Pub. 3 2014-2015 Issue 1

26 San Diego Dealer 102,624 77,707 87,621 99,255 126,570 139,593 146,750 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 2008 2009 2010 2011 2012 2013 2014 Forecast New light vehicle registrations Covering Second Quarter 2014 San Diego Auto Outlook San Diego Auto Outlook Comprehensive information on the San Diego County new vehicle market Market Summary YTD '13 YTD '14 % Chg. Mkt. Share thru June thru June* '13 to '14 YTD '14* TOTAL 68,047 70,896 4.2% Car 42,122 42,571 1.1% 60.0% Light Truck 25,925 28,325 9.3% 40.0% Detroit Three 17,646 18,035 2.2% 25.4% European 10,752 11,006 2.4% 15.5% Japanese 34,137 36,450 6.8% 51.4% Korean 5,512 5,405 -1.9% 7.6% Annual Trend in County Market FORECAST County Market Moves Higher in First Half of 2014 5.1% improvement predicted for entire year Detroit Three consists of vehicles sold by GM, Ford, and Chrysler. *Figures for June, 2014 were estimated by Auto Outlook. Source: Polk. The graph above shows annual new retail light vehicle registrations in the county from 2008 thru 2013, and Auto Outlook’s projection for all of 2014. Historical data source: Polk. 6 Key Market Trends 1. County new retail registrations increased 4.2% for the first six months of this year versus a year earlier (June figures were estimated), in line with the 4.8% improvement in the U.S. 2. The market is predicted to increase 5.5% in the second half of 2014 versus 2013. 3. County light truck market share has increased from 38.1% during the first half of 2013 to 40% this year. 4. Japanese brand registrations were up 6.8%, higher than the 4.2% improvement in the overall market 5. Hybrid and electric vehicle market share was 9.6% thru May of this year, up from 9% in 2013. 6. Toyota, BMW, Lexus, and Volkswagen are strong performing brands in the county market (see page 5). Flash back to 2009 - the devastating impact that the financial crisis would have on the economy was becoming plainly evident. Banks weren’t lending, the stock market crashed, and unemployment was rising. The writing was on the wall for a sharp decline in new vehicle sales, and that’s exactly what transpired. New retail light vehicle reg- istrations in San Diego County fell from 137,157 in 2007, to just 77,707 in 2009, a 43% drop in two years. At the time, the prevailing view was that it could take a decade or more for the market to return to sales level reached during the early and mid-2000’s. We disagreed. At the time, we pointed out that the combination of significant pent up demand, extremely low interest rates, higher used vehicle prices, and greatly improving new vehicle offerings would more than offset the negative impact of a slowing economy and household de-leveraging. We predicted that within about five years, the market could easily approach, or exceed, sales levels attained in 2007. And that is exactly what has transpired. This year’s total is predicted to exceed 146,000, higher than in 2007. So where is the market likely to head in 2015 and beyond? As men- tioned in the past few issues of Auto Outlook, there are reasons to believe that the pace of the sales recovery will ease during the next 18 months. At this point, we are predicting a 3% increase next year, with registrations exceeding 151,000.