Weekly Automotive Market Update -

Week Ending January 9th, 2021

Wholesale Prices Wholesale prices continued their decline last week at the seasonally normal rate, for the eighteenth week in a row. Volume-weighted, overall Car and Truck segments both experienced continued softening in values last week, with the rate of decline increasing compared to recent weeks.

This Week Last Week Historical Average Car segments -0.91% -0.70% -0.60% Truck & SUV segments -0.74% -0.33% -0.50% Market -0.80% -0.46% -0.60%

Car Segments

• Mainstream car segments continue to experience large week-over-week declines. Sub-Compact and Compact cars have now had twenty weeks of consistent declines, with Compact Cars having the largest average weekly change at -0.92% over those last twenty weeks.

Truck Segments

• Similar to the car segments, the Sub-Compact and Compact Crossovers are also experiencing consistent large weekly declines. Low fuel prices and an oversupply in the market are contributing to their heavy depreciations each week.

• A bright spot in the market this past week was the Full-Size Crossover/SUV segment that saw minimal gains at 0.05%,

2 |

• Sporty Cars had a strong summer, with some record gains, some weeks exceeding 2%, but the traditional winter softening is catching up with this segment. Last week it had the largest weekly decline at 1.30%. This is the largest decline since the end of April last year.

after sixteen weeks of declines. However, the declines in most weeks were not large. For all the reasons smaller crossovers are struggling with retention, these obstacles are leading to higher retention for the largest SUV segment.

Weekly Wholesale Index

2020 ended with used wholesale prices at the elevated level. With economic patterns (including automotive market) driven by the pandemic, normal seasonal patterns (e.g. 2019 calendar yar) in the wholesale market were not observed for most of the year. We saw a similar picture in 2009, at the end of the Great Recession. The question still remains whether we will go back to normal seasonality in 2021.

3 |

Used Retail Prices With the proliferation of ‘no-haggle pricing’ for used-vehicle retailing, asking prices accurately measure trends in the retail space. Retail demand slowed down leading up to the holidays and thus resulted in declining retail asking prices over the last several weeks. Retail prices are typically slower to react to changes in the market and are not reflecting the recent uptick in consumer demand. Days-to-turn has been increasing since November but remains at levels below average.

4 |

Volume Used Retail

Used retail listing volume dropped slightly last week, but remains at levels above where the industry was in January, during the pre-COVID year of 2019.

Wholesale Over the last several weeks of 2020 we saw wholesale sold volume decrease as dealers need for inventory declined as a result of weaker used retail demand. As has been the case, the drops in volume were not uniform across all auctions and platforms. In the first full week of 2021 average conversion rate at the auctions improved as a result of strong retail demand to finish out 2020 that resulted in dealers needing to return to the lanes to secure inventory. Sellers started their year ready to negotiate and this resulted in a much higher sale rate than in recent weeks, and resulted in an overall increase in sold volume.

5 |

Black Book’s Market Insights

Retail (Used and New) • New and used retail demand helped finish the year strong for

many dealers. Used demand saw an increase the final week of the year, and has continued into the start of 2021. New inventory levels continue to be a challenge, especially on Full-Size Trucks and SUVs.

• Final new vehicle sales for 2020 finished the year roughly15% down compared to 2019, for a total volume of 14.46 million car and light trucks.

o Q4 performance was only down 2.4% compared to2019.

o Mazda and Volvo were just a few of themanufacturers to see YOY gains, 0.20% and 1.8%, respectively.

o Tesla experienced the largest gains in 2020, up 20%.o Nissan had a tough year with declines exceeding

30%. o Full-Size Trucks were in strong demand throughout

2020, but despite the heightened demand, the F150 and Ram 1500 both reported drops in sales. Silverado 1500 reported an increase in YOY sales of 2.8%.

Wholesale • Auctions were full of action last week with dealers getting back into

full-swing with their purchasing and sellers starting the year ready to negotiate. This activity led to higher conversion rates than we’ve seen in recent weeks. Lanes with in-person attendance of buyers and sellers saw higher success as in-lane negotiations increased their sales rates. The big buyers (Carmax, Vroom, etc.) had slowed their buying over the last few weeks, but last week they increased their bidding.

• In general, remarketers are still reporting that they are low oninventory to offer starting the year and will be conservative in their floor adjustments. However, volumes in certain segments (like Compact Cars and Compact Crossovers) are in larger supply and that is resulting in larger adjustments on their floor pricing for those specific higher volume units.

• Sentiment is still mixed by dealers and remarketers regarding atraditional spring/tax season market for 2021, but some of the early indicators of a spring market are popping-up at the auctions. This past week we caught another glimpse of an increase in demand for the under $10,000 vehicles at the Independent auctions.

Industry News • The microchip shortage is having far-reaching impacts on the automotive industry with Toyota, Honda, Nissan, FCA, and Ford all feeling the

effects. FCA is delaying the restart date of their Jeep Compass production in Mexico and idling another plant in Canada through the end of January. Ford is also taking similar steps by suspending operations at their Louisville plant. Others are only slowing production at this time.

• After a tough year of retail sales for Nissan, they have re-affirmed their commitment to reduced fleet sales as they continue to strive towardprofitability over market share.

• GM is retiring their existing logo and launching a new one as part of their strategy for the future that more heavily focuses on electrification.• Jeep announced the arrival of their new 3-row SUV last week, the Grand Cherokee L. They haven’t been in the 3-row space since the

discontinuation of the Commander.

6 |

About Black Book

Black Book® is best known in the automotive industry for providing timely, independent and precise vehicle pricing information, and is available to industry-qualified users through online subscription products, mobile applications and licensing agreements. Since 1955 Black Book has continuously evolved to ensure that it achieves its goal of delivering mission-critical information to its customers, along with the insight necessary to successfully buy, sell, and lend. Black Book data is published daily by National Auto Research, a Hearst company, and maintains offices in Georgia as well as the Canadian Black Book in Toronto.

Laura Wehunt

Vice President Automotive Valuations

Alex Yurchenko, Ph.D.

Senior Vice President

Data Science

Contact

Black Book p. 800.554.1026 e. info@blackbook.com www.blackbook.com

w