December 2014 - NADA.com

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NADA Used Car Guide Industry Update December 2014 

Wholesale Prices Fall by 1.3 Percent in November Strong demand and a pullback in auction volume helped ease used vehicle depreciation



NADA’s Used Vehicle Price Index Increases to 123.0 Index grows by nearly 2 percentage points over October



New Vehicle Sales Rise by 4.5 percent SAAR nears 17.1M units



Incentive Spending Climbs for 22nd Consecutive Month Spending reaches an average of just below $2,900 per unit

Guidelines | December 2014

TABLE OF CONTENTS New & Used Market Trends ........................................................................................................ 2 At NADA Used Car Guide ............................................................................................................. 9

NEW & USED MARKET TRENDS USED MARKET REVIEW Strong demand and a pullback in auction volume slowed used vehicle depreciation to one of the lowest levels of the year in November. Wholesale prices for vehicles up to eight years in age slipped by a mild 1.3 percent in November, which is a result better than what has been historically recorded for the month and also one that ended a four month streak with depreciation at or above 3 percent. November’s solid performance lifted NADA’s seasonally adjusted used vehicle price index by nearly 2 percentage points over October’s figure to 123.0. The index stood at 124.0 in November 2013. Traditionally, auction volume in November falls compared to October. This is mainly due to the extended Thanksgiving holiday. While the same

NADA Used Vehicle Price Index Vehicles up to eight years in age. Seasonally adjusted.

pattern occurred again this year, volume fell a bit

120

Auction volume for vehicles up to eight years in age

110

percentage points more than the 7 percent drop recorded last year. While auction supply was down overall, the steeper

January 2010 = 100

more sharply than it did over the period in 2013. dropped by nearly 9 percent in November, or 2

Index rises to 123.0

100

90

80

70

decline in rental-heavy 2014 model year volume likely played a key role in alleviating downward

November 2014:

130

Month Source: NADA Used Car Guide

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Guidelines | December 2014

[ NEW & USED MARKET TRENDS continued ] pressure on used vehicle prices last month. After rising by an average of 44 percent in September and October, 2014 model volume fell by nearly 10 percent last month. By comparison 1-year old volume fell by less than 2 percent in November 2013. As for segments, mid-size van prices fell by 2.6 percent, which was the most of any segment in November, but much less than the nearly 5 percent drop averaged in the two months prior. Subcompact car prices also slipped by slightly more than the market average, however, the month’s 1.6 percent decline was a

Monthly Change in Wholesale Used Vehicle Prices - October vs. November 2014 Vehicles up to eight years in age. 0.0%

significant improvement over the previous four percent. All other segments performed better than the

-0.5% Prior Month Change

months when depreciation ranged between 3 to 4

-0.4% -0.8%

-1.0%

-1.5%

-0.7%

-0.7%

-0.8%

-1.0% -1.2%

-1.2%

-1.2%

-0.9% -1.1% -1.3%

-1.6% -2.0%

market average in November. Compact and mid-size

-2.5%

car prices fell by 1.2 and 1.1 percent, respectively.

-3.0%

-2.6%

Prices were even stronger for mainstream truck and SUV segments, as prices fell within a tight range of 0.9 to 0.4 percent. On the luxury side of the market, large car and

Source: NADA Used Car Guide

Annual Change in Wholesale Used Vehicle Prices - 2013 vs. 2014, YTD Through November. Vehicles up to eight years in age

compact utility prices fell by 1.2 percent, apiece, 12.0%

followed by the mid-size utility segment’s decline of were the strongest of the group, as each fell by only 0.7 percent for the month. Prices year-to-date are still 1.1 percent higher than they were through November last year. Led by the

8.0% Prior Year Change

1 percent. Compact and mid-size luxury car prices

9.6%

10.0%

6.0%

4.0% 2.0%

3.5% 2.1%

3.2%

0.9%

3.3%

1.8%

0.5%

1.1%

0.0%

-0.2%

-2.0% -4.0%

-2.5%

-2.7%

-6.0% -8.0%

-6.2%

-5.1%

large pickup segment’s 9.6 percent increase, prices for nearly every segment ― save subcompact and

Source: NADA Used Car Guide

most luxury cars ― remain flat-to-up on a prior year basis. Prices for large SUVs, mid-size utilities and mid-size vans have grown by 3.2 to 3.5 percent, followed by compact cars and mid-size cars, which saw increases of 2.1 and 1.8 percent, respectively. Compact utility prices are up by a slight 0.9 percent.

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Guidelines | December 2014

[ NEW & USED MARKET TRENDS continued ] Out of the five luxury vehicle segments, four have experienced losses so far year-todate. Luxury large and mid-size cars are down by 6.2 and 5.1 percent, followed by a 2.5 percent loss in the luxury compact car segment. Luxury mid-size utility prices are down by a modest 0.2 percent; however luxury compact utility prices have increased by 0.5 percent, which is the only segment to see price appreciation on the luxury side of the market.

DECEMBER USED PRICE FORECAST Used vehicle depreciation is expected to remain modest in December, as NADA’s forecast for the month has prices falling by one to 1.5 percent. Losses in December are expected to be most severe for luxury cars and mid-size vans. Compact car and utility depreciation should also be above average, while losses for mid-size cars and most other truck segments should be at or below the industry average. Once again, pickup prices are expected to slip the least of other segments. Moving forward into 2015, prices are expected to follow a traditional seasonal pattern where they steadily increase through the first quarter before declining the remainder of the year. NADA’s forecast has prices sliding by less than 1 percent in January, and then rising by 1 to 2 percent in February.

DECEMBER OFFICIAL USED CAR GUIDE VALUE MOVMENT Trade-in values in December’s edition of the official Used Car Guide decreased by 4.1 percent relative to November, which is the biggest downward movement for the period in the past three years. Car values were lowered by a combined average of 4.4 percent, slightly more than the truck segments combined average of 3.7 percent. Mid-size vans performed the worst for the month and prices for the segment were adjusted downward by 5.3 percent. For December’s edition, luxury vehicles performed much better than their non-luxury counterparts. As a result, luxury segment values were lowered by a combined average of 2.7 percent compared to the mainstream segment average of 4.3 percent.

NEW VEHICLE SALES RISE BY 5 PERCENT, SAAR NEARS 17.1M UNITS November saw new vehicle sales increase for the 10th consecutive month as deliveries rose by 4.5 percent year-over-year, while year-to-date sales remained above 5 percent.

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Guidelines | December 2014

[ NEW & USED MARKET TRENDS continued ] The seasonally adjusted annual rate was just under 17.1 million units, which is 4.7 percent higher than it was last year.

FIAT CHRYSLER AND GENERAL MOTORS LEAD DOMESTIC PUSH The recent see-saw between domestics and imports favored U.S. automakers in November, which sold

New Vehicle Sales

7.2 percent more vehicles year-over-year despite

1.8

14%

another disappointing month from Ford Motor

1.6

12%

Company. Year-to-date sales growth is now on par

1.4

10%

1.2

8%

1.0

6%

0.8

4%

0.6

2%

0.4

0%

0.2

-2%

0.0

-4%

Fiat Chrysler hit the 20 percent growth mark again year-over-year as every one of the company’s brands realized sales gains. With every model

Sales Volume (millions)

percent.

achieving improved sales, Jeep and Ram deliveries jumped by 27 percent and 31 percent, respectively, while Alfa Romeo returned to the U.S. market with

YoY Change

Month Source: WardsAuto

New Vehicle SAAR

its first 4C units being punched in November.

17

12%

General Motors was a solid performer with

16

10%

Chevrolet’s sales rose by only 3.2 percent year-overyear due to falling Impala and Malibu deliveries.

New Vehicle SAAR (millions)

by Buick and GMC. However, volume brand

SAAR

YoY Change

8%

15

6% 14 4% 13

2%

12

0%

11

-2%

Cadillac sales were down 19 percent as the Escalade was the brand’s only good performer. Ford Motor Company’s struggles continued in

Month Source: WardsAuto

November with deliveries falling by 1.8 percent, pulling year-to-date sales down 0.9 percent. Lincoln exhibited positive growth of over 20 percent thanks to its new MKC, but the larger Ford brand’s sales dropped by 2.7 percent as its F-Series and car lineup ― excluding the new Mustang ― all saw deliveries fall yearover-year.

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Percent Change

deliveries improving by 6.5 percent due to big gains

Percent Change

with the industry with deliveries up just over 5

New Vehicles Sales

Guidelines | December 2014

[ NEW & USED MARKET TRENDS continued ] IMPORTS REALIZE POSITIVE GROWTH, BUT TRAIL DOMESTICS Import sales increased by 2.5 percent as Asian and European brands grew at a very similar pace. For the year, deliveries have improved by 5.4 percent, just slightly above the industry’s growth rate. Japanese deliveries climbed by 3.6 percent, with Subaru once again on top with a 24 percent improvement thanks to Legacy and Outback model sales performance. However, sales from Korean automakers fell by 2.8 percent as both Hyundai and Kia posted fewer deliveries than a year ago. After a tremendous run of sales increases, Nissan North America’s deliveries slipped by 3.1 percent as both of its brands experienced declines. A slowdown in semipremium deliveries, including the Maxima and Murano, weighed down Nissan’s sales. . Infiniti continues to struggle with fledgling sales. Toyota Motor Sales achieved 3 percent growth, despite

Mainstream Brand Performance (Units Sold)

Buick Chevrolet Chrysler Dodge Fiat Ford GMC Honda Hyundai Jeep Kia Mazda Mini Mitsubishi Nissan Ram Scion Smart Subaru Toyota Volkswagen

Nov-14 19,143 149,673 27,243 42,108 3,111 173,642 43,854 106,957 53,672 57,489 44,936 21,242 5,009 6,534 91,790 39,460 3,907 815 45,273 151,967 31,725

Oct-14 18,699 155,965 27,546 41,512 3,725 174,096 38,540 105,745 50,081 55,198 44,694 18,798 5,300 6,199 94,072 40,555 4,182 585 43,012 153,043 30,313

falling sales from the company’s Scion brand Its Toyota

Source: Wa rds Auto

and Lexus brands were solid performers. Utility vehicles,

Luxury Brand Performance (Units Sold)

particularly the 4Runner, Highlander and RAV4 were hits for the Toyota brand, while the Lexus CT, IS, GS and GX were the luxury brand’s biggest movers. Meanwhile, the xB was Scion’s only model to post a sales increase as sporty FR-S coupe sales show signs of slowing demand. American Honda Motor Co. pushed deliveries up by 4.6 percent, bringing its year-to-date growth rate to 1 percent above last year’s. The CR-V and Fit were popular

Alfa Romeo Acura Audi BMW Cadillac Infiniti Jaguar Land Rover Lexus Lincoln Mercedes-Benz Porsche Volvo

Nov-14 24 14,857 16,640 31,019 13,148 11,398 1,253 3,644 27,472 8,113 37,110 4,699 3,623

Oct-14 0 15,427 15,150 30,602 13,615 9,045 1,007 3,643 23,355 8,883 30,733 3,667 3,972

Nov-13 15,072 145,089 21,024 41,506 3,075 178,378 35,727 101,948 56,005 45,415 45,411 20,754 4,575 6,071 93,376 30,159 4,968 959 36,621 147,465 30,727

Change From Month Ago Year Ago 2.4% 27% -4.0% 3.2% -1.1% 30% 1.4% 1.5% -16% 1.2% -0.3% -2.7% 14% 23% 1.1% 4.9% 7.2% -4.2% 4.2% 27% 0.5% -1.0% 13% 2.4% -5.5% 9.5% 5.4% 7.6% -2.4% -1.7% -2.7% 31% -6.6% -21% 39% -15% 5.3% 24% -0.7% 3.1% 4.7% 3.2%

Nov-13 0 14,559 13,636 31,752 16,172 13,152 1,446 4,601 25,611 6,727 36,386 3,966 4,233

Change From Month Ago Year Ago -3.7% 2.0% 9.8% 22% 1.4% -2.3% -3.4% -19% 26% -13% 24% -13% 0.03% -21% 18% 7.3% -8.7% 21% 21% 2.0% 28% 18% -8.8% -14%

Source: Wa rds Auto

models for Honda, while the TLX and ILX lead the charge Acura. All of the luxury marque’s other models sold fewer units this year. Altogether, German brand deliveries grew by over 4 percent, largely due to successful

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Guidelines | December 2014

[ NEW & USED MARKET TRENDS continued ] selling of Audi’s small A3 and Porsche’s new Macan. With the leading success of Audi sales jumping 22 percent, BMW saw mixed results, leading to a decrease in sales. Mercedes-Benz achieved only a 2 percent improvement. With a show of resiliency, Volkswagen of America succeeded in increasing deliveries for the second straight month thanks to the Jetta, Golf and GTI. The sales lift illustrates potential for a positive trend after 18 consecutive year-over-year declines.

INCENTIVE SPENDING CLIMBS FOR 22ND CONSECUTIVE MONTH Per Autodata, average incentive spending in November was just below $2,900 per unit, which represents an 8 percent increase from a year ago. Incentives were up for the 22nd consecutive month and year-to-date, spending has remained 8 percent higher year-over-year. While Fiat Chrysler continues to post significant sales improvements, its reliance on the Jeep and Ram brands is ever-increasing. This development may explain why the two brands’ average incentives climbed by 15 percent and 21 percent, respectively. The company’s other brands spent roughly the same or less year-over-year. General Motors succeeded in raising its sales despite cutting its spending by nearly 16 percent for its volume Chevrolet marque. Ford, meanwhile, spent 4.8 percent less on average year-over-year and saw its Blue Oval brand continue to struggle. Despite a 28 percent and 32 percent incentive spending increase by Nissan and Infiniti, Nissan’s November sales strategy failed to show positive results. Competitor Toyota saw its brand perform better, dropping incentives 5.7 percent. Honda’s sales improvement justified its 11

Incentives Average of Total

YoY Change

$3,100

percent increase in spending.

25%

Volkswagen’s 34 percent jump in incentives was one order to generate positive momentum for the German marque.

$2,800

15%

$2,700 10%

$2,600 $2,500

Subaru’s $716 per unit average is the second lowest

$2,400

after Land Rover. The company’s 9.8 percent

$2,300

decrease in year-over-year spending is a positive development as sales have shown no signs of slowing.

20%

$2,900

5%

0%

Month Source: Autodata

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Percent Change

of the biggest in the industry, but was necessary in

Average Incentive Spending

$3,000

Guidelines | December 2014

[ NEW & USED MARKET TRENDS continued ] DAYS’ SUPPLY FALLS BY FIVE DAYS FROM OCTOBER November inventory levels ended at 70 days. The figure is a decrease of five days month -over-month and a six day drop from a year ago. Like last month, General Motors had the greatest supply among domestics at 88 days, which is six and seven days above Ford and Fiat Chrysler, respectively. Toyota, Honda and Nissan all cut inventory from last month and ended November with respective inventory levels of

New Vehicle Days' Supply

53, 62 and 75 days.

Days' Supply

European brand inventory remains relatively low as Jaguar Land Rover inventory is at a sparse 26 days,

Days of Supply

year-over-year.

13

70 60

8

50 3

40 30

-2

20 -7 10 0

-12

followed by Audi and Porsche, both at 38 days. BMW daily supply levels sit at just 39 days, while Daimler

Month Source: WardsAuto

has an inventory of 45 days.

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Day Change

lowering its supply levels to 76 days; a 29 day drop

18

80

With 19 days of supply, Subaru is easily the lowest in the industry, while Volkswagen has done a nice job

YoY Change

90

Guidelines | December 2014

AT NADA USED CAR GUIDE What’s New The NADA Appraisal Suite is launched! Tired of the back and forth? Turn your entire appraisal process into something your customers can truly understand. Select NADA Appraisal, starting at $99/month with an annual subscription, or upgrade to NADA AppraisalPRO to include additional market data from trusted industry sources. Both provide you with an official appraisal document, backed by NADA, which gives customers the confidence to sign. Take advantage of our 2015 NADA Convention special and get an iPad mini FREE with an annual subscription of NADA AppraisalPRO. Learn more at nada.com/appraisal or call 866.974.6232.

On the Road January Events: Steve Stafford and John Beckman are attending and exhibiting at the 19th Annual ASFA Vehicle Finance Conference & Exposition January 20 -22, 2015 in San Francisco. Please stop by booth #304 and talk with Steve and John. Please join the NADA Used Car Guide Team for the 2015 NADA/ATD Convention & Expo January 22 - 25, 2015 in San Francisco. Stop by NADA Used Car Guide booth #1511 S and pick-up your FREE iPad Mini with an annual subscription of NADA AppraisalPRO. Also, be sure to visit our ATD/NADA Used Commercial Truck booth #4284N to talk with Chris Visser. Learn about the various services NADA Used Car Guide provides to support your business needs.

About NADA Used Car Guide Since 1933, NADA Used Car Guide has earned its reputation as the leading provider of vehicle valuation products, services and information to businesses throughout the United States and worldwide. NADA’s team collects and analyzes over one million combined automotive and truck wholesale and retail transactions per month. Its guidebooks, auction data, analysis and data solutions offer automotive/truck, finance, insurance and government professionals, the timely information and reliable solutions they need to make better business decisions. Visit nada.com/b2b to learn more. Financial Industry, Accounting, Legal, OEM Captive Steve Stafford 800.248.6232 x7275 [email protected]

Credit Unions, Fleet, Lease, Rental Industry, Government Doug Ott 800.248.6232 x4710 [email protected]

Automotive Dealers, Auctions, Insurance Jim Dodd 800.248.6232 x7115 [email protected]

Director, Sales and Customer Service Dan Ruddy 800.248.6232 x4707 [email protected]

Automotive OEMs Stu Zalud 800.248.6232 x4636 [email protected]

Business Development Manager James Gibson 800.248.6232 x7136 [email protected]

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Guidelines | December 2014

NADA CONSULTING SERVICES NADA’s market intelligence team leverages a database of nearly 200 million automotive transactions and more than 100 economic and automotive market-related series to describe the factors driving current trends to help industry stakeholders make more informed decisions. Analyzing data at both wholesale and retail levels, the team continuously provides content that is both useful and usable to the automotive industry, financial institutions, businesses and consumers. Complemented by NADA’s analytics team, which maintains and advances NADA’s internal forecasting models and develops customized forecasting solutions for automotive clients, the market intelligence team is responsible for publishing white papers, special reports and the Used Car & Truck Blog. Throughout every piece of content, the team strives to go beyond what is happening in the automotive industry to confidently answer why it is happening and how it will impact the market in the future. Senior Director, Vehicle Analysis & Analytics Jonathan Banks 800.248.6232 x4709 [email protected]

Senior Manager, Market Intelligence Larry Dixon 800.248.6232 x4713 [email protected]

Automotive Analyst David Paris 800.248.6232 x7044 [email protected]

Automotive Analyst Joseph Choi 800.248.6232 x4706 [email protected]

ADDITIONAL RESOURCES Guidelines

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Updated monthly with a robust data set from various industry sources and NADA’s own proprietary analytical tool, Guidelines provides the insight needed to make decisions in today’s market.

NADA’s white papers and special reports aim to inform industry stakeholders on current and expected used vehicle price movement to better maximize today’s opportunities and manage tomorrow’s risk.

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Leveraging data from various industry sources and NADA’s analysts, NADA Perspective takes a deep dive into a range of industry trends to determine why they are happening and what to expect in the future.

Written and managed by the Market Intelligence team, the Used Car & Truck Blog analyzes market data, lends insight into industry trends and highlights relevant events.

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Disclaimer: NADA Used Car Guide makes no representations about future performance or results based on the data and the contents available in this report (“Guidelines”). Guidelines is provided for informational purposes only and is provided AS IS without warranty or guarantee of any kind. By accessing Guidelines via email or the NADA website, you agree not to reprint, reproduce, or distribute Guidelines without the express written permission of NADA Used Car Guide.

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