vehicle market insights · 2020-04-07 · vehicle market insights manheim used vehicle value index...

Vehicle Market InsightsManheim Used Vehicle Value Index Call - April 7, 2020

J o n a t h a n S m o k e & Z o R a h i m

S p e c i a l G u e s t s : Z a c h H a l l o w e l l &

B e n F l u s b e r g

1

INVENTORY

RETAIL

FINANCIAL

MOBILITY

COVID-19 Market Update

4

Covid-19 State Impact Varies Per County (Cases per Million)

Source: CDC

5

Weekly Initial Claims Hit Record Levels

Source: U.S. Department of Labor

6

Consumer Sentiment Declined Steeply in March

Source: Morning Consult

0

20

40

60

80

100

120

140

1/1/20 1/8/20 1/15/20 1/22/20 1/29/20 2/5/20 2/12/20 2/19/20 2/26/20 3/4/20 3/11/20 3/18/20 3/25/20 4/1/20

ICS Value (7-Day Average)

Morning Consult’s Index of Consumer Sentiment on Monday was down 28% since March 1

7

Retail Trend Estimate - New

Source: Cox Automotive

-65.6%

-80.0%

-70.0%

-60.0%

-50.0%

-40.0%

-30.0%

-20.0%

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DAILY NEW RETAIL % CHG YoY vs SAME DAY OF WEEK

YoY % Chg 2019 YoY % Chg 2020

8

New Vehicle Sales Slide Swiftly In March

Source: BEA

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Mar

-06

Au

g-0

6

Jan

-07

Jun

-07

No

v-07

Ap

r-0

8

Sep

-08

Feb

-09

Jul-

09

Dec

-09

May

-10

Oct

-10

Mar

-11

Au

g-1

1

Jan

-12

Jun

-12

No

v-12

Ap

r-1

3

Sep

-13

Feb

-14

Jul-

14

Dec

-14

May

-15

Oct

-15

Mar

-16

Au

g-1

6

Jan

-17

Jun

-17

No

v-17

Ap

r-1

8

Sep

-18

Feb

-19

Jul-

19

Dec

-19

May

-20

Total New % Change y/y

9

New Vehicle Sales Slide Swiftly In March

Source: Motor Intelligence

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

% Change Y/Y

10

New Vehicle Sales Slide Swiftly In March

Source: Cox Automotive

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

% Change Y/Y

11

Retail Trend Estimate - Used

Source: Cox Automotive

-63.5%

-80.0%

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

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/20

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DAILY USED RETAIL % CHG YoY vs SAME DAY OF WEEK

YoY % Chg 2019 YoY % Chg 2020

The Step Change to All-Digital

Zach Hallowell

VP, Manheim Digital

13

ACCESSING MANHEIM INVENTORY

MANHEIM.COM OVE / PRIVATE STORES MANHEIM EXPRESS

PHYSICAL SALES SIMULCAST DIGITAL BLOCKS

14

OF LANES AT

MANHEIM SITES

ARE DIGITAL

IN 2020

52%OF INVENTORY SOLD

TO A DIGITAL BUYER

IN 2020

2.3M+VEHICLES SOLD

TO A

DIGITAL BUYERS

IN 2019

18M+BIDS IN A DIGITAL

CHANNEL

IN 2019

150,000MONTHLY UNIQUE

VISITORS TO DIGITAL

CHANNELS IN

2019

25%

STATS: MANHEIM DIGITAL MARKETPLACE

MANHEIM DIGITAL SNAPSHOT

15

BEFORE COVID-19: THE RISE OF DIGITAL

Source: Manheim/Cox Automotive

Shift from Physical

to Digital Sales

Increased Adoption

of Digital Platforms

& Mobile Apps

Increased Usage of

MMR & Mobile Scans 51.5 53.0

18.7 20.1

0.0

20.0

40.0

60.0

80.0

2018 2019

Mill

ions

MMR Lookups VIN Scans

39% 43% 48% 52%

0%

20%

40%

60%

80%

100%

2017 2018 2019 2020 YTD W13

Digital Physical

0.0

50.0

100.0

150.0

200.0

2012 2013 2014 2015 2016 2017 2018 2019

Tho

usan

ds

Mobile Total Digital

16

BEFORE COVID-19: CLIENT SENTIMENT

Source: Manheim/Cox Automotive

80%of dealers have been

doing at least some pre-

sale research digitally

3/4say digital tools make

it easier to prepare for

the auction and

enhances their work.

2/3say digital tools have a

positive impact

Dealers Expect Growth Across Various Digital Channels

Dealers expect wholesale

digital buying to grow over

30% in the next year.

17

POST COVID-19: BUYERS AND SELLERS ARE ADAPTING TO DIGITAL ONLY

Source: Manheim/Cox Automotive

40% of dealers say that Simulcast has been an

excellent replacement

34% of Simulcast buyers since March 16 were first-time buyers

on the platform in 2020

“We prefer to buy in person if possible,

you get a better feel for the inventory, [but]

shifting online for now it’s a good thing.”

Simulcast Remote Seller Logins Simulcast Bids

“Beginning of a new

ERA!!! I like it a lot.”

“Not super happy

about it. But at least

I can still buy.”

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

18

Steps:

A single measure of used vehicle price

change that is independent of underlying

segment shifts in the characteristics of

vehicles being sold

Concept:

19

Wholesale Prices Decline In March

Source: Manheim/Cox Automotive

141.9

90

95

100

105

110

115

120

125

130

135

140

145

150

Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-13 Jan-16 Jan-19

January 1995 = 100

Prices in March decreased 1.10% versus February 2020 and were up 4.4% compared to March 2019

20

Used Vehicle Values Off Lows

Year-over-year price performance stronger than average

4.4%

-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 Jan-20

Source: Manheim/Cox Automotive

21

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

22

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

$41,000

$9,500

$10,000

$10,500

$11,000

$11,500

$12,000

$12,500

$13,000

$13,500

$14,000

$14,500

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3

Jul-

13

Oct

-13

Jan

-14

Ap

r-1

4

Jul-

14

Oct

-14

Jan

-15

Ap

r-1

5

Jul-

15

Oct

-15

Jan

-16

Ap

r-1

6

Jul-

16

Oct

-16

Jan

-17

Ap

r-1

7

Jul-

17

Oct

-17

Jan

-18

Ap

r-1

8

Jul-

18

Oct

-18

Jan

-19

Ap

r-1

9

Jul-

19

Oct

-19

Jan

-20

Manheim Non-Adjusted Price (LHS) Average new vehicle transaction price per KBB (RHS)

23

2020 Spring Bounce Was Short-Lived

Week 11 was the official peak in values

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

2014-2016 2017 2018 2019 2020

24

How does MMR currently work?

Source: Manheim

MMR represents the wholesale value of distinct Year-Make-Model-Styles (YMMS), adjusted for vehicle attributes like mileage, AutoGrade™ condition and exterior color.

MMR is powered by a non-editorialized, statistical analysis of in-lane and digital wholesale vehicle transactions that are facilitated by Manheim, and it’s updated daily.

MMR uses a dynamic look-back period. MMR starts with transactions from the prior 30 days and extends back further as needed based on recent auction volumes.

MMR is not a simple average. To reflect today’s value rather than a historic average, MMR accounts for upward/downward trend of transaction prices over look-back period.

25

How does MMR currently work?

Source: Manheim

26

How does MMR currently work?

Source: Manheim

27

Manheim.com links to daily MMR Retention trend

Source: Manheim

https://publish.manheim.com/en/whats-new/daily-mmr-retention.html

Requires Manheim log-in credentials

28

Retention Values Ended March Down 0.2% Relative to 2019

Relative to MSRP and fixing the basket of vehicles by what was sold leaves residuals swinging from up to down

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 2018 CY 2019 CY 2020

29

Percent Change in Wholesale Prices for Major Market Segments

Most major segments saw year-over-year gains in March

Source: Manheim/Cox Automotive

4.4%

1.6%

-1.4%

6.4%

1.0%

4.7%

-2.6%

-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

30

Average Auction Price – Rental Risk Units

Average price for rental risk units sold in March up 7.3% y/y and up 3.0% 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

2016

2017

2018

2019

2020

31

Distribution of Rental Risk Vehicles

Source: Manheim/Cox Automotive

2018 Q1 2019 Q1 2020 Q1

Number of unique

year, make, model,

body configurations

sold

3,005 3,030 3,390

Share accounted for

top 10 YMMB 13.1% 11.7% 11.8%

Share accounted for

top 25 YMMB 23.3% 22.0% 21.4%

Number of YMMB to

reach 50% share 108 114 113

32

Average Mileage – Rental Risk Units Sold at Auction

Average mileage for rental risk units in March was up 1% compared to a year ago and down 12% m/m

Source: Manheim/Cox Automotive

45,897

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

33

Rental Risk Units Sold by Condition

Source: Manheim/Cox Automotive

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

2020Q1

5.0

4.0 - 4.9

3.0 - 3.9

2.0 - 2.9

0 - 1.9

34

Rental Risk Units Sold by Make

Source: Manheim/Cox Automotive

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

2020Q1

All other

Mazda

Kia

Jeep

VW

Chrysler

Hyundai

Dodge

Toyota

Nissan

Ford

Chevrolet

35

Rental Risk Units Sold by Segment

Source: Manheim/Cox Automotive

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

2017Q1

2017Q2

2017Q3

2017Q4

2018Q1

2018Q2

2018Q3

2018Q4

2019Q1

2019Q2

2019Q3

2019Q4

2020Q1

Van

SUV

Sports Car

Pickup

Luxury Car

Midsize Car

Compact Car

36

Manheim Market Report (MMR) Vehicle Insights

Source: Manheim/Cox Automotive

Top selling vehicles in March at Manheim saw accelerating depreciation rates in the last 30 days (March 5 – April

4) with top rental vehicle declining the most. Prices year-over-year saw mostly higher than normal depreciation.

Rank Source(Rank) Category Subcategory Vehicle 4-Apr Past 30 Days Last Year Current Dep L12M Dep/Mo

1 All SUV SUV Midsize 2017 NISSAN ROGUE AWD 4D SUV 2.5L SV $14,300 $14,600 $16,150 -2.1% -1.0%2 All Compact Car Compact Car Premium 2017 NISSAN SENTRA 4D SEDAN SV $8,525 $8,725 $10,500 -2.3% -1.6%

3 All SUV SUV Entry 2019 HYUNDAI SANTA FE AWD 4D SUV 2.4L SE $18,550 $18,750 $20,200 -1.1% -0.7%

4 All Compact Car Compact Car Premium 2017 HYUNDAI ELANTRA 4D SEDAN SE $8,750 $8,925 $10,450 -2.0% -1.4%5 All SUV SUV Midsize 2017 CHEVROLET EQUINOX AWD 4C FFV 4D SUV LT $12,850 $13,100 $15,700 -1.9% -1.5%

1 Dealer Dealer Midsize Car Midsize Car Premium 2015 NISSAN ALTIMA 4C 4D SEDAN S $5,875 $6,025 $8,675 -2.5% -2.7%

1 Lease Lease SUV SUV Midsize 2017 CHEVROLET EQUINOX AWD 4C FFV 4D SUV LT $12,850 $13,100 $15,700 -1.9% -1.5%

1 Rental Rental Van Van Compact 2019 DODGE GRAND CARAVAN FFV MINIVAN GT $16,000 $16,700 $20,900 -4.2% -2.0%

37

Sales Impact Varies by DMA As Evidenced By Unique Credit Apps

Source: Cox Automotive

Appendix

38

39

Weekly Price Trend More Severe For Non-Luxury

Stronger appreciation turned into stronger depreciation

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

Non-Luxury 3-Year-Old Model MMR Index by Week

2014-2016 2017 2018 2019 2020

40

Weekly Price Trend Less Severe For Luxury

Luxury vehicles have outperformed by not declining as much so far

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 3-Year-Old Model MMR Index by Week

2014-2016 2017 2018 2019 2020

41

Weekly Price Trend Off the Most for One-Year-Old Vehicles

One-year-old vehicle prices were very stable throughout most of 2019 but have had a rough March

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

1-Year-Old Model MMR Index by Week

2014-2016 2017 2018 2019 2020

42

Luxury Prices Move Higher Than Non-Luxury In March

Source: Manheim/Cox Automotive

Luxury prices in March were up 6.4% compared to March 2019, while non-luxury prices increased 2.8%

January 2000 = 100

120.4

137.8

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 Jan-20

Luxury Non-Luxury

43

112.2

0

20

40

60

80

100

120

140

Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20

Electric Car

Electric Car Prices Improve In March

Source: Manheim/Cox Automotive

Electric car prices in March were up 22.8% compared to March 2019

January 2015 = 100

44

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

45%

11%

39%

5%

0%

10%

20%

30%

40%

50%

60%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Manheim Sales by Category

CAR PICKUP SUV VAN

26%

19%

50%

5%0%

10%

20%

30%

40%

50%

60%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

New Vehicle Sales by Category

CAR PICKUP SUV VAN

45

Tax Refunds by Week in Recent Years

Source IRS

$0.0

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Bill

ions

Amount of Refunds (Cumulative)

2014 2015 2016 2017 2018 2019 2020

46

Thank You

Jonathan Smoke & Zo RahimEconomic Industry Insights

jonathan.smoke@coxautoinc.com

zohaib.rahim@coxautoinc.com

@SmokeonCars

@autosanalyst