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One nightclub at a time. And the best one is here in Birmingham!

One nightclub at a time. And the best one is here in Birmingham! . February 20-22, 2014. Is the market one big Brrrrr ! February 18, 2014. Is the market one big Brrrrr ?. Holidays and Southern Snow Does everything happen on Wednesday?

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One nightclub at a time. And the best one is here in Birmingham!

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  1. One nightclub at a time. And the best one is here in Birmingham! February 20-22, 2014

  2. Is the market one big Brrrrr! February 18, 2014

  3. Is the market one big Brrrrr? • Holidays and Southern Snow • Does everything happen on Wednesday? • Other than the values the primary topic has been the weather • Recent survey report: “the sale started late, cars were out of order and it just wasn’t the typical organization.” • What does this do to the values? • Creates a 2000 unit auction, almost double normal run list • Black Book tracks the variables as well as the block bidding

  4. Car Segment Changes January 10-Jan -78 17-Jan-58 24-Jan-72 31-Jan-48 February 7-Feb -43 14-Feb -47 21-Feb-40 yr ago 2/15/2013 -18

  5. Car Segment Changes • SCC & ELC: Most consistent and stable • It is what it is, transportation • 3 week avg: -$21 & -$19 • 6 week avg: -$28 & -$24 • PLC: larger $ change, • 6 week avg: -$107 • PSC: Just not sports car weather • 6 week avg: -$145

  6. Truck Segment Changes January 10-Jan -55 17-Jan-55 24-Jan-64 31-Jan-44 February 7-Feb -49 14-Feb-38 21-Feb-67 (we feel a temporary change) yr ago 2/15/2013 -19 Both improving as weeks pass, but not as strong or stable as last year

  7. Truck Segment Changes • FVW & FVC: most stable and consistent • 3 week avg: -$10 • FSU: truck based 4x4 doing well • 3 week avg: -$12 • LSU & FXU: largest $ movement • 3 week avg: -$109 & -$90 • CXU: volume units and very competitive • 3 week avg: -$56

  8. Volume Affects Depreciation Expectations

  9. Looking Back at 2013 • Depreciation levels driven by increasing used inventory 2 – 6 Year Olds Annual 2014 Prediction: -13.5%

  10. Looking Back at 2013 • Hybrids/Electrics Spread is closing in all mixes! $2398 $1748 $1416

  11. Looking Back at 2013 • New car sales – 15.6M: 1 million growth over 2012 • New Lease penetration continued through year-end • EOT Lease Returns continued to grow: consider as part of new car trade-ins • A change in the trade-in mix • Older Trades: • Pre-recession 2 – 4 years • 2011 & 2012 8 – 11 years • Second half 2013 3 – 4 & 8 – 11 years • Lending growth continued supporting new and used sales • Buying deeper, greater LTVs and longer terms • Value trends used more for risk analysis

  12. Looking Ahead • New Vehicle Sales: Less Growth • 16,056,123 • Off-Lease Volume: part of the trade-in count • Only about 30K more trades yr over yr • About 3.1M total EOT • Slight increase in rental turn-ins with retail sales joining the mix • ??? How many will make it to the physical auction?

  13. Looking Ahead • Gas price impact • Next 2 months – expect by $.25 to $.30 per gallon • Highs of $3.75 to $3.85 in 2014 • 2013 averaged $3.49, 2012 was $3.65 Wide gap gas/diesel

  14. Looking Ahead • Incentives: • Cash on the hood • Lease focused • Payment spread new to used • Back to pre-recession differences • Residual forecasting • Hybrid and EV retention vs. gas models in 2014 • Need is for more accurate or additional residual forecasting to help lenders spot the right opportunities • Continued truck segment strength • Entry Level and Compact Cars: Not overly optimistic

  15. Full Size Pickup Trucks $ End $ Start $ Change % Change Overall market change: -7.7% -12.4% -12.8%

  16. Compact Pickup Trucks

  17. Mid-Size Pickup Trucks Overall market change: -7.7% -12.4% -12.8%

  18. Why the FPT have and will do better than the market? • Factors: • Economy: construction within the commercial and residential markets, and service industry demand • Supplies/Volumes • Gas Prices • Revised Models • Increasing average used pricing • Forecast: • Jan 2014/Jan 2015 overall: -13.5% • FPT forecast: -9.0% to -10.5%

  19. Entry Level Cars Overall market change: -7.7% -12.4% -12.8%

  20. Compact Cars

  21. Why these expectations? • New market is artificially forced volumes • CAFÉ requirements: 34.5/54.5MPG • Current and short term gas prices • Revised models of mid-size cars • Close to same mpg • More size and comfort • Forecast: • Jan 2014/Jan 2015 overall: -13.5% • ELC: -15.5% to -16.5% • SCC: -14.5% to -16.0%

  22. Questions?

  23. Just call or email Tim West 770.533.5230 • TWest@BlackBookUSA.com Ricky Beggs 770.533.5221 RBeggs@BlackBookUSA.com

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