ACMA CONFERENCE New Delhi India

1. ACMA CONFERENCENew Delhi India GLOBAL AFTERMARKET

2. South African Motor Industry Presentation By Jeff Osborne CEO Retail Motor Industry Organisation Belonging Is Better Business

3. Framework of Presentation • Organisations representing the Automotive industry sectors in SA • Auto Industry in the Global context • SA Automotive sector as share of GDP • Development of competition in SA passenger car market • SA vehicle export trends • SA vehicle sales • Structure of the industry in SA and manufacturers market share • Government support programs to Automotive industry

4. Framework of Presentation - cont SA Components aftermarket • Component Exports • SA Vehicle Parc requiring components • Value of the parts market • Distribution channels • Market Dynamics

5. Organisations Representing the Automotive Industry NAAMSA – Representing the Automotive Manufacturers in SA (29 000 Employees) NAACAM – Representing the Automotive Component Manufacturers in SA (70 000 Employees) RMI – Representing the Retail Motor Industry (260 000 employees)

6. Vehicle Sales by Region 2007 - 2011 SA Auto Industry in the Global Context Sales (million units) Rest of World Asia-Pacific South America North America Central and Eastern Europe Western Europe note: partly estimated Group Treasury – K-FTU – NI/SM/MO – 6009/559.6 6 Source: VDA, IHS Global Insight, Automobile Manufacturers Ass., own calc. 03/2012

7. Structure of Car / CV Production by Region1970 – 2011 (SA .66%) SA Auto Industry in the Global Context Structure in % Rest of World Japan North America Western Europe note: partly estimated 7 03/2012 Group Treasury – K-FTU – NI/OL/MO – 6008/176.10b JP Source: VDA, IHS Global Insight, own calculations

8. Ranking of Most Important Production Countries January - December 2011 (SA 0.53) SA Auto Industry in the Global Context million units Rank 2011 (2010) Cars CV note: partly estimated, car production USA, Canada and Mexico = cars & LCV Anmerkung: teilweise geschätzt 8 02/2012 Group Treasury – K-FTU – NI/MO – 6008/113.17c JP Source: VDA, Polk Germany, press information

9. SA Auto Industry in the Global Context SA Auto Production vs Global Production 9

10. SA Auto Industry in the Global Context Auto exports as % of total exports 10

11. Growth in Auto IndustrySA vs Global 11

12. How Important is the Auto Sector in SA? 12

13. Development of Competition in SA Passenger Car Market Brands & Models: January 1994 to January 2012 January 2012 60 Brands 1,375 models 25% Import Duty January 1994 17 Brands 192 Models 115% Import Duty 13

14. SA Automotive IndustryDevelopment of FBU Export Volume - Units Units 14

15. SA Passenger & LCV Market 1950 to 2011 LCV Passenger 15

16. Structure of the Industry in SA – OEMs, Importers & Distributors Major multinational automotive corporations – BMW, Ford, GM, Mercedes Benz, Nissan, Renault, Toyota and Volkswagen – are operating in South Africa as manufacturers through wholly owned subsidiaries All other major marques are imported – European (Fiat, Jaguar/Land Rover, Maserati, Peugeot/Citroen, Porsche, Volvo), Japanese (Daihatsu, Honda, Mitsubishi, Subaru, Suzuki), USA (Chrysler), Korean (Daewoo, Hyundai, Kia), Indian (Mahindra, Tata) with Chinese brands entering the SA market (Chery, Chana, Foton, GWM) 16

17. Market Share Figures 2009 to 2012 Total Sales 17

18. Government Support Programs to the Automotive Industry 2013 – 2020 Automotive Production Development Plan (APDP) 1995 – 2012 Motor Industry Development Programme (MIDP) 1989 – 1994 Phase 6 Local Content Programme 1989 2000 2010 2020 18

19. SA Automotive IndustryDevelopment of Component Exports - R Bio 19

20. SA Vehicle Parc as at December 2011 Average age of vehicle parc is 9.9 years Vehicle parc in 2011 was 8 108 978 vehicles The vehicle parc is made up of 89 manufacturers and 23831 models

21. Value of Parts market • Value of replacement parts market in 2011 was R27 078 306 000 (US$3 384 788 250) • Slow growth expected for next few years

22. Parts Market – Value

23. Parts Market - Units

24. Vehicle Parc

25. Market Growth Forecast

26. Distribution Channels • The market is serviced by two channels OES (P&A) and Alternative or Independent Aftermarket. • P&A represents 50% of the total Aftermarket value and the independent aftermarket represents 50% by value (this includes “captured” product lines which are exclusive to the OEM’s) • In volume terms P&A represents 24% of the market and Independents 76% • The independent aftermarket went through a stage of restructuring in the past few years and two large groups (Midas Group and Autozone) are now the dominant distributors in the market • The balance of the market is serviced through a few significant wholesalers, product specialist and a host of smaller traders • Imported products vary significantly by product category but represents an estimated 35% by volume of total sales in the independent aftermarket

27. Market Dynamics • The Aftermarket is a very competitive sector of the industry with price playing an important role in the purchasing decision • Recent economic pressures and lower levels of disposable income is forcing a buying trend with consumers buying “fit for purpose” products at lower prices • This trend is placing pressure on the known brands to maintain their market share and profitability • The manufacturing base for automotive components has reduced in recent years with prominent manufacturers discontinuing local manufacturing • Although consumers have made some compromises in quality in recent years the market still does not tolerate products of sub standard quality. Known brands are still the first choice. • Imports from lower cost countries such as China and India has increased significantly in recent years • With a widely proliferated model range stocking a full range of products are becoming increasingly difficult