. New vehicle inventory took a typical seasonal turn north and overall days supply grew by 16 days to land at 67. Although supply jumped, looking back a year inventory stood at 71 days or 5.6% higher than what was observed last month. In addition, average January new vehicle days supply over the past nine years has been 86 days, much higher than current levels. Domestic brands experienced the biggest increase in supply at 22 days, primarily due to a 29 day rise in light truck inventory. Given this, domestic light trucks, in particular large pickups, are prime candidates for large incentive increases over the next month or two. Asia/Pacific and European brand supply moved up much less at 13 and 5 days respectively. ECONOMIC INDICATORS Economically the year started out moving solidly in the right direction with improvements in employment, productivity, and even some relatively upbeat news in the housing market complementing the nearly four year high in new vehicle sales. On the employment front, per the Bureau of Labor Statistics some 243,000 jobs were added to nonfarm payrolls in January and as a result, the unemployment rate moved down.2 points to reach 8.3%. This is the lowest level of unemployment seen since February More good news can be gleaned by looking through the BLS jobs report. The drop in the unemployment rate was mostly due to new jobs being added as opposed to a significant drop in the participation rate, and for only the second time since 1998, 50k jobs were added in manufacturing (primarily in durable goods, which includes motor vehicle and part production). In the last two months, manufacturing has added 82,000 jobs to non-farm payrolls. The BLS also revised payroll estimates for November and December by +57,000 and +3,000 respectively. 2

3 Official Used Car Guide Update (continued ) Per the Conference Board, consumer confidence slipped last month despite the employment improvements. After jumping by nearly ten points in December, the firm s Consumer Confidence Index fell by -3.7 points to reach 61.1 last month. Slide aside, January s reading marks the eighth month out of the last fourteen that the CCI has been at or above 60. Reflecting a continuation of the growth seen in the fourth quarter, industrial production improved for the third month in a row in January. The Institute of Supply Management s Purchasing Managers Index moved up a full point to 54.1, while the Inventories and New Orders indices lunged upward by 4 and 2.8 points respectively. Per the ISM, a PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. The Case/Shiller Composite-20 Home Price Index moved down yet again in November (the latest period available), this time by nearly a point to This is over five points back of where prices stood on a year-ago basis and brings the index back to a level last seen in early 2003, or some nine years ago. Falling prices aside, the months supply of homes fell by nearly two months on an annual basis to hit 6.2 in December, while the number of existing home sales increased for the third month in a row. A full housing recovery is still some ways off, but in certain respects things have at a minimum started trending towards less negative. Recent economic trends inspire something just a tick beyond guarded optimism, but the same could have been said of last year at this time before earthquakes, tsunamis, and debt downgrades derailed fledgling economic momentum. USED VEHICLES AuctionNet wholesale prices followed a familiar upward course in January, although the 1% mileage-and-mix adjusted rate of appreciation was a bit less than what we ve seen in recent years following the transition from December. This being said, the slowing rate of appreciation was expected given the growth we ve seen over the past three years. In fact, we re forecasting that used price growth in 2012 will be a relatively mild 1.8% or 1.2 points back from the 3% witnessed last year (on a seasonally adjusted basis). In addition, we expect that gradually improving economic conditions over the course of the year will mean that prices will appreciate more in the fourth quarter than they will in the preceding three (see page 10 for more information on our 2012 used price forecast). Across vehicle classes, month-over-month pickup truck appreciation led all others at 2.2%. Price growth for vans, utilities, and cars in that order ranged from 1.6% to just over 1%. On an annual basis, prices for cars and vans were up by 5.8% and 4.7% respectively, while pickup and utility prices were 2.5% and 2.9% higher than they were in January At a segment and model year level, price growth continues to be concentrated on model year vehicles, reflecting both the scarcity of volume and demand for late-model, certifiable units. Large pickup and SUV prices advanced virtually across the model year board to average 1%, or exactly double the average amount of growth achieved by mid-size and compact cars (.5%). Compact utilities, mid-size vans, and luxury car prices all softened in January, although only the near luxury segment (e.g. BMW 3 Series) saw prices fall more than -1%. 3

4 Official Used Car Guide Update (continued ) Relative to last year, overall AuctionNet supply in January for vehicles up to five years in age was down by -15% with every major segment continuing to experience annual reductions in volume. Combined, large pickup and SUV volume was down by -28%, compact and mid-size car volume by -12% and luxury car volume was off by -20%. Mid-size van volume was also down by some -18%. Value adjustments for February s edition of the Official Used Car Guide are reflective of the seasonal firming associated with the first third of a given year. As a result, average values for 60% of all NADA segments were either equal to or greater than January s figures, with upward changes predominantly applied to fuel efficient car segments, large SUVs and mid-size utilities. Downward adjustments for the remaining NADA segments averaged less than -1.4% and mostly impacted luxury vehicles and vans. 4

5 ATD/NADA Official Commercial Truck Guide Update 2011 Year-End Wrap-up and 2012 Forecast With all of our 2011 data now in the database, this edition will focus on year-over-year comparisons. We will examine the relative performance of the Class 8 and medium duty markets in the retail and wholesale channels, starting with general, 1000-foot views, and then narrowing our focus into individual segments. We ll start by looking at pricing, then sales volume, and wrap up with a summary and forecast. Pricing Class 8 Let s start with the segment that saw the most impressive gains the Class 8 highway market. The general population of Class 8 sleeper tractors ended 2011 with an average retail selling price of $46,436 on average mileage of 523,272. That price was $8024 higher than 2010 s average, despite mileage that was 52,639 higher (see graph). In percentage terms, 2011 retail prices were 17.3% higher than 2010 s, despite a mileage increase of 10.0%. These trucks were also 4.4 months older in 2011 vs For reference, the average sleeper truck sold off a dealer s lot in 2011 was just under 6 years old, cost $46,436, and had 523,272 miles. On the wholesale side, 2011 gains were even more impressive. Specifically, Class 8 sleepers averaged $31,036 in 2011, a whopping 36.0% increase over 2010 s $19,870 average. Average mileage was closer than retail, with 2011 s 636,780 result representing a 4.3% increase year-over-year (see graph). Trucks sold in 2011 were slightly younger than their 2010 counterparts, at 80.7 vs months. For reference, the average sleeper truck sold at auction or through wholesale channels in 2011 was 6.7 years old, cost $31,036, and had 636,780 miles. Now, let s dive a bit deeper into the data and focus strictly on 4 year old sleepers. This pool is represented by the 2008 model year in 2011, and the 2007 model year in Year-over-year results here are eye-opening s average retail price, at $63,660, was 27.2% higher than 2010 s $46,313 result. Mileage was essentially identical, with 2011 s 436,026 average only 290 miles lower than 2010 s (see graph). Let s split up the data further into aerodynamic sleepers vs. their traditionally-styled ( square-nose or owner-operator ) counterparts. When comparing these segments, it is necessary to keep in mind that styling isn t the only difference between aerodynamic and long-nose trucks. Owner-operator trucks are typically equipped with multispeed transmissions, chrome accessories, and other equipment that their aerodynamic counterparts are not. For that reason, we have provided an adjusted figure for that segment, subtracting out the NADA Retail value for the major owner-operator equipment in order to ensure an apples-to-apples comparison. We have also included the unadjusted figures for reference. On to the results. The retail price gap between the aerodynamic and adjusted owner-operator segments widened in 2011, from an average of 7% in 2010 to 12% in In dollar terms, owner-operator trucks brought an adjusted $2822 premium over aero trucks in 2010, which increased to $6233 in 2011 (see graph). Mileage and age were similar for both segments, so those factors did not influence the averages by an appreciable amount. (Continued on page 6) 5

6 Commercial Truck Guide Update (continued ) For reference, the average owner-operator sleeper tractor retailed in 2010 was just under 6 years old, sold for $46,695, and had 488,476 miles. In 2011, that same truck was roughly the same age, retailed for $57,822, and had 539,411 miles. To round out the Class 8 segment, we ll look at construction trucks. For this study, we re using retail data, since the level of detail is better from those sources s average of $65,611 was 7.4% higher than 2010, and this was on mileage 19% higher (at 262,562). Age of this segment was similar year-over-year, at about 8.5 years. See the graph for detail. Pricing Medium Duty Now let s move away from the Class 8 market and look at medium duty trucks. We ll use two segments as benchmarks: Class 6 Conventionals and Class 3-4 Cabovers. These segments cover a very wide range of applications, and, as such, provide a good gauge for the medium duty market overall. We ll focus on auction and wholesale results, since the majority of our medium duty sales data comes from those channels. Unlike the Class 8 market, there was no major upward movement in these medium duty segments. Class 3-4 Cabovers averaged $9360 in wholesale channels in 2011, which was 5.7% higher than Mileage averaged 132,919, or 11.7% higher than 2010 (see graph). These results are mildly encouraging, since higher prices combined with higher mileage is generally evidence of increasing demand. Class 6 Conventionals decreased slightly, with 2011 s average of $13, % behind 2010 s average. Mileage for 2011 was 6.9% higher, at 164,959 (see graph). These results may be considered flat, since the minor decrease in price is most likely explained by the minor increase in mileage. Sales Volume In the Class 8 highway market, the past 3 years have been historically unusual in that pricing has been dictated by a shortage of late-model trucks with low to average mileage. As such, year-over-year comparisons of sales volume merely reflect the lack of supply rather than fluctuations in demand that we would note in more typical periods. With that in mind, on the retail side, our reporting dealers sold an average of 6.9 trucks per rooftop in 2011, down from 7.5 in 2010 (see graph). On the wholesale side, our auction and wholesale totals for 2011 were down dramatically from The 2011 total was 29,282 data points, down a whopping 30.8% from For reference, Class 8 trucks represented 20.7% of our total auction/wholesale data for 2011 (the remainder being medium duty). The Class 8 portion was 23.2% in Summary Starting with Class 8 highway tractors, the directional movement in price since the 3 rd quarter of 2011 has been mildly downwards. Mileage has trended in the opposite direction. There is likely a price ceiling in place in the retail channel there is apparent resistance to pay much more than mid to high $40 s for a truck with mileage in the low to mid 500 s. Newer sleeper tractors are exhibiting a similar trend. Average retail selling price of 4-year-old sleeper tractors in 2011 crushed 2010, but that segment has also been moving slightly downward since the 3 rd quarter. 6

7 Jan-10 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-11 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-10 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-11 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-10 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-11 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Guidelines February 2012 Commercial Truck Guide Update (continued ) Again, there is apparent resistance to the price/mileage equation, which currently stands at low-$60 s for a truck with mileage in the mid-400 s Average Retail Price and Mileage: Sleeper Tractors Includes all data from all retail sources for trucks under 1,000,000 miles. $55,000 The wholesale Class 8 market is still showing strength, with a $50,000 general upward trend in price that fluctuates as mileage $45,000 nears 650,000. In other words, 650K seems to be a relatively clear delineation point at which buyers start to lose interest $40,000 Looking at specific Class 8 segments, owner-operator trucks are bringing a premium, even in this era when fuel economy is of primary importance. The widening gap between these two types (in favor of owner-operator) is likely due to a number of factors such as the fluctuating market for sleeper trucks in general, the trend towards regional hauling (which reduces the emphasis on fuel economy over a long-haul), and the relative condition of higher-mileage trucks in the aerodynamic segment. Construction trucks might finally be starting to lift off from the bottom. As the domestic economy finally starts to show signs of sustained recovery in more than just the industrial sector, these trucks may finally enjoy increased demand. Currently, mining and raw materials are keeping the segment alive. Commercial and infrastructure construction could potentially be the next driver of growth in this market. A broader economic recovery will also expand demand for all types and classes of medium duty trucks. Looking back, the rebound in the industrial sector that drove Class 8 demand starting in late 2009 was simply not relevant to most medium duty segments. Urban rentals, light construction, residential services, and the other sectors that medium duty trucks serve have remained depressed since the downturn began. Looking forward, however, a sustained increase in consumer spending, decreased unemployment, and expansion of credit are all factors that could ignite an increase in demand for most medium duty segments Source: NADA 2 per. Mov. Avg. (Mileage) 2 per. Mov. Avg. (Price) Average Wholesale Price and Mileage: Sleeper Tractors Includes all data from all wholesale sources for trucks under 1,000,000 miles. Source: NADA 2 per. Mov. Avg. (Mileage) 2 per. Mov. Avg. (Price) Average Retail Price and Mileage: Four-Year-Old Sleeper Tractors Source: NADA Mileage Price $35,000 $30,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $75,000 $70,000 $65,000 $60,000 $55,000 $50,000 $45,000 $40,000 $35,000 $30,000 7

8 Commercial Truck Guide Update (continued ) Forecast So here are the key points. For Class 8 sleeper tractors, look for prices to remain at high levels in both the retail and $80,000 Average Retail Price and Mileage: Class 8 Construction Trucks wholesale channels. However, with mileage of available $70, trucks at historic highs, don t expect much more in the way of upward movement. The low build rate of model year trucks will guarantee a low supply of late-model trucks for at least the remainder of After that, the emissions/economy rules will become the next story as they begin to influence purchasing decisions of new $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 Source: NADA 2 per. Mov. Avg. (Price) 2 per. Mov. Avg. (Mileage) and used trucks. $0 0 For construction trucks, if you are involved in the mining/raw materials/natural resources sector, expect business to con- Average Wholesale Price and Mileage: Class 3 & 4 Cabovers tinue at a solid pace. Look for mild upticks in demand as business slowly opens up in the broader construction industry. $12,000 $11,000 $10,000 $9,000 Includes all data from all wholesale sources for trucks under 350,000 miles On the medium duty side, demand may increase for box trucks, but there is ample supply. As such, it would be safe to $8,000 $7,000 $6, bet on mild upward movement, with lower-mileage trucks bringing a premium. Heavier weight classes will follow a similar pattern, with demand for light construction and residen- $5,000 $4,000 $3,000 $2,000 Source: NADA 2 per. Mov. Avg. (Price) 2 per. Mov. Avg. (Mileage) tial services picking up gradually in Again, the first trucks to see an improvement in price will be those with the lowest mileage. Expect these to be cherry-picked out of the market early on should be a year of recovery in a broader range of economic sectors. We re likely not going to see a bounce, but we should see a gradual liftoff in sectors that have stayed flat since Thanks for reading. For regular updates on this data, check my blog every few days at $16,000 $15,000 $14,000 $13,000 $12,000 $11,000 $10,000 $9,000 $8,000 $7,000 Average Wholesale Price and Mileage: Class 6 Conventionals Source: NADA Includes all data from all wholesale sources for trucks under 350,000 miles. 2 per. Mov. Avg. (Price) 2 per. Mov. Avg. (Mileage)

9 Commercial Truck Guide Update (continued ) Average Retail Price: Aerodynamic vs. Owner-Operator Sleeper Tractors $70,000 $65,000 Includes all data from all retail sources for trucks under 1,000,000 miles. $60,000 $55,000 $50,000 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 Source: NADA Aerodynamic O/O Adjusted O/O Unadjusted Average Number of Sales Per Rooftop (NADA Reporting Dealers) Retail Wholesale 9

10 2012 Used Price Forecast (Light Vehicles) In last month s edition of Guidelines we discussed some of the fundamental drivers that affected industry performance last year and provided insight on the probable movement of each in We concluded our review by serving up the question Will used prices continue to rise or have they reached a plateau? The direct answer is this although used prices have been on an upward tear over the past three years, we are forecasting additional appreciation this year. We ll discuss just how much growth we re expecting a bit later on, but first let s cover the rationale behind our estimates. Consumer demand will grow along with the economy. Granted the economy has been growing at a less than desirable pace, but it has been growing nonetheless. After languishing for the better part of last year, GDP jumped by 2.8% in the fourth quarter and many economists, including ours, expect that the rate of growth will continue to climb as the year progresses. February s Blue Chip Economic Indicators report places GDP for the year at 2.2%, or a half-point higher than 2011 s 1.7% rate of growth (advanced estimate). Widespread gains in employment, manufacturing, and in the stock market have us starting out the year moving in the right direction, and although consumer confidence fell slightly last month, January s positive economic news should see it rebound in February. Confidence and a consumer s nascent willingness to spend could take a dive if things worsen in Europe however, but as of right now we re cautiously optimistic that this won t happen. The turmoil in Europe is still a developing story, but it appears that after many months of negotiating, European leaders are finally setting the stage for a rough economic landing rather than the cataclysmic fireball that many had feared. Given the above, we expect that consumer demand for used vehicles will continue on the upward course that it has been following since the early part of 2009, and that it will steadily expand as the year progresses. Used supply will continue to fall. As a natural byproduct of the steep drop-off in new sales since 2008, used vehicle supply will remain on a downward course in We ve modified our forecast from last month to account for an anticipated influx of trade-ins stimulated by slowly improving economic conditions and strong trade-in values. As a result, we re now projecting that total used supply for vehicles up to 8 years in age will decline by -3% and that retail supply will fall by just -1%. 10

11 2012 Used Price Forecast (continued ) Our forecast for off-lease supply remains unchanged at -22%, while returning fleet supply should see a -2% drop relative to last year. As we stated last month in Guidelines, less than a half dozen of NADA s twenty-four segments will see an uptick in supply this year, with supply for the remainder either holding steady or continuing to erode. Some nine segments predominantly large cars, mid-size vans, large SUVs, and luxury cars will experience supply losses in the double-digits. Credit availability and terms will progressively become more favorable. In terms of credit availability, prime and near-prime loan approval percentages continue to improve on an annual basis (approvals for each strengthened by 2% last year). Subprime approvals started out 2011 year on a positive note before slipping during the second third of the year. This being said, approvals have continuously inched up each month since September. In addition, the net percentage of senior loan officers reporting an increased willingness to make consumer installment loans has grown for the last nine quarters. Regarding terms, finance rates continue to drift downward even though they are already near historic lows. Rates at the end of last year were a half-point back from where they were in Q and a full point back from Q Considering that the prime rate hasn t moved since January 2009 and that the Fed has promised to hold short-term rates near zero until 2014, we shouldn t expect this trend to reverse course in a detrimental fashion any time soon. Moreover, a reemerging automotive asset-backed securities market, whose appeal has grown along with strengthening used vehicle values, should further foster lender willingness to extend credit for new and used vehicle purchases. New vehicle prices will remain stable. As a general rule, new vehicle prices impose a logical ceiling on used vehicle prices. Production cuts over the past few years (intentional or otherwise) have allowed manufacturers to raise MSRPs and reduce incentive spending. The resulting growth in new transaction prices has provided the room necessary for used vehicle prices to rise. Certainly it s rational to argue that unique circumstances last year temporarily inflated new vehicle prices and now that new vehicle production is back online, prices will retreat. Data and logic suggest otherwise. 11

12 2012 Used Price Forecast (continued ) New vehicle production estimates for the year remain reasonable, 2012 model year MSRPs are up (by ~1.6%), and incentive spending continues to contract. Regarding incentives, total spending fell by -9% in January which is one-to-two points greater than what we normally see in the transition from December. Spending for the month was also down 5.6% on an annual basis. In addition, manufacturers finally find themselves in a position of pricing power and it will be difficult for them to give up hardfought advances simply because Japanese production is running at full steam. When taken as a collective, we expect to see new transaction prices rise subtly once again this year which will minimize downward pressure on used vehicle prices. The stage is set for used prices to increase again in Our used price forecast for the year is predicated on fundamental economics. Demand will be up, supply will be down, and more credit will be made available to facilitate sales. As a result, we re estimating that on a seasonally adjusted basis, used vehicle prices will increase by 1.8% through the end of the year. Looking at the first chart on the right, note that the growth in prices in the fourth quarter coincides with our expectation that economic conditions will improve as the year wears on. When we add the effects of seasonality back into our forecast, we estimate that used prices will peak in the April-May time period (second chart at right). When viewed in this context, consumers will find the spring and early summer months a great time to go shopping for a new or previously owned vehicle because that s when trade-in prices will be at their highest. Within segments, we expect that gas prices revolving around $3.50 per gallon will mean that demand will be high for fuel efficient compact and mid-size cars and as such, we re forecasting that prices will grow by 2.7% and 2.1% respectively (on a seasonally adjusted basis; see table on next page). We foresee mid-size and large utility prices moving up by an average of 1.35% as low supply will more than compensate for the higher price of gasoline. We don t believe the same will be true for large pickups because the segment s -4.1% drop in supply won t be enough to offset the price of gas; given this, we see prices for the segment falling by a slight -.5%. We re forecasting that near luxury car (e.g. BMW 3 Series) and mid-size van prices will increase well above our 1.8% mean at 3% and 3.6% respectively, the former due to increasing numbers of aspirational fence-sitters returning to the market and the latter due to the combined versatility and efficiency the segment has to offer. Prices for both segments will also be pressured up by declining supply. 12

13 2012 Used Price Forecast (continued ) Considering the run-up in used prices over the past few years, there has been some concern about a developing used price bubble but we don t believe this to be the case. For starters, sound fundamental changes particularly the shift away from overproduction have been the real catalysts behind price growth, not the speculation normally associated with untenable appreciation. In addition, used prices are a reasonable 12% above their long-term trend which is a mere blip compared to other pre-bubble peaks (see final chart below). In short, used price appreciation has been legitimately earned. Barring some unpredictable external event or a return to bad business practices, when prices do fall the descent should be a gradual one. This being said, we don t see prices retreating until sometime in the distant future or at the very least, some twelve months from now. 13

14 NADA Used Supply Forecast About NADA s Used Supply Forecast NADA s Used Supply Forecast estimates the supply of vehicles returning to the secondary market at various points in the future. NADA s propriety methodology is predicated on actual new vehicle registration data and incorporates return period and volume estimates based on the original registration type (i.e. lease, retail, and rental fleet). The data in the following charts represents returning supply for vehicles less than eight model years old. 14

15 Days' Supply Volume (Millions) Guidelines February 2012 Retail Market Indicators New Vehicle Sales Retail market indicators convey information on the performance of the new and used vehicle markets. Total vehicle sales are core indicators of consumer demand and overall industry health. Supply is a measurement used to gauge the relationship between supply and demand, and provides an indication of pricing strength in general. New Vehicle Sales 1.4 New Vehicle Sales YoY Change 30% % 1 20% % 10% 5% 0% -5% % Change 0-10% Source: WardsAuto.com Month New Vehicle Days' Supply Days' Supply YoY Change 4% 2% 0% 60-2% 50-4% % -8% -10% -12% -14% -16% -18% % Change Source: WardsAuto.com Month Seasonally Adjusted Annual Rate (Millions) Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan Source: WardsAuto.com 15

16 Price P/Gal. Price P/Gal. Guidelines February 2012 Fuel Prices Average Price of Regular Grade Gasoline: All Formulations $4.25 $4.00 $3.75 $3.50 $3.25 $3.38 $3.00 $2.75 $2.50 $2.25 $2.00 $1.75 $1.50 Source: EIA Month Average Price of On-Highway Diesel $5.00 $4.75 $4.50 $4.25 $4.00 $3.83 $3.75 $3.50 $3.25 $3.00 $2.75 $2.50 $2.25 $2.00 $1.75 $1.50 Source: EIA Month 16

17 Index (SA) Rate (SA) Guidelines February 2012 Economic Drivers Unemployment and Consumer Confidence are two of the most important economic drivers behind both a consumer s ability and willingness to make a new or used vehicle purchase, and are provided as indicators on the future outlook for both markets. 10.5% 10.0% 9.5% 9.0% 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% Unemployment Rate Source: BLS Month 120 Consumer Confidence Index Source: The Conference Board Month 17

18 NADAguides.com Consumer Site Trends New Activity About NADAguides.com NADAguides.com is the most comprehensive vehicle information website on the internet today, offering a broad range of information and services to help educate consumers in the market to buy, sell, trade, or simply shop for a vehicle. The figures contained below are based on consumer activity at and are calculated by measuring the number of unique lookups for a given period of time. Acura Land Rover Mercedes-Benz Subaru Audi Scion Nissan Volkswagen Porsche MINI GMC Chevrolet BMW Honda Mazda Volvo Suzuki Hyundai Toyota Jeep Kia Mitsubishi Lexus Jaguar Dodge Infiniti Smart Lincoln Ford Buick Cadillac Chrysler Saab YoY Change in Consumer Activity: NEW Make -67% -50% -54% -27% -33% -14% -14% -21% -7% -8% -8% -12% -12% 0% -2% -2% -4% 3% 2% 8% 8% 16% 15% 13% 28% 26% 22% 33% 32% 30% 42% 54% 108% -100% -50% 0% 50% 100% 150% Source: NADAguides.com Percent Change New: Top 15 Researched Models January 2012 January 2012 Rank MoM Change MY MAKE MODEL Chevrolet Silverado (1) 2012 Ford F (1) 2012 Toyota Camry 4 (1) 2012 Chevrolet Equinox Kia Sorento 6 (1) 2012 Ford Focus 7 (7) 2012 Honda CR-V Ram Truck (2) 2012 Ford Mustang Ford Explorer 11 (5) 2012 Hyundai Sonata Chevrolet Corvette GMC Acadia Acura TL 15 (5) 2012 Hyundai Elantra New: Top 15 Researched Models January 2011 January 2011 Rank MY MAKE MODEL Ford Mustang Ford F Chevrolet Cruze Hyundai Sonata Kia Sorento Toyota Camry Chevrolet Equinox Jeep Grand Cherokee Chevrolet Silverado Chrysler Ford Explorer Cadillac CTS-V Coupe Kia Optima Dodge Challenger Ford Super Duty F

19 NADAguides.com Consumer Site Trends Used Activity YoY Change in Consumer Activity: USED Make Jaguar BMW Pontiac Chrysler Infiniti Volkswagen Saab Nissan Audi Dodge Mercury Honda Ford Chevrolet Mercedes-Benz Jeep MINI Mazda Suzuki Buick Hummer Subaru Acura GMC Lincoln Kia Cadillac Hyundai Toyota Mitsubishi Lexus Saturn Porsche Volvo Land Rover Scion -1% -1% -1% -3% -5% 1% 7% 6% 5% 5% 4% 7% 7% 11% 11% 10% 9% 9% 9% 13% 13% 13% 13% 12% 12% 11% 11% 16% 14% 14% 14% 18% 17% 17% 17% 25% Source: NADAguides.com -10% -5% 0% 5% 10% 15% 20% 25% 30% Percent Change Used: Top 15 Researched Models January 2012 Used: Top 15 Researched Models January 2011 January 2012 Rank MoM Change MAKE MODEL 1 0 Ford F Chevrolet Silverado Nissan Altima 4 1 Toyota Camry 5 (1) Honda Accord Sdn 6 0 Chevrolet Impala 7 0 Dodge Ram Ford Mustang 9 (1) Toyota Corolla 10 2 Ford Escape 11 (1) Chevrolet Tahoe 12 (1) Chevrolet Silverado 2500HD 13 2 Ford Focus 14 (1) BMW 3 Series 15 (1) Toyota Tacoma January 2011 Rank MAKE MODEL 1 Ford F Chevrolet Silverado Dodge Ram Nissan Altima 5 Honda Accord Sdn 6 Toyota Camry 7 Chevrolet Impala 8 Ford Super Duty F Ford Mustang 10 Chevrolet Tahoe 11 Chevrolet Silverado 2500HD 12 Toyota Corolla 13 Ford Escape 14 Toyota Tacoma 15 Chevrolet Cobalt 19

20 AuctionNet Wholesale Market Trends About AuctionNet AuctionNet is an industry-unique wholesale transaction database, available exclusively from NADA Used Car Guide, in joint partnership with the National Auto Auction Association (NAAA). Over 100 million records strong and updated weekly, it captures sales from all Manheim and ADESA, as well as participating ABC, ServNet and large independent auctions, representing over 80% of nationwide auction activity. Monthly Change in Average AuctionNet Price: Core Segments December 2011 v. January 2012 NADA Segment 2007MY 2008MY 2009MY 2010MY 2011MY Compact Utility -0.8% -0.2% 1.2% -1.7% 1.2% Intermediate Compact -2.0% 0.1% 1.9% 0.1% 1.6% Intermediate Mid-Size 0.0% -0.2% 1.9% 0.4% 0.9% Large Pickup 0.4% 0.8% 2.0% 1.1% 1.2% Large SUV 0.3% 1.2% -1.1% 0.5% 3.6% Luxury Mid-Size 0.9% -1.1% 1.0% -0.9% -0.7% Mid-Size Utility -0.3% -0.1% 0.7% -0.9% 2.2% Mid-Size Van -3.4% -1.4% -1.3% 1.1% 0.6% Near Luxury -2.9% -0.5% -2.4% -2.9% -3.0% *Underlying data has been adjusted for Mileage & Mix. See the last page of "Guidelines" for data key. 2.5% Monthly AuctionNet Price Change: 1 to 5 yr. Old Vehicles* Dec-11 vs Jan % YoY AuctionNet Price Change: 1 to 5 yr. Old Vehicles* Jan-11 vs Jan % 2.0% 5.0% 1.5% 4.0% 1.0% 3.0% 2.0% 0.5% 1.0% 0.0% Car Pickup Utility Van 0.0% Car Pickup Utility Van *Figures have been adjusted for both Mileage & Mix *Figures have been adjusted for both Mileage & Mix 20

21 Guidebook Value Trends Month-Over-Month Monthly Change in Average Official Used Car Guide Value: NADA Segment January 2012 v. February 2012 NADA Segment 2007MY 2008MY 2009MY 2010MY 2011MY* Compact Utility -0.1% -0.5% -0.4% -0.2% 0.0% Entry Subcompact 1.6% 1.0% -0.1% 0.5% 0.3% Intermediate Compact 0.3% 0.3% 0.4% 0.4% 0.2% Intermediate Mid-Size 0.1% 0.3% 0.5% 0.6% 0.3% Intermediate Subcompact 0.0% 0.0% 0.0% 0.0% -0.1% Large Car 0.0% 0.1% 0.5% 0.8% 1.3% Large Pickup 0.0% -0.1% 0.1% -0.2% 0.0% Large SUV 0.2% 0.0% 0.3% 0.5% 0.3% Large Van 0.0% -0.2% -1.0% -1.7% -2.3% Luxury Compact Utility 1.5% 0.0% 0.0% -0.5% -0.1% Luxury Large 0.0% -0.1% 0.0% 0.0% 0.0% Luxury Large Truck 0.1% -0.1% 0.0% -0.1% 1.3% Luxury Mid-Size -0.2% -0.3% -0.4% -0.1% -0.2% Luxury Mid-Size Utility 0.1% 0.1% 0.2% 0.1% 0.0% Luxury Sport 0.0% 0.0% 0.0% 0.0% 0.0% Mid-Size Pickup 0.7% 0.0% 0.3% -0.2% -0.1% Mid-Size Utility -0.1% 0.0% 0.0% 0.3% 0.3% Mid-Size Van -1.6% -1.2% -1.8% -1.9% -1.1% Near Luxury -0.5% -0.6% -0.5% -0.3% -0.5% Premium Luxury Large 0.0% 0.0% 0.0% 0.0% 0.0% Sport -0.1% 0.0% -0.1% 0.1% 0.0% Upper Compact 0.3% 1.3% 0.5% 0.2% -0.3% Upper Mid-Size 0.5% 0.1% 0.5% 0.5% -0.9% Upper Sport 0.0% 0.0% 0.0% 0.0% -0.7% *Value movement can be influenced by newly valued vehicles. See the last page of "Guidelines" for data key. Monthly Change in Average CTG Value: NADA Segment January 2012 v. February 2012 NADA Segment 2006MY 2007MY 2008MY 2009MY 2010MY* Commercial Van 0.0% -0.5% -0.6% 0.0% N/A Extended Hood 0.9% 1.1% -0.1% -0.5% 0.0% Highway Aerodynamic -0.3% 0.2% -0.2% -1.5% 0.2% Highway Traditional 0.9% 1.1% 0.0% -0.5% 0.0% Local/Delivery Daycab 0.5% 0.8% 0.0% -0.1% 0.1% Medium Duty Cabover 0.0% 0.0% 0.0% N/A N/A Medium Duty Conventional -0.3% -3.2% -0.7% -2.0% -1.7% Vocational/Construction 0.0% 0.0% 0.0% 0.0% N/A *Value movement can be influenced by newly valued vehicles. See the last page of "Guidelines" for data key. 21

22 Guidebook Value Trends Year-Over-Year NADA Used Car Guide Value Change: February, 2011 v YoY Segment NADA Segment 5YR 4YR 3YR 2YR 1YR Change Compact Utility 13.1% 12.9% 11.0% 10.4% 4.1% 9.2% Entry Subcompact 33.4% 31.1% 20.8% 11.2% 10.5% 16.0% Intermediate Compact 10.1% 14.8% 11.2% 14.5% 17.0% 15.6% Intermediate Mid-Size 16.2% 8.9% 3.6% 7.1% 12.2% 12.4% Intermediate Subcompact 3.4% 13.5% 10.9% 9.3% 7.8% 7.5% Large Car 10.4% 13.1% 3.4% 8.7% 6.4% 11.1% Large Pickup 10.8% 7.4% 5.8% 2.4% 6.8% 5.2% Large SUV 21.9% 8.4% 2.6% -0.8% -0.6% 2.7% Large Van 12.7% 13.5% 6.5% 6.6% 4.2% 9.5% Luxury Compact Utility 10.3% 5.5% 21.9% 11.3% 6.2% 4.8% Luxury Large 26.3% 19.5% 16.1% 8.9% 25.1% 25.0% Luxury Large Truck 13.7% 17.6% 14.0% 7.9% 9.9% 8.7% Luxury Mid-Size 17.9% 8.6% 6.8% 8.0% 15.0% 19.3% Luxury Mid-Size Utility 13.8% 13.5% 14.5% 12.5% 10.0% 12.7% Luxury Sport 26.9% 14.4% 14.7% 13.1% 28.4% 25.0% Mid-Size Pickup 9.9% 8.9% 19.5% 3.3% 0.4% 7.7% Mid-Size Utility 13.4% 10.2% 7.8% 6.7% 4.3% 5.9% Mid-Size Van 6.4% 23.3% 14.3% 9.3% 11.7% 16.7% Near Luxury 16.3% 14.2% 4.7% 20.8% 15.0% 23.9% Premium Luxury Large 27.3% 18.4% 17.4% 17.2% 13.4% 36.5% Sport 26.6% 11.3% 10.2% 8.7% 3.9% 13.3% Upper Compact 12.5% 6.4% 9.6% 7.3% 10.2% 9.8% Upper Mid-Size 10.5% 6.8% 24.7% 3.5% 0.1% 9.8% Upper Sport 22.6% 15.4% 12.4% 24.4% 3.1% 22.9% *Calculations are based on vehicle age. I.e. Values for 1 year old vehicles in CY2011 are compared against values for 1 year old vehicles in CY2010. ATD/NADA Commercial Truck Guide Value Change: February, 2011 v NADA Segment 5YR 4YR 3YR 2YR YoY Segment Change Commercial Van 25.6% 33.6% -11.8% -1.7% 9.6% Extended Hood 15.8% 33.7% 22.9% 6.2% 25.1% Highway Aerodynamic 14.7% 39.7% 21.1% 4.7% 14.6% Highway Traditional 19.2% 31.2% 19.7% 7.7% 13.5% Local/Delivery Daycab 17.3% 37.2% 18.4% 7.9% 17.5% Medium Duty Cabover 34.9% 27.3% 5.4% N/A 15.8% Medium Duty Conventional 28.8% 30.2% 13.7% 11.9% 15.0% Vocational/Construction 20.3% 48.2% 12.6% N/A 18.0% *Calculations are based on vehicle age. I.e. Values for 1 year old vehicles in CY2010 are compared against values for 1 year old vehicles in CY

23 Guidebook Value Trends Year-To-Date NADA Used Car Guide Value Change: January December 2011 YTD Segment NADA Segment 2006MY 2007MY 2008MY 2009MY 2010MY* Change Compact Utility -6.7% -5.9% -4.0% -3.4% -6.4% -4.5% Entry Subcompact 6.8% 5.1% 1.0% 1.1% -12.7% 2.2% Intermediate Compact -3.3% -3.0% -1.8% -1.6% -11.1% -2.2% Intermediate Mid-Size -4.0% -4.1% -5.1% -8.3% -14.5% -5.7% Intermediate Subcompact -4.3% -1.5% -4.0% -3.9% -13.0% -3.5% Large Car -3.6% -5.0% -7.5% -9.5% -14.0% -6.4% Large Pickup -11.0% -10.2% -8.5% -7.9% -4.4% -9.2% Large SUV -15.3% -14.0% -10.4% -11.1% -10.0% -12.1% Large Van -5.3% -4.0% -5.3% -6.2% -8.4% -5.3% Luxury Compact Utility -6.4% -7.5% -8.2% 0.7% -1.9% -1.3% Luxury Large -6.4% -3.4% -9.8% -11.5% -11.3% -8.7% Luxury Large Truck -11.4% -10.7% -8.2% -8.6% -5.9% -9.2% Luxury Mid-Size -7.3% -8.9% -9.8% -10.3% -9.7% -9.4% Luxury Mid-Size Utility -10.0% -9.3% -9.4% -8.3% -3.4% -8.2% Luxury Sport -7.4% -5.6% -9.7% -9.4% -7.1% -8.5% Mid-Size Pickup -3.9% -4.9% -4.9% -3.3% -5.6% -4.3% Mid-Size Utility -12.3% -12.1% -9.1% -8.6% -7.5% -10.1% Mid-Size Van -11.2% -9.3% -7.0% -4.7% -6.3% -8.6% Near Luxury -8.7% -8.7% -9.6% -8.9% -8.6% -9.1% Premium Luxury Large -10.4% -10.5% -10.9% -13.9% -8.4% -11.8% Sport -4.1% -4.3% -3.5% -3.6% -9.9% -3.8% Upper Compact -4.5% -8.0% -6.0% -9.9% -5.6% -7.6% Upper Mid-Size -7.8% -13.0% -4.7% -7.1% -9.7% -8.6% Upper Sport -5.1% -4.6% -4.6% -9.2% -8.8% -6.5% *May 2011 through current period. ATD/NADA Commercial Truck Guide Value Change: January December 2011 YTD Segment NADA Segment 2005MY 2006MY 2007MY 2008MY 2009MY Change Commercial Van -3.1% -1.3% -4.5% -3.1% -7.1% -3.1% Extended Hood 6.2% -1.5% -7.5% -1.2% -5.0% 2.0% Highway Aerodynamic 7.7% -0.5% -10.6% -5.4% -8.6% -5.6% Highway Traditional 8.3% -1.6% -8.0% -3.9% -7.7% -4.2% Local/Delivery Daycab 3.8% -0.5% -4.7% -0.8% -6.3% -0.4% Medium Duty Cabover 10.9% 6.1% 6.8% 0.0% N/A 4.6% Medium Duty Conventional 3.0% 2.5% -0.1% -0.4% 4.5% 0.2% Vocational/Construction 0.1% 0.2% -0.1% 0.5% 0.0% 5.0% 23

24 At NADA Used Car Guide Are you using the NADA VIN Scanner? If not, the VIN Scanner application is free to subscribers of NADA AppraisalPRO and NADA Online. It simplifies the vehicle decoding process by giving users the ability to scan and retrieve NADA vehicle values including features like automatic adjustments for mileage and accessories more efficiently and faster than ever before. The VIN Scanner app is available for download to Android and iphone mobile devices. For more information, go to or call NADA. On The Road NADA Used Car Guide is a sponsor of the Conference of Automotive Remarketing (CAR) from March 14-15, 2012 at Caesars Palace in Las Vegas. NADA Executive Auto Analyst, Jonathan Banks will be a panelist at the Forecast of Residual Values: session. Jonathan along with other industry experts will provide a forecast of residual values and key trend predictions for the wholesale resale market for the upcoming year. CONTACTS: Financial Industry/ Accounting/ Legal/OEM Captive Steve Stafford x7275 sstafford@nada.org Credit Unions, Fleet/Lease/ Rental Industry, Government Doug Ott x4710 dott@nada.org Automotive Dealers/Auctions, Insurance Jim Dodd x7115 jdodd@nada.org Automotive OEMs Stu Zalud x4636 szalud@nada.org Business Development Manager Jim Gibson x7136 jgibson@nada.org Director Sales and Customer Service Dan Ruddy x4707 druddy@nada.org About NADA Used Car Guide Over a 79-year history, NADA Used Car Guide has earned its reputation as the leading provider of market-reflective vehicle valuation products, services and information to businesses throughout the U.S. and worldwide. NADA s editorial team collects and analyzes over one million combined wholesale and retail automotive-related transaction prices per month. Its guidebooks, auction data, analysis, and data solutions offer automotive, financial, insurance, and government professionals the timely information and reliable solutions they need to make better business decisions. Visit Director Public Relations Charles Cyrill (mobile) ccyrill@nada.org Disclaimer: NADA Used Car Guide makes no representations about future performance or results based on the data and the contents available in this report ("Guidelines"). Guidelines is provided for informational purposes only and is provided AS IS without warranty or guarantee of any kind. By accessing Guidelines via or the NADA website, you agree not to reprint, reproduce, or distribute Guidelines without the express written permission of NADA Used Car Guide. 24