analysis of today’s used vehicle market bill cieslak vice president phh arval
TRANSCRIPT
Analysis of today’s used vehicle market
Bill CieslakVice PresidentPHH Arval
PHH proprietary information
2008 year in review
Major market drivers• Fuel prices• Housing industry• Overall economic challenges• And most recently… funding
PHH proprietary information
Fuel prices impact the market
• Early ’08 thru mid year, fuel was the largest factor
• The worst performing month was June
• Truck prices declined significantly
• Mid-size sedans became more popular
• Compact and hybrid prices became over valued
PHH proprietary information
Housing industry impacts
The dramatic decline in construction reduced truck values:
• Used fleets trucks are popular with contractors
• The quick decline in demand, combined with high fuel prices created an over supply of truck inventories
• New and used truck values were impacted
• Many Consumers abandoned their trucks for daily commutes
PHH proprietary information
Economic challenges
Market impact from tight credit
Consumers:• Rate increases• Less credit for sub prime• Shorter payment terms• Reduced credit lines for credit cards, home equity and auto loans
Business:• Increased cost to borrow• Shortage of funding
PHH proprietary information
Trends in the car & truck market
Information from Black Book(used with permission)
10000
15000
20000
25000
30000
35000
4/1
/20
08
5/1
/20
08
6/1
/20
08
7/1
/20
08
8/1
/20
08
9/1
/20
08
10
/1/2
008
Do
llars
AVG Wholesale
Full-Size Pickup
Full-Size SUV
Luxury SUV
Mid-Size Pickup
Mid-Size SUV
Trucks and SUVs
8000850090009500
1000010500110001150012000
4/1/
2008
5/1/
2008
6/1/
2008
7/1/
2008
8/1/
2008
9/1/
2008
10/1
/200
8
Dol
lars
AVG Wholesale
Compact CarEntry Level CarEntry Mid-Size Car
Entry & Mid-Size Cars
$15,000
$16,000
$17,000
$18,000
$19,000
$20,000
$21,000
2006 Prius AVG Wholesale 4/1
/2008
5/1
/2008
8/1
/2008
9/1
/2008
10/1
/2008
6/1
/2008
7/1
/2008
* Limited to a single vehicle.
-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%
Full Size SUVMid Size CarMid & Full Size SUVFull Size TrucksFull Size Trucks
Full Size CarCompact Car
CrossoverVans*
Full Size Car
Sample of Two Manufacturers
Build Level Change : 2008 to 2009
-15.0% -10.0% -5.0% 0.0% 5.0%
Full-Size PickupLuxury SUVFull-Size SUVMid-Size PickupFull-Size Car
Compact CarEntry Level Car
Near Luxury CarUpper-Mid Size Car
Mini Van
BestWorse
* Comparing 2008 and 2009 Available New Car 36-Month Residuals as of Sept. (112 vehicles total)
New Car Residual Winners
+4.5%
+5.5%
+5.8%
+6.0%
+6.5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Ford Focus
Scion xD
Buick Enclave
Chevrolet HHR
Pontiac Vibe2009 2008
Retention Value [%]
-17.6%
-15.5%
-13.8%
-12.3%
-11.8%
-11.8%
Cadillac Escalade
Hummer H2
Nissan Armada
GMC Yukon
Jeep Commander
Chevrolet Avalanche
New Car Residual Losers2009 2008
Retention Value [%]
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
* 36-Month
MSRP Sep. 07 Dec. 07 Apr. 08 Oct. 08Silverado Pickup : $5,310$6,200 $6,900 $6,400 $3400
3 Year Old Used Car Return
New Beetle : $1,240 $1,500 $1,500 $1,500 $1700Jetta : $1,220 $2,000 $2,000 $1,500 $2000E320 CDI : $1,000 $2,500 $3,200 $3,000 $3200
Liberty : $2,687 $2,200 $2,200 $2,200 $ 900
F250 6.0L : $5,100 $6,500 $6,900 $6,400 $3400
Dodge Ram : $5,955 $6,200 $6,900 $6,400 $3400
Diesel Fuel March 17, 2007 $2.68 / gal(U.S. Nat. Avg) March 17, 2008 $3.80 / gal
+$1.30 / gal
3 Year Old Used Car Return :
Sept. 07 Dec. 07 Apr. 08 Oct. 09Silverado Pickup : 117% 130% 120% 64%Dodge Ram : 104% 116% 107% 57% F250 6.0L : 127% 135% 125% 67%Liberty : 82% 82% 82% 33%Jetta : 164% 164% 164% 138%
New Beetle : 121% 121% 121% 164%
E320 CDI : 250% 320% 300% 320%
12000130001400015000160001700018000190002000021000
Gasoline vs. Hybrid AVG [$]
Accord LX
Accord Hybrid
Civic LX
Civic Hybrid
Prius
8000
10000
12000
14000
16000
18000
20000
22000
Gasoline vs. Hybrid AVG [$]
Escape XLS
Escape Hybrid
Highlander Sport
Highlander Hybrid
Model Year Option - 2006
Small MSRP
Small Avg
UsedMid
MSRPMid Avg
UsedLarge MSRP
Large Avg Used
Leather 863 412 975 450 1091 742min/max 695/1200 200/500 385/1600 300/700 800/1600 300/1350
Option vs. MSRP UsedOption vs. MSRP Used
2006 Models
Sunroof 744 275 1054 404 1014 494min/max 585/900 200/400 695/1900 350/500 795/1450 450/600Navigation 1563 200 2318 338 500min/max 940/1950 200/200 1800/2995 200/600 200/800V6 over 4 Cyl 1675 0 1235 825min/max 1350/2000 425/2000 300/1800V8 over V6 3600 400 1239 944min/max 2000/5200 250/600 945/2000 300/1600
Data Delivery» Web Services, XML & HTML Portal Applications
» Xpress Portfolio/Inventory Analysis
» API Solutions
» Service Solutions
» Database Solutions
» Custom/Tailored Solutions
» Client Server Applications
Delivery Options
PHH proprietary information
Budgeting for fleet in tough economic times
PHH proprietary information
External cost factors
Fuel costs
Ordering and delivery
Depreciation
Maintenance and repairs
Tire costs
Accident costs
Interest rates
Vehicle prices
PHH proprietary information
Internal factors
Fleet size
Type of vehicle
Mileage profile
Replacement policy
In service terms
PHH proprietary information
Preparing your 2009 budget
Strategic planning• Plan proactively for trucks• Selector decisions – right vehicle for right job• Downsizing of vehicles/alternate fuel vehicles• Optimize fleet size• Plan selector with resale in mind• Re-evaluate lease terms for a challenged UVS market
PHH proprietary information
Other ideas:• Fuel purchase policies• Consider Personal Use chargeback• National accounts for maintenance/repairs• Consult with finance department on interest rates
Budget for higher costs in 2009
Delay replacement of executive vehicles
Preparing your 2009 budget
PHH proprietary information
Questions and Discussion?