THE SUV SEGMENT OUTLOOK STUDY · A Surplus of SUVs May Increase Incentive Spend Source: Dealer...

THE SUV SEGMENT OUTLOOK STUDYF E B R U A R Y 2 0 1 9

Has the SUV Market Peaked?

Are there indications of SUVs peaking?

The SUV Market Does Not Appear to Be Peaking in the Short Term….However, There are Signs of Saturation

Source: OEM Press Release Sales Data

Are there indications of SUV Saturation?

Days supply increasing

Average ATP increasing

Increased competition from used market

More SUV launches

Sales - 6.5+ million units and forecasted to grow

Consideration - highest

4x as many SUVs from 30 years ago

SUV Sales have grown 16% in the last 2 years. 6.5+ million units were sold in 2018

Utility Sales Overtook Car Sales in 2016 and is Now the Most Popular Segment

Source: OEM Press Release Data. Sales for all segments (non-lux)

0%

10%

20%

30%

40%

50%

60%

2010 2011 2012 2013 2014 2015 2016 2017 2018

Car SUV Truck Van

Segment 2015 2025

COMPACT SUV 20% 29%

MID-SIZE SUV 16% 18%

COMPACT CAR 16% 13%

MID-SIZE CAR 20% 13%

MID-SIZE TRUCK 3% 4%

FULL-SIZE TRUCK 12% 14%

Source: IHS Markit, U.S. Automotive Sales Forecast April 2018

SUV Segment Shares Forecasted to Grow

Consideration for SUVs Has Been Trending Upwards

Source: KBB.com Brand WatchPlease select at most 5 vehicles that you are currently shopping.

40%

45%

50%

55%

60%

65%

70%

2013 2014 2015 2016 2017 2018

TRENDED SUV CONSIDERATION

Non-luxury Utility Vehicles Luxury Utility Vehicles

56%

40%

21%

18%

17%

9%

6%

4%

SEGMENT CONSIDERATION

Non-Luxury Utility Vehicle

Non-Luxury Sedan

Luxury Utility Vehicle

Luxury Sedan

Pickup

Non-Luxury Coupe

Minivan

Luxury Coupe

The Number of SUV Offerings Has Dramatically Increased in the Past 30 Years

Source: KBB.com Buildout Table

Consumers now have more SUV choices than they ever had before, especially in the smaller sizes that consumer really want.

NEW SUBCOMPACT SUV SEGMENT CREATED

0

50

100

150

200

250

# o

f V

ehic

les

# OF VEHICLES

There are now 4 times as many SUVs as there were 30 years ago.

Even though there are more cars today, the segment has only grown by 20% since 1990.

Data includes both luxury and nonluxury vehicles.

SEGMENT 1990 1998 2008 2018

Subcompact SUV 13

Compact SUV 10 10 20 18

Mid-size SUV 5 15 28 23

Fullsize SUV 7 6 11 8

Luxury Compact SUV 4 26

Luxury Mid-size SUV 3 16 23

Luxury Fullsize SUV 2 5 13 11

Grand Total 24 39 92 122

Model Count

1990 1998 2008 2018

CARS 168 141 186 202

SUVS 24 39 92 122

Growth May Be at Risk with the Current Days Supply for SUVs…

Source: Autodata Days’ Supply, United States Bureau of Economic Analysis New Lt. Vehicle SAAR 88

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

25

35

45

55

65

75

85

95

105

Jan

-10

Ap

r-1

0

Jul-

10

Oct

-10

Jan

-11

Ap

r-1

1

Jul-

11

Oct

-11

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3

Jul-

13

Oct

-13

Jan

-14

Ap

r-1

4

Jul-

14

Oct

-14

Jan

-15

Ap

r-1

5

Jul-

15

Oct

-15

Jan

-16

Ap

r-1

6

Jul-

16

Oct

-16

Jan

-17

Ap

r-1

7

Jul-

17

Oct

-17

Jan

-18

Ap

r-1

8

Jul-

18

Oct

-18

Jan

-19

SAA

R (

mill

ion

s)

Day

s Su

pp

ly

New Vehicle SAAR Days Supply - Industry Days Supply - Cars Days Supply - Light Trucks

Average Transaction Price Continues To Rise

Source: Dealer Retail Transaction Data

$39,805

$47,400

$33,376

$38,187

$26,342

$28,920

$24,716

$26,042$25,491

$24,698

$20,175 $20,825

2012 2013 2014 2015 2016 2017 2018

YoY ATP INCREASE/DECREASE

SEGMENT % CHG

Full-size Pickup Truck +19%

Midsize-SUV/Crossover +14%

Compact SUV/Crossover +10%

Mid-size Car +5%

Subcompact SUV/Crossover -3%

Compact Car +3%

With Increased Days Supply and Rising Interest Rates, Affordability is Affected and May Impact SUV Sales

Source: Federal Reserve, Bankrate.com, Bloomberg

0

1

2

3

4

5

6

7

8

9

%

Interest Rates

New Auto 60 Mo New Auto 48 Mo Used Auto 36 Mo US 10 Year Treasury Fed Discount Rate

SUVs Continues Its Rise…But Will Face More Nearly-New Competition

Source: Motor Intelligence/Autodata new sales by segment, IHS Market registrations, Cox Automotive analysis 1111

0%

10%

20%

30%

40%

50%

60%

2016 2017 2018 2019 2020

Car CUV SUV Pickup Van

0%

10%

20%

30%

40%

50%

60%

Jan

-09

Jul-

09

Jan

-10

Jul-

10

Jan

-11

Jul-

11

Jan

-12

Jul-

12

Jan

-13

Jul-

13

Jan

-14

Jul-

14

Jan

-15

Jul-

15

Jan

-16

Jul-

16

Jan

-17

Jul-

17

Jan

-18

Jul-

18

SHARE OF NEW LIGHT VEHICLE SALES

CUV Car Van SUV Pickup

OFF-LEASE MATURITIES SEGMENT SHARE

A Surplus of SUVs May Increase Incentive Spend

Source: Dealer Retail Transaction data (ATP), Motor Intelligence (Incentives)

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

1/1/

20

17

2/1

/201

7

3/1

/201

7

4/1

/201

7

5/1

/201

7

6/1

/201

7

7/1

/201

7

8/1

/201

7

9/1

/201

7

10

/1/2

017

11

/1/2

017

12

/1/2

017

1/1

/201

8

2/1

/201

8

3/1

/201

8

4/1

/201

8

5/1

/201

8

6/1

/201

8

7/1

/201

8

8/1

/201

8

9/1

/201

8

10

/1/2

018

Ince

nti

ves

Spen

d a

s %

of

ATP

Cars Industry SUVs

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

1/1

/20

17

2/1

/20

17

3/1

/20

17

4/1

/20

17

5/1

/20

17

6/1

/20

17

7/1

/20

17

8/1

/20

17

9/1

/20

17

10

/1/2

01

7

11

/1/2

01

7

12

/1/2

01

7

1/1

/20

18

2/1

/20

18

3/1

/20

18

4/1

/20

18

5/1

/20

18

6/1

/20

18

7/1

/20

18

8/1

/20

18

9/1

/20

18

10

/1/2

01

8

Ince

nti

ve S

pen

d a

s %

of

ATP

Subcompact SUV/Crossover Compact SUV/Crossover

Industry Mid-size SUV/Crossover

Full-Size SUV/Crossover

SUV incentives are on the rise

Small SUVs have higher incentives

Bank of America Merrill Lynch Car Wars 2019-2022

And More are Expected to Hit the Market…Which Can Potentially Saturate the Market

0

10

20

30

40

50

60

70

801

99

9

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

Nu

mb

er o

f N

ew M

od

els

Lau

nch

es

NEW MODEL LAUNCHES 43% of new vehicles in 2019-2022 are

projected to be SUVs

Why Are Shoppers Choosing SUVs?

46%42%

38%

33%30%

24%

19%15%

10% 9%

5%

55%

42%

56%

38%

30%

23%

13%

21%24%

11%

4%

More utility/cargo

capacity

Ease of getting in and out of the vehicle

Increased interior space

High vantage point (e.g. can see over other

traffic)

Safety advantages

Many new appealing SUV models on the

market

Comparable MPG/fuel economy

More rugged Flexible seating configuration

Competitively priced

Gas prices have been low

WHY ARE YOU TRADING IN YOUR CURRENT VEHICLE FOR AN SUV?

Compact SUV Midsize SUV

People Are Trading In Their Cars For More Space and Ingress/Egress

Source: KBB.com Compact SUV Survey and Mid-Size SUV Survey, 2018Q: Why are you trading in your current vehicle for an SUV? (Compact SUV N=344)

Q: Why are you trading in your current vehicle for an SUV? (Midsize SUV N=142)

Utility and Safety Features are Important to SUV Shoppers

Source: KBB.com Compact SUV Survey and Mid-Size SUV Survey, 2018Please select up to 5 features that your next Compact/Midsize SUV must have in order for you to purchase it N=1320, N=835

51% 51%

37%

26%24%

22%19%

17% 16% 16%

56%

50%

36%

28%

22% 22%19% 19% 19%

14%

AWD or 4WD Backup camera Bluetooth Heated/cooledseats

Blind spotmonitors

Automaticheadlights

Electronicstability control

Collisionavoidance

system

Collisionwarning alert

system

Leather seats

TOP 10 MUST HAVE FEATURES


19% 35% 37% 19% 18% 21% 16% 13% 12% 15%Compared to Non-Lux Car Norms

Reliability/Safety, Affordability, and Reputation are Essential to SUV Shoppers

Source: Compact SUV Survey and Mid-Size SUV Survey, 2018Q: Which of the following factors is the MOST important to you when considering a compact/midsize SUV? (N=1320; N=835)

Top 10 Most Important Factors When Considering Compact SUV & Mid Size SUV

Reliability

Best value for my budget

Safety ratings

Driving comfort

Good experience with vehicle's brand

Fuel Economy

Driving performance

Reviews/ratings/awards

Good experience with past model

Maintenance costs

SUV Shoppers Are Replacing an SUV or Adding an SUV to the Household Fleet

Source: Compact SUV Survey and Mid-Size SUV Survey, 2018Q: Regarding your next SUV purchase, what type of vehicle are you trading in for it? (Select all that apply.) (N=835)

Q: Regarding your next SUV purchase, what type of vehicle are you trading in for it? (Select all that apply.) (N=1320)

41%

19%

2% 3% 2%5%

28%

48%

13%

4% 3% 3% 1%

29%

SUV/CUV Sedan Truck Coupe Van/Minivan Hatchback/Wagon NA, I'm not trading in avehicle

TRADE IN VEHICLE FOR THE NEXT SUV PURCHASE

Compact SUV Mid-size SUV

Compact SUV Owners are Looking to Upgrade as 32% are Looking to Defect to a Mid-Size SUV Based on KBB.com Traffic

Source: KBB.com Traffic, Q2 2018Read as: Compact SUV shoppers are cross shopping Mid-Size SUVs at the rate of 15% and Compact SUV is defecting to Mid-Size SUV at the rate of 32%

Mid-Size SUV 15%

13%

12%

9%

7%

Subcompact SUV

Compact Car

Lux Compact SUV

Mid-Size Car

CROSS SHOPPING DEFECTION

COMPACT

SUV

Mid-Size SUV 32.0%

10.5%

10.2%

9.3%

9.0%

Compact Car

Subcompact SUV

Full-Size Pickup

Mid-Size Car

Mid-Size SUV Owners are Defecting to a Smaller SUV or a Full-Size Truck Based on KBB.com Traffic

Source: KBB.com Traffic, Q2 2018Read as: Mid-Size SUV shoppers are cross shopping Compact SUVs at the rate of 20% and Mid-size SUV is defecting to Compact SUV at the rate of 27.1%

Compact SUV 20%

9%

8%

8%

6%

Lux Compact SUV

Lux Mid-Size SUV

Subcompact SUV

Compact Car

CROSS SHOPPING DEFECTION

MID-SIZE

SUV

Compact SUV 27.1%

12.4%

9.3%

8.9%

8.4%

Full-Size Pickup

Lux Mid-Size SUV

Mid-Size Car

Lux Compact SUV

Who’s Buying SUVs?

46% 54%

Women Skew More Towards Compact SUV, Whereas Men Are Looking for More Ruggedness and Buying Mid-Size SUVs

Source: IHS/Markit – New Retail Vehicle Registrations. Jan 2017 – March 2018

COMPACT

SUV

MID-SIZESUV

57% 43%

SUV Owners – Income


6%

15%

31%

27%

20%

3%

10%

27%

30% 30%

6%

13%

27%26%

29%

$0 - $19,999 $20,000 - $39,999 $40,000 - $74,999 $75,000 - $124,999 $125,000 +

SUV INCOME(Vehicle Registrations)

Compact SUV Mid-size SUV Industry

People making less money are drawn to the more affordable

Compact SUV segment

As income increases, Midsize SUV ownership increases

(higher than industry average)

Majority of Mid-size SUV Buyers are Gen X; Compact SUV are Baby Boomers


10%

37%

45%

9%12%

48%

35%

5%

18-34 35-54 55-74 75+

AGE GROUP(Vehicle Registration)

COMPACT SUV/CUV MIDSIZE SUV/CUV

Whites are Over-Indexing in SUV Ownership


72%

13%

8% 7%

74%

14%

7% 6%

61%

18%

13%

6%

White Hispanic African American Asian

ETHNICITY BREAKOUT AND PURCHASE PERCENT

Compact SUV Mid-Size SUV Industry

Psychographics – Fence Sitters are More Similar to Car Considerers

Source: Kelley Blue Book, Consumer Sentiment Survey (Jan-Jun, 2018) N = 7167

Domestic Partisan Eco-Conscious

Family Oriented

Financially Responsible

Image Conscious Outdoorsy Self-Confident Techie Thrill Seeker

+10% +15% +11% +14%

+10% +9%

+22% +14%

Cars Only

SUVs Only

Fence Sitter

CONSIDERERS

More likely to be ABOVE Average

Which OEMs Are Succeeding or Are Challenged in Leveraging the Shift to SUVs in the Marketplace?

SUVs Have Disproportionally Helped Grow These Successful Brands

Source: OEM Press release sales data

Overall Sales Change Car Change SUV Change

+262% +29% +640%

+132% +109% +196%

+70% +24% +203%

+62% -7% +968%

+59% +9% +173%

SALES % CHANGE(2008 vs 2018)

Explosive SUV growth contributed

to the overall brand sales

Despite SUV Growth, Cars Have Diminished Impact in Overall Brand Success



Despite growth in SUVs, decline in car

sales hindered overall brand

growth


+27% -15% +77%

+25% -63% +366%

+25% -41% +207%

+17% -13% +92%

+17% -27% +158%

+11% -39% +147%

Negative Growth in Car Sales and Modest SUV Gains




-18% -45% +53%

What Are OEMs Doing to Offset Spikes in Gas Prices?

Fuel Economy Has Vastly Improved Among All Segments;SUV Made the Biggest MPG Change Over The Past 11 Years

Source: FuelEconomy.gov and KBB Automotive Insights

24.0

24.825.3

25.8

26.5

27.7

28.528.9 29.1 29.4 29.6

29.9

17.918.6

19.6

20.420.8

21.221.9

22.322.9 23.1 23.4

23.7

15.8 16.0 16.2 16.3 16.5 16.5 16.717.2

18.0 18.118.4 18.5

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Ave

rage

MP

G

MPG BY SEGMENT

+ 32%

SUVs

+ 17%

Trucks

+ 25%

Cars

Source: Bloomberg, AAA, Kelley Blue Book, Cox Automotive

As MPG Improves for SUVs, There is Less Volatility in Light Truck Sales When Gas Prices Spike

33

53%

49%48%

51%52%

50%

51%

53%

57%61%

65%

68%

$45.16

$52.52

$34.68

$38.36

$48.36

$52.03

$49.57

$45.61

$29.43 $25.58

$27.82

$31.75

$-

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

40%

45%

50%

55%

60%

65%

70%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Truck Share and Monthly Fuel Premium on New Models

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

Jan

-05

Au

g-0

5

Mar

-06

Oct

-06

May

-07

Dec

-07

Jul-

08

Feb

-09

Sep

-09

Ap

r-1

0

No

v-1

0

Jun

-11

Jan

-12

Au

g-1

2

Mar

-13

Oct

-13

May

-14

Dec

-14

Jul-

15

Feb

-16

Sep

-16

Ap

r-1

7

No

v-1

7

Jun

-18

Jan

-19

Oil and Unleaded Gas Prices

WTI Cushing Spot Price Ave Gas Price UnleadedAvg Gas Price Unleaded

X4

CUV

Mid-Lux CUV

Near-Lux CUV

CUV

NX

Macan

CUV

GV70

G. Cherokee

RX

Rogue

GV80

Murano

4-Runner

C-HR

CUV

HR-V

CUV

Cherokee

CUV

CUV

Forester

Polestar 3

Expedition

300 NX

Sorento

CUV

iNext

X3

CUV

Model Y

CUV

SUV

Equinox

Terrain

Cherokee

Q4

CUV

GLC

XC40

CUV

M Byte

Bolt SUV

Imx

ID Crozz

CUV

GLB

CUV

Regal Tour X

Escape Energi

Pilot

Wrangler

Aviator

Forester

XC40

e-Tron

Kona

Niro

EQC

Escape

Corsair

Levante

Cherokee

Crosstrek

In Continuing to Improve MPG in SUVs, OEMs are Launching Alternative Fuel SUVs in the Coming Years in Addition to New Brands Entering the Market

Source: Automotive News Future Pipeline, OEM websites

2019 2020 2021 2022

Fuel CellElectric Vehicle Plug-in Hybrid

2023+

Key Takeaways

• The market shift from cars to SUVs continues, as 2018 was a stellar year for new SUV sales, closing out at 6.5+ million units. However, there are signs of SUV saturation with days supply and average ATP climbing up and more new product launches. Dealers and OEMs have the challenging task of balancing inventory and incentives to sustain sales.

• To effectively message to SUV shoppers, highlight must-have features that appeal most to them: AWD or 4WD, Backup Camera, Bluetooth, and Heated/Cooled Seats. Also, showcase aspects that capture their attention such as Spaciousness, Ingress/Egress, Higher Vantage Point, and Safety Advantages.

• Car and SUV Considerers significantly differ in their psychographic mindset. Fence sitters (those considering both Cars and SUVs) share similar values as Car Considerers. In order to persuade Fence sitters toward SUVs, the products should be environmentally friendly and have striking styling among other factors.

• With ongoing gas price fluctuations and the prediction of $3 per gallon, OEMs have been significantly improving fuel efficiency on SUVs in the last 10+ years. In continuing the trend of more fuel efficiency and meeting CAFÉ standards, OEMs are planning to launch a slew of alternative fuel SUVs.

APPENDIX

SUV Shopper Profile

Source: Compact SUV Survey, 2018, N=1320, Mid-Size SUV Survey, 2018, N=835

MedianIncome

Gender (Male)

65K

70K

COMPACT

MID-SIZE

50%

63%

58

54

Median Age

Ethnicity

74%

4% 4% 3%

70%

5% 6%2%

Caucasian Hispanic African-American Asian

MID-SIZECOMPACT

Compact SUV Dominates the Coasts and New England States, WhileMidsize SUV Has A Strong Presence in the Central and Southern States

Source: IHS/Markit – New Retail Vehicle Registrations March 2017 – March 2018

MID-SIZE & COMPACT SUV REGISTRATION SHARE

Compact SUVRegistration

Midsize SUVRegistration

Top Selling Models By Brand: Subaru


Car62%

SUV38%

2008 SUBARU SALES

Car22%

SUV78%

2018 SUBARU SALES

32%Forester

6%Tribeca

36%Legacy

20%Impreza

26%Outback

25%Forester

21%Crosstrek

6%Legacy

11%Impreza

Top Selling Models By Brand: Kia


11%Sorento

12%Sportage

25%Spectra

16%Optima

18% Soul

17%Optima

17%Forte

18%Sorento

14%Sportage

Car67%

SUV23%

Minivan, 10%

2008 KIA SALES

Car65%

SUV32%

Minivan, 3%2018 KIA SALES

Top Selling Models By Brand: Hyundai


18%Santa Fe X

5%Tucson

30%Elantra

16%Sonata

29%Sonata

24%Elantra

13%Accent

21%Tucson

14%Santa Fe

Car73%

SUV25%

Minivan2008 HYUNDAI SALES

Car54%

SUV46%

2018 HYUNDAI SALES

Top Selling Models By Brand: Volkswagen


4%Tiguan

26%Jetta

12%Passat

44%Jetta

13%Passat

12%Beetle

29%Tiguan

17%Atlas

Car91%

SUV7%

Minivan2008 VOLKSWAGEN SALES

Car53%

SUV47%

2018 VOLKSWAGEN SALES

Top Selling Models By Brand: Nissan


9%Rogue

9%Murano

16%Altima

16%Sentra

32%Altima

12%Sentra

31%Rogue

Car61%

SUV27%

Minivan2% Truck

10%

2008 NISSAN SALES

Car43%SUV

47%

Truck10%

2018 NISSAN SALES

Top Selling Models By Brand: Ford


11%Escape

7%Edge

12%Focus

9%Fusion

Truck37%

SUV29%

Car34%

2008 FORD SALES

Truck42%

SUV37%

Car21%

2018 FORD SALES

33%F-Series

13%Escape

12%Explorer

8%Fusion

5%Focus

42%F-Series

Top Selling Models By Brand: Mitsubishi


14%Outlander

29%Lancer

16%Eclipse

35%Outlander

33%Outlander Sport

21%Mirage

Car77%

SUV20%

Truck, 3%2008 MITSUBISHI SALES

Car23%

SUV77%

2018 MITSUBISHI SALES

Top Selling Models By Brand: MAZDA


10%CX-7

10%CX-9

42%MAZDA3

20%MAZDA6

50%CX-5

9%CX-9

22%MAZDA3

10%MAZDA6

Car67%

SUV24%

Minivan9%

2008 MAZDA SALES

Car35%

SUV65%

2018 MAZDA SALES

Top Selling Models By Brand: Honda


15%CR-V

8%Pilot

29%Accord

26%Civic

26%CR-V

11%Pilot

23%Civic

20%Accord

Car61%

SUV25%

Minivan11%

Truck, 3%2008 HONDA SALES

Car48%SUV

43%

Minivan7%

Truck, 2%2018 HONDA SALES

Top Selling Models By Brand: Toyota


7%RAV4

5%Highlander

24%Camry

19%Corolla

20%RAV4

11%Highlander

16%Camry

13%Corolla

Car60%

SUV19%

Minivan6%

Truck15%

2008 TOYOTA SALES

Car38%

SUV41%

Minivan4%

Truck17%

2018 TOYOTA SALES

Top Selling Models By Brand: Chevrolet


6%Tahoe

5%TrailBlazer

16%Impala

11%Malibu

28%Silverado

17%Equinox

8%Traverse

7%Malibu

7%Cruze

30%Silverado

Car49%

SUV18%

Truck33%

2008 CHEVROLET SALES

Car25%

SUV38%

Truck37%

2018 CHEVROLET SALES

Top Selling Models By Brand: Dodge


13%Journey

26%Charger

23%Caliber

31%Journey

21%Durango

26%Charger

22%Challenger

Car48%

SUV52%

2018 DODGE SALES2008 DODGE SALES

Car72%

SUV28%

10%Nitro

46% 54% 58% 42% 57% 43%

Compact SUV Shoppers Skew Female, Whereas, Mid-Size SUV Skews Male


COMPACT

SUVMID-SIZESUV

Industry

SUVs Retain More Values Than Cars

Source: KBB.com Auction Values, 8/31/2018

Current auction retention values for 1 to 3-year-old models

CAR RETENTION % SUV RETENTION %

Subcompact Car 49% Subcompact SUV/Crossover 59%

Compact Car 55% Compact SUV/Crossover 59%

Mid-size Car 53% Mid-size SUV/Crossover 61%

Full-size Car 51% Full-Size SUV/Crossover 61%

Overall Cars 54% Overall SUV 60%

Compact and Midsize Cars Still Cost Less to Operate, Although the Gap With Utilities Has Narrowed

Source: FuelEconomy.gov and KBB Automotive Insights

AVERAGE GAS COST

Segment2007

Monthly Cost2018

Monthly Cost Difference

2018 Daily Cost

Compact Car

$119.64 $94.30 $25.34 $3.14

Mid-size Car

$147.28 $98.97 $32.90 $3.30

Compact SUV

$132.09 $114.38 $33.12 $3.81

Mid-size SUV

$181.15 $141.89 $39.26 $4.73

Even When Considering New, Consumers Might Gravitate Towards Used Cars for the Value It Offers

KBB.com Interplay Between New and Used Survey N=2001What do you think are the top 3 reasons someone shopping a new vehicle ends up buying a used vehicle instead?

New model ended up being too expensive

Deal on used vehicle was too good to pass up

Ended up getting more bang for their buck (i.e. more options, more premium brand/model)

Finance rates and terms were more favorable

The used version was exactly the same, but with more miles

Model they want is not available new

Prefer the styling of the used version of the model compared to latest version

Salesperson talked them into it 23%

25%

28%

32%

39%

42%

53%

58%

REASONS SOMEONE SHOPPING NEW ENDS UP BUYING USED

SUV Milestones

Source: Wikipedia*Body-on-Frame (truck-based) construction; unibody construction is also known as car-based

1990: Ford ignites SUV market with family-focused Explorer

2008: GM introduces Lambda crossovers to replace BOF SUVs

2010: Ford replaces BOF Explorer with crossover

2012: Nissan replaces BOF Pathfinder with crossover

1996: Toyota introduces RAV4 as first pure crossover

2000: Toyota establishes dual product strategy, introducing Highlander while keeping the 4Runner

1997: Honda establishes size and execution mold for compact CUVs with CR-V

1980s: SUV market goes mainstream, with several entries including Blazer, Cherokee, Pathfinder and 4Runner following same formula

2002: After Isuzu-based Passport comes up short, Honda bets on CUV formula with Pilot

1988-2000: Safety of truck-based utilities comes into question, as rollover news plagues Explorer, Trooper and Samurai

1941: American Bantam’s design for the military Jeep creates the original off-road utility vehicle

1935: The Chevy Suburban offers a wagon body on a truck frame, kicks off its streak as longest-running nameplate in auto history

1960s: Brands from Int’l Harvester to Ford come to market with truck-based utility vehicles

Pre-1990s 1990s 2000s 2010s

In the 2000s the industry made the switch from BOF* to unibody in earnest

Historically SUVs Have Faced Distinct Barriers to Adoption

Fuel EfficiencySafety Affordability

Car-Based 2013

Chevy Traverse

Ford Explorer

Nissan Pathfinder

Toyota Highlander

Average 4

Most SUVs Were Converted to Car-Based Frame, Rollover Ratings Improved Significantly Across the Board and Shifted Safety Perception

Source: Safercar.gov, KBB.com

NHTSA RATINGS OUT OF 5 STARS

Truck-Based 2009

Chevy TrailBlazer

Ford Explorer

Nissan Pathfinder

Toyota 4Runner

Average 3

SUVs Are Now More Affordable than Previous Years

More SUV offerings within the 30-40K price range now than 2012. More available in the

lower price range.

SUVs in the 40-50K price range has gone down, more of an even mix with cars.

42%

44%

46%

48%

50%

52%

54%

56%

2012 2013 2014 2015 2016 2017 2018

VEHICLES BETWEEN $30K-40K

Car SUV

0%

10%

20%

30%

40%

50%

60%

70%

2012 2013 2014 2015 2016 2017 2018

VEHICLES WITHIN $40K-50K

Car SUV

Source: Dealer Retail Transaction Datase Data. Sales for all segments (non-lux)

PRIMARY VEHICLE CAR SUV

Car 46% 54%

SUV 15% 85%

Truck 26% 74%

Minivan 25% 75%

Wagon 41% 59%

Drivers of All Segments Perceive SUVs to be Safer than Cars

Source: KBB.com Core Segment Survey, April 2017, N=3813Q: Between car and an SUV, which do you think is generally better on each of these factors?

Q: Why do you think [vehicle] is SAFER?

Which is safer?

• SUVs have a clear advantage in safety image, with

many citing size and visibility as pluses

SUV Shoppers Are Placing Less Importance on Fuel Efficiency

Source: KBB.com Brand Watch Please review the list below and rate how important each of the factors are to you in deciding your next new vehicle.

35%

40%

45%

50%

55%

60%

65%

70%

20

12

Q1

20

12

Q2

20

12

Q3

20

12

Q4

20

13

Q1

20

13

Q2

20

13

Q3

20

13

Q4

20

14

Q1

20

14

Q2

20

14

Q3

20

14

Q4

20

15

Q1

20

15

Q2

20

15

Q3

20

15

Q4

20

16

Q1

20

16

Q2

20

16

Q3

20

16

Q4

20

17

Q1

20

17

Q2

20

17

Q3

20

17

Q4

20

18

Q1

20

18

Q2

% V

ery

Imp

ort

ant

FUEL EFFICIENCY IMPORTANCE

Compact Utility Vehicle Midsize Utility Vehicle

Compact SUV

Midsize SUV

3rd

4th

5th

7th

...And More Importance on Affordability

Source: KBB.com Brand Watch Please review the list below and rate how important each of the factors are to you in deciding your next new vehicle.

45%

50%

55%

60%

65%

70%

75%2

01

2Q

1

20

12

Q2

20

12

Q3

20

12

Q4

20

13

Q1

20

13

Q2

20

13

Q3

20

13

Q4

20

14

Q1

20

14

Q2

20

14

Q3

20

14

Q4

20

15

Q1

20

15

Q2

20

15

Q3

20

15

Q4

20

16

Q1

20

16

Q2

20

16

Q3

20

16

Q4

20

17

Q1

20

17

Q2

20

17

Q3

20

17

Q4

20

18

Q1

20

18

Q2

% V

ery

Imp

ort

ant

AFFORDABILITY IMPORTANCE


3rd

4th

Compact SUV

Midsize SUV

THE SUV SEGMENT OUTLOOK STUDY · A Surplus of SUVs May Increase Incentive Spend Source: Dealer...

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