NADA Used Car Guide Industry Update February 2014 Used Vehicle Prices Flat in January Prices tick up by 0.1%; NADA’s used vehicle price index remains unchanged at 124.6 Used Prices Expected to Climb by 2.1% in February Prices to climb marginally in March before falling the remainder of the year February Official Used Car Guide® Movement Trade-in values raised by an average of 1%; car and truck values increase by 1.2% and 0.8%, respectively Weather Stalls New Vehicle Sales Growth Sales drop by 3%; Seasonally Adjusted Annual Rate reaches 15.2M Guidelines | February 2014 TABLE OF CONTENTS New & Used Market Trends ........................................................................................................ 2 Economic Data ............................................................................................................................. 12 NADA Official Used Car Guide Value Trends ............................................................................... 16 At NADA Used Car Guide ............................................................................................................. 17 NEW & USED MARKET TRENDS The continuous blasts of arctic weather that affected large swaths of the country did little to push used vehicle prices off of their expected course in January, as the month’s essentially flat increase of just 0.1% relative to December was in line with NADA’s forecast for the period. NADA’s seasonally adjusted used vehicle price index was unchanged at 124.6 in January, tied with two other months (August 2013 and December 2013) as the third highest figure ever NADA’s used recorded. Price movement for the majority of segments fell between a tight range of -0.3% to 0.4%, with compact utility, large SUV and mid-size van prices dropping slightly, while compact car, large pickup and midsize utility prices inched up; mid-size car prices were flat over the month. vehicle price index remains unchanged at 124.6, tied with August 2013 and December 2013 as the third highest ever recorded. On an annual basis, wholesale prices ended the month a scant 0.3% higher than they were in January 2013. For the eighth month in a row, large pickup prices were at least 10% higher than they January 2010 = 100 Per the seasonal norm, luxury car and utility prices continued to fall in January, dropping by respective figures of 1.1% and NADA Used Vehicle Price Index 0.9%. Luxury car losses were a notable one Vehicles up to eight years in age. Seasonally adjusted. percentage point improvement over December’s 130 2.1% drop, while luxury utility depreciation matched 120 December’s figure; declines for both segments also 110 essentially equaled what was recorded for the 100 month last year. January 2014: Index unchanged at 124.6 90 80 70 Month Source: NADA Used Ca r Guide NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 2 Guidelines | February 2014 [ NEW & USED MARKET TRENDS continued ] were on a prior-year basis and January marked an incredible 59th straight month of annual price growth for the segment – the longest streak of growth recorded for any group of vehicles. Monthly AuctionNet Price Change - December 2013 vs. January 2014 Vehicles up to eight years in age. 0.7% 0.4% 0.1% 0.0% -0.3% -0.2% -0.3% -0.3% -0.8% Percent Change Exhibiting similar strength, large SUV prices were 6.2% higher on a prior-year basis last month; however, this is the lowest annual improvement recorded since January 2012’s figure of 5.9%. At 2% and 3%, respectively, mid-size utilities and vans rounded out the list of segments whose prices remained in the green compared to last year. 0.4% 0.3% 0.2% -1.3% -1.1% -0.9% -1.8% -2.3% -2.8% -3.3% -3.8% Compact Car Compact Utility Large Pickup Large SUV Luxury Car Luxury Utility Mid-Size Car Mid-Size Utility Mid-Size Van Market Average Segment Source: NADA Used Ca r Guide Source: NADA Annual AuctionNet Price Change - YTD, 2013 vs. 2014 Through January. Vehicles up to eight years in age. 12.0% 10.0% 10.0% 8.0% 6.2% Percent Change As for declines, compact car, mid-size car and luxury utility prices were on average 0.8% lower relative to last year, while compact utility prices were down by 1.4%. Bringing up the rear was the luxury car segment, whose 2.8% fall extended the group’s monthly year-over-year losses to 13 straight. AuctionNet Volume Trends The average number of weekly AuctionNet sales was 6.0% 4.0% 3.0% 2.0% 2.0% 0.3% 0.0% 6% higher in January than it was in the preceding -2.0% four-week period (excluding holiday weeks), with -4.0% -0.8% -0.7% -2.8% Compact Car Compact Utility growth led by a combined 16.2% jump in the -0.9% -1.4% Large Pickup Large SUV Luxury Car Luxury Utility Mid-Size Car Mid-Size Utility Mid-Size Van Market Average Segment number of 2011 and 2012 model year transactions Source: NADA Used Ca r Guide Source: NADA (the 2014 model year increase of nearly 63% was off of a low base). Weekly sales volume increased by a smaller 7% for the 2013 model year, while sales for model years 2007 through 2009 dropped by an average of 1.3%; signaling dissipating off-lease volume, the average number of transactions for the 2010 model year dropped by a substantial 7.6%. AuctionNet® Auction Volume Trends The average number of weekly AuctionNet transactions. Period Prior 4-wk Avg.* Current 4-wk Avg. Difference (%) 2007 8,357 8,237 -1.4% 2008 7,470 7,345 -1.7% 2009 4,323 4,295 -0.7% Model Year 2010 2011 8,418 11,669 7,778 13,638 -7.6% 16.9% 2012 9,083 10,503 15.6% 2013 12,437 13,304 7.0% 2014 495 804 62.5% Source: NADA Used Car Guide *Excludes the holiday weeks of 11/25, 12/23 & 12/30/13 NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 3 Guidelines | February 2014 [ NEW & USED MARKET TRENDS continued ] It’s worth noting that the number of 2013 model year to follow a familiar seasonal pattern, with prices transactions recorded last month was 13% lower than continuing to grow slightly through March before falling those of 2012 model year units captured in January 2013. throughout the rest of the year. NADA predicts overall Given the foul weather that gripped much of the country, depreciation from April through December will average it’s highly likely that fewer rental 2.3% per month; by comparison, units were able to reach auction depreciation over the same period lots in January. Considering this, it wouldn’t come as a surprise if the market were to experience an above-average spike in rental volume over the next few weeks as remarketers push to make up for lost time. That being said, the last year averaged a smaller 1.8%. In February, NADA expects used prices to rise by an average of 2.1%, 1.4 points more than the increase recorded in February 2013. The higher rate of depreciation expected this year is due almost entirely to an expanding supply of units up to four years in age, which NADA anticipates will increase by 11% compared to increase in rental volume should 2013. Despite the increase, be countered by a rise in buyer traffic, as weather also prevented a number of dealers from making their way to the lanes. February 2014 used vehicle price forecast Historically, February marks the beginning of a two-tothree month period of definitive used vehicle price growth as the receipt of federal tax refund checks help stimulate an upsurge in consumer auto demand. From 1995 to 2013, prices of units up to eight years in age increased by an average of 1.8% on a monthly basis in February – the most of any month – and over the past three years prices have grown by an average of 2.2% during the month. Concerning this February, NADA expects prices will rise by an average of 2.1%, which is a meaningful 1.4 points more than the increase recorded last February when higher payroll taxes impeded consumer spending. however, late model supply will still be relatively tight as it will remain some 7% below 2009 levels and 18% lower than 2007’s pre-recession level. In addition, numerous signs point to dealers staying highly focused on used car operations and consumer appetite for certified pre-owned vehicles – which are predominantly derived from this age group – continues to grow. These factors will help counter the downward pressure placed on late model prices by higher supply. As far as older model volume is concerned, NADA estimates that the number of units between five and eight years old will fall by 9.6% in 2014 (again, a byproduct of the new vehicle sales decline that occurred from 2006 to 2009). Supply aside, demand side factors will remain largely positive in 2014. The current consensus forecast places economic growth for the year at 2.8%, a rate substantially better than last year’s estimated figure of 1.9%. Price movement over the remainder of 2014 is expected NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 4 Guidelines | February 2014 [ NEW & USED MARKET TRENDS continued ] Unemployment will continue to fall, home prices will remain on the rise (although at a rate lower than 2013’s 12% increase), and gasoline prices are expected to be flat to down slightly. Credit conditions will deteriorate slightly as the market transitions from a period of extremely favorable conditions to one more in line with historic norms; however, the lending environment will still be very strong compared to prior year standards. And while lower new sales growth makes manufacturer incentive spending a bit more of a wildcard this year, it’s likely that discount strategy will continue to revolve around lease and finance subvention rather than customer cash; this, along with an anticipated rise in new vehicle prices, will help shield used prices from the effect of higher total incentive spending. NADA Used Vehicle Price Index & CY14 Forecast Down 0.5% - 1% Units up to 8 years in age 140.0 of demand drivers, the diverging movement of 120.0 supply across the various vehicle age groups will be the primary factor affecting used vehicle prices in 2014. NADA predicts prices for vehicles younger than five years old will finish the year 2.5% lower than they were in 2013, while five-to-eight year old Used Vehicle Price Index (2010 = 100) Taking into account the minimal changes expected 100.0 80.0 60.0 40.0 20.0 vehicle prices will remain essentially flat. Combined, the average price of units up to eight years in age is expected to slip by 0.5% to 1% in 2014. 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Forecast Calendar Year Source: NADA Used Car Guide February Official Used Car Guide® value movement Trade-in values in February’s edition of the Official Used Car Guide® were raised by an average of just over 1% relative to January’s edition. Car values were increased by an average of 1.2%, with mid-size car figures rising by a segment leading average of 2.2% and subcompact and compact car values increasing by 1.4%. Value changes for remaining car segments were minimal, rising or falling by an average of just 0.3%. Truck values were raised by a smaller average of 0.8% for February’s edition, with compact utility and large SUV increases of 1.7% and 1.1%, respectively, exceeding those of other truck segments. Large van and mid-size utility (both mainstream and luxury) values were increased by an average of 0.9%; figures for remaining truck segments were NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 5 Guidelines | February 2014 [ NEW & USED MARKET TRENDS continued ] left essentially unchanged from January’s levels. New vehicle sales drop by 3%, SAAR dips to 15.16M units Historic winter weather arrived in January to the delight of students across much of the United States, but crippled businesses and curbed auto sales as people were confined to their homes New Vehicle Sales New Vehicles Sales January’s total sales figure was also the lowest of any month in the past two years after the 910,000 units that were delivered in January 2012. 15% 1.2 10% 1.0 0.8 5% 0.6 0% 0.4 -5% 0.2 While the overall industry performance left much to Percent Change year-over-year decrease in the last 32 months. 20% 1.4 Sales Volume (millions) million units and the 3% decline was only the second YoY Change 1.6 for days on end. New sales were held to just 1.01 0.0 -10% be desired and mainstream brands were down a collective 4%, luxury brands enjoyed a solid 5.5% Month Source: Wardsauto.com improvement. Also, roughly half of all mainstream nameplates (10 out of 21) exhibited gains and New Vehicle SAAR SAAR brands with declines were down more than 10%. On 16 increased sales and improved by 10%, collectively, whereas Volvo, Cadillac and Porsche fell greater than 14%. The seasonally-adjusted annual rate (SAAR) slipped YoY Change 14% 12% 10% 15 8% 14 6% 4% 13 2% 12 0% 11 -2% to 15.16 million units from last year’s 15.23 million, a decline of 0.5%. Adding to the disappointing result Month Source: Wardsauto.com was the fact that January’s SAAR was the first yearover-year decline since August 2010, a span of 41 months. Domestics gets snowed in, but Chrysler plows ahead Hailing from Michigan, the Big Three’s performance took a hit after multiple storms brought excessive amounts of snow and ice as well as below-freezing temperatures that NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 6 Percent Change the luxury side, nine out of 12 brands enjoyed New Vehicle SAAR (millions) together were up greater than 12%, while the 17 Guidelines | February 2014 [ NEW & USED MARKET TRENDS continued ] discouraged folks from leaving the comforts of their homes. The Midwestern and Southern regions represent hugely significant parts of their customer bases, but were hit hard by poor weather, which led to a 5.5% drop in domestic sales, totaling fewer than 449,000 units. Chrysler Group LLC successfully navigated the obstacles, Mainstream Brand Performance (Units Sold) however, and managed an impressive 7.9% increase in sales. Although Dodge sales fell by 19%, the rest of the company’s lineup was up as Jeep and Ram both experienced healthy growth of 38% and 24%, respectively. Jeep kept its momentum up and once again led the group’s brands by increasing sales of every model in its portfolio, including the Cherokee, whose sales were up by 416% versus the discontinued Liberty, the model it replaced in Jeep’s lineup. As the largest automaker in the United States, the sales performance of General Motors carries a significant amount of weight in total industry figures and in January, despite remaining as the sales leader, the automaker’s 171,000 deliveries was a 12% drop that greatly influenced Buick Chevrolet Chrysler Dodge Fiat Ford GMC Honda Hyundai Jeep Kia Mazda Mini Mitsubishi Nissan Ram Scion Smart Subaru Toyota Volkswagen double-digits. Sales for the brand dropped by 1.4% and were propped up by a good showing from the Regal (up 44%) and strong sales of the Encore (up 570%), which did much to help it stand out from the rest of the GM family. Ford Motor Company had a difficult month as well with overall sales down 7.4%, but Lincoln was a bright spot for Dec-13 15,379 153,493 20,270 47,689 3,745 203,876 43,120 119,504 63,005 53,275 33,631 22,964 6,592 6,423 96,526 34,788 4,323 855 40,172 151,763 34,015 Jan-13 13,463 137,304 20,696 43,227 2,503 158,445 30,816 84,137 43,713 30,318 36,302 21,319 3,682 4,659 73,793 20,669 4,893 481 27,663 136,621 29,018 Change From Month Ago Year Ago -14% -1.4% -22% -13% 4% 2% -27% -19% -14% 29% -29% -8.8% -36% -10% -32% -4.0% -30% 0.7% -21% 38% 10% 2.0% -18% -12% -61% -31% -24% 4.5% -16% 10% -26% 24% -7% -18% -39% 8.3% -18% 19% -18% -8.7% -31% -19% Jan-13 9,489 10,056 16,513 13,116 7,126 1,029 4,200 16,211 4,191 23,578 3,358 4,875 Change From Month Ago Year Ago -31% 14% -41% 0.4% -51% 11% -37% -13% -32% 26% -13% 31% -19% 11% -49% 8.8% -25% 43% -33% 1.3% -5% -7.8% -22% -22% Source: Wa rds Auto Luxury Brand Performance (Units Sold) the industry’s disappointing month. Of all GM brands, only Buick was able to keep sales from falling in the Jan-14 13,278 119,089 21,113 34,905 3,222 144,568 27,733 80,808 44,005 41,910 37,011 18,813 2,543 4,867 81,472 25,596 4,011 521 33,000 124,717 23,494 Acura Audi BMW Cadillac Infiniti Jaguar Land Rover Lexus Lincoln Mercedes-Benz Porsche Volvo Jan-14 10,823 10,101 18,253 11,386 8,998 1,347 4,674 17,637 5,973 23,892 3,096 3,792 Dec-13 15,751 17,013 37,389 18,165 13,232 1,544 5,764 34,757 7,984 35,835 3,246 4,888 Source: Wa rds Auto the organization after accomplishing 43% growth compared to Ford brand’s 8.8% decline. Sales were mixed among the Lincoln products, but the model that swung the pendulum greatest was the MKZ, which was up a notable 368% and carried the brand for the month. While only the Mustang and Flex posted gains for Ford, the models that most underperformed were the Focus and Taurus, down 26% and 34%, respectively, for NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 7 Guidelines | February 2014 [ NEW & USED MARKET TRENDS continued ] eclipsing 90,000 units, a mere 1,161 less than American a total decrease of over 6,000 units. Imports fare better than domestics, see only slight decline Honda Motor Co. The success was enjoyed between both brands as well, with Infiniti up 26% on sales just a hair under 9,000 and Nissan up 10% with over 81,000 Sales for importers exhibited only a small decrease of deliveries, which actually bested the Honda brand by 664 1.1% as Asia/Pacific deliveries were down only a marginal units. Combined Q50 and G sales were up 37% over last 0.2%, with Japan’s sales down 0.6% and Korea’s up 1.3%. year’s G deliveries while the QX60 was up 21% over the JX While importers sold more cars than domestics a year to propel Infiniti’s performance while Nissan enjoyed a ago, the gap increased this January and grew from 89,000 good month from their Frontier and Juke models, which units to 108,000. Out of 15 importers, only six were were up 88% and 46%, respectively. actually down, but those represented a 7.3% drop while American Honda Motor Co. slowed the rest were up 7.1%. Although down and was down 2.1%, but fewer imports saw diminished maintained its position over Nissan sales, they carried more weight with the top two importers, Toyota and Honda, being down 5.3%, collectively. Subaru had another stellar month after driving sales up over 19% as Out of 15 importers, only six were actually down, but those represented a 7.3% drop while the rest were up 7.1%. by the slightest of margins thanks to its Acura brand, which was up 14%. The Honda brand fell by 4% almost exclusively because sales of the Accord were down a significant 14%, with the 3,291 dip the snow and ice storms that in sales for the model reflecting troubled much of the competition 98.9% of the brand’s shortfall in appears to have benefited the deliveries. Acura was an smaller Japanese automaker. As its product portfolio interesting case being that, excluding the new RLX, all of offers the brand’s highly-touted all-wheel drive system the brand’s models were down except for the MDX (up nearly across the board, with the lone exception being 65%) and RDX (up 10%) utility vehicles, which grew by a the BRZ sports car, the circus of winter weather could combined 38%. With the new 2015 TLX sedan coming to possibly have played right into Subaru’s hands. The next market later this year, it will be interesting to see how the generation 2015 Legacy sedan, touting what is arguably incoming model performs as a replacement for both the its most polished and handsome design ever, was also TL and TSX considering the brand’s current reliance on its revealed at last week’s Chicago Auto Show and adds to utility vehicles to sustain growth. what has proven to be a remarkable run for the brand. Toyota Motor Sales sputtered to a 7.2% decrease in sales Just like last month, Nissan North America outperformed after having fallen slightly last month as well. Lexus Toyota and Honda with almost 12% growth in January by NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 8 Guidelines | February 2014 [ NEW & USED MARKET TRENDS continued ] performed nicely with 9% growth resulting from huge months from the IX sedan (up 120%) and the GX SUV (up 97%) while Scion was down 18% after its leader from a year ago, the FR-S sports coupe, dropped by 36%. Volume brand Toyota had a disappointing January with sales down 8.7% partly due to falling deliveries of the Camry (down 27%) and Prius (down 26%), but the RAV4 (up 45%) and Highlander (up 21%) utility vehicles did their best to make up the difference. Though the increases in sales were marginal, German luxury automakers, BMW, Mercedes-Benz and Audi, performed well to post improvements year-over-year. Mini sales sank by 31%, but BMW did more than enough to balance things out by increasing deliveries by 11% thanks primarily to the 5-Series and X3, which were up 26% and 35%, respectively. Mercedes’ sales crept up by 1.3%, but it was mainly due to its new Mercedes-Benz CLA sedan coming to the rescue with 2,433 addition sales as many of the Mercedes models were down. Audi had a mixed month, up a minor 0.4%, but the Q5 (up 18%) and Q7 (up 43%) were instrumental in keeping the brand headed in a positive direction. Incentive spending climbs for the 12th consecutive month While incentives were down 6.3% relative to last month, they represented a 8.7% jump over last January, per Autodata. Dealer, finance and lease subvention were all up, but customer cash, which most negatively impacts used car value retention, fell by 6.2%. It was the first time since last January that automakers pulled back their utilization of customer cash, but on the other hand the increase in the other types of incentives was significant as it was Incentives Average of Total the first time all three were up since December spending for the most part as the only brand to see an increase was Buick (up 42%), which may help 12% 10% $2,600 8% 6% $2,500 4% $2,400 2% 0% $2,300 -2% explain why it was able to outperform its GM peers. $2,200 Lincoln was effective in putting its increased $2,100 -4% -6% spending to good use as its 5.3% rise in incentives paled in comparison to its 43% sales jump; however, Month Source: Autodata NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 9 Percent Change Similar to last month, General Motors cut back on its 14% $2,700 Average Incentive Spending 2010. YoY Change $2,800 Guidelines | February 2014 [ NEW & USED MARKET TRENDS continued ] Ford was unable to do the same with sales down 8.8% despite spending rising by 25%. Notable for Chrysler Group LLC was how Jeep again posted a strong sales month without being reliant on incentives, which were down 15%. Toyota Motor Sales spent more in January, but the payoff was less than ideal as Toyota brand sales fell with incentives up 4.3% while Lexus’ sales growth lagged behind its spending, which was up 41%. Nissan and Infiniti ramped up incentives by 27% and 29%, respectively, but the automaker reaped the rewards with a noteworthy performance relative to its peers. Interestingly, Acura was the only brand among the Japanese Big Three to cut back, yet it still managed to increase deliveries by 14%; Honda’s sales decline outweighed its luxury sibling considering the mainstream brand’s 76% leap in spending. As has been the case in past months, Subaru was remarkable in scaling its incentives back by 16% to fall to an industry-low $921 per unit. While the automaker may have been the biggest beneficiary of January’s poor winter weather, it has successfully proven for months that it can continue to push its deliveries upward even as its incentives usage diminishes. Jaguar Land Rover had a nice January considering its sales were up 15% while limiting its incentives with the Jaguar and Land Rover brands’ spending down 3.1% and 31%, respectively. Unfortunately for Volkswagen, despite having the fourth-highest percent increase in spending (up 47%) and sixth-highest total at $2,699 per unit among mainstream brands, the German make had the third-worst sales month, down 19%. Overall new vehicle days’ supply jumps by New Vehicle Days' Supply Days' Supply 13 days compared to last year 90 Inventory climbed to 89 days of supply in January, up 70 Acura stood out as its days’ supply decreased by 39 days versus prior year and went from having the fourth-highest inventory last January to having the Days of Supply days higher than January 2013’s level of 76 days. 18 80 13 60 8 50 40 3 30 20 -2 10 0 -7 16th-highest. Lincoln, whose days’ supply is consistently lofty, was notable in that it managed to Month Source: Wardsauto.com NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 10 Day Change 26 days from December’s figure of 64 and also 13 YoY Change Guidelines | February 2014 [ NEW & USED MARKET TRENDS continued ] lower its inventory level from second-highest a year ago to seventh-highest this year. Jaguar Land Rover was the only European automaker to significantly reduce its inventory level, which fell by 14 days. NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 11 Guidelines | February 2014 [ ECONOMIC TRENDS ] According to the Commerce Department, the U.S. economy expanded at an annual rate of 3.2% in the last three months of 2013 as consumers and businesses largely ignored a government shutdown and fight over the debt ceiling. The pace of growth slowed from 4.1% in the previous quarter, but still means U.S. gross domestic product (GDP) – the broadest measure of goods and services produced in the last half of 2013, a pace unseen since 2003. A weak first half of the year contributed to a lower annual rate of growth down of 1.9% for 2013, down from 2.8% in 2012. The fourth-quarter growth benefitted from healthy gains in consumer spending as 2013 drew to a close. Personal consumption expenditures, which make up more than two-thirds of GDP, rose by an annual rate Real Gross Domestic Product Percent change from preceding period (%, SAAR) Percent Change from Preceding Period across the economy – grew at an annual rate of 3.7% 6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0 -2.0 -3.0 -4.0 -5.0 -6.0 -7.0 -8.0 -9.0 of 3.3%, the strongest pace in three years. Economists speculated that a hike in payroll taxes at Quarter Source: U.S. Bureau of Economic Analysis the start of the year, the 16-day government shutdown in October and the still unresolved fight over the debt ceiling would prove a drag on consumer and business spending. However, the latest figures suggest both consumers and businesses largely shrugged off the battles in Washington. For consumers, auto and household goods sales slowed but were offset by purchases of services and nondurable goods including clothing and footwear. Meanwhile, businesses boosted spending at an annualized 3.8% pace, with the bulk coming from investment in equipment. Hiring was surprisingly weak in January for a second straight month, likely renewing concern that the U.S. economy might be slowing after a strong finish last year. Employers added 113,000 jobs, according to the Labor Department, while the unemployment rate dropped slightly to 6.6%. Job gains have averaged just 154,000 the past three months, down from 201,000 in the preceding three months. The sluggish job growth may reflect what investors and economists are concerned with: the U.S. job market is weakening again, along with sectors like manufacturing and retail sales in the United States and abroad. The weakness might also raise doubts about the NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 12 Guidelines | February 2014 [ ECONOMIC TRENDS continued ] Federal Reserve's plans to steadily reduce its economic stimulus this year. Cold weather was likely a factor that held back hiring in December, though the impact faded in January. Construction firms, which sometimes stop work in bad weather, added 48,000 jobs last month. On a more hopeful note, a survey of service sector companies, including retailers, banks and restaurants, found that they grew faster in January than in December. Unemployment and Labor Participation Rates Seasonally Adjusted January’s report showed that some higher-paying technical services, which include architects and engineers, added 20,000. But health care 66.0 9.0 8.0 65.0 7.0 6.0 64.0 5.0 63.0 4.0 employment was mostly unchanged for a second 3.0 straight month, after adding 17,000 jobs a month 1.0 62.0 2.0 61.0 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 last year. Retailers cut 12,900 jobs, the most in 18 months, and government shed 29,000 jobs, mostly 67.0 10.0 Unemployment Rate (%) 21,000 new positions, while professional and Unemployment Rate Labor Participation Rate (%) industries added jobs last month. Factories created Participation Rate 11.0 Month Source: U.S. Bureau of Labor Statistics in education and the Postal Service. Monthly Change in Nonfarm Payrolls January employment data will be read closely by Seasonally Adjusted stimulus program. One more monthly jobs report will be released before the Fed’s policy setting committee meets again in March to consider the issue. Last month, the Federal Reserve announced its intention to trim another $10 billion a month, bringing the monthly investment down to $65 billion 700.0 600.0 500.0 400.0 300.0 200.0 100.0 0.0 -100.0 -200.0 -300.0 -400.0 -500.0 -600.0 -700.0 -800.0 -900.0 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 how quickly to scale back its quantitative easing Prior-Month Change (thousands) officials at the Federal Reserve, which is determining Month Source: U.S. Bureau of Labor Statistics a month from its giant economic stimulus program. The tapering will be incremental and last most of 2014, economic conditions permitting. What the equity markets heard, however, was the strikingly different tone of analysis from the Fed, which had finally become positive on the economic future. Existing-home sales edged up in December, sales for all of 2013 were the highest since NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 13 Guidelines | February 2014 [ ECONOMIC TRENDS continued ] 2006 and median prices maintained strong growth, according to the National Association of Realtors. S&P/Case-Shiller 20-City Composite Home Price Index Three-month moving average published with a two-month lag. Total existing-home sales increased 1% to a 190.0 180.0 seasonally adjusted annual rate of 4.87 million in in November, but are 0.6% below the 4.90 millionunit level in December 2012. 170.0 160.0 Index Level December from a downwardly revised 4.82 million 150.0 140.0 130.0 120.0 In 2013, there were 5.09 million sales, which is 9.1% 110.0 higher than in 2012. It was the strongest Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 100.0 performance since 2006 when sales reached an Month unsustainably high 6.48 million at the close of the Source: S&P Dow Jones housing boom. Total Housing Starts, Privately Owned was $197,100, which is 11.5% above the 2012 median of $176,800 and was the strongest gain since 2005 when it rose 12.4%. The median existinghome price for all housing types in December was $198,000, up 9.9% from December 2012. Seasonally Adjusted 1300.0 1100.0 Housing Starts (thousands) The national median existing-home price for 2013 900.0 700.0 500.0 300.0 Total housing inventory at the end of December fell 100.0 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 9.3% to 1.86 million existing-homes available for sale, which represents a 4.6-month supply at the current sales pace, down from 5.1 months in November. Unsold inventory is 1.6% above a year ago, when there was a 4.5-month supply. According Month Source: U.S. Census Bureau Regular Grade Gasoline Prices (all formulations) Average Price Per Gallon $ YoY Change $0.30 $3.80 $0.20 $3.70 $0.10 $3.60 $0.00 $3.50 ($0.10) $3.40 ($0.20) The U.S. average retail price of regular gasoline $3.30 ($0.30) decreased less than one cent to $3.29 per gallon as $3.20 ($0.40) $3.10 ($0.50) to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.46% in December from 4.26% in November; the rate was 3.35% in December 2012. Average Price $0.40 $3.90 of Feb. 3, 2014, 25 cents lower than last year at this time. Prices increased 1 cent in the Midwest to Source: U.S. Energy Information Admi nistration Month NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 14 Price Change $4.00 Guidelines | February 2014 [ ECONOMIC TRENDS continued ] $3.23 per gallon, and rose less than a cent on the West Coast, remaining at $3.49 per gallon. The East Coast price decreased 2 cents to $3.36 per gallon, and prices dropped 1 cent on the Gulf Coast and in the Rocky Mountains, to $3.08 per gallon and $3.13 per gallon, respectively. The national average diesel fuel price was up 5 cents On-Highway Diesel Fuel Prices Average Price Per Gallon $ YoY Change $0.15 this time. Prices increased in all regions of the nation $4.05 $0.10 except the Rocky Mountains, where the price $4.00 $0.05 $3.95 $0.00 $3.90 ($0.05) $3.85 ($0.10) $3.80 ($0.15) $3.75 ($0.20) $3.70 ($0.25) declined less than a penny to remain at $3.86 per gallon. The East Coast price was $4.07 per gallon and the Midwest price was $3.94 per gallon, both up 7 cents from last week. The West Coast price gained 2 Average Price $0.20 $4.10 to $3.95 per gallon, 7 cents lower than last year at cents to $3.99 per gallon, while the Gulf Coast price increased less than 1 cent to $3.78 per gallon. Source: U.S. Energy Information Admi nistration Month NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 15 Price Change $4.15 Guidelines | February 2014 [ NADA OFFICIAL USED CAR GUIDE® TRENDS ] Monthly Change in NADA Used Car Guide Value January 2014 v. February 2014 NADA Segment 2009MY 2010MY 2011MY 2012MY 2013MY* Compact Car Compact Utility Large Pickup Large SUV Luxury Car Luxury Utility Mid-Size Car Mid-Size Utility Mid-Size Van 1.3% 1.5% -0.1% 0.2% -0.3% 0.1% 1.5% 1.1% 1.3% 1.4% 0.9% -0.2% 0.5% -0.5% 0.4% 1.5% 0.4% 0.3% 0.8% 1.0% -0.3% 0.7% -0.1% 0.4% 1.5% 0.8% 0.6% 0.9% 0.6% -0.1% 0.8% 0.1% 0.4% 1.0% 0.7% 0.6% 0.6% 0.8% 0.0% 2.1% -0.2% 0.5% 1.1% 0.7% 1.1% *Value movement can be influenced by newly valued vehicles. Annual Change in NADA Used Car Guide Value February, 2013 v. 2014 NADA Segment 5YR 4YR 3YR 2YR 1YR YoY Segment Change Compact Car Compact Utility Large Pickup Large SUV Luxury Car Luxury Utility Mid-Size Car Mid-Size Utility Mid-Size Van -1.2% 0.6% 10.7% 3.1% 0.0% 7.5% -2.8% 5.3% 4.5% 2.6% 1.9% 5.5% 0.5% 1.5% 3.4% 8.6% 4.3% -0.7% -1.8% 0.2% 10.8% 4.6% -0.5% -3.7% -0.3% 1.8% 11.5% 1.0% -0.7% 4.6% 3.1% 8.7% 0.6% 2.0% 0.4% 1.9% 0.2% 1.2% 5.9% 3.9% -0.1% 1.0% 3.2% 2.0% 4.9% 0.4% -0.7% 7.8% 3.4% 3.0% 0.1% 1.7% 3.4% 2.7% *Calculations are based on vehicle age, i.e. values for 1 year old vehicles in CY2014 are compared against values for 1 year old vehicles in CY2013. YTD Change in NADA Used Car Guide Value January — February 2014 NADA Segment Compact Car 2009MY 1.3% 2010MY 1.4% 2011MY 0.8% 2012MY 0.9% 2013MY* YTD Segment Change 0.6% 0.9% Compact Utility Large Pickup Large SUV 1.5% -0.1% 0.2% 0.9% -0.2% 0.5% 1.0% -0.3% 0.7% 0.6% -0.1% 0.8% 0.8% 0.0% 2.1% 0.9% -0.2% 1.0% Luxury Car -0.3% -0.5% -0.1% 0.1% -0.2% -0.2% Luxury Utility Mid-Size Car Mid-Size Utility Mid-Size Van 0.1% 1.5% 1.1% 1.3% 0.4% 1.5% 0.4% 0.3% 0.4% 1.5% 0.8% 0.6% 0.4% 1.0% 0.7% 0.6% 0.5% 1.1% 0.7% 1.1% 0.4% 1.3% 0.7% 0.8% NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 16 Guidelines | February 2014 AT NADA USED CAR GUIDE What’s New Available on iPhone, iPad and Android devices, the recently enhanced NADA MarketValues is the fastest, easiest and most cost-efficient way to make smart vehicle decisions on the go. This native app allows you to get your NADA values anywhere, anytime without an Internet connection. Subscriptions start at $50 per month and when you download NADA MarketValues from Google Play or the Apple Store for $1.99, you’ll receive a FREE 30-day trial! On the Road Larry Dixon, senior automotive analyst, will be attending and speaking at the 2014 Conference of Automotive Remarketing (CAR) in Las Vegas on March 5 – March 6, 2014. Larry will be speaking on a panel titled “Forecast of Residual Values for 2014-2015” on Thursday, March 6 at 3:10 p.m. During the session, Larry and other industry experts will provide a forecast of residual values for the wholesale resale market for 2014-2015, setting the stage for the year that attendees can use to prepare their business strategies. NADA Used Car Guide is exhibiting at the Consumer Bankers Association’s CBA Live 2014 in Washington, DC on March 31 – April 2, 2014. Stop by booth #40 to see Dan Ruddy, Steve Stafford, Jonathan Banks and Larry Dixon. NADA President Peter Welch is speaking at CBA Live’s Auto Finance Forum at 8:00 a.m. on Wednesday, April 2. Andy Koblenz, general counsel and executive vice president of legal and regulatory affairs, will also be in attendance. About NADA Used Car Guide Since 1933, NADA Used Car Guide has earned its reputation as the leading provider of vehicle valuation products, services and information to businesses throughout the United States and worldwide. NADA’s editorial team collects and analyzes over one million combined automotive and truck wholesale and retail transactions per month. Its guidebooks, auction data, analysis and data solutions offer automotive/truck, finance, insurance and government professionals the timely information and reliable solutions they need to make better business decisions. Visit nada.com/b2b to learn more. Financial Industry, Accounting, Legal, OEM Captive Steve Stafford 800.248.6232 x7275 [email protected] Credit Unions, Fleet, Lease, Rental Industry, Government Doug Ott 800.248.6232 x4710 [email protected] Automotive Dealers, Auctions, Insurance Jim Dodd 800.248.6232 x7115 [email protected] Director, Sales and Customer Service Dan Ruddy 800.248.6232 x4707 [email protected] Automotive OEMs Stu Zalud 800.248.6232 x4636 [email protected] PR Manager Allyson Toolan 800.248.6232 x7165 [email protected] Business Development Manager Jim Gibson 800.248.6232 x7136 [email protected] NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 17 Guidelines | February 2014 NADA CONSULTING SERVICES NADA’s market intelligence team leverages a database of nearly 200 million automotive transactions and more than 100 economic and automotive market-related series to describe the factors driving current trends to help industry stakeholders make more informed decisions. Analyzing data at both wholesale and retail levels, the team continuously provides content that is both useful and usable to the automotive industry, financial institutions, businesses and consumers. Complemented by NADA’s analytics team, which maintains and advances NADA’s internal forecasting models and develops customized forecasting solutions for automotive clients, the market intelligence team is responsible for publishing white papers, special reports and the Used Car & Truck Blog. Throughout every piece of content, the team strives to go beyond what is happening in the automotive industry to confidently answer why it is happening and how it will impact the market in the future. Senior Director, Vehicle Analysis & Analytics Jonathan Banks 800.248.6232 x4709 [email protected] Senior Manager, Market Intelligence Larry Dixon 800.248.6232 x4713 [email protected] Automotive Analyst David Paris 800.248.6232 x7044 [email protected] Automotive Analyst Joseph Choi 800.248.6232 x4706 [email protected] ADDITIONAL RESOURCES Guidelines White Papers Updated monthly with a robust data set from various industry sources and NADA’s own proprietary analytical tool, Guidelines provides the insight needed to make decisions in today’s market. NADA’s white papers and special reports aim to inform industry stakeholders on current and expected used vehicle price movement to better maximize today’s opportunities and manage tomorrow’s risk. NADA Perspective Used Car & Truck Blog Leveraging data from various industry sources and NADA’s analysts, NADA Perspective takes a deep dive into a range of industry trends to determine why they are happening and what to expect in the future. Written and managed by the Market Intelligence team, the Used Car & Truck Blog analyzes market data, lends insight into industry trends and highlights relevant events. Connect with NADA Read our Blog Follow Us on Twitter Find Us on Facebook Watch Us on YouTube nada.com/usedcar @NADAUsedCarGde Facebook.com/NADAUsedCarGuide Youtube.com/NADAUsedCarGuide Disclaimer: NADA Used Car Guide makes no representations about future performance or results based on the data and the contents available in this report (“Guidelines”). Guidelines is provided for informational purposes only and is provided AS IS without warranty or guarantee of any kind. By accessing Guidelines via email or the NADA website, you agree not to reprint, reproduce, or distribute Guidelines without the express written permission of NADA Used Car Guide. NADA Used Car Guide | 8400 Westpark Drive | McLean, VA 22102 | 800.544.6232 | nada.com/b2b © 2014 NADA Used Car Guide 18
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