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  • NADA: 2013 Dealers Outlook

    20th Annual Automotive Outlook Symposium Federal Reserve Bank of Chicago-Detroit Branch May 31, 2013

    Jonathan Banks Executive Automotive Analyst NADA Used Car Guide

    Angela Lisulo Economist NADA Industry Analysis Division

  • U.S. Economic Indicators, December 2012-April 2013

    U.S. Economic

    Indicator

    December 2012 January 2013 February 2013 March 2013 April 2013

    Real GDP (% change) 0.09

    (Q42012)

    0.62

    (Q12013)

    Industrial Production

    Index (Index 2007=100)

    98 98 99 99 99

    NFIB Small Business

    Optimism Index

    (Index 1986=100)

    88 89 91 89 92

    Housing Starts (000s) 983 898 969 1,021 853

    Housing Prices (S&P/

    Case-Shiller Index

    (Index Jan 2000=100)

    147 148 150 152

    Unemployment rate (%) 7.8 7.9 7.7 7.6 7.5

    Personal Consumption

    Expenditures (% change)

    0.5

    (Q42012)

    0.8

    (Q12013)

    Consumer Confidence

    Index (Index 1985=100)

    67 58 68 62 69

    U.S. Regular Conventional

    Retail Gasoline Prices

    (U.S.$/gallon)

    3.26 3.25 3.61 3.65 3.50

    Light Vehicle Sales

    (m)(YOY% change)

    1.4m

    (9.0%)

    1.0m

    (14.3%)

    1.2m

    (3.7%)

    1.4m

    (3.4%)

    1.3m

    (8.4%)

    All data (except U.S. Regular Conventional Retail Gasoline Prices and Light Vehicle Sales): Moodys Analytics (secondary source) (various primary sources) U.S. Regular Conventional Retail Gasoline Prices data source: U.S. Energy Information Administration Light Vehicle Sales data source: WardsAuto

  • Consumer Purchase Intentions

    2%

    3%

    4%

    5%

    6%

    7%

    8%

    9%

    Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

    Resp

    onda

    nt P

    erce

    ntag

    e

    Month

    The Conference Board: Plans to Buy w/in 6 Months SurveysNew and Used Automobiles (%, SA) - 12 month rolling average

    New Used

    Source: The Conference Board

    Consumer intent to purchase recovered more quickly for used sales than new, however both metrics are well below pre-recession levels.

    Data source: The Conference Board

  • New and Used Price Performance

    Both the new and used markets have experienced price growth driven by stronger fundamentals in the industry.

    70.0

    80.0

    90.0

    100.0

    110.0

    120.0

    130.0

    Janu

    ary

    2010

    = 1

    00

    Month

    NADA Vehicle Price Indices: New and UsedUsed index covers vehicles up to 8 years in age. SA.

    Source: NADA

    Used New

    Data source: NADA

  • U.S.: Number of Franchised Dealerships, 1990-2013

    Data source: NADA Membership Department

    17,540

    17,635

    15,000

    17,000

    19,000

    21,000

    23,000

    25,000

    27,000

    Nu

    mb

    er

    of

    Fran

    chis

    ed

    De

    ale

    rsh

    ips

    (un

    its)

    Year

  • Regions include the 50 U.S. states and the District of Columbia (D.C.)

    Data source: NADA Membership Department U.S. regions as classified by U.S. Census Bureau

    2012 U.S. Franchised Dealerships, by region (As of January 1, 2013)

  • U.S.: Franchised Dealerships, by annual sales (1993, 2003, 2013)

    0

    1,000

    2,000

    3,000

    4,000

    5,000

    6,000

    7,000

    8,000

    0-149 150-399 400-749 750+

    Nu

    mb

    er o

    f Fr

    anch

    ise

    d D

    eal

    ersh

    ips

    (un

    its)

    Annual sales (units)

    1993 2003 2013Data source: NADA Industry Analysis Division; NADA Membership Department

  • Franchise Dealers: Sales Breakout

    Dealership sales have quickly recovered from the trough in 2009 and have reached record levels from our sample.

    Data source: NADA 20 Group

    $0

    $5,000,000

    $10,000,000

    $15,000,000

    $20,000,000

    $25,000,000

    $30,000,000

    $35,000,000

    $40,000,000

    NADA 20 Group Franchise Dealers: Total Dealership Sales in Dollars

  • 20.0%

    25.0%

    30.0%

    35.0%

    40.0%

    45.0%

    50.0%

    55.0%

    60.0%

    65.0%

    New Vehicle Sales

    Used Vehicle Sales

    NADA 20 Group Franchise Dealers: Percentage of Total SalesNADA 20 Group Franchise Dealers: Percentage of Total SalesNADA 20 Group Franchise Dealers: Percentage of Total Sales

    Franchise Dealers: Sales Breakout

    Used vehicle sales supported franchise dealers during the recession and have remained important even in light of dramatic new sales improvements.

    Data source: NADA 20 Group

  • Franchise Dealers: Gross Profits

    The viability of maintaining a strong used vehicle program is evident in the strong gross profit between the two channels.

    0.0%

    2.0%

    4.0%

    6.0%

    8.0%

    10.0%

    12.0%

    14.0%

    16.0%

    New Vehicle Sales

    Used Vehicle Sales

    NADA 20 Group Franchise Dealers: Gross Profit

    Data source: NADA 20 Group

  • Dealership Employment

    Not surprisingly dealership employment has outpaced the overall employment rate. There are headwinds to future growth due to political and economic uncertainty.

    88.0

    90.0

    92.0

    94.0

    96.0

    98.0

    100.0

    102.0

    104.0

    106.0

    Jan

    -09

    Ma

    r-09

    Ma

    y-0

    9

    Jul-

    09

    Sep

    -09

    No

    v-0

    9

    Jan

    -10

    Ma

    r-10

    Ma

    y-1

    0

    Jul-

    10

    Sep

    -10

    No

    v-1

    0

    Jan

    -11

    Ma

    r-11

    Ma

    y-1

    1

    Jul-

    11

    Sep

    -11

    No

    v-1

    1

    Jan

    -12

    Ma

    r-12

    Ma

    y-1

    2

    Jul-

    12

    Sep

    -12

    No

    v-1

    2

    Jan

    -13

    Ma

    r-13

    Pa

    yro

    ll I

    nd

    ex

    (J

    an

    . 2

    00

    9 =

    10

    0)

    Month

    Change in Nonfarm Payrolls: New Car Dealers v. Total Nonfarm

    New Dealerships Total Nonfarm

    Source: BLSData source: U.S. Bureau of Labor Statistics (U.S. Department of Labor)

  • Public Dealership Groups

    We continue to expect industry new vehicle sales to be approximately mid-15 million units in 2013.

    ~ Mike Jackson, Chairman/CEO, April 19, 2013

    Business environment continues to be favorable to retail automotive.

    ~ April 23, 2013

    Expect revenue to grow by more than 10% (in 2013) through a combination of same-store growth and acquisitions.

    ~ April 29, 2013

    All four of the nations top dealer groups reported record earnings from continuing operations for Q1 2013. Many of the public groups emphasized the importance of used vehicle sales as a contributor to their high profitability.

    Pent-up demand has increased and consumers still intend to buy

    Used vehicle prices remain robust Helps consumers in terms of trade-in values;

    allows for more aggressive leasing

    ~ May 2, 2013

    AutoNation:

    Penske Automotive:

    Sonic Automotive:

    Group 1 Automotive:

  • U.S.: NADA Optimism Index, NFIB Small Business Optimism Index (2000-2013)

    NADA Optimism Index data source: NADA Industry Analysis Division NFIB Small Business Optimism Index data source: Moodys Analytics (secondary source), NFIB Research Foundation (primary source)

    0

    20

    40

    60

    80

    100

    120

    140

    160

    180

    200

    80

    85

    90

    95

    100

    105

    110

    00 III 01 III 02 III 03 III 04 III 05 III 06 III 07 III 08 III 09 III 10 III 11 III 12 III 13

    NA

    DA

    Op

    tim

    ism

    Ind

    ex (

    no

    t se

    aso

    nal

    ly a

    dju

    sted

    )

    NFI

    B S

    mal

    l Bu

    sin

    ess

    No

    rmal

    ized

    Op

    tim

    ism

    Ind

    ex (

    Ind

    ex

    19

    86

    =10

    0,

    Seas

    on

    ally

    Ad

    just

    ed)

    Quarter/Year

    NFIB Small Business Optimism Index NADA Optimism Index

  • U.S.: Profit Expectations by Dealers (%), 2000-2012

    0.0

    10.0

    20.0

    30.0

    40.0

    50.0

    60.0

    70.0

    4/00 4/01 3/02 3/03 3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 12/12

    % o

    f D

    eale

    rs w

    ith

    Pro

    fit

    Exp

    ecta

    tio

    ns

    Month/Year

    Profit expectations: Increase Profit expectations: no change Profit expectations: Decrease

    Data source: NADA Industry Analysis Division

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