Transcript Source: Manheim Consulting

NADA Press Conference
February 5, 2011
1
Rental: Stability Ahead
2

New vehicle sales into rental stabilizing at “new normal”.

Shift from program cars to risk units is completed.

Increased service life for risk units has leveled off.

Off-rental prices will show stability at current high base.
New Vehicle Sales Into Rental &
Rental Fleet Size
Millions
New Purchases
Average Fleet Size
2.2
2.0
1.8
1.6
1.4
1.2
1.0
0.8
1998
2000
2002
2004
2006
2008
2010
Source: Bobit Business Media
3
Distribution of New Vehicle Sales into
Rental - Program versus Risk
Program
Risk
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Source: Bobit Business Media & Manheim Consulting
4
Average Mileage –
Rental Risk Units
2007
2008
2009
2010
45,000
40,000
35,000
30,000
25,000
20,000
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Source: Manheim Consulting
5
Average Auction Price –
Rental Risk Units
2007
2008
2009
2010
$13,500
$13,000
$12,500
$12,000
$11,500
$11,000
$10,500
$10,000
$9,500
$9,000
$8,500
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Source: Manheim Consulting
6
Leasing:
Growth in Originations & Satisfaction
Lease Originations - Millions of Units
4.0
3.5
3.7
3.4
3.5
3.0
2.7
2.5
2.5
2.5
2.7 2.7
2.1 2.1
2.0
2.0
1.5
1.7
1.1
1.0
0.5
0.0
1998
2000
2002
2004
2006
2008
2010
Source: Manheim Consulting
7
Lease Penetration Rates
by Manufacturer
2008
2009
2010
Chrysler
17.0%
2.9%
9.2%
Ford
15.1%
5.5%
9.8%
GM
11.1%
2.1%
8.8%
Honda
19.4%
18.7%
28.7%
Toyota
15.8%
15.6%
24.5%
2.4%
2.2%
12.3%
BMW
51.0%
51.3%
48.6%
Mercedes-Benz
49.2%
46.6%
51.7%
Total Industry
17.9%
13.1%
19.1%
Hyundai
Source: J.D. Power and Associates
8
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
0
20 9
10
20 E
11
20 E
12
20 E
13
20 E
14
20 E
15
E
millions of units
Off-Lease Volumes –
Another Down Cycle Ahead
4.0
3.5
9
3.0
2.5
2.0
1.5
1.0
Source: Manheim Consulting
Repossessions:
Lower Volumes & Older Units
Number of Repossessions - Millions of Units
2.2
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Manheim Consulting
10
Commercial and Government Fleets:
Higher Volumes & Strong Prices
New Vehicle Sales into Commercial and Government Fleets
Thousands
Commercial
Government
1,200
1,000
800
600
400
200
0
2001
2002
2003
2004
2005
2006
2007
2008
2009 2010 e
Source: Bobit Business Media
11
Average Auction Price –
Midsize Fleet Cars
Unadjusted
Mileage & Seasonally Adjusted
$10,000
$9,000
$8,000
$7,000
$6,000
$5,000
$4,000
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Source: Manheim Consulting
12
Dealer Consignment:
Steady Growth Ahead
Millions
Dealer Consigned Vehicles Sold at NAAA Member Auctions
6
5
4
3
2
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
05
20
04
20
03
20
02
20
01
20
00
19
99
1
Source: 1999-2009 NAAA Surveys, 20010-2015 Manheim Consulting estimate
13
New Car & Light-Duty Truck Sales
Seasonally Adjusted Annual Rate - 3-Month Moving Average
19
millions of units
18
17
16
15
14
13
12
11
10
Jan-11
Jan-09
Jan-07
Jan-05
Jan-03
Jan-01
Jan-99
Jan-97
Jan-95
Jan-93
Jan-91
Jan-89
Jan-87
9
Source: Automotive News
14
New Vehicle Sales
New Car & Light-Duty Truck Sales
20
millions of units
18
16
14
12
Peak-to-troughs:
10
1973 to 1975
1978 to 1982
1986 to 1991
2000 to 2009
8
6
-24%
-33%
-23%
-41%
4
1960
1970
1980
1990
2000
2010
Source: Automotive News
15
Used Vehicle Retail Sales
Millions
Total
Dealers
50
45
40
35
30
25
20
15
10
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Source: CNW Marketing Research
16
Ratio of Used Vehicles Retailed
to New Vehicles Retailed
4.0
3.5
3.0
2.5
2.0
1.5
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
1.0
Source: Automotive News & CNW Marketing Research
17
Monthly Change In Nonfarm Payrolls
3-month moving average – in thousands
Total
Private Sector
400
200
0
-200
-400
-600
-800
n-0
a
J
8
y-0
a
M
8
p-0
e
S
8
n-0
a
J
9
y-0
a
M
9
p-0
e
S
9
n-1
a
J
0
y-1
a
M
0
p-1
e
S
0
n-1
a
J
1
Source: Bureau of Labor Statistics
18
19
Manheim Used Vehicle Value Index
January 1995 = 100
125
120
115
110
105
100
95
Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
Source: Manheim Consulting
20
Outlook and Implications

New vehicle sales
– A lower underlying trend
– Movements around that trend driven by labor market and credit conditions
– Manufacturers maintain inventory and pricing discipline

Retail sales and profits continue to shift in favor of used vehicles

Less supply and stable demand means strong used vehicle pricing

Economic recovery may surprise to the upside in the near-term,
but we will fail to achieve previous peaks in employment,
household net worth, and new vehicle sales prior to the next
recession.
21