Leaseurope Car Finance Trends & Comparison across the CEE Region. Manuela Pachoinig Head of Vendors and Cross Border. Ljubljana, 15 April 2011

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1 Leaseurope 2011 Car Finance Trends & Comparison across the CEE Region Manuela Pachoinig Head of Vendors and Cross Border Ljubljana, 15 April 2011

2 Agenda Executive Summary Car Sales Statistics and comparison through SECEE countries - Outlook Changes in the financing development Advanced Powertrain Technology Summary 2

3 EXECUTIVE SUMMARY Car Industry hit hard by the crisis recovery has already started, but with different intensity in the different markets Growth in SECEE 5 times bigger than in WE Russia has the biggest recovery and growth potential Strong demand for smaller new cars and lower fallback on used cars More cash buyers and lower financing volumes as well as delivery issues SECEE region low demand on Powertrain Technology 3

4 Agenda Executive Summary Car Sales Statistics and comparison through SECEE countries - Outlook Changes in the financing development Advanced Powertrain Technology Summary 4

5 SECEE markets selectively hit by ongoing economic turmoil Overall 13% CAGR downturn in the industry in Car market size and growth by UCL country (000 units), 2010F Avg. -13,2% DE Positive growth Moderate / avg. downturn Significant downturn Units (000), 2010F RU IT PL AT RO UA HU BG HR SRB SK CZ LV SI Avg. ~450 K 5 Source: UCL internal analysis CAGR (%)

6 All brands hit by ongoing economic downturn Japanese brands underperforming top EU / other Asian brands Car market size and growth by player (000 units), 2010F Avg. -10,9% VW 800 Units (000), 2010F Honda Mitsubishi 0 Opel Toyota Chevrolet Nissan Mazda Suzuki Volvo Subaru Fiat Ford Renault Mercedes Bmw Skoda Peugeot Audi Hyundai Citroen Kia Dacia Seat Alfa Avg. ~277 K 6 Source: UCL internal analysis CAGR (%)

7 Car industry in SECEE perimeter accounts for 3.0 million new registered vehicles and registered financing Car (passenger cars and LCV) market size in CEE perimeter 1 (000 units), 2010F 63% 12% 6% 6% 4% 2% 2% 2% 1% 1% 1% ~0% ~0% 100% Leasing Loans Cash Cash or loans (non-leasing) N/A RU PL UA CZ RO SK SI HU HR SRB BG BA LV Tot Excluding EE and TR Note: overestimate of leasing share of new registered vehicles in countries where data on second-hand vehicle leasing financing are not available Source: UCL internal analysis

8 Agenda Executive Summary Car Sales Statistics and comparison through SECEE countries - Outlook Changes in the financing development Advanced Powertrain Technology Summary 8

9 In Eastern Europe market growth will be 2x Worldwide growth and 5x Western European growth Cars and LCVs Market Forecast CAGR % units in ,2 million 14,5 million 72,0 million 8,4% CAGR% ,3% 1,6% Eastern Europe (incl.ru) Western Europe Worldwide 9 Source: IHS Global Insight (February 2011)

10 Market size will reach 4.5 million units in 2015 Car (passenger cars and LCV) market size in CEE perimeter 1 (000 units) F 2012F 2013F 2014F 2015F 10 Latvia Bosnia Bulgaria Serbia Croatia Hungary Slovenia Slovakia Romania Czech Republic Ukraine Poland 1. Excluding EE and TR Note: overestimate of leasing share of new registered vehicles in countries where data on second-hand vehicle leasing financing are not available Source: UCL internal analysis Russia

11 Russia is expected to outperform CEE countries with a growth from 1.9 to 3.1 million units in 2015 Car (passenger cars and LCV) market size in CEE perimeter 1 (000 units) F RU PL UA CZ RO SK SI HU HR RS BG BA LV Excluding EE and TR Note: overestimate of leasing share of new registered vehicles in countries where data on second-hand vehicle leasing financing are not available Source: UCL internal analysis

12 RUSSIA 12 Source: Ernst & Young

13 Russia general economic recovery and automotive industry Economy recovery by 3,9 % through - revival in internal demand - improvement of labour and credit market Macroeconomic policy of the government focused on - Stabilizing the financial market - large scale privatization (5500 companies) to modernize the public sector - likelyhood to gain excession to World Trade Organization 2011 Automotive Industry: 2010 already return to growth Industry is in 3rd place only behind insurance and banking (globally 18th) Government initiatives to support local production - Scrapping package - Subsidized interest rates on local produced cars - Increased state orders to domestic car producers 13 Source: Ernst & Young

14 RUSSIA mid and long-term market drives Higher demand for cars, because of aging car fleet and low car density Increased production volume by automative manufacturers in Russia Planed state allocation to subsidized car lending Long term strategy of partnerships with foreign producers 14 Source: Ernst & Young

15 RUSSIA-Car financing development in 2010 Every second passanger car was financed Decrease in interest, due to lower funding Loosening of credit criteria Improved liquidity position of Financial Institutions State program for subsidized interest Rates 15 Source: Ernst & Young

16 Three top players in CEE perimeter VW, Renault and Ford Car market size by player in CEE (000 units), 2010F Skoda Renault Ford Chevrolet VW Kia Hyundai Toyota Nissan Opel Fiat Peugeot Dacia Citroen Mitsubishi Suzuki Honda Mazda Bmw Other(1) 16 (1) Including Lada (571), Gaz (77), UAZ (49) Source: UCL internal analysis

17 POTENTIAL CAR MARKET COMPARISON WITHIN CEE Population in Mio Cars per 1000 people Car Sales Strongest Brands Production/Sales Bulgaria 7,6 632 ~ Hyundai, Toyota, Peugeot Volkswagen Czech Republic 10,2 505 ~ Skoda, Ford, Volkswagen, Renault Hungary 9,9 360 ~ Suzuki, Ford, Volkswagen, Opel Poland 38,5 511 ~ Fiat, Skoda, Volkswagen, Ford Romania 22,2 247 ~ Dacia, Hyundai, Volkswagen, Ford Russia ~ Lada, Chevrolet, Ford, Hyundai Slowakia 5,4 357 ~ Skoda, Renault, Peugeot, Kia Slovenia ~ Renault, Vokswagen, Citroen, Opel Turkey ~ Fiat, Ford, Renault, Hyundai Ukraine ~ Lada, Daewoo, Hyundai 17 Source: UCL internal analysis

18 CIS COUNTRIES % reduction of the market with the exception of Uzbekistan with a marginal increase 18 Source: Ernst & Young

19 Agenda Executive Summary Car Sales Statistics and comparison through SECEE countries - Outlook Changes in the financing development Advanced Powertrain Technology Summary 19

20 CHANGES IN FINANCING BEHAVOUR Financing acquired at the Point of Sale droped by 13,1 % between , alltogether financing fell by 6,1 % Smaller cars where bought (Scrappage package) Increase on cash sales Differences for new and used cars - New cars: Drop of financing by 18,8 % - Used cars: Drop of financing by 8,9 % Big differences country by country (moderate growth in the 6 biggest WE countries, huge decline in some CEE countries) 20 Source: Finaccord,2010

21 Agenda Executive Summary Car Sales Statistics and comparison through SECEE countries - Outlook Changes in the financing development Advanced Powertrain Technology Summary 21

22 POWERTRAIN TECHNOLOGIES Manufacturers develop alternative solutions in several areas - Electricity - Gas - Improvment of conventional engines - Other areas (e.g. lighter vehicles) Brings new companies within the automotive industry, e.g. - Telecom companies (advanced rooming and safty technology, connection to police/hospitals etc.) - Renewable energy companies - Utility companies (e.g. Electric ind. energy peak demand etc.) - Large componant manufacturers (plug in hybrid and electric vehicles) CEE countries still far behind in the development but first initiatives have started 22

23 23 POWERTRAIN TECHNOLOGIES - Initiatives

24 POWERTRAIN TECHNOLOGIES Reasons for CEE slow path They are viewed as low cost production countries with difficulties already in producing traditional cars suppliers are not investing in advanced technologies Missing purchasing power for EV s Little demand for owning a second car Little government support to focus on this industry First projects are done - SK/Volkswagen production of E-up (electricity) launch Turkey/Renault production of Electric car launch

25 Agenda Executive Summary Car Sales Statistics and comparison through SECEE countries - Outlook Changes in the financing development Advanced Powertrain Technology Summary 25

26 SUMMARY Recovery is ongoing in most of the countries, but definitely with different speed and intensity Huge growth potential in the CEE in the coming years Russia is having the biggest potential, but also other countries, due to low density are having huge potential Financing wise there is a necessity for adjusting the products, since - more cash buyers are there - smaller volumes, due to increased purchase of low volume cars - used cars are going to be an issue, but due to delivery shortage also a lower availability on used cars is going to be an issue More production volume will come to the CEE countries, so more investments will be done Powertrain technology is going to come, but still years away 26

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