November 7, 2016

“Depreciation slowed a little last week after four weeks of steeper declines. However, auction reports continue to show spotty demand and higher no-sales.”

Anil Goyal, Senior Vice President of Automotive Valuation and Analytics

Model Years: 2008-2014, Volume Weighted Wholesale Average Values, Weekly Change from 10/28/16 to 11/04/16

Lower Declines Last Week

Volume-weighted, overall car values decreased by 0.53% last week. This is lower than the average

depreciation rate of 0.75% seen in the previous four weeks.

In car segments, Prestige Luxury Car, Sub-Compact Car and Full-Size Car segments declined the most,

dropping by 1.03%, 0.76% and 0.75%, respectively.

Volume-weighted, overall truck values decreased by 0.58% last week. This is lower than the average

depreciation rate of 0.61% seen in the previous four weeks.

In truck segments, Sub-Compact Crossover/SUV and Sub-Compact Luxury Crossover segments

declined the most, dropping by 1.96% and 1.66%, respectively.

-$44-0.76%

-$45-0.61%

-$15-0.17%

-$77-0.75%

-$92-0.61%

-$114-0.58%

-$328-1.03%

-$72-0.49%

-$251-0.68%

-$55CARS

-0.53%

-1.2%

-1.0%

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-0.6%

-0.4%

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0%

+0.2%

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-$235-1.96%

-$44-0.36% -$103

-0.67%

-$26-0.14%

-$305-1.66%

-$102-0.53% -$137

-0.68%

-$109-0.37%

-$43-0.36%

$00%

-$70-0.46%

-$69-0.52% -$142

-0.78%

-$92TRUCKS-0.58%

-2.2%-2.0%-1.8%-1.6%-1.4%-1.2%-1.0%-0.8%-0.6%-0.4%-0.2%

0%+0.2%

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2

November 7, 2016

Sentiment from the Auction Lanes

Our editors and personnel attend about 60 auctions every week across the country to provide key insights:

“The market here is still good but there were lots of no-sales today.” Richard

from NJ

“Above normal amount of no-sales on several lanes today. Dealers reporting

retail sales are still slow on their lots.” Doug from TN

“Trucks are still highest in demand in this auction location, especially the

ones that were already ‘Retail Ready’.” Herb from PA

“The auction was well attended and prices stable today.” Richard from TX

“Clean condition cars are getting harder to find.” Rick from FL

Monthly Depreciation in Car Segments (10/1/16-11/1/16)

Overall, depreciation in car segments increased last month. Compact Car segment performed the worst

with 3.6% depreciation in the month of October.

Vehicle Highlight 2017 Mazda6 Sedan has a base MSRP of $21,945 excluding destination charge. Trim levels include Sport, Touring and Grand Touring. It is powered by a 184-hp 2.5-liter four-cylinder engine. Close competitors include Chevrolet Malibu, Honda Accord, Toyota Camry, Kia Optima, Hyundai Sonata, Ford Fusion and Volkswagen Passat.

This week’s report includes our Monthly Edition Supplement on Specialty Markets.

3

November 7, 2016

Collectible Auctions Offer Wide Variety of Choices “There were several prominent auctions held within the past few weeks, each one

specializing in something different…Classics, muscle cars, exotics, or customs,

October had something for everybody. My favorites were the Porsche 911 R at

Bonham’s Zoute sale and RM Hershey’s phantom 1932 Lincoln Model KB Boattail Speedster.”

Eric Lawrence, Director of Specialty Markets

RM Sotheby’s celebrated the tenth anniversary of their Hershey auction, held in conjunction with the AACA Eastern Division Fall Meet, with total sales of $11,580,000. Of the 132 lots on offer, including an impressive array of pre-WWII classics, 118 were declared sold, for a very impressive 90% sell through rate.

Mecum’s Chicago sale, held at the Renaissance Schaumburg Convention Center, totaled $10,500,000 on the sale of 435 vehicles, primarily American muscle cars, out of the roughly 1,000 offered.

Barrett-Jackson’s Las Vegas auction, held at the Mandalay Bay Resort and Casino, was also very successful, selling 99% of all vehicles offered for a total of $32,500.000, including $37,400 for the 1976 AMC Pacer from Wayne’s World. As Garth would say, “It’s party time…excellent!”

Notable Sales Include:

1935 Auburn Eight Speedster $880,000 (RM Sotheby’s)

1930 Duesenberg Model J DC Phaeton $2,090,000 (RM Sotheby’s)

1970 Ford Mustang Boss 429 Fastback $245,000 (Mecum)

1988 Porsche 911 Turbo Cabriolet $100,000 (Mecum)

1957 Ford Thunderbird “E” Convertible $85,000 (Mecum)

1970 Dodge Challenger Hemi Hardtop $80,000 (Mecum)

1968 Shelby GT500KR Fastback $77,000 (Mecum)

1966 Shelby GT350H Fastback $137,500 (Mecum)

1967 Chevy Corvette Conv 427/435 $123,000 (Mecum)

1969 Ford Mustang Boss 429 Fastback $357,500 (Mecum)

Photo Courtesy of RM Sotheby’s

41000

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American Classics Value Trends

SPECIALTY MARKETS:

COLLECTIBLE CARS

4

November 7, 2016

Auction Values Hit All Time High

“If you were a seller, this was a historically good month. The average selling

price for towables hit an all-time high, and motorized units equaled a number not

seen since October 2010. Last month’s performance is much more typical of a strong Spring market, and

not at all what we’d expect to see heading into Fall. Black Book survey personnel reported that the

vehicle mix was heavily skewed toward higher end units, which drove the average transaction price up.” Eric Lawrence, Director of Specialty Markets

For Motor Homes (including Class A, B, and C)

Average selling price was $44,597, up $2,545 (6.0%) from previous month

One year ago, the average selling price was $37,802

Auction volume was down 27% from previous month

For Towables (including Travel Trailers and Fifth Wheels)

Average selling price was $12,808 up $1,120 (9.5%) from previous month

One year ago, the average selling price was $10,183

Auction volume was down 9% from previous month

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Motor Home Value Trends

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Travel Trailer and Fifth Wheel Value Trends

SPECIALTY MARKETS:

RECREATIONAL VEHICLES

SPECIALTY MARKETS:

RECREATIONAL VEHICLES

5

November 7, 2016

Powersports Market Declines Level Off “The Powersports market has leveled off this month, after two straight

months of substantial declines in value. The drops in pricing are much

smaller, and coupled with the earlier changes, leave the overall market slightly underperforming its

historical averages.”

Scott Yarbrough, Motorcycle & Powersports Editor

The single biggest movers this month are the Utility Vehicles, which are down 1.4%. This continues a trend we have seen throughout this year, when this segment has finally started to come “down to earth” from its sky high value retention averages. This is likely the result of a combination of increased production volumes and new models from the manufacturers starting to reach a more normal supply and demand equilibrium.

At last month’s Powersports Finance Conference in Las Vegas many dealers had a chance to talk with representatives from the finance side of the industry. One of the main requests was for more sources of sub-prime financing. The MIC gave an informative presentation that discussed current new unit sales trends, which are currently down a bit for the year to date. There were also quite a few panels discussing topics such as the changing demographics of the powersports customer base and where the industry is headed in the future.

The recently concluded AIME show in Orlando raised some similar questions on where the future of the industry lies. Amongst the excitement for all the new models that were introduced, a common question was where the next generation of powersports customers will come from, and which segments this will likely impact. No firm answers are available to that question, but like the recent increases in demand for Side by Sides have shown us, the next generation of buyers (Millennials) are likely to spur new interest in street bikes, electric units, or some other currently unknown category of vehicle as they enter the market.

0.90%

-0.90%

-0.70%

-0.90%

-0.70%

-0.10%

1.00%

-0.80%

-1.40%

-0.80%

-2.00%

-1.50%

-1.00%

-0.50%

0.00%

0.50%

1.00%

1.50%Motorcycle & Powersports Percent Change October to November 2016

SPECIALTY MARKETS:

POWERSPORTS

6

November 7, 2016

Construction/Vocational Segment Maintains Stability, while Over the Road tractors drop!

Dump Trucks and other Construction/Vocational Trucks make a strong

case for maintaining a good mix of used truck inventory!

Charles Cathey, Editor – Heavy Duty Truck Data

With a greater number of used Over the Road Tractors being more consistently available, it could be difficult for dealers to build a more balanced used truck inventory to meet the demand for construction/vocational buyers. All year long the lagging wholesale values at auction for highway units have been consistent. When these sales values improve, and they should, dealers may look at ways to hedge against this situation down the road. Excessive mileage, unproven technology, trade cycle changes and the challenges emission changes has imposed have all played a part in truck buyers being more selective on these units. Increased supply and low demand on Over the Road Tractors have caused this segment to drop more last month than it has all year.

DATE

Constructional/Vocational Over the Road Trucks & Tractors Regional Tractors MODEL YEARS Value $ Change % Change Value $ Change % Change Value $ Change % Change

11/01/16 85,335 -584 -0.7% 70,673 -1546 -2.1% 60,265 -1478 -2.4% 2014-2015

10/01/16 85,919 -734 -0.8% 72,218 -865 -1.2% 61,743 -1104 -1.8% 2014-2015

2014-2015 HD Construction/Vocational segment dropped an average of $734 (0.8%) in September compared to the average decline of $584 (0.7%) in October.

2014-2015 HD Over the Road Tractor segment dropped an average of $865 (1.2%) in September compared to the average drop of $1546 (2.1%) in October.

2014-2015 HD Regional Tractor segment dropped an average of $1104 (1.8%) in September compared to the average depreciation of $1478 (2.4%) in October.

DATE

Constructional/Vocational Over the Road Trucks & Tractors Regional Tractors MODEL YEARS Value $ Change % Change Value $ Change % Change Value $ Change % Change

11/01/16 42,657 -389 -0.9% 33,185 -1078 -3.1% 24,730 -945 -3.7% 2006-2013

10/01/16 43,045 -371 -0.9% 34,263 -596 -1.7% 25,676 -704 -2.7% 2006-2013

2006-2013 HD Construction/Vocational segment dropped an average of $371 (0.9%) in September compared to the $389 (0.9%) in October.

2006-2013 HD Over the Road Tractor segment dropped an average of $596 (1.7%) in September compared to $1078 (3.1%) average depreciation in October.

2006-2013 HD Regional Tractor segment dropped an average of $704 (2.7%) in September compared to the average drop of $945 (3.7%) in October.

-$1,600-$1,400-$1,200-$1,000

-$800-$600-$400-$200

$0+$200

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Average Wholesale Value Changes (Market)

Construction/Vocational Over the Road Trucks & Tractors Regional Tractors

SPECIALTY MARKETS:

HEAVY DUTY

7

November 7, 2016

The Medium Duty Truck Segment stays on its steady decline

“On average, Medium Duty trucks dropped slightly less this past month.”

Bret Swanson, Editor – Medium Duty Truck Data

Once again, both groups of trucks in the Medium Duty wholesale market had a very similar rate of decline

this past month as to the previous month. This past month, the 2006-2013 model years came down on

average $261, or 1.3%. In September, that average decline for this group was $280, or 1.4%. The 2014-

2015 model years dropped just a bit less this past month than the previous month. The average amount of

decline was $449, or 1.0%, for October. In September, that average decline was $500, or 1.1%.

The price of diesel has continued its upward trend this past month. The national average price per gallon

now stands at $2.48. That is $0.10 more than last month’s average of $2.38. That is just $0.02 lower than

last year’s average price of $2.50 per gallon. Hopefully this upward push on prices will not continue.

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+$0.00

+$0.04

+$0.06

+$0.01

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-$0.02

-$0.05

-$0.11-$0.10

-$0.09

-$0.12

-$0.10

-$0.08

-$0.06

-$0.04

-$0.02

$0

+$0.02

+$0.04

+$0.06

+$0.08

10/24/1610/17/1610/10/1610/03/1609/26/16

Diesel Price Changes

Change/Week Change/Year

SPECIALTY MARKETS:

MEDIUM DUTY

Value $ Change % Change

11/01/16 19,405 -261 -1.3% 2006-2013

10/01/16 19,665 -280 -1.4% 2006-2013

MODEL

YEARSDATE

Medium Duty

Value $ Change % Change

11/01/16 43,924 -449 -1.0% 2014-2015

10/01/16 44,374 -500 -1.1% 2014-2015

MODEL

YEARS

Medium Duty

DATE