Russian Automobile Dealers Convention 2016 Results of the Twelfth Car Dealer Satisfaction Index DSI12 12 April 2016 Andrey Tomyshev Head of the CIS Automotive Group
April 2016 Twelfth Car Dealer Satisfaction Index Survey Page 2
Methodology Sales data are historical actuals. The Dealers Opinion is a forward-looking index of their confidence in the brand s future. The Dealers Opinion takes into account the following key aspects of relations with automotive manufacturers: 1. Sales of new cars 2. After-sales service 3. Sales of used cars 4. Financial arrangements 5. Retention and support of the dealer network 6. Advertising and promotion 7. Communication and feedback. The index includes opinions on those brands for which at least 10% of the dealer network gave their vote (based on estimates of ROAD and EY). Page 3
Respondents The survey includes the opinion of 403 dealer centers covering 11 brands, which passed the 10% threshold. The number of survey participants totaled 488 dealer centers and 34 brands. Brand % of participat ion in the survey Brand sales in 2015 Position by sales in 2015 Brand sales in January- February 2016 Growth from January- February 2015 MITSUBISHI 79% 35,909 14 3,258-50% GAZ 62% 51,192 9 5,118 7% VOLKSWAGEN 41% 78,390 7 9,854-18% MAZDA 37% 27,358 19 2,913-39% CHEVROLET 22% 49,765 12 3,644-42% FORD 20% 38,607 11 5,676 77% RENAULT 19% 120,411 4 13,837-23% HYUNDAI 17% 161,201 3 18,520-29% SKODA 16% 55,012 10 7,632-29% NISSAN 14% 91,100 6 11,813-36% TOYOTA 11% 98,149 5 14,017-2% Sources: AEB data, EY analysis Note: Data include light commercial vehicles. Page 4
Top brands which failed to reach the 10% threshold Brand % of participati on in the survey Brand sales in 2015 Sales growth in 2015 Position by sales in 2015 Brand sales in January- February 2016 Sales growth from January- February 2015 SUZUKI 9% 6,540-67% 27 1,185 36% DATSUN 9% 31,697 178% 16 2,656-54% LAND ROVER 9% 11,605-45% 22 1,381-29% INFINITI 9% 5,495-39% 30 669-40% BMW 9% 27,486-23% 20 4,669-23% AUDI 8% 25,650-25% 17 2,655-24% GEELY 8% 11,617-38% 23 1,199 6% CITROEN 7% 5,528-72% 33 559-35% KIA 7% 163,500-16% 2 20,541-14% HONDA 7% 4,622-78% 36 345-46% JAGUAR 6% 972-40% 45 101-25% PEUGEOT 5% 5,645-73% 32 447-44% PORSCHE 4% 5,290 12% 31 719 25% MERCEDES-BENZ 3% 41,614-15% 13 6,538-11% LADA 3% 269,096-31% 1 34,612-16% Sources: AEB data, ROAD data, EY analysis Note: Data include light commercial vehicles. Page 5
Not rankings alone The survey highlighted the development priorities from the standpoint of the dealers Logistics Development of IT systems Dealer network developme nt Manufact urers Advertising and promotion Success factors Sales of new cars Dealers Financing Maintenance and repairs Sales of used cars and tradein Page 6
Five priorities from the standpoint of dealers Priority Thought leadership Area Balance the supply volume and model range depending on the country s economic environment. Increase the dealers involvement in planning. Build dynamic supply models based on scenarios taking into Optimize the pricing policy taking into account regional specifics, competitors' prices and margins of specific services, spare parts and cars. account the increased influence of macroeconomic factors Sales of new cars Pricing Risk analysis Logistics Ensure greater involvement of dealers in preparing production plans to ensure their fulfillment on a timely basis. Optimize the allocation of spare parts, cars and quotas. Common IT environment IT system integration Mobile access Planning Logistics Optimize the size of the dealer network depending on the degree of market saturation. Consolidate dealer centers, restructure inefficient companies Optimize sales channels Dealer network development Enhance positions of the authorized dealers in services. Enhance support of advertising budgets with an emphasis on "sales-focused" advertising. Joint promotional events relating to service centers Train service centers' employees Optimize the document flow in service centers (including guarantees) Use new advertising channels Maintenance and repairs Advertising and promotion Page 7
DSI-12 results Page 8
Support for sales of new cars by manufacturer GAZ MAZDA SKODA NISSAN MITSUBISHI HYUNDAI Market average 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 Dealers opinions (based on comments): Implement a balanced pricing and bonus policy in line with market conditions and in view of the Russian ruble s depreciation Ensure transparency in planning of quotas taking into consideration dealers opinions Rebalance the volume and model range based on demand given the changing market conditions Optimize and enhance the transparency of delivery terms Enhance the transparency and predictability of the schedule of pricing policy changes Page 9
After-sales service Dealers opinions (based on comments): MAZDA GAZ MITSUBISHI SKODA NISSAN Market average 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 Enhance the competitiveness of prices for spare parts, adequate standard hourly service rates (linked to the US dollar and Euro exchange rates) Optimize planning of supply and stock of spare parts Enhance dealer margins from the sale of spare parts Arrange "sales-focused" seasonal events and advertising support for services Implement a transparent planning system for cost reimbursement Speed up and simplify document flow Page 10
Support for sales of used cars by manufacturer GAZ NISSAN FORD TOYOTA MITSUBISHI SKODA Market average 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 Dealers opinions (based on comments): Develop a standard program to support the sale of used cars Optimize the procedure for paying compensation to dealers for involvement in trade-in and car disposal programs Intensify advertising events for dealers and provide advertising support Provide the opportunity for credit sales of used cars Improve the skills of importing companies' employees Develop mobile applications for customers Page 11
Financial arrangements GAZ MITSUBISHI MAZDA NISSAN Market average 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 Dealers opinions (based on comments): Enhance transparency of the bonus policy and the rules for updating and amending it: develop a schedule and clear rules for paying compensation and bonuses to dealers Optimize interest rates on loans and factoring Optimize deferred payment arrangements. Expand the commission sales term and grace period Set objectives in line with market conditions Page 12
Retention and development of the dealer network GAZ MITSUBISHI NISSAN TOYOTA SKODA Market average 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 Dealers opinions (based on comments): Optimize the dealer networks in the context of excessive supply and low demand Revise the requirements for show room refurbishment amidst the deteriorating macroeconomic environment. Decrease the cost of show room rebranding Protect dealer investments Page 13
Advertising and promotion GAZ NISSAN SKODA MAZDA MITSUBISHI VOLKSWAGEN HYUNDAI Market average 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 Dealers opinions (based on comments): Increase support of dealers' advertising budgets Ensure greater involvement of dealers in the evaluation process / selection of events Increase the volume of advertising at the national and regional levels, contextual advertising in the Internet and advertising via other channels Emphasis on sales-focused rather than image-focused event advertising Increase the volume of advertising materials Reimburse expenses on online advertising Page 14
Communication and feedback GAZ MITSUBISHI MAZDA RENAULT NISSAN TOYOTA Market average 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 Dealers opinions (based on comments): Accelerate response to offers / questions from the dealers Provide timely information on any changes to plans, including plans to raise prices Optimize and automate the document flow to accelerate key processes and reduce red tape Standardize the processes for raising awareness of policy changes, new events and materials New operating techniques: request a call back via the Internet or e-mail Page 15
Leaders of satisfaction index by brand April 2016 2 1 3 MITSUBISHI GAZ NISSAN No. 1, 2 and 3 in the following categories: No. 2: Financial arrangements Dealer network development Communication and feedback No. 1: Sales of new vehicles Sales of used vehicles Financial arrangements Dealer network development Advertising and promotion Communication and feedback No. 2: Advertising and promotion Dealer network development Sales of used cars No. 3: After-sales service No. 2: After-sales service Page 16
Overall satisfaction index by brand April 2016 GAZ MITSUBISHI NISSAN MAZDA SKODA Market average TOYOTA FORD VOLKSWAGEN HYUNDAI RENAULT CHEVROLET 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 Page 17
Appendix Page 18
Prior ranking leaders 2008-2016 August 2008 April 2009 August 2009 April 2010 August 2010 August 2011 October 2012 April 2013 October 2013 April 2014 April 2015 April 2016 1 2 3 AUDI 2 1 1 1 1 1 1 6 1 - SKODA LEXUS 3 1 2 3 1 1 1 - - 1 PEUGEOT 2 3-1 1 CITROEN 2 3-1 1 KIA 2 3-1 1 GAZ 2 2 1 1 1 1 4 2 - TOYOTA 2-1 - VOLVO 2-1 - RENAULT MAZDA MITSUBISHI 3 3 3 3 3 3 2 2 1 2 - - 3 - - 2 1 3 1 NISSAN 3 1 Page 19
Presenter Andrey Tomyshev Head of the CIS Automotive Group Tel.:+7 (495) 755 9673 Mob.: +7 (985) 991 5849 Fax: +7 (495) 755 9701 Email: Andrey.Tomyshev@ru.ey.com Background Andrey is the Head of the CIS Automotive Group. Andrey has more than 10 years of experience in providing transaction advisory services. Accredited appraiser of the American Society of Appraisers (ASA). MSc in Economics (Moscow State University). Skills Business valuation, financial modeling, comprehensive investment research, including preparation of business plans for investment projects, commercial review, and market research. Professional experience Participated in more than 100 projects that involved financial modeling, business valuation, and preparation of comprehensive investment research for the purposes of finance raising, mergers and acquisitions, financial reporting, business restructuring, issue and exchange of securities, etc. Provided expert testimony on behalf of clients. This has included reviews of valuation reports prepared by experts of the counterparty in a lawsuit; countering arguments/answering questions posed by the counterparty; assisting in preparation of documents submitted by the client's lawyers; appearance in arbitration court. Has led a significant number of projects in the automotive industry. Page 20
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