Dr JULIA SAINI VICE PRESEDENT CONSULTING FROST & SULLIVAN.

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1 Dr JULIA SAINI VICE PRESEDENT CONSULTING FROST & SULLIVAN

2 The Importance of the UK Aftermarket to the UK Economy / 2017 Presented by Dr. Julia E Saini Vice President, Global Aftersales & Retail 1

3 The Automotive Aftermarket Key Metrics 2016 has been another year of growth: sector turnover increased by 2.4% to 21.6bn, delivering 12.5bn to the economy and creating an additional 1,400 jobs 3

4 BREXIT Impact Analysis If the UK aftermarket loses tariff-free access to the EU we could see the introduction under WTO rules of a % tariff on imported components 4

5 UK EU Relationship and Trade Balance The aftermarket is suffering from a considerable trade imbalance. Britain imports more than twice as much as it exports - amounting to 6.2bn not captured by British suppliers 5

6 E-Retailing Trends (1/2) In 2016, UK consumers purchased ~ 0.92bn in parts, accessories and services online, about 4.3% of total aftermarket sales 6

7 E-Retailing Trends (2/2) Automotive Aftermarket online revenues are expected to grow at around 10.5%, reaching 1.65 billion by

8 Evolving Personal Mobility Behaviour (1/2) Although car sharing & e-hailing could remove up to 460,000 vehicles by 2025, higher demand for parts and services could benefit the UK aftermarket 8

9 Evolving Personal Mobility Behaviour (2/2) Strong performance of fleet-owned and leased segments is a positive indicator for the UK aftermarket as a whole 9

Proposed Changes to MOT Inspection Eight in 10 car owners choose peace of mind over 45 MOT money savings as industry urges government to keep first test at 3 years In a YouGov survey, when told about

10 Proposed Changes to MOT Inspection Eight in 10 car owners choose peace of mind over 45 MOT money savings as industry urges government to keep first test at 3 years In a YouGov survey, when told about government plans to change the date of a car s first MOT, 76% of car owners said the test should continue to take place when the vehicle is three years old. Other findings included: 68% of car owners said they believed extending the length of time before a car has to go for its first MOT would put drivers, passengers, pedestrians and other road users in danger. 84% of UK car owners say typical 45 MOT test fee is worth the peace of mind that their car is safe, roadworthy and legal. 76% of car owners back automotive industry s call for government to abandon plans to delay the first MOT for cars by a year. 89% of car owners would be unlikely to consider purchasing a car aged more than three years old that did not have a valid MOT certificate. 10

11 Connected Vehicles (1/2) Because of its commercial value, the question of who owns the data, and how it is accessed, is of paramount importance to the UK aftermarket industry 11

12 Connected Vehicles (2/2) Increased focus on prognostic, repair and maintenance solutions as well as service and customer satisfaction Source: Frost & Sullivan 11

13 Conclusions and Recommendations to the Industry Revenues generated from the aftermarket are currently at 21.6 billion this is set to rise to 28 billion by 2022, with more than 400,000 jobs dependent on the aftermarket; UK parts and service providers will need to hire an additional 30,000 skilled service technicians, parts sellers and support staff it is imperative to attract more young workers into the automotive aftermarket industry in strong partnership with schools and the government; Parts and accessories online sales are expected to reach 1.65 billion by Parts suppliers, as well as workshops, will need to develop their clicks strategy or collaborate with aggregators in order to survive in an increasingly online marketspace; The aftermarket should leverage mobility service providers as potential technology partners - offering parts and services to mobility fleets in exchange for access to their mobile platforms and technology will help traditional suppliers integrate with the emerging digital aftermarket; Delaying the first required MOT inspection until the age of 4 would not only increase pollution and reduce public safety but also reduce total revenue across the aftermarket by an estimated 250 million; Restricting access to vehicle-generated data could put the IAM at a competitive disadvantage. It is important that industry stakeholders take advantage of the Connected Autonomous Vehicle (CAV) meetings organised by the SMMT in an effort to find a mutually acceptable outcome on data ownership and access. 13

14 Contact Details for more information. Dr. Julia E. Saini Vice President Global Aftersales & Retail Frost & Sullivan Mob: +44 (0)

ENG Vehicle Remarketing Summit Eric Lacouture, 24 th January 2017, Berlin

ENG Vehicle Remarketing Summit Eric Lacouture, 24 th January 2017, Berlin A SAFE WORLD THE GLOBAL PARTNER PROVIDING PERFORMANCE FOR THE AUTOMOTIVE DISTRIBUTION CHAIN. Slide 1 DEKRA Automotive Solutions