Auto component industry prospects Russian Automotive Market Research Auto component market: trends and opportunities Appendix Russian Automotive Market Research 21 Automotive clusters in Russia Vehicle sales in 2013: 2 774.35 Vehicle production in 2013: 2 186.80 Capacity in 2014: 3 497.00 Capacity in 2020: 4 417.00 Vehicle sales in 2021: 1 914 – 2 340 Vehicle production in 2021: 1 622 – 2 032 Export potential in 2021: 200.00 – 300.00 Source : Russian Automotive Market Research Russian Automotive Market Research 31 Localization Start of OEM production Capacity Models Localization level Nisan Pathfinder Nissan X-Trail Nissan 50 000 2009 Nissan Qashqai – November 2015 34% (St. Petersburg) 2015-100 000 Nissan Murano – June 2016 Nissan End of 2012 Nissan Almera - 2012 (Togliatti) Nissan (Renault plant in Nissan Terrano - 2014 Moscow) Nissan August 2014 Nissan Sentra (IzhAuto, Udmurtia 2015 Nissan Tiida - 2015 Republic) Datsun Datsun on-DO 2014 Up to 100 000 (Togliatti) Datsun mi-DO Renault Logan Renault Logan – Renault Sandero 75% Renault 1999 190 000 Renault Fluence – up to March, 2016 Renault Sandero – CKD (Moscow) Renault Duster Renault Fluence – CKD Renault Kaptur – April 2016 Renault Duster-CKD Renault Logan Renault Renault Logan – 2014 B0 line – 350 000 Renault Sandero (Togliatti) 75% Hyundai Solaris – 47% Hyundai Solaris Hyundai-KIA Hyundai Creta Crossover: 2016 – 2011 220 000 Kia Rio (St. Petersburg) 30%, Hyundai Creta Crossover – August, 2016 2017 – 50% KIA Sorento, KIA Cee’d, KIA Mohave, KIA Soul, KIA Sportage, KIA Venga, KIA Quoris, KIA Sorento CKD – November Hyundai-KIA 1997 100 000 KIA Optima, KIA Cerato, Hyundai i40, Hyundai 2013 (Kaliningrad) Equus, Hyundai Elantra KIA Cerato – November 2014 KIA Venga 270 000, including Volkswagen Polo Sedan Volkswagen Volkswagen Polo - 40% 2007 CKD: 225 000 Volkswagen Tiguan (Kaluga) Volkswagen Tiguan - 22% Skoda Rapid - 2014 SKD 45 000 vehicles Skoda Yeti - November 2011 - 20 000 Volkswagen November 2011 132 000 Volkswagen Jetta – April 2013 - 40 000 Skoda Yeti – CKD 2012 (Nizhniy Novgorod) Skoda Octavia – June 2013 - 50 000 Source : Russian Automotive Market Research Russian Automotive Market Research 51 Localization Start of OEM production Capacity Models Localization level GM (Togliatti) 2002 100 000 Chevrolet Niva 95% Peugeot 408 CKD, PSA Peugeot Citroen localization level- 35% (PSMA RUS) 2010 125 000 – for PSA Peugeot 408 Citroen C4 - CKD, (Kaluga) and MMC, PSA – 85 Citroen C4 Sedan localization level- 35% 000 Projected localization level-50% 125 000 – for PSA Mitsubishi Outlander- CKD Mitsubishi Motor Corporation 2010 and MMC Mitsubishi Outlander 2014– 20% (PSMA RUS) (Kaluga) MMC – 40 000 End of 2015 – 30% Ford (Leningrad region) 2002 125 000 Ford Focus Ford Focus - 30% Ford Mondeo Ford Transit – CKD April Ford Transit 2015 Ford Explorer Ford Explorer – CKD April Elabuga - 2012 85 000 Ford Kuga 2013 Ford-Sollers Ford-S Max Ford Kuga - CKD October (Tatarstan Republic) Naberezhnye 115 000 Ford Galaxy 2013 Chelny - 2014 Ford Tourneo Custom - June 2013 40%-2014 Ford EcoSport – 2014 45%-2015 Ford Fiesta - June 2015 50% - 2016 60%-2018 50 000 Toyota (St. Petersburg) 2007 Possible in 2016 – Toyota Camry CKD - 15% 100 000 Toyota RAV 4 - 2016 2014 - 30% 1 stage – 50 000 Mazda CX-5 Mazda (Far East) October 2012 2 stage – 70 000 Mazda 6 - April 2013 SKD Planned welding and Great Wall (Lipetsk region) March 2014 Great Wall H6 painting Great Wall (Lipetsk region) 2016-2017 Haval CKD Haval H2 Planned welding, painting, Great Wall (Tula region) 2017 150 000 Haval H6 Coupe assembling Haval H9 Suppliers park Brilliance (Derways, Karachay- Cherkessia Republic) March 2014 2014 -3500-4000 Brilliance V5 Chery (Derways, Karachay- Chery A 19 Cherkessia Republic) Autumn 2014 10 000-20 000 Chery T21 JAC (Derways, Karachay- Cherkessia Republic) February 2014 JAC S5 Dongfeng Tatarstan Republic January 2015 120-170 000 CKD - 2017 Lifan (Lipetsk region) Summer 2017 60 000 CKD Stamping, welding, Hawtai (Partnership with KAMAZ, painting, assembling Tatarstan Republic) 50 000 Hawtai, 4 models: crossovers and sedans Projected localization level – 60% Foton Tunland – pick-up Foton Motors September 2016 Foton Sauvana - SUV Source : Russian Automotive Market Research Russian Automotive Market Research 51 Localization Start of Localizati OEM production Capacity Models on level Autocomponents for localization IVECO-AMT 1994 1 000 TRAKKER - - (Chelyabinsk region) Volvo FH-12 Volvo FM-12 End of 2014 – Different types of bodies, tyres, springs, cabins, VOLVO TRUCKS 10 000 (by 15% chassis components, automatic transmission 19, January, 2009 Volvo FM-64 (Kaluga region) 2015) Volvo FM-42 Projected level - Possible assembly of axles, gear boxes in 2020 Volvo FM-84 33% Volvo FMX Renault Route RENAULT TRUCKS 19, January, 2009 5 000 Renault Lander 20-50% Different types of bodies, tyres, cabins (Kaluga region) Renault Kerax Cable harnesses, fuel tanks, tyres, wheels, leaf 28% 5 000 and parabolic springs, frames, plastics and rubber, SCANIA Chassis assembly 2010 Increase up to Griffin P 380 castings, forgings, machining, batteries, air surge (St. Petersburg) + body structure tanks, torque rods, pressed parts, including 7 500 in 2 shifts surface treatment MERCEDES-BENZ Mercedes-Benz Actros (Euro V) 2013 - 4 500 KAMAZ is the main Partner (Tatarstan Republic) 2010 Mercedes-Benz Atego (Euro V) - 2018 -10 000 Mercedes-Benz Axor (Euro V) Cabins, engines, axles, tires, fuel filter separator Mercedes-Benz Unimog (Euro V) FUSO KAMAZ is the main Partner April, 2010 7 000 Mitsubishi Fuso Canter - (Tatarstan Republic) Batteries, tires MERCEDES-BENZ licensed production of the engine at YaMZ plant July 2013 25 000 Mercedes-Benz Sprinter CKD (Nizhny Novgorod region) Body part stamping at GAZ plant Different body types MAN MAN TGS (Leningrad region) 2013 6 000 - ZF Gearbox MAN TGX (KAMAZ JV -ZF KAMA) Isuzu NLR85A Isuzu NMR85H Isuzu NPR75 Isuzu NQR90 ISUZU CKD brginning April 2014 2006 5 000 Isuzu FSR90 30-50% (Ulyanovsk region) Isuzu FVR34 Different body types Isuzu N1 Isuzu Forward 2017 – trucks, carrying capacity over 24 t BAW Tonik 33463 BAW 40 000/ 60 000 Projected level - Exhaust system, radiators, sound insulation, shock 19, July, 2011 BAW Fenix 3346 (Ulyanovsk region) (by 2015) BAW Fenix 33462 70% absorbers, starters, alternator, wheels, tyres Baw Fenix with gas-petrol engine 2015 – 10 000 HD 78 from September 2012, HYUNDAI SKD, (Kaliningrad region) September 2012 2018 – 25 000 HD-170 , HD 120 from 2013 HD - 35 Since 2015 - CKD FUSO KAMAZ is the main Partner April, 2010 7 000 Mitsubishi Fuso Canter - (Tatarstan Republic) Batteries, tires 2 000, Tata Daewoo Tata Daewoo Prima (Kaliningrad region) October 2014 Increase up to Planned stamping, welding 15 000 Tata Daewoo Novus MDT Ford Otosan Ford 1846 T (tractor) cargo trucks CKD, frame production and body superstructure 2015 (Kaliningrad region) 4X2,6X2, construction trucks 6X4, 8X4 in Russia Donfeng Motor (Saratov region) 500 City bus HOWO (Far East) 2016 – Start of construction work Source : Russian Automotive Market Research Russian Automotive Market Research 61 Auto component manufacturers: density by region Source : Russian Automotive Market Research Russian Automotive Market Research 71 Foreign suppliers in Russia Source : Russian Automotive Market Research Russian Automotive Market Research 81 Production of foreign suppliers in Russia Source : Russian Automotive Market Research Russian Automotive Market Research 91 KAMAZ Purchasing of materials and components 2013 2014 2015 2016, QII 16% 19% 22% 25% 84% 81% 78% 75% Imported Imported Imported Imported Purchased in Russia Purchased in Russia Purchased in Russia Purchased in Russia Source : KAMAZ, analysis Russian Automotive Market Research Russian Automotive Market Research 10 1 KAMAZ 16% growth in costs per 1 vehicle set, 2015/2014: ● Component price growth - 24% ● Material price growth – 43% ● Metal price growth – 2% 16% growth in costs per 1 vehicle set, 2016 QII / 2015 QII: ● Component price growth - 18% ● Material price decrease – 3% ● Metal price growth – 9% Source : KAMAZ, analysis Russian Automotive Market Research Russian Automotive Market Research 11 1 AVTOVAZ Purchasing of materials and components 2014 2015 2016, I-st HY 32% 32% 60% 40% 68% 68% Imported Imported Imported Purchased in Russia Purchased in Russia Purchased in Russia Source : AVTOVAZ, analysis Russian Automotive Market Research Russian Automotive Market Research 12 1 AVTOVAZ Inventory price indices, 2015 ● Components - 1.1220 ● Materials – 1.1480 ● Metal – 1.1860 ● Total: 1.1270 Inventory price indices, 2016 I-st HY ● Components - 1.0166 ● Materials – 1.0190 ● Metal – 0.9691 ● Total: 1.0120 Source : AVTOVAZ, analysis Russian Automotive Market Research Russian Automotive Market Research 13 1 Localization problems AVTOVAZ-RENAULT-NISSAN: suppliers from the Volga region caused 93% of INCOMPLETE vehicles and 98% of IDLE TIME (10 months 0f 2015) Incomplete vehicles Idle time [thousand units] [thousand minutes] 106.7 30.3 0,5 10,5 [10%] [2%] 29,8 96,1 20.1 [98%] [90%] 1,5 43.3 [7%] 3,0 18,6 [93%] [7%] 40,3 [93%] FY 2014 10M 2015 2014 10M 2015 Volga Region Other Volga Region Other Source : ARNPO Russian Automotive Market Research 14 1 Auto component industry profile Russian independent Foreign suppliers Russian holdings suppliers Poor cooperation with foreign 100% of foreign capital prevails Cooperation with foreign companies companies, Limited resources Supplies to OEM prevail. Decline in supplies to OEMs Supplies to OEMs and to the A few suppliers working