Key Trends of 2019 Q2 Update...New Vehicle Sales by Category CAR PICKUP SUV VAN 7% 47% 24% 16% 6% 2%...
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Jonathan Smoke | Chief Economist, Cox Automotive KEY TRENDS OF 2019 Q2 Update
Transcript of Key Trends of 2019 Q2 Update...New Vehicle Sales by Category CAR PICKUP SUV VAN 7% 47% 24% 16% 6% 2%...
Jonathan Smoke | Chief Economist, Cox Automotive
KEY TRENDS OF 2019Q2 Update
ECONOMIC GROWTH SLOWS AS HEADWINDS MOUNT
Source: United States Bureau of Economic Analysis
Real GDP growth will slow to no more than 2.4% in 2019 while risk of recession grows
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US ECONOMIC GROWTH SINCE WORLD WAR II
2.9
2.4
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
1948
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2018
2019
F
Annu
al %
Cha
nge
Recession Real GDP Growth (Annual)
Source: IRS 3
Total refunds in 2019 are down $7.5 billion or 2.7% and the average refund is down 1.7%
SLOWER AND LOWER TAX REFUNDS
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Billio
ns
Week of Tax Season Through May 10
Amount of Refunds (Cumulative)2014 2015 2016 2017 2018 2019
Source: Bankrate.com, US Federal Reserve, Bloomberg
“BEST AVAILABLE” AUTO RATES HAVE NOT DECLINED
4
Since October, auto rates are higher by 11 basis points even though Treasury yields have declined by 114BPs
0
1
2
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9
Jan-0
4Ju
l-04
Jan-0
5Ju
l-05
Jan-0
6Ju
l-06
Jan-0
7Ju
l-07
Jan-0
8Ju
l-08
Jan-0
9Ju
l-09
Jan-1
0Ju
l-10
Jan-1
1Ju
l-11
Jan-1
2Ju
l-12
Jan-1
3Ju
l-13
Jan-1
4Ju
l-14
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5Ju
l-15
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6Ju
l-16
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7Ju
l-17
Jan-1
8Ju
l-18
Jan-1
9
%
Interest RatesNew Auto 60 Mo New Auto 48 Mo Used Auto 36 Mo US 10 Year Treasury Fed Discount Rate
Source: Equifax
SUBPRIME AUTO LOANS HAVE RISING DELINQUENCY RATE
5
Subprime delinquency rate ticked back up in May and remains higher y/y and highest rate for May since 2010
AUTO LOAN SEVERE DELINQUENCIES UNIT RATE
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
2010
01
2010
03
2010
05
2010
07
2010
09
2010
11
2011
01
2011
03
2011
05
2011
07
2011
09
2011
11
2012
01
2012
03
2012
05
2012
07
2012
09
2012
11
2013
01
2013
03
2013
05
2013
07
2013
09
2013
11
2014
01
2014
03
2014
05
2014
07
2014
09
2014
11
2015
01
2015
03
2015
05
2015
07
2015
09
2015
11
2016
01
2016
03
2016
05
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07
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09
2016
11
2017
01
2017
03
2017
05
2017
07
2017
09
2017
11
2018
01
2018
03
2018
05
2018
07
2018
09
2018
11
2019
01
2019
03
2019
05
All 60+ Unit Rate Subprime 60+ Unit Rate 12 per. Mov. Avg. (All 60+ Unit Rate) 12 per. Mov. Avg. (Subprime 60+ Unit Rate)
Source: Autodata, Kelley Blue Book
DECLINE OF CARS SLOWS, BUT AFFORDABILITY WORSENS
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The SUV has not gained share so far in 2019 as car share decline slowed
30%
17%
48%
5%0%
10%
20%
30%
40%
50%
60%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
New Vehicle Sales by CategoryCAR PICKUP SUV VAN
7%
47%
24%
16%
6%
2%
30%
24%
20%
25%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
< $20,000 $20,000-29,999
$30,000-39,999
$40,000-49,999
$50,000+
Distribution of MSRP by Year2012 2013 2014 2015 2016 2017 2018 2019
Source: Cox Automotive, June 2019
NEW VEHICLE SALES RESUME MODERATE DECLINE TREND
7
17.2
8
9
10
11
12
13
14
15
16
17
18
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2020
COX AUTOMOTIVEFULL-YEAR FORECASTS
2018
17.22019
16.82020*
16.5
LIGHT VEHICLE SALES OUTLOOK (MILLIONS)
2019 YTD
16.9
COX AUTOMOTIVENEW RETAIL FORECASTS
2018
14.22019
13.62020*
13.3
39.4
25
28
31
34
37
40
43
46
2000
2002
2004
2006
2008
2010
2012
2014
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2020
Source: Cox Automotive, June 2019
USED VEHICLE SALES DECLINE MARGINALLY IN TOTAL BUT RETAIL GROWS
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COX AUTOMOTIVEFULL-YEAR FORECASTS
2018
39.42019
39.22020*
39.0
USED VEHICLE SALES OUTLOOK (MILLIONS)
YTD 2019
39.3
COX AUTOMOTIVEUSED RETAIL FORECASTS
2018
19.52019
19.82020*
20.0
Source: Manheim 9
Much higher than normal depreciation for start of year, then strong spring bounce, and now low appreciation
2019 WEEKLY PRICE TREND NOW LOOKING LIKE LAST TWO YEARS
80.0%
85.0%
90.0%
95.0%
100.0%
105.0%
110.0%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52
3-Year-Old Model MMR Index by Week2014 2015 2016 2017 2018 2019
MID-SIZE CARS AND PICKUPS OUTPERFORMING OTHER SEGMENTS
Source: Manheim 10
PERCENT CHANGE IN MANHEIM INDEX YEAR-OVER-YEAR JUNE 2019
4.1%
0.4%
4.8%
4.1%
5.3%
2.5%
1.2%
0%
1%
2%
3%
4%
5%
6%
Industry Compact cars Midsize cars Luxury cars Pickups SUV/CUV Vans
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TARIFF ACTIONS & KEY DATES
Ratification of USMCA (ITC Report Delivered)
Immigration Related Tariffs on Mexico
Section 232 Tariff on Imported Autos and Parts(Action on EU and Japan Postponed to Nov. 18)
China Trade Deal (March 1; TBD)
EU Trade Deal
Japan Trade Deal
UK Trade Deal Post Brexit?
