Brazil Market Update: Trends, Threats and Opportunities

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1 Brazil Market Update: Trends, Threats and Opportunities International Car Rental Show, Las Vegas, March 27th,2017

2 FENALOC Brazilian Car Rental Federation, is in charge of all legal & labour issues for the Car Rental Industry in Brazil. Fenaloc is represented at the National Transportation Board and at the National Council for Tourism. HQ in Brasília at SAUS qd.1 Bl.J Torre A sl.510 ph We lead the APP Transportation Commision at NTC and the Congress and have represented the Industry at the U.N. ABLA Brazilian Car Rental Association, turning 40 this year. In charge of all commercial issues, deals with manufacturers and providers. HQ in São Paulo at Rua Estela 515 Bl.A, cj.51 ph

3 Monte Caburaí/RR An overview on Brazil Population of 203 million More than 8,5 mi sq.km 26 States and 1 Fed.District Portuguese colonization Strong European immigration 23 Car Manufacturers(and no buy-backs) Auto Fleet of 49mi(1 per 4 inhab. Approx) New fleet is 100% Bi-Fuel (ethanol) Mote than 6,000 car rental companies, most of them family business(moms and Paps) Hosted Fifa s World Cup and the Olympic Games Chuí/RS

4 Relevant data on economy Interest rate is still VERY HIGH(18% p.a.) Inflation is going down but still 6% p.a. Unemployment is 12% and still growing Taxes on car(sales, industrialized, property and circulation) very high Big recession and GDP shrink of 3,6% for the 3rd consecutive year(depression) 9% shrink versus 25% inflation in teh last3 years Difficulties of financing new fleet and car production shrank from almost 4mi units per year to 2.8mi( from 4th to 7th global producer) High risk, bad roads in the countrysinde, expensive insurance and legislation not regulating competitors WHY DO SPECIALISTS STILL BET IN BRAZIL???

5 Some more Figures

6 Fleet growth and Manufacturers share

7 Client s profile educated, relative young corporate employees 77% male and 62% married

8 Relevant facts about the global mobility market Taxi and technology companies are fighting for the client! Both Uber x 99 Taxi received huge investments RECENTLY Mobility is the new WORD for transportation, no matter where. Integration of mobility via apps is already a reality.. Trafic jams in the big cities give us the will of being driven in the rear seat. Autonomous cars are not ready in Brazil,but it won t take long. FCA is market leader in Brazil and is Google s partners in this field. Sharing a driver is currently more popular than Car Sharing You can get easily fined by cameras in the cities, and parking is extremelly expensive. There are also restrictions in many areas and rodizio (prohibition of driving in certain days of the week according to plate s number / pico y placa)

9 Fact:Brazilian Market has still a lot to grow Question Discussion. Do we still have time or will it all be disrupted? How can we addapt? What do we have to change? How can we improve to survive?

10 Fact: Autonomous and Electric cars Question Discussion How was Volvo affected with recent accident in Arizona?. What is behind? Will O&Ms and Google blame humans? They already did! Cost of electric cars

11 Fact: New generations no longer desires a car Question Discussion. In a young country like Brazil, what should we offer in terms of mobility? If people buy less cars in the future, will it be easy to finance these cars? What about the residual value of a good nobody wants to buy?

12 Fact: Financial Market is still betting Question Discussion Capital Funds are destroying instead of employing. What is the next step?. How can we addapt? What do we have to change? How can we improve to survive?

13 Fact:O&Ms and Uber/Google are together in autonomous cars projects Question Discussion Will manufacturers be the official transportation providers?. Will the Government regulate Uber? They already did! How can we addapt?

14 Company Recent moves, M&As and IPOs Estimated fleet Localiza Purchase Hertz brazilian operation (11,000 cars) 120,000 Movida IPO (for half price) 58,000 Unidas Enterprise s stake of 20% and introduction of Alamo & National brands in Brazilian market AND postponed going public 36,000 Locamérica (LT / fleet) Bought Ricci this week (17,000cars) 53,000 Avis/Budget Corporation bought it back 2 years ago now Corporate 16,000

15 Thank you for the opportunity!