Innovations in the Automobile Retail Business Model Kevin Tynan Bloomberg Intelligence June 2019 CONSUMER DEMAND DYNAMICS US Vehicle Mix Pushing Transaction Prices The Role of Leasing Evolves ID: 815928
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Opportunities In U.S. Automobile MarketInnovations in the Automobile Retail Business Model
Kevin TynanBloomberg IntelligenceJune 2019
Slide2CONSUMER DEMAND DYNAMICS: U.S.
Vehicle Mix Pushing Transaction Prices
The Role of Leasing Evolves
Pre-Owned/CPO Market Opportunity
New Sales Models
Electric
Autonomous
Ridehail
Slide3New Vehicle Segment mix in
u.s.
70.2%
Slide4Vehicle segment mix shift
61%
Slide5Average MSRP & transaction prices
Segment Mix and In-vehicle Content Inflating Prices
Slide6Average transaction price in us
Competitive CUV and Car Segments
Slide7Discounting ratio in us
Competing CUV and Car Segments
Slide8Inventory by segment
Light trucks were 74% of sales and inventory on June 1
69%
2018
Slide9Unit sales by segment in us
Largest Segments by Volume
Slide10Average transaction prices in us
Slide11CONSUMER DEMAND DYNAMICS: U.S.
Vehicle Mix Pushing Transaction Prices
The Role of Leasing Evolves
Pre-Owned/CPO Market Opportunity
New Sales Models
Electric
Autonomous
Ridehail
Slide12DISCOUNTING & Incentives
As percentage of transaction prices
Slide13Lease penetration in u.S.
Leasing Increases as Offset to Rising Prices
32.1%
Slide14Leases by household
60% of vehicle households have at least one lease
40%
Slide15Lease penetration in u.s.
Entry Luxury Segments
Slide16Off-lease vehicle flow
Slide17Brand loyalty lease vs purchase
Clear benefits to steering consumers towards leasing
Source: IHS
Markit
, Bloomberg Intelligence
Average fleet age of 12 years
Older vehicles rolling into new
Purchase turning into leases
Loyalty will intensify as customers lease
Market (and segment) share will be increasingly difficult to win
Slide18CONSUMER DEMAND DYNAMICS: U.S.
Vehicle Mix Pushing Transaction Prices
The Role of Leasing Evolves
Pre-Owned/CPO Market Opportunity
New Sales Models
Electric
Autonomous
Ridehail
Slide19Off-lease vehicle flow
Pre-Owned and CPO Opportunities
2.7 million CPO in 2018
Slide20Off-lease vehicle flow
Pre-Owned Vehicle Opportunities Attract Competition
Slide21Shifting revenue dynamics
Shifting gross Profit dynamics
intensifying gross margin dynamics
Slide22Off-lease vehicle flow
Pre-Owned and Parts & Service Opportunities
Slide23Parts & Service Opportunities
Retail Aftermarket Revenue Growth
Slide24CONSUMER DEMAND DYNAMICS: U.S.
Vehicle Mix Pushing Transaction Prices
The Role of Leasing Evolves
Pre-Owned/CPO Market Opportunity
New Sales Models
Electric
Autonomous
Ridehail
Slide25U.S. SAAR LATE IN CYCLE
Record U.S. Volume in 2015 and 2016
HIGH FIXED COSTS
COST
RATIONALIZATION
RECORD
PROFITABILITY
Slide26ADJUSTED OPERATING INCOME
Post global financial crisis (2008-09)
Slide27NEW VEHICLE MIX
Legacy U.S. Manufacturers
Slide28BEV MIX IN U.S.
Slide29CONSUMER DEMAND DYNAMICS: U.S.
Vehicle Mix Pushing Transaction Prices
The Role of Leasing Evolves
Pre-Owned/CPO Market Opportunity
New Sales Models
Electric
Autonomous
Ridehail
Slide30SELF-DRIVING INVESTMENTS
$5.4b
Slide31AUTONOMOUS CAR
Pretax Losses on Zero Revenue
Slide32SELF-DRIVING CAR STUDY
Slide33CONSUMER DEMAND DYNAMICS: U.S.
Vehicle Mix Pushing Transaction Prices
The Role of Leasing Evolves
Pre-Owned/CPO Market Opportunity
New Sales Models
Electric
Autonomous
Ridehail
Slide34UBER & LYFT AS CUSTOMER BASE
Expanding the addressable market if the business model holds together
49%
48%
UBER
Slide35UBER & LYFT AS CUSTOMER BASE
Expanding the addressable market if the business model holds together
54%
47%
LYFT
Slide36UBER & LYFT AS CUSTOMER BASE
Expanding the addressable market if the business model holds together
Slide37VEHICLE MILES TRAVELED
Slide38NEW BUSINESS MODELS
Supporting Ridehail/Rideshare/Delivery Drivers
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