Jean Van der hasselt - Inchcape

Jean Van der hasseltCEORussia and the Nordics

Market OverviewRussia Population 140.4 millionLanguage(s)RussianCurrencyRubleCapital CityMoscowGDPUS$1.465 trillionSource: IMFRussia is the largest country in the world, covering more than a ninth of the Earth's land area

Commercial OverviewStable economicgrowthWell balanced economic structureSubstantialeconomy, withstrong growthprospectsGDP = ~US$1.5 trillion7 th largest economy in the world atPPP*14.8% CAGR GDP projectedthrough 2015Low unemployment Unemployment dropped from 9.0%in 2010 to 6.7% in 2011 supportedby government programsGDP growth(CAGR)2005-2010 2010-201513.9% 14.8%Population (CAGR) -0.3% -0,3%Natural resourcesdriven exporteconomyKey exporter of oil and gas toEuropeUnemployment rate 8.0% 7.4%Inflation 8.0% 5.0%Russia experiencing strong and stable growthSource: IMF*GDP at Purchasing Power Parity

Economic growth drivers 2010-2015High oil prices and strong demand for gasStable government systemWell – educated populationGovernment focus on modernization and innovationsGDP 2010 - 2015US $bnRussian GDP forecast to experience strong growth with 14.8% CAGR 2010 - 2015Source: IMF

Automotive OverviewOne of the largest countriesVast country, lowpopulation densityGreat potential for carpenetration growthPopulation preferences4x4 segment popularityPetrol Dominance140m peopleAround 17% of population live in 2 major regions –Moscow and St. PetersburgPopulation density = 8.4 people per sq km (vs 255in UK)243 registered cars per 1000 people(vs 494 in UK)In Russia car ownership is viewed as indicator ofsocial status, thus there is stable interest forpremium brands car segmentPoor road quality and extreme weather conditions4x4 viewed as sign of wealthLow fuel pricesPoor quality of dieselNo taxation initiatives on fuel economyRising personal wealth drives interest in new car purchasesSource: IMF/JD Power

Total Industry VolumeRussia Car Market recovering after 2009 crisisScrappage scheme played important role in supporting car market with 500k certificates issuedThe regions are growing faster than Moscow and St Petersburg after a severe downturnmillion vehiclesSource: Global InsightMarket increased by 35% in 2010

Car Penetration 2008 - 2015Key driver – Strong Russia GDP growth 2010-2015 CAGR of 15.2%Penetration growth forecasted at 4 – 5% annuallyMoscow and St. Petersburg car penetration already above 300 cars per 1000 peopleStill big gap vs Western Europe car penetration levels (Germany - 558 and UK - 494 vehicles per1000 people)Per 1000 peopleSource: IMF/JD PowerCar penetration projected to increase to 298 cars / 1000 by 2015

Total Industry Volume projected to reach 3.0m by 2015000’ vehiclesSource: Global Insight2010 – 2015 TIV CAGR of 9.2%

Foreign brands dominate the marketKey Drivers - Growing population wealth and sophistication resulted in migration to foreign brand carsConsumers want more stylish and reliable products, higher customer experience & standards, vehiclesto handle challenging weather conditionsShare of foreign brands in Russian car market (%)Source: Global InsightMarket premiumisation will drive future growth

Russia market strengthMarket growth potentialLow car penetration per capitaStrong GDP and disposable income upsidepost downturnCustomer aspiration for premium brandsCapital efficient footprintFewer retail pointsSite capacity built for growthScale operationsBetter customer experienceSustainable retail marginHigh marginsUsed vehicles untapped opportunityVehicle parc growth will drive AftersalesHigher returnsHigher revenues per square meterLower people costsStronger operational gearing

Retail LocationsMoscowSt. PetersburgMoscow – 13 Retail CentresSt. Petersburg – 7 Retail CentresInchcape represents strong foreign / premium brands in 20 sites

Inchcape invested in best in class retail facilitiesToyotaPiskarevskiy,St. PetersburgOpened in 2009Retail center of 12k sq. m. – one of thelargest in Europe18 car Showroom of 1.3k sq. m.AFS area of 4k sq. m. operates with 36workshop and 20 bodyshop baysToyotaVnukovo,MoscowOpened in Dec 2010 as Joint Venturewith IndependenceRetail center of 9.6 sq. m. includes twoshowrooms for new and used carsAFS area of almost 5k sq. m. includesmore then 20 workshop and 20bodyshop bays each

Inchcape occupies retail centres in the best locationsMusa Motors 11 st and 2 nd Magistralnaya str.Very central locationclose to ThirdTransportation circleMusa Motors 3OlimpiyskiyBusy and trendy areaMusa Motors 4YaroslavkaJV with IndependenceVnukovoNear by airport andLuxury suburbsOne of biggest andbusiest city arteriesMusa Motors 5BalashikhaJust outside MKADMusa Motors 2ProfsouznayaOne of the finestdistricts of MoscowMusa Motors 7Hotel UkraineCity centerMusa Motors 6VarshavskoeOne of biggest andbusiest city arteries

Inchcape occupies retail centres in the best locationsConcord 1RustavelliMini automotive clusterof St. PetersburgToyota PiskarevskiyRustavellyMini automotive clusterof St. PetersburgConcord 2LeninskiyConveniently located closeto LeninskiySt. Petersburg roadsAudi VitebskiyVitebskiy pr.Located close to theCity centerConcord 3SofiyskayaLargest PeugeotSt. Petersburg RCIn busy city areaToyota PulkovoSheremetievskayaSt. Petersburg key road goingto Pulkovo (city only airport)

Our top 5 PrioritiesGrowingmarketshareGrowingaftersalesImprovingmarginControllingworkingcapitalSelectivecapitalexpenditure

Operational focus on our top 5 priorities to deliver ourCustomer 1 st strategyGrowingmarketshareFully implementing Inchcape Advantage processes toleverage our superior customer service and createindustry differentiationFocus of our new car sales executives on developingleads, offering test-drives and on increasing capturerate while leveraging vehicle supply from our OEMsGrowth of used car business across the businesssupported by Inchcape expertise & leadershipInchcape brand partners launch new products on aregular basis, appealing to new customers andimproving customer loyaltyTrafficLeads/TrafficTestdrives/TrafficOrder/ TrafficGrowingaftersalesStrategic focus on developing and promoting uniqueaftersales offers (i.e. warranty programs, partswholesale programs, insurance packageswith life insurance, car rental service, etc.)Upsell strategy within the warranty period; retentionfocus on post warranty customersWorkshop productivity improvements increasinghours soldFocus on more profitable workshop mix, increasingshare of more profitable customer groupsEnquiriesBooking/EnquiryIntakes/Enquiry

Operational focus on our top 5 priorities to deliver ourCustomer 1 st strategyBMW: 1-series Cabrio, 6-series CabrioJaguar: XJ 3.0 PetrolAudi: A6 new, A8 3.0TDI, A8 W12 6.3, Q5 hybrid, RS3Toyota: Land Cruiser Prado (anniversary edition),Land Cruiser 200 (anniversary edition),Land Cruiser Prado 2.7LLexus: CT 200hVolvo: V60BMW: 1-series, 6-series CoupeLand Rover: Range Rover EvoqueJaguar: XF (restyling)Audi: A5 and A5 Sportback – restyling, Q3, S8, S7Toyota: Camry (new generation), Hilux 2.5 Diesel, Hilux 3.0Diesel, Alphard (Russia launch), Prius (restyling)

Operational focus on our top 5 priorities to deliver ourCustomer 1 st strategyImprovingmarginBenchmark existing new car sales discount / controlmanagement processPreinstalled value-added packagesNew F&I products launchOperational efficiency improvement on all levels:- Better mechanics / service advisers productivity- Efficient support from non productive unitsControllingworkingcapital1.5 months stock coverFocus on aged stock

Operational focus on our top 5 priorities to deliver ourCustomer 1 st strategySelectivecapitalexpenditureOpening of new retail centers in Moscow:BMW, Mini, Jaguar, Land Rover, Used carand bodyshop facilitiesLocated on Moscow ring roadRedevelop existing facilities and opennew Musa Motors City retail centre:Jaguar, Land Rover and Volvo facilitiesLocated in the business heart of Moscow (10min. drive from Moscow City and around 20min. drive from Kremlin)26K sq. m. plot with total 14K sq. m. footprintOperational start scheduled for early 2012

Inchcape RussiaMarket premiumisation to drive growthScale position in the two largest regions with highest margins –Moscow and St. PetersburgWorking with strongest brand partners: BMW, Audi, Volvo, Toyota, Jaguar andLand Rover20 high-quality retail centresStable and highly-experienced management and operational teamsInvesting in growth with the opening new scale facilitiesMusa Motors acquisition has given us a leading retail position in MoscowUniquely positioned with a high quality operation in a fast - growing market