THE SUV SEGMENT OUTLOOK STUDY FEBRUARY 2019 Has the SUV Market Peaked? The SUV Market Does Not Appear to Be Peaking in the Short Term….However, There are Signs of Saturation
SUV Sales have grown 16% in the last 2 years. Are there indications of SUVs peaking? 6.5+ million units were sold in 2018 Sales - 6.5+ million units and forecasted to grow
Consideration - highest
4x as many SUVs from 30 years ago Are there indications of SUV Saturation? Days supply increasing
Average ATP increasing
Increased competition from used market
More SUV launches
Source: OEM Press Release Sales Data Utility Sales Overtook Car Sales in 2016 and is Now the Most Popular Segment
Car SUV Truck Van 60%
50%
40%
30%
20%
10%
0% 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: OEM Press Release Data. Sales for all segments (non-lux) SUV Segment Shares Forecasted to Grow
Segment 2015 2025
COMPACT SUV 20% 29%
MID-SIZE SUV 16% 18%
COMPACT CAR 16% 13%
MID-SIZE CAR 20% 13%
MID-SIZE TRUCK 3% 4%
FULL-SIZE TRUCK 12% 14%
Source: IHS Markit, U.S. Automotive Sales Forecast April 2018 Consideration for SUVs Has Been Trending Upwards
SEGMENT CONSIDERATION TRENDED SUV CONSIDERATION Non-luxury Utility Vehicles Luxury Utility Vehicles Non-Luxury 70% Utility Vehicle 56%
Non-Luxury 65% Sedan 40%
Luxury Utility 60% Vehicle 21%
Luxury Sedan 18% 55%
Pickup 17% 50% Non-Luxury Coupe 9% 45% Minivan 6% 40% Luxury Coupe 4% 2013 2014 2015 2016 2017 2018
Source: KBB.com Brand Watch Please select at most 5 vehicles that you are currently shopping. The Number of SUV Offerings Has Dramatically Increased in the Past 30 Years
NEW SUBCOMPACT SUV SEGMENT CREATED Model Count # OF VEHICLES 250 SEGMENT 1990 1998 2008 2018
Subcompact SUV 13 200
Compact SUV 10 10 20 18 150 Mid-size SUV 5 15 28 23 100 Fullsize SUV 7 6 11 8 of # Vehicles
Luxury Compact SUV 4 26 50 Luxury Mid-size SUV 3 16 23 0 Luxury Fullsize SUV 2 5 13 11 1990 1998 2008 2018 CARS 168 141 186 202 Grand Total 24 39 92 122 SUVS 24 39 92 122
Consumers now have more SUV choices than they ever had before, There are now 4 times as many SUVs as there were 30 years ago. especially in the smaller sizes that consumer really want. Even though there are more cars today, the segment has only grown by 20% since 1990. Data includes both luxury and nonluxury vehicles.
Source: KBB.com Buildout Table Growth May Be at Risk with the Current Days Supply for SUVs…
New Vehicle SAAR Days Supply - Industry Days Supply - Cars Days Supply - Light Trucks 105 20.0
18.0 95
16.0 85 14.0
75 12.0
65 10.0 Days Supply Days
8.0 (millions) SAAR 55
6.0 45 4.0
35 2.0
25 0.0
Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18
Jan-12 Jan-10 Jan-11 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19
Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18
Apr-12 Apr-10 Apr-11 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18
Source: Autodata Days’ Supply, United States Bureau of Economic Analysis New Lt. Vehicle SAAR 8 8 Average Transaction Price Continues To Rise
YoY ATP INCREASE/DECREASE
$47,400
SEGMENT % CHG
Full-size Pickup Truck +19%
$39,805 Midsize-SUV/ $38,187 Crossover +14% Compact SUV/ Crossover +10% $33,376 Mid-size Car +5%
$28,920 Subcompact SUV/ $26,342 Crossover -3% $26,042 $25,491 $24,716 $24,698 Compact Car +3%
$20,175 $20,825
2012 2013 2014 2015 2016 2017 2018
Source: Dealer Retail Transaction Data With Increased Days Supply and Rising Interest Rates, Affordability is Affected and May Impact SUV Sales
Interest Rates
New Auto 60 Mo New Auto 48 Mo Used Auto 36 Mo US 10 Year Treasury Fed Discount Rate 9
8
7
6
5 % 4
3
2
1
0
Source: Federal Reserve, Bankrate.com, Bloomberg SUVs Continues Its Rise…But Will Face More Nearly-New Competition
SHARE OF NEW LIGHT VEHICLE SALES OFF-LEASE MATURITIES SEGMENT SHARE
CUV Car Van SUV Pickup Car CUV SUV Pickup Van 60% 60% 50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
2016 2017 2018 2019 2020
Jul-15 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-16 Jul-17 Jul-18
Jan-12 Jan-09 Jan-10 Jan-11 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18
Source: Motor Intelligence/Autodata new sales by segment, IHS Market registrations, Cox Automotive analysis 1111 A Surplus of SUVs May Increase Incentive Spend
Subcompact SUV/Crossover Compact SUV/Crossover Cars Industry SUVs Industry Mid-size SUV/Crossover Full-Size SUV/Crossover 18% 18%
16% 16% Small SUVs have higher incentives 14% 14%
12% 12%
10% 10% SUV incentives 8% are on the rise 8%
6% 6% Incentive Incentive Spend as of ATP % Incentives Spendas % ofATP 4% 4%
2% 2%
0% 0%
6/1/2018 1/1/2017 2/1/2017 3/1/2017 4/1/2017 5/1/2017 6/1/2017 7/1/2017 8/1/2017 9/1/2017 1/1/2018 2/1/2018 3/1/2018 4/1/2018 5/1/2018 7/1/2018 8/1/2018 9/1/2018
11/1/2017 10/1/2017 12/1/2017 10/1/2018
1/1/2017 2/1/2017 3/1/2017 4/1/2017 5/1/2017 6/1/2017 7/1/2017 8/1/2017 9/1/2017 1/1/2018 2/1/2018 3/1/2018 4/1/2018 5/1/2018 6/1/2018 7/1/2018 8/1/2018 9/1/2018
10/1/2017 11/1/2017 12/1/2017 10/1/2018
Source: Dealer Retail Transaction data (ATP), Motor Intelligence (Incentives) And More are Expected to Hit the Market…Which Can Potentially Saturate the Market
NEW MODEL LAUNCHES 43% of new vehicles 80 in 2019-2022 are projected to be SUVs 70
60
50
40
30
20
10 Number of New Models LaunchesModelsofNewNumber
0
2005 2018 1999 2000 2001 2002 2003 2004 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2019 2020 2021 2022
Bank of America Merrill Lynch Car Wars 2019-2022 Why Are Shoppers Choosing SUVs? People Are Trading In Their Cars For More Space and Ingress/Egress
WHY ARE YOU TRADING IN YOUR CURRENT VEHICLE FOR AN SUV?
Compact SUV Midsize SUV
55% 56%
46% 42% 42% 38% 38% 33% 30% 30% 24% 24% 23% 21% 19% 15% 13% 10% 9% 11% 5% 4%
More Ease of getting Increased High vantage Safety Many new Comparable More rugged Flexible seating Competitively Gas prices have utility/cargo in and out of interior space point (e.g. can advantages appealing SUV MPG/fuel configuration priced been low capacity the vehicle see over other models on the economy traffic) market
Source: KBB.com Compact SUV Survey and Mid-Size SUV Survey, 2018 Q: Why are you trading in your current vehicle for an SUV? (Compact SUV N=344) Q: Why are you trading in your current vehicle for an SUV? (Midsize SUV N=142) Utility and Safety Features are Important to SUV Shoppers
56% TOP 10 MUST HAVE FEATURES 51% 51% 50% Compact SUV Midsize SUV
37% 36%
28% 26% 24% 22% 22% 22% 19% 19% 19% 19% 17% 16% 16% 14%
AWD or 4WD Backup camera Bluetooth Heated/cooled Blind spot Automatic Electronic Collision Collision Leather seats seats monitors headlights stability control avoidance warning alert system system
Compared to Non-Lux 19% 35% 37% 19% 18% 21% 16% 13% 12% 15% Car Norms
Source: KBB.com Compact SUV Survey and Mid-Size SUV Survey, 2018 Please select up to 5 features that your next Compact/Midsize SUV must have in order for you to purchase it N=1320, N=835 Reliability/Safety, Affordability, and Reputation are Essential to SUV Shoppers
Top 10 Most Important Factors When Considering Compact SUV & Mid Size SUV
Reliability Fuel Economy
Best value for my budget Driving performance
Safety ratings Reviews/ratings/awards
Good experience with past Driving comfort model Good experience with Maintenance costs vehicle's brand
Source: Compact SUV Survey and Mid-Size SUV Survey, 2018 Q: Which of the following factors is the MOST important to you when considering a compact/midsize SUV? (N=1320; N=835) SUV Shoppers Are Replacing an SUV or Adding an SUV to the Household Fleet
TRADE IN VEHICLE FOR THE NEXT SUV PURCHASE
Compact SUV Mid-size SUV 48% 41%
28% 29%
19% 13%
4% 5% 2% 3% 3% 2% 3% 1%
SUV/CUV Sedan Truck Coupe Van/Minivan Hatchback/Wagon NA, I'm not trading in a vehicle
Source: Compact SUV Survey and Mid-Size SUV Survey, 2018 Q: Regarding your next SUV purchase, what type of vehicle are you trading in for it? (Select all that apply.) (N=835) Q: Regarding your next SUV purchase, what type of vehicle are you trading in for it? (Select all that apply.) (N=1320) Compact SUV Owners are Looking to Upgrade as 32% are Looking to Defect to a Mid-Size SUV Based on KBB.com Traffic
CROSS SHOPPING DEFECTION
Mid-Size SUV 15% Mid-Size SUV 32.0%
Subcompact SUV 13% Compact Car 10.5%
10.2% Compact Car 12% COMPACT Subcompact SUV SUV Lux Compact SUV 9% Full-Size Pickup 9.3%
Mid-Size Car 7% Mid-Size Car 9.0%
Source: KBB.com Traffic, Q2 2018 Read as: Compact SUV shoppers are cross shopping Mid-Size SUVs at the rate of 15% and Compact SUV is defecting to Mid-Size SUV at the rate of 32% Mid-Size SUV Owners are Defecting to a Smaller SUV or a Full-Size Truck Based on KBB.com Traffic
CROSS SHOPPING DEFECTION
Compact SUV 20% Compact SUV 27.1%
Lux Compact SUV 9% Full-Size Pickup 12.4%
9.3% Lux Mid-Size SUV 8% MID-SIZE Lux Mid-Size SUV SUV Subcompact SUV 8% Mid-Size Car 8.9%
Compact Car 6% Lux Compact SUV 8.4%
Source: KBB.com Traffic, Q2 2018 Read as: Mid-Size SUV shoppers are cross shopping Compact SUVs at the rate of 20% and Mid-size SUV is defecting to Compact SUV at the rate of 27.1% Who’s Buying SUVs? Women Skew More Towards Compact SUV, Whereas Men Are Looking for More Ruggedness and Buying Mid-Size SUVs
COMPACT MID-SIZE SUV SUV
46% 54% 57% 43%
Source: IHS/Markit – New Retail Vehicle Registrations. Jan 2017 – March 2018 SUV Owners – Income
SUV INCOME (Vehicle Registrations)
Compact SUV Mid-size SUV Industry 31% 30% 30% 29% 27% 27% 27% 26% People making less money are drawn to the more affordable 20% Compact SUV segment
15% 13% 10%
6% 6% As income increases, Midsize 3% SUV ownership increases (higher than industry average)
$0 - $19,999 $20,000 - $39,999 $40,000 - $74,999 $75,000 - $124,999 $125,000 +
Source: IHS/Markit – New Retail Vehicle Registrations. Jan 2017 – March 2018 Majority of Mid-size SUV Buyers are Gen X; Compact SUV are Baby Boomers
AGE GROUP (Vehicle Registration)
COMPACT SUV/CUV MIDSIZE SUV/CUV
48% 45%
37% 35%
12% 10% 9% 5%
18-34 35-54 55-74 75+
Source: IHS/Markit – New Retail Vehicle Registrations. Jan 2017 – March 2018 Whites are Over-Indexing in SUV Ownership
ETHNICITY BREAKOUT AND PURCHASE PERCENT
Compact SUV Mid-Size SUV Industry
72% 74%
61%
18% 13% 14% 13% 8% 7% 7% 6% 6%
White Hispanic African American Asian
Source: IHS/Markit – New Retail Vehicle Registrations. Jan 2017 – March 2018 Psychographics – Fence Sitters are More Similar to Car Considerers
More likely to be ABOVE Average
Domestic Family Financially Image CONSIDERERS Partisan Eco-Conscious Oriented Responsible Conscious Outdoorsy Self-Confident Techie Thrill Seeker
+10% +15% +11% +14% Cars Only
+10% +9% Fence Sitter
+22% +14% SUVs Only
Source: Kelley Blue Book, Consumer Sentiment Survey (Jan-Jun, 2018) N = 7167 Which OEMs Are Succeeding or Are Challenged in Leveraging the Shift to SUVs in the Marketplace? SUVs Have Disproportionally Helped Grow These Successful Brands
SALES % CHANGE (2008 vs 2018)
Overall Sales Change Car Change SUV Change
+262% +29% +640%
+132% +109% +196% Explosive SUV +70% +24% +203% growth contributed to the overall brand sales +62% -7% +968%
+59% +9% +173%
Source: OEM Press release sales data Despite SUV Growth, Cars Have Diminished Impact in Overall Brand Success
SALES % CHANGE (2008 vs 2018)
Overall Sales Change Car Change SUV Change
+27% -15% +77% Despite growth in +25% -63% +366% SUVs, decline in car sales hindered +25% -41% +207% overall brand growth +17% -13% +92%
+17% -27% +158%
+11% -39% +147%
Source: OEM Press release sales data Negative Growth in Car Sales and Modest SUV Gains
SALES % CHANGE (2008 vs 2018)
Overall Sales Change Car Change SUV Change
-18% -45% +53%
Source: OEM Press release sales data What Are OEMs Doing to Offset Spikes in Gas Prices? Fuel Economy Has Vastly Improved Among All Segments; SUV Made the Biggest MPG Change Over The Past 11 Years
MPG BY SEGMENT + 25% 29.9 29.4 29.6 28.9 29.1 28.5 Cars 27.7
26.5 25.8 25.3 24.8 + 32% 24.0 23.7 23.4 22.9 23.1 SUVs 22.3 21.9
Average MPG Average 21.2 20.8 20.4 19.6 + 17% 18.6 18.4 18.5 17.9 18.0 18.1 17.2 Trucks 16.5 16.7 16.2 16.3 16.5 15.8 16.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: FuelEconomy.gov and KBB Automotive Insights As MPG Improves for SUVs, There is Less Volatility in Light Truck Sales When Gas Prices Spike
Oil and Unleaded Gas Prices Truck Share and Monthly Fuel Premium on New Models WTI Cushing Spot Price AveAvg Gas Gas Price Price UnleadedUnleaded 70% $60.00
$160.00 $4.50 $52.52 $52.03 $49.57 68% $48.36 $140.00 $4.00 65% $45.16 $50.00 $45.61 65% $3.50 $38.36 $120.00 60% $34.68 $40.00 $3.00 61% 57% $100.00 $31.75 $2.50 $80.00 55% $27.82 $30.00 $25.58 $2.00 $29.43
$60.00 53% 53% $1.50 52% 50% 51% 51% $20.00 $40.00 50% $1.00 49% 48%
$20.00 $0.50 45% $10.00
$- $-
40% $-
Jul-08 Jul-15
Jan-05 Jan-12 Jan-19
Jun-11 Jun-18
Oct-06 Oct-13
Apr-10 Apr-17
Sep-09 Sep-16 Feb-09 Feb-16
Dec-07 Dec-14
Aug-05 Aug-12
Nov-10 Nov-17
Mar-06 Mar-13 May-14 May-07 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Bloomberg, AAA, Kelley Blue Book, Cox Automotive 33 In Continuing to Improve MPG in SUVs, OEMs are Launching Alternative Fuel SUVs in the Coming Years in Addition to New Brands Entering the Market
Electric Vehicle Plug-in Hybrid Fuel Cell
2019 2020 2021 2022 2023+
e-Tron GLC CUV CUV X4 Kona XC40 iNext HR-V CUV Niro CUV X3 CUV Mid-Lux CUV EQC M Byte CUV Cherokee Near-Lux CUV Escape Bolt SUV Model Y CUV CUV Corsair Imx CUV CUV NX Levante ID Crozz SUV Forester Macan Cherokee CUV Equinox Polestar 3 CUV Crosstrek GLB Terrain Expedition GV70 CUV Cherokee 300 NX G. Cherokee Regal Tour X Q4 Sorento RX Escape Energi CUV Rogue Pilot GV80 Wrangler Murano Aviator 4-Runner Forester C-HR XC40
Source: Automotive News Future Pipeline, OEM websites Key Takeaways
• The market shift from cars to SUVs continues, as 2018 was a stellar year for new SUV sales, closing out at 6.5+ million units. However, there are signs of SUV saturation with days supply and average ATP climbing up and more new product launches. Dealers and OEMs have the challenging task of balancing inventory and incentives to sustain sales.
• To effectively message to SUV shoppers, highlight must-have features that appeal most to them: AWD or 4WD, Backup Camera, Bluetooth, and Heated/Cooled Seats. Also, showcase aspects that capture their attention such as Spaciousness, Ingress/Egress, Higher Vantage Point, and Safety Advantages.
• Car and SUV Considerers significantly differ in their psychographic mindset. Fence sitters (those considering both Cars and SUVs) share similar values as Car Considerers. In order to persuade Fence sitters toward SUVs, the products should be environmentally friendly and have striking styling among other factors.
• With ongoing gas price fluctuations and the prediction of $3 per gallon, OEMs have been significantly improving fuel efficiency on SUVs in the last 10+ years. In continuing the trend of more fuel efficiency and meeting CAFÉ standards, OEMs are planning to launch a slew of alternative fuel SUVs. APPENDIX SUV Shopper Profile
Median Gender Median Ethnicity COMPACT MID-SIZE Income (Male) Age 74% 70% COMPACT 65K 50% 58
MID-SIZE 6% 70K 63% 54 4% 5% 4% 3% 2% Caucasian Hispanic African-American Asian
Source: Compact SUV Survey, 2018, N=1320, Mid-Size SUV Survey, 2018, N=835 Compact SUV Dominates the Coasts and New England States, While Midsize SUV Has A Strong Presence in the Central and Southern States MID-SIZE & COMPACT SUV REGISTRATION SHARE
Compact SUV Registration
Midsize SUV Registration
Source: IHS/Markit – New Retail Vehicle Registrations March 2017 – March 2018 Top Selling Models By Brand: Subaru
2008 SUBARU SALES 2018 SUBARU SALES
Car SUV 38% 22% Car SUV 62% 78%
32% 6% 36% 20% 26% 25% 21% 6% 11% Forester Tribeca Legacy Impreza Outback Forester Crosstrek Legacy Impreza
Source: OEM Press release sales data Top Selling Models By Brand: Kia
2008 KIA SALES 2018 KIA SALES Minivan, Minivan, 3% 10%
SUV SUV 32% 23% Car Car 67% 65%
11% 12% 25% 16% 18% 14% 18% 17% 17% Sorento Sportage Spectra Optima Sorento Sportage Soul Optima Forte
Source: OEM Press release sales data Top Selling Models By Brand: Hyundai
2008 HYUNDAI SALES 2018 HYUNDAI SALES Minivan
SUV 25% SUV 46% Car Car 54% 73%
18% 5% 29% 24% 13% 21% 14% 30% 16% Santa Fe X Tucson Sonata Elantra Accent Tucson Santa Fe Elantra Sonata
Source: OEM Press release sales data Top Selling Models By Brand: Volkswagen
2008 VOLKSWAGEN SALES 2018 VOLKSWAGEN SALES Minivan SUV 7%
SUV Car 47% Car 53% 91%
4% 44% 13% 12% 29% 17% 26% 12% Tiguan Jetta Passat Beetle Tiguan Atlas Jetta Passat
Source: OEM Press release sales data Top Selling Models By Brand: Nissan
2008 NISSAN SALES Truck2018 NISSAN SALES Minivan 10% 2% Truck 10%
SUV Car 27% Car SUV 43% 61% 47%
9% 9% 32% 12% 31% 16% 16% Rogue Murano Altima Sentra Rogue Altima Sentra
Source: OEM Press release sales data Top Selling Models By Brand: Ford
2008 FORD SALES 2018 FORD SALES
Car Car Truck 21% Truck 34% 37% 42% SUV SUV 29% 37%
11% 7% 12% 9% 33% 13% 12% 8% 5% 42% Escape Edge Focus Fusion F-Series Escape Explorer Fusion Focus F-Series
Source: OEM Press release sales data Top Selling Models By Brand: Mitsubishi
2008 MITSUBISHI SALES 2018 MITSUBISHI SALES Truck, 3%
SUV Car 20% 23% Car SUV 77% 77%
14% 29% 16% 35% 33% 21% Outlander Lancer Eclipse Outlander Outlander Sport Mirage
Source: OEM Press release sales data Top Selling Models By Brand: MAZDA
2008 MAZDA SALES 2018 MAZDA SALES
Minivan 9% SUV Car 24% 35% Car SUV 67% 65%
10% 10% 42% 20% 50% 9% 22% 10% CX-7 CX-9 MAZDA3 MAZDA6 CX-5 CX-9 MAZDA3 MAZDA6
Source: OEM Press release sales data Top Selling Models By Brand: Honda
2008 HONDA SALES 2018 HONDA SALES Truck, 3% Minivan Minivan Truck, 2% 11% 7%
SUV Car 25% Car SUV 48% 61% 43%
15% 8% 29% 26% 26% 11% 23% 20% CR-V Pilot Accord Civic CR-V Pilot Civic Accord
Source: OEM Press release sales data Top Selling Models By Brand: Toyota
2008 TOYOTA SALES 2018 TOYOTA SALES
Truck Truck Minivan 6% 15% Minivan 17% 4% Car SUV Car 38% 19% 60% SUV 41%
7% 5% 24% 19% 20% 11% 16% 13% RAV4 Highlander Camry Corolla RAV4 Highlander Camry Corolla
Source: OEM Press release sales data Top Selling Models By Brand: Chevrolet
2008 CHEVROLET SALES 2018 CHEVROLET SALES
Truck Car Truck 25% 33% Car 37% 49% SUV SUV 18% 38%
6% 5% 16% 11% 28% 17% 8% 7% 7% 30% Tahoe TrailBlazer Impala Malibu Silverado Equinox Traverse Malibu Cruze Silverado
Source: OEM Press release sales data Top Selling Models By Brand: Dodge
2008 DODGE SALES 2018 DODGE SALES
SUV 28% SUV Car Car 52% 48% 72%
13% 10% 26% 23% 31% 21% 26% 22% Journey Nitro Charger Caliber Journey Durango Charger Challenger
Source: OEM Press release sales data Compact SUV Shoppers Skew Female, Whereas, Mid-Size SUV Skews Male
COMPACT Industry MID-SIZE SUV SUV
46% 54% 58% 42% 57% 43%
Source: IHS/Markit – New Retail Vehicle Registrations. Jan 2017 – March 2018 SUVs Retain More Values Than Cars
Current auction retention values for 1 to 3-year-old models
CAR RETENTION % SUV RETENTION %
Subcompact Car 49% Subcompact SUV/Crossover 59%
Compact Car 55% Compact SUV/Crossover 59%
Mid-size Car 53% Mid-size SUV/Crossover 61%
Full-size Car 51% Full-Size SUV/Crossover 61%
Overall Cars 54% Overall SUV 60%
Source: KBB.com Auction Values, 8/31/2018 Compact and Midsize Cars Still Cost Less to Operate, Although the Gap With Utilities Has Narrowed
AVERAGE GAS COST 2007 2018 2018 Segment Difference Monthly Cost Monthly Cost Daily Cost Compact Car $119.64 $94.30 $25.34 $3.14
Mid-size Car $147.28 $98.97 $32.90 $3.30
Compact SUV $132.09 $114.38 $33.12 $3.81
Mid-size SUV $181.15 $141.89 $39.26 $4.73
Source: FuelEconomy.gov and KBB Automotive Insights Even When Considering New, Consumers Might Gravitate Towards Used Cars for the Value It Offers
REASONS SOMEONE SHOPPING NEW ENDS UP BUYING USED
New model ended up being too expensive 58%
Deal on used vehicle was too good to pass up 53%
Ended up getting more bang for their buck (i.e. more options, more premium brand/model) 42%
Finance rates and terms were more favorable 39%
The used version was exactly the same, but with more miles 32%
Model they want is not available new 28%
Prefer the styling of the used version of the model compared to latest version 25%
Salesperson talked them into it 23%
KBB.com Interplay Between New and Used Survey N=2001 What do you think are the top 3 reasons someone shopping a new vehicle ends up buying a used vehicle instead? SUV Milestones
1990: Ford ignites SUV 2002: After Isuzu- market with family- based Passport focused Explorer comes up short, 1988-2000: Safety Honda bets on 1935: The Chevy 1996: Toyota of truck-based CUV formula with Suburban offers a wagon introduces RAV4 utilities comes into Pilot body on a truck frame, 1960s: Brands from Int’l as first pure question, as rollover kicks off its streak as crossover news plagues Harvester to Ford come 2008: GM introduces longest-running Explorer, Trooper to market with truck- Lambda crossovers to nameplate in auto history and Samurai based utility vehicles replace BOF SUVs
Pre-1990s 1990s 2000s 2010s
In the 2000s the industry made the switch from BOF* to unibody in earnest
1941: American Bantam’s 1980s: SUV market goes 1997: Honda establishes 2000: Toyota establishes 2012: Nissan replaces design for the military mainstream, with several size and execution mold dual product strategy, BOF Pathfinder with Jeep creates the original entries including Blazer, for compact CUVs with introducing Highlander crossover off-road utility vehicle Cherokee, Pathfinder and CR-V while keeping the 4Runner following same 4Runner 2010: Ford replaces BOF formula Explorer with crossover
Source: Wikipedia *Body-on-Frame (truck-based) construction; unibody construction is also known as car-based Historically SUVs Have Faced Distinct Barriers to Adoption
Safety Fuel Efficiency Affordability Most SUVs Were Converted to Car-Based Frame, Rollover Ratings Improved Significantly Across the Board and Shifted Safety Perception
NHTSA RATINGS OUT OF 5 STARS
Truck-Based 2009 Car-Based 2013
Chevy TrailBlazer Chevy Traverse
Ford Explorer Ford Explorer
Nissan Pathfinder Nissan Pathfinder
Toyota 4Runner Toyota Highlander
Average 3 Average 4
Source: Safercar.gov, KBB.com SUVs Are Now More Affordable than Previous Years
VEHICLES BETWEEN $30K-40K VEHICLES WITHIN $40K-50K
Car SUV Car SUV 56% 70% 54% 60% 52% 50% 50% 40% 48% 30% 46% 20% 44% 10% 42% 0% 2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018
More SUV offerings within the 30-40K price SUVs in the 40-50K price range has gone range now than 2012. More available in the down, more of an even mix with cars. lower price range.
Source: Dealer Retail Transaction Datase Data. Sales for all segments (non-lux) Drivers of All Segments Perceive SUVs to be Safer than Cars
• SUVs have a Which is safer? clear advantage in safety image, with PRIMARY VEHICLE CAR SUV many citing size and Car 46% 54% visibility as pluses
SUV 15% 85%
Truck 26% 74%
Minivan 25% 75%
Wagon 41% 59%
Source: KBB.com Core Segment Survey, April 2017, N=3813 Q: Between car and an SUV, which do you think is generally better on each of these factors? Q: Why do you think [vehicle] is SAFER? SUV Shoppers Are Placing Less Importance on Fuel Efficiency
FUEL EFFICIENCY IMPORTANCE
Compact Utility Vehicle Midsize Utility Vehicle 70% 3rd
65%
4th 60%
55% 5th Compact SUV
% Very ImportantVery % 50%
45% 7th Midsize SUV 40%
35%
2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2
Source: KBB.com Brand Watch Please review the list below and rate how important each of the factors are to you in deciding your next new vehicle. ...And More Importance on Affordability
AFFORDABILITY IMPORTANCE
Compact SUV Midsize SUV 75%
3rd 70% Compact SUV
65% 4th Midsize SUV
60% % Very Important % Very 55%
50%
45%
2015Q3 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2
Source: KBB.com Brand Watch Please review the list below and rate how important each of the factors are to you in deciding your next new vehicle.