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Trends Impacting the Automotive Aftermarket June 2013 Automotive Distribution Network NIS Tech Forum - Nashville

Trends Impacting the Automotive Aftermarket June 2013 Automotive Distribution Network NIS Tech Forum - Nashville. Agenda. Who is Polk & Where Do Our Insights Come From Economic Backdrop Key Indicator Outlook The 5 Trends. R. L. Polk & Co.

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Trends Impacting the Automotive Aftermarket June 2013 Automotive Distribution Network NIS Tech Forum - Nashville

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  1. Trends Impacting the Automotive Aftermarket June 2013 Automotive Distribution Network NIS Tech Forum - Nashville

  2. Agenda Who is Polk & Where Do Our Insights Come From Economic Backdrop Key Indicator Outlook The 5 Trends

  3. R. L. Polk & Co. Polk collects and interprets global data, and provides extensive automotive business expertise to help customers understand their market position, identify trends, build brand loyalty, conquest new business and gain a competitive advantage. • Privately-held company • 130+ year Detroit history - based in Southfield, MI • 1300 employees global • Go to market as: Automotive market intelligence and solutions Vehicle history reports for U.S. consumers and dealers

  4. Offices in 11 Countries—4 Continents St. Albans, United Kingdom Essen, Germany Paris, France Toronto, Canada Southfield, Michigan Avigliana, Italy Beijing, China Long Beach, California Woodcliff Lake, New Jersey Tokyo, Japan CARFAX, Centreville, VA Seoul, South Korea Madrid, Spain Sydney, Australia Melbourne, Australia

  5. Economic Backdrop

  6. Longest and Deepest Recession Since WWII Worst Three Real GDP Contractions Since 1973 Peak to Trough in Quarters Source: Haver Analytics

  7. Recovery Path of Real GDP Trough of ‘73 & ’81 Recessions 4.0 YEARS Source: Haver Analytics

  8. Severe Wealth Destruction in 2008-09 Recession Trough of ‘73 Recession Current Source: Haver Analytics

  9. High Level Industry Drivers

  10. Change in Driving Volume First time seeing sustained flat miles driven, under 3,000,000,000 miles since 2007 10 Source: R.L. Polk and FHWA

  11. Change in Driving Volumes – Year-o-Year • 2012 Up 0.3% • Feb 2013: Down 0.4% Source: R.L. Polk and FHWA

  12. The Trends

  13. Trend #1: OEM’s Becoming More Aggressive as New Vehicle Sales Continue to Rise

  14. New Light Vehicle Registrations - 2012 Light vehicle registrations hit 14.3 million units for 2012 14.3 MILLION +13% Y-O-Y Source: Polk

  15. U.S. Registration History/Forecast: The Road to Wellness USA: Light Vehicles – Source: Polk Forecast

  16. Why is the U.S. auto industry doing so well?

  17. Interest Rates Interest rates are exceptionally low and the Fed has promised to keep them at these low levels for the foreseeable future “Rates are basically zero.”

  18. Vehicle Ages

  19. Strengthening Housing Market • Homeprices increased 8.1% in January from a year ago, the largest increase in six and a half years and the eleventh consecutive monthly gain. Home prices increased in April, going up 12.1 percent year-over-year. The annual increase is the biggest in more than seven years. Prices were up 3.2 percent in April from March. • Prices increased in every one of the 20 markets surveyed to generate the S&P/Case-Shiller index • The number of existing homes for sale fell to 1.7 million in January, down 25% versus a year ago and the lowest inventory level since December 1999 • In January 2012 homes were on the market for an average of 99 days before they sold; this past January that time period decreased to 71 days

  20. New Product Activity Models are being replaced at an accelerating rate by all manufacturers

  21. Used Cars are Hard to Find “The scarcity (of used cars) has pushed up used car prices, often to the point that consumers who finance a purchase with subsidized interest rates can get brand new vehicles for about the same as a monthly payment required for a late-model used car.” Joe White Wall Street Journal February 21, 2013 WSJ 2-21-2013 P. B1-2

  22. Headwinds • Sluggish GDP growth (.1% growth in 4Q 2012) • High unemployment (7.7% in February, U.S. unemployment rate dropped in April to a four-year low of 7.5 percent, down from 7.6 percent in March) • Ongoing violence and turmoil in the Middle East • Ongoing polarization and gridlock in Washington

  23. OEMs are Aggressive During the Recovery

  24. Volkswagen Become #1 by 2018 Must add 800K VW and 200K Audi

  25. Volkswagen 30% VW 2012 new vehicle sales up 30% over prior year.

  26. Volkswagen – Successful Launch Passat VW’s #2 Model >117K units in 2012

  27. Toyota and Honda +27%2012 Back on track! +24% 2012

  28. Hyundai/Kia Focused on maintaining market share. +11% 2012

  29. The Detroit 3

  30. North American Production Detroit Three Market Share 2000 77% 2012 54% 2018 50%

  31. Chrysler • Last 2 Years: • 16 redesigned models • Launched 2 Brands – Ram & Fiat • 2012 = 21% growth

  32. Ford Motor Company • Transformed dramatically • Debt is down • Labor costs on-par • Eliminated Mercury brand • 2012 = 5% growth

  33. General Motors • Less debt • Only 4 makes • New models • 2012 = 4% growth

  34. Aggressive During the Recovery – 240 New Models, Re-Designs, etc.

  35. New MD/HD Vehicles – 2012 (GVW 4-8) Medium & Heavy Vehicle new registrations hit 379,000units 379 THOUSAND +16% Y-O-Y Source: Polk

  36. U.S. New MD/HD Registrations (GVW 4-8) 59.7% 7.8% 25% 16% Source: Polk

  37. Trend #2: The Vehicle Population Continues to Age

  38. Average Age of Light Vehicles in Operation All Light Vehicles = 11.3 Years +14%+17% Source: Polk Annual Snapshots

  39. Rising Length of Ownership New & used combined > 24 month increase in ownership since 2001 71.6 58.2 51.7 47.5 34.2 28.3 2001 2012 Source: Polk

  40. U.S. VIO Aging ‘08 to ‘12: +19M units ‘08 to ‘12:-18M units Source: Polk

  41. U.S. Light Vehicles Under Warranty Source: Polk

  42. Trend #3: CUVs & Mid-Size Cars are Driving the Recovery in New Vehicle Sales

  43. Large Vehicles on the Decline New Registration Data Large pickup volume is flat whereas industry increased 1.1 million units 2008-2012 Large pick-ups dropped from 13% to just over 10% in 5 years Large Vehicle Segment Source: Polk

  44. Crossover & Midsize Dominance –New Registrations Source: Polk

  45. Car Segment Analysis Corolla Malibu Taurus Source: Polk

  46. Light Truck Segment Analysis Equinox Caravan F-Series Explorer Source: Polk

  47. SUV Analysis New Vehicle Registrations Cherokee Escalade Expedition Wrangler Lexus GX Source: Polk

  48. CUV Analysis New Vehicle Registrations Traverse BMW X3 ML Class Crosstour Source: Polk

  49. Segments Polk divides the U.S. new vehicle industry into 32 segments, but just 4 account for more than half of all new registrations

  50. 4 Cylinder Engines on the Rise +20% As portion of new registrations Source: Polk

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