IAA SALVAGE INDEX ZONE 3 $300 ZONE 4 $250

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1 Automotive Salvage Trends March & April 2009 As the Automotive Salvage industry moves into 2009, the market continues to be challenging. Although some recovery is beginning to show with scrap prices, several indexes remain in flux. This report includes several charts and indexes that continue to affect salvage volume and prices. The health of the global economy continues to affect all industries including the salvage auto auction industry. IAA s hybrid auction model combining live and live-online auctions helps maintain returns and bolster selling prices in a down turned economy. SCRAP METAL WHOLE CRUSHED AUTOBODY Whole crushed autobody saw very modest growth in March and then slightly declined in April. Although demand has modestly recovered overseas in areas like China, the weak foreign currency and strong US Dollar make US scrap metal more expensive, stated the April issue of American Recycler. In addition, shifts in industries such as aerospace and home construction have a dramatic affect on scrap demand. Major production dynamics including fifteen of Boeing s 787 Dreamliner orders being cancelled and the near elimination of business jet manufacturing has put dramatic pressure on metal manufacturing resulting in declines in the price of scrap. Although the strength of the US Dollar has affected scrap demand in several foreign markets, the April issue of American Recycler stated that China demand is strengthening and the Chinese purchasing managers index rose to 49.0 percent in February, the highest level in over five months. FIGURE 1 Crushed Auto body Avg. per ton Jan 1, 2007 Apr 30, 2009 Data American Recyclers $400 $ ZONE 1 ZONE 2 ZONE 3 $300 ZONE 4 $250 ZONE 5 $200 $150 $100 $50 $0 Jan-08 Feb-08 M ar-08 Apr-08 M ay-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09

2 PLATINUM AND ALUMINUM PRICES Aluminum may be getting a small boost thanks to increases in use by automakers stated American Recycler. The Aluminum Association confirms that in North America the use of automotive aluminum is at an all-time high, averaging 8.6% of vehicle curb weight in 2009 calendar year vehicles. This is an increase from 5.1 percent in However, the future of platinum is not fairing as well. Over 55% of the demand for platinum is driven by auto manufacturers and catalytic converters. With overall production down, the demand and prices for platinum have fallen. According to EFT- Database.com a platinum exchange traded fund (ETF) has filed for registration in the US, but has not been approved. Many platinum producers fear this would create hoarding and drive the prices up, actually hurting demand for the precious metal. The London Exchange has a platinum fund. $2,500 FIGURE 2 Platinum Avg. USD per ounce Jan 1, 2008 Apr 30, 2009 Data by Week Number London Daily Close Weekly Average $2,000 $1,500 $1,000 $500 $ $1.60 FIGURE 3 Aluminum Avg. USD per pound Jan 1, 2008 Apr 30, 2009 Data LME Cash $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 Apr-09 Mar-09 Feb-09 Jan-09 Dec-08 Nov-08 Oct-08 Sep-08 Aug-08 Jul-08 Jun-08 May-08 Apr-08 Mar-08 Feb-08 Jan-08

3 US DOLLAR VALUE The US unemployment rate jumped to 8.5% in March, the highest since 1983 stated the Associated Press on April 3, The economy has shed a total of 5.1 million jobs since the recession began in December of 2007, and approximately two-thirds of those losses have come from November 2008 March USD Euro USD Compared to Major Global Currency Yahoo! Inc. The Associated Press also stated that in early April the European Central Bank made a modest interest-rate cut, but would cut further if necessary. Although, cutting interest rates can weaken a currency as investors move funds to places where returns are better, the cut was less than expected and the dollar began to weaken against the European currencies. USD Mexican Peso The Peso, according to Investment Markets, was hurt by the spreading concern of the swine flu outbreak as fewer tourists brought foreign currencies into the country and as Mexican consumers spent less as those concerned about contracting the disease stayed home. USD Canadian Dollar The Canadian Dollar rose for the fourth straight week as of April 25, 2009 stated Bloomberg.com. As a result of stocks rising and oil trading above $50, the appeal of the currency was enhanced. The charts to the right illustrate the year to date currency exchange rate of the US dollar against the Euro, Mexican Peso, Canadian Dollar and Japanese Yen. USD Japanese Yen

4 US AVERAGE GAS PRICE AVERAGE USED CAR PRICE Prices per gallon of gas surpassed the $1.90 level in March and held on average at the $2.02 level in April. Combined, the average of $1.97 per gallon is $1.34 less than the $3.31 per gallon price for the same period a year ago. The US Energy Information Administration projects that the price for regular grade gasoline this summer will average $2.21 a gallon more than $1.30 lower than last summer. According to CNNMoney.com increases in per gallon prices in March and April were primarily driven by increased demand rather than crude oil prices which have remained relatively steady. April saw used vehicle prices lose the momentum they had enjoyed the previous five months stated Kontos Kommentary from Tom Kontos of ADESA. With limited capital and concerns over bankruptcy, dealers are being selective at auctions and more conservative with inventory management. Although retail demand remained strong, incoming auction industry supplies as well as units in inventory diminished in April. US Average Per Gallon Price USD Jan 2007 Apr 2009 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 $10,500 Average Used Car Price USD ADESA Jan 2007 Apr 2009 $10,000 $9,500 $9,000 $8,500 $8,000 $7,500

5 Insurance Auto Auctions, Inc. is leading the salvage auto auction industry in North America by providing the largest facility footprint, strongest global buyer base and highest selling returns. IAA s exclusive focus on the salvage auto auction industry and over 150 corporate owned facilities across the United States and Canada provides suppliers and buyers with the best solution to process and acquire total-loss, recovered-theft, fleet lease and rental vehicles. The company s hybrid auction model, including live, internet and proxy bidding, united with their mature global buyer base and diverse inventory produce record setting returns. With over 26 years in the industry, IAA holds the most comprehensive warehouse of salvage auction data. For more information regarding IAA, please visit our website at Researched and written by Jeanene O Brien, Vice President of Provider Marketing for IAA. The IAA Salvage Index is distributed bi-monthly. For additional information or to join our list, please your contact information to marketing@iaai.com.