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Tom Kontos Executive Vice President Customer Strategies and Analytics

Used Vehicle: Market Conditions and Outlook May 2008. Tom Kontos Executive Vice President Customer Strategies and Analytics. KAR Holdings ADESA whole car—60 auction sites IAAI salvage—147 auction sites AFC—91 loan production offices AutoVin—286 professionals and locations.

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Tom Kontos Executive Vice President Customer Strategies and Analytics

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  1. Used Vehicle: Market Conditions and Outlook May 2008 Tom Kontos Executive Vice President Customer Strategies and Analytics

  2. KAR Holdings • ADESA whole car—60 auction sites • IAAI salvage—147 auction sites • AFC—91 loan production offices • AutoVin—286 professionals and locations Our geographic footprint positions us as the preferred auction and financing provider.

  3. ADESA e-Business rocks. • LiveBlock • Hybrid online/in-lane sales environment lets you bid online on vehicles running through the physical auction lanes. • AutoBid lets you bid automatically even if you aren’t at your PC. • Can order post-sale inspections online • DealerBlock • Vehicles available 24/7 • Bid Now or Buy Now • Notify Me • Can be used to set up a report to automatically search ADESA run lists for the vehicles you want and let you know where and when they’re available for purchase live or online. • ADESA Market Guide (AMG) • Provides market prices for recently sold vehicles.

  4. Timely market analysis keeps our clients and associates informed of trends in the vehicle remarketing industry. For a PDF copy of the PULSE 2007 Recap, please go to www.adesa.com, select Analytical Services, then select Pulse. Plus monthly postings on: www.adesa.com/kontoskorner

  5. General Economy

  6. GDP growth rates are expected to slow to below 1.0% from year-end 2007 into early 2008.

  7. Unemployment has crept up as employment growth has turned negative.

  8. Manufacturing has slowed.

  9. Low savings rates indicate that consumers are “spent-up, not pent-up.”

  10. Business investment and consumer spending have slowed.

  11. Low residential construction is costing the economy around 100 basis points of growth, but this is necessary to reduce unsold home inventories.

  12. Supply and demand conditions suggest high fuel prices for the foreseeable future.

  13. Remarketing Industry Supply

  14. Fleet sales grew by 500K units between 2003 and 2005, held in 2006, and declined ~150K units in 2007.

  15. Rental fleet sales continue to drop, while commercial fleet sales are up.

  16. Lease penetration has risen above 25%.

  17. Lease origination volume began growing in 2004 and has grown strongly since.

  18. More off-lease units will enter the market beginning in 2007. Growth (000s): 162 195 49 82 154

  19. As delinquency rates rise, so do Repos.

  20. Repos are at all-time highs.

  21. Retail Vehicle Markets

  22. Retail sales have been weak.

  23. Franchised dealers have tried to offset declines in new vehicle sales by emphasizing used vehicle sales. Independent dealers are having an even tougher go.

  24. April was another dismal sales month.

  25. New vehicle incentives have been relatively stable after dropping in 2006. This is good news for vehicle remarketers.

  26. Retail sales of used vehicles may be suffering because used vehicle prices are bumping up against discounted new vehicles again.

  27. Dealers will need to further discount their used vehicle inventories to support used vehicle sales in 2008.

  28. Wholesale Vehicle Markets

  29. Wholesale prices have softened so far this year.

  30. High fuel prices are helping compact car prices and hurting big truck prices.

  31. High inventory levels will exert downward pressure on prices.

  32. The auction industry’s mix has changed and overall volumes are down.

  33. Despite overall volume declines, vehicles that BHPH dealers seek are in relative abundance.

  34. It’s a buyer’s market at auction.

  35. Recon pays.

  36. In Summary: • The macro economy is weak, although the stimulus package and lower interest rates will help. • Wholesale vehicle supply is increasing. • Retail demand remains weak. • Anticipate softer wholesale prices for first half of 2008 and possibly until after the election. • It’s a buyer’s market.

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