ATLANTA, March 27, 2019 – Following a lower-than-expected February, Cox Automotive is forecasting March U.S. auto sales volume to hit 1.547 million, an increase from last month, but a nearly 7 percent decline from March 2018. The seasonally adjusted annual rate (SAAR) of sales is forecast to be 16.8 million units, up from February’s sales pace of 16.5 million, but down from last year’s 17.2 million pace.

Even with healthy March sales, the sales rate in the first quarter of 2019 is expected to be 16.7 million units, below the 17.1 million sales rate achieved in the first quarter of 2018.

Over the past five years, March has been among the strongest months for new-vehicle sales as consumers emerge from winter hibernation and buy new vehicles. “We will be carefully watching how sales perform this month,” said Charlie Chesbrough, senior economist at Cox Automotive. “March is an important indicator of the overall strength of the automotive market.”

Several factors are contributing to the auto sales outlook for the month. The number of selling days is one less this year, 27 versus 28 last year, which increases the seasonal adjustment applied in the SAAR. In addition, volatility in the stock market and consumer confidence, the president’s trade policies, and recent statements by Fed Chairman Jerome Powell are adding uncertainty to the U.S. economy. At the same time, prices, incentives, and auto loan rates are not presenting compelling reasons to buy. As a result, potential buyers may be hesitant to purchase. There’s little reason to expect the relatively weak sales pace in January and February will improve significantly in March.

March 2019 Sales Forecast Highlights

New light-vehicle sales volume is forecast to increase by more than 290,000 vehicles versus February 2019, up 23.2 percent. March is traditionally a big-volume month.

Sales, including fleet, are expected to reach 1.547 million units, down 6.7 percent from year-ago levels.

Seasonally adjusted annual rate (SAAR) is forecast to be 16.8 million, up from last month’s 16.5 million level, but down from the 17.2 million pace recorded in March 2018.

An all-time March record occurred in 2000, with sales of 1.67 million and a SAAR of 17.8 million.

March 2019 Forecast

Sales Forecast1 Market Share Mar-19 Mar-18 Feb-19 YOY% MOM% Mar-19 Feb-19 MOM GM 275,000 296,341 210,000* -7.2% 31.6%* 17.8% 16.6%* 1.1% Ford Motor Co 225,000 243,021 185,000* -7.4% 21.7%* 14.5% 14.7%* -0.2% Toyota Motor Co 210,000 222,782 172,748 -5.7% 21.6% 13.6% 13.8% -0.2% FCA Group 200,000 216,063 162,036 -7.4% 23.4% 12.9% 12.9% 0.0% American Honda 140,000 142,392 115,139 -1.7% 21.6% 9.0% 9.2% -0.1% Nissan NA 142,000 162,535 114,342 -12.6% 24.2% 9.2% 9.1% 0.1% Hyundai Kia 108,000 112,185 90,546 -3.7% 19.3% 7.0% 7.2% -0.2% VW 53,000 57,394 44,092 -7.7% 20.2% 3.4% 3.5% -0.1% Subaru 58,000 58,097 49,081 -0.2% 18.2% 3.7% 3.9% -0.2% Grand Total2 1,547,000 1,658,242 1,255,922 -6.7% 23.2% 1 March 2019 Cox Automotive Industry Insights Forecast; all historical data from OEM sales announcements * GM and Ford monthly sales are estimated 2 Industry total includes brands not shown

Sales Forecast1 Market Share1 Segment Mar-19 Mar-18 Feb-19 YOY% MOM% Mar-19 Feb-19 MOM Mid-Size Car 130,000 145,032 106,427 -10.4% 22.1% 8.4% 8.5% -0.1% Compact Car 155,000 182,975 124,024 -15.3% 25.0% 10.0% 9.9% 0.1% Compact SUV/Crossover 290,000 299,172 229,816 -3.1% 26.2% 18.7% 18.3% 0.4% Full-Size Pickup Truck 205,000 213,556 167,252 -4.0% 22.6% 13.3% 13.3% -0.1% Mid-Size SUV/Crossover 230,000 242,315 196,866 -5.1% 16.8% 14.9% 15.7% -0.8% Grand Total2 1,547,000 1,658,242 1,255,922 -6.7% 23.2% 1 Cox Automotive Industry Insights data 2 Industry total includes brands not shown

All percentages are based on raw volume, not daily selling rate.

New-Vehicle Sales Slow in Q1 2019

Industry watchers have been expecting the vehicle market to slow as a result of declining affordability. Since 2015, auto loan interest rates have risen more than 175 basis points. Coupled with rising vehicle prices, affordability issues, which often leads to lower new-vehicle sales, have become real for many consumers. Since March 2015, the monthly SAAR has averaged nearly 17.3 million. The sales pace remained strong through the end of 2018; however, sales in Q1 2019 are notably weaker.

“The year has started relatively soft for new-vehicle sales,” notes Jonathan Smoke, chief economist for Cox Automotive. “January was a combination of factors, some of which were related to the broader economy. The government shutdown, decline in consumer confidence, and the polar vortex all detracted from the economy and new-vehicle sales in January. We had somewhat better weather in February, in most of the U.S., an open government and a rebound in confidence, yet new-vehicle sales did not improve. Now we know that consumer confidence again moved down in March.”

Adds Smoke, “It’s looking like the new-vehicle market is suffering in part from the overdue resumption of the normal, post-peak slowdown that was temporarily disrupted last year by tax reform.

First Quarter Forecast

First quarter 2019 auto sales are forecast to come in at 3.924 million units, down 4.6 percent from year-ago levels. The slower sales pace of 16.7 million in Q1 is slightly lower than Cox Automotive’s full-year sales forecast of 16.8 million units.

Q1 2018 Q1 2019 Forecast % Change Share ’18 Share ’19 Change American Honda 362,491 361,278 -0.3% 8.8% 9.2% 0.4% BMW Group 84,368 76,796 -9.0% 2.1% 2.0% -0.1% Daimler 86,981 76,251 -12.3% 2.1% 1.9% -0.2% Fiat Chrysler 514,769 498,118 -3.2% 12.5% 12.7% 0.2% Ford Motor Co 596,794 581,574 -2.6% 14.5% 14.8% 0.3% GM 715,794 668,913 -6.5% 17.4% 17.0% -0.4% Hyundai Kia 275,823 277,942 0.8% 6.7% 7.1% 0.4% Mazda 83,995 71,899 -14.4% 2.0% 1.8% -0.2% Mitsubishi 35,821 36,468 1.8% 0.9% 0.9% 0.1% Nissan NA 416,003 357,083 -14.2% 10.1% 9.1% -1.0% Subaru 149,703 153,153 2.3% 3.6% 3.9% 0.3% Tata (Land Rover/Jaguar) 32,295 35,079 8.6% 0.8% 0.9% 0.1% Tesla Motors 17,980 30,975 72.3% 0.4% 0.8% 0.4% Toyota Motor Co 572,033 538,769 -5.8% 13.9% 13.7% -0.2% VW 147,958 139,838 -5.5% 3.6% 3.6% 0.0% Volvo NA 20,083 20,489 2.0% 0.5% 0.5% 0.0% Total 4,112,891 3,924,625 -4.6% Avg SAAR 17.1 16.7 -2.3%

“The weakness in automotive has been in retail sales,” said Smoke. “Part of the issue is that incentives remain relatively low, and auto loan rates have not improved, so consumers haven’t had a compelling reason to buy.”

A new wrinkle for the vehicle market and the economy are possible negative consequences from recent tax reform legislation. The new tax law, which went into effect January 1, 2018, had positive implications for the vehicle market last year, but more lift is not expected. Consumers paid less in taxes in 2018 and this off-set some of the affordability burdens caused by higher interest rates. In addition, fleet activity increased as a result of lower corporate tax rates.

The tax season this spring, however, has brought unwelcome surprises to some consumers due to deduction limits and under-withholding during 2018, resulting in smaller than expected tax refunds. And, aggressive fleet activity sparked by the tax overhaul in 2018 is not expected again this year. All of these factors suggest that the vehicle market is slowing.

“For each of the last three years, new-vehicle sales have improved in the second half of the year for a variety of reasons,” adds Smoke. “It will be tougher to repeat that trend this year if the economy itself is slowing down.”

Cox Automotive Q1 Auto Sales Conference Call

The Cox Automotive Industry Insights team will host a conference call on Thursday, March 28, 2019 at 11 a.m. EDT. During the call, the team will discuss key economic indicators driving the auto market, review the forecast, and offer analysis of new- and used-vehicle sales for March and the first quarter. The presentation will be followed by a Q&A session.

Dial-in Information:

1 (800) 446-1671 U.S. Toll Free

1 (847) 413-3362 U.S. Toll

Confirmation Number: 48259777

About Cox Automotive

Cox Automotive Inc. makes buying, selling, owning and using cars easier for everyone. The global company’s 34,000-plus team members and family of brands, including Autotrader®, Clutch Technologies, Dealer.com®, Dealertrack®, Kelley Blue Book®, Manheim®, NextGear Capital®, VinSolutions®, vAuto® and Xtime®, are passionate about helping millions of car shoppers, 40,000 auto dealer clients across five continents and many others throughout the automotive industry thrive for generations to come. Cox Automotive is a subsidiary of Cox Enterprises Inc., a privately-owned, Atlanta-based company with revenues exceeding $20 billion. www.coxautoinc.com

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