Blue Book MARKET REPORT

Blue Book

MARKET REPORT

Chintan Talati

Sr. Director, Public Relations 210.884.3675 | chintan.talati@

Joanna Pinkham

Sr. Public Relations Manager 404.568.7135 | joanna.pinkham@

SECOND QUARTER 2016

Brenna Robinson

Sr. Public Relations Manager 909.225.4643 | brenna.robinson@

Michelle Behar

Public Relations Coordinator 909.241.5441 | michelle.behar@

IN THIS ISSUE:

> Auction Values Report Steady Seasonal Decline on Decreased Volume > Fuel Prices Continue to Rise Throughout the Second Quarter of 2016 > Sports Cars Segment Continues to Outperform All Segments Year-to-Date...MORE

Auction Values Report Steady Seasonal Decline on Decreased Volume

$20,000 $19,500 $19,000 $18,500

Auction Values, 2016 YTD

CY 2014 CY 2015 CY 2016

Auction Value

$18,000

$17,500

$17,000

$16,500

$16,000

$15,500

$15,000

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

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

? Average auction values for 1- to 3-year-old vehicles fell

...THE OVERALL AVERAGE DECLINE IN AUCTION VALUES IN THE SECOND QUARTER OF 2016 HAS

3.6 percent, or $671, in the second quarter of 2016. ? Despite the uncommon decline seen in auction values in the first quarter of 2016, the 3.6 percent decline in the following quarter was less drastic than expected. Historically, the first quarter sees an uptick in vehicle values due to

MATCHED THE SAME PACE AS IT DID DURING THE seasonal trends. Rather than contributing to a steeper decline in the second quarter, vehicle values compare very

SAME PERIOD LAST YEAR.

similarly to the declines in previous years (down -3.6 percent in the second quarter of 2015 and down -2.5 percent in 2014). ? The average used-car value at the end of the second

SEAN FOYIL, KELLEY BLUE BOOK ANALYST

quarter finished just 1.5 percent, or $272, lower than it did

this time last year.

? Year-to-date, the average auction value for 1- to 3-year-

old used cars has declined by 4.9 percent, or roughly $900, compared to 1.8 percent, or $327, in 2015. It is worthwhile to note that the

average 1- to 3-year-old vehicle costs about $300 more in 2016 than it did in 2015.

? Kelley Blue Book Field Analysts have reported that auction volume across the country has started to slow since reaching record

levels in the first quarter of 2016, due to a high level of lease returns. This slowing of auction volume may help stabilize values and

prevent market oversaturation.

? Despite auction volume in the second quarter of 2016 declining since its peak in the first quarter, auction volume still remains higher

than we've seen in previous years. However, we have not seen a faster-than-usual decline in values in the second quarter, contrary

to expectations. In fact, the overall average decline in auction values in the second quarter of 2016 has matched the same pace as

it did during the same period last year. This could indicate that manufacturers and rental companies are choosing to hold on to

inventory, rather than oversaturate the market and risk a drop in vehicle values.

Fuel Prices Continue to Rise Throughout the Second Quarter of 2016

Fuel Prices

$4.00 $3.75 $3.50 $3.25 $3.00 $2.75 $2.50 $2.25 $2.00 $1.75 $1.50

Jan

Fuel Prices

Regular All Formulations Retail Gasoline

CY 2014 CY 2015 CY 2016

$2.30

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: U.S. Energy Information Administration

? Fuel prices continued along their upward trajectory in the second quarter of 2016 with the average price per gallon increasing by 13 percent, or $0.26. Over the same time period in 2015, the average price per gallon increased similarly by 14 percent, or $0.35.

? Year-to-date, the average price per gallon of fuel is up 15 percent, or $0.30. ? Year-over-year, the average price per gallon of fuel is down 17 percent, or $0.47. ? As expected, fuel prices continued to increase throughout the second quarter of 2016 at a very similar pace that we saw over the same

time period in 2015. Historical trends suggest that yearly fuel prices typically peak around the July to August time frame, indicating that we will begin to see fuel prices change course and begin a downward trajectory throughout the third quarter of 2016. The U.S. Energy Information Administration (EIA) projects fuel prices to fall to $2.12, a decline of $0.21, in September.

Sports Cars Segment Continues to Outperform All Segments Year-to-Date

YTD Change by Segment

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

Full-size Car Luxury Sports Car

Minivan Full-Size SUV/Crossover

Compact Car Full-size Pickup Truck Compact SUV/Crossover Mid-size SUV/Crossover

Average Hybrid/Alternative Energy Car

Subcompact SUV/Crossover High-end Luxury Car

Entry-level Luxury Car Mid-size Car

Luxury Compact SUV/Crossover Van

Luxury Mid-size SUV/Crossover Subcompact Car

Luxury Full-size SUV/Crossover Luxury Car

Electric Vehicle

-15.6%

-0.1% -0.5% -0.7% -1.9% -2.4% -2.6% -4.0% -4.0% -4.2% -4.4% -4.5% -4.9% -5.1% -5.5% -5.6% -5.7% -6.7% -6.8% -6.9% -7.6% -7.7% -8.6% -8.7%

1.5%

-18%

-13%

-8%

-3%

2%

7%

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

MINI Alfa Romeo

Dodge Chrysler Porsche Volkswagen

Jeep Lincoln Chevrolet

Scion Audi Toyota Honda Mazda GMC Subaru Average Ford Nissan Mitsubishi Buick Cadillac Ram Acura Jaguar Infiniti

Kia Lexus Volvo Hyundai Land Rover Mercedes-Benz BMW smart FIAT

-10.6% -10.8% -11.0%

-0.12

-0.1

YTD Change by Manufacturer

-2.3% -2.3% -2.6% -2.9% -3.2% -3.4% -3.7% -4.2% -4.2% -4.5% -4.6% -5.0% -5.0% -5.2% -5.2% -5.3% -5.5% -5.7% -5.8% -6.0% -6.2% -6.3% -6.7% -6.8% -6.9% -7.1% -7.5% -7.9% -8.2%

-0.8%

0.2% 0.0%

-0.08

-0.06

-0.04

-0.02

0

0.02

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

2 BLUE BOOK MARKET REPORT SECOND QUARTER 2016

? The average auction value for 1- to 3-year-old vehicles has declined 4.9 percent from a year-to-date perspective.

? The sports car segment is the only segment to have increased in value year-to-date, having increased 1.5 percent. The top performers in this segment include: the Nissan 370Z (up +3.5 percent), Ford Mustang (up +3.3 percent), Dodge Challenger (up +3.2 percent), Mazda MX-5 Miata (up +2.9 percent) and the Subaru BRZ (up +1.4 percent).

LOWER FUEL PRICES AND INFERIOR DEMAND CONTINUE TO SUPPRESS THE ELECTRIC VEHICLE SEGMENT, WHICH HAS TUMBLED A STAGGERING 15.6 PERCENT ON AVERAGE SINCE THE START OF THE YEAR. VEHICLES SUCH AS THE BMW I8 AND THE MERCEDES-BENZ B-CLASS HAVE DECLINED THE MOST YEAR-TO-DATE AT 37 PERCENT

AND 33 PERCENT RESPECTIVELY.

SEAN FOYIL, KELLEY BLUE BOOK ANALYST

Mid-Size Pickup Trucks Lead the 2015 Model-Year Vehicle Retention by Segment

Retained Value, MY 2015

Y-o-Y Point Change, Retained Value

Mid-size Pickup Truck High Performance Car

Luxury Sports Car Luxury High Performance Car Luxury Full-size SUV/Crossover Luxury Compact SUV/Crossover Luxury Mid-size SUV/Crossover

Full-Size SUV/Crossover Sports Car

Mid-size SUV/Crossover Compact SUV/Crossover

High-end Luxury Car Average

Subcompact SUV/Crossover Minivan

Full-size Pickup Truck Entry-level Luxury Car

Van Luxury Car Compact Car Full-size Car Mid-size Car Hybrid/Alternative Energy Car Subcompact Car Electric Vehicle

0%

87% 82% 79% 79% 77% 75% 75% 75% 73% 72% 70% 69% 68% 67% 66% 65% 64% 62% 62% 60% 60% 58% 57% 56% 49%

20%

40%

60%

80%

100%

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

Mid-size Pickup Truck High Performance Car Luxury High Performance Car Luxury Full-size SUV/Crossover

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

Full-Size SUV/Crossover Mid-size SUV/Crossover

Sports Car High-end Luxury Car Compact SUV/Crossover Subcompact SUV/Crossover Full-size Pickup Truck

Minivan Entry-level Luxury Car

Luxury Car Van

Compact Car Mid-size Car Full-size Car Subcompact Car Hybrid/Alternative Energy Car Electric Vehicle

-0.15

-1% -11%

-9% -3%

-6% -6%

-4% 7%

-2% -1%

-5% -6%

-1% -6%

1% -6% -7% -8% -6% -8%

2% -5%

-4% 2%

-0.1

-0.05

0

0.05

0.1

Source: Kelley Blue Book Automotive Insights, Model-Year 2015 vs 2014

? For 2015 model-year vehicles, the mid-size pickup truck segment continues to outperform all segments with an average value retention rate of 87 percent. Leading this segment are the Toyota Tacoma and Chevrolet Colorado at 97 percent and 82 percent retention respectively.

? Aside from the subcompact SUV/crossover segment, all SUV and crossover segments are largely outperforming the segment average retention rate of 68 percent for 1-year-old vehicles.

? Top Performing SUV/Crossover by Segment: ? Compact SUV/Crossover: Jeep Wrangler, 96.9 percent ? Mid-size SUV/Crossover: Toyota Highlander, 83.5 percent ? Full-size SUV/Crossover: Chevrolet Suburban, 77.5 percent ? Subcompact SUV/Crossover: MINI Countryman, 70.8 percent

? From a year-over-year perspective, the only segments that have increased their retained value include the full-size SUV/crossover (up +7 percent), minivan (up +1 percent), full-size car (up +2 percent) and electric vehicle (up +2 percent) segments.

Appendix

Retained Value (Auction Value/MSRP)

Retained Value, 2016 YTD

70%

CY 2014

65%

CY 2015

CY 2016

60%

55%

50%

45%

40%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

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

3 BLUE BOOK MARKET REPORT SECOND QUARTER 2016

Appendix, Continued

Subaru Jeep MINI

Honda Toyota

GMC Scion Chevrolet Mazda Dodge Nissan Ford Ram

Kia Volkswagen

Hyundai Chrysler Mitsubishi

FIAT

0

Retained Value, MY 2015

Non-Luxury Brands

78% 73% 72% 71% 69% 69% 68% 65% 64% 63% 62% 62% 60% 59% 59% 59% 55% 53% 48%

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

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

Y-o-Y Point Change, Retained Value

Non-Luxury Brands

Subaru

-2%

Jeep

-6%

MINI

0%

Honda

-2%

Toyota

-4%

GMC

-2%

Scion

-7%

Chevrolet

-5%

Mazda

-6%

Dodge

-1%

Nissan

-2%

Ford

-4%

Ram

-5%

Kia

-8%

Volkswagen

-1%

Hyundai -8%

Chrysler

-3%

Mitsubishi

-8%

FIAT -8%

-0.09

-0.08

-0.07

-0.06 -0.05 -0.04 -0.03 -0.02 -0.01

0

0.01

Source: Kelley Blue Book Automotive Insights, Model-Year 2015 vs 2014

Porsche Land Rover

Lexus Acura Mercedes-Benz

Audi Infiniti BMW Jaguar Lincoln Cadillac Buick Volvo

0

Retained Value, MY 2015

Luxury Brands

86%

83%

76%

73%

72%

70%

69%

67%

67%

65%

64%

61%

58%

0.2

0.4

0.6

0.8

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

Y-o-Y Point Change, Retained Value

Luxury Brands

Porsche

-4%

Land Rover

-6%

Lexus

-5%

Acura

-6%

Mercedes-Benz

-6%

Audi

-8%

Infiniti

-5%

BMW

-5%

Jaguar

-9%

Lincoln

-1%

Cadillac

-1%

Buick

-5%

Volvo

-11%

-0.12

-0.1

-0.08

-0.06

-0.04

-0.02

0

Source: Kelley Blue Book Automotive Insights, Model-Year 2015 vs 2014

Top 5 Performing Segments: SEGMENT Hybrid/Alternative Energy Car Luxury Sports Car Mid-size Pickup Truck Sports Car Luxury High Performance Car MY 2013-2015, Kelley Blue Book? Auction Value

Q2 Change (%) -0.2% -0.8% -0.9% -1.0% -1.0%

4 BLUE BOOK MARKET REPORT SECOND QUARTER 2016

Appendix, Continued

Bottom 5 Performing Segments: SEGMENT Electric Vehicle Mid-size Car Subcompact Car Luxury Full-size SUV/Crossover Luxury Car MY 2013-2015, Kelley Blue Book? Auction Value

Q2 Change (%) -8.8% -7.7% -7.2% -6.2% -5.4%

Top 5 Performing Brands SEGMENT MINI Alfa Romeo Jeep Audi Dodge MY 2013-2015, Kelley Blue Book? Auction Value

Q2 Change (%) 2.2% 0.0% -0.6% -1.4% -1.4%

Bottom 5 Performing Segments: SEGMENT Electric Vehicle Mid-size Car Subcompact Car Luxury Full-size SUV/Crossover Luxury Car MY 2013-2015, Kelley Blue Book? Auction Value

Q2 Change (%) -8.8% -7.7% -7.2% -6.2% -5.4%

Top 10 Performing Models: MAKE Porsche Volkswagen Jeep Mazda Subaru Infiniti Nissan Chevrolet Mercedes-Benz Nissan MY 2013-2015, Kelley Blue Book? Auction Value

MODEL 911 Touareg Wrangler MX-5 Miata BRZ Q60 Xterra SS CLA-Class GT-R

Q2 Change (%) 6.7% 5.6% 5.3% 4.6% 3.9% 3.4% 3.4% 3.0% 2.7% 2.5%

5 BLUE BOOK MARKET REPORT SECOND QUARTER 2016

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