Automotive Retail Executive-Lender-SummitD

[Pages:31]Automotive Retail Trends

Raj Sundaram

Co-President | Dealertrack Technologies

Copyright ? 2015 Dealertrack, Inc. All rights reserved.

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Key Trends Impacting Auto Retailers

Shopping Process

Shopping Process Internet and mobility has transformed shopping. Shoppers demand transparency, speed, no hassle. "Pride of ownership" replaced by ease/utility/experience.

Macro Factors

Macro-factors predict strong demand, most retailers expect more opportunity in used cars and limited growth in new vehicle sales. Credit availability strong across all tiers, but interest rate increases and delinquencies may dampen growth rates. Pricing pressure will increase as used supply increases and OEM capacity comes online.

Regulations

Franchise laws will continue to be the norm. Lending regulation (CFPB) and compliance requirements will increase, pressuring F&I gross.

Dealership Structure

Continued consolidation into National and Regional super groups. Increasing trend to centralize operations and drive scale.

Connected Car

Internet connectivity to console will usher game changing applications and opportunities to engage consumer post sale.

Copyright ? 2015 Dealertrack, Inc. All rights reserved.

2

U.S. Light Vehicle Sales and Forecast

20

19

12 Month Moving Average

18 17

17.3 17.1 16.8 16.6 16.9 16.9 16.5

16.1

16

17.5 17 16.4

15.5

15

14.4

14 13.2

13

12.7

12

11.6

11

10.4

10

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E

Source: Deutsche Bank, Wards Inc.

?2015 Dealertrack, Inc.

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Dealer Optimism Index vs. Vehicle Sales

Pragmatism settles in... but optimism holds.

Copyright ? 2015 Dealertrack, Inc. All rights reserved.

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New cars become used cars...

?2015 Dealertrack, Inc.

Source: ALG Used Supply study, Q1 2015 5

US Distribution of Vehicles in Operation

46% of used cars are 11 years old, or older.

?2015 Dealertrack, Inc.

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Franchise Dealer Count Begins to Rebound

Franchised Dealer Count (in thousands)

22.8

22.7

22.3

21.7

21.5

20.0

17.5

17.9

1993 1996

?2015 Dealertrack, Inc. Source: NADA

1999

2002 2005

7

2008

2011

2014

Opportunities Remain Plentiful

In 2015-16, leading dealers and dealer groups will... Embrace digital more fully ? online and in-store. Seize the continuing opportunity in used cars. Redefine the service experience to drive retention.

?2015 Dealertrack, Inc.

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