China Vehicle Retention Value Report Updated in March 2020 China Vehicle Retention Value Report 01 05 Background Conclusions 02 04 Used Vehicle 03 Retention Rate Ranking Transaction Data Retention Value Findings Definition of Vehicle Retention Value It refers to the ratio of the transaction price* to a new vehicle‘s Manufacturer Suggested Retail Price* (MSRP) at purchase after a 1 period of use from the date of purchase 2 It is an important index to measure the value depreiaction speed of a vehicle It is affected by multiple factors: Single vehicle (e.g. age/ mileage/ condition/ purpose), product (e.g. quality/ design/ features/ 3 performance), brand (e.g. influence), new vehicle (e.g. price/ sales volume/ market share), used vehicle (e.g. market strategy/ supply-demand relationship), season, region, policy… Transaction Price* = X 100% Vehicle Retention Rate MSRP of New Vehicle* Vehicle transaction data within the most recent year (March 2019 to February 2020) * Vehicle Transaction Price: Retail price (B2C) is adopted, excluding purchase price and wholesale price; the transaction price is based on good vehicle condition and an average annual mileage of 15,000 km. * MSRP of New Vehicle: MSRP of New Vehicle shall be adopted uniformly, excluding discount of manufacturer or dealer. * Sampling Period: Stably reflect the retention rate level in a recent period, such as yearly/quarterly. 3 China Vehicle Retention Value Report Joint Production • J.D. Power is a global leader in consumer insights, data, analytics, • 58che.com and Uxin.com are the largest used vehicle and advisory services and conducts world-class industry transaction/listing data platforms in China. benchmarking studies. • In 2019, the listing data exceeded 10 million, market coverage > • 58che.com and Uxin.com are the leaders of classified 60%; online transactions exceeded 600,000, and market coverage > information platform and used vehicle trading platform in China. 20%. • The retention rate ranking is jointly created by the three parties. • First-hand and real POS listing and transaction data have higher reference significance to the industry and consumers. 模型 • Based on J.D. Power’s mature retention rate model and • Automotive industry expert team: Automotive industry experts, used evaluation and calculation system used for many years in the vehicle evaluators and consulting team who have in-depth insight United States and verified by domestic localized data. into new vehicle and used vehicle markets and causes of value • The application of the retention rate model covers 100% of the retention ratio. franchised dealers in the United States, over 60% of the OEMs • Data analysis and modeling team: J.D. Power‘s global used vehicle and auto finance companies, more than 95% of loan companies, business data team and China automotive industry data analysis and the top 10 insurance companies and the top 2 leasing companies. modeling team. 4 China Vehicle Retention Value Report Significance of Retention Value Study How to make retention value more referential? • Real: Transaction data (not listing prices through crawling) • First-hand: POS transaction data (not collection price or intermediate wholesale price) 01 Data Basis • Focused: Transaction data on platforms (avoiding fragmental online data collection) Value • Stable: Covering recent transaction data (stably reflecting the value retention ratio level in a recent period of time) Consumers: Information support of full lifecycle cost of new vehicle purchase and used vehicle transaction • Model calculation, expert verification and OEMs: Brand/marketing, replacement/used vehicles and product 02 Study Basis commercialization practice Basis upgrading support Auto Finance/Insurance: Auto finance product and vehicle insurance product design support Leasing/Fleet/Shared Mobility: Aasset cost management and vehicle disposal support • Retention Rate Rankings Automotive Industry:Deepening consumers‘ understanding towards vehicles and making used vehicle transactions more • Retention Rate Analysis Reports transparent 03 Output … • Retention Value Diagnosis Services • Retention Value Data Services … Output Value 5 China Vehicle Retention Value Report Framework of Retention Value Study Region OEM Type Brand Origin Multi- dimensional Brand Comparison OEM Segment Retention Value Small SUV Small Car Compact SUV Compact Car Segment Midsize SUV MPV Rankings Midsize Car Mid-large SUV Luxury Car Luxury SUV 6 China Vehicle Retention Value Report Review of 2019 Automotive Market – Key Words of 2019 China Automotive Market China VI Vehicle Emission Standards Used Vehicles Export 01 Some classic/old models have been forced to be changed or replaced, and The implementation of the used vehicle export policy will help to reduce the technology upgrading has become a great test for vehicle manufacturers; at the 04 pressure of domestic vehicle population and the domestic market, while same time, new vehicles have attracted much attention, and the residual value invigorating the circulation of used vehicles, improving the speed of vehicle of old vehicles has declined; the cycle of new vehicle ordering has become replacement, so as to expand the new vehicle consumption market and stimulate longer; many vehicle manufacturers have to reduce prices and promote sales related demands in the domestic market. for the sake of inventory clearance, which affects value retention ratio. New Vehicle Sales 02 Proportion of Trading Up According to the data of China Association of Automobile Manufacturers (CAAM), According to the data of the National Information Center, from 2011 to 2019, 05 the sales volume in 2019 dropped by 8.2% year-on-year, and nearly 70% of the the proportion of trading up in China continued to increase, to 46.0% in 2019. manufacturers saw their sales fall. However, the sales volume of the top 5 In China’s existing automotive market, it is urgent for automotive manufacturers in value retention ratio represented by FAW Toyota and Beijing manufacturers to strengthen management of the entire automobile life cycle. Benz all rose against the trend, and the value retention ratio has become an important selling point of new vehicle sales. 03 New Energy Vehicle Manufacturers' Residual Value Management Passat Crash Test The used new energy vehicle (NEV) market is in a downturn due to the lack of 06 The lowest crash test score in the history of CIRI Auto Test Institute has damaged testing standards, the acceleration of battery technology iteration and the the brand image to a certain extent, and will have a certain negative impact on the insufficient warranty period and other factors. The residual value management sales volume of new vehicles and the value retention ratio. of new energy vehicles led by manufacturers will play a positive role in the market sales and brand building of new vehicles and used vehicles. 7 China Vehicle Retention Value Report Market Analysis of February Pandemic Prevention and Control Auto Show/CES • There's periodic victory in the fight against the • China's largest auto show in Beijing was pandemic but the pandemic prevention and postponed, while Geneva Auto Show (one of four control is still the main KPI. largest international auto shows) and Asia consumer electronics show were cancelled. New Vehicle Market OEMs • to the National Passenger Car Information • OEMs are gradually back to work, which do their Exchange Association, the sales volume of new marketing online, and new services such as VR car cars in February fell by nearly 80% year-on-year. viewing and live car viewing are launched. Used Vehicle Market Used vehicle e-Ecommerce • Affected by the pandemic, the off-season of • Used vehicle e-commerce platforms need to used vehicles has been prolonged. According to upgrade their services to adapt to the new trend China Automobile Dealers Association (CADA), of online car viewing. the transaction volume in February fell by more than 90% year-on-year. 8 China Vehicle Retention Value Report China Vehicle Retention Value Report 01 05 Background Conclusions 02 04 Used Vehicle 03 Retention Rate Ranking Transaction Data Retention Value Findings Used Vehicle Transaction Nationwide – Regional Provinces – TOP 10 Cities – TOP 10 Jiangsu 13.0% Shanghai 7.5% Guangdong 10.1% Chengdu 4.6% Shanghai 7.5% Nanjing 4.3% Shandong 7.3% Beijing 3.7% Sichuan 5.4% Suzhou 3.5% Nanjing Percentage of Shanghai Hebei 5.3% 3.0% transaction Shenzhen Chengdu < 3% Zhejiang 4.9% Dongguan 2.3% 3% - 7% Beijing 3.7% Wuhan 2.2% 7% - 10% Liaoning 3.4% Chongqing 2.0% > 10% Henan 3.1% Hefei 2.0% Note: The sample statistics doesn’t include Hong Kong, Macao and Taiwan of China. 0.0% 5.0% 10.0% 15.0% 0.0% 2.0% 4.0% 6.0% 8.0% 1 China Vehicle Retention Value Report 0 Used Vehicle Transaction – Comparison of Listing Data and Transaction Data Percentages of Listing and Transaction Price Ranges Within 100,000 RMB takes up the highest percentage among different transaction price ranges. The total percentage exceeds 70%. It can be seen that used vehicles with good quality and low price are more popular. Transaction prices are lower than listing prices overall. There is generally 10%-20% bargaining space for used vehicle transactions on the Internet. Price Range (10,000 RMB Percentage of listing price range (%) Percentage of transaction price range (%) 1 China Vehicle Retention Value Report 1 Used Vehicle Transaction – Segment and Top 10 Models • Compact cars and Compact SUVs account for the highest proportion in • Although Cruze has withdrawn from the new car market,