Nonrenewable Energy Resources
Natural resources like minerals and fossil fuels are nonrenewable, meaning they cannot be easily replaced. Fossil fuels such as oil, coal, and natural gas are formed over millions of years from ancient plant and animal remains. They contain carbon and are considered limited resources due to their long formation process. The utilization of nonrenewable energy resources raises concerns about sustainability and environmental impact.
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Instructor Bio Jeremy Robb joined Nissan in May 2012 and has worked on both the motor company side as well as for the captive finance company. Currently, he functions as the Senior Manager over Sales, Strategy and Analytics for Nissan and Infiniti Remarketing Services. In addition to planning the sales strategy for NIRS, Mr. Robb is the primary contact for Nissan's outside business partners. Prior to joining Remarketing, he served as the finance controller for NMAC and has worked in Corporate Strategy and Supplier Risk Management. Mr. Robb had several years of experience in Finance and Financial Services prior to joining Nissan and he graduated from Vanderbilt University with a degree in Economics and Music. Jeremy Robb has remained a CFA Charterholder since December 2007. Jeremy M. Robb, CFA Senior Manager, Remarketing Sales and Strategy Nissan and Infiniti Remarketing Services Nissan Motor Acceptance Corporation (NMAC) E: Jeremy.Robb@Nissan-Usa.com P: 615.725.5116 2
Nissan Infiniti Remarketing Services Auction Academy Presentation April 2017 Nissan Motor Acceptance Corporation
Nissan and Mitsubishi Strategic Alliance On October 20th 2016, Nissan completed its acquisition of a 34% equity stake in Mitsubishi Motors (MMC) and became its largest shareholder. Under the terms of the transaction, Nissan Motor purchased 506.6 million newly issued MMC shares at 468.52 yen per share. Nissan and MMC have agreed to cooperate in areas including purchasing, common vehicle platforms, technology-sharing, joint plant utilization and growth markets. Nissan estimates 60 billion yen in savings next fiscal year. MMC will also become part of the global Alliance with Nissan and Renault. With the addition of MMC, the Alliance will be in the world's top three automotive groups by global volumes, with sales of 10 million units in fiscal year 2016. 5
Renault Nissan Alliance Founded in 1999 the alliance continues to be the longest-lasting cross- cultural collaboration among major automakers Together, Renault and Nissan rank in the top four auto groups globally The Alliance business platform maximizes synergies The Alliance has served as a buffer to protect partners during regional downturns Renault holds a 43.4% stake in Nissan, Nissan holds a 15% stake in Renault 6
Nissan Motor FY16 Q3 Sales Performance: Global Total Industry Volume* Retail Volume vs. FY15 +2.6% vs. FY15 +4.5% 5.9% M/S** 6.1% M/S** 3,993 344 GLOBAL 3,891 67.16 3.50 GLOBAL 64.28 3.47 -10.0% JAPAN +0.9% JAPAN 383 +8.2% 929 CHINA 18.59 +13.0% CHINA 859 16.40 (THOUSAND UNITS) (MILLION UNITS) +1.0% NORTH AMERICA (U.S.) 16.26 +6.2% NORTH AMERICA (U.S.) 16.10 1,582 1,490 (13.46) (-0.4%) (13.52) (1,164) (1,117) (+4.2%) 14.20 +5.1% 13.51 EUROPE +0.4% 540 542 EUROPE -1.3% OTHERS 14.80 14.61 -3.9% 619 OTHERS 596 FY15 3Q YTD FY15 3Q YTD FY16 3Q YTD FY16 3Q YTD * Nissan s estimation ** Market Share 7
FY16 Q3 Sales Performance: North America United States TIV: 13.46 million units, -0.4% Sales: 1,164 k units, +4.2% Market share: 8.7%, +0.4% US RETAIL VOLUME +4.2% 1,164 1,117 (THOUSAND UNITS) Canada TIV: 1.55 million units Sales: 104 k units, +0.4% Market share: 6.7%, -0.1% FY15 3Q YTD FY16 3Q YTD US MARKET SHARE +0.4% 8.7 8.3 Mexico TIV: 1.26 million units Sales: 313 k units, +17.0% Market share: 24.9%, -0.7% (PERCENT) FY15 3Q YTD FY16 3Q YTD 8
Strong Market Performance Nissan has achieved consistent market share growth since 2000. 2016 sales data shows strong growth potential for Nissan. Source: Motor Intelligence New For Fiscal Years Ended March 31st 1999 2016 and Q3 ended December 31st 2016 Vehicle Sales As of December 31st, 2016 9
Volume Trends U.S. Only New Vehicle Penetration Contracts Outstanding (Thousands) Note: Vehicles financed through NMAC and IFS As of December 31st, 2016 10
NMAC Loan Origination Trends U.S. Only NMAC continues to maintain a high quality of bookings in its retail loan portfolio New Bookings - Retail (660+ FICO) Retail Loan Total Portfolio Tier Distribution as of Dec 31st Credit Tier Note: Tier % in dollars. Tier distribution percentages may not total 100% due to rounding As of December 31st, 2016 11
NMAC Avg. Loan Prin Outstanding & Net Losses U.S. Only For the FY ended March 31st and 9 months ended December 31st 12
NMAC Lease Origination Trends U.S. Only NMAC continues to maintain a high quality of bookings in its lease asset portfolio New Bookings - Lease (660+ FICO) Retail Lease Total Portfolio Tier Distribution as of Dec 31st Credit Tier Note: Tier % in dollars. Tier distribution percentages may not total 100% due to rounding As of December 31st, 2016 13
NMAC Avg. Lease Prin Outstanding & Net Losses U.S. Only For the FY ended March 31st and 9 months ended December 31st 14
Lease Recovery vs. Base Residual Portfolio terminations including payoffs at full contract, credit/repo s, and auction sales netted ALG - 2.08% (Nissan ALG: - 1.95%, Infiniti ALG: - 3.72%) Primary drivers of NMAC residual decline: Increased supply of off-lease vehicles available at auction Normalization of used car market Customer demand moving away from sedans to CUV, SUV, and truck segments 6.00% 4.00% 3.54% 3.83% 2.73% 2.00% 0.56% 0.00% -1.34% -2.00% -2.08% -2.37% -4.00% -6.00% FY10 FY11 FY12 FY13 FY14 FY15 FY16 YTD For the FY ended March 31st and 9 months ended December 31st Note: Excludes models not securitized in the NALT platform 15
Base Residual Comparison Compared to other SEC registered lease ABS issuers, Nissan takes a more conservative approach by utilizing an ALG mark-to-market at the time of the transaction Base Residual Definitions Nissan GM Marked-to- market at transaction ALG Residual (MRM)1 Most Conservative BMW Mercedes Marked-to- market at transaction ALG Residual Least Conservative Ford World Omni ALG at Origination (No mark-to-market)2 Determined at Inception Source: Latest available offering documents as of February 16th, 2017 1. MRM Residual Values produced by ALG give only partial credit to vehicle options that add little or no value to the resale price of the vehicle ( Maximum Realized MSRP ) 2. Base residual determined using contract residual, ALG residual, or ALG residual MRM at lease inception 16
Remarketing 17
Remarketing Current State Overview Industry Volume in Wholesale units has grown each year since 2012. In 2016, total auction volume was 6.5M: Off-Lease 3.1M, Fleet/Rental 1.7M and Repo 1.7M. Auction volume is expected to grow by double digit rates in both 2017 and 2018 reaching ~7.2M units in 2017 and then a record 8M in 2018. (source Manheim Consulting). Returns and Auction Inventory are heavily influenced by vehicle mix. Sedans continue to hold values at a lower rate than Truck/SUVs as gas prices remain low and consumers continue to demand and desire Trucks and Crossover units. NADA cites used car depreciation at 23% in 2016 vs the average of 18%. Ford Credit has decreased the profit expectation of its financial services arm by $300M in 2016, much of it due to lower used values. Hertz also cut its forward guidance in Q4 and replaced the CEO citing lower used values. Nissan/Infiniti Remarketing began the Flag Your Infiniti (FYI) program in April 2015 and the Flag Your Nissan program in October 2016. This allows the grounding dealer the option to purchase the unit sitting on their lot mitigating transportation and auction cost, and reducing supply. FYN could move up to 25,000 units annually once mature. Auction values relative to RV do not take into account units sold in the GPO process, via FYI/FYN, and upstream thus giving a less than holistic view of remarketing values. Source: http://www.newsmax.com/Finance/Companies/ford-car-used-prices/2017/01/23/id/769900/ 18
Used Vehicle Market Price Indicators The NADA Used Vehicle Price Index reflects lower overall prices at a level last seen in 2010 While the Manheim Index remains high relative to historical norms, Manheim s economist expects used values to decline in 2017 due to industry volume The Black Book Index is off by 5.9% in the past year Source: NADA Used Card Guide Industry Update March 2017 19
Price Changes in Segments Overall values have been relatively stable in total, but intra-segment the data is varied. In December 2016, the only segment with higher prices were Trucks, at 4.3%. Every other segment, including SUV s declined YoY with the exception to be Vans. Source: Cox Automotive Consulting Macro Indicators Dashboard December 2016 20
Industry Economic Viewpoint Source: Cox Automotive Consulting Spring Bounce Declining December 2016 21
Nissan Remarketing Sales Channels Remarketing Portfolio Manager ( RPM ) Purchase at grounding Flag Your Nissan ( FYN ) Launched on October 24, 2016 Nissan dealers make an offer on eligible off-lease Nissan vehicles grounded at their location Online-exclusive Upstream Channels Nissan Advantage Closed Sale (RPM) Daily selection of off-lease Nissan vehicles located throughout dealer network Cross-Channel Closed Sale (RPM) Offer extended to both Nissan and Infiniti retailers Nissan Closed Weekend Online Event Sale on OVE.com Weekly selection of premium vehicles available online exclusively for Nissan franchises Closed Sales at Auction (In-lane and Simulcast Everywhere) High-quality corporate, fleet, and off-lease vehicles offered exclusively to Nissan and Infiniti retailers Open Sales at Auction (In-lane, Value, and TRA) Vehicles offered to all buyers 22
