Automotive DEMAND IS COASTING. NEW VEHICLE SALES Some automakers are cruising through 2016 with solid sales growth, while others are losing traction.

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1 AUGUST 2016 Automotive VOLUME 223 DEMAND IS COASTING NEW VEHICLE SALES Some automakers are cruising through 2016 with solid sales growth, while others are losing traction. DOMESTIC DEMAND Major U.S. automakers posted sales increases for the fi rst half of 2016.

2 In This Issue MONITOR AUTOMOTIVE GREATAMERICAN.COM AUGUST GREAT VOLUME Trend Tracker 10 Experience 04 Overview 11 Appraisal & Valuation Team 07 Recent Appraisal Trends 11 Monitor Information 09 European Market 12 About Great American Group Deals are a moving target. A constantly shifting mix of people, numbers, and timing. We re here to simplify this process for you. Our experts are dedicated to tracking down and flushing out the values you need, even on the most complex deals. So when the time comes to take your shot with Great American, you re always right on the money Great American Group, LLC. All Rights Reserved.

3 Trend Tracker OEM Parts Aftermarket Replacement Parts Aftermarket Accessories Tires NOLVs Increasing Increasing Consistent Consistent Sales Trends Mixed Increasing Decreasing Slightly Increasing Gross Margin Increasing Consistent Decreasing Consistent Inventory Mixed Increasing Increasing Decreasing OEM PARTS NOLVs for OEM parts increased as mixed sales and inventory levels were offset by improved gross margins resulting from a favorable product mix. In addition, OEM finished goods continue to hold high recovery values due to a combination of minimal quantities maintained on hand by manufacturers, made-to-order business models, and sole supplier relationships with customers. AFTERMARKET REPLACEMENT PARTS NOLVs for aftermarket replacement parts increased with improved sales and consistent gross margins, as well as increased inventory levels deleveraging fi xed expenses. AFTERMARKET ACCESSORIES NOLVs for aftermarket accessories were consistent with those of the previous monitor, as increased inventory levels were offset by declines in sales and gross margins resulting from factors such as customer reliance on overseas vendors, increased discounting, and unfavorable exchange rates. TIRES NOLVs for tires were consistent as gross margins held steady, despite slight increases in sales. Many companies experienced decreasing inventory levels as a result of decreases in rubber prices. 3 MONITOR AUTOMOTIVE AUGUST 2016

4 Overview The U.S. auto industry is steadily cruising through Unit sales totaled 8.7 million vehicles for the first half of the year, an increase of approximately 1.5% as compared to However, experts predict that full-year sales will not match the record-breaking numbers of last year, as pent-up demand dissipates. Adjusted estimates predict 17.4 million vehicles to be sold this year, down 0.1% from Nonetheless, current sales growth bodes well for all segments of the automotive market, as demand for OEM parts, aftermarket accessories, and tires is directly impacted by the number of new vehicles hitting the road. Data continues to suggest that Americans are going the distance in 2016, as affordable gas prices promote more time behind the wheel. Travel on all roads increased 2.2% in May 2016 versus the prior year, which translates to increased wear on vehicle engines, parts, and tires. As such, demand for OEM and replacement parts is expected to remain relatively strong going forward. While consumer spending levels remained relatively fl at through the first half of 2016, many buyers continued to take advantage of low interest rates and attractive credit terms offered by automotive lenders. As the number of vehicles on the road continues to grow, all segments of the automotive industry, including aftermarket replacement parts and tire manufacturers, will experience bolstered demand. 4 MONITOR AUTOMOTIVE AUGUST 2016

5 Overview NEW VEHICLE SALES While pent-up demand for new vehicles has begun to slacken in 2016, the U.S. auto industry continues to report overall growth. Low interest rates, stable gas prices, and increasing disposable incomes have driven demand for light trucks, crossovers, and SUVs. However, experts anticipate attractive used car prices will temper new vehicle sales in 2016 as regional markets are impacted by the loss of oil and gas jobs. Sales in July 2016 improved marginally over the prior year with a 0.7% increase in sales, totaling 1.5 million units, as demand for new vehicles continued to soften. New vehicle sales in May 2016 decreased 6.3% from the same month in 2015, with sales for the month totaling 1.5 million vehicles due to two fewer selling days in 2016 versus the prior year. As a result, several manufacturers relied more heavily on sales to rental car and other bulk buyers to offset the sales slump. June 2016 sales proved to be stronger than the prior year with 1.5 million units sold for the month, representing an increase of 2.2% over June 2015 sales. In contrast, electric vehicle sales in the U.S. are up 18.9% year-over-year in 2016, including a 48.4% increase in July 2016 versus the prior year. The majority of sales were attributed to the surging popularity of Tesla s Model S and Model X vehicles, as well as the Chevy Volt and BMW i3. 1 U.S. Auto Sales 12 Months Ended July 2016 versus 2015 (in Units Sold) 1,700,000 1,600,000 1,500,000 1,400,000 1,300,000 1,200,000 1,100,000 1,000,000 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul MONITOR AUTOMOTIVE AUGUST 2016

6 Overview DOMESTIC MANUFACTURERS According to Ford s most recent press release, the company has sold 1.6 million units in the U.S. year-to-date in 2016, an increase of 3.5% from the previous year. Ford s sales have been bolstered by its van and truck lines, up 26% and 5%, respectively, in July 2016 versus the prior year. However, the automaker s U.S. vehicle sales were down 3% in July 2016 versus the prior year, totaling 216,479 units. General Motors reported similar results thus far in 2016, with the company s retail market share up 1.0% in July 2016, marking the highest level since December The company attributed growth to the continued popularity of the Chevrolet Silverado and GMC Sierra full-size pickup lines. GM sold 236,235 vehicles to retail customers in July 2016, up 5% year-over-year, driven by sales increases for its Chevrolet, GMC, Buick, and Cadillac brands and reinforcing GM s position as the fastest-growing full-line automaker in the U.S. In addition, GM s brands collectively reported their best July retail sales performance since FCA US LLC sold 180,727 vehicles in the U.S. in July 2016, up 0.3% compared with the prior year. The company s sales were largely driven by its Ram Truck and Jeep lines, both of which experienced 5% increases in sales year-over-year. Notably, Jeep Renegade sales increased 57% in July 2016 versus the prior year. 2 U.S. Light Vehicle Retail Sales Seven Months Ended July 2016 versus 2015 (in Units Sold) 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , , MONITOR AUTOMOTIVE AUGUST 2016

7 Recent Appraisal Trends OEM PARTS OEM parts manufacturers and distributors experienced mixed results in the first half of 2016, with sales increasing or decreasing up to 15%, depending on the company. Sales were primarily impacted by relationships with OEM customers, as some companies gained platforms while others lost business with certain customers. AFTERMARKET REPLACEMENT PARTS Sales of aftermarket replacement parts increased up to 15% in the first half of 2016, driven by continued economic improvement. In addition, many companies successfully introduced new products and gained new customers. With low fuel prices in 2016, many consumers carved out more time on the road, increasing wear on their vehicles and bolstering demand for replacement and repair parts. Gross margins for aftermarket replacement parts remained relatively consistent with the previous monitor, fluctuating up to two percentage points in either direction, depending on the company. The majority of companies were impacted by a combination of product mix and customer mix. GA observed that inventory levels moderately increased up to 5% as a result of increased demand for replacement parts. Gross margins increased up to 5% primarily due to a combination of improved product mix and many companies successfully passing price increases on to customers. Inventory levels were mixed thus far in 2016, fluctuating 10% to 20% in either direction, due to company-specifi c factors. NOLVs for finished goods OEM parts increased up to 2%, due to a combination of minimal quantities maintained on hand by manufacturers, made-to-order business models, and sole supplier relationships with customers. The specialized nature of lower-recovery raw materials and work-in-process inventory continued to offset these increases. NOLVs for aftermarket replacement parts increased up to two percentage points, primarily due to improved demand, as well as increased inventory levels deleveraging fi xed expenses. 7 MONITOR AUTOMOTIVE AUGUST 2016

8 Recent Appraisal Trends AFTERMARKET ACCESSORIES Sales of aftermarket accessories for many companies decreased up to 15% in the first half of 2016, with greater declines in the most recent quarter. GA attributed the sales decreases to a combination of unfavorable currency exchange rates and customers utilizing overseas vendors. However, some companies maintained or improved their sales by growing their market share and strengthening their brands. GA observed that gross margins remained consistent for players in the tire industry, holding steady on an annual basis. Inventory levels decreased through the first half of 2016, with many companies experiencing declines of up to 20%, primarily due to a decrease in rubber prices. Gross margins decreased up to 2% due to unfavorable changes in sales mix, as well as increased discounting to sell through inventory. Inventory levels increased 5% to 10%, depending on the company, with most citing sales trends as the driving force behind inventory fluctuations. NOLVs for participants in the aftermarket accessories sector remained consistent, with companies attributing slight fluctuations to company-specifi c margin and sales factors. The world s top producers of rubber, which represent Indonesia, Thailand, and Malaysia, made a concerted effort to try to reduce exports by as much as 20% in order to boost rubber prices beginning February The measure only resulted in a short-lived boost in rubber prices, as producers supply restrictions were less severe than originally proposed. Despite the moderate increase in sales, NOLVs for tire manufacturers remained consistent in the first half of 2016, in keeping with consistent overall gross margins. TIRES Tire sales increased as much as 5% in the first half of The increased sales were primarily attributed to most companies aggressively focusing to obtain new customers. 8 MONITOR AUTOMOTIVE AUGUST 2016

9 European Market AUTOMOTIVE INDUSTRY OVERVIEW The European automotive industry experienced mixed results in the first half of While sales have improved since the financial downturn nine years ago, many European markets have wrestled with local economies on the verge of recession. Nevertheless, new vehicle registrations grew by 6.9% in June 2016 versus the prior year, reaching nearly 1.5 million units sold as well as representing the 34th consecutive month of growth for the European passenger vehicle market, according to the European Automobile Manufacturers Association. European sales totaled 8.1 million vehicles for the first half of 2016, up 9.1% versus the prior year. Industry experts remain guarded in their projections for 2017 as the full ramifi cations of the UK s departure from the European Union have yet to be realized. As a result, vehicle sales are anticipated to grow roughly 0.2% in PERFORMANCE BY MARKET Following a robust first quarter, the UK s sales rose only 0.1% in July 2016 versus the prior year, totaling 1.6 million vehicles. Industry experts cited the UK s referendum outcome to exit the European Union as the primary factor behind the country s slowed sales, with full-year UK sales estimates adjusted to decline 3.3% through Germany s sales fell 2% in July 2016, marking the country s first decline in nearly three years. France experienced a similar decrease, with both Western European markets attributing declines to a combination of slowed demand and one less selling day versus the prior year. In contrast, the Southern European market experienced notable growth. While down from the double-digit growth over the first half of 2016, Italy s sales still increased 2.9% in July 2016, with demand slowing as fewer discounts and incentives were available at the end of a summer price war. Spain reported similar growth, with sales up 4.3% for the month. PERFORMANCE BY MANUFACTURER Major European manufacturers experienced positive overall performances thus far in The PSA Group, which includes Peugeot and Citroën, reported record-breaking firsthalf results, with European sales up 7.4% versus the same period in the prior year. However, the group s consolidated revenue fell 0.9% due to unfavorable currency exchange rates. The Volkswagen Group reported 1.3% sales growth in Europe for the first half of 2016, despite the automaker s continued struggle in the U.S. market with the fallout of its emissions scandal and subsequent $14.7 billion settlement. In addition, Volkswagen reported that new car registrations totaled 5.1 million units for the first of 2016, an increase of 1.5% versus the same period in the prior year. American-based manufacturers fared well in Europe, as Ford reported a 7.5% increase for the first half of 2016 versus 2015, with 718,700 vehicles sold, reinforcing the automaker s position as the number one commercial vehicle brand in the European market. 9 MONITOR AUTOMOTIVE AUGUST 2016

10 Experience GA has worked with and appraised numerous companies within the automotive industry. While our clients remain confi dential, they include companies throughout the automotive supply chain, including manufacturers, importers, distributors, and retailers of aftermarket, performance, replacement, and OEM parts and accessories. GA s extensive list of appraisal experience includes: An importer and wholesaler of specialized aftermarket automotive wheels and parts, including wheels for the U.S. auto market available in a variety of specifi cations. A designer, manufacturer, and distributor of specialty products for the performance automotive aftermarket, including fuel, air, and internal engine management systems, which are sold to retailers and distributors. A remanufacturer and distributor of alternators and starters for imported and domestic vehicles with over $170 million in sales and over $60 million in inventory, including $20 million of core inventory. An Internet retailer of aftermarket replacement automotive parts, including auto body and engine parts, as well as accessories, to customers worldwide. The company s $50 million of inventory includes approximately 1.8 million types of aftermarket auto parts for nearly all makes and models of domestic and foreign cars and trucks. The company s nearly $300 million in sales are primarily generated via multiple websites. OEM parts suppliers to the big three U.S. automakers, which includes manufacturers of transmission, interior, wheel, and accessory products. A retailer and wholesaler of aftermarket auto parts, including engine, wiper, undercar, heat, and cooling parts and accessories, as well as electrical supplies, oil, filters, tools, equipment, paint, chemicals, and more, all sold under well-known national brands. A processor and distributor of precision automotive components designed for various automotive assemblies, such as transfer cases, transmissions, and air conditioners, selling to Tier 1 and Tier 2 suppliers. A U.S.-based producer and recycler of automotive and industrial lead acid batteries, with locations throughout North American and the world, an inventory of approximately $200 million, and sales of $1.2 billion. A distributor of pneumatic (air-filled), solid, and semisolid tires for use in various industries, including agriculture, construction, mining, and transportation. GA has also liquidated a number of manufacturers and distributors of OEM and aftermarket parts, including Midas Corporation, Trak Auto, Smittybilt Outland Automotive Group, Inc., and American Products Company, Inc. In addition to our vast liquidation and appraisal experience, GA maintains contacts within the automotive industry that we utilize for insight and perspective on recovery values. 10 MONITOR AUTOMOTIVE AUGUST 2016

11 Appraisal & Valuation Team BUSINESS DEVELOPMENT Mike Marchlik National Sales & Marketing Director (818) Ryan Mulcunry Executive Vice President, Northeast Region, Canada & Europe (857) David Seiden Executive Vice President, Southeast Region (404) Daniel J. Williams Managing Director, New York Region (908) Drew Jakubek Managing Director, Southwest Region (214) Bryan Fischer Relationship Manager, CO,KS,MO,UT (857) bfi Bill Soncini Senior Vice President, Midwest Region (773) Jennie Kim Vice President, Western Region (818) Monitor Information OPERATIONS Michael Petruski Executive VP, General Manager (818) Thomas Mitchell Project Manager (818) ASSET DISPOSITION TEAM Scott Carpenter President, GA Retail Solutions (818) Kristi Faherty Managing Director (781) Adam Alexander President, GA Global Partners (818) The Automotive Monitor relates information covering a variety of automotive products, including industry trends and their relation to the valuation process. GA internally tracks recovery ranges for automotive parts, but we are mindful to adhere to your request for a simple reference document. Should you need any further information or wish to discuss recovery ranges for a particular segment, please feel free to contact your GA Business Development Offi cer. The information contained herein is based on a composite of GA s industry expertise, contact with industry personnel, liquidation and appraisal experience, and data compiled from a variety of well-respected sources believed to be reliable. GA does not make any representation or warranty, expressed or implied, as to the accuracy or completeness of the information contained in this issue. Neither GA nor any of its representatives shall be liable for use of any of the information in this issue or any errors therein or omissions therefrom. 11 MONITOR AUTOMOTIVE AUGUST 2016

12 About Great American Group Great American Group is a leading provider of asset disposition solutions and valuation and appraisal services to a wide range of retail, wholesale, and industrial clients, as well as lenders, capital providers, private equity investors, and professional services fi rms. In addition to the Automotive Monitor, GA also provides clients with industry expertise in the form of monitors for the paper and packaging, metals, chemicals and plastics, and building products sectors, among many others. For more information, please visit Capital Management, LLC, an SEC registered Investment Advisor, which includes B. Riley Asset Management, a provider of investment products to institutional and high net worth investors, and B. Riley Wealth Management (formerly MK Capital Advisors), a multi-family offi ce practice and wealth management fi rm focused on the needs of ultrahigh net worth individuals and families; and Great American Capital Partners, a provider of senior secured loans and second lien secured loan facilities to middle market public and private U.S. companies. Great American Group, LLC is a wholly owned subsidiary of B. Riley Financial, Inc. (NASDAQ: RILY), a diversifi ed provider of collaborative financial and business advisory services through several subsidiaries, including: B. Riley & Co. LLC, a leading investment bank and a FINRA & SIPC member, which provides corporate finance, research, and sales & trading to corporate, institutional, and high net worth individual clients; Great American Group, LLC; B. Riley B. Riley Financial, Inc. is headquartered in Los Angeles with offi ces in major financial markets throughout the United States and Europe. For more information on B. Riley Financial, Inc., please visit MONITOR AUTOMOTIVE GREATAMERICAN.COM AUGUST GREAT VOLUME 223 LOS ANGELES (HQ) Burbank Blvd. Suite 300 South Woodland Hills, CA T F NEW YORK Graybar Building 420 Lexington Ave. Suite 3001 New York, NY T ATLANTA 1200 Abernathy Rd. Suite 1700 Atlanta, GA T BOSTON 300 First Ave. Suite 201 Needham, MA T F CHICAGO 10 South LaSalle St. Suite 2170 Chicago, IL T F DALLAS Preston Rd. Suite 720 Dallas, TX T F CHARLOTTE, NC Brixham Hill Ave. Suite 300 Charlotte, NC T F MILWAUKEE West Park Pl. Suite 970 Milwaukee, WI T WILTON, CT 73 Old Ridgefi eld Rd. Suite 6 Wilton, CT T GERMANY Prinzregentenstr 18 Fifth Floor Munchen, Germany AUSTRALIA Level 29, Chifl ey Tower 2 Chifl ey Square Sydney, NSW 2000 Australia 2016 Great American Group, LLC. All Rights Reserved.