Pub. 4 2015-2016 Issue 3

18 San Diego Dealer Toyota, 18.3% Honda, 11.2% Ford, 10.4% Nissan, 9.0% Chevrolet, 5.4% Kia, 4.1% Lexus, 3.7% BMW, 3.6% Hyundai, 3.5% Subaru, 3.5% Others, 27.4% Covering Fourth Quarter 2015 San Diego Auto Outlook San Diego Auto Outlook Comprehensive information on the San Diego County new vehicle market 2014 2015 % Chg. Mkt. Share Annual Annual* '14 to '15 2015* TOTAL 146,947 162,055 10.3% Car 88,098 91,459 3.8% 56.4% Light Truck 58,849 70,596 20.0% 43.6% Domestic 36,291 41,769 15.1% 25.8% European 23,592 24,715 4.8% 15.3% Japanese 76,361 83,280 9.1% 51.4% Korean 10,703 12,291 14.8% 7.6% 7 Key Market Trends 1. County new retail registrations increased 10.3% from 2014 to 2015 (December,‘15 figures were estimated), well above the 5.7% improvement in the U.S. 2. The market is predicted to increase 3.7% in 2016. 3. County light truck market share increased from 40% during 2014 to 43.6% last year. 4. Domestic brand registrations were up 15.1%, higher than the 10.3% improvement in the overall market 5. Hybrid and electric vehicle market share was 8.5% thru No- vember of last year, down from 9.7% in 2014. 6. Toyota, Honda, BMW, Lexus, Mazda, Nissan, Volkswagen, and Mercedes are strong performing brands in the county market (see page 6). 7. SUVs have gained ground, with market share increasing 2.1 points from 2014. The county new vehicle market has been on an amazing run, with new retail registrations increasing for six consecutive years. As shown on the graph on page 7, the market fell to about 77,000 units in 2009 and recovered to more than 162,000 in 2015. That’s a 109% increase over the six year period! With sales reaching such high levels, there are concerns that the market has peaked. And based solely on the primary predictors of core demand (i.e., the cyclical nature of sales and the release of pent-up demand) there are reasons to believe that sales will soon begin their inevitable cyclical downturn. But predicting the course of new vehicle sales is not always as straightforward as it seems. Despite the concerns mentioned above, there are some compelling reasons to believe that the market still has some gas left in the tank. As mentioned previously in Auto Outlook, the impressive array of advanced safety features and infotainment offerings in new vehicles can make even three year old cars seem out-dated. This can provide strong motivation for consumers to enter the new vehicle market. In addition, manufacturers have generally stated a commitment to hold the line on incentives and emphasize profitability over sales volume. However, if demand starts to soften, the battle for market share could result in an opening of the incentives spigot, which would prolong the sales rebound. Most likely scenario for the county market is slow growth this year, and perhaps in 2017 as well, with moderate easing to follow. Market Summary Domestic brands consists of vehicles sold by GM, Ford, FCA (excluding FIAT), and Tesla. *Figures for December, 2015 were estimated by Auto Outlook. Source: IHS Automotive. County Brand Market Share - 2015* The graph above shows market share leaders in 2015. Source: IHS Automotive. FORECAST County Market Predicted to Improve Again in 2016 New vehicle sales are expected to remain at strong levels for several years