Auto Tech Changing The Game Women in Auto Care Winter Leadership Conference

AUTOMOTIVE Auto Tech Changing The Game Women in Auto Care Winter Leadership Conference 15 February 2017 Anaheim, CA Jeremy Carlson, Principal Analyst +1 310 524 4065, jeremy.carlson@ihsmarkit.com 2016 IHS Markit. All Rights Reserved.

Contents Women in Auto Care February 2017 US Industry Overview Vehicles In Operation Infotainment & Connectivity Automated Driving User Experience 2

Monthly sales (SAAR, millions) Women in Auto Care February 2017 US: Light vehicle sales SAAR Cars were passed by light trucks again this trend will continue 22 20 18 Keep America rolling Employee pricing for all Light Trucks driving sales, outpacing cars current utility vehicle popularity similar to SUV craze of 2000s 18.3 16 14 Cash for clunkers 12 10 8 6 4 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Total Car Light Truck 4

1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 Annual sales (millions) Women in Auto Care February 2017 US: Light vehicle sales forecast Sales cycle peak is approaching; a return to the previous long-term trend level is possible 20 18 17.6 17.5 16 17.4 17.2 17.116.9 14 12 Market peaks in 2018-19 Rising interest rates, wages and oil prices make market more competitive. 10 Precrash 40-year trend: +140,000 annually 8 Source: IHS Markit, current light vehicles sales forecast 5

Billions of miles Women in Auto Care February 2017 US Vehicle Miles Traveled 3,500 3,250 3,000 2,750 2,500 2,250 2,000 1,750 1,500 1,250 1,000 750 500 250 0 4 yr positive trend after 5 yrs of flat or declining VMT Record VMT in 2015 with 3.1+ trillion miles driven 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: IHS Markit, DOT, FHWA 7

Millions of vehicles As of January 1 each year Women in Auto Care February 2017 US Light Vehicles In Operation 350 300 VIO will increase 10.4% by 2021 250 200 150 100 50 0 History Forecast Source: IHS Markit 8

Years Women in Auto Care February 2017 US Vehicle Average Age History 12.0 11.5 11.0 10.9 11.1 11.3 11.4 11.5 11.6 10.5 10.3 10.6 10.0 9.5 9.6 9.7 9.7 9.8 9.8 9.9 10.0 9.0 8.5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: IHS Markit 9

Women in Auto Care February 2017 In-Vehicle Infotainment 2016 2022 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Navigation Display Audio Audio No Headunit Source: IHS Markit 11

Women in Auto Care February 2017 Vehicle Connectivity 2016 2022 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Hybrid Telematics Embedded Connection Consumer Device Connection No Telematics (both OEM & consumer) (OEM-owned channel) (consumer-owned channel) (no external connection) Source: IHS Markit 12

Women in Auto Care February 2017 Defining the terminology Automated Cooperative Driver in Car-Driver Relationship Driver in the loop Autonomous Replacement or coop Driver out or absent Driver Failsafe 0 3 SAE Levels 4 5 Car Evolutionary Automotive Industry Approach Proponent Revolutionary Challengers 14

Women in Auto Care February 2017 ADAS Automated Autonomous L5 L4 L3 L2 L1 New Forms of Mobility Autonomous Driving Automated Driving Autopilot AEB LKA L0 FCW LDW 15

Women in Auto Care February 2017 Advanced Driver Assist Systems growing rapidly ADAS Unit Growth CAGR 2017-2022 Park Assist Autonomous Park Assist Blind Spot Detection Adaptive Cruise Control Surround View Driver Monitoring Collision Warning & Avoidance Lane Departure Warning Side & Rear Mirror Camera Autopilot OVERALL ADAS MARKET 17.3% excluding Park Assist 25.8% 0 10 20 30 40 50 60 70 Source: IHS Markit 16

Women in Auto Care February 2017 Sensors & electronics will complicate vehicle service stereo-camera sensors infrared night vision sensor additional vehicle sensors, ECUs ACC / AEB radar sensors camera parking sensors ultrasonic parking sensors 17

Women in Auto Care February 2017 Autonomous Vehicle Testing Regulations December 2017 Source: Gabriel Weiner and Bryant Walker Smith, Automated Driving: Legislative and Regulatory Action, cyberlaw.stanford.edu/wiki/index.php/automated_driving:_legislative_and_regulatory_action 18

Women in Auto Care February 2017 Consumers demand an intuitive interface Consumer opinions on using a smartphone while driving "Using my smartphone while driving is distracting" 81% "I prefer using in-vehicle speech recognition to control my smartphone" "I prefer using in-vehicle touch screen to control my smartphone" "I prefer using steering wheel controls to control my smartphone" 70% 69% 75% "I prefer using my smartphone directly" 50% Base: 4009 new car intenders that own smartphones 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Source: IHS Markit 20

Women in Auto Care February 2017 HMI input preferences HMI preferences by function Radio Media/iPod/ CD Phone calling Text messaging Smartphone apps Navigation Climate control System settings Touch screen 1 st 1 st 1 st 1 st 1 st 1 st 1 st 1 st Speech recognition 2 nd 2 nd 2 nd 2 nd 2 nd 2 nd 2 nd 2 nd Controller/ touch pad 5 th 3 rd (tied) 4 th 3 rd (tied) 3 rd 3 rd 3 rd 3 rd Steering wheel controls 3 rd 3 rd (tied) 3 rd 3 rd (tied) 4 th 4 th 5 th 5 th Individual buttons & knobs 4 th 5 th 5 th 5 th 5 th 5 th 4 th 4 th Gesture recognition 6 th 6 th 6 th 6 th 6 th 6 th 6 th 6 th Notes: Data represent preferences of HMI inputs across all demographics. 4,000+ new car intender respondents from the United States, United Kingdom, Germany, and China Source: IHS Markit 21

Women in Auto Care February 2017 HMI output preferences HMI preferences by function Radio/media playback Phone calling Text messaging Smartphone apps Navigation directions Vehicle status Driving status Safety systems Center stack display 1 st 1 st 1 st 1 st 1 st 2 nd 3 rd 3 rd Instrument cluster display 2 nd 2 nd (tied) 3 rd 2 nd (tied) 3 rd (tied) 1 st 1 st 1 st Head-up display 3 rd 4 th 4 th 2 nd (tied) 2 nd 3 rd 2 nd 2 nd Spoken feedback 4 th 2 nd (tied) 2 nd 4 th 3 rd (tied) 4 th 4 th 4 th Audible cues 5 th 5 th 5 th 5 th 5 th 5 th 5 th 5 th Haptic feedback 6 th 6 th 6 th 6 th 6 th 6 th 6 th 6 th Notes: Data represent preferences of HMI inputs across all demographics. 4,000+ new car intender respondents from the United States, United Kingdom, Germany, and China Source: IHS Markit 22

Thousands Women in Auto Care February 2017 Head-up display systems Global head-up display system production by type 6,000 5,000 5,399 Combiner 4,000 4,818 3,000 2,000 1,000-1,851 562 2015 2016 2017 2018 2019 2020 2021 2022 Windscreen Source: IHS Markit 23

Women in Auto Care February 2017 UI & autonomy tech have symbiotic relationship UI innovations will aid deployment of automated vehicle technologies (L3, L4 & L5) 24

Women in Auto Care February 2017 Lexus UX Concept 2017 Paris Motor Show Drivers-side emirror 3D Holographic globe in instrument binnacle Capacitive touch multi-function 5- way steering wheel controllers Capacitive touch controls for windows & transmission Electro-chromatic windows Passengerside emirror 3D Holographic center display & input display Capacitive touch pad 25

Women in Auto Care February 2017 Summary: A mixed outlook Increasing vehicle miles traveled + growing fleet + older fleet > More wear & tear + older vehicles = more service opportunities Connectivity becomes ubiquitous > New customer touchpoints to be challenged by automakers wanting more of the post-sale experience Automated driving electronics complicate vehicle service > OEM-certified and documented repairs become the norm User experience drives change > Content and services continue to evolve alongside new mobility services 26

THANK YOU! DANKE ありがとうございました MERCI 謝謝 GRAZIE 감사합니다 GRACIAS धन यव द DANK U WEL OBRIGADO TAKK Women in Auto Care February 2017 IHS Markit Customer Care: CustomerCare@ihsmarkit.com Americas: +1 800 IHS CARE (+1 800 447 2273) Europe, Middle East, and Africa: +44 (0) 1344 328 300 Asia and the Pacific Rim: +604 291 3600 IHS Markit TM COPYRIGHT NOTICE AND DISCLAIMER. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent of IHS Markit. Content reproduced or redistributed with IHS Markit permission must display IHS Markit legal notices and attributions of authorship. The information contained herein is from sources considered reliable, but its accuracy and completeness are not warranted, nor are the opinions and analyses that are based upon it, and to the extent permitted by law, IHS Markit shall not be liable for any errors or omissions or any loss, damage, or expense incurred by reliance on information or any statement contained herein. In particular, please note that no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any projections, forecasts, estimates, or assumptions, and, due to various risks and uncertainties, actual events and results may differ materially from forecasts and statements of belief noted herein. This presentation is not to be construed as legal or financial advice, and use of or reliance on any information in this publication is entirely at your own risk. IHS Markit and the IHS Markit logo are trademarks of IHS Markit. 27