Wholesale Prices, Week Ending March 13th

This past week saw another round of all segments reporting increases in wholesale values. New and used inventory shortages coinciding with the traditional spring/tax season bump, as well as an additional round of stimulus, has led to larger than normal weekly gains in values. With used supply remaining tight, remarketers are raising floors and holding firm. This Week Last Week 2017-2019 Average (Same Week) Car segments +1.12% +1.11% -0.12% Truck & SUV segments +0.99% +0.58% -0.34% Market +1.04% +0.76% -0.25%

Car Segments Truck Segments

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• The Car segments had a second week in a row of value gains • The Truck segments had larger gains this past week at +0.99%, exceeding 1% (+1.12% last week vs +1.11% the prior week). compared to +0.58% the preceding week. • Mainstream segments all reported gains exceeding +1% this • Eight out of the thirteen truck segments reported gains exceeding past week, with Full-Size Car (+1.57%) being the largest. 1%, with three of those eight being greater than +1.50%. • The Near Luxury Car segment was slow to experience increases • The Sub-Compact segment had the largest level of in prices, but the rate of increases has been gaining each week truck segment increases for a third week in a row at +1.59%. with this past week’s rate growing to +1.18%. • Full-Size Trucks doubled the rate of increase from +0.50% two • Sporty Cars broke the 1% level again this past week, but the rate weeks ago to +1.00% last week. The Small of increase (+1.02%) did slow down compared to the +1.78% and segment also had a significant increase to +1.52%, compared to +1.89% gains the previous two weeks. +1.06% the prior week. Newer Used Vehicles (0-2-year-old)

Driven by an extreme shortage of rental returns and limited inventory of new vehicles, the price trends of newer used vehicles have started to diverge from older units. The table below shows the average weekly price changes for 0-2-year-old vehicles.

This Week Last Week 2017-2019 Average (Same Week) Car segments +1.49% +1.28% -0.12% Truck & SUV segments +1.32% +0.68% -0.20% Market +1.37% +0.85% -0.16%

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Weekly Wholesale Index

2020 ended with used wholesale prices at elevated levels. With economic patterns (including the automotive market) driven by the pandemic, normal seasonal patterns (e.g. 2019 calendar year) in the wholesale market were not observed for most of the year. We saw a similar picture in 2009, at the end of the Great Recession. It appears that 2021 will not have typical seasonality patterns. So far, the spring market arrived about 7 weeks earlier and with much stronger price increases compared to a typical pre-COVID year. Graph below looks at trends in wholesale prices of 2-6- year old vehicles, indexed to the first week of the year.

Retail (Used and New) Insights

• Jeep unveiled the all-new Wagoneer and Grand Wagoneer last week with loads of luxury features that on some trim levels will push the MSRP over $100,000 and will add competition to the Escalade and Lincoln Navigator. • announced the next GMC electric vehicle, a Hummer SUV, will be unveiled on April 3rd. Production is expected to begin in early 2023. • Kia announced their new nomenclature for their upcoming electrified line-up will be “EV” followed by a number, with the first vehicle being the EV6 crossover. • GM is idling another plant this week through at least the end of the month as a result of the chip shortage. The Lansing, MI plant is where the Chevrolet Camaro and Cadillac CT4 and CT5 are produced.

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Used Retail Prices

With the proliferation of ‘no-haggle pricing’ for used-vehicle retailing, asking prices accurately measure trends in the retail space. Retail demand slowed down leading up to the December holidays, and thus resulted in declining retail asking prices over the last several weeks of 2020. As demand rebounded in January, retail prices seemed to lag wholesale prices – retail asking prices continued to decline throughout January and remained stable in February. This analysis is based on approximately two million vehicles listed for sale on US dealer lots. The graph below looks at 2-6-year-old used vehicles (similar to our wholesale price index).

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Volume Used Retail Wholesale

Used retail listing volume stayed essentially flat since the beginning of • Auction sales rates, as a percentage of total offered for sale, the year but remains at levels above where the industry was in January, continue to grow, despite the frequent increases in floor pricing. during the pre-COVID time of 2019.

Days-to-turn have been increasing since November and is approaching historic average level. Recently, the trend is starting to show signs of reversing as retail demand picks up in many parts of the country. • Limited new inventory is sending dealers to auction to look for newer model year used units that can be substitutes for their lack of new inventory. Additionally, dealers are looking to the auctions for the traditional spring/tax season vehicles as more consumers begin to receive their tax return checks and the additional round of stimulus.

• The expectation in the market is that supply is going to continue to get tighter, so buyer sentiment is that it is best to buy now, even if that means taking on some higher mileage and/or edgier condition units.

• As buyers step-up in their willingness to pay a higher premium at auction, sellers are matching it by raising floors each week and in some cases mid-week based on their conversion rates.

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About Black Book

Black Book® is best known in the automotive industry for providing timely, independent and precise vehicle pricing information, and is available to industry-qualified users through online subscription products, mobile applications and licensing agreements. Since 1955 Black Book has continuously evolved to ensure that it achieves its goal of delivering mission-critical information to its customers, along with the insight necessary to successfully buy, sell, and lend. Black Book data is published daily by National Auto Research, a Hearst company, and maintains offices in Georgia as well as the Canadian Black Book in Toronto.

Laura Wehunt

VP, Automotive Valuations

Alex Yurchenko, Ph.D.

SVP, Data Science

Contact Black Book p. 800.554.1026 e. [email protected] www.blackbook.com

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