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2018 PICKUP TRUCK STUDY J U L Y 2 0 1 8 Truck Survey Background

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2018 PICKUP TRUCK STUDY J U L Y 2 0 1 8 Truck Survey Background 2018 PICKUP TRUCK STUDY J U L Y 2 0 1 8 Truck Survey Background Goals and Objectives: • Assess economic factors affecting truck market share • Determine shopper consideration and opinions of mid-size and full-size trucks • Identify shopper preferences and the most important consideration features when purchasing Methodology and Sample: • Online quantitative survey fielded to U.S. consumers visiting KBB.com • Respondents answered on either a desktop or mobile device • In order to be eligible for this survey, respondents had to be: • Purchasing/leasing a mid-size/full-size truck in the next 12 months • Considering one or more mid-size trucks (Tacoma, Colorado, Ranger, Canyon, Ridgeline, Gladiator, Frontier) • Considering one or more full-size trucks (Chevrolet Silverado 1500, Chevrolet Silverado 2500/3500 HD, Ford F-150, Ford F-250/F-350/F-450 Super Duty, GMC Sierra 1500, GMC Sierra 2500/3500 HD, Nissan Titan, Nissan Titan XD, Ram 1500, Ram 2500/3500/4450, Toyota Tundra) • Mid-Size Truck N=764; Full-Size Truck N=1369 Field Dates: January 2018 to April 2018 ECONOMIC FACTORS DRIVING TRUCK SALES Economic Outlook Remains Optimistic REAL GDP GROWTH RATE 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Federal Reserve, Moody’s Analytics Headwinds Lead to Only Modest Decline in 2018 10 11 12 13 14 15 16 17 18 8 9 1968 1970 Full 1972 Cox Automotive Cox - Year Forecasts Year 1974 1976 1978 1980 1982 (Up (Up 100K forecast) from earlier LIGHT VEHICLE SALES OUTLOOK (MILLIONS) LIGHT VEHICLE OUTLOOK SALES 1984 1986 16.8 2018 1988 1990 1992 1994 1996 16.4 2019 1998 2000 2002 2004 Source: Cox Automotive, June Cox Automotive, June 2018 Source: 2006 2008 16.5 2020 2010 2012 2014 2016 16.8 2018 2020 Pickup Sales Are Strong Across Brands PICKUP TRUCKS VOLUME (IN THOUSANDS) 3500 3000 2500 Honda Nissan 2000 GMC Toyota in in thousands 1500 Ram Chevrolet 1000 Ford 500 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: Statista, February 2018 Trucks Significant Driver of Revenues Across All Brands 120000 PICKUP TRUCKS REVENUE (IN MILLION USD) 100000 80000 Honda Nissan Toyota 60000 GMC in million USD in million Ram Ford 40000 Chevrolet 20000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: Statista, February 2018 Pickup Truck Share Expands While Cars Decline FULL-SIZE MID-SIZE COMPACT MID-SIZE COMPACT MID-SIZE TRUCK TRUCK CAR CAR SUV SUV between between between between between between 12-14% 3-4% 16-13% 20-13% 20-29% 16-18% from 2015-2025 Source: HIS/Markit, U.S. Automotive Sales Forecast April 2018 Truck Consideration Steady; Expected to Climb as New Models Arrive (Ford Ranger, GMC Sierra 1500, Ram 1500, Chevrolet Silverado) SEGMENT CONSIDERATION Non-luxury Utility Vehicle 59% Non-luxury Sedan 39% TRENDED PICKUP CONSIDERATION Luxury Utility Vehicle 20% 25% 20% Luxury Sedan 18% 15% Pickup 17% 10% Non-luxury Coupe 8% 5% Minivan 7% 0% 2015 2016 2017 2018 Luxury Coupe 4% Source: KBB.com Brand Watch Q1 2018 Please select at most 5 vehicles that you are currently shopping. Economic Economic Expansion Drives Construction Sales and Truck 1,000,000 1,200,000 1,400,000 200,000 400,000 600,000 800,000 0 Jan-2007 Mar-2007 May-2007 Jul-2007 Sep-2007 Nov-2007 Jan-2008 Mar-2008 May-2008 Jul-2008 Sep-2008 (IN MILLIONSDOLLARS) OF CONSTRUCTION INVESTMENT TOTAL Nov-2008 Source: U.S. Census Bureau, 2007 Bureau, U.S. CensusSource: Jan-2009 Mar-2009 May-2009 Jul-2009 Sep-2009 Nov-2009 Jan-2010 Mar-2010 May-2010 Jul-2010 Sep-2010 Nov-2010 Jan-2011 - 2018 Construction SpendingConstruction 2018 Mar-2011 May-2011 Jul-2011 Sep-2011 Nov-2011 Jan-2012 Mar-2012 May-2012 Jul-2012 Sep-2012 Nov-2012 – Total Construction including both Public and Private SectorsPrivateand Public bothincluding Construction Total Jan-2013 Mar-2013 May-2013 Jul-2013 Sep-2013 Nov-2013 Jan-2014 Mar-2014 May-2014 Jul-2014 Sep-2014 Nov-2014 Jan-2015 Mar-2015 May-2015 Jul-2015 Sep-2015 Nov-2015 Jan-2016 Mar-2016 May-2016 Jul-2016 Sep-2016 Nov-2016 Jan-2017 Mar-2017 May-2017 Jul-2017 Sep-2017 Nov-2017 Jan-2018 New Construction, Builder Confidence Bode Well for Truck Sales HOME SALES BUILDER CONFIDENCE 800 76 662,000 700 593,000 74 600 72 70 70 69 500 68 400 66 300 +12% Y/Y 64 +1% Y/Y 200 -1% M/M 62 +1% M/M 100 60 - 58 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Source: U.S. Census Bureau: New Residential Sales, April 2018 Source: NAHB/Wells Fargo National and Regional Housing Market Index (HMI), May 2018 WHO ARE TRUCK BUYERS? Respondent Demographics Median Gender Median Ethnicity MID-SIZE FULL-SIZE Income (Male) Age 75% 72% MID-SIZE 60K 84% 53 FULL-SIZE 6% 8% 70K 89% 46 4% 3% 1% 2% Caucasian Hispanic African-American Asian Source: KBB.com Mid-Size Truck Survey, 2018, N=764, Full-Size Truck Survey, 2018, N=1369 Truck Intenders are Mainly Purchasers vs. Lessees PURCHASE/LEASE INTENTIONS Purchase Lease Mid-Size Truck Full-Size Truck Compared to Non-Lux SUVs 5% 5% 10% 95% 95% 90% Average # of Years Shoppers Plan to Hold on to Their Trucks Mid-Size Truck Full-Size Truck 9 8 YEARS YEARS Source: KBB.com Mid-Size and Full-Size Truck Surveys, 2018 Q7: Do you plan to purchase or lease your new truck? (N=764) Full-Size Truck Shoppers are More Committed to Domestic Brands; Mid-Size Considerers are More Likely Neutral to Country of Origin PREFERENCE ON WHERE A TRUCK’S BRAND IS HEADQUARTERED Full-Size Mid-Size I have no preference 28% 58% 1% Japan 11% Domestic 71% 31% Source: KBB.com Mid-Size Truck Survey and Full-Size Truck Survey, 2018 Q25: When buying a mid-size truck, do you have a preference for where the brand is headquartered? (N=764) Q25: When buying a full-size truck, do you have a preference for where the brand is headquartered? (N=1369) Full-Size Truck Shoppers Most Loyal Owners. Mid-Size Truck Shoppers Least Loyal, Creating Conquest Opportunities. TRENDED SHOPPER LOYALTY Compact Car Mid-size Car Compact SUV Mid-size SUV Mid-size Truck Full-size Truck Average Loyalty 50% 40% 30% 20% 10% 0% 2015 2016 2017 2018 -10% -20% -30% Source: 2014-2018 KBB.com Traffic WHERE ARE TRUCK BUYERS? Full-Size Pickups Dominate the Heartland. Mid-Size Trucks Proliferate on the Coasts. FULL-SIZE & MID-SIZE PICKUP TRUCK REGISTRATION SHARE Full-Size Truck Registration Midsize-size Truck Registration Source: IHS/Markit – New Retail Vehicle Registrations March 2017 – March 2018 There are Some Geographically Differences in Appeal… Full-Size Truck Share Tend to be Stronger in Middle America FULL-SIZE PICKUP TRUCK REGISTRATION SHARE Highest Share % • ND – 24.2% • SD – 22.0% • MT – 18.0% • NE – 17.4% • AR – 17.3% Lowest Share % • DC – 1.1% • NJ – 4.1% • CT – 4.9% • CA – 5.7% • MD – 5.8% Source: IHS/Markit – New Retail Vehicle Registrations March 2017 – March 2018 … While Mid-Size Trucks are Concentrated in Coastal Areas MID-SIZE PICKUP TRUCK REGISTRATION SHARE Highest Share % • VT – 5.1% • AK – 4.8% • WV – 4.7% • OR – 4.5% • NM – 4.4% Lowest Share % • DC – 0.7% • MI – 1.2% • NJ – 1.4% • NY – 1.5% • IL – 1.6% Source: IHS/Markit – New Retail Vehicle Registrations March 2017 – March 2018 WHY DO PEOPLE BUY TRUCKS? Truck Shoppers Are Replacing a Truck or Adding a Truck to the Household Fleet TRADE IN VEHICLE FOR THE NEXT TRUCK PURCHASE 40% 32% 12% 10% 4% 2% 1% Truck SUV/CUV Sedan Coupe Hatchback/Wagon Van/Minivan NA, I'm not trading in a vehicle Source: KBB.com Mid-Size Truck Survey, 2018 Q: Regarding your next truck purchase, what type of vehicle are you trading in for it? (Select all that apply.) (N=373) Shoppers Different Activities with Midsize, Work with Full-Size Trucks ACTIVITIES THAT GO BEST WITH SEGMENT 84% Urban Delivery for Small Business 16% 80% Outdoorsy – Camping/Surfing 20% 52% Towing/Hauling – ATV, Motorcycle Mid-Size 48% Full-Size 39% Home Improvement/Contract Projects 61% 17% Towing/Hauling – Cars, Trailers 83% Source: KBB.com Mid-Size Truck Survey, 2018 Q28: Please classify the activities that goes best with each category. (N=764) Midsize Truck Defectors Heavily Shop Full-Size Trucks and SUVs, Creating an Opportunity to Target Outside of the Traditional Segment. CROSS SHOPPING DEFECTION Full-Size Truck 12.9% Full-Size Truck 28.0% Mid-Size SUV 6.7% Compact SUV 18.9% 17.5% Compact SUV 6.6% MID-SIZE Mid-Size SUV TRUCK Compact Car 3.8% Compact Car 10.5% Mid-Size Car 3.7% Mid-Size Car 9.4% Source: KBB.com Traffic, Q1 2018 Read as: Mid-Size Truck and Full-Size Truck are cross shopping each other at the rate of 12.9% and Mid-Size Truck is defecting to Full-Size Truck at the rate of 28% While Mid-Size Truckers are More Likely to Upsize, Full-Size are Looking at SUVs CROSS SHOPPING DEFECTION Mid-Size Truck 3.8% Mid-Size SUV 20.7% Mid-Size SUV 3.7% Compact SUV 17.4% 10.5% Compact SUV 3.2% FULL-SIZE Mid-Size Truck TRUCK Mid-Size Car 2.4% Mid-Size Car 10.3% Compact Car 2.3% Compact Car 10.0% Source: KBB.com Traffic, Q1 2018 Read as: Full-Size Truck and Mid-Size Truck are cross shopping each other at the rate of 3.8% and Full-Size Truck is defecting to Mid-Size SUV at the rate of 20.7% WHAT DO BUYERS WANT IN IN THEIR TRUCKS? Reliability is The Most Important Factor To Shoppers, Followed by Best Value For My Budget, Then Good Brand Experience MOST IMPORTANT FACTORS WHEN CONSIDERING..
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