2019 q3 auto sales conference call...ytd 12.9 12.7f-1.6% a lot must happen in q4 to reach our 16.8...

2019 Q3 AUTO SALES CONFERENCE CALLSeptember 26, 2019

1

ECONOMICCONDITIONSQ3 2019

2

Overall Economy GDP Growth2.2%

(Q3 NY Fed Nowcast)

2.0% (Q2 ’19)

2.9% (Q3 ’18)

Employment

Conditions

U3 Unemployment

Rate

3.7%

(Aug ‘19)3.7% (Sep ’18)

Buyer ConfidenceUofM Consumer

Sentiment

92.0

(Sep ‘19 Early)

89.8 (Aug ’19)

100.1 (Sep ’18)

WagesEarnings

Growth

3.2%

(Aug ‘19)

3.3% (Jul ’19)

3.2% (Aug ’18)

Buyer AbilityDisposable

Income Y/Y

4.5%

(Jul ’19)

6.1%

(2018)

3Source: IRS

OUR ECONOMY: Livin’ On a Prayer

Auto Finance Equifax$1,260T

(Aug ’19)

$1,221T

(Sep ’18)

Interest RatesTarget Fed

Funds Rate

1.75 -2.00%

(Sep ’19)

2.00 -2.25%

(Sep ’18)

Borrowing CostsAvg Rate

New Auto Loan

5.82%

(Aug ’19)

5.90%

(Sep ’18)

Ownership CostsRetail Unleaded

Gasoline Price

$2.66

(Sep ’19)

$2.88

(Sep ’18)

4Source: IRS

OUR ECONOMY: Livin’ On a Prayer

Cox Automotive Dealer Sentiment Index Q3 2019 5Source: IRS

DEALER SENTIMENT: Overall Market Conditions in Q3

Strong

Weak

48

45

46

49

51 51

44

48

49

48

54

55

54

55

56

59

51

50

54

56

46

42

43

47

50

48

42

47

48

46

Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

Overall Franchise Independent


DEALER SENTIMENT: New Vehicle Sales Q3

Good

Poor

57 57

61

65

59

60

57

53

54

55

57 57

61

65

59

60

57

53

54

55

Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

Overall Franchise

Note: Scale 1 - 100


DEALER SENTIMENT: Overall Market Next 3 Months

Good

Poor

Note: Scale 1 - 100

55

5253

70

5657

49

63

55

51

64

57 57

73

69

61

54

62 62

57

5251

52

70

52

55

47

63

52

49

Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

Overall Franchise Independent

VEHICLE SALESAND FORECAST

8

9

17.1 m

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

15,000,000

15,500,000

16,000,000

16,500,000

17,000,000

17,500,000

18,000,000J

an

-20

14

Ja

n-2

015

Ja

n-2

016

Ja

n-2

017

Jan

-2018

Ja

n-2

019

US Light Vehicle Sales (moving 12 month total)

Light Vehicle Sales 12m Annual Change

Peak: April 2016

Election: Nov 2016

Tax Reform: Dec 2017

U.S. SALES GROWTH: Contracting After Tax Reform Sugar High

10

-10%

-5%

0%

5%

10%

15%

20%

25%

Jan

-20

14

Jan

-20

15

Jan

-20

16

Jan

-20

17

Jan

-20

18

Jan

-20

19

Registrations Growth By Sales Channel (annual change)

Rental Fleet 12m% Dealer/OEM Fleet 12m%

Retail Lease 12m% Retail Purchase 12m%

U.S. SALES CHANNEL: Fleet Providing Sales Support

Tax Reform

Dec 2017

Source: Cox Automotive analysis of IHS vehicle registrations data

Low

Aug 2017

New Market FleetRetail

PurchaseRetail Lease

2018 0.5% 4.3% -0.4% -0.2%

2019January Forecast

-2.4% 4.0% -3.5% -4.6%

YTD -1.6% 9.1% -4.7% -2.0%

Tax Reform

Vehicle Affordability

Residual Values

Cox Automotive

Sales Forecast

2019 = 16.8 million

2020 = 16.5 million

U.S. SALES YTD: Likely To Beat Our Forecast, Helped By Fleet

Source: Cox Automotive analysis of BEA and IHS vehicle registrations data

12

U.S. SALES YTD: September Will Be Down Due To Sales Calendar

Month Sept-18 Sept-19 YOY Aug-19MOM

Change

Sales

Millions1.44 1.25 -14% 1.65 -24%

Selling Day 25 23 28

Quarter 2018 2019 Change

Sales Q1 4.1 4.0 -3.1%

Q2 4.5 4.4 -1.3%

Q3 4.3 4.3F -0.4%

Q4 4.4 4.1F -6.0%

Year 17.3 16.8F -2.4%

YTD 12.9 12.7F -1.6%

A Lot Must Happen In Q4 To

Reach Our 16.8 Million

Forecast

Pace of sales decline expected

to increase in Q4 – credit

tightening, less fleet, rising

recession fears all reduce

volume

Additional Threats

Oil price spike

Prolonged GM Strike

Aggressive Incentive Pricing

Trump Tariffs: China and EU

Impeachment: Impact Unknown

Source: Cox Automotive analysis

13

16.0

16.2

16.4

16.6

16.8

17.0

17.2

17.4

17.6

17.8

18.0

Jan

-20

18

Feb

-20

18

Mar

-20

18

Ap

r-2

018

May

-20

18

Jun

-20

18

Jul-

20

18

Au

g-2

018

Sep

-20

18

Oct

-20

18

No

v-20

18

Dec

-20

18

Jan

-20

19

Feb

-20

19

Mar

-20

19

Ap

r-2

019

May

-20

19

Jun

-20

19

Jul-

20

19

Au

g-2

019

Sep

-20

19

New Light Vehicle Seasonally Adjusted Annualized Rate (Millions)

U.S. SALES SAAR: Volatility Likely To Continue After Short Respite

16.9m F

Source: Cox Automotive analysis or BEA/Wards sales

SEPTEMBER & Q3 YTD: Cox Automotive Forecast

September 2019 Cox Automotive Industry Insights Forecast; all historical data from OEM sales announcements

Note: Total includes brands not shown. GM and Ford monthly sales are estimated

Cox Automotive Forecast: September Auto Sales to Fall Significantly For Everyone

14Source: Cox Automotive analysis Kelley Blue Book sales

Sep‘19 Sep‘18 YOY% Q3'19 Q3'18 YOY% Jan–Sep ‘19 Jan–Sep ‘18 YOY%

GM 213,000 235,000* -9.7% 736,507 694,054 6.1% 2,145,828 2,167,468 -1.0%

Ford Motor Co 170,000 196,000* -13.5% 572,673 606,939 -5.6% 1,804,127 1,878,653 -4.0%

Toyota Motor Co 175,000 203,098 -13.8% 632,538 634,923 -0.4% 1,783,243 1,824,232 -2.2%

FCA Group 165,000 199,819 -17.4% 550,450 564,507 -2.5% 1,646,560 1,679,983 -2.0%

American Honda 125,000 132,668 -5.8% 440,289 419,173 5.0% 1,217,284 1,206,997 0.9%

Nissan NA 95,000 122,819 -22.7% 321,110 343,987 -6.7% 1,038,146 1,124,682 -7.7%

Hyundai Kia 100,000 108,862 -8.1% 338,555 325,132 4.1% 986,351 953,744 3.4%

Subaru 54,000 57,004 -5.3% 188,145 180,558 4.2% 527,671 503,418 4.8%

VW 47,000 55,007 -14.6% 164,093 166,013 -1.2% 480,398 476,274 0.9%

Grand Total 1,250,000 1,448,309 -13.7% 4,297,675 4,316,731 -0.4% 12,726,918 12,931,991 -1.6%

15

BRAND SHARE GAINS: Ram Wins Big, Chevy Declines

-0.5%

-0.4%

-0.3%

-0.2%

-0.1%

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

YTD 2019 Market Share Gain From CY 2018

Source: Cox Automotive analysis Kelley Blue Book sales

16

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

Share Of Rental Fleet Activity (Difference YTD 2019 vs 2018) Top and Bottom Five Brands


SHARE OF RENTAL: Ford Increasing, Chevy Pulls Back

17

-0.20%

-0.15%

-0.10%

-0.05%

0.00%

0.05%

0.10%



LUXURY SHARE GAINS: “Value Luxury” Seems To Be Winning

18

SEGMENT SHARE: Cars Continue To Lose Share To Crossovers

-1.0%

-0.8%

-0.6%

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%



THEROADAHEAD

19

20

THE ROAD AHEAD: A Highly EVENTFUL Calendar

• Fed meetings on October 30 and December 11

• Section 232 Action on EU and Japan Deadline November 18

• Brexit October 31 (or not)

• Congressional debate on USMCA

• Ongoing NHSTA / EPA battle, multiple moves in Q4

• UAW Contract Negotiations Across all 3 Detroit Companies

The political landscape:

• Impeachment hearings

• Middle East / Fuel Prices

• Election Season

Dependence on Q4 to reach 17 million again

New and used price trends far less favorable

21

FIVE TAKEAWAYS: September Year To Date 2019

MONETARY POLICY

& THE ECONOMY

CREDIT

CRUNCHRETAIL

USED MARKET

TARIFF

THREATTHERE ARE

STILL WINNERS

The Git Up

Blanco Brown

Subaru Crosstrek XV

Hobo Johnsen

Never Really Over

Katy Perry

Stay High

Brittany HowardOne Thing Right

Marshmello,

Kane Brow

Q&A

22

23

Contact Information:

Dara Hailes

Manager, Public Relations

Cox Automotive

[email protected]

Mark Schirmer

Director, Public Relations

Cox Automotive

[email protected]

mailto:[email protected]

mailto:[email protected]

2019 q3 auto sales conference call...ytd 12.9 12.7f-1.6% a lot must happen in q4 to reach our 16.8...

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