Greater Cleveland Auto Outlook

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Covering First Quarter 2014 Volume 22, Number 2 Sponsored by: Greater Cleveland Automobile Dealers Association FORECAST Area New Vehicle Market Up Slightly in First Quarter of 2014 Small improvement

Greater Cleveland Area new retail light vehicle registrations increased 1.9% in the First Quarter of this year versus a year earlier, just above the estimated 1.6% improvement in the Nation.

4% in the First Quarter of 2013 to 50.9% this year. 4. Registrations for Japanese brands were up 3.9% so far this year, above the 1.9% overall industry increase. 5. The new vehicle market has come a long way from the depths of the recession.

1 Covering First Quarter 2014 Volume 22, Number 2 Sponsored by: Greater Cleveland Automobile Dealers Association FORECAST Area New Vehicle Market Up Slightly in First Quarter of 2014 Small improvement predicted for entire year Below is a list of 10 key trends and developments in the Greater Cleveland Area new vehicle market: 1. Greater Cleveland Area new retail light vehicle registrations increased 1.9% in the First Quarter of this year versus a year earlier, just above the estimated 1.6% improvement in the Nation. (Note: March figures were estimated). 2. Auto Outlook s annual forecast for 2014 new retail light vehicle registrations: 248,500 units, up 3.5% from Light truck market share increased from 48.4% in the First Quarter of 2013 to 50.9% this year. 4. Registrations for Japanese brands were up 3.9% so far this year, above the 1.9% overall industry increase. 5. The new vehicle market has come a long way from the depths of the recession. Registrations in the First Quarter of this year were an estimated 58,157 units, up more than 19,000 compared to the First Quarter of Alternative powertrain (hybrid and electric) market share was 1.6% thru February of this year, down slightly from last year. 7. Three biggest segments in the area are Compact SUV, Standard Mid SIze car, and Sub Compact Car. New light vehicle registrations 300, , , , ,000 50,000 Annual Trend in Area Market 217, , , , , , , Forecast The graph above shows annual new retail light vehicle registrations in the area from 2008 thru 2013, and Auto Outlook s projection for all of Historical data source: Polk. 8. Brands with the largest percentage increases in registrations during the first three months of this year: Ram, Lincoln, Jaguar, Mitsubishi, and Jeep. Top five in market share were Ford, Chevrolet, Honda, Toyota, and Nissan. 9. The area unemployment rate has declined from a high of 9.3% in October of 2009 to 7.3% in March of this year. 10. Top five selling cars in area market: Chevrolet Cruze, Ford Fusion, Ford Focus, Honda Civic, and Chevrolet Malibu. Top five light trucks: Ford Escape, Ford F-Series, Chevrolet Equinox, Chevrolet Silverado, and Ram. General Market Outlook for next two years: Sales likely to move higher; but market is approaching it s cyclical peak Gradually improving economic conditions, the easing of the household debt burden, and most significantly, pent up demand have provided the boost to new vehicle sales during the past four years. Although sales are likely to increase during the next year or two, the pace of the recovery is almost certain to ease. Market Summary YTD YTD '14 % Chg. Mkt. Share thru Mar thru Mar* to '14 YTD '14* TOTAL 57,052 58, % Car 29,437 28, % 49.1% Light Truck 27,615 29, % 50.9% Detroit Three 30,798 31, % 53.8% European 3,253 3, % 5.7% Japanese 17,079 17, % 30.5% Korean 5,922 5, % 9.9% Detroit Three consists of vehicles sold by GM, Ford, and Chrysler. *Figures for March, 2014 were estimated by Auto Outlook. Source: Polk.

Page 2 MARKET TRACKER: QUARTERLY RESULTS Area Market Increases 1.9% in 1st Quarter 2014 vs. 1.6% in U.S. QUARTERLY TREND Percent Change in New Vehicle Market Area and U.S. QUARTERLY PERSPECTIVE Five Years of First Quarter Results in Area Market 14.

New retail light vehicle registrations 40000 30000 20000 The market was up by more than 19,000 units in the First Quarter of 2014 vs. 2010. 2.0% 10000 0.0% '14* Area 10.9% 8.8% 8.7% 1.9% U.S. 9.0% 13.

39122 54567 53584 57052 58157 First Quarter registrations during past five years * Figures for First Quarter 2014 are estimated by Auto Outlook based on data for January and February.

2 Page 2 MARKET TRACKER: QUARTERLY RESULTS Area Market Increases 1.9% in 1st Quarter 2014 vs. 1.6% in U.S. QUARTERLY TREND Percent Change in New Vehicle Market Area and U.S. QUARTERLY PERSPECTIVE Five Years of First Quarter Results in Area Market 14.0% 12.0% Area U.S % change versus year earlier 10.0% 8.0% 6.0% 4.0% The area market increased at a slightly faster pace in the First Quarter of New retail light vehicle registrations The market was up by more than 19,000 units in the First Quarter of 2014 vs % % '14* Area 10.9% 8.8% 8.7% 1.9% U.S. 9.0% 13.3% 4.9% 1.6% 0 '10 '11 '12 '14* Regs First Quarter registrations during past five years * Figures for First Quarter 2014 are estimated by Auto Outlook based on data for January and February. Data Source: Polk. * Figures for First Quarter 2014 are estimated by Auto Outlook based on data for January and February. Data Source: Polk. Covering First Quarter 2014 Published by: Auto Outlook, Inc. PO Box 390 Exton, PA Phone: jfoltz@autooutlook.com Editor: Jeffrey A. Foltz Reproduction, including photocopying of this publication in whole or in part, is prohibited without the express permission of Auto Outlook, Inc. Any material quoted must be attributed to, published by Auto Outlook, Inc. on behalf of the Greater Cleveland Automobile Dealers Association, and must also include the statement: Data Source: Polk. Unforeseen events may affect the forecast projections. Consequently, Auto Outlook is not responsible for management decisions based on the content of.

0% Quarterly Alternative Powertrain Market Share (includes hybrid and electric vehicles) European 0.0 1.5% Detroit Three Korean -0.5-0.2-2.5-1.5-0.5 0.5 1.

3 Covering First Quarter 2014 Page 3 MARKET TRACKER: BRAND MARKET SHARE Japanese Brands Gain MARKET TRACKER: HYBRID AND ELECTRIC VEHICLES Green Vehicle Share Falls in 1Q 14 Japanese Change in Area Market Share YTD 2014 thru March* vs. YTD 2013 Japanese brand share increased 0.6 points % 2.0% Quarterly Alternative Powertrain Market Share (includes hybrid and electric vehicles) European % Detroit Three Korean Change in market share The graph above shows the change in year-to-date market share for four primary brand segments. *Figures for March, 2014 were estimated by Auto Outlook. Data Source: Polk. MARKET TRACKER: SEGMENTS Compact SUV Segment Leads Area Market Segment Market Share YTD 13 thru February 1.0% 0.5% 0.0% '11 '11 '11 Alternative Trendline powertrain market share has trended higher over the past three years, but fell in the First Quarter of this year. '12 '12 '12 '12 '14* The graph above shows hybrid powertrain and electric vehicle quarterly market share in the area. The line shows market share trend over the past 12 quarters. *First Quarter 2014 includes January and February. Source: Polk. Cleveland Area Segment Market Share Review Market Share YTD 14 thru February Change in share YTD 13 to 14 Best selling model in segment Compact SUV Ford Escape Standard Mid Size Car Ford Fusion Sub Compact Car Chevrolet Cruze Full Size Pickup Ford F Series Mid Size SUV 3 Rows Ford Explorer Mid Size SUV 2 Rows Jeep Grand Cherokee Entry Car Kia Soul Mini Van Honda Odyssey Large Mid Size Car Chevrolet Impala Mid Size Luxury SUV Cadillac SRX Near Luxury Car Lincoln MKZ Luxury and Sports Cars Cadillac CTS Compact Luxury SUV Buick Encore Full Size Van Chevrolet Express Full Size SUV Chevrolet Tahoe Sport Compact Car Chevrolet Camaro Compact Pickup Toyota Tacoma Entry Luxury Car Mercedes CLA-Class Full Size Luxury SUV Cadillac Escalade The table above shows Cleveland area market share for 19 vehicle segments during the first two months of 2013 and 2014, and the change in market share over the period. The best selling model in each segment is also shown. Segments are ranked from top to bottom based on 2014 share. Most popular segment in the area is Compact SUV, which also had the largest gain. Data Source: Polk.

4 Page 4 Brand Registrations Report Greater Cleveland Area New Retail Car and Light Truck Registrations First Quarter* Annual Totals Registrations Market Share (%) Registrations Market Share (%) 1Q Q 2014 % change 1Q Q 2014 Change % change Change TOTAL 57,052 58, , , Cars 29,437 28, , , Light Trucks 27,615 29, , , Domestic Brands 30,798 31, , , European Brands 3,253 3, ,529 15, Japanese Brands 17,079 17, ,287 74, Korean Brands 5,922 5, ,536 25, Acura ,879 2, Audi ,454 1, BMW ,471 2, Buick 1,500 1, ,140 6, Cadillac ,510 4, Chevrolet 8,395 8, ,540 33, Chrysler 1,898 1, ,412 6, Dodge 2,221 2, ,221 9, FIAT Ford 10,439 10, ,961 40, GMC 2,102 2, ,664 8, Honda 4,927 4, ,191 22, Hyundai 2,665 2, ,208 11, Infiniti ,107 1, Jaguar Jeep 2,137 2, ,911 9, Kia 3,257 3, ,328 13, Land Rover Lexus ,268 2, Lincoln ,838 1, Mazda 1,228 1, ,378 4, Mercedes ,931 3, MINI Mitsubishi ,190 1, Nissan 2,919 3, ,847 11, Other Porsche Ram 855 1, ,151 4, Subaru 1,696 1, ,086 7, Tesla Toyota 4,753 4, ,165 21, Volkswagen 1,285 1, ,249 5, Volvo *March 2014 figures were estimated by Auto Outlook. Source: Polk The table above shows new retail light vehicle (car and light truck) registrations in the area market. Figures are shown for the First Quarters of 2013 and 2014, and annual totals for 2012 and The top ten ranked brands in each category are shaded gray.

5 Covering First Quarter 2014 Page 5 BRAND SCOREBOARD - PART ONE Ram and Lincoln Post Large Percentage Gains Jaguar, Mitsubishi, and Jeep are also up sharply The graphs below provide a comparative evaluation of brand sales performance in the area market. They show the year-to-date percent change in registrations for each brand, organized by category (i.e., Detroit Three, European, Japanese, and Korean). Percent Change in Area New Retail Light Vehicle Registrations YTD 2014 thru March* vs. YTD 2013 Ram Lincoln 55.8% 59.4% Jeep GMC Buick Detroit Three Brands -0.6% 0.3% 38.8% Ford -2.4% Dodge -3.0% Chevrolet -3.0% Cadillac -7.1% Chrysler -17.0% Jaguar 54.2% BMW FIAT Land Rover Mercedes European Brands 18.7% 18.7% 18.4% 16.6% Porsche 15.1% Audi Volkswagen Volvo -12.0% -12.5% 5.3% Ram and Lincoln had the biggest increases. Mitsubishi had the largest increase among Japanese brands. MINI -61.1% Mitsubishi 51.4% Infiniti Nissan Lexus Subaru Japanese Brands 20.9% 20.3% 16.5% 15.7% Acura 0.0% Mazda -3.5% Honda -3.9% Toyota -4.8% Kia Hyundai Korean Brands -6.8% 1.0% -80.0% -60.0% -40.0% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0% *Figures for March, 2014 were estimated by Auto Outlook. Source: Polk.

6 Page 6 BRAND SCOREBOARD - PART TWO Chevrolet is Non-Luxury Car Brand Leader; Ford #1 for Trucks Cadillac is best selling luxury car and light truck brand The four graphs below show market share leaders in the Cleveland Area during the past six months for four primary segments. (Note: figures for March, 2014 were estimated.) Chevrolet was the best-selling Non Luxury Car brand, with a 1.6 point lead over second place Ford. Ford was the top ranked Non Luxury Light Truck brand, ahead of Chevrolet and Jeep. Cadillac was the best-selling Luxury Car and Light Truck brand. Data Source: Polk. Top 10 Non Luxury Car Brands in Area Market October 2013 thru March 2014 Top 10 Non Luxury Light Truck Brands in Area Market October 2013 thru March 2014 Chevrolet 16.6 Ford 22.2 Ford 15.0 Chevrolet 14.3 Honda 11.5 Jeep 11.3 Toyota 10.2 GMC 8.1 Kia 9.0 Honda 8.0 Hyundai 8.1 Toyota 7.6 Nissan 6.5 Ram 4.9 Volkswagen 4.2 Nissan 4.8 Subaru 4.1 Dodge 3.9 Dodge 4.0 Subaru Share of non luxury car market (%) Share of non luxury truck market (%) Top 10 Luxury Car Brands in Area Market October 2013 thru March 2014 Top 10 Luxury Light Truck Brands in Area Market October 2013 thru March 2014 Cadillac 19.5 Cadillac 18.6 Mercedes 19.1 Mercedes 14.4 BMW 15.4 Lexus 13.0 Lincoln 9.9 Acura 12.5 Lexus 9.6 BMW 11.9 Audi 7.8 Lincoln 7.8 Infiniti 7.7 Infiniti 7.0 Acura 5.2 Audi 5.7 Volvo 2.5 Land Rover 4.8 Porsche 1.6 Volvo Share of luxury car market (%) Share of luxury truck market (%)

Brands are positioned on the graph from top to bottom based on area market share. Ford was the area leader, accounting for 17.5% of the market, well above its 13.1% share in the Nation. Area and U.S.

7 Covering First Quarter 2014 Page 7 BRAND SCOREBOARD - PART THREE Ford is Top Selling Brand in Area Market Ford s share of area market exceeds U.S. by 4.4 points The graph below provides a comparison of Cleveland Area and U.S. new retail market share during the first three months of this year for the top 20 selling brands in the area. Brands are positioned on the graph from top to bottom based on area market share. Ford was the area leader, accounting for 17.5% of the market, well above its 13.1% share in the Nation. Area and U.S. Market Share - YTD 2014 thru March* Ford 13.1% 17.5% Chevrolet 10.3% 14.0% Honda 8.1% 9.7% Toyota 7.8% 13.1% Nissan 6.0% 7.9% Kia Jeep 3.7% 5.1% 4.4% 5.7% Hyundai 4.3% 4.3% Dodge 3.7% 3.2% GMC 3.6% 2.9% Subaru Chrysler 1.2% 3.4% 3.5% 2.7% Ford, Chevrolet, and Kia area market shares are well above U.S. levels. Area U.S. Buick 1.4% 2.6% Ram 2.3% 2.7% Mazda Volkswagen Cadillac 2.0% 2.0% 1.9% 2.3% 1.5% 1.2% BMW Mercedes Lexus 1.1% 1.1% 1.0% 2.2% 2.1% 2.1% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Market Share *Figures for March, 2014 were estimated. Source: Polk.

Page 8 FORECAST DETERMINANTS Three Primary Factors Impacting New Vehicle Sales Indicators point to continued (but slowing) improvement in area new vehicle market #1 Consumer Sentiment Consumer

9 in the Third Quarter of 2013, well above the recession-low point of 57.7 in the Fourth Quarter of 2008. However, consumer attitudes remain somewhat subdued. Source: University of Michigan.

ntiment Index 09 09 09 10 10 10 10 11 11 11 Quarters 11 12 12 '12 '12 '14 #2 Household Net Worth 90.0 U.S.

8 Page 8 FORECAST DETERMINANTS Three Primary Factors Impacting New Vehicle Sales Indicators point to continued (but slowing) improvement in area new vehicle market #1 Consumer Sentiment Consumer attitudes have risen over past several months, but still reflect concerns Impact on new vehicle sales: MILDLY POSITIVE Sentiment reached a five year high of 81.9 in the Third Quarter of 2013, well above the recession-low point of 57.7 in the Fourth Quarter of However, consumer attitudes remain somewhat subdued. Source: University of Michigan. Consumer sentiment University of Michigan Consumer Sentiment Index Quarters '12 '12 '14 #2 Household Net Worth 90.0 U.S. Household Net Worth Household net worth has moved higher from the lows in early 2009 Impact on new vehicle sales: POSITIVE After declining sharply from 2007 to the First Quarter of 2009, household net worth recovered, and exceeded $80 trillion in the Fourth Quarter of The trend of improving net worth provides a boost to consumer spending. Source: Federal Reserve. Household net worth (trillions of $'s) Quarters #3 Area Unemployment Area unemployment rate has declined since 2009 Impact on new vehicle sales: MOSTLY POSITIVE The graph on the right shows the monthly change in the area unemployment rate versus the same month a year earlier. The rate was unchanged in March of this year versus a year earlier. Source: BLS. Change in unemployment rate vs. year earlier Monthly Change in Area Unemployment Rate (vs. year earlier) Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Months

Covering First Quarter 2014 Page 9 MODEL SCOREBOARD Ram and Rogue Post Big Market Share

the area car and light truck markets during the first two months of 2013 and 2014.

10 Selling Cars - YTD 2014 thru February vs. YTD 2013 8.0% 7.0% 6.

Honda Accord Chrysler 200 Toyota Camry Kia Soul Change in Market Share for Top 10

0% Market shares for Ram and Rogue improved. (Cherokee was introduced late in 2013.

9 Covering First Quarter 2014 Page 9 MODEL SCOREBOARD Ram and Rogue Post Big Market Share Gains Cruze and Altima also gained ground The two graphs below show market shares in the area car and light truck markets during the first two months of 2013 and Includes the top ten selling car and light truck models Change in Market Share for Top 10 Selling Cars - YTD 2014 thru February vs. YTD % 7.0% 6.0% Cruze and Altima market shares were up sharply YTD 2014 YTD 5.0% Market Share 4.0% 3.0% 2.0% 1.0% 0.0% Chevrolet Cruze Ford Fusion Ford Focus Honda Civic Chevrolet Malibu Nissan Altima Honda Accord Chrysler 200 Toyota Camry Kia Soul Change in Market Share for Top 10 Selling Light Trucks - YTD 2014 thru February vs. YTD % 7.0% 6.0% Market shares for Ram and Rogue improved. (Cherokee was introduced late in 2013.) 2013 YTD 2014 YTD 5.0% Market Share 4.0% 3.0% 2.0% 1.0% 0.0% Ford Escape Ford F Series Chevrolet Equinox Chevrolet Silverado Ram Source: Polk. Honda CR-V Jeep Cherokee GMC Terrain Nissan Rogue Toyota RAV4

10 Page 10 MARKET SHARE FOR VARIOUS FUEL TYPES Gasoline Powered Vehicle Market Share Declines Hybrids still account for small share of area and U.S. markets The pie charts below show market share by vehicle fuel type in the Cleveland Area and U.S. markets for the 2010 and 2013 calendar years. (Note: flexible fuel vehicles can run on a blend of up to 85% ethanol.) Key observations: Market share for pure gasoline powered vehicles declined in both the area and U.S. markets. Market Share by Vehicle Fuel Type - Cleveland Area 2010 Calendar Year 2013 Calendar Year Hybrid market share in the area was lower than in the Nation, but increased slightly during the three year period. Diesel vehicles accounted for less than 2% of the area market in Flexible : 19.57% Flexible : 10.16% Electric : 0.00% Diesel : 0.98% Electric : 0.05% Diesel : 1.39% Hybrid : 1.43% Hybrid : 1.90% Gasoline : 87.42% Gasoline : 77.10% Legend Hybrid Gasoline Flexible Electric Diesel Market Share by Vehicle Fuel Type - U.S Calendar Year 2013 Calendar Year Flexible : 11.27% Flexible : 16.54% Electric : 0.01% Diesel : 2.61% Electric : 0.37% Diesel : 2.99% Hybrid : 2.58% Hybrid : 3.66% Gasoline : 83.55% Gasoline : 76.44% Source: Polk.

11 Covering First Quarter 2014 Page 11 COUNTY SCOREBOARD Seven County Markets Moved Higher in Early 2014 Cuyahoga County market fell 2% in first two months of 2014 COUNTY MARKETS SUMMARY - PART 1 Year to date thru February Percent Change Unit Change Light Truck Market Share (%) YTD 2013 YTD to to 2014 YTD 2013 YTD 2014 Ashland % Ashtabula % Carroll % Coshocton % Cuyahoga 8,583 8, % Erie % Geauga % Hancock % Holmes % Huron % Lake 1,998 1, % Lorain 2,584 2, % Lucas 2,614 2, % Mahoning 2,075 2, % Medina 1,656 1, % Portage 1,206 1, % Richland % Stark 2,136 2, % Summit 3,759 3, % Trumbull 1,804 1, % Tuscarawas % Wayne % Wood % COUNTY MARKETS SUMMARY - PART 2 Market Share Summary - YTD thru February Domestic Brands Top Ten Selling Brands in Area YTD 2013 YTD 2014 Change to '14 Ford Chevrolet Honda Toyota Nissan Jeep Kia GMC Hyundai Dodge Ashland Ashtabula Carroll Coshocton Cuyahoga Erie Geauga Hancock Holmes Huron Lake Lorain Lucas Mahoning Medina Portage Richland Stark Summit Trumbull Tuscarawas Wayne Wood The tables above show new retail light vehicle registrations. Top five ranked counties in each category are shaded. Data Source: Polk to 2014

12 Page 12 GREATER CLEVELAND AREA MARKET VERSUS U.S. Percentage Increase in Area Market Slightly Above U.S. Car market share in area market is higher than in Nation Change in registrations % change in registrations YTD '14 thru March* vs. YTD Car Market Share Car share of industry retail light vehicle registrations - YTD '14 thru March* Detroit Three Brand Market Share Domestic brand share of industry retail light vehicle registrations - YTD '14 thru March* Area Market U.S. Market 1.9% 1.6% 49.1% 47.8% 53.8% 41.1% Top selling light vehicle brands and market share - YTD '14 thru March* First Ford 17.5% Toyota 13.1% Second Chevrolet 14.0% Ford 13.1% Third Honda 8.1% Chevrolet 10.3% Fourth Toyota 7.8% Honda 9.7% Fifth Nissan 6.0% Nissan 7.9% Sixth Kia 5.7% Jeep 4.4% Seventh Jeep 5.1% Hyundai 4.3% Eighth Hyundai 4.3% Kia 3.7% Ninth Dodge 3.7% Subaru 3.5% Tenth GMC 3.6% Dodge 3.2% *Figures for March 2014 were estimated by Auto Outlook Data Source: Polk is distributed free of charge to all members of the Greater Cleveland Automobile Dealers Association. The publication is sponsored and supported by GCADA. is published and edited by Auto Outlook, Inc., an independent automotive market research firm. Opinions expressed in are solely those of Auto Outlook, Inc., and are not necessarily shared by GCADA. Greater Cleveland Automobile Dealers Association Brecksville Road Brecksville, OH Copyright Auto Outlook, Inc. April 2014

San Diego Auto Outlook

San Diego Auto Outlook Covering First Quarter 2014 Volume 14, Number 2 Comprehensive information on the San Diego County new vehicle market FORECAST County New Vehicle Market Up 6.7% in First Quarter of 2014 Registrations predicted