Auto Loan Refinancing Could Top 14 Percent in 2013

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1 Auto Loan Refinancing Could Top 14 Percent in % 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 11.2% Refi Auto Loan 4.3% 12.6% 14.1% cy2006 cy2009 cy2012 cy2013 The number of automotive finance contracts that will be refinanced in 2013 could top 14 percent, according to an analysis by CNW Research as part of its Purchase Path Study. Calendar Year 2012 saw 12.6 percent of finance contracts being refi d. Jitters Index 0.10% Many new and used-car buyers during the recession who needed to make a vehicle acquisition were hit with loans carrying high-interest as much as 24 percent. They accepted the premium because they had little if any choice. Banks and other financial institutions were chary about taking on low-fico borrowers and applications for the sub-prime and low-near-prime applicant were turned down. Those who were in such loans had few places to turn. They were in a contract that couldn t be refinanced because there were few alternative lenders willing to take the risk. In 2009, for example, only 4.3 percent of auto contracts were refinanced, not because there wasn t a pool of potential customers, but there were only a few lenders willing to perform the refi. And of those who were able to get a refinanced loan, most were at the top-end of the FICO range either through improved employment or coming out of a poor credit rating through systematic home-finance debt reductions on the part of the consumer. By 2012, as lending institutions began loosening credit criteria and reconsidering the automotive refinance market, the rate of refi applications approved jumped dramatically, surpassing the level of 2006 the highest in nearly a decade. CONTEXT: Auto loans are reasonably safe bets for financial institutions. Repossession rates are low because consumers need transportation and will pay an auto loan before other debts including home mortgages. The pool of existing loans that are held by consumers who now would be considered moderate risks is growing dramatically and the industry should see the rate of refi expand to nearly 18 percent by 2015.

2 Page 2 CNW Research: Retail Automotive Summary January Sales Could Set the Pace for a 15.7 Million Unit Year; Still Uncertainties, Tho It s a mixed bag of signals for January. On one hand, deliveries during the opening weeks of January are nearly 13 percent higher than last year s solid January numbers (see Back Page), but same-store sales are up barely 6 percent leaving much of the increase in the first half of January to new facilities and those that were partially closed due to extensive remodeling. The latter dealerships tend to skew the sales numbers upward since grand opening sales are always well above the planning potential for a particular dealership. Add to this the fact that more than 18 percent of all dealerships went through a remodel or location change in the final two months of 2012 compared to the usual 8 percent, and the January numbers could be well off of the true 2013 trend-line. On the Positive Side Floor traffic is running nearly 11 percent ahead of last year with closing ratios up about 5 percent. Combined it should be an indication of a 6 to 8 percent year-over-year gain in sales. Sub-Prime approvals continue to smother year-ago numbers up 41 percent thus far in January compared to the same month of The Jitters Index tracking home-centric economic concerns rose slightly in January, but not sufficiently to have a major impact of the desire for or willingness to buying a new vehicle. Leasing continues to be a player in the market, offering lower monthly payments for those who are at the mid-fico and above credit scores. The short-term contracts and low payments are gaining traction among dealers who are looking to boost their customer base. Salespeople are being trained to explain leasing as an alternative to financing with spotty, but positive results. Pent Up Demand The number of people who in January who postponed a vehicle acquisition and say they plan to reenter the market soon has fallen to below 100,000. Reason for the postponements: Uncertainty about the economy leads the way and concerns about job stability. That said, however, the length of the delay continues to shrink, down 11 percent vs. the same month last year. If the numbers hold true, there could be as many as 85,000 additional sales in April-May than conventional marketing and trend line sales numbers would suggest. Sub-Prime Approval 41.00% Closing Ratio Closing Ratio 5.06% 10.8% 12.05% 6.31%

3 Page 3 CNW Research: Retail Automotive Summary Is it Time for a New Way to Calculate Sales Success? One of the issues related to sales data is making comparisons with previous years, adjusting for SAAR, looking at month-over-month. The net result often gives a skewed picture of just how good or bad a company is doing. For example, all through 2011, Ford s month over month data showed incredible strength as did its yearover-year stats. When 2012 rolled around and other makes notably Toyota and Honda recovering from production-crippling tsunami Ford s year-over-year gains were less impressive because it was working from a high base while the two Japanese brands looked extremely strong mostly, though, because they were working from a weak base. Add the never ending and increasingly focused incentives to the mix, and the year-over-year data can become completely veiled. Having a huge lease incentive this month can result in a double digit percentage increase vs. a year ago or even last month. Adding Another Analytical Layer So perhaps it s time to add another layer in the ongoing sales analysis jumble. At the right is a table showing the Real strength of each brand based on a number of criteria: A blend of year over year, month over month, weighted incentives and other floating issues such as new product introductions and fuel prices. The score for the Total Industry is, of course, The scores of brands fall either above or below that level. How much above or below gives a sense of just how strong the reported sales are when everyone is playing on a level field. CNW will be publishing this table monthly and begin refining the process to give a better picture of the industry s inherent strength or weakness. More to come. DEC. '12 Document 1967 Real Sales Strength Jaguar car 3.12 Subaru truck 3.12 Smart 2.77 Mazda truck 2.58 Audi truck 2.47 Chrysler car 2.26 GMC truck 2.13 Lexus car 1.99 Acura truck 1.90 Dodge truck 1.84 Lexus truck 1.84 Land Rover 1.82 Subaru car 1.80 Total GM truck 1.78 Chrysler truck 1.78 Cadillac car 1.77 Chevrolet Truck 1.75 Total Chrysler car 1.75 Total GM 1.71 Lincoln car 1.69 Total Subaru 1.61 Mini 1.53 Buick car 1.53 Total Ford car 1.46 Ford car 1.45 Dodge car 1.45 Total VW truck 1.41 Total Historic Big 3 car 1.41 VW car 1.41 Lincoln truck 1.40 Total Historic Big Total Mazda 1.39 Total Chrysler 1.35 Total Historic Big 3 truck 1.27 Acura car 1.25 Total VW car 1.23 Total GM car 1.21 BMW car 1.16 Buick truck 1.16 Cadillac truck 1.13 Toyota car 1.12 Total VW 1.12 Total Chrysler truck 1.10 BMW truck 1.10 Total Ford 1.09 Total Toyota 1.08 Total BMW 1.08 Chevrolet Car 1.07 Total Toyota truck 1.06 Ram truck 1.05 Mitsubishi car 1.04 Total Industry car 1.00 Total Industry truck 1.00 Total Industry 1.00 Total Toyota car 0.94 Hyundai car 0.94 Toyota truck 0.93 Total Asian car 0.88 Total Ford truck 0.87 Infiniti car 0.87 Ford truck 0.86 Total Honda car 0.81 Total Mitsubishi 0.80 Total Euro truck 0.78 Bentley 0.77 Honda car 0.77 Total Honda 0.76 Total Honda truck 0.76 Total Euro car 0.72 Total Asian 0.72 Total Nissan car 0.70 Total Euro 0.69 Nissan car 0.68 Mitsubishi truck 0.65 Jeep truck 0.62 Total Asian truck 0.61 Total Hyundai 0.60 Honda truck 0.58 Mazda car 0.54 VW truck 0.54 Audi car 0.54 Volvo car 0.48 Mercedes truck 0.24 Fiat 0.22 Total Nissan 0.17 Infiniti truck 0.02 Total Volvo 0.01 Hyundai truck 0.00 Rolls Royce 0.00 Scion car Suzuki truck Kia car Total Kia Total Nissan truck Total Mercedes Nissan truck Kia truck Volvo truck Total Suzuki Mercedes car Porsche truck Suzuki car Total Porsche Porsche car -1.81

4 Page 4 CNW Research: Retail Automotive Summary JITTERS INDEX Fed Gas Child s Job Day to Day Condition of Food Local Jitters Taxes Prices Edu Stability Needs Investments Prices Taxes Index Vs Previous Mo. 0.10% 0.61% 0.93% -0.65% 0.80% -0.57% 0.31% -0.20% 0.10% Vs Mo % 5.66% % -7.47% 2.45% -5.53% 4.97% 0.72% 0.62% Jitters Index Stubbornly Vexing; Consumers Not Happy with Government The numbers are only an indication of how Americans feel about their home-centric economics. To get to the reasons for the high or low ratings requires some serious conversations with these consumers. The Attitudes Behind the Numbers Concerns about taxes at the federal, state and local levels continue to be a persistent source of worry. From property taxes to payroll deductions, consumers say they are seriously concerned their disposable income will shrink substantially (53 percent of respondents) or quite a bit (29 percent) over the coming year. Discernable in the responses to interviews is an underlying seething against government willing to up taxes with little concern for families. Food Prices are number 1 of the non-government concerns. What is most telling here, however, is the consumers inability to identify the reasons or the source for these higher prices. Interviews showed a significant frustration over higher food prices but an unfocused or unidentifiable cause. Some blame the food industry, others the government (corn for fuel, for example), retail stores or any number of other villains. Common, though, is a belief that government should fix the problem even though less than 2 percent had any suggestions on what that fix could be. CONTEXT: These home-centric issues are causing a serious dampening of confidence in the ability of the American economy to significantly improve. The key word is significantly. While most of those interviewed felt the overall economy might get better, there is little belief that it will return to the pre-recession levels. In effect, consumers are calling the current state of high costs and lower expectations the new normal. For automakers, the result is an unwilingness among a large number of consumers to make big-ticket purchases. These are the same people who prior to 2007 would have been prime new-car buyers. That, in turn, puts a wet blanket on any thoughts of a 17-million unit year any time soon even though all other metrics such as population expansion would historically point to that happening.

5 Page 5 CNW Research: Retail Automotive Summary Anticipated Jan Actual Jan % Chng YTD YTD % Chng Document 106m cy13 cy12 13v12 cy2013 cy v12 Franchised Dealer Sales 828, , % 828, , % Independent Dealer Sales 817, , % 817, , % Casual (Private) Sales 645, , % 645, , % Total Sales 2,291,372 2,203, % 2,291,372 2,203, % January Off to Excellent Start, F-Series Best Used Seller Again Total used-car sales in January are on track to approaching 2.3 million units, up four percent from the same month a year ago. Franchised new-car dealership used-car operations are ahead of their 2012 pace by 14 percent while independents are ahead of 15-plus percent. Continuing a trend that began in the last quarter of 2012, private party sales are down nearly 16 percent. This should reverse course as soon as Spring arrives. Top Sellers The Ford F-Series pickup has been the number one selling used vehicle for at least 13 years in a row with million sales in 2012 compared to million in Camry replaced the Silverado in the number two spot while the Chevy pickup fell to ninth. Explorer made the Top 10 for the first time since 2005 when it was third. Hybrid Used Sales As of January 1, 2013 there were 2.17 million hybrid vehicles on U.S. roads of which 762,169 individual vehicles have been sold at retail from any of the three used-car channels. Also as of January 15, there are approximately 371,000 hybrids currently on dealer lots or for sale privately in the U.S. Cy2011 Top Sellers Cy2012 Top Sellers Used Used F Series 1,124,262 F Series 1,168,227 Silverado 1,030,356 Camry 1,042,392 Camry 984,638 Accord 992,234 Corolla/Matrix 916,622 Civic 809,338 Accord 883,784 Corolla/Matrix 807,552 Focus 758,643 Focus 772,692 Altima 717,365 Ram pickup 726,377 Ram pickup 684,471 Altima 658,629 Sentra 628,820 Silverado 655,234 Civic 611,378 Explorer 619,725 Hybrid Sales Currently Sold Hybrid On Road Selling Since '00 Sales Turnover Jan. '13 2,168, , ,169 1,689,729 Of the used hybrids that have been sold, the average number of transactions since purchased new total about 1.69 million or 2.22 title transfers per sold hybrid. Of the hybrids sold, the average mileage at transfer was 43,812 miles and the average price paid was 11 percent higher than comparable non-hybrid models. Top seller: Prius, of course. Also on the list: Civic, Accord, Escape.

6 Page 6 CNW Research: Retail Automotive Summary Franchised Independent Franchised Franchised Independent Independent Document 107m Asking Price Asking Price Trans Price % of Asking Trans Price % of Asking Jan. '13 $11,336 $9,867 $10, % $9, % Jan. '12 $11,516 $10,483 $10, % $9, % Feb. '12 $11,653 $10,516 $11, % $9, % Mar '12 $11,826 $10,592 $11, % $9, % Apr 12 $11,507 $10,216 $10, % $9, % May '12 $12,119 $9,987 $11, % $9, % June '12 $11,684 $9,937 $10, % $9, % July '12 $12,136 $9,842 $11, % $8, % Aug '12 $12,103 $9,849 $11, % $8, % Sept '12 $11,458 $10,172 $11, % $9, % Oct '12 $11,419 $9,872 $10, % $9, % Nov. 12 $11,319 $9,796 $10, % $9, % Dec. '12 $11,186 $10,148 $10, % $9, % Percent Change Yr over Yr -1.56% -5.88% -2.73% -1.19% -5.73% 0.15% Month Over Month Price 0.15% 0.72% 0.00% -0.15% 0.88% 0.15% Used Prices Stagnant; Little Relief in Sight Used vehicle prices remain stagnant at both retail and wholesale. In January thus far, transaction prices are down 2.73 percent for franchised dealers compared to January of last year and flat compared to December. For independents, the story is a bit more depressing. Transaction prices are off 5.7 percent vs. a year ago and up only slightly 0.88 percent compared to December. Days Supply Part of the price problem is a growing supply of vehicles. CNW estimates that the Days Supply for January will be around 49.9 days compared to 44.2 days in January of last year a 13 percent increase. Trucks Days Supply is running around 48.6 days while passenger cars are at 51.2 days. (See Document 112m for details.) Used Vehicle Days' Supply

7 Page 7 CNW Research: Retail Automotive Summary cy12 Jan Feb March April May June July August September October November December All Sales 912,874 1,148,975 1,404,100 1,184,069 1,334,150 1,285,005 1,153,269 1,285,292 1,188,348 1,093,508 1,143,426 1,355,453 Percent Change v Previous Year 11.4% 15.7% 12.7% 2.4% 25.9% 22.0% 8.9% 19.9% 12.8% 7.1% 15.0% 9.0% Fleet and Commercial Use 39.52% 36.48% 36.92% 38.09% 36.41% 38.25% 38.73% 44.38% 41.43% 40.86% 42.18% 40.28% Total Fleet (Monthly Approximates) 360, , , , , , , , , , , ,976 Percent Change v Previous Year 32.7% 40.5% 31.6% 22.4% 63.5% 77.2% 57.8% 96.1% 33.9% 24.9% 30.7% 14.2% FLEET COMMERCIAL VALUE -- Per Unit $27,219 $27,254 $27,614 $27,943 $27,904 $28,147 $28,221 $28,794 $28,937 $29,172 $29,258 $29,316 FLEET COMMERCIAL VALUE -- Total $Bllns $9.82 $11.42 $14.31 $12.60 $13.55 $13.83 $12.61 $16.42 $14.25 $13.03 $14.11 $16.01 Percent Change v Previous Year 40.92% 48.55% 39.68% 30.13% 69.34% 84.70% 64.12% % 39.67% 31.43% 39.59% 21.43% Government Fleet 18,805 23,439 28,222 24,747 25,616 25,315 22,373 40,358 24,599 20,121 19,210 22,365 Share Gov't of Total Sales 2.06% 2.04% 2.01% 2.09% 1.92% 1.97% 1.94% 3.14% 2.07% 1.84% 1.68% 1.65% Percent Change v Previous Year -27.6% -17.5% -16.7% -18.0% 3.3% 10.8% 2.5% 83.7% 14.5% -7.5% -7.6% -14.7% Small Business Fleet and Commercial Use 35,967 47,338 59,815 51,152 59,770 58,082 53,973 60,537 57,278 54,347 57,972 66,688 Share Small Business of Total Sales 3.94% 4.12% 4.26% 4.32% 4.48% 4.52% 4.68% 4.71% 4.82% 4.97% 5.07% 4.92% Percent Change v Previous Year 34.3% 29.1% 24.1% 13.1% 72.4% 81.4% 63.8% 73.2% 42.4% 56.1% 62.9% 36.1% Medium Business Fleet and Commercial Use 88, , , , , , , , , , , ,919 Share Medium Business of Total Sales 9.72% 10.16% 10.72% 10.53% 10.71% 9.68% 9.78% 9.17% 9.24% 9.56% 9.82% 9.88% Percent Change v Previous Year -3.6% 57.5% 67.6% 48.5% 104.6% 88.1% 66.6% 77.1% 68.7% 73.0% 40.8% 23.2% Large Business Fleet, Daily Rental, Commer. 217, , , , , , , , , , , ,004 Share Large Business of Total Sales 23.80% 20.16% 19.93% 21.15% 19.30% 22.08% 22.33% 27.36% 25.30% 24.49% 25.61% 23.83% Percent Change v Previous Year 71.0% 45.5% 26.1% 19.8% 53.5% 81.5% 60.4% 110.2% 24.8% 11.2% 25.7% 9.8% All Sales Percent Change v Previous Year Fleet and Commercial Use Total Fleet (Monthly Approximates) Percent Change v Previous Year FLEET COMMERCIAL VALUE -- Per Unit FLEET COMMERCIAL VALUE -- Total $Bllns Percent Change v Previous Year Government Fleet Share Gov't of Total Sales Percent Change v Previous Year Small Business Fleet and Commercial Use Share Small Business of Total Sales Percent Change v Previous Year Medium Business Fleet and Commercial Use Share Medium Business of Total Sales Percent Change v Previous Year Large Business Fleet, Daily Rental, Commer. Share Large Business of Total Sales Percent Change v Previous Year Full Year ,770, % 31.74% 4,053, % $26,940 $ % 300, % -33.6% 451, % 20.4% 924, % -25.8% 2,378, % -0.1% Full Year ,488, % 39.42% 5,711, % $28,362 $ % 295, % -1.7% 662, % 47.0% 1,439, % 55.7% 3,313, % 39.3% Fleet-Commercial Sales Jump 41% While new-car overall sales were up 13.5 percent, commercial-fleet sales climbed nearly 41 percent compared to 2011 to 5.7 million units or 39 percent of total deliveries. As noted last month, this includes all vehicles that are used at least half of the time for business purposes including retail sales to contractors, retail shops, etc. The average value of those vehicles was $28,362 excluding upfitting bringing the total value of Fleet- Commercial to nearly $162 billion, a whopping gain from cy11 s $109 billion.. With the exception of government sales, all categories of F-C sales were up by double digits. CNW is estimating that 2013 s F-C business will slow as a share of total sales with increases in the 10 to 14 percent range rather than the 39 to 56 percent of Primary reason: Businesses spent much of this past year bringing its recession-aged fleets up to desired levels and will return to an historical replacement cycle.

8 Page 8 CNW Research: Retail Automotive Summary Kontos Kommentary Summary Some residual effects of Superstorm Sandy may be evident in the relatively strong wholesale prices seen during December, with average prices rising by over three percent relative to November. Moreover, December has been a seasonally stronger month than November in recent years, notwithstanding, or perhaps because of, the tendency of some consignors to hold cars during the month. Those consignors who chose to sell rather than hold were rewarded with stronger prices, as well as capitalizing on the time value of money. Details According to ADESA Analytical Services monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class 1, wholesale used vehicle prices in December averaged $9,849 up 3.1% compared to November and down a modest 0.2% relative to December Cars, trucks and crossovers all showed strong monthly gains. Prices for used vehicles remarketed by manufacturers rose by 3.2% month-over-month in December, and were up 6.9% year-over-year, indicating continued good absorption of off-rental program vehicles. Fleet/lease consignors experienced a 2.8% increase in December, resulting in prices being up 2.0% year-over-year. Dealer consignors saw a 3.5% average price increase versus November, leaving prices being down 1.7% versus December For the full year, wholesale prices in 2012 versus 2011 were up 4.9% for manufacturers, but down 0.4% for fleet/lease consignors, and 1.7% for dealers. This is explainable in part by the more significant lack of latemodel used vehicles generally sold by manufacturers versus the more abundant supply of older models typically sold by fleet/lease companies and dealers. Wholesale Used Vehicle Price Trends Average Prices ($/Unit) Latest Month Versus: Dec-12 Nov-12 Dec-11 Prior Month Prior Year Total All Vehicles $9,849 $9,554 $9, % -0.2% Total Cars $8,930 $8,602 $8, % 0.6% Compact Car $6,990 $6,848 $6, % 0.9% Midsize Car $8,034 $7,789 $7, % 2.6% Fullsize Car $7,693 $7,674 $7, % 2.7% Luxury Car $12,542 $11,807 $13, % -3.7% Sporty Car $12,488 $11,959 $12, % -0.3% Total Trucks $9,889 $9,666 $10, % -1.2% Mini Van $6,936 $6,971 $7, % -5.0% Fullsize Van $8,915 $9,471 $9, % -4.2% Mini SUV $10,930 $10,592 $10, % 2.1% Midsize SUV $6,763 $6,828 $7, % -5.6% Fullsize SUV $11,684 $11,344 $11, % -2.6% Luxury SUV $19,286 $18,631 $20, % -5.9% Compact Pickup $7,229 $7,158 $7, % -5.7% Fullsize Pickup $11,702 $11,398 $11, % 3.8% Total Crossovers $13,117 $12,777 $13, % -1.4% Based on data from CNW Rearch, retail used vehicle sales in December were up 16.3% year-over-year for franchised dealers and 18.4% for independent dealers, and up by 4.9% month-over-month for both groups combined. For the year, retail used vehicle sales were up 5.0% versus 2011, yielding a total of almost 29 million units sold (broken out by about 15 million franchised dealers and 14 million independent dealers). December sales of certified used vehicles were down a modest 0.7% versus a strong prior year December figure, and up by 5.7% versus prior month based on data from Autodata. Total certified pre-owned (CPO) sales in 2012 broke the 1.8 million annual threshold for the first time.

9 Page 9 CNW Research: Retail Automotive Summary Jean Halliday s Chevrolet Takes a New Road Another Attempt at Global Identification Lots of goings on in advertising at Chevrolet these days. The latest news is that General Motors' volume brand is dropping the ad tag it has used since fall 2010: Chevy Runs Deep. Instead Chevrolet will introduce Find New Roads as its new ad theme in ads arriving in February, first here in the USA then throughout the world. The word from Chevy's global marketing VP Alan Batey is that now is the time to break this initiative because the brand will launch more than 20 vehicles all over the planet this year. We are continuing to grow globally, especially in key emerging markets, and Find New Roads will help us drive even more consistency both internally with our employees and externally with customers,. he said. Ugh oh, so GM plans to use this slogan as an internal guide post for developing new models and technologies. Sound familiar? It should because it's the same thing Toyota did with its previous ad tag Moving Forward. The line was meant as a global rallying cry for employees, as well as for dealers and consumers. That's a pretty big job for a little slogan, don't you think? By the way Toyota just dropped that Moving Forward line which bowed in fall of 2004, in favor of Let's Go Places, which I panned in an earlier AdRap. Run Deep Didn t It didn't take Chevy's Run Deep very long to run into trouble with the client. Out less than a year, GM's then CMO Joel Ewanick said the line wasn't resonating with people and that some of the ads from Chevy's agency, Goodby Silverstein and Partners, San Francisco, didn't clearly explain the meaning of the slogan. Runs Deep also wasn't converting buyers to the brand. Alan Batey Continued next page

10 Page 10 CNW Research: Retail Automotive Summary Continued from previous page Need to mention that the new tag is pretty darn close to Find your own Road, the slogan used by Saab USA in the mid-90s from Angotti, Thomas, Hedge in New York. That line worked for Saab because the niche brand was embraced by independent-minded buyers. Let's take a look at Chevy's ad tag history. After Ewanick arrived at GM in spring 2010, he quickly ditched the line Excellence for All for the brand from its short-termed agency, Publicis, tapped by GM's former management. That tag succeeded American Revolution, which had almost a 7-year run and came from Campbell-Ewald in Warren, Michigan. Campbell-Ewald, Chevy's agency of record for more than 90 years, also developed the iconic Like a Rock in the early 1990s, Baseball, Hot Dogs, Apple Pie and Chevrolet in 1974 and See the USA in your Chevrolet that was used from 1951 through How crucial are ad tags? Not very. Consider this: Honda's Acura brand didn't use one for 9 years before it started using Advance for the MDX in fall Ad tag lines don't do much or mean much if they aren't relevant to the brand, like the new ones (and old ones for that matter) for both Chevrolet and Toyota. Both of these new ad tags are generic and could be used for other car brands. Both would arguably make more sense for nav systems. Let's face it, neither Chevrolet's nor Toyota's new lines are intrinsically linked to the brands they represent. That's a big problem that will translate to virtually NO consumer recall of the lines even after several years- if they last that long. Chevy's first work with the new ad tag is due this quarter from Commonwealth, the brand's, 10-month-old global creative agency. Commonwealth is actually a sort of hybrid shop since it is a venture between two arms of two giant holding companies: Omnicom Group's Goodby and IPG's McCann Erickson in New York. Goodby had the entire USA creative account until GM decided to consolidate the account and hold a review. So Goodby is teamed up with McCann for Chevy work in all markets except the major, fast-growing markets of China, India and Uzbekistan. But Commonwealth took a major blow when Chevrolet recently decided to shift oversight of the Silverado pickup to Publicis Groupe's Leo Burnett in Chicago. The full-size pickup is a crucial part of the Chevrolet brand, its image and GM profits. And the clock is ticking to develop a launch blitz for the next generation of the Silverado, which arrives in the second quarter as a 2014 model. Client Not Happy With Commonwealth Agency The folks at Chevrolet claim the move is to help the Commonwealth start-up, since there's so many launches it has to do this year. But make no mistake - this is a bitch slap to Commonwealth and that the client wasn't happy with the direction of the creative ideas for the truck's launch. By the way, the top creative on Chevy at Goodby,'s Detroit office, Rick Dennis, is no longer there. Goodby had started to feel some heat on the Chevy account back in the summer of 2011, when Ewanick said the agency's ads weren't consistent. Burnett USA, based in Chicago, already handles creative for Buick and GMC, including GMC's Silverado sister, the Sierra. Burnett USA's President Rich Stoddart knows a thing or two about truck marketing, having launched the new Ford F-150 during his reign as marketing director there before returning to the agency world in How important is the new Silverado's launch? Well, GM spent more than $100 million in media to launch its newest Silverado back in the fall of 1998, which then marked Chevrolet's biggest blitz ever. And in the fall of 2006, Chevy spent almost $400 million for the arrival of the redone 2007 pickup, its last redo. The competition in the full-size pickup segment hasn't abated either, with Chrysler Group's new Ram making inroads and Ford Motor trying to upstage GM at the North American International Auto Show in Detroit in January by showing the first concept of its 2015 Ford F-150. Interesting times, indeed.

11 Page 11 CNW Research: Retail Automotive Summary % Change % Change % Change % Change % Change cy02 02 Rank cy04 04 Rank 04 v 02 cy05 05 Rank 05 v 02 cy06 06 Rank 06 v 02 cy07 07 Rank 07 v 02 cy12 12 Rank 12 v 07 Toyota % % % % % Honda % % % % % GM % % % % % Ford % % % % % Nissan % % % % % VW % % % % % Hyundai % % % % % Chrysler % % % % % Subaru % % % % % BMW % % % % % Mercedes % % % % % Mazda % % % % % Volvo % % % % % Kia % % % % % Mitsubishi % % % % % Saab % % % % Suzuki % % % % Isuzu % % % % Overall Avg % % % % % Capturing the Good Citizen Kudos of Consumers Supports Sales Goals Volt sales may be lagging, but it played a major part in keeping General Motors into the top three Good Corporate Citizens. In the past, local dealers carried the load by supporting ground-zero events and venues like Little League Baseball and local charities. For Toyota, the Prius and an ever expanding hybrid lineup along with similar local community projects helped boost it from number 4 in 2002 to first place in Looking at the other end of the spectrum, Izusu and Suzuki perennial bottom of the pack brands are no longer with us which also matches their tight-budget lack of strong environmentally friendly (perception) products and low-spending on local events. Marketing Dollars And Environment Friendly Using a 10-point scale, CNW asked a cross section of consumers about various companies and their image of being corporately responsible. This study is conducted occasionally but not annually. While virtually every automaker has a budget set aside for charities and good works, only about half dip into their large marketing budgets for local-specific promotions relying, instead, on the dealer body to pick up the at-home slack. There seems to be a strong correlation between such local spending by dealers and the score received by the automaker. But the broader picture began to include products in the early 2000s. Prius helped boost Toyota from number 4 to Number 1 with scores in 2002 of 8.43 jumping to 9.13 in Ford saw significant year-over-year declines from 2002 to After introducing a series of fun, high-mileage vehicles, hybrids and the Eco engine, those numbers reversed themselves and pulled Ford from 8 th in 2007 to 4 th in Translate into Sales? Harder to correlate is the sales benefit of such Good Citizen scores. What is known, however, is that those who give a score of 8- plus to a brand are twice as willing to consider a product from that company than those who give ratings under 8. While consideration doesn t always translate into a sale, it at least puts the brand on a shopping list. And, as the Purchase Path Studies have long shown, is a sizeable chunk of the marketing battle. CONTEXT: Sponsoring a girl s softball team or donating a car to a local auction is only a small piece of the marketing puzzle. But an important one because it lays groundwork that can offset the unexpected bad news of a recall, for example. Toyota has played that card extremely well.

12 Page 12 CNW Research: Retail Automotive Summary Aspiring to a Brand At what age do people begin aspiring to a particular automotive brand? It s one of those studies CNW has conducted for a decade for both fun and insight. The goal here isn t to determine if a person can or can t afford to make the purchase of his or her heart throb vehicle, only when such a potential love affair begins. (For the complete list, see Document 1582 at CNWbyWEB.com) Porsche Rules Way out of reach for most 20 year olds, but Porsche snagged the youngest aspirations of all car brands at 19.7 years of age. That s down from 20.3 years in cy10 and 22.2 years in cy05. Lincoln Number 1 At the other end of the list, Lincoln sees a 6 percent increase in age of aspirers vs. cy10 from 44.2 years to 46.9 years. That displaces Buick as the number 1 brand with the oldest aspirers in both of the previous years. Oldest 10 Aspire Age '05 Aspire Age '10 % Chng v 05 Aspire Age '12 % Chng v '10 Lincoln car % % Acura truck % % Buick truck % % Acura car % % Lincoln truck % % Mercedes truck % % Chrysler truck % % Volvo car % % Buick car % % Mercedes car % % Youngest 10 Hyundai truck % % Kia truck % % Hyundai car % % Mazda car % % VW car % % Mini % % Jeep truck % % Scion truck % % Scion car % % Porsche car % % An interesting note to the data is Hyundai. Over the years, the corporate philosophy was to go upscale with both its products and the pricing. That meant appealing to older consumers who could afford the upmarket models. It s been a successful approach for the Korean brand. And it s seen a parallel increase in the age of aspirers. While still among the youngest 10 automotive brands (both cars and trucks), the average aspiration age has grown from 19.7 years in 2005 to 22.7 years in 2010 and 25.9 years in Over the coming years, Hyundai is going to face the issue of what to do with an older demographic owner base and what impact will that have on younger consumer eventually wanting the brand.

13 Page CNW Research: Retail Automotive Summary Low-Priced Vehicles Taking a Hit as Share of Total Sales; Buyers Looking for Image Calendar Year 2012 ended on a down note for budget and economy cars, both showing the lowest share-of-total-sales of the year. While this is partially the result of late-year declines in fuel prices, a further analysis of reasons for making the particular acquisition was the desire for buying a vehicle that projects a positive image. Even among the Budget and Economy car segments, consumers were picking models in the 87 th percentile of maximum price, well above the historic 59 percent and recession-era 41 percent. At the other end of the share-of-sales spectrum, upscale segments ranging from Large Utility Vehicles to Premium Mid-Range Cars had a solid and in most cases highest share of year month. CONTEXT: As the economy improves, these trends should continue, as long as fuel prices are reasonably stable, much to automakers distress. Budget/Economy cars are needed for mandated fuel economy standards. To sell more will require greater incentives. Budget Car 2.09% 2.13% 1.96% 1.93% 1.70% 1.54% 1.68% 1.81% 1.66% 1.66% 1.56% 1.40% Economy Car 12.54% 13.45% 13.81% 13.85% 12.34% 12.41% 12.24% 12.87% 12.13% 12.59% 11.86% 11.52% Entry Level Utility Vehicle 12.48% 12.09% 11.40% 11.87% 11.31% 11.78% 12.21% 12.04% 12.15% 11.11% 11.66% 10.32% Electric Car 0.28% 0.33% 0.21% 0.14% 0.13% 0.16% 0.17% 0.18% 0.20% 0.42% 0.27% 0.31%

14 Page 14 CNW Research: Retail Automotive Summary Full Size Pickup 13.25% 10.90% 10.56% 10.37% 10.19% 10.46% 10.58% 10.78% 11.63% 11.96% 11.64% 13.31% Full Size Van 1.56% 1.71% 1.68% 1.99% 2.05% 2.05% 2.08% 1.66% 1.42% 1.60% 1.65% 1.83% Luxury Car Lower Midrange 2.10% 2.07% 1.32% 1.35% 1.38% 1.33% 1.46% 1.52% 1.67% 1.73% 1.21% 1.47% 10.78% 11.04% 11.43% 11.87% 12.44% 11.96% 10.76% 10.14% 9.23% 9.27% 9.89% 9.54% Lower Mid Range Utility Vehicle 8.51% 8.20% 7.99% 8.34% 8.20% 8.28% 8.77% 8.53% 8.60% 8.70% 9.63% 9.90% 1.62% Large Utility Vehicle 2.15% 1.46% 1.49% 1.66% 1.74% 1.79% 1.33% 1.38% 1.52% 1.65% 1.89%

15 Page 15 CNW Research: Retail Automotive Summary Midi-Van 0.24% 0.20% 0.21% 0.24% 0.29% 0.21% 0.23% 0.26% 0.25% 0.24% 0.25% 0.28% Mid Range Utility-Vehicle 2.66% 2.70% 2.32% 2.27% 2.35% 2.17% 2.34% 2.42% 1.98% 2.20% 2.26% 2.31% Minivan Near Luxury Car 3.47% 3.86% 3.85% 4.01% 4.14% 3.72% 3.78% 4.28% 4.05% 3.66% 3.36% 3.60% 3.70% 3.52% 3.35% 3.35% 3.06% 3.51% 3.80% 3.71% 3.67% 3.83% 4.16% 3.84% Premium Car Premium Mid-Range Car 0.37% 0.28% 0.30% 0.29% 0.31% 0.26% 0.37% 0.34% 0.24% 0.26% 0.28% 0.30% 4.39% 4.64% 4.24% 4.63% 4.05% 4.52% 4.30% 3.93% 3.76% 3.86% 3.74% 3.93%

16 Page 16 CNW Research: Retail Automotive Summary Premium Sporty Car Premium Utility Vehicle 0.31% 0.34% 0.34% 0.33% 0.35% 0.35% 0.34% 0.33% 0.32% 0.25% 0.25% 0.27% 3.24% 2.73% 2.50% 2.76% 2.72% 2.74% 2.72% 2.78% 2.91% 3.27% 3.69% 3.82% Standard Mid Range Car Small Pickup 12.87% 12.56% 12.71% 12.42% 12.43% 12.46% 11.85% 11.54% 11.21% 12.10% 11.28% 10.74% 2.54% 2.23% 2.07% 1.91% 1.91% 1.93% 2.02% 1.86% 1.79% 1.70% 1.69% 1.56% Sport Utility Pickup 0.19% 0.17% 0.16% 0.15% 0.17% 0.17% 0.19% 0.19% 0.14% 0.23% 0.17% 0.22% Touring Car 2.43% 2.39% 2.64% 2.07% 2.19% 2.28% 1.94% 1.92% 1.75% 1.70% 1.75% 1.73%

17 Page 17 CNW Research: Retail Automotive Summary Traditional Car 0.07% 0.05% 0.03% 0.03% 0.02% 0.02% 0.02% 0.01% 0.03% 0.02% 0.02% 0.04% Ultra Upscale Car 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.01% 0.01% Ultra Luxury Sporty Car Upper Mid-Range Utility 0.05% 0.04% 0.04% 0.05% 0.04% 0.04% 0.05% 0.04% 0.05% 0.05% 0.04% 0.05% 2.23% 1.81% 1.90% 1.61% 1.88% 1.97% 1.98% 2.07% 2.30% 1.79% 1.54% 1.37% Ultra-Premium Utility Vehicle 0.04% 0.05% 0.02% 0.04% 0.06% 0.05% 0.03% 0.05% 0.06% 0.09% 0.09% 0.08% Upper Premium Sporty Car 0.17% 0.18% 0.19% 0.16% 0.16% 0.19% 0.20% 0.22% 0.15% 0.17% 0.17% 0.12%

18 CNW Research: Retail Automotive Summary Back Page *Deliveries not sales Jan 1-15 Jan 1-15 % Chng Actual Sales Jan 13 Full Mo cy2013 cy v 12 Jan '12 Sales Change New Cars Extension Detroit 3 96,436 86, % 137, , % Asian 152, , % 272, , % European 44,116 32, % 65,064 87, % Ttl Pass. Cars 293, , % 475, , % New Trucks Detroit 3 142, , % 265, , % Asian 72,493 68, % 145, , % European 8,126 7, % 26,224 26, % Ttl Lt. Trucks 222, , % 437, , % Ttl Industry 515, , % 912,874 1,027, % Jan 1-15 Full Dec % Chng Prev Mo Prev Mo % Chng cy2013 cy v 12 cy2012 cy v 11 Lease Share 29.1% 28.8% 1.0% 28.5% 26.4% 8.0% Floor Traffic - New % % Floor Traffic - Used % % Jan 1-15 Prev Yr % Chng % Chng Pent Up Demand Units cy2013 cy2012 Same Mo '12 Prev Mo Jan '13 94,250 Avg. New MSRP $37,386 $35, % 0.49% Jan '12 106,300 Total Discounts $5,223 $5, % 0.71% % Change -11.3% Manufacturer Incentives $3,880 $4, % 1.14% Dealer Incentives $1,343 $1, % -0.53% Purchase Delay Months Core Transaction Price**** $32,163 $30, % 0.45% Jan ' % Mfg Incentive of MSRP 10.38% 11.43% -9.2% Jan ' % Ttl Discounts of MSRP 13.97% 15.96% -12.5% % Change -10.2%