World Congress January 14, 2003

1. World CongressJanuary 14, 2003 Victor Doolan President and CEO Volvo Cars of North America, LLC

2. Hybrid Diesel VCNA Business Model Quality Durability Leadership Option Pkgs Individual Models Environmental Leadership Retractable Hardtop Get it all right all the time Commun - actions Functional Utility Leadership SUV Brand Via Product Positioning Lane Change Assist Environment Best Vehicle Utility Quality Durability Safety to be Inspirational Dealer Customer Build Orientation Performance Run Flat Tires Industry Safety Leadership Communi- actions Character Vehicle Safety Market Run DAGs AWD Strategy Best Practices Inventory Mgmt Profitable Retailers Resale Value Convenient Times & Locations Customer Satisfaction Profitability Brand Value Build To Expanded Demand 1:1 CRM CRCs E-Com Customer For Life Pre-Owned Programs Best Residual Product Life Care For Customer Maint Owner For Life Cycle Conscience Lower Insurance Costs Tailored Finance Program Value Care Experience Value Effective Loaner Car Prog Experience Reduced Near-New Cars Cust. Centric Roadside Asst CRCs Reduce Ins. Costs Market Pricing - Option Pkgs Consistent Best Practices Reward Retailer Achievement Tailored Value Finance Facilities Reduce Maint. Costs Develop Insurance Program People Expertise Processes Check Body Parts Pricing Consistent Best Practices Systems Lower Maintenance Increase Service Intervals Rewards Build-in Maint. Costs Retention Program Lower Inventories Lower Costs Less Unproductive Tasks(?) People Expertise Training & Develop. Rewards Pre-owned Business Improved Margin Retailer Profitability Higher Service/Parts Retention Lower Cost of People Development Due to Lower Turnover Lower Costs - Loaner Cars Floorplan Growth in Volume Higher Owner Retention Better Model Mix Profitability Lower Variable Marketing More Finance Income 1

3. BUILDING RESALE VALUE RESALE VALUE IS THE ULTIMATE MIRROR THAT REFLECTS THE TRUE STRENGTH OF PREMIUM BRAND AS IT REPRESENTS THE CUMULATIVE EFFECT OF ALL ASPECTS OF THE BRAND, IMAGE, QUALITY, DURABILITY, PRODUCT DESIRABILITY, PRICING, MARKETING, REMARKETING, DISTRIBUTION, VOLUME MANAGEMENT, DEALERS AND, OF COURSE, CUSTOMER SATISFACTION. 2

4. Learning's from Previous 5 Years • Large Residual Losses • Initial values set too high • Negative pricing • New car incentives • Supply – New and Used exceeded demand • Pre-owned programs to mitigate losses • 0% Finance, Customer cash in lieu of leasing 3

5. Leases as a Share of Overall Vehicle Sales 4

6. Next 3 Years • Residuals at realistic levels • Positive pricing • Higher interest rates • Reduction in “Off Lease Vehicles” • New car incentive progressively returning to lease or dealer cash • Possibility of incentives via “Free of Charge” option packages • Continuous development of Certified Pre-Owned Programs 5

7. The art of remarketing in an era of high incentives is to market new cars correctly in the first place • Build quality – durability • Build desirability of brand – vehicle • Establish competitive – right pricing, vehicle and options • Balance supply and demand • Reduce supply of “Near New” cars • Remarket effectively via Certified Pre-Owned programs 6

8. Certified Pre-Owned Programs - Benefits • Critical to ensuring effective remarketing of product • Customers show increasing preference for Certified Pre-Owned because of greater confidence in the purchase • Bring first time buyers to the brand • Great discipline on manufacturers to ensure ongoing ownership costs, quality and desirability are competitive • Efficient way to distribute off lease vehicles to the franchise system • Brand equity can be effectively managed by utilization of residual reserves to support the sale • Profit opportunities for franchise retailers 7

9. Certified Pre-Owned Programs - Challenges • Substitution for new cars – retailer capacity • Cost of advertising, promotion and support for certified programs 8