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1 March 7, 2015

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2 Auction Academy: The premier educational training experience Congratulations on being proactive in your growth! Black Book is proud to support this training. Our tools and insight are always available. Tom Cross, President. Tim West, VP North American Auction Director. Anil Goyal, VP Automotive Valuation and Analytics

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3 Guidebooks, Black Books processes, and the market A look at the Guidebook industry: Who are the Players? Black Book Processes. What drives the used market? Recent market trends. Expectations for 2015. Your industry insight. Additional questions.

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4 They have been a fixture at auctions seemingly forever Dec 2012 NIADA Used Car Dealer Magazine

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5 IARA Certified Auto Remarketer Education Program Guidebooks and Pricing is one of 20 educational modules educational modules modules

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6 Guidebooks And The Role We Play In The Automotive Industry Who are the Players? Black Book: reporting the market Kelley Blue Book: projections, consumer website oriented NADA: projections in the used values market, more of a lenders guide vAuto: dealer inventory management, compilation of data Galves: New England focused, wholesale buyers Red Book: insurance and taxation, less frequent updates ALG: residual projections only MMR: selected sold listings from Manheim only

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7 Black Book History 1955 Provide dealers an auction based market report Gainesville, GA. All printed books 1966 Cox Communications purchased Black Book 1968 Cox bought auctions in PA 1981 Hearst Corporation parent company Today: Information company for dealers, lenders, insurance, govt and industry value added resellers Key data when putting your money on the line, most in tune with the actual market

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8 Guidebooks provide Current market values: buying, selling, trade-ins Historical values/comparisons Forecasting Loan Collateral / Risk aversion Access through: Printed book Mobile application Desktop internet Data files

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9 Guidebook Users: Who, Why, How Dealers New & Used Financial: Collateral, Risk aversion, Portfolio Analysis Captives Banks Credit Unions Finance Issues facing finance: Credit scores Advance levels Length of term All about monthly payment

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10 Guidebook Users: Who, Why, How? Are These Your Customers? Ally Wells Fargo Toyota Chase Capital One Ford Honda Finance Santander Nissan Infiniti TD Auto Bank Of America 5 th 3 rd Hyundai US Bank VW Credit Inc. Huntington BMW Bank Americredit/GM Financial Credit Acceptance Suntrust Bank *Represent 51.76% of all financing* Source: Experian Information Solutions, Inc. Top 20 Lenders By Volume

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11 Guidebook Users: Who, Why, How Source: Experian Information Solutions, Inc. Up by 10-25% Is it going too far? Lending almost disappeared in 2010. Lending has loosened!

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12 Guidebook Users: Who, Why, How Fleet Management Companies Insurance: Claim settlement Government VARs (Value added resellers) Auctions and Auctioneers Additional users:

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13 Why And How Are Guidebooks Important To The Auctions? Market relevance Relating to current trends Account representation Offer accurate market data to the remarketers Arbitration Customer support: Reference & Benchmark to help get accounts

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14 Where Do The Black Book #s Come From? Wholesale or retail Auction lanes: physical and online Black Book survey personnel 63 auctions every week, 20 electronic data feeds Tim West, VP, North American Auction Director Data feeds Kevin Giddens, Managing Editor Anil Goyal, VP Automotive Valuation and Analytics 300+ years industry experience: 13 Editors 5 dedicated data analysts Daily updates

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15 How does new relate to used? It is a supply and demand market Manufacturing the used car New car sales variation: 2004 thru 2007 Averaged 17M 2008 13.3M 2009 - 10.3M 2010 11.5M 2011 12.7M 2012 14.3M 2013 15.6M 2014 16.5M 2015 16.76M BB forecast

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16 Effects of New Car Sales Levels Supplies were at record lows Strong used car retention Normal annual depreciation: 15-18% 2011: -7.7%; New car sales in 2009 bottomed at 10.3M 2012: -12.4% 2013: -12.8% 2014: -12.1%; New finished at 16.5M 2015: -14.5% projected; BB projects 16.8M

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17 Unexpected events or factors affecting the Market C4C: $2000 to $4000 wholesale Tsunami Consumer credit availability Gas price volatility: 2008/2009 Hybrids up and Trucks down up to $4.11 Trucks up and Hybrids down gas at $2.65 Today $2.33, 1/19/15 Diesel first time under $3.00 in 7 years Hurricane Sandy: instant increasing demand Winter weather across the country in 2014 Whats next in 2015?

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18 Recent Market Trends What is normal, prerecession annual depreciation? 15-18% What is normal monthly depreciation? 1.5-1.8% Does seasonality cause variation in depreciation?

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19 Recent Market Trends 10 segments less than 1%. Only 3 are cars Dec 1, 2014 to Jan 1, 2015

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20 Recent Market Trends 8 less than 1% FSC +.1% ELC & SCC: tax season strong Jan 1, 2015 to Feb 1, 2015

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21 Recent Market Trends 9 less than -1.0%, 7 truck related Feb 1, 2015 to Mar 1, 2015 Non-typical tax season, Gas prices driving?

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22 Recent Market Trends

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23 Recent Market Trends Most recent market changes

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24 Recent Market Trends

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27 Recent Market Trends New car sales: 16.5M better than industry expected New transaction prices: Cars.com up 5.2%, +$1562 Spread from new to used: 1/1/14 $18277 to 1/1/15 $19279, +$1002 2015 forecasted annual depreciation: -14-14.5% Continued strong and extended term lending 2015 36M avg forecast 2% points lower than 2014 Lease penetration vs 1997-2000 Why the unexpected & better trends?

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28 The abnormality factors Volatility driven by unpredictable events The weather Incentive: lease or cash on the hood; F150? Economy, consumer confidence Pent up demand Used vehicle supplies

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Gas prices $2.90 $2.33

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Gas prices

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Peak in Sept 2015 under $2.50 June 2016, Max @$2.90 June 2014, Max @$3.70

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Consumers are happy Your 401K might not be Today: $2.32 A year ago: $3.44 2012 avg pump price: $3.62 2013 avg pump price: $3.50 2014 avg pump price: $3.36 2015 $1.00+ lower???? The joys and frustrations of gas prices

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Come on down! Throughout January in Gainesville, GA

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Increases available funds 25 gallon tank fill up Last year: $83.25 This year: $55.25 2 tanks a month: $56.00 additional spending Newer, Bigger, Better, or Keeping it in your pocket? Reason to change buying or borrowing?

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Caf still driving new: Hybrids, EVs, Entry and Compacts Used driven by more ROI, affected by low gas prices Trucks strong by economy, service industries, new designs, old style full-size vans Toyota Tacoma being challenged by Colorado & Canyon in the mid-size truck market CPO growth supporting EOT return values Overall market thoughts

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Whats good for your auction todays market? Are things different for the full auction industry? What are your concerns regarding the future market? Any additional questions or comments on the market? Additional feedback

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37 Black Book Auction Industry Relationships NAAA Used Car Value Report: NAAA website

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38 www.BlackBookAuto.com Values, forecast, specifications, demand index, market trends vehicle history, all in a desktop application

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39 Set Up Academy Members w/Mobile App? Complementary mobile app for each of you throughout the Auction Academy program. Auto and specialty markets: iPhone or Android

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40 Set Up Academy Members w/Mobile App? Values

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CONTINUING EDUCATION PROGRAM DEVELOPED BY: 41 Black Book is proud to support this educational program and the National Auto Auction Association

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42 Just call or email Ricky Beggs Sr VP, Editorial Director 770.533.5221 w, 404.915.4215 c Rbeggs@BlackBookUSA.com Tim West, VP, North American Auction Director 770.533.5230 w, 404.915.2428 c Twest@BlackBookUSA.com Kevin Giddens, Managing Editor 770.533.5262 w, 678.316.0910 Kgiddens@BlackBookUSA.com Anil Goyal, VP Automotive Valuation and Analytics 770.533.5236 w, 678.231.9352 c Agoyal@BlackBookUSA.com Thank you!