1. 1 One nightclub at a time. And the best one is here in Birmingham! February 20-22, 2014

2. Is the market one big Brrrrr! February 18, 2014

3. Is the market one big Brrrrr?  Holidays and Southern Snow  Does everything happen on Wednesday?  Other than the values the primary topic has been the weather  Recent survey report: “the sale started late, cars were out of order and it just wasn’t the typical organization.”  What does this do to the values?  Creates a 2000 unit auction, almost double normal run list  Black Book tracks the variables as well as the block bidding

4. Car Segment Changes January10-Jan-78 17-Jan-58 24-Jan-72 31-Jan-48 February7-Feb -43 14-Feb-47 21-Feb-40 yr ago 2/15/2013-18

5. Car Segment Changes  SCC & ELC: Most consistent and stable  It is what it is, transportation  3 week avg: -$21 & -$19  6 week avg: -$28 & -$24  PLC: larger $ change,  6 week avg: -$107  PSC: Just not sports car weather  6 week avg: -$145

6. Truck Segment Changes January10-Jan-55 17-Jan-55 24-Jan-64 31-Jan-44 February7-Feb -49 14-Feb-38 21-Feb-67 (we feel a temporary change) yr ago 2/15/2013-19 Both improving as weeks pass, but not as strong or stable as last year

7. Truck Segment Changes  FVW & FVC: most stable and consistent  3 week avg: -$10  FSU: truck based 4x4 doing well  3 week avg: -$12  LSU & FXU: largest $ movement  3 week avg: -$109 & -$90  CXU: volume units and very competitive  3 week avg: -$56

8. 8 Volume Affects Depreciation Expectations

9. Looking Back at 2013  Depreciation levels driven by increasing used inventory 2014 Prediction: -13.5% Annual 2 – 6 Year Olds

10. Looking Back at 2013  Hybrids/Electrics Spread is closing in all mixes! $2398 $1748 $1416

11. Looking Back at 2013  New car sales – 15.6M: 1 million growth over 2012  New Lease penetration continued through year-end  EOT Lease Returns continued to grow: consider as part of new car trade-ins  A change in the trade-in mix  Older Trades:  Pre-recession2 – 4 years  2011 & 2012 8 – 11 years  Second half 20133 – 4 & 8 – 11 years  Lending growth continued supporting new and used sales  Buying deeper, greater LTVs and longer terms  Value trends used more for risk analysis

12. Looking Ahead  New Vehicle Sales: Less Growth  16,056,123  Off-Lease Volume: part of the trade-in count  Only about 30K more trades yr over yr  About 3.1M total EOT  Slight increase in rental turn-ins with retail sales joining the mix  ??? How many will make it to the physical auction?

13. Looking Ahead  Gas price impact  Next 2 months – expect by $.25 to $.30 per gallon  Highs of $3.75 to $3.85 in 2014  2013 averaged $3.49, 2012 was $3.65 Wide gap gas/diesel

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16. Looking Ahead  Incentives:  Cash on the hood  Lease focused  Payment spread new to used  Back to pre-recession differences  Residual forecasting  Hybrid and EV retention vs. gas models in 2014  Need is for more accurate or additional residual forecasting to help lenders spot the right opportunities  Continued truck segment strength  Entry Level and Compact Cars: Not overly optimistic

17. $ Start$ End$ Change % Change Full Size Pickup Trucks Overall market change: -7.7% -12.4% -12.8%

18. 18 Compact Pickup Trucks

19. 19 Mid-Size Pickup Trucks Overall market change: -7.7% -12.4% -12.8%

20. 20 Factors: Economy: construction within the commercial and residential markets, and service industry demand Supplies/Volumes Gas Prices Revised Models Increasing average used pricing Forecast:  Jan 2014/Jan 2015 overall: -13.5%  FPT forecast: -9.0% to -10.5% Why the FPT have and will do better than the market?

21. 21 Entry Level Cars Overall market change: -7.7% -12.4% -12.8%

22. 22 Compact Cars

23. 23 Why these expectations? New market is artificially forced volumes CAFÉ requirements: 34.5/54.5MPG Current and short term gas prices Revised models of mid-size cars Close to same mpg More size and comfort Forecast: Jan 2014/Jan 2015 overall: -13.5% ELC: -15.5% to -16.5% SCC: -14.5% to -16.0%

24. Questions?

25. Just call or email Tim West 770.533.5230 TWest@BlackBookUSA.com Ricky Beggs 770.533.5221 RBeggs@BlackBookUSA.com