China was the largest country accounting for $14.6 billion or 18.5% of the global inland market. Read report: https://www.thebusinessresearchcompany.com/report/inland-global-market-report-2018
The overall outlook for 2017 Canadian M&A activity remains moderately positive, despite the decrease in the number of Canadian companies sold in 2016. Corporate balance sheets are flush with cash, with corporations actively looking for quality investments. Interest rates remain low, and oil prices are showing signs of improvement. Private Equity firms also have large cash holdings and often see Canadian firms as good "bolt-on" opportunities. Read the report for more detail on trends, public market performance and deal activity.
Market conditions at the fourth quarter’s outset largely reflected expectations of continued (albeit modest) economic growth and accommodative monetary policy. At mid quarter, the presidential election portended a period of fiscal stimulus and tightening monetary policy. Overall, the quarter witnessed a sharp rally in equities, tightening credit spreads, a downturn in Treasury prices and a strengthening of the U.S. dollar.
Datamonitor's Electricity in Canada industry profile is an essential resource for top-level data and analysis covering the Electricity industry. It includes data on market size and segmentation, plus textual and graphical analysis of the key trends and competitive landscape, leading companies and demographic information. Scope * Contains an executive summary and data on value, volume and/or segmentation* Provides textual analysis of Electricity in Canada's recent performance and future prospects* Incorporates in-depth five forces competitive environment analysis and scorecards * Includes a five-year forecast of Electricity in Canada* The leading companies are profiled with supporting key financial metrics * Supported by the key macroeconomic and demographic data affecting the market Highlights * Detailed information is included on market size, measured by value and/or volume* Five forces scorecards provide an accessible yet in depth view of the market's competitive landscape * Market shares are covered by manufacturer or brand Why you should buy this report * Spot future trends and developments * Inform your business decisions * Add weight to presentations and marketing materials * Save time carrying out entry-level researchMarket DefinitionThe electricity market consists of the sale of electricity to industrial, commercial, household, transportation, and other end-users, including agricultural. The volume of the market is calculated as the total volume of electricity consumed (in billions of kilowatt hours, kWh), and the market value has been calculated according to average annual electricity prices. Note that 1 TWh is identical to 1 billion kWh, or 1 million MWh. Market shares are calculated on the basis of retail sales to end-users in all segments. Any currency conversions used in the creation of this report have been calculated using constant 2009 annual average exchange rates. For the purposes of this report, the Americas consists of North America and South America.North America consists of Canada, Mexico, and the United States.South America comprises Argentina, Brazil, Chile, Colombia, and Venezuela.
This is a demo version of Williams & Marshall Strategy's report on the ethylene oxide market in South and Central America. The report presents a strategic analysis of the ethylene oxide market in the region and a forecast for its development in the medium term. It provides a comprehensive overview of the market, its dynamics, structure, characteristics, main players, growth and demand drivers, etc. This is the most detailed and comprehensive report about the ethylene oxide market in South and Central America currently available!
EY Analyst themes of quarterly oil & gas earnings: 3Q18EY
Oil & gas companies are reporting stronger cash flows and improved bottom lines. Analysts are focused on how that cash will be put to work. Do they return cash to shareholders or do they expand portfolios, possibly taking advantage of stronger market indicators? Macro factors and timing are likely to play a greater role as markets reset.
The SVB State of the Markets report provides a quarterly update on the health and productivity of the global innovation economy. This quarter's report includes a special section on the booming Chinese tech industry.
The U.S. Tech sector’s new record high has brought back memories of the dot-com bubble. But unlike then,
today’s Tech sector is not propped up by fanciful talk. It’s led by companies that are truly transforming the
economy and our lives.
aquí esta un pedasito de la vida de lady , aparte del pedasito de la historia verán algunos personajes como: lady,mirella,liliana,alex...... espero les guste, gracias
Este trabajo es realizado con el fin de hacer que las personas comprendan la importancia de estos animales, que hoy en día están en peligro de extinción y que nosotros como seres humanos debemos reaccionar ante este hecho que viene sucediendo desde hace mucho tiempo
China was the largest country accounting for $14.6 billion or 18.5% of the global inland market. Read report: https://www.thebusinessresearchcompany.com/report/inland-global-market-report-2018
The overall outlook for 2017 Canadian M&A activity remains moderately positive, despite the decrease in the number of Canadian companies sold in 2016. Corporate balance sheets are flush with cash, with corporations actively looking for quality investments. Interest rates remain low, and oil prices are showing signs of improvement. Private Equity firms also have large cash holdings and often see Canadian firms as good "bolt-on" opportunities. Read the report for more detail on trends, public market performance and deal activity.
Market conditions at the fourth quarter’s outset largely reflected expectations of continued (albeit modest) economic growth and accommodative monetary policy. At mid quarter, the presidential election portended a period of fiscal stimulus and tightening monetary policy. Overall, the quarter witnessed a sharp rally in equities, tightening credit spreads, a downturn in Treasury prices and a strengthening of the U.S. dollar.
Datamonitor's Electricity in Canada industry profile is an essential resource for top-level data and analysis covering the Electricity industry. It includes data on market size and segmentation, plus textual and graphical analysis of the key trends and competitive landscape, leading companies and demographic information. Scope * Contains an executive summary and data on value, volume and/or segmentation* Provides textual analysis of Electricity in Canada's recent performance and future prospects* Incorporates in-depth five forces competitive environment analysis and scorecards * Includes a five-year forecast of Electricity in Canada* The leading companies are profiled with supporting key financial metrics * Supported by the key macroeconomic and demographic data affecting the market Highlights * Detailed information is included on market size, measured by value and/or volume* Five forces scorecards provide an accessible yet in depth view of the market's competitive landscape * Market shares are covered by manufacturer or brand Why you should buy this report * Spot future trends and developments * Inform your business decisions * Add weight to presentations and marketing materials * Save time carrying out entry-level researchMarket DefinitionThe electricity market consists of the sale of electricity to industrial, commercial, household, transportation, and other end-users, including agricultural. The volume of the market is calculated as the total volume of electricity consumed (in billions of kilowatt hours, kWh), and the market value has been calculated according to average annual electricity prices. Note that 1 TWh is identical to 1 billion kWh, or 1 million MWh. Market shares are calculated on the basis of retail sales to end-users in all segments. Any currency conversions used in the creation of this report have been calculated using constant 2009 annual average exchange rates. For the purposes of this report, the Americas consists of North America and South America.North America consists of Canada, Mexico, and the United States.South America comprises Argentina, Brazil, Chile, Colombia, and Venezuela.
This is a demo version of Williams & Marshall Strategy's report on the ethylene oxide market in South and Central America. The report presents a strategic analysis of the ethylene oxide market in the region and a forecast for its development in the medium term. It provides a comprehensive overview of the market, its dynamics, structure, characteristics, main players, growth and demand drivers, etc. This is the most detailed and comprehensive report about the ethylene oxide market in South and Central America currently available!
EY Analyst themes of quarterly oil & gas earnings: 3Q18EY
Oil & gas companies are reporting stronger cash flows and improved bottom lines. Analysts are focused on how that cash will be put to work. Do they return cash to shareholders or do they expand portfolios, possibly taking advantage of stronger market indicators? Macro factors and timing are likely to play a greater role as markets reset.
The SVB State of the Markets report provides a quarterly update on the health and productivity of the global innovation economy. This quarter's report includes a special section on the booming Chinese tech industry.
The U.S. Tech sector’s new record high has brought back memories of the dot-com bubble. But unlike then,
today’s Tech sector is not propped up by fanciful talk. It’s led by companies that are truly transforming the
economy and our lives.
aquí esta un pedasito de la vida de lady , aparte del pedasito de la historia verán algunos personajes como: lady,mirella,liliana,alex...... espero les guste, gracias
Este trabajo es realizado con el fin de hacer que las personas comprendan la importancia de estos animales, que hoy en día están en peligro de extinción y que nosotros como seres humanos debemos reaccionar ante este hecho que viene sucediendo desde hace mucho tiempo
The global connected logistics market is to increase from US$ 20.7 billion in 2020 to US$ 34.2 billion by 2025 with a compound annual growth rate (CAGR) of 10.5% for the period 2020-2025. The emergence of high tech vehicles is the major driving factor for the growth of the connected logistics market. The growing need for connected logistics in several sectors, such as food and beverage, healthcare and pharmaceuticals, manufacturing, etc., to move goods safely over a minimum amount of time raises the need for connected logistics. For example, the Volvo group declared its corporation with Nvidia for the production of self-driving trucks. Both firms working to create an advanced artificial intelligence framework for the analysis of driving results. Therefore, the development of autonomous vehicles uplifts the demand for connected logistics. Besides, the growing mobility demand has emphasized challenges such as volatile oil prices, massive investment, and dealing with emission. The player is involved in developing a high-tech vehicle that is capable of meeting the future need of the economy as well as society. High-tech vehicles are also utilized in supply chain and logistics which helps in enhancing efficiency and safety of transportation, along with better environmental sustainability. Hence, these factors lead to the development and growth of the connected logistics market in the forecasting years.
Sewells Group Automotive Dealer Confidence Index (ADCI) Report Apr-Jun 2014Sewells MSXI
Sewells Group Automotive Dealer Confidence Index (ADCI) indicates significant increase in optimism amongst auto dealer fraternity
Survey to quantify dealer sentiment shows significant positive swing amongst passenger car and two-wheeler dealers; commercial vehicle dealers continue to maintain a pessimistic outlook.
Term ProjectFinancial Statement Analysis of Autonation and.docxbradburgess22840
Term Project
Financial Statement Analysis of Autonation and Lithia Motors Inc.
Prepared by
Monica Galindo
For
Professor C.E. Reese
in partial fulfillment of the requirement for
ACC 770 – Managerial Accounting
School of Business/Graduate Studies
St. Thomas University
Miami Garden, Fla.
Term A2/Spring, 2017
May 11, 2017
Table of Contents
Introduction 1
Business history and future 2
Financial analysis 6
Liquidity analysis 12
Activity analysis 14
Solvency analysis 15
Profitability analysis 16
Comparative analysis 18
Summary and Conclusions 21
Appendices 22
References 29
3
Term Project
Financial Statement Analysis of Autonation and Lithia Motors Inc. 2014 - 2016
Prepared by
Carlos Flores
For
Professor C.E. Reese
in partial fulfillment of the requirement for
FIN 751 – Managerial Accounting
School of Business/Graduate Studies
St. Thomas University
Miami Garden, Fla.
Term A2/Spring, 2017
May 11, 2017
Table of Contents
Introduction 2
Business history and future 3
Financial analysis 7
Liquidity analysis 14
Activity analysis 15
Solvency analysis 16
Profitability analysis 18
Comparative analysis 19
Summary and Conclusions 22
Appendices 24
References 31
Introduction
a. Objective
This paper conducts a comparative financial analysis on AutoNation and Lithia Motors with the objective to assess the financial health of the companies. Financial analyses provide objective answers and gives companies support for making informed decisions. By reviewing past and current financial statements and comparing them to the automobile industry, future predictions can be made to ensure that the companies can be profitable. Financial analyses thus allows companies to discover areas that must be improve to ensure that creditors look favorable upon the companies and drive profit potential (Asongu, 2015).
b. Scope
This financial analysis is conducted to understand key business ratios to understand AutoNation and Lithia Motors stability and compare business's financial performance to competitors and the industry as a whole. In the end, creditworthiness is assessed for both companies to determine if credit should be extended as well as the recommendations for both companies after all of the data has been analyzed and interpreted.
c. Methodology
The information from balance sheet, income statement and other financial statements will be used to calculate the relevant ratios to complete these analyses. The relevant ratios that will be used are the liquidity, activity, solvency and profitability ratios. The financial statements will then be used to conduct vertical and horizontal analyses to indicate any changes in the companies’ accounts and evaluate which accounts uses much of the companies' money. The various computations and websites references will be employed to analyze the data and make sound interpretations, recommendations and conclusions.
Business History and Future
a.Industry
The automobile industry is made up of several companies in US.
ACT Research: Economy Strong, but Moderating; CV Industry Nearing Inflection ...Ian McGriff
n the release of its Commercial Vehicle Dealer Digest, ACT Research noted that the economic picture remains largely unchanged, with growth moderating in 2019 from strong 2018 growth. The economy was already moderating as tailwinds from the end-of-2017 tax cuts diminished, but other caution flags are waving including current trade uncertainties, slowing industrial and auto sectors, tariff-driven inventory building, and an unfolding global economic slowdown. The report provides monthly analysis on transportation trends, equipment markets, and the economy.
North America was the largest geographic region accounting for $15.9 billion or 36.4% of the global market. The USA was the largest country accounting for $13.4 billion or 30.8% of the global cargo air transportation market.
Read Report
https://www.thebusinessresearchcompany.com/report/cargo-global-market-report-2018
Sewells MSXI Automotive Dealer Confidence Index is our quarterly publication quantifying the dealer confidence sentiment across Passenger Cars, Two Wheeler and Commercial Vehicle dealers in India for that particular quarter.
Sewells Group released the results of their Automotive Dealer Confidence Index (ADCI) survey for India for the end of April-June 2015 quarter. The overall ADCI indicates a sharp swing from -3 at the end of Q1 2015 to +7 at the end of Q2 2015 indicating a significant shift in optimistic sentiment of automotive dealers across the country.
Snapshot report - Sustainability in TruckingJennifer Wong
In August 2020 Convoy surveyed over 440 small and mid-sized trucking companies across the United States to collect a snapshot of sustainability in trucking. Survey participants include dispatchers for fleets and owner-operators. All the results are self reported by the participants. This report is data from over 31,787,562 miles driven in July.
SEWELLS GROUP ADCI REPORT- END OF JUL-SEP 2014 QUARTER (INDIA)Sewells MSXI
Sewells Group Automotive Dealer Confidence Index (ADCI) is a measure of dealer sentiment about their business over the next six months from the time it is being captured. The Sewells Group ADCI survey is conducted with automotive dealers across the nation to quantify their sentiment about the automotive retail trade, with a six-month time horizon. The survey is conducted quarterly, with an intention of tracking the movement of dealer sentiment over time. This report gives the results of the survey for the at the end of July-September 2014 quarter which was conducted in the first week of October.
3. U N D E R S T A N D I N G R E C E N T T R E N D S I N A C V s | 3
Summary
In terms of perspective, this white paper provides more of a ‘birds-eye’ view rather than
a granular, case-by-case analysis of actual cash value (ACV) estimations. Some useful
insights are made available. Principal among these are that macroeconomic factors
are the key determinants for the supply of, and demand for, used vehicles, and of used
vehicle pricing in aggregate. It is also apparent that Autosource ACV trends are reliable
proxies for used vehicle market price trends. Although not explored in detail, it is clear that
used vehicle markets in Canada and the U.S. are fundamentally alike, but the timing and
scale of any response to marketplace events may be affected by other factors unique
to each country.
Purpose
Many of Canada’s leading insurers rely on used vehicle valuations generated by Autosource,
Audatex Canada’s valuation tool, to help them settle total loss claims. Autosource captures
data from across the Canadian marketplace, finds vehicles that are both geographically
proximate and comparable to the loss vehicle, and then uses a proprietary algorithm built
using literally millions of data points to calculate a valuation amount.
Autosource is a robust, time-tested product. Its outputs are critical to ensuring that the
promise of indemnity, i.e., that the claimant will be restored to the position they were in
prior to their loss, is met, and that the settlement process is equitable for both policyholder
and insurer alike.
Over the past 18-24 months, aggregate analyses suggested that actual cash value
amounts were trending upward (See Figure 1.) during a period when inflation was negligible
and other economic factors such as GDP growth, the price of oil, employment, and the
value of the Canadian dollar were either soft or declining. In an environment where most
indicators suggest that prices should hold steady or perhaps even decline, the trend in
ACV seems counterintuitive.
4. 4 | U N D E R S T A N D I N G R E C E N T T R E N D S I N A C V s
From a client perspective, confidence in ACV is critical. They need to know that the data
used is both representative and that the calculations used weight key factors appropriately.
For Audatex, generating valuations is not a static process, but more an evolutionary one
that necessitates continual re-evaluation of data, methods, assumptions and external
factors that may be impactful.
This study was undertaken to identify key drivers of recent trends and to confirm that
generated valuations continue to accurately reflect the marketplace and are not artefacts
of an imperfect methodology.
FIGURE 1
For Audatex, generating valuations
is not a static process, but more an
evolutionary one.
5. U N D E R S T A N D I N G R E C E N T T R E N D S I N A C V s | 5
Research Design
The research design for this study comprises two components: a statistical analysis of 2015
ACV data; and a literature search focused primarily on reports generated by government
agencies and commercial market research firms.
Autosource data were extracted for 20151
and various data mining techniques were applied,
including a cluster analysis, the construction of a linear regression model, a correlation
analysis of expected vs. observed outcomes, and profiling of the identified clusters.
The dataset included latest ACV values aggregated by month, province, region of origin,
make, and vehicle category as well as vehicle age and mileage. Only data from typical
instant, i.e., system-generated, valuations were included. A linear regression model built
off the dataset also incorporated additional variables such as the value of the Canadian
dollar over time. Part of the dataset from the first half of the year was used to “train” or
fine tune the model while the remainder was reserved to test its predictive ability against
observed results.
Valuable insights were gained from a variety of sources accessed during the literature
search conducted for the study. Because vehicle markets develop over multi-year, or even
longer, timescales the search was not limited to only the most recent published material
but also included analyses of economic events and trends stretching back for the better
part of the last decade.
Material from government entities such as the Financial Consumer Agency of Canada
and Statistics Canada, as well as from the research arms of major financial institutions such
as Scotiabank, was reviewed. Reports from specialist automotive research companies on
both sides of the border, such as the U.S.-based National Automobile Dealers Association
(NADA) and DesRosiers Automotive Consultants in Canada, were also examined. Business
news reports published by mainstream media outlets such as The Globe & Mail or The
Financial Post provided additional, relevant information.
As a starting point for the research and subsequent analytical activity, it was hypothesized
that ACVs are proxies for used vehicle market prices and that any long-term movement
or identifiable trend in ACVs will mirror real-world events, price movements, and trends in
those markets. As such, the drivers of the used vehicle market will also drive ACVs.
1 Obtaining current data for the used car market in Canada can be challenging. For
example, there is a two-three-month lag for Statistics Canada price data and seasonal
adjustments are made to prior entries with each new entry. Volume data are not readily
accessible except in year-end summaries. The ability to provide an “up to the minute”
snapshot of the market is, therefore, constrained.
6. 6 | U N D E R S T A N D I N G R E C E N T T R E N D S I N A C V s
A strong correlation
between changes to
ACVs and changes in
$CAD/$USD exchange
rate is a suprising find.
Research Findings
Data Analytics
Through the initial data analysis, fourteen clusters were defined. Each cluster contained
vehicle makes and models that share similar characteristics. A multiple linear regression
model was developed and trained with a subset of the data as planned. The model was
then used to forecast results for the remainder of the dataset. Actual ACVs for the latter
half of the year were then compared with the forecast ACVs, exceeding them by an
average of $674 at year-end.
Two of the fourteen clusters defined were weakly correlated with overall ACV and two
others, clusters 4 and 8, were negatively correlated, meaning that the actual results for
these clusters moved in the opposite direction to what the model predicted. Clusters 4
and 8 accounted for 36% of the valuations in the dataset which suggests that they strongly
influenced the difference between actual and model results.
Examining the composition of these clusters revealed that 50% of the vehicles in Cluster
4 are classified as “Economy-Domestic” while an additional 14% are “Economy-Import”.
In terms of vehicle makes, Cluster 4 contains a disproportionate number of vehicles from
defunct brands; Pontiac, Saturn, and Oldsmobile account for 42%, 11% and 8% of the
cars in the cluster, respectively. These brands are overrepresented in the cluster relative
to their distribution within the dataset overall.
Within Cluster 8, “Economy-Import” at
47%, and “Mid-Foreign” at 27% are the
predominant categories, and Toyota,
Honda, Nissan and Volkswagen are notable
brands (See Figure 2.). At shares of 29%,
13%, 10% and 9%, respectively, these
makes account for nearly two thirds of
the vehicles in the cluster.
FIGURE 2
7. U N D E R S T A N D I N G R E C E N T T R E N D S I N A C V s | 7
A strong correlation discovered between changes to ACVs and changes in the $CAD/$USD
exchange rate is a somewhat surprising finding. Although the U.S. is Canada’s largest
trading partner, there is no obvious reason that the value of the dollar should correlate
with, or have any influence upon Canadian used vehicle prices as these are domestic
assets being bought and sold in the domestic market with domestic currency.
A separate analysis was conducted comparing ACVs for both cars and light trucks for 2014
through the first quarter of 2016 with the Consumer Price Index (CPI)1
over the same period.
The following charts (Figures 3. & 4.) illustrate a generally positive correlation, particularly
for cars, with overall price inflation in the Canadian economy.
1 Source for CPI data: www.statcan.gc.ca
FIGURE 3
FIGURE 4
8. 8 | U N D E R S T A N D I N G R E C E N T T R E N D S I N A C V s
Literature Research
The purpose of the literature search was twofold: identify current marketplace trends
and the key macroeconomic factors that drive them; and provide historical context by
reviewing and analyzing recent, relevant economic events.
Notable findings:
Over the 2012-2015 time frame, the total value of used car sales in Canada increased 18%,
while the average price increased 20%1
and total unit volume declined 2%2
(Figure 5).
• Following near-record new car sales in 2012, record sales were seen in 2013, 2014
and 2015
• There are still approximately ten million cars ten years old or older on Canadian roads
– replacement demand continues to fuel a very active new car market in 2016
• Consumer preference has shifted to light trucks and crossovers – sales of subcompact
and compact cars have declined
• Low fuel prices plus favourable purchase financing and leasing options contribute to
changing preferences
• While the overall value of used cars sold in Canada has risen over the past few years
the number of units sold has declined slightly meaning that average values have
increased
1 Statistics Canada, CANSIM 080-0020, 2016
2 DesRosiers Automotive Consultants Inc., 2016
FIGURE 5
9. U N D E R S T A N D I N G R E C E N T T R E N D S I N A C V s | 9
• There is a used car shortage that is putting upward pressure on prices – particularly
within specific categories
• Industry-watchers expect the shortage to ease as the effects of multiple factors, e.g.,
changing consumer preferences or changes in financing, impact supply
• Used vehicle sales from Canada to the U.S. have soared as the value of the Canadian
dollar has declined
• The recession in 2008-09 profoundly impacted auto sales on both sides of the border
• Post-recession, new vehicle financing changed significantly1
• In 2007 in Canada, leasing had a 42.4% share of new vehicle financing – this collapsed
to a 7.1% share in 2009
• Leasing has been rebounding steadily – in 2015, 28.8% of new cars in Canada were
financed with leases
• During the recession, some automakers, notably GM Corp. and Chrysler LLC, suspended
leasing altogether while others limited its availability to certain market segments
• Chrysler did not offer leasing in Canada from 2008 until 2013, and GM from 2008
until 2011
• To maintain affordability, the market shifted to extended-term loans (ETLs) – average
terms have increased by two months annually since 2010 reaching 74 months in 2015
• 84- and 96-month ETLs are now commonplace
• There is increasing concern about an “auto bubble” – ETLs and broader availability of
leasing options contribute to ever-higher levels of consumer debt – the frothy new car
market of recent years could contract sharply under certain scenarios which would
have an impact on used car markets a few years down the road
Interpretaion & Analysis
The results of the data analytics and literature search point in the same direction. Recent
increases in ACVs mirror a rise in average used car prices that is driven by multiple factors.
Principal among these is a shortage in supply that has its roots in the recession of 2008-09.
Off-lease vehicles are an important source of supply to the used car market. Lease financing
terms are typically 36-60 months in length meaning that many late-model used cars are
lease returns. The cessation or sharp curtailing of leasing by major manufacturers during
the recession directly affected used car supply 3-5 years later.
As noted by the Financial Consumer Agency of Canada, consumer purchase decisions
hinge on affordability, or more correctly, on the regular payment amount needed to
finance the vehicle2
. In fact, much vehicle advertising highlights the payment amount
while burying the full retail price and other payment terms in fine print.
1 For the purposes of this document, loans, leases and cash are all considered as
different forms of purchase financing.
2 Auto Finance: Market Trends, Financial Consumer Agency of Canada, March 2016
10. 1 0 | U N D E R S T A N D I N G R E C E N T T R E N D S I N A C V s
In order to continue to provide car shoppers with attractive, “affordable” financing options
in the absence of leasing programs, manufacturers turned to extended term loans, low
interest rates and more frequent payments. Previously, typical car loans had 36-48 month
terms paid monthly. Post-recession, ETLs became the norm with terms of 60, 72, 84, and,
more recently, 96 months. In addition, bi-weekly, or even weekly repayment schedules
have become commonplace. Advertising focused on the payment amount and the low,
or even 0% interest rates being offered.
Consumer choice has also been affected by ETL financing. Purchasers who focus on the
regular payment rather than on the total cost of financing have a tendency to buy up
and purchase “more car”, or possibly a different type of vehicle such as a crossover or
compact SUV (Figure 6).
The increasing prevalence of ETLs has played a part in shifting consumer preference
away from conventional passenger cars toward light trucks. In an expanding market over
the period 2011–2015 where the total number of units sold has risen from 1,585,519 to
1,898,485, the passenger car share of market has slipped from 43.8% to 37.7% while the
light truck share of market has grown from 56.2% to 62.3%1
.
Many consumers find themselves in a negative equity position because of ETLs – they
owe more than their car is worth for much of the loan term – the average amount of ETL
negative equity is -$6,7002
. For some car owners, being in a negative equity position is
a disincentive to sell or trade their vehicle before they have finished paying for it which
effectively delays the addition of these vehicles to the used vehicle market.
When GM and Chrysler went into bankruptcy protection in 2008 they suspended their
leasing programs. This action would have had the effect of limiting the supply of vehicles
from these manufacturers to the used vehicle marketplace in the short- to medium-term, as
purchasers would have been forced to migrate to longer-term ETLs for affordable financing.
The recession also impacted new vehicle sales overall (see Figure 7, below). Total sales
volume for new passenger cars and light trucks collapsed from about 1.69 million units
in 2007 to 1.48 million in 20093
. The market has steadily rebounded since, achieving
successive new records in the past three years.
These changes in sales volume, financing and consumer preference affect the market
1 DesRosiers Automotive Consultants Inc., 2016
2 Financial Consumer Agency of Canada, March 2016
3 Statistics Canada, CANSIM 079-0003, 2016
FIGURE 6
11. U N D E R S T A N D I N G R E C E N T T R E N D S I N A C V s | 1 1
unevenly, i.e., by region, vehicle type, make and model, but the overall effect post-recession
was a slow erosion of the supply of used vehicles to the Canadian market.
Figure 8., below, maps the changes in finance options against overall unit sales. It shows
that leasing peaked in 2005 and then suffered a 38% drop in share of finance by the
end of 20091
. Unit sales of used vehicles, rose for four years until 2011, after which they
began to decline, suggesting, first, an increase in supply between 2005 and 2011, and
then a subsequent tightening of supply. Three years later, used sales were again on the
rise, fueled by steadily increasing supplies of off-lease vehicles as leasing rebounded
over the intervening years, plus the addition of vehicles purchased post-recession using
conventional financing.
1 DesRosiers Automotive Consultants Inc., 2016
FIGURE 7
…leasing peaked in 2005
and then suffered a 38%
drop in share of finance by
the end of 2009.
In the broadest terms, the expected response
to a reduction in supply is upward pressure on
pricing. The cluster analysis provides support
for this. As discussed in the Data Analytics
section earlier, cluster 8 accounted for 30%
of the valuations in the dataset. The largest
vehicle categories in the cluster are
“Economy-Import” at 47%, “Mid-Foreign”
at 27%, “Minivans” at 11%, and “Economy-
Domestic” at 8%. On a brand basis, Toyota,
Honda, and Nissan account for 29%, 13%,
and 10% of the vehicles in the clusterwhile
Ford, Dodge and Volkswagen have 9%
each. Notably, Toyota and Volkswagen were
overrepresented in the cluster relative to their
distribution within the dataset overall.
12. 1 2 | U N D E R S T A N D I N G R E C E N T T R E N D S I N A C V s
Cluster 8 ACVs are negatively correlated with model predictions meaning that they are
higher than projected. Taking into account the various factors influencing supply, it is
reasonable to posit that fewer domestic vehicles would have been added to the used
vehicle market as lease returns dried up. This would have a twofold impact on pricing as
the limited supply of domestic vehicles would lend buoyancy to prices for those vehicles
and, in turn, consumers looking for domestics but finding fewer to choose from would look
for substitutes, i.e., similar imported vehicles. The increased demand for a limited supply
of imported, foreign vehicles would put price pressure on those vehicles. A reduction in
supply of one category leads to increased demand for a substitute category and both
categories experience upward price pressure.
Recent changes in the $CAD/$USD exchange rate only served to exacerbate the problem.
As noted previously, the rise in ACVs is also negatively correlated with the decline in the
value of the Canadian dollar versus the US dollar. In 2015, Americans bought 200,000
used vehicles in Canada and exported them to the U.S. - 7% of the total number of used
vehicles sold in Canada1
. The favourable exchange rate makes Canadian used autos very
attractive to U.S. buyers; dealers are reported to be paying asking prices at auction and
shipping truckloads of vehicles south. The impact on the Canadian market is a reduction
in the supply of late model used vehicles contributing to increased retail prices. Exports
from every province climbed in 2015, but Ontario was the dominant supplier suggesting
that impacts might be experienced differently by region2
.
Looking forward, the ongoing resurgence of leasing post-recession bodes well for used car
buyers. Analyses of the U.S. market suggest that as these vehicles start to come off-lease
in 2016-2018 buyers will have greater choice and the increased supply is expected to
exert downward pressure on prices3
. These expectations appear to be coming to fruition.
1 Auto Remarketing Canada, 2016
2 Scotiabank, 2015
3 National Automobile Dealers Association, NADA Used Car Guide, under licence by
J.D. Power and Associates, 2016
FIGURE 8
13. U N D E R S T A N D I N G R E C E N T T R E N D S I N A C V s | 1 3
The NADA Used Car Guide for August and September report consecutive declines in the
Used Vehicle Price Index of 1.1% and 0.4% respectively1
. Similar easing is expected for
Canada as well, and a decline was evident in August when average used car prices
declined month-over-month by 0.3%2
(see Figure 9.). With increasing supply south of the
border, exports of used vehicles to the U.S. may also decline which might further ease
pressure on pricing.
Conclusion
An obvious endpoint for this analysis is that the impressions of industry participants are
confirmed; ACVs have been rising and this rise is counterintuitive when considered in the
context of how a number of widely reported economic indicators such as inflation, the
price of oil, and rates of employment have behaved. In fact, the story is more complex.
Although there may be a tendency to view the used car market as static, with a steady
supply of vehicles becoming available as the fleet inexorably turns over, it is anything but.
The research conducted for this paper reveals that current availability is largely determined
by the economic conditions that prevailed several years ago and by the response of the
marketplace to those conditions.
1 NADA Used Car Guide, August, September, 2016
2 Auto Remarketing Canada, September, 2016
FIGURE 9
14. 1 4 | U N D E R S T A N D I N G R E C E N T T R E N D S I N A C V s
The recession of ’08-’09 dealt a serious blow to overall sales. It also had a dramatic impact
on car companies and financing institutions in terms of how they assessed and managed
risk. Leasing collapsed and with it a major source of supply to the used car market. To
maintain affordability, ETLs became commonplace.
These events and the responses to them impacted both short- and longer-term supply.
The disequilibrium between the supply and demand of used vehicles in both Canada
and the U.S. is a major driver of the recent rise in ACV values; the resurgence in leasing
and record sales of new vehicles is expected to reverse that trend in the near-term.
If nothing else, this analysis highlights the complexities of new and used vehicle markets
and the multiplicity of variables that drive volumes and pricing. A good example is the
impact that a declining dollar has had. When the Canadian dollar was at or near par with
the U.S. dollar Canadians turned to the U.S. and purchased new vehicles because, even
with import costs, lower MSRPs south of the border made it attractive to do so. Now the
tables have turned and used Canadian vehicles are seen as bargains by American buyers.
Used vehicle exports help ease supply issues in the importing country but exacerbate
them in the source country.
The challenge this complexity presents for market watchers and forecasters is significant.
It is reasonable to broadly predict future trends but exceedingly difficult to determine
the delta of marketplace changes with any accuracy. The analysis also highlights that
Autosource, which uses current marketplace prices obtained from multiple sources, is an
excellent proxy for the market. The cluster analysis reveals how changes in supply and
changing consumer preferences impact pricing - Autosource valuations effectively track
these changes.
There are some emerging trends that are likely to have an impact going forward. New
vehicle sales in Canada softened somewhat beginning in July and continuing through
August and September, but still remain at historically high levels and in aggregate are up
by 3.2% year-over-year1
. The consumer shift away from passenger cars to sport utilities
and crossovers continues unabated. Also noteworthy is the long-term trend toward greater
negative equity. This will affect the ability of consumers to take on additional debt meaning
that some will retain their vehicles longer and others will be pushed into different vehicle
and financing choices when they fail to meet the underwriting criteria of lending institutions
for the purchase of new vehicles. How these trends will affect the future supply and pricing
of used vehicles will only be apparent through continued monitoring and analysis.
1 DesRosiers Automotive Consultants Inc.
The disequilibrium between the supply and
demand of used vehicles is a major driver of
the recent rise in ACV values.