Industry leader Analyst Site Visit St Petersburg, Russia 9th October 2007 Emerging Market Model Strategy and Growth Potential Andre Lacroix - Group CEO 9th October 2007 We have started building scale in Emerging Markets • Tripling number of retail sites by 2008 • Targeting over 75% increase in revenues by 2008 Number of Retail centres Emerging markets revenue (£m) £m 1,200 40 36 35 1,000 30 30 +c75% 800 24 25 20 600 440 15 13 12 400 10 H2 199 200 5 141 H1 0 0 2005 2006 2007 H1 2007 H2 2008 2005 2006 2007 2008 3 The strengths of the Emerging Market model Fastest growing markets Capital efficient footprint • Low per capita car penetration • Fewer retail points • Strong GDP and disposable income • Site capacity built for growth upside • Scale operations • Customer aspiration for foreign brands • Better customer experience • Investment in infrastructure and in car dindustry Sustainable retail margin Attractive unit economics • High margin region today • Higher revenues per square metre. • Used vehicles untapped opportunity • Lower operating costs • F&I up side • Stronger operational gearing • Vehicle parc growth driving After Sales 4 Attractive unit economics in Emerging Markets with strong operational gearing 3S Scale Retail Unit Economics proforma Premium volume & Volume Premium Ø Units p.a. 2000 700 600 400 4.5% 4.5% ROS 2.0% 2.0% IRR 15%+ 15%+ 12%+ 12%+ Emerging markets Developed markets Source: Inchcape plc Premium: MB, Audi, BMW, Lexus. Premium volume: Toyota, Honda, VW. Volume: Ford, Opel, Chevrolet, Renault, Peugeot 5 Emerging Markets - Biggest expansion opportunity for the Group Inchcape 2006 revenues Car market penetration 2006 (car parc/ ‘000 population) Cars per '000 Population Emerging markets 600 4% 491 500 400 300 200 100 28 0 Developed Developed Markets Total Emerging Markets Total Markets 96% Source: Inchcape PLC Source: JD Power 6 Emerging Markets: A significant scale opportunity Passenger Car Sales in Inchcape's Emerging Markets Ne w Pa sse nge r Cars ('000s) 10,514 465 10,000 Eastern Europe CAGR 16% 8,000 China 5,754 7,465 6,000 345 Russia 4,000 (foreign brands) 4,350 2,000 2,584 1,055 - 2006 2010 Source: Global Insight 7 Our market entry approach depends on the size of the opportunity Large Emerging Markets Medium and small Emerging e.g. Russia - China Markets e.g. Lithuania Business model • Scale Retail with core partners • Distribution and VIR • Scale retail Selection Criteria • 30,000-50,000 units within 5 years • Opportunities to develop market leading positions (1 or 2) • Attractive economics • Attractive Economics Brand Portfolio • Foreign brands: Premium, Premium • Foreign brands: Premium, Premium volume and Volume brands volume and Volume brands • Coverage of key segments • Coverage of key segments • Scale operation with each OEM • Global scale relationships • Scale in targeted regions, starting in • VIR where possible or scale retail Entry Strategy capital cities • Acquisition or greenfield • Acquisition or greenfield 8 Acquisitions provide immediate earnings enhancement Acquisitions Greenfield operations Research Identification & Costing 6-8 Validation Business plan 3-5 months Business Plan Project build years Transaction Handover and launch Post investment review Post investment review Time to Profitability Immediate c. 2-3 years IRR 15% + IRR 15% + 9 Recap of existing strategy in Emerging Markets Russia • Build scale Retail in Moscow and St Petersburg • Exploit regional growth opportunities China • Build scale in capital and secondary cities within the three biggest regional markets: Shanghai, Beijing, Guangzhou • Greenfield and acquisition opportunities Balkans • Accelerate growth and increase market share in Romania • Increase retail presence in Bulgaria, leveraging our market leading position Baltics • Build scale with retail and vertically integrated retail presence • Capitalise on market leading position and further grow share with multi brand model 10 While we build scale in Russia and China, we will select markets 9 and 10 Markets under consideration Scale entry strategy Pop: OEM opportunities India 1.1bn Distribution/Retail/VIR Turkey 70.4m Optimal brand portfolio Brazil 187m Scale potential S Africa 44m Acquisitions & Greenfield opportunities Markets selection criteria Group resources Market growth potential Market 9 &10 Management capability in- Attractive brand partners selection market or in the region Retail economics Strong global OEM relationships Availability of scale entry opportunity Financial capacity to expand 11 The fire power to execute • Strong balance sheet • Ongoing cash generation of £100m pa • Net debt of c.£200m • Un-utilised facilities of c.£600m • Total available funds: c.£800m We have the ability to grow quickly 12 Inchcape Global Retail Model applied from Day 1 to maximize the profit growth opportunity Invest in profitable Deliver the best growth opportunities Customer Experience • Brands • Inchcape Advantage • Sites • Vehicles Empowerment • IT Systems • Aftersales Quality Rewards Strong Team of management Operational excellence Innovation to maximise Training • Product profitability • Services including F&I • Focus on value drivers • Processes • Process improvements 13 Evolution of business model as markets mature • Sustained growth from developing markets • Growth of higher margin value drivers: • Used Cars • Service • Parts • F&I and market forces model application • Streamlined IT infrastructure 14 Building Scale in Emerging Markets is strategic for the Group • High growth markets • Immediate scale with attractive returns • Strong pipeline of both acquisition and greenfield opportunities • Sustainable margins as the car market develops Proven track record in Emerging Markets 15 Russian Market Martin Taylor – CEO Russia, Europe & Africa Distribution 9th October 2007 Russia represents a significant opportunity • Foreign brand car sales continue to see significant growth with 70 % increase in 2007H1 over the same period in 2006. Russia will be the largest car market in Europe in the next 5 years • Continued demand growth is driven by rapid emergence of a large middle class in Russia with significant disposable income, choosing foreign brand cars over domestic brands • New car sales growth will also be supported by replacement of existing aged car parc in Russia, which is still predominantly made up of domestic brands • Affordability has also improved by increasing availability of finance for car purchases • Attractive and sustainable margins for retail groups representing foreign brands due to strong unit economics today based on scale facilities with growth of used car sales and aftersales supporting margins going forward 18 Market value doubled in 2 years as foreign brand sales tripled 2005 2007 est $5.360 12% $5.431 29% New Foreign New Foreign $18.9bn brands $44.6bn brands total Local brands total Local brands $13.453 71% $39.200 36% Source: Avtostat 19 Russia – a vast opportunity Scale: 1000 km Nizhny Novgorod St. Petersburg Kaliningrad Moscow Rostov-on-Don Yekaterinburg Cities with population >250k Novosibirsk Russia Western Europe Population 143 million 394 million Forecast GDP Growth 2006 – 2010 CAGR 7.7% CAGR 2.2% Car parc - Total 27 million 205 million Car parc per 1,000 population - 2006 188 519 Source: JD Power Global Car & Touch Forecast, Avtostat 20 Developed vs. Emerging market growth Car parc per 1,000 population GDP per Capita Car parc per 1000 Population vs. GDP per Capita ('000s USD) 2006 40 United Kingdom 35 Belgium Germany 30 Greece France 25 20 Russia 2010 15 Russia Estonia 10 Romania Latvia Poland Lithuania 5 China 0 0 100 200 300 400 500 600 Car parc per 1000 population 21 Source: Global Insight Industry Forecast Reports, International Monetary Fund, JD Power Developed vs. Emerging market growth New car sales per 1,000 population GDP per Capita New car sales vs. GDP per Capita ('000s USD) 2006 45 40 United Kingdom Belgium 35 France Germany 30 Greece 25 Russia 20 2010 Poland 15 Russia Estonia Lithuania 10 Romania Latvia 5 Bulgaria China 0 0 102030405060 New car sales per 1000 population 22 Source: Global Insight Industry Forecast Reports, International Monetary Fund, JD Power Market growth supported by increase in finance penetration Credit sales share (units) Credit sales share (millions USD) 2 500 000 50000 45000 2 000 000 40000 New car 35000 sales New cars 1 500 000 units 30000 spending New car 25000 mUSD sales 1 000 000 20000 on credit Car loans 15000 volum e, 500 000 10000 mUSD 5000 0 0 2003 2004 2005 2006 2007 e 2003 2004 2005 2006 2007 e 60% 50% 40% Credit sales share, % 30% 20% Loans 10% share in total 0% spending 2003 2004 2005 2006 2007 e 23 4th biggest market in world - biggest in Europe in the next five years Sales forecast of Russian & Foreign brands 5.0 4.5 4.0 3.5 Foreign brands (new) 3.0 2.5 2.0 Russian 1.5 brands (new) Units (millions) 1.0 0.5 0.0 2005 a 2006 a 2007 e 2008 f 2009 f 2010 f 2011 f 2012 f 2006 – 2011 CAGR c.25% 24 Source: Avtostat Demand for cars from Russia consumer comes from a number of sources Car parc structure in 2007 • New car sales as GDP and incomes/affordability 27% increase • Replacement of existing Rus sian cars Foreign • Existing parc predominantly Russian cars – will be replaced by foreign brands 73% • Over 70% of car parc in Russia is over 7 years old 25 Source: Avtostat Russia has a higher price and larger vehicle mix Western Europe Passenger Car Segmentation 2006 Russia Foreign Brand Passenger Car Segmentation 2006 SUV A A 3% 7% 7% SUV 19% MPV B 14% 16% B 26% MPV 6% E 4% E 2% D 14% D 12%