AutoCycle™



Quantitative Economic Forecasts of Car Values Under Scenarios

Moody’s Analytics AutoCycle solution quickly and accurately forecasts car values in the secondary market. The solution provides forecasts of car prices under basline and stressed scenarios, and incorporates cyclical economic dynamics affecting the automotive industry. The purely quantitative model was built and is maintained by economists with extensive experience forecasting business cycles and formulating credible stress scenarios.


To manage risk in their auto portfolios effectively, banks, captive finance, insurers, auto dealers, rental networks, and other firms, must account for future economic conditions. While firms estimate car prices using internal and third-party models that often include a degree of subjectivity, they do not fully account for cyclical economic factors. As a result, these approaches can produce inaccurate, inconsistent, or biased values that can affect estimations and stress testing programs. Moreover, stress testing has revealed a need for wholly model-driven projections. Rigorous back-testing and complete documentation are also mandatory. AutoCycle offers a quantitative, consistent, and documented methodology for incorporating economic factors into car price forecasts. Forecasts are driven by macro factors, and account for mileage and age.

Benefits

  • Run forecasts for large car portfolios of varying makes, models, mileage, years and features, at an 11-digit VIN level
  • Account for macroeconomic variables such as gasoline prices, supply and demand drivers, and seasonal effects
  • Evaluate plausible outcomes and mitigate risk by generating forecasts under baseline and stressed scenarios
  • Meet regulatory requirements with detailed and transparent model methodology
  • Evaluate sensitivity to differing economic environments by car segment
  • Leverage Moody's Analytics proven modeling and forecasting expertise
  • Challenge third-party models and traditional valuation approaches
  • Evaluate and plan for adverse economic conditions
  • Manage risk and capital more effectively
  • Identify long-term influences on prices
  • Create competitive advantage
  • Challenge internal assumptions

Applications

  • Residual Price Setting
  • Scenario Analyses
  • Sensitivity Analysis
  • Risk Management
  • Portfolio Stress Testing

Key Features

  • Quantitative econometric forecast model
    • Incorporates supply and demand drivers
    • Captures seasonal effects
  • Coverage of more than 31 million transactions
    • Nearly 1,200 vehicles from 70 manufacturers
    • Data segmented by region and sale type
    • 28 body types like wagon, hatchback or coupe
    • 35 vehicle segments covering cars, SUVs, light trucks and exotics
    • Vehicle color and features detailed to 11-digit VIN including: Body type, Doors, Engine type, Fuel type and Drive type
  • Coverage of more than 1,800 economic variables
  • Forecasts and scenarios updated monthly
  • Robust platform to run forecasts for thousands of varying makes simultaneously, by model, mileage, year and features
  • Direct access to economists and highly trained relationship management team