U.S. New Vehicle Industry Overview - 2017 Trends to Watch

Annual New Vehicle Registrations – It’s All Relative

Industry plateauing: U.S. sales forecasted at 16.8 to 17.1 million

U.S. Light-Vehicle Sales 17.6 17.0 17.1 16.9 16.8 17.3 million

17.110.4 17.3 17.2 17.1

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: July 2017 IHS Markit Forecast

Ramifications of Plateauing

Increased Greater Higher Higher fleet pressure on emphasis on incentive mix sales and F&I conquesting spend depts.

Light trucks dominate: they will account for 66% of new sales by 2020

Car-Light Truck Vehicle Sales Split by Year Car Light Truck 17.3 million

66%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

New players and growth in high-end shoppers will drive the luxury segment to double by 2020

Luxury-Non-Luxury Vehicle Sales Split by Year (in millions)

2.1 2.1 2.1 2.3 2.3 1.9 1.9 1.9 2.5 1.8 1.6 1.5 1.4 1.4 1.2

Total Non-Luxury Total Luxury

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

SUVs/CUVs—Growth Continues

SUV/CUV share takes the crown at 41.7%

U.S. New Vehicle Registrations Market Share by Body Style

45%

40% 41.7%

35%

30% 28.0% 25%

20% Body Style U.S. Market Share 15% 15.5%

10% 5.1%

5% 4.4% 2.3% 0% 2012 2013 2014 2015 2016 2017*

Sport Utility Sedan Pickups Van Hatchback Coupe

IHS Markit Registration Type: Total * July 2017 CYTD

More than half of all luxury sales are SUV/CUVs

SUV/CUV Market Share – Luxury and Mainstream

60%

55% 54.1% 50%

45% 41.7% 40% 40.1%

35%

30% SUV/CUV SUV/CUV U.S. Market Share

25%

20% 2012 2013 2014 2015 2016 2017*

Industry Luxury Mainstream

* July 2017 CYTD IHS Markit Registration Type: Total

SUV/CUV loyalty dominates, with almost two thirds of households acquiring another one Body Type Loyalty

70% 65% 2012 2013 2014

60% 2015 2016 2017* 52% 49% 50% 50%

40% 33%

30% 26%

20%

10%

0% Total Sport Utility Industry Sedan Pickups Van Hatchback

Note: “Total Sport Utility” includes SUV, CUV and ”Truck Wagon” *June 2017 CYTD

SUV/CUV Dominance*

§ #1 body type in new registrations § #1 body type for body type loyalty § #1 and #2 and #3 models in industry (Rogue, CR-V and RAV4) after three full size pickups § #1 segment in industry (non-luxury compact CUV) § #1 segment in mainstream (same) § #1 and #2 segments in luxury (luxury midsize and compact CUV)

SUV/CUV Dominance* (Continued)

§ #1, 2 and 3 model May 2017 CYTD for: BMW, Buick, Jeep, Land Rover and Subaru

§ #1 and 2 May CYTD for: Acura, Cadillac, Lexus, Mitsubishi, Porsche and Volvo

§ #1 May CYTD for Audi, Honda, Jaguar, Lincoln, Mazda, Nissan and Toyota

Pickup Competition

Fullsize pickup share of industry has climbed more than two percentage points from its low point in 2009

13.3% 13.1% 14% 12.6% 12.3% 11.9% 12.1% 12.2% 11.5% 11.6% 11.2% 12% 10.7%

10%

6% Share of U.S. Industry 4%

0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 July 2017 CYTD NON LUXURY FULL SIZE HALF TON PICKUP NON LUXURY FULL SIZE 3 QTR TO 1 TON PICKUP

Fullsize Pickup is one of the most profitable categories in the industry, rivaled only by fullsize SUVs

2016 CY Total New U.S. Estimated Net Profit Estimated 2016 Net Model* Registrations Per Unit Profit from PU Model

F SERIES 774,963 $8,000 $6,199,704,000

SILVERADO 581,050 $8,000 $4,648,400,000

RAM 472,646 $8,000 $3,781,168,000

*Models include all series; models are light duty only

Although Silverado has been #2 every year for the past ten years, through seven months in 2017 it leads Ram by less than 28,000 Units

900,000

800,000

700,000

600,000

500,000

400,000

300,000

200,000 New Vehicle Registrations

100,000

0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 July 2017 CYTD F SERIES 639,549 480,059 389,981 500,391 545,191 600,081 709,711 700,095 727,846 774,963 485,539 RAM 356,271 245,260 175,276 189,741 234,683 279,827 341,630 422,922 432,986 472,646 288,534 SILVERADO 614,938 469,655 315,325 366,857 411,730 415,399 476,081 523,809 596,749 581,050 316,197

And Ram has outsold Silverado in three of the first seven months of 2017

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000 Total New Registrations

10,000

0 May- May- Jan-2016 Feb-2016 Mar-2016 Apr-2016 Jun-2016 Jul-2016 Aug-2016 Sep-2016 Oct-2016 Nov-2016 Dec-2016 Jan-2017 Feb-2017 Mar-2017 Apr-2017 Jun-2017 Jul-2017 2016 2017 F SERIES 54,339 60,691 65,683 63,973 70,273 66,072 60,196 66,790 66,193 62,280 66,080 72,393 65,506 63,916 74,089 66,218 77,734 69,870 68,022 RAM 32,812 38,685 41,170 36,712 41,368 38,816 36,966 41,939 47,757 42,976 35,387 38,058 39,321 37,977 43,134 39,880 47,480 40,838 39,860 SILVERADO 44,387 45,445 45,644 47,241 48,690 47,855 54,555 53,644 48,638 50,290 45,133 49,528 38,417 52,197 43,080 40,800 45,240 48,295 48,113

Registration Type: Total

The Silverado and Ram are in an incentives battle, while Ford consistently spends less per unit than either competitor

8000

7000

6000

5000

4000

3000

2000 RAM Silverado F-Series Incentive Spend Per Unit Unit Per Spend Incentive 1000

0 15 16 17 15 16 17 15 16 17 15 16 15 16 17 15 15 16 16 17 15 16 15 16 15 16 15 16 17 15 16 17 ------Jul Jul Jul Jan Jan Jan Jun Jun Jun Oct Oct Apr Apr Apr Feb Sep Feb Sep Feb Dec Dec Aug Aug Nov Nov Mar Mar Mar May May May

Note: Data are for complete model, including all series (for example, Ford includes F-150, F-250 and F-350) Data source: Autodata

Confidential. © 2017 IHS MarkitTM. All Rights Reserved. Incentive spend metric includes consumer rebates, discount financing, lease rate subvention, residual exposure, dealer allowances, volume bonus payments and contests. 19

Four years ago Ram consistently ranked fourth on brand loyalty, but in the past six quarters it has been near to or equal to the GMC Sierra

30 Brand Loyalty % 20 F150 Silverado 1500 RAM 1500 Sierra 1500 10

0 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 2012 2013 2014 2015 2016 2017

Ram Pickup has had a positive C/D ratio with each of its three primary competitors every quarter since the start of 2015

Conquest/Defection Ratio 0 1 2 3 4 1 2 3 4 1 2 2015 2016 2017 Ram 1500 vs. Silverado 1500 4.33 2.57 2.15 1.91 1.63 1.54 2.17 2.56 2.51 2.66 Ram 1500 vs. Sierra 1500 5.72 2.49 2.44 1.9 1.97 1.85 2.15 2.45 2.02 2.45 Ram 1500 vs. F1500 4.76 4.53 2.74 2.1 2.26 1.7 2.26 1.78 1.83 1.69

Silverado 1500 and Sierra 1500 households are three times as likely to defect to a midsize pickup as Ram 1500 or F-150 households

8.0% 4.0% 7.0% 3.5% 6.0% 3.0% 5.0% 2.5%

4.0% 2.0%

1.5% 3.0%

1.0% 2.0%

0.5% 1.0% Percent of Defections to Midsize Pickup Segment

0.0% 0.0% 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Sierra 1500 2 dr Silverado 1500 2 dr

Silverado 1500 Sierra 1500 Ram 1500 Ford F-150 Silverado 1500 4 dr Sierra 1500 4 dr

Pickup Product Activity – Remainder of 2017 – 2019

§ Ram 1500 Re-Design - February 2018 § Silverado 1500 and Sierra 1500 Re-Design – August 2018 § Ranger US Launch - December 2018 § Frontier Re-Design – January 2019 § Hyundai Santa Cruz US Launch – May 2019 § Jeep Pickup US Launch – May 2019 § Silverado and Sierra HD Re-Design – July 2019

Parity

Market share range among the seven leading OEMs has declined from about 16 pp to about 9 pp U.S. Market Share

Jan – Jul 2008 Jan – Jul 2017 21.4%

16.8% 16.9% 14.9% 14.5% 15.9 pp 14.1% 12.5% 9.2 pp 11.5% 10.9% 9.5% 9.5% 7.7% 7.2% 5.4%

GM TOYOTA FORD FCA HONDA NISSAN HYUNDAI GM FORD TOYOTA FCA NISSAN HONDA HYUNDAI

Mainstream and Luxury brand leaders remain close to one another in registrations and share Mainstream Brand Leaders Luxury Brand Leaders

1.9% 1,600,000 14.2% 14.5% 190,000 1.90% New Registrations 1,400,000 U.S. Market Share 14.0% 185,000 1.85%

1,200,000 13.5% 180,000 1.80% 1,000,000 13.0%

800,000 12.4% 175,000 1.75% 12.5% 1.7% 600,000 1.7% 170,000 1.70% 12.0% 400,000 11.5% 165,000 1,438 1.65% 200,000 11.5%

1,413,050 1,231,839 1,145,246 187,247 170,753 169,315 0 11.0% 160,000 1.60% FORD TOYOTA CHEVROLET MERCEDES-BENZ* BMW LEXUS

“Best Selling” margins can be very small

Non-Luxury Compact CUV Non-Luxury Luxury Compact CUV Luxury Midsize Car Compact Car 250,000 229,584 223,646 219,502 211,162 194,438 200,000

150,000

100,000

50,000 32,533 30,633 28,509 28,067 29,327 27,580 New Vehicle Registrations July 2017 CYTD 2017 July Registrations Vehicle New

0 TOYOTA NISSAN HONDA CR-V HONDA CIVIC TOYOTA LEXUS NX ACURA RDX BMW X3 AUDI Q5 LEXUS ES MERCEDES- RAV4 ROGUE COROLLA BENZ E- CLASS

10,082 16,724 4,466 1,747

Note: All data are based on total new registrations July 2017 CYTD

Implications of Parity

Pressure to Heavier increase Higher fleet targeted availability/ mix? incentives inventories

Pressure to reduce product life Impact on cycles/ residuals? increase cadence

ICE Forever? Internal Combustion Engine

Gasoline vehicles continue to dominate, with over 84% share Fuel Type U.S. Market Share

90% 84.8%

80%

70%

60%

50%

40%

Share Share of U.S. Market 30%

20%

10% 2.7% 2.6% 0.6% 0% GASOLINE DIESEL HYBRID ELECTRIC 2012 2013 2014 2015 2016 July 2017 CYTD

Tesla (Models S and X), Leaf and Bolt account for 79% of all electric vehicle registrations Electric Vehicle Volumes and Market Share – July 2017 CYTD

18,000 40% 16,106 16,000 35%

14,000 30%

12,000 New Vehicle Registrations EV Share 25% 9,702 10,000 8,900 8,751 20%

8,000 EV Share Total of 15% 6,000 New New Registration Volume 3,831 10% 4,000 2,207 2,000 1,212 5% 1,116 998 821 375 371 140 0 0%

Electric Vehicles in Operation (VIO) by State

5.4% 50% in California

3 states combined

account for 60% 49.5%49.1%

32 states combined 4.9% account for 10%

Tesla Model S leads the Luxury Sedan category by a wide margin, with more registrations than the S-Class and 7-Series combined Luxury Sedan New Vehicle Registration Volume

TESLA MODEL S 16,106

CADILLAC XTS 8,774

MERCEDES-BENZ S-CLASS 6,558

CADILLAC CT6 6,359

7 SERIES 5,824

PORSCHE PANAMERA 3,619

LEXUS LS 2,365

GENESIS G90 2,257

TOTAL XJ 1,746

AUDI A8 1,652

HYUNDAI EQUUS 50

Hybrids and Evs will gain share, but gasoline will remain dominant IHS Markit Fuel Type Mix Forecast

20% 120% 18% 100% 16% 14% 80% 12% All Fuel Types AllTypes Fuel

- 10% 60% Gasoline Only

8% – 40% 6% Except Gasoline 4% 20% 2% Fuel Type Share Type Fuel 0% 0% 2017 2018 2019 2020 2021 2022 2023 2024 2025 Fuel Type Share FuelType Hybrid 3.5% 4.3% 7.4% 9.4% 11.9% 13.3% 14.9% 16.5% 18.4% EV 0.6% 1.1% 1.2% 1.8% 2.1% 2.4% 2.5% 2.7% 2.9% Fuel Cell 0.0% 0.0% 0.0% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% Gasoline 95.9% 94.6% 91.3% 88.7% 86.0% 84.2% 82.5% 80.6% 78.5%

Loyalty on the Rise

Brand loyalty has surpassed the 50% mark, as brands on average now retain more customers than they lose U.S. Industry Brand Loyalty %

52.9 53.4 51.5 50.2 49.6 48.2

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 2012 2013 2014 2015 2016 2017

Lincoln and Mercedes-Benz are tied for luxury brand loyalty leadership

Brands with Highest Brand Loyalty

64% 61% 60% 58% 58% 58% 57% 56% 54% 54% 52%

FORD CHEVROLET TOYOTA LINCOLN MERCEDES-BENZ HONDA NISSAN SUBARU BMW LEXUS INDUSTRY

Leasing Pause

LEASING

Leases continue to account for almost a third of all new vehicle transactions, though their penetration appears to have peaked Retail Lease Penetration

35% 31.6% 30.3% 30.1% 29.5% 30% 26.7% 25.3% 23.3% 25% 20.2% 20%

15%

Retail Lease % Total Retail Total % Lease Retail 10%

0% 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 2012 2013 2014 2015 2016 2017

Retail Lease Penetration – Top 5 Segments Retail Lease Penetration in Luxury Compact Car Segment – Top 5 Models

LUXURY SUB COMPACT CAR 69% INFINITI Q50 83%

LUXURY COMPACT CAR 67% BMW 330 78%

LUXURY MID SIZE CAR 62% JAGUAR XE 77% LUXURY PRESTIGE FULL SIZE CAR 60%

INFINITI Q60 73% LUXURY COMPACT CUV 52%

MB C-CLASS INDUSTRY 30% 71%

0% 10% 20% 30% 40% 50% 60% 70% 80% 64% 66% 68% 70% 72% 74% 76% 78% 80% 82% 84%

Time Period: Q2 2017

In the non-luxury compact CUV segment, younger, wealthier and/or Hispanic households are better lease conquest targets

43% 42% 45% 39% 43% 41% 41% 40% 37% 39% 41% 39% 39% 37% 39% 35% 34% 37% 36% 37% 37% 36% 33% 32% 35% 35%

33% 33% 31% 31% 31% 29% 29%

29% 27% 27% 26% 25% 27%

25% 25% AFRICAN ASIAN HISPANIC 18-34 35-44 45-54 65+ AMERICAN

In the Pipeline

Asians launch 33 all-new or re-designed products in U.S. in next 15 months U.S. Product Activity at Asian Brands – Q4 2017 - 2018

Brand Model Body Type Car/LT Brand Model Body Type Car/LT

Q4 2017 Q2 2018 Honda Accord Sedan PV Acura RDX SUV CV Hyundai Accent Sedan PV Honda Insight Hatchback PV Lexus LS Sedan PV Hyundai Santa Fe Sport SUV CV Tesla Model 3 Sedan PV Infiniti Q70 Sedan PV Q1 2018 Kia Stonic SUV CV Genesis G70 Sedan PV Kia Forte Sedan PV Hyundai Veloster Hatchback PV Kia Forte Hatchback PV Hyundai Kona SUV CV Nissan Kicks SUV CV Infiniti QX50 SUV CV Subaru Ascent SUV CV Nissan Leaf Hatchback PV Toyota Avalon Sedan PV

Asians launch 33 all-new or re-designed products in U.S. in next 15 months U.S. Product Activity at Asian Brands – Q4 2017 - 2018 Brand Model Body Type Car/LT Q3 2018 Genesis G70 Coupe PV Kia K900 Sedan PV Kia Telluride SUV CV Lexus ES Sedan PV Mazda CX-8 SUV CV Q4 2018 Honda Pilot Sport SUV CV Hyundai C-SUV EV SUV CV Kia Soul SUV PV Mazda 3 Sedan PV Mazda 3 Hatchback PV Nissan Altima Sedan PV Subaru Forester SUV CV Toyota Prius V MPV PV Toyota Corolla iM Hatchback PV

Five takeaways

1. 16.5+ million industry will continue through end of decade

2. Targeted conquesting becomes high priority

3. SUV/CUV dominance is industry-wide, will continue in near term

4. Fullsize pickup competition is intense, and will only get more so

5. The traditional internal combustion engine (I.C.E.) will dominate through 2025

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