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Manheim Consulting, Tom Webb
With over 33 years of automotive experience, Webb is one of the most knowledgeable professionals in the remarketing industry. As Manheim Consulting’s chief economist, he is a primary industry source, providing insightful analysis of used car market activity based on data gathered from all of Manheim’s operating locations and associated businesses, as well as industry research.
Recent Activity
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From the third quarter of 2009 through the first quarter of 2016, the seven publicly traded dealership groups strung together 27 consecutive quarters of increased same-store retail used unit sales.* That streak ended last quarter when the sales-weighted change was -0.9%. Blame Takata. Asbury, for example, noted that 10% of its total inventory was tied up in “stop-sale” units. At some individual stores the share was as high as 40%. Sonic offered an even more telling story on its earnings call - after breaking down inventory into affected and unaffected buckets, they found an 8% increase in year-over-year sales for... Continue reading
Posted Jul 29, 2016 at Tom Webb's Blog (Manheim Consulting)
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With Penske’s release this morning, all seven publicly traded dealership groups (CarMax, AutoNation, Penske, Sonic, Group1, Asbury, and Lithia) have posted third quarter results.* As expected, same-store retail used unit volumes rose for the 25th consecutive quarter. But, also as expected, the average gross margin earned on those sales continued to narrow. Increased operating efficiencies, higher throughput, and solid F&I income enabled dealers to continue to make record profits despite the lower margins. View the narrower used vehicle margins as a sign of a competitive industry passing on some of its efficiency gains to consumers. More troubling is the decline... Continue reading
Posted Oct 29, 2015 at Tom Webb's Blog (Manheim Consulting)
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Yesterday’s revision to GDP showed a weaker recovery since the Great Recession – and, as a result, emphasized further just how much autos have outperformed in recent years. In the graph below each dot represents one of the 60 years between 1955 and 2014. The x-axis shows the annual percent change in real GDP for that year and the y-axis is the percent change in new vehicle sales. Naturally, there is a strong correlation. And, naturally, there will be outliers since it is based on simple annual percent changes. For example, in 1966 new vehicle sales declined 2.1% even though... Continue reading
Posted Jul 31, 2015 at Tom Webb's Blog (Manheim Consulting)
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Highlights now that all seven groups have reported: The seven publicly-traded dealership groups posted their 24th consecutive quarterly increase in same-store retail used unit sales. On a sales-weighted basis the gain was 6.9% - the best since fourth quarter of 2013. On a sales-weighted basis, the average used retail selling price was flat relative to a year ago. Average gross margin fell to a new low. Continue reading
Posted Jul 29, 2015 at Tom Webb's Blog (Manheim Consulting)
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Slide deck for today's Ford Motor Company Fixed Income Conference Call. Off-lease volume evenly split between 24-month term and longer terms. Strong pricing with good gap between 24-month and 36-month term Lower return rate Repos remain low Continue reading
Posted Jul 28, 2015 at Tom Webb's Blog (Manheim Consulting)
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Some familiar and not-so-familiar graphs: Gas prices ticked up a couple cents in recent days, but January 2015 average was still 35% below January 2014 average. Despite light trucks, sport utilities, and crossovers accounting for 54% of January new vehicle sales, average sales-weighted fuel economy rose to 25.4 mpg. Combine graphs 1 & 2 and you find the cost to drive a new vehicle 1,000 miles the lowest since December 2008. With gold prices recovering from November low, the number of gallons that an ounce of gold will buy jumped to 583 gallons in January. Combine graphs 3 & 4... Continue reading
Posted Feb 4, 2015 at Tom Webb's Blog (Manheim Consulting)
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New vehicle sales into rental in 2014 (1.63 million) as a share of total new unit sales (16.53 million) fell to 9.8%. It was the first time since 2001 that the share dipped below 10%. (The recent cyclical peak was 12.4% of new unit sales in 2006.) As we have noted often, sales into rental today are more evenly dispersed across manufacturers and models. Likewise, there are constant shifts in share between manufacturers from year to year. Thus, although the share of new unit sales into rental is at a more-than-decade low for the industry as a whole, the same... Continue reading
Posted Jan 29, 2015 at Tom Webb's Blog (Manheim Consulting)
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Two pictures from today's 2014 Fourth Quarter Fixed Income Presentation http://corporate.ford.com/investors/investor-events/event-details/ford-motor-company-4th-quarter-2014-fixed-income-conference-call.html Continue reading
Posted Jan 29, 2015 at Tom Webb's Blog (Manheim Consulting)
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Oil prices tumble, so too interest rates. What’s not to like? Well, it seems quite a bit as of late. In fact, this week’s plunge in oil prices and swoon in interest rates were cited as the direct cause and consequence, respectively, of the collapse in equity prices. As if falling oil prices should always be greeted as a good thing. When did gas last go below $1.75 per gallon? December 2008. We weren’t exactly dancing in the streets then either. Continue reading
Posted Oct 16, 2014 at Tom Webb's Blog (Manheim Consulting)
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Driving by my local gas station last week, I snapped this pic. Yes, in each of the past two years gas prices here in Virginia also dipped below $3 per gallon, but that happened between Thanksgiving and Christmas – not before Labor Day! So, here’s my picture book of the underlying story. We’re driving fewer miles: In more efficient cars: At a lower cost per gallon: Which means we must be saving a lot of money. What are we doing with it? Buying new cars? Continue reading
Posted Sep 5, 2014 at Tom Webb's Blog (Manheim Consulting)
This is the opening to the Review and Outlook section of the 2014 Manheim Used Car Market Report released yesterday at NADA : June of 2014 will mark the economic expansion’s fifth year. It is an anniversary that will be achieved. For some individuals and industries it will mark a half decade of exceptional advancement. But, for others, progress has been painfully slow or non-existent. And, for the macro economy, despite five years of slow and sustainable growth, there is a sense we’re just one lug nut away from the wheel falling off. Explanations for the differing economic performance between... Continue reading
Posted Jan 25, 2014 at Tom Webb's Blog (Manheim Consulting)
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The Q&A from this month's Auto Brief, soon to published on our website: Q&A Lease penetration rates on new vehicle sales continue to reach new highs. Some analysts have expressed concern and say that leasing is being used to artificially boost sales. Is there a “natural” lease penetration rate that, if exceeded, hurts future residuals? Actually, I would say that lease penetration rates should be higher. I firmly believe that today there are more people in long-term retail contracts who should be in leases than there are people in leases who should be in retail contracts. Consider some of the... Continue reading
Posted Sep 25, 2013 at Tom Webb's Blog (Manheim Consulting)
With yet another “critical” employment report soon to be released, it seems appropriate to consider some longer-term issues. Here’s one recently raised courtesy of the Federal Reserve Bank of Chicago: “What level of job growth is needed to lower the unemployment rate?” For decades the rule-of-thumb for economists has been that job growth needs to total 150,000 per month just to keep the unemployment rate from rising. Of course, the actual job growth needed can vary greatly depending on where we are in the economic cycle - discouraged workers leave the labor pool during economic downturns, while an economic recovery... Continue reading
Posted Jun 27, 2013 at Tom Webb's Blog (Manheim Consulting)
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Monthly vehicle miles of travel (VMT) declined 1.4% in February versus a year ago. This pushed annual VMT 2.8% below the previous peak reached in November 2007. Some of February's declined can be blamed on gas prices and weather, but the long-term weakness is clearly shown below. Analysts should incorporate this factor into their long-term forecasts for new vehicle sales and vehicles in operation. Continue reading
Posted Apr 26, 2013 at Tom Webb's Blog (Manheim Consulting)
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Total vehicle miles of travel (VMT) declined 2.9% in December 2012 versus December 2011. Not surprisingly, the biggest drop was recorded in the Northeast. For the full year 2012, VMT rose just 0.3%. Relative to the peak reached in November 2007, VMT (on a 12-montrh rolling basis) is now down 3.3%. As the graph indicates, it is now much more likely that even employment will get back to its previous peak before VMT does, especially given the approximate 50-cent increase in gas prices so far this year. A 4.9% increase in insurance costs over the past year is also weighing... Continue reading
Posted Feb 26, 2013 at Tom Webb's Blog (Manheim Consulting)
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Same-store used vehicle retail unit volumes for the seven publicly traded dealership groups rose 8.5% in the fourth quarter of 2012. It represented the fourteenth consecutive quarter in which there was a gain. And, for the full year of 2012, these seven dealership groups had a total retail unit volume that exceeded the one million mark for the first time ever. Higher volumes were accompanied by greater operating efficiencies, faster inventory turns, and strong F&I income. As a result, profits were at record levels and, thus, the ongoing decline in gross margins raised little concern. That does not change the... Continue reading
Posted Feb 25, 2013 at Tom Webb's Blog (Manheim Consulting)
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It’s time to add another year to this interesting graph. Each dot represents one of the 58 years between 1955 and 2012. The x-axis shows the annual percent change in real GDP for that year and the y-axis is the percent change in new vehicle sales. Naturally, there is strong correlation. A correlation that quantifies just how much new vehicle sales have outperformed the overall economy in this recovery. Two outliers are noted in the chart above. At the far right, close to the horizontal axis, we see that in 1966 new vehicle sales declined 2.1% even though real GDP... Continue reading
Posted Feb 15, 2013 at Tom Webb's Blog (Manheim Consulting)
The vast majority of economists believe that the decision by the Federal Reserve to pay interest on bank held reserves was a good one, and that lowering the rate to zero now would have no material impact on bank lending. (Ironically, some of the very same economists believe that raising the rate on reserves will prove to be an effective new tool when the Fed needs to reverse course.) And there is also a small, but philosophically diverse, group of economists who believe that paying interest on bank reserves is counter-productive to the objectives entailed in three rounds of quantitative... Continue reading
Posted Jan 23, 2013 at Tom Webb's Blog (Manheim Consulting)
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To consider relative pricing strength between various vehicle price tiers it is useful to look at changes in average mileage for each of those tiers. An increase in average mileage for vehicles within a given tier means that prices are strengthening since it implies that dealers are willing to spend the same amount of money for a vehicle with higher mileage. Shown below is the change in average mileage (in both absolute and percentage terms) for several broad price tiers for the first ten months of this year versus the same period in 2010. All tiers show an increase in... Continue reading
Posted Dec 3, 2012 at Tom Webb's Blog (Manheim Consulting)
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There are several earlier posts on this blog that described some of the failings (both in data and methodology) that result in a less-than-perfect used vehicle component of the Consumer Price Index. Over long periods of time, however, the Used Vehicle CPI does roughly reflect the true course of used vehicle values. That is confirmed by the close correlation to the Manheim Index. But that true trend is always revealed on a delayed basis. That’s because the Used Vehicle CPI is based on a three-month moving average of data that had already been previously smoothed. The graph below shows the... Continue reading
Posted Nov 15, 2012 at Tom Webb's Blog (Manheim Consulting)
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With the Obama administration yesterday releasing final fuel economy standards which set an average 54.5 mpg for 2025, and with a hurricane in the Gulf, and with Middle East tensions exacting a heavy premium in current oil prices, consider a few longer term trends. The U.S. is in the midst of an energy boom. When we say we want to reduce U.S. energy consumption, are we referring to that stuff in the ground that has made North Dakota one of the fastest growing states and given it an unemployment rate of 3.0%? Are gas prices “really” high? With the Federal... Continue reading
Posted Aug 29, 2012 at Tom Webb's Blog (Manheim Consulting)
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(This is an update to a post from last September) To consider relative pricing strength between various vehicle price tiers it is useful to look at changes in average mileage for each of those tiers. An increase in average mileage for vehicles within a given tier means that prices are strengthening since it implies that dealers are willing to spend the same amount of money for a vehicle with higher mileage. Shown below is the change in average mileage (in both absolute and percentage terms) for several broad price tiers for the first seven months of this year versus the... Continue reading
Posted Aug 10, 2012 at Tom Webb's Blog (Manheim Consulting)
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Total vehicle miles of travel (VMT) rose 1.8% in February versus the year-ago level. As in previous months, the gain was concentrated in the Northeast and North Central regions. VMT in both regions has been helped by mild winter weather and, in the latter region, by an economy that is performing much better than the overall U.S. As noted in earlier posts, VMT and employment peaked at similar times (November 2007 for VMT, and January 2008 for employment). The graph below tracks the percent change from the peak for each series. Since VMT is expressed as a 12-month moving average... Continue reading
Posted Apr 25, 2012 at Tom Webb's Blog (Manheim Consulting)
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Today’s Consumer Price Index release showed the new vehicle component rising 0.2% in March, and 2.5% over the past year. (These prices are mix- and quality-adjusted and are net of incentives.) March marked the twelfth consecutive month where the year-over-year increase was above 2%. That stands in stark contrast to the period between 1997 and 2008 when the new vehicle component of the CPI was flat or declining. This has been described in earlier posts and is shown in the updated graph below. And, as is shown in another updated graph, new vehicle pricing goes a long way in explaining... Continue reading
Posted Apr 13, 2012 at Tom Webb's Blog (Manheim Consulting)
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In January, total vehicle miles of travel (VMT) increased by 1.6%. This came on the heels of a 1.3% rise in December. That later gain, however, followed nine consecutive months of decline – and, the twelve-month rolling average of VMT is still 3.5% below the peak level reached in November 2007. As was the case in December, the biggest VMT gains came in the Northeast and North Central sections of the country, which suggest that mild winter weather was partly responsible. Previous posts have noted how the historic decline in VMT has exceeded what one would expect based solely on... Continue reading
Posted Mar 26, 2012 at Tom Webb's Blog (Manheim Consulting)