Blue Book MARKET REPORT

Blue Book

MARKET REPORT

Andrew Nicolai

Director, Public Relations 949.293.5241 | andrew.nicolai@

Michelle Behar

Public Relations Specialist 909.241.5441 | michelle.behar@

FIRST QUARTER 2017

IN THIS ISSUE:

> Auction Values See Moderate Declines in First Quarter of 2017 > Luxury High Performance Vehicles Best 2016 Model-Year Retention by Segment; Porsche Leads in Top Three Spots > Compact and Subcompact Vehicles Continue to Trend Lower Year-Over-Year...MORE

Auction Values See Moderate Declines in First Quarter of 2017

Auction Value

$19,000 $18,500 $18,000 $17,500 $17,000 $16,500 $16,000 $15,500 $15,000

Jan

Feb

Mar

Auction Values, 2016 YTD

CY 2015 CY 2016 CY 2017

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Source: Kelley Blue Book Automotive Insights, 1- to 3-year-old vehicles

? Auction values for 1- to 3-year-old vehicles fell a modest 1.4 percent, or $250 per unit, in the first quarter of 2017. This marks the

second year in a row that auction values have declined throughout the first quarter, which is contrary to typical seasonal patterns.

Increasing auction supply is likely a key driver for this shift in seasonal patterns.

? The average cost per 1- to 3-year-old vehicle at the end of the first quarter of 2017 was 0.6 percent, or $104, higher than the same

quarter of 2016 and 1.3 percent, or $232, lower than in the first quarter

of 2015.

? In mid-March, average auction values realized an increase of $110 per unit, likely driven by tax refund season and consumers looking

...INCREASED CONSUMER

to purchase new vehicles before the coming summer months where consumers have planned vacations or road trips, or want to enjoy the

CONFIDENCE COULD HELP

warmer weather in an appropriate vehicle. ? In March, consumer confidence rose sharply to reach a 16-year high,

according to the Consumer Confidence Survey?. These strong consumer

THE MARKET SEE A MORE

confidence figures coupled with tax refunds could help to mitigate increasing auction volumes, at least in the short term. Last year between

PROLONGED BUYING

March and June, we didn't see the typical seasonal bump between the first and second quarters, but increased consumer confidence could help the market see a more prolonged buying season in the second quarter

SEASON...

this year.

SEAN FOYIL, KELLEY BLUE BOOK ANALYST

? Year-over-year total auction volume for the first quarter of 2017

increased roughly 12 percent and 23 percent compared to 2016 and 2015

respectively.

Luxury High Performance Vehicles Best 2016 Model-Year Retention by Segment; Porsche Leads in Top Three Spots

Retained Value, MY 2016

Y-o-Y Point Change, Retained Value

Luxury High Performance Car Mid-size Pickup Truck Luxury Sports Car Sporty Compact Car High Performance Car

Luxury Mid-size SUV/Crossover Luxury Compact SUV/Crossover

Sports Car Luxury Full-size SUV/Crossover

High-end Luxury Car Mid-size SUV/Crossover Full-Size SUV/Crossover

Average Van

Compact SUV/Crossover Subcompact SUV/Crossover Hybrid/Alternative Energy Car

Full-size Pickup Truck Entry-level Luxury Car

Minivan Compact Car Mid-size Car

Luxury Car Full-size Car Subcompact Car Electric Vehicle

90% 83% 80% 78% 77% 75% 71% 70% 70% 69% 69% 69% 68% 66% 65% 64% 64% 63% 63% 63% 61% 58% 58% 57% 55% 52%

Luxury High Performance Car Mid-size Pickup Truck Luxury Sports Car Sporty Compact Car High Performance Car

Luxury Mid-size SUV/Crossover Luxury Compact SUV/Crossover

Sports Car Luxury Full-size SUV/Crossover

High-end Luxury Car Mid-size SUV/Crossover Full-Size SUV/Crossover

Van Average Compact SUV/Crossover Subcompact SUV/Crossover Hybrid/Alternative Energy Car Full-size Pickup Truck Entry-level Luxury Car Minivan Compact Car Mid-size Car Luxury Car Full-size Car Subcompact Car Electric Vehicle

6% -1%

0% 2%

-7% 0%

-1% -4% -10%

-1% -4% -7%

1% -2% -8% -7%

6% 1% 0% -3% -2% -4% -4% -5% -1% -2%

0%

20%

40%

60%

80%

100%

Source: Kelley Blue Book Automotive Insights, Model-Year 2016 Vehicles

-15%

-10%

-5%

0%

5%

10%

Source: Kelley Blue Book Automotive Insights, Model-Year 2016 vs 2015

? Model-year 2016 vehicles closed out the first quarter of the year with an average retention value rate (Auction Value/MSRP) of 68

percent.

? The luxury high performance car segment, which includes the Porsche 911 and Mercedes-Benz AMG GT, topped the list with an

average retained value rate of 90 percent for model-year 2016 vehicles.

? The mid-size pickup truck segment remains near the top of the list with an average retention rate of 83 percent, due to the strong

retention rates of the Toyota Tacoma (88 percent), Chevrolet Colorado (82 percent) and GMC Canyon (81 percent).

? From a year-over-year perspective, the largest decrease in retention rate by segment was a 10 percent drop in the luxury full-size SUV/

crossover segment. The largest declines within the segment year-over-year are seen in the Mercedes-Benz GL-Class (down 17 percent)

and the Infiniti QX80 (down 15 percent).

Top 10 2016 Model-Year Vehicles by Value Retention

VEHICLE SEGMENT

MANUFACTURER

Luxury Sports Car

Porsche

Luxury High Performance Car

Porsche

Luxury Compact SUV/Crossover

Porsche

Luxury Mid-Size SUV/Crossover

Land Rover

Mid-Size Pickup Truck

Toyota

Compact SUV/Crossover

Subaru

Luxury Mid-Size SUV/Crossover

Lexus

Luxury Mid-Size SUV/Crossover

Land Rover

Luxury Mid-Size SUV/Crossover

Volvo

Luxury Compact SUV/Crossover

Audi

Kelley Blue Book Automotive Insights

MODEL Cayman 911 Macan LR4 Tacoma Double Cab Crosstrek RX Range Rover Sport XC90 Q5

VALUE RETENTION (%) 93.1% 92.1% 91.6% 88.0% 87.7% 87.3% 85.9% 85.7% 85.5% 83.9%

Bottom 10 2016 Model-Year Vehicles by Value Retention

VEHICLE SEGMENT

MANUFACTURER MODEL

Electric Vehicle

Nissan

LEAF

Electric Vehicle

Mitsubishi

i-MiEV

Subcompact Car

FIAT

500

Mid-Size Car

Chrysler

200

Compact Car

Dodge

Dart

Luxury Car

Cadillac

XTS

Subcompact Car

Chevrolet

Sonic

Compact Car

Mitsubishi

Lancer

Subcompact Car

Ford

Fiesta

Entry-Level Luxury Car

Cadillac

ATS

Kelley Blue Book Automotive Insights

VALUE RETENTION (%) 39.1% 40.6% 41.6% 48.3% 48.6% 50.3% 50.4% 50.5% 51.1% 51.2%

2 BLUE BOOK MARKET REPORT FIRST QUARTER 2017

Average Vehicle Value Retention by Model-Year

MODEL YEAR

AVERAGE RETENTION (%)

2017

74%

2016

68%

2015

60%

2014

53%

2013

46%

2012

40%

2011

35%

Kelley Blue Book Automotive Insights

Compact and Subcompact Vehicles Continue to Trend Lower Year-Over-Year

Auction Value

$13,000 $12,500 $12,000 $11,500 $11,000 $10,500 $10,000

$9,500 $9,000 $8,500 $8,000

Jan

Feb

Mar

Compact Car Auction Values, 2016 YTD

CY 2015 CY 2016 CY 2017

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Source: Kelley Blue Book Automotive Insights, 1- to 3-year-old vehicles

$11,000 $10,500 $10,000

$9,500

Subcompact Car Auction Values, 2016 YTD

CY 2015 CY 2016 CY 2017

Auction Value

$9,000

$8,500

$8,000

$7,500

$7,000

$6,500

$6,000

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Source: Kelley Blue Book Automotive Insights, 1- to 3-year-old vehicles

? The average auction value for 1- to 3-year-old compact cars increased 1.5 percent, or $163, while subcompact vehicles fell 2.2 percent, or $178, in the first quarter of 2017.

? Year-over-year, both compact and subcompact segments were down in the first quarter, finishing 2.7 percent, or -$294, lower and 4 percent, or -$334, lower respectively.

? Inferior year-over-year values can be attributed to continued decreasing demand for smaller car segments in favor of the increasingly popular compact SUV and crossover segments. Lack of consumer demand coupled with relatively low fuel prices and increasing competition has put consistent downward pricing pressure on small car segments.

Top 5 Performing Compact Cars in the First Quarter of 2017 (1- to 3-year-old vehicles) 1. Nissan Cube: 11.7 percent, $1,039 2. Mini Hardtop: 8.4 percent, $959 3. Dodge Dart: 3.4 percent, $301 4. Ford Focus: 3.3 percent, $296 5. Nissan Sentra: 2.7 percent, $252

Top 5 Performing Subcompact Cars in the First Quarter of 2017 (1- to 3-year-old vehicles) 1. Scion xD: 9.2 percent, $745 2. Mazda Mazda2: 2.7 percent, $160 3. Scion iQ: 0.4 percent, $28 4. Ford Fiesta: -0.7 percent, -$51 5. Mitsubishi Mirage: -0.9 percent, -$52

3 BLUE BOOK MARKET REPORT FIRST QUARTER 2017

Fuel Prices Hold Steady During First Quarter 2017; Up 12 Percent Year-Over-Year

Fuel Prices

$4.00 $3.75 $3.50 $3.25

Fuel Prices

Regular All Formulations Retail Gasoline

CY 2014 CY 2015 CY 2016 CY 2017

$3.00

$2.75

$2.50 $2.25 $2.00

$2.38 $2.30

$2.03

$1.75

$1.50

Jan Jan Feb Mar Mar Apr May Jun Jun Jul Aug Aug Sep Oct Oct Nov Dec Dec

Source: U.S. Energy Information Administration

? Fuel prices remained relatively unchanged throughout the first quarter of 2017, averaging $2.33 per gallon. ? At $2.32 per gallon in late March, fuel prices remained $0.25, or 12 percent higher, than at this time last year and $0.13, or 5 percent

lower than in March of 2015. ? With summer right around the corner, we expect to see higher fuel prices as producers switch from winter-blend to more costly

summer-blend fuel. Historically, this occurs around May 1, according to the U.S. Energy Information Administration. ? If fuel prices reach high enough, it could cause more fuel-efficient vehicles in the used-car market to see greater demand.

Average Fuel Prices By Month ($)

Year Chart (Hi/Lo) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year

2017

$2.35 $2.30 $2.33

$2.33

2016

$1.98 $1.76 $1.93 $2.11 $2.25 $2.36 $2.21 $2.18 $2.22 $2.25 $2.18 $2.28 $2.14

2015 2014

$2.14 $2.22 $2.46 $2.47 $2.72 $2.80 $2.79 $2.67 $2.41 $2.29 $2.18 $2.04 $2.43 $3.32 $3.36 $3.53 $3.66 $3.67 $3.69 $3.61 $3.49 $3.42 $3.17 $2.91 $2.54 $3.36

4 BLUE BOOK MARKET REPORT FIRST QUARTER 2017

Appendix

Top 5 Performing Segments: SEGMENT Hybrid/Alternative Energy Car Electric Vehicle Sports Car Sporty Compact Car Van MY 2014-2016, Kelley Blue Book? Auction Value

First Quarter 2017 Change (%) 6.2% 5.9% 4.2% 3.2% 2.3%

Bottom 5 Performing Segments: SEGMENT Luxury Car High-End Luxury Car Luxury Mid-Size SUV/Crossover Luxury Full-Size SUV/Crossover Entry-Level Luxury Car MY 2014-2016, Kelley Blue Book? Auction Value

First Quarter 2017 Change (%) -5.9% -4.8% -4.7% -4.5% -4.3%

Top 5 Performing Brands SEGMENT Chrysler Scion Ram Toyota Dodge MY 2014-2016, Kelley Blue Book? Auction Value

First Quarter 2017 Change (%) 1.8% 1.7% 1.2% 1.1% 0.9%

Bottom 5 Performing Brands: SEGMENT BMW smart Lincoln Mercedes-Benz FIAT MY 2014-2016, Kelley Blue Book? Auction Value

First Quarter 2017 Change (%) -11.9% -6.4% -5.0% -4.7% -4.0%

5 BLUE BOOK MARKET REPORT FIRST QUARTER 2017

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