August 2014 — Automotive Monitor

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Automotive Monitor
August 2014 — Automotive Monitor
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Trend
Tracker
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result of better overall market conditions,
NOLVs for aftermarket replacement parts
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remained consistent.
NOLVs: Values for OEM parts were
mixed, due to certain gross margin declines and changes in inventory mix.
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NOLVs: Values increased for aftermarket
accessories due to rising sales and an in-
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NOLVs: Despite improved gross margins,
crease in new products offered at higher
as well as an increase in selling prices as a
gross margins.
August 2014 — Automotive Monitor
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Overview
After getting off to a slow start in 2014 amid freezing winter
weather, the domestic automotive industry has proved to be a
consistently strong sector of the U.S. economy, with sales
continuing to rebound. In the first half of 2014, unit sales totaled
8.2 million vehicles, an increase of approximately 4.3% from the
same period of 2013. Experts originally projected sales to reach
16 million by year-end, yet are now projecting even higher totals.
Consistent sales increases set the tone for the
Due to the discretionary nature of many
overall automotive industry, as a higher
aftermarket accessories, demand for these
number of new vehicles on the road translates
items are traditionally linked to disposable
into higher demand for various OEM parts
incomes.
and tires.
Recent reports indicate that consumer
Additionally, as research continues to show
spending in June 2014 witnessed modest
that the average age of cars on the road
growth, following a similar increase in May.
hovers near peak levels, demand for
Personal income exhibited a slight increase as
aftermarket parts is strong as well. As
well, which bodes well for the U.S. economy
consumers continue to hold onto cars longer,
as a whole.
the need for replacement and repair parts
increases.
August 2014 — Automotive Monitor
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Overview
of 2014, the U.S. automotive industry sold
approximately 8.2 million vehicles, an
Following tepid winter sales, the U.S. auto
increase of 4.3% over the same period in
industry witnessed renewed growth in
2013.
spring, with May 2014 representing a third
straight month of sales increases following
July’s performance was softer than
March and April. Sales in May increased
predicted, as sales for the month increased
approximately 11.3% from the same month
approximately 9% over the prior year,
in 2013, with the annual sates rate of 16.8
falling short of the 11% gain projected by
million vehicles representing the strongest
industry analysts. However, as summer
witnessed since prior to the 2008 recession.
sales incentives are expected to continue to
lift sales in the coming months, experts
assert 2014 will post growth overall.
The strength continued through June, with
sales increasing 1.2% over 2013 levels. The
month marked yet another milestone in the
Electric cars continue to be a growing
automotive sector, with the annual sales
segment, with nearly 55,000 plug-in vehicles
rate of 17.0 million representing the best
sold thus far in 2014, a 35% increase as
experienced since June 2006. In the first half
compared to the same period of 2013.
U.S. Auto Sales
12 Months Ended July 2014 versus 2013
(in Units Sold)
1,700,000
1,600,000
1,500,000
1,400,000
1,300,000
1,200,000
1,100,000
1,000,000
This Year
Last Year
August 2014 — Automotive Monitor
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Overview
best performance since 2007. Retail sales
increased 4%. Performance was strong
According to a recent press release, Ford
across the company’s brands, with every
sold over 212 thousand vehicles in July 2014,
GMC nameplate posting sales growth for
which is a 10% increase from the previous
the month. Chevrolet-branded vehicles
year and the company’s best performance in
witnessed an increase in deliveries of 8% in
eight years. The increase was attributed to
July.
strong sales for its Ford Explorer and Ford
Fusion models, which posted gains of 32%
Chrysler Group reported its best July since
and 17% respectively. Its F-Series line of
2005 with sales of 167,667 vehicles for the
pickup trucks continued to be popular
month, representing a 20% increase from
items, with sales increasing 5% at 63
2013. Jeep was the group’s strongest brand,
thousand trucks sold for the month.
with sales increasing 41% from the same
month in 2013, representing the brand’s best
General Motors reported that unit sales
July sales in the company’s history. Ram
totaled 256,160 vehicles in July, which
also performed well for the month, with
represents a 9% increase from 2013 and its
sales increasing 14%.
U.S. Light Vehicle Retail Sales
Year-to-Date July 2014 versus 2013
General Motors
Ford
Toyota
Chrysler
Honda
Nissan
Hyundai
Kia
Volkswagen
Subaru
BMW
Daimler
Mazda
Mitsubishi
Jaguar-Land Rover
Volvo
Porsche
Tesla
Maserati
Ferrari
Suzuki
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
Year-to-Date - July 2013
Year-to-Date - July 2014
Source: Autodata Corporation
August 2014 — Automotive Monitor
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Recent
Appraisal Trends
Manufacturers and distributors in the OEM parts
Sales of aftermarket replacement parts were steady
sector have posted strong performances in the second
on an annual basis for GA’s recent engagements.
quarter of 2014, with sales increasing an average of
10% to 20% as a result of increased business with
existing customers.
Gross margins increased slightly, in a shift from
previous monitors, with GA noting a gain in gross
margins of approximately one point. Gains were
Gross margins tend to fluctuate based on market
aided by stronger market conditions, as well as the
prices, as well as the number of new contracts added
introduction of slight price increases on some
or lost per year and the gross margin associated with
industry products.
the lost or gained contact. Overall, GA’s
engagements exhibited mixed gross margins,
fluctuating five percentage points in either direction.
In general, inventory levels have remained consistent
since the previous monitor. Inventory levels for
products that perform well have increased, yet this
Inventory levels for those companies supplying the
was offset by companies improving their inventory
OEM market have been mixed, with changes driven
management and therefore maintaining minimal
by the number of new contacts entering the market
levels of slow-moving products.
and old contacts expiring.
The aforementioned factors have led to relatively
consistent NOLVs for participants in the aftermarket
replacement parts sector.
NOLVs for OEM parts were mixed in the second
quarter of 2014. Gains were driven by increased
sales as well as improved management of obsolete
inventories. Improvements were partially offset by
the increases in lower-recovering raw materials and
work-in-process inventory.
Aftermarket accessories consist of both cosmetic and
performance-enhancing products. These items are
typically discretionary in nature and, as a result,
industry performance is often dependent upon the
greater economy.
August 2014 — Automotive Monitor
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Recent
Appraisal Trends
In general, sales increased on an annual basis,
approximately 5% to 10% year-over-year. The
increased sales can be attributed to an overall
improvement in market conditions, as well as a
rise in the number of new products offered.
Along with increased sales, gross margins
increased zero to two percentage points.
Margins were positively impacted by the
aforementioned improvement in market
conditions. Additionally, some industry
participants have introduced new products at
higher price points, which has positively
impacted margins.
As a result of improvements in sales, gross
margins, and inventory mix, NOLVs for
aftermarket accessory parts increased for the
second quarter of 2014. However, the amount of
Inventory levels for thus far in 2014 have
increased, with companies maintaining higher
increased varied by participant, anywhere from
zero to five percentage points.
inventory levels for those products which
perform well.
August 2014 — Automotive Monitor
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Experience
GA has worked with and appraised numerous companies within the automotive industry.
While our clients remain confidential, they include companies throughout the automotive
supply chain, including manufacturers, importers, distributors, and retailers of aftermarket,
performance, replacement, and OEM parts and accessories.
GA’s extensive list of appraisal experience includes:
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A remanufacturer and distributor of alternators
and starters for imported and domestic vehicles
with over $170 million in sales and over $60 million in inventory, including $20 million of core
inventory.
A U.S.-based producer and recycler of automotive and industrial lead acid batteries, with locations throughout North American and the world,
an inventory of approximately $200 million, and
sales of $1.2 billion.
An Internet retailer of aftermarket replacement
automotive parts, including auto body and engine parts, as well as accessories, to customers
worldwide. The company’s $50 million of inventory includes approximately 1.8 million types of
aftermarket auto parts for nearly all makes and
models of domestic and foreign cars and
trucks. The company’s nearly $300 million in
sales are primarily generated via hundreds of
websites.
OEM parts suppliers to the “big three” U.S. automakers, which includes manufacturers of
transmission, interior, wheel, and accessory
products.
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A distributor of replacement passenger, light
truck, and commercial truck tires, including winter, four-season, and high-performance tires.
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A wholesale distributor and retailer of aftermarket automotive parts and accessories, including
engine and exhaust components such as fuel injectors, steering and suspension parts, oil and air
filters, performance parts, shock absorbers, chassis parts, gaskets, water/fuel pumps, brake
drums and rotors, and other related aftermarket
automotive replacement parts.
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A designer, manufacturer, and distributor of specialty products for the performance automotive
aftermarket, specializing in motorcycles and
boats, with products including fuel, air, and internal engine management systems, which are
designed to enhance vehicle performance
through generating increased horsepower and
torque.
GA has also liquidated a number of manufacturers and distributors of OEM
and aftermarket parts, including Midas Corporation, Trak Auto, Smittybilt
Outland Automotive Group, Inc., and American Products Company, Inc. In
addition to our vast liquidation and appraisal experience, GA maintains contacts within the automotive industry that we utilize for insight and perspective
on recovery values.
August 2014 — Automotive Monitor
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Monitor
Information
The Automotive Monitor relates information covering most automotive products, including
industry trends, market pricing, and their relation to the valuation process. GA provides our
customer base with a concise document highlighting the automotive industry. GA strives to
contextualize important indicators in order to provide a more in-depth perspective of the
market as a whole. This publication will provide you with market value and industry trends
for a variety of products within the automotive sector.
GA internally tracks recovery ranges for parts, but we are mindful to adhere to your request
for a simple reference document. Should you need any further information or wish to discuss
recovery ranges for a particular segment, please feel free to contact your GA Business
Development Officer.
GA’s Automotive Monitor provides market value and industry trend information for a
variety of automotive products. The information contained herein is based on a composite
of GA’s industry expertise, contact with industry personnel, liquidation and appraisal
experience, and data compiled from a variety of well-respected sources believed to be
reliable. We do not guarantee the completeness of such information or make any
representation as to its accuracy.
August 2014 — Automotive Monitor
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Appraisal
& Valuation Team
Mike Marchlik
National Sales & Marketing Director
[email protected]
(818) 746-9306
Jennie Kim
Vice President, Western Region
[email protected]
(818) 746-9370
Ryan Mulcunry
Executive Vice President - Northeast Region, Canada & Europe
[email protected]
(617) 692-8310
Dan Williams
Managing Director, New York Region
[email protected]
(646) 381-9221
David Seiden
Executive Vice President, Southeast Region
[email protected]
(770) 551-8114
Bill Soncini
Senior Vice President, Midwest Region
[email protected]
(312) 777-7945
Drew Jakubek
Managing Director, Southwest Region
[email protected]
(972) 265-7981
Mark Weitz
President
[email protected]
(818) 884-3737
Ken Bloore
Chief Operating Officer
[email protected]
(818) 884-3737
Thomas Mitchell
Project Manager, Automotive Parts/Petroleum Specialist
[email protected]
(818) 746-9356
About Great American Group
Great American Group is a leading provider of asset disposition solutions and valuation and appraisal services to
a wide range of retail, wholesale, and industrial clients, as well as lenders, capital providers, private equity
investors, and professional services firms. In addition to the Automotive Monitor , GA also provides clients with
industry expertise in the form of monitors for the chemicals and plastics, metals, food, and building products
sectors, among many others. GA offers the European Automotive Monitor via its subsidiary, GA Europe
Valuations Limited.
Headquarters
21860 Burbank Blvd. Suite 300 South
Woodland Hills, CA 91367
800-45-GREAT
www.greatamerican.com
August 2014 — Automotive Monitor
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