ANNUAL FINANCIAL PROFILE OF AMERICA S FRANCHISED NEW-CAR DEALERSHIPS

ANNUAL FINANCIAL PROFILE OF AMERICA S FRANCHISED NEW-CAR DEALERSHIPS 2014 www./nadadata

Overview NADA Data 2014 the annual financial profile of America s franchised new-car dealerships shows a robust and highly competitive industry that is helping boost the U.S. economy. Last year, for example, dealerships employed more than 1 million people in their communities. Dealerships sold or leased more than 15.5 million new cars and light trucks in 2013, up 7.5 percent from the year before, along with 351,737 new medium- and heavy-duty trucks, up 1.7 percent. Yet dealership profitability remained flat. Going forward, fierce price competition whether from online research by consumers, the vast network of competing dealers or the many new compelling vehicles rolling into showrooms will continue to dominate an industry with slim retail margins. While dealers will stay focused on improving customer service and controlling operating costs, expect net profitability before tax at dealerships to remain unchanged at 2.2 percent in 2014. At the same time, consumer financing will remain an integral part of the auto-retail experience for car buyers. Most shoppers continue to finance vehicles through new-car dealerships because of the competitive finance rates offered. And service work, whether for warranty repairs or a quick oil change, is still an integral part of dealership customer service and operations. The demand for used Steven Szakaly Chief Economist, NADA vehicles is also very strong. In 2013, used-vehicle prices were better than expected, and as has happened every year since the recession there was a clear shortage of latemodel used vehicles. All in all, 2013 was a year of growth leading to a year of opportunity in 2014. With a stronger housing market, improved job prospects and continued low interest rates to bolster auto sales further, NADA forecasts new-car and light-truck sales to reach 16.4 million in 2014. Contents Average Dealership Profile... 3 NADA Optimism Index... 4 New-Vehicle Dealerships... 5 Total Dealership Sales Dollars... 6 Dealership Financial Trends... 7 The New-Vehicle Department... 8 The Used-Vehicle Department... 11 Service, Parts and Body Shop... 12 Employment and Payroll... 14 Vehicles in Operation and Scrappage... 16 Advertising and the Dealership... 18 New-Truck Dealerships... 19 F&I, Service Contracts... 10 2

Average Dealership Profile Sales for franchised new-car dealerships reached 15.5 million units in 2013 1. Total dealership revenue by department which includes sales of new and used vehicles, as well as service and parts reached $730 billion, an 8.8 percent increase from the previous year. For the average dealership, sales in the new-car department were up 10.5 percent and exceeded sales in the used-car department, which was up 7.3 percent. Net pretax profit was an average of $923,248. TOTAL GROSS AND EXPENSE Total dealership gross margins fell further in 2013 to 13.4 percent of total dealership sales from 13.7 percent the previous year. Total expenses were up 5.4 percent, but declined as a percentage of sales to 11.2 percent from 11.5 percent. Advertising expenses on a per-vehicle basis decreased to $616 from $621. Floor-plan expenses were a negative $90 per new vehicle sold. TOTAL DEALERSHIP PROFITS In 2013, total dealership net profit before tax as a percent of sales was 2.2 percent, which was unchanged from the previous year. 1 Data source: WardsAuto Average dealership profile % change 2009 2010 2011 2012 2013 2012-2013 Total dealership sales $26,645,303 $30,941,801 $35,128,692 $37,993,989 $41,333,975 8.8% Total dealership gross $4,060,649 $4,498,949 $5,047,340 $5,216,294 $5,539,675 6.2% As % of total sales 15.2% 14.5% 14.4% 13.7% 13.4% Total dealership expense $3,658,560 $3,863,023 $4,252,805 $4,380,646 $4,616,427 5.4% As % of total sales 13.7% 12.5% 12.1% 11.5% 11.2% Net profit before taxes $402,090 $635,926 $794,536 $835,649 $923,248 10.5% As % of total sales 1.5% 2.1% 2.3% 2.2% 2.2% (Net pretax profit in $187,454 $291,575 $353,284 $363,959 $396,414 8.9% constant 1982 dollars) New-vehicle department sales $13,937,579 $16,352,208 $19,114,448 $21,361,580 $23,599,234 10.5% As % of total sales 52.3% 52.8% 54.4% 56.2% 57.1% Used-vehicle department sales $8,537,426 $10,244,937 $11,369,595 $12,063,177 $12,945,520 7.3% As % of total sales 32.0% 33.1% 32.4% 31.8% 31.3% Service and parts sales $4,170,298 $4,344,656 $4,644,649 $4,569,233 $4,789,222 4.8% As % of total sales 15.7% 14.0% 13.2% 12.0% 11.6% New-vehicle average selling price $28,966 $29,793 $30,659 $30,910 $31,762 2.8% Used-vehicle average selling price $14,976 $16,474 $17,267 $17,547 $18,111 3.2% Average net worth (as of 12/31) $2,235,369 $2,563,220 $2,838,652 $3,005,725 $3,181,198 5.8% Net profit as % of net worth 18.0% 24.8% 28.0% 27.8% 29.0% 3

NADA Optimism Index According to the latest quarterly survey 1, the NADA Dealer Optimism Index value was 156 at the end of the 2013, down from 161 the previous year but higher than the average value for the period 2003-2013, which was 134. This survey also showed that more than half (52.4 percent) of franchised new-car dealers expect their profits to rise in 2014. This continues a trend from the past few years where most dealers expect greater profits, while those dealers who expect reduced profits remain the smallest group of survey respondents. 1 The latest quarterly survey data is for Q4 2013. Optimism index vs. new-vehicle sales 200 100 NADA Optimism Index New-vehicle sales 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 4

New-Vehicle Dealerships In 2013, the number of franchised new-car dealerships continued to grow, leading to a net increase of 30 stores. Annual sales volume was greatest for those dealerships selling 150-399 new vehicles (or units ), followed by stores selling 0-149 units and then those selling 750-plus units. Dealerships selling 400-749 units had the lowest annual sales volume. As in the previous year, there was a decline in the number of dealerships selling 0-149 units and also a decline in the number of stores selling 150-399 units. There was also a rise in the number of dealerships with sales volumes of 400-749 units and those selling 750- plus units. New-vehicle dealerships, by state 1 in 2013 Alabama 294 Alaska 34 Arizona 245 Arkansas 218 California 1,377 Colorado 258 Connecticut 269 Delaware 54 D.C. 1 Florida 852 Georgia 512 Hawaii 69 Idaho 110 Illinois 752 Indiana 424 Iowa 329 Kansas 233 Kentucky 255 Louisiana 290 Maine 124 Maryland 306 Massachusetts 400 Michigan 637 Minnesota 358 Mississippi 195 Missouri 414 Montana 113 Nebraska 182 Nevada 103 New Hampshire 142 New Jersey 471 New Mexico 119 New York 888 North Carolina 589 North Dakota 90 Ohio 760 Oklahoma 275 Oregon 239 Pennsylvania 936 Rhode Island 51 South Carolina 262 South Dakota 101 Tennessee 345 Texas 1,210 Utah 141 Vermont 88 Virginia 500 Washington 330 West Virginia 144 Wisconsin 513 Wyoming 63 Total U.S. 17,665 1 Including District of Columbia (D.C.). Number of dealerships, by volume of new-unit sales, 2013 Number of dealerships 8,000 4,000 0 0-149 150-399 400-749 750+ Annual new-unit sales 5

Total Dealership Sales Dollars The dollar sales per franchised newcar dealership increased by 8.8 percent in 2013 and the dollar sales for all franchised new-car dealerships increased by 9 percent. The new-vehicle department had the largest share of total dealership sales dollars (57.1 percent), followed by the used-vehicle department (31.3 percent) and service and parts (11.6 percent). Arizona had the highest dollar sales per dealership of all states, while California had the highest dollar sales for all dealerships. Total sales of new-vehicle dealerships $ billions $ millions 800 All dealerships (left scale) 50 Average per dealership (right scale) 600 400 2004 2005 2006 2007 2008 2009 2010 2011 2012 and U.S. Department of Commerce 2013 35 20 Share of total dealership sales dollars, 2013 6 By department Service and parts 11.6% Used vehicles 31.3% New vehicles 57.1% Total sales by state, 2013 Average per All dealerships dealership State (millions) (thousands) Alabama $10,165 $34,576 Alaska $1,287 $37,852 Arizona $17,623 $71,932 Arkansas $6,431 $29,498 California $86,985 $63,170 Colorado $13,576 $52,621 Connecticut $9,471 $35,207 Delaware $2,565 $47,491 Florida $51,537 $60,490 Georgia $22,147 $43,256 Hawaii $2,029 $29,400 Idaho $3,232 $29,379 Illinois $28,356 $37,708 Indiana $13,110 $30,920 Iowa $8,011 $24,351 Kansas $6,110 $26,225 Kentucky $7,305 $28,648 Louisiana $10,020 $34,553 Maine $3,303 $26,637 Maryland $13,983 $45,696 Massachusetts $16,719 $41,798 Michigan $15,102 $23,708 Minnesota $10,222 $28,552 Mississippi $5,424 $27,816 Missouri $13,864 $33,489 Average per All dealerships dealership State (millions) (thousands) Montana $2,915 $25,792 Nebraska $5,264 $28,921 Nevada $5,252 $50,990 New Hampshire $4,720 $33,239 New Jersey $24,180 $51,337 New Mexico $3,831 $32,189 New York $41,943 $47,233 North Carolina $21,484 $36,475 North Dakota $3,201 $35,570 Ohio $26,893 $35,385 Oklahoma $18,674 $67,905 Oregon $7,794 $32,611 Pennsylvania $28,437 $30,381 Rhode Island $2,045 $40,107 South Carolina $9,347 $35,675 South Dakota $2,788 $27,603 Tennessee $14,176 $41,090 Texas $70,832 $58,539 Utah $6,476 $45,927 Vermont $1,801 $20,470 Virginia $18,033 $36,066 Washington $13,267 $40,203 West Virginia $3,916 $27,193 Wisconsin $12,872 $25,092 Wyoming $1,365 $21,671 Total U.S. $730,082 $41,329

Dealership Financial Trends For the third year in a row, net profit in the new-vehicle department remained positive in 2013. During 2006-2010, net profit in the newvehicle department was negative each year. But while net profit in the new-vehicle department was positive in 2013, the profit per-new-vehicle retailed fell to $69 from $111 the previous year. For the fifth year in a row, net profit in the used-vehicle department was positive in 2013. The profit per-usedvehicle retailed increased to $254 from $194 the previous year. Total service and parts profits were were up 6.8 percent in 2013. During 2003-2013, net profit in the service and parts department has been higher than in the new- and used-vehicle departments. New-vehicle department net profit Used-vehicle department net profit Average dealership, in thousands of dollars, including F&I $200 2013 100 0-10 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Service and parts department net profit Average dealership, in thousands of dollars $500 250 7 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

The New-Vehicle Department New-vehicle sales were 15.5 million units in 2013. The gross margin on new-vehicle sales continued downward, falling to 3.8 percent in 2013 from 4.2 percent the previous year. New-car sales were up 4.7 percent from the previous year and comprised 48.8 percent of total new-vehicle sales. Sales of new light trucks increased 10.3 percent and comprised 51.2 percent of total vehicle sales. Overall, sales of new cars and light trucks were up 7.5 percent from the previous year. Domestic inventory rose from 62 to 66 days supply, while import inventory increased from 52 to 58 days supply. In 2013, the average selling price of a new vehicle, including accessories and options, rose by 2.8 percent. Gross margin as percentage of selling price New vehicles retailed 6.0% 4.5 New-vehicle inventories and days supply Inventory (in millions) 4.0 2.0 Domestic Import Total 0 2004 2013 Source: WardsAuto and NADA New-vehicle sales, by month Days supply 80 60 Domestic Import 40 2004 2013 2013 2013 SAAR 1 2012 2012 SAAR 1 % change Actual (in millions) Actual (in millions) 2012 to 2013 January 1,039,201 15.2 910,190 14.1 14.2% February 1,188,262 15.3 1,145,822 15.0 3.7% March 1,448,014 15.2 1,400,131 14.3 3.4% April 1,279,690 14.9 1,181,224 14.4 8.3% May 1,436,771 15.2 1,330,101 13.7 8.0% June 1,398,721 15.9 1,281,266 14.1 9.2% July 1,309,997 15.6 1,149,612 14.3 14.0% August 1,498,540 16.0 1,280,204 14.5 17.1% September 1,133,580 15.2 1,183,913 14.9-4.3% October 1,201,341 15.2 1,087,607 14.2 10.5% November 1,238,377 16.3 1,139,930 15.5 8.6% December 1,352,330 15.3 1,351,789 15.3 0.0% Full Year 15,524,824 15.5 14,441,789 14.4 7.5% Source: WardsAuto Source: WardsAuto and NADA 1 Seasonally adjusted annual rate 3.0 2004 2013 8

Total new light-vehicle sales rose by 7.5 percent in 2013. New light-duty vehicle sales, by year Total Light-duty Light-duty light-duty trucks Year New cars trucks vehicles as % of total 2004 7,505,900 9,360,600 16,866,500 55.5% 2005 7,666,700 9,278,300 16,945,000 54.8% 2006 7,780,800 8,721,000 16,502,700 52.8% 2007 7,618,400 8,470,900 16,089,300 52.6% 2008 6,813,550 6,381,050 13,194,600 48.4% 2009 5,456,300 4,945,400 10,401,700 47.5% 2010 5,635,400 5,919,100 11,554,500 51.2% 2011 6,089,300 6,644,900 12,734,200 52.2% 2012 7,242,800 7,199,000 14,441,800 49.8% 2013 7,582,500 7,942,300 15,524,800 51.2% Source: WardsAuto Number of new vehicles sold and selling price New vehicles Average sold per retail Year dealership selling price 2004 779 28,050 2005 788 28,400 2006 778 28,450 2007 775 28,800 2008 659 28,350 2009 563 28,966 2010 653 29,793 2011 726 30,659 2012 819 30,910 2013 879 31,762 New-vehicle sales and market share, by manufacturer General Other Year Chrysler Ford Motors Toyota Honda Nissan Volkswagen imports Total 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2,206,000 3,271,100 4,657,400 2,060,050 1,394,400 855,000 334,050 2,088,500 16,866,500 13.08% 19.39% 27.61% 12.21% 8.27% 5.07% 1.98% 12.38% 2,304,900 3,106,900 4,456,800 2,260,300 1,462,500 1,076,900 307,250 1,969,450 16,945,000 13.60% 18.34% 26.30% 13.34% 8.63% 6.36% 1.81% 11.62% 2,142,500 2,848,100 4,067,600 2,542,500 1,509,400 1,019,500 325,300 2,047,900 16,502,700 12.98% 17.26% 24.65% 15.41% 9.15% 6.18% 1.97% 12.41% 2,076,100 2,502,000 3,824,550 2,620,800 1,551,550 1,068,500 324,050 2,121,750 16,089,300 12.90% 15.55% 23.77% 16.29% 9.64% 6.64% 2.01% 13.19% 1,447,750 1,942,050 2,955,900 2,217,700 1,428,800 951,450 310,900 1,940,050 13,194,600 10.97% 14.72% 22.40% 16.81% 10.83% 7.21% 2.36% 14.70% 927,200 1,656,100 2,072,200 1,770,200 1,150,800 770,100 296,200 1,758,900 10,401,700 8.91% 15.92% 19.92% 17.02% 11.06% 7.40% 2.85% 16.91% 1,079,700 1,905,400 2,211,300 1,763,600 1,230,500 908,600 358,500 2,096,500 11,554,100 9.34% 16.49% 19.14% 15.26% 10.65% 7.86% 3.10% 18.15% 1,361,600 2,110,800 2,503,800 1,644,700 1,147,300 1,042,500 442,000 2,481,500 12,734,200 10.69% 16.58% 19.66% 12.92% 9.01% 8.19% 3.47% 19.49% 1,641,500 2,205,500 2,595,700 2,082,500 1,422,800 1,141,700 438,100 2,912,260 14,440,060 11.37% 15.27% 17.98% 14.42% 9.85% 7.91% 3.03% 20.17% 1,789,500 2,435,300 2,786,100 2,236,000 1,525,300 1,248,400 407,700 3,096,500 15,524,800 11.53% 15.69% 17.95% 14.40% 9.82% 8.04% 2.63% 19.95% 10-Year 1,697,675 2,398,325 3,213,135 2,119,835 1,382,335 1,008,265 354,405 2,251,331 14,425,296 Average 11.8% 16.6% 22.3% 14.7% 9.6% 7.0% 2.5% 15.6% Source: WardsAuto 9

F&I, Service Contracts Aftermarket income at new-car dealerships rose slightly in 2013. Combined sales from F&I, service contracts and other products accounted for 38.8 percent of gross profit in the new- and used-vehicle departments in 2013, up from 36.9 percent the previous year. F&I sales accounted for 22.8 percent of gross profit in the new- and used-vehicle departments in 2013, up from 21.3 percent; and sales from service contracts and other products accounted for 16 percent of gross profit in the new- and used-vehicle departments in 2013, up 0.4 percentage points. New-vehicle service contract penetration rates declined slightly by 0.2 percentage points in 2013, while usedvehicle service contract penetration rates declined by 1.5 percentage points. Aftermarket income As % of new- and used-vehicle department gross profit 40% Total Service contract and other 20 Finance and insurance 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Service contract penetration rates As % of new vehicles retailed 45% 35 25 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 10

The Used-Vehicle Department Of the 17.4 million used vehicles sold by franchised new-car dealers in 2013, 9.9 million were retailed and 7.5 million were wholesaled. Used-vehicle sales were up 1.7 percent with retail sales up 5.6 percent, and wholesale sales down 3 percent. The retail price for the average used vehicle was $18,111, up 3.2 percent from $17,547. Franchised new-car dealers obtained 66 percent of these used units from trade-ins, 25 percent from auctions and 8 percent from street purchases and other sources. Used-vehicle sales by new-vehicle dealerships In millions 20 Total Wholesale 10 Retail 10-Year Average Retail.... 10.17 Wholesale.... 7.07 Total.... 17.25 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sources of used vehicles retailed by dealerships, 2013 Average retail selling price of used vehicles retailed by new-light dealerships, 2013 $19,000 Auction purchase 25% Street purchase 5% Other 3% Trade-in on used vehicle 25% Trade-in on new vehicle 41% 16,500 14,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 11

Service, Parts and Body Shop Total sales for service, parts and the body shop was $84.6 billion in 2013, up 5 percent from the previous year. This is the third consecutive year that sales for service, parts and the body shop exceeded $80 billion. Warranty work performed by franchised new-car dealers was $14.4 billion in service and parts all at no cost to the customer. The percentage of dealerships with on-site body shops increased to 36 percent from 34 percent the previous year. Total body-shop work for dealerships rose to $7 billion from $6.8 billion the previous year. Dealerships total service and parts sales, 2013 In billions of dollars Service labor sales $20 10 0 Parts sales $20 Customer mechanical Customer body Warranty Sublet Internal Other 10 0 Customer mechanical Customer body Wholesale Counter Warranty Internal Other Profile of dealerships service and parts operations, 2013 Average dealership All dealers Total service and parts sales $4,789,222 $84.59 billion Total gross profit as percent of service and parts sales 46.03% Total net profit as percent of service and parts sales 6.09% Total number of repair orders written 14,002 247 million Total service and parts sales per customer repair order $250 Total service and parts sales per warranty repair order $236 Number of technicians (including body) 15 264,945 Number of service bays (excluding body) 20 353,260 Total parts inventory $309,498 $5.47 billion Average customer mechanical labor rate $101 12

Warranty work performed by franchised new-car dealers in 2013 was $14.4 billion in service and parts all at no cost to the customer. Dealerships total service and parts sales In billions of dollars $90 80 70 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Dealerships service and parts sales, 2013 In billions of dollars Service labor sales Customer Mechanical $15.82 Customer Body 3.93 Warranty 6.84 Sublet 2.65 Internal 6.72 Other 1.48 Total service labor $37.45 Parts sales Customer Mechanical $13.33 Customer Body 3.10 Wholesale 12.56 Counter 2.57 Warranty 7.58 Internal 4.48 Other 3.52 Total parts $47.15 Total service and parts $84.59 Total dealership body shop sales In billions of dollars $11 Dealerships operating on-site body shops Percent of total dealership population 50% 8 40 5 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 30 2004 2013 13

Employment and Payroll In 2013, total dealership employment reached 1,008,800 people up 3.4 percent from 2012; the average dealership in operation employed 57 people in 2013 up from 55 people during the previous year. The number and type of employees vary significantly among dealerships depending on store characteristics such as size, location, makes handled, and distribution of sales among departments. The makeup of total dealership employment in 2013 was: Sales Staff... 207,945 Service Center... 262,896 Managers & Office Staff... 236,130 Other... 301,829 Total... 1,008,800 The average dealership in 2013 had an annual payroll of $3 million. The total payroll for all dealerships combined was $53.7 billion. Dealerships provided, on average, just over 12 percent of total retail payroll in their respective states. 14 Estimated number of employees in new-car dealerships In thousands 1,200 1,000 800 Total of all dealerships (left scale) Average number per dealership (right scale) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 and U.S. Bureau of Labor Statistics Estimated number of new-car dealership employees in 2013, by state Total number Average number State (all dealers) (per dealership) Alabama 14,016 48 Alaska 2,047 60 Arizona 24,088 98 Arkansas 8,421 39 California 110,092 80 Colorado 16,755 65 Connecticut 13,162 49 Delaware 3,991 74 Florida 67,088 79 Georgia 29,613 58 Hawaii 3,914 57 Idaho 5,140 47 Illinois 40,086 53 Indiana 19,985 47 Iowa 11,816 36 Kansas 9,786 42 Kentucky 11,642 46 Louisiana 15,238 53 Maine 5,128 41 Maryland 21,553 70 Massachusetts 21,281 53 Michigan 33,135 52 Minnesota 18,375 51 Mississippi 7,392 38 Missouri 20,417 49 and U.S. Bureau of Labor Statistics Total number Average number State (all dealers) (per dealership) Montana 3,846 34 Nebraska 7,029 39 Nevada 7,663 74 New Hampshire 6,227 44 New Jersey 29,293 62 New Mexico 6,588 55 New York 46,323 52 North Carolina 30,566 52 North Dakota 3,806 42 Ohio 39,425 52 Oklahoma 15,874 58 Oregon 11,980 50 Pennsylvania 44,377 47 Rhode Island 2,833 56 South Carolina 14,348 55 South Dakota 3,790 38 Tennessee 19,361 56 Texas 91,370 76 Utah 8,394 60 Vermont 2,899 33 Virginia 27,854 56 Washington 20,603 62 West Virginia 5,883 41 Wisconsin 22,248 43 Wyoming 2,059 33 Total U.S. 1,008,800 57 60 50 30

Annual payroll of new-car dealerships $ billions $ thousands 60 55 Total of all dealerships (left scale) Average per dealership (right scale) 4,000 50 45 40 35 3,500 3,000 2,500 30 2,000 2004 2013 and U.S. Bureau of Labor Statistics Average weekly earnings of new-car dealership employees in 2013, by state Alabama $975 Alaska $1,049 Arizona $1,039 Arkansas $958 California $1,113 Colorado $1,076 Connecticut $1,160 Delaware $1,031 Florida $1,041 Georgia $1,036 Hawaii $1,093 Idaho $901 Illinois $1,017 Indiana $906 Iowa $927 Kansas $951 Kentucky $948 Louisiana $993 Maine $919 Maryland $1,066 Massachusetts $1,195 Michigan $1,064 Minnesota $936 Mississippi $929 Missouri $991 and U.S. Bureau of Labor Statistics Dealership employment by position in 2013 Percent of total Other 29.9% Managers 23.4% Sales 20.6% Service 26.1% and U.S. Bureau of Labor Statistics Montana $888 Nebraska $952 Nevada $1,133 New Hampshire $1,094 New Jersey $1,242 New Mexico $925 New York $1,159 North Carolina $969 North Dakota $960 Ohio $929 Oklahoma $1,001 Oregon $942 Pennsylvania $972 Rhode Island $1,056 South Carolina $957 South Dakota $990 Tennessee $1,034 Texas $1,138 Utah $939 Vermont $949 Virginia $1,032 Washington $1,020 West Virginia $870 Wisconsin $824 Wyoming $959 Total U.S. $1,038 2013 annual payroll of new-car dealerships, by state Total all Average per dealerships dealership State ($ billions) ($ millions) Alabama $0.70 $2.38 Alaska $0.11 $3.24 Arizona $1.28 $5.23 Arkansas $0.41 $1.90 California $6.28 $4.56 Colorado $0.92 $3.58 Connecticut $0.78 $2.91 Delaware $0.21 $3.90 Florida $3.58 $4.20 Georgia $1.57 $3.07 Hawaii $0.22 $3.18 Idaho $0.24 $2.16 Illinois $2.09 $2.78 Indiana $0.93 $2.19 Iowa $0.56 $1.70 Kansas $0.48 $2.05 Kentucky $0.57 $2.22 Louisiana $0.77 $2.67 Maine $0.24 $1.95 Maryland $1.18 $3.85 Massachusetts $1.30 $3.26 Michigan $1.81 $2.84 Minnesota $0.88 $2.46 Mississippi $0.35 $1.80 Missouri $1.04 $2.50 Montana $0.17 $1.55 Nebraska $0.34 $1.88 Nevada $0.44 $4.32 New Hampshire $0.35 $2.46 New Jersey $1.86 $3.96 New Mexico $0.31 $2.62 New York $2.75 $3.10 North Carolina $1.52 $2.58 North Dakota $0.19 $2.08 Ohio $1.88 $2.47 Oklahoma $0.81 $2.96 Oregon $0.58 $2.42 Pennsylvania $2.21 $2.36 Rhode Island $0.15 $3.01 South Carolina $0.70 $2.69 South Dakota $0.19 $1.90 Tennessee $1.03 $2.97 Texas $5.33 $4.40 Utah $0.40 $2.86 Vermont $0.14 $1.60 Virginia $1.47 $2.95 Washington $1.08 $3.26 West Virginia $0.26 $1.82 Wisconsin $0.94 $1.83 Wyoming $0.10 $1.61 Total U.S. $53.71 $3.04 and U.S. Bureau of Labor Statistics 15

Vehicles in Operation and Scrappage There were 252.6 million cars and light-duty trucks in operation in the United States in 2013, up 1.5 percent from the previous year. The average age for both cars and light trucks was 11.4 years. Vehicles in operation scrappage, by year Total vehicles New vehicle Scrappage as % in use registrations Scrappage of registrations 2004 239,248,456 16,866,690 13,077,585 77.5% 2005 243,037,561 16,761,113 13,464,030 80.3% 2006 246,334,644 16,574,314 13,596,815 82.0% 2007 249,312,143 16,023,380 13,441,309 83.9% 2008 251,894,214 13,217,544 12,953,514 98.0% 2009 252,158,244 10,350,687 13,077,026 126.3% 2010 249,431,905 11,480,465 11,438,223 99.6% 2011 249,474,147 12,657,370 13,410,584 106.0% 2012 248,720,933 14,314,508 14,185,995 99.1% 2013 248,849,446 15,380,578 11,629,077 75.6% Source: R.L. Polk & Co. Total light vehicles in operation in 2013, by state 1 Passenger Light Trucks Total State cars GVW 1 3 vehicles Alabama 2,109,261 2,518,015 4,627,276 Alaska 182,650 466,134 648,784 Arizona 2,476,785 2,916,861 5,393,646 Arkansas 961,589 1,544,633 2,506,222 California 14,657,068 13,214,743 27,871,811 Colorado 1,924,973 2,696,944 4,621,917 Connecticut 1,540,195 1,281,133 2,821,328 Delaware 392,147 387,911 780,058 D.C. 219,344 101,359 320,703 Florida 7,731,046 7,103,123 14,834,169 Georgia 3,892,464 4,440,869 8,333,333 Hawaii 471,412 581,531 1,052,943 Idaho 583,195 930,477 1,513,672 Illinois 5,082,558 4,975,299 10,057,857 Indiana 2,480,315 2,964,358 5,444,673 Iowa 1,267,963 1,677,717 2,945,680 Kansas 1,135,308 1,532,965 2,668,273 Kentucky 1,680,173 2,045,428 3,725,601 Louisiana 1,495,417 2,193,932 3,689,349 Maine 510,521 642,107 1,152,628 Maryland 2,405,498 2,161,900 4,567,398 Massachusetts 2,575,640 2,304,820 4,880,460 Michigan 3,783,589 4,339,618 8,123,207 Minnesota 2,208,770 2,564,916 4,773,686 Mississippi 1,149,522 1,476,533 2,626,055 Missouri 2,447,646 2,912,565 5,360,211 Source: R.L. Polk & Co. Passenger Light Trucks Total State cars GVW 1 3 vehicles Montana 415,684 783,275 1,198,959 Nebraska 787,664 1,061,455 1,849,119 Nevada 959,461 1,082,136 2,041,597 New Hampshire 581,917 625,980 1,207,897 New Jersey 3,724,647 3,120,320 6,844,967 New Mexico 733,062 1,066,516 1,799,578 New York 5,662,471 5,270,861 10,933,332 North Carolina 3,814,523 4,236,773 8,051,296 North Dakota 256,748 473,692 730,440 Ohio 5,073,009 4,958,692 10,031,701 Oklahoma 1,712,545 2,272,527 3,985,072 Oregon 1,491,450 1,848,668 3,340,118 Pennsylvania 5,249,369 5,372,794 10,622,163 Rhode Island 456,081 341,679 797,760 South Carolina 1,912,929 2,213,095 4,126,024 South Dakota 343,332 550,912 894,244 Tennessee 2,456,340 3,062,978 5,519,318 Texas 8,480,399 11,852,695 20,333,094 Utah 1,073,310 1,282,973 2,356,283 Vermont 256,928 301,026 557,954 Virginia 3,414,335 3,517,585 6,931,920 Washington 2,846,969 3,208,544 6,055,513 West Virginia 614,068 923,876 1,537,944 Wisconsin 2,345,397 2,665,559 5,010,956 Wyoming 186,286 430,221 616,507 Total 120,213,973 132,500,723 252,714,696 1 Including District of Columbia (D.C.) 16

Total new-vehicle registrations, by state 1 State 2012 2013 Alabama 188,539 199,834 Alaska 31,356 30,674 Arizona 291,890 349,453 Arkansas 123,503 131,080 California 1,529,238 1,711,762 Colorado 227,307 247,544 Connecticut 158,128 169,999 Delaware 43,929 47,840 D.C. 17,900 19,743 Florida 1,006,888 1,100,893 Georgia 399,515 435,464 Hawaii 60,543 67,482 Idaho 42,964 49,076 Illinois 590,162 611,432 Indiana 221,926 229,966 Iowa 127,396 133,825 Kansas 102,362 109,562 Kentucky 137,288 139,681 Louisiana 209,337 220,987 Maine 51,898 56,143 Maryland 305,228 317,924 Massachusetts 309,736 332,786 Michigan 483,926 540,295 Minnesota 232,160 245,719 Mississippi 102,565 109,305 Missouri 259,706 273,755 Source: R.L. Polk & Co. State 2012 2013 Montana 54,796 58,129 Nebraska 80,643 84,516 Nevada 112,209 120,277 New Hampshire 80,298 84,016 New Jersey 513,551 545,613 New Mexico 81,407 86,060 New York 868,459 928,475 North Carolina 373,885 402,078 North Dakota 39,517 43,724 Ohio 527,743 571,047 Oklahoma 718,900 699,406 Oregon 133,100 146,603 Pennsylvania 598,274 622,088 Rhode Island 44,446 47,289 South Carolina 175,888 197,635 South Dakota 37,156 38,759 Tennessee 266,568 273,138 Texas 1,275,909 1,423,625 Utah 107,013 116,124 Vermont 35,578 39,043 Virginia 378,916 375,262 Washington 228,180 251,044 West Virginia 83,036 84,117 Wisconsin 217,599 233,680 Wyoming 26,047 26,606 Total U.S. 14,314,508 15,380,578 1 Including District of Columbia (D.C.) Total vehicles in operation, by year In millions 350 300 250 200 150 100 50 0 Total Trucks Cars 2004 2013 Source: R.L. Polk & Co. Average age of passenger cars, trucks, and light trucks, by year 12 11 10 9 8 Cars Light trucks All light vehicles 2004 2013 Source: R.L. Polk & Co. Estimated vehicle scrappage, by year Total cars and trucks In millions 17 Number of vehicles scrapped during year 16 (left scale) 15 14 13 12 11 10 9 8 Scrappage as % of new-vehicle registrations (right scale) 2004 2013 Source: R.L. Polk & Co. Percent 140% 130 120 110 100 90 80 70 60 17

Advertising and the Dealership Franchised new-car dealerships spent $7.6 billion on advertising in 2013, up 6.1 percent from $7.2 billion the previous year. Average ad expense per new-vehicle retailed fell to $616, down 0.8 percent. For various advertising (newspapers, radio, television, direct mail, Internet and other), dealer advertising for newspaper, print and radio has declined since 2003 with newspaper advertising declining the most, down more than 30 percentage points. Internet advertising increased the most since 2003, up nearly 30 percentage points. The average dealership spent 33 percent of advertising on the Internet in 2013, up from 26.5 percent. Radio advertising fell to 14.5 percent, from 15.9 percent. Television advertising increased slightly to 20.8 percent, from 20.2 percent. Estimated advertising expenses per dealership in 2013 By number of new units sold Average of all 750 or By media used dealerships 1 149 150 399 400 749 more Newspapers $66,253 $26,910 $32,907 $47,892 $81,020 Radio $65,690 $19,336 $28,770 $62,840 $91,617 Television $97,657 $17,451 $36,598 $92,694 $162,376 Direct Mail $46,208 $11,064 $19,999 $39,139 $75,002 Internet $111,822 $26,828 $52,798 $95,557 $172,453 Other $42,114 $11,046 $21,364 $35,249 $61,476 Total $429,744 $112,635 $192,436 $373,371 $643,942 Total advertising as a % of total sales 1.04% 1.11% 1.05% 1.01% 0.92% Total advertising per new vehicle sold $616 $862 $616 $517 $410 Advertising expenditures, by medium, 2013 Percent of total Internet 33.0% Other 5.3% Direct mail 11.0% Newspaper 15.5% Television 20.8% Radio 14.5% Total dealership advertising expenditures In billions of dollars $9 Total dealership advertising Per new unit sold $800 7 600 400 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 5 2004 2013 18

New-Truck Dealerships Sales of medium- and heavy-duty trucks (classes 4-8) increased to 351,737 units in 2013 a 1.7 percent gain from 345,876 units the previous year. For all truck classes, Freightliner sold the most commercial trucks, with 31.6 percent of the market. In 2013, Ford and International exchanged ranks from the previous year Ford moved to second place while International moved to third place. Ford had 16.5 percent of the medium- and heavy-duty truck market, up from 12.9 percent, while International had 14.3 percent of the market, down from 19.8 percent. Truck categories Trucks are classified by gross vehicle weight Class 1 0 6,000 lb. Class 2 6,001 10,000 lb. Class 3 10,001 14,000 lb. Class 4 14,001 16,000 lb. Class 5 16,001 19,500 lb. Class 6 19,501 26,000 lb. Class 7 26,001 33,000 lb. Class 8 33,001 and over lb. Source: WardsAuto Number of medium- and heavy-duty truck dealerships 2004 2005 2006 2007 2008 Truck classes 4 8 Percent of Class 4 5 6 7 8 Total market Freightliner 0 1,754 18,899 23,030 67,568 111,251 31.6% Ford 3,166 39,302 12,487 3,169 0 58,124 16.5% International 29 2,369 9,875 11,587 26,555 50,415 14.3% Kenworth 0 24 1,193 3,289 25,943 30,449 8.7% Peterbilt 0 85 181 4,574 24,717 29,557 8.4% Volvo Truck 0 0 0 0 20,658 20,658 5.9% Mack 0 0 0 0 16,289 16,289 4.6% Isuzu 7,570 4,048 0 0 0 11,618 3.3% Dodge/Ram 0 10,901 0 0 0 10,901 3.1% Hino 0 880 4,728 1,833 0 7,441 2.1% Western Star 0 0 0 0 3,008 3,008 0.9% Mitsubishi Fuso 1,144 666 1 2 0 1,813 0.5% UD Trucks 0 16 111 40 0 167 0.0% Other 0 0 0 0 46 46 0.0% Total 11,909 60,045 47,475 47,524 184,784 351,737 100.0% 2009 2010 2011 U.S. retail sales and market share calendar year 2013 Source: WardsAuto 2012 2013 19

ANNUAL FINANCIAL PROFILE OF AMERICA S FRANCHISED NEW-CAR DEALERSHIPS 2014 www./nadadata