1. THE ECONOMY, AUTO SALES
& AUTO AUCTIONS
Dr. Ira Silver
NAAA Economist

2. Slow Real GDP Growth
0.3
3.1
2.7
1.5
-2.7
2.0
-2.0
-8.3
-5.4
-0.4
1.3
3.9
1.6
3.9
2.8 2.8
-1.3
3.2
1.4
4.9
3.7
1.2
2.8
0.1
1.1
1.7
-11.0
-9.0
-7.0
-5.0
-3.0
-1.0
1.0
3.0
5.0
7.0
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
2008 2009 2010 2011 2012 2013
Percent Change From Prior
Quarter at Annual Rate
Recession
Percent Change From Prior Year
Is this all bad?

3. Slow Growth Does Not Quickly Create
The Excesses That Lead To Recessions
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13
Recession
Unemployment Rate
Recessions are preceded by very low unemployment
And the economy is growing

4. Institute for Supply Management
Indexes Indicate Continued Growth
Three-Month Moving Averages
25.0
30.0
35.0
40.0
45.0
50.0
55.0
60.0
65.0
70.0
78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
Recession
Manufacturing Activity
Recession Level
Nonmanufacturing Activity

5. Employment Is Growing
Change (thousand of Jobs)
-1,000
-800
-600
-400
-200
0
200
400
600
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7
2007 2008 2009 2010 2011 2012 2013
Recession

6. Auto Sales Recover
(MILLIONS OF UNITS, SEASONALLY ADJUSTED AT ANNUAL RATE)
8.0
10.0
12.0
14.0
16.0
18.0
79 82 85 88 91 94 97 00 03 06 09 12
Recession
Light Vehicle (right scale)

7. Auto Sales Recover
(MILLIONS OF UNITS, SEASONALLY ADJUSTED AT ANNUAL RATE)
Housing Recovery Starts
8.0
10.0
12.0
14.0
16.0
18.0
0.2
0.7
1.2
1.7
2.2
79 82 85 88 91 94 97 00 03 06 09 12
Recession
Housing Starts (left axis)
Light Vehicle (right scale)

8. Households Reduce Financial Obligations
Financial Obligations as a Percent of Disposable Personal Income
Back to Early 1980s Levels – Consumer Spending Will Grow
10.0
10.5
11.0
11.5
12.0
12.5
13.0
13.5
14.0
14.5
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Recession

9. Household Wealth Recovers
Supports Future Spending
Stock Prices Surge & Home Prices Turn Up
100
120
140
160
180
200
220
300
500
700
900
1,100
1,300
1,500
1,700
1,900
91 93 95 97 99 01 03 05 07 09 11 13
Recession
S&P500 Stock Price (left axis)
House Price (right axis)

10. Corporate Cash & Excess Reserves
Will Ultimately Be Spent
Billions of Dollars
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Nonfinancial Corporate Cash
Bank Excess Reserves

11. Corporate Profitability At Record Levels
Will Support Business Investment & Hiring
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
3
4
5
6
7
8
9
10
Recession
After-tax Profit Margin

12. Other Economic Drivers
Continued Monetary Stimulus If Needed
“the Committee decided
to keep the target range
for the federal funds rate
at 0 to 1/4 percent and
currently anticipates that
this exceptionally low
range for the federal funds
rate will be appropriate at
least as long as the
unemployment rate
remains above 6-1/2
percent”

13. Other Economic Drivers
Continued Monetary Stimulus If Needed
“the Committee decided
to keep the target range
for the federal funds rate
at 0 to 1/4 percent and
currently anticipates that
this exceptionally low
range for the federal funds
rate will be appropriate at
least as long as the
unemployment rate
remains above 6-1/2
percent”

14. Other Economic Drivers
Continued Monetary Stimulus If Needed
“the Committee decided
to keep the target range
for the federal funds rate
at 0 to 1/4 percent and
currently anticipates that
this exceptionally low
range for the federal funds
rate will be appropriate at
least as long as the
unemployment rate
remains above 6-1/2
percent”

15. Other Economic Drivers
The World Is Looking Better

16. Other Economic Drivers
U.S. Energy Production Soars (Quadrillion BTU)
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2.0
2.1
2.2
00 03 06 09 12
Natural Gas
Oil

17. Other Economic Drivers
A potential game changer!
Federal Energy Regulatory Commission
Natural Gas Prices
Dollars per Thousand Cubic Fee

18. Better Times Are Ahead!
Real GDP Percent Change
-0.3
-2.8
2.5
1.8
2.8
1.5
3.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
2.0
3.5

19. Auto Sales Recover
(MILLIONS OF UNITS, SEASONALLY ADJUSTED AT ANNUAL RATE)
8.0
10.0
12.0
14.0
16.0
18.0
79 82 85 88 91 94 97 00 03 06 09 12
Recession
Light Vehicle (right scale)

20. Auto Sales Drivers

21. New Vehicle Sales
Continue Strong Recovery
Millions of Units
16.6 16.9 16.9 16.5 16.1
13.2
10.4 11.6
12.7
14.4
15.6
16.7
-1%
1% 0%
-3% -3%
-18%
-21%
11% 10%
13%
8%
7%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
New Vehicle Sales Percent Change

22. AUCTION UNIT VOLUME
PERCENT CHANGE FROM PREVIOUS YEAR
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
1 2 3 4 1 2 3 4 1 2 3 4 1 2
2010 2011 2012 2013
Dealer Consignment Commercial Consignment Total
AuctionNet
Strong new car sales

23. AUCTION UNIT VOLUME
PERCENT CHANGE FROM PREVIOUS YEAR
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
1 2 3 4 1 2 3 4 1 2 3 4 1 2
2010 2011 2012 2013
Dealer Consignment Commercial Consignment Total
AuctionNet
Weak past new car sales
Strong new car sales

24. AUCTION UNIT VOLUME
PERCENT CHANGE FROM PREVIOUS YEAR
[VALUE]
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
1 2 3 4 1 2 3 4 1 2 3 4 1 2
2010 2011 2012 2013
Dealer Consignment Commercial Consignment Total
AuctionNet
Weak past new car sales
Strong new car sales
Strong
past new
car sales

25. Turnaround in Commercial Consignment
Adds to Strong Dealer Consignment
Millions of Units Sold
10.0
9.7 9.4 9.5 9.5 9.5
8.9
8.3
7.7 7.9
8.4
9.0
4.6%
-3.0% -2.8%
1.2%
0.3%
-0.6%
-5.9%
-7.1% -7.6%
3.3%
6%
8%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Units Sold Percent Change NAAA Survey, NAAA

26. Bottom Line
Better Times Are Ahead!
• The economic recovery will
strengthen
• Auto sales will approach past levels
• Auction volume will increase this
year and next
– And probably further on
• Auctions need to ramp up to be
able handle the increased business

27. THE ECONOMY, AUTO SALES
& AUTO AUCTIONS
Dr. Ira Silver
NAAA Economist

28. Used Retail Sales Continue Recovering
Millions of Units & Percent Change
Source: CNW Research, NAAA
43.6 42.7 44.1
42.6 41.4
36.5 35.5 37.0
39.0 40.5
42.6
44.1
1.3%
-2.0%
3.4%
-3.6%
-2.7%
-11.8%
-2.8%
3.9%
5.2%
4.5% 5.0%
3.5%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Used Vehicle Sales Percent Change