GLOBAL AFTERMARKET

ACMA CONFERENCENew Delhi

India

PRESENTATIONBY

JEFF OSBORNE CEO

RETAIL MOTOR INDUSTRY ORGANISATION

Belonging Is Better Business

South African Motor Industry

Framework of Presentation

Organisations representing the Automotive industry sectors in SA

Auto Industry in the Global context

SA Automotive sector as share of GDP

Development of competition in SA passenger car market

SA vehicle export trends

SA vehicle sales

Structure of the industry in SA and manufacturers market share

Government support programs to Automotive industry

Framework of Presentation - cont

SA Components aftermarket

Component Exports

SA Vehicle Parc requiring components

Value of the parts market

Distribution channels

Market Dynamics

NAAMSA – Representing the Automotive Manufacturers in SA (29 000 Employees)

NAACAM – Representing the Automotive Component Manufacturers in SA (70 000 Employees)

RMI – Representing the Retail Motor Industry (260 000 employees)

Organisations Representing the Automotive Industry

Vehicle Sales by Region 2007 - 2011

Group Treasury – K-FTU – NI/SM/MO – 6009/559.6note: partly estimated03/2012

Sales (million units)

Central andEastern Europe

Western Europe

North America

South America

Asia-Pacific

Rest of World

Source: VDA, IHS Global Insight, Automobile Manufacturers Ass., own calc.

SA Auto Industry in the Global Context

6

Structure of Car / CV Production by Region1970 – 2011 (SA .66%)Structure in %

Group Treasury – K-FTU – NI/OL/MO – 6008/176.10b JP03/2012

Rest of World

Japan

WesternEurope

NorthAmerica

millionvehicles

29.539 39.145 48.468 57.814 77.612 80.274note: partly estimated

Source: VDA, IHS Global Insight, own calculations

SA Auto Industry in the Global Context

7

Ranking of Most Important Production Countries January - December 2011 (SA 0.53)

million units

Group Treasury – K-FTU – NI/MO – 6008/113.17c JP02/2012

Rank2011 (2010)

CVCars

Anmerkung: teilweise geschätzt

1. (1.)2. (3.)3. (2.)4. (4.)5. (5.)6. (6.)7. (7.)8. (9.)9. (8.)

10. (10.)11. (11.)12. (13.)13. (14.)14. (12.)15. (16.)16. (15.)17. (20.)18. (19.)

note: partly estimated, car production USA, Canada and Mexico = cars & LCV

Source: VDA, Polk Germany, press information

SA Auto Industry in the Global Context

8

Year 2008 2009 2010 2011Global vehicle

Production70.52 Mio 61.7 Mio 77.9 Mio 80.1 Mio

SA vehicle Production

0.563 Mio 0.374 Mio 0.472 Mio 0.533 Mio

SA share of Global

Production

0.8% 0.61% 0.61% 0.66%

SA Auto Production vs Global Production

SA Auto Industry in the Global Context

9

Auto exports as % of total exports

YearYear 19951995 20002000 20072007 20082008 20092009 20102010 20112011

Total SA ExportsTotal SA Exports(R Billion)(R Billion) 102.1102.1 210.4210.4 494.4494.4 656.0656.0 515.4515.4 584584 694.2694.2

Total Automotive Total Automotive ExportsExports(R Billion)(R Billion)

4.24.2 23.423.4 67.667.6 94.294.2 61.061.0 69.569.5 82.282.2

Automotive Automotive exports as a % of exports as a % of total SA exportstotal SA exports

4.1%4.1% 11.1%11.1% 13.7%13.7% 14.4%14.4% 11.8%11.8% 11.9%11.9% 11.8%11.8%

SA Auto Industry in the Global Context

10

Growth in Auto IndustrySA vs Global

Year Global Production (Mio units)

SA Production (Mio units)

SA Exports (Mio units)

SA Component Exports (R Bio)

2000 57.8 0.357 0.068 12.6

2011 80.1 0.533 0.273 38.8

% Growth2011 vs 2000

39% 59% 302% 208%

2012 FC 83 0.585 0.308 43

11

5.5

6.0

6.4 6.4

6.87.0

7.5 7.5

6.8

7.3

5.9

6.2

6.87.0

5

5.5

6

6.5

7

7.5

8

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012FC

% S

hare

of G

DP

Automotive Sector Share of GDP

How Important is the Auto Sector in SA?

12

Development of Competition in SA Passenger Car Market

Brands & Models: January 1994 to January 2012January 201260 Brands1,375 models25% Import Duty

January 199417 Brands192 Models115% Import Duty

13

15 764

68 031

171 237

284 211

174 947

239 465

272 457301 000

1995 2000 2007 2008 2009 2010 2011 2012 FC

SA Automotive IndustryDevelopment of FBU Export

Volume - Units

Uni

ts

14

SA Passenger & LCV Market 1950 to 2011

LCV Passenger15

16

Structure of the Industry in SA – OEMs, Importers &

Distributors Major multinational automotive corporations – BMW, Ford, GM,

Mercedes Benz, Nissan, Renault, Toyota and Volkswagen – are operating in South Africa as manufacturers through wholly owned subsidiaries

All other major marques are imported – European (Fiat, Jaguar/Land Rover, Maserati, Peugeot/Citroen, Porsche, Volvo), Japanese (Daihatsu, Honda, Mitsubishi, Subaru, Suzuki), USA (Chrysler), Korean (Daewoo, Hyundai, Kia), Indian (Mahindra, Tata) with Chinese brands entering the SA market (Chery, Chana, Foton, GWM)

17

Market Share Figures 2009 to 2012 Total Sales

Brand 2009 2010 2011 % Change

Toyota 22.9 20.5 19.2 -1.3VW/Audi 13.3 14.3 17.5 3.2GMSA 11.0 11.2 12.0 0.8Ford Motor Co 9.7 8.8 8.8 0.0Nissan 7.1 7.0 7.0 0.0Mercedes-Benz SA 7.6 6.9 5.6 -1.3BMW group 4.8 4.9 4.6 -0.3Renault 1.8 2.0 1.9 -0.1Honda 2.1 1.7 1.4 -0.3Chrysler SA 1.0 1.0 1.2 0.2Land Rover/Jaguar 1.2 1.1 1.1 -0.1Suzuki Auto 1.0 1.0 1.0 0.0PCSA 0.6 1.0 0.9 -0.1Other 5.4 5.0 4.9 -0.5AMH 10.5 13.6 12.9 -0.7Total 100 100 100 100

Government Support Programs to the Automotive Industry

Phase 6 Local Content Programme

Motor Industry Development Programme (MIDP)

Automotive Production Development Plan

(APDP)

1989 – 1994

1995 – 2012

2013 – 2020

1989 202020102000

18

3.3

12.6

39.1

44.1

27.930.8

38.842.7

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

1995 2000 2007 2008 2009 2010 2011 2012 FC

R Bi

oSA Automotive Industry

Development of Component Exports - R Bio

19

Average age of vehicle parc is 9.9 years

Vehicle parc in 2011 was 8 108 978 vehicles

The vehicle parc is made up of 89 manufacturers and 23831 models

SA Vehicle Parc as at December 2011

Value of Parts market

Value of replacement parts market in 2011 was R27 078 306 000 (US$3 384 788 250)

Slow growth expected for next few years

Parts Market – Value

Trade value in Rands (R000)

Passenger LCV Commercial Passenger LCV CommercialService 725 297 398 634 628 892 1 752 823 774 462 442 381 1 001 420 2 218 263 3 971 086 Engine 619 580 316 976 1 451 186 2 387 742 1 259 698 771 810 862 308 2 893 816 5 281 558 Drive Line 683 350 374 084 1 587 245 2 644 679 419 675 276 197 765 796 1 461 668 4 106 347 Fuel 155 822 131 247 385 104 672 173 43 428 39 521 986 190 1 069 139 1 741 312 Wheel & Brake 400 578 216 027 676 085 1 292 690 262 275 159 168 755 975 1 177 418 2 470 108 Cooling 133 680 109 436 209 722 452 838 224 606 127 261 762 934 1 114 801 1 567 639 Ignition 75 496 19 910 - 95 406 79 071 44 834 - 123 905 219 311 Electrical 413 816 258 524 245 424 917 764 933 400 548 501 496 201 1 978 102 2 895 866 Suspension & Steering 117 914 97 915 294 012 509 841 299 250 183 603 109 713 592 566 1 102 407 Body 1 367 203 635 795 808 266 2 811 264 427 756 221 234 262 418 911 408 3 722 672 Grand Total 4 692 736 2 558 548 6 285 936 13 537 220 4 723 621 2 814 510 6 002 955 13 541 086 27 078 306

Parts Basket Alternative Total

Grand TotalP&A P&A Total Alternative

Parts Market - Units

Year 2011Unit of Measurement Units

Passenger LCV Commercial Passenger LCV CommercialService 13 311 203 6 928 090 2 142 592 22 381 885 21 297 393 11 711 596 6 352 114 39 361 103 61 742 988 Engine 1 327 236 644 862 2 410 231 4 382 329 5 784 225 3 353 585 5 581 629 14 719 439 19 101 768 Drive Line 454 618 220 616 323 983 999 217 1 458 070 900 050 467 596 2 825 716 3 824 933 Fuel 213 924 554 248 536 285 1 304 457 186 017 828 342 2 820 825 3 835 184 5 139 641 Wheel & Brake 681 543 283 228 298 787 1 263 558 3 428 086 1 995 506 1 648 321 7 071 913 8 335 471 Cooling 595 520 354 300 343 283 1 293 103 2 422 208 1 290 154 2 322 450 6 034 812 7 327 915 Ignition 134 685 67 360 - 202 045 831 508 447 347 - 1 278 855 1 480 900 Electrical 2 332 873 1 397 484 798 327 4 528 684 23 549 030 13 280 239 4 237 403 41 066 672 45 595 356 Suspension & Steering 153 371 72 620 89 900 315 891 1 550 294 890 221 104 063 2 544 578 2 860 469 Body 462 812 224 722 62 787 750 321 410 192 139 479 3 398 553 069 1 303 390 Grand Total 19 667 785 10 747 530 7 006 175 37 421 490 60 917 023 34 836 519 23 537 799 119 291 341 156 712 831

Grand TotalParts Basket AlternativeP&A P&A Total Alternative Total

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Other Total Grand TotalNr. Of Models 2 271 6 705 8 976 1 064 1 690 1 007 2 271 6 705 1 891 14 628 227 227 23 831

Nr. Of Manufacturers 69 66 80 40 38 32 69 66 59 72 62 62 89 Grand Total 2 147 040 5 424 290 7 571 330 78 041 202 361 201 533 1 17 46 012 527 965 9 683 9 683 8 108 978 Average Age 9.9 9.7 9.9 2011 131 123 383 554 514 677 3 368 15 697 11 754 1 599 32 418 803 803 547 898 2010 111 381 325 604 436 985 1 908 13 177 14 024 1 618 30 727 1 154 1 154 468 866 2009 95 416 249 641 345 057 2 916 11 626 13 959 1 575 30 076 1 115 1 115 376 248 2008 144 088 318 723 462 811 4 745 21 729 23 030 1 2 337 51 842 941 941 515 594 2007 175 483 411 356 586 839 4 850 21 350 27 924 3 2 481 56 608 279 279 643 726 2006 167 018 438 092 605 110 4 702 18 294 16 013 2 2 266 41 277 14 14 646 401 2005 141 704 378 990 520 694 4 449 15 311 12 668 3 1 816 34 247 8 8 554 949 2004 109 300 285 673 394 973 3 082 10 561 8 789 2 1 615 24 049 10 10 419 032 2003 89 180 225 975 315 155 2 929 7 547 5 955 970 17 401 7 7 332 563 2002 85 812 205 971 291 783 2 534 6 197 5 971 1 927 15 630 18 18 307 431 2001 94 409 207 514 301 923 2 269 5 356 4 511 1 899 13 036 17 17 314 976 2000 89 556 195 255 284 811 2 604 5 501 3 814 1 164 13 083 48 48 297 942 1999 69 250 173 297 242 547 2 627 3 784 3 587 1 103 11 101 3 3 253 651 1998 65 915 187 510 253 425 3 366 4 111 4 376 3 2 086 13 942 207 207 267 574 1997 70 914 208 282 279 196 4 691 4 002 4 209 1 2 713 15 616 905 905 295 717 1996 74 630 208 009 282 639 3 970 5 907 4 128 3 482 17 487 1 182 1 182 301 308 1995 67 948 182 092 250 040 3 149 5 572 3 956 2 688 15 365 740 740 266 145 1994 55 640 136 583 192 223 2 845 4 814 3 737 2 954 14 350 900 900 207 473 1993 49 317 127 789 177 106 2 249 3 113 3 691 1 991 11 044 894 894 189 044 1992 45 877 104 169 150 046 2 210 2 495 3 445 1 1 271 9 422 71 71 159 539 1991 45 454 100 931 146 385 2 177 2 748 3 942 1 428 10 295 61 61 156 741 1990 48 131 102 818 150 949 2 771 3 425 4 465 1 742 12 403 93 93 163 445 1989 46 775 102 197 148 972 2 942 3 833 4 977 1 975 13 727 80 80 162 779 1988 41 236 92 886 134 122 2 760 3 627 4 746 1 891 13 024 73 73 147 219 1987 31 483 71 379 102 862 1 928 2 584 3 862 1 421 9 795 60 60 112 717

Market Growth Forecast

2011 2013 2014 2015 2016 2012 2013 2014 2015 2016R 19 888 787 R 20 503 207 R 20 809 012 R 21 222 979 R 22 142 465 R 22 956 650 3.1% 1.5% 2.0% 4.3% 3.7%

R 4 642 925 R 4 739 765 R 4 842 328 R 4 986 543 R 5 169 287 R 5 343 857 2.1% 2.2% 3.0% 3.7% 3.4%R 10 014 120 R 10 509 767 R 10 742 835 R 10 915 893 R 11 349 145 R 11 754 677 4.9% 2.2% 1.6% 4.0% 3.6%

R 795 427 R 810 726 R 806 949 R 815 646 R 873 878 R 913 771 1.9% -0.5% 1.1% 7.1% 4.6%R 204 613 R 205 894 R 209 137 R 216 298 R 224 380 R 231 403 0.6% 1.6% 3.4% 3.7% 3.1%

R 1 009 965 R 1 028 551 R 1 055 741 R 1 093 980 R 1 135 581 R 1 173 201 1.8% 2.6% 3.6% 3.8% 3.3%R 239 614 R 235 268 R 225 584 R 225 709 R 241 089 R 252 768 -1.8% -4.1% 0.1% 6.8% 4.8%

R 67 256 R 70 530 R 73 361 R 75 779 R 78 372 R 80 946 4.9% 4.0% 3.3% 3.4% 3.3%R 1 983 514 R 1 977 970 R 1 927 978 R 1 934 500 R 2 056 658 R 2 158 810 -0.3% -2.5% 0.3% 6.3% 5.0%

R 765 642 R 758 514 R 755 833 R 783 070 R 831 035 R 857 678 -0.9% -0.4% 3.6% 6.1% 3.2%R 165 711 R 166 222 R 169 266 R 175 561 R 183 040 R 189 539 0.3% 1.8% 3.7% 4.3% 3.6%

3.1% 1.5% 2.0% 4.3% 3.7%* This value excludes Captive which is included in the Total Market as independent Aftermarket do not have access to the captive market for OEMs

Distribution Channels The market is serviced by two channels OES (P&A) and Alternative or

Independent Aftermarket.

P&A represents 50% of the total Aftermarket value and the independent aftermarket represents 50% by value (this includes “captured” product lines which are exclusive to the OEM’s)

In volume terms P&A represents 24% of the market and Independents 76%

The independent aftermarket went through a stage of restructuring in the past few years and two large groups (Midas Group and Autozone) are now the dominant distributors in the market

The balance of the market is serviced through a few significant wholesalers, product specialist and a host of smaller traders

Imported products vary significantly by product category but represents an estimated 35% by volume of total sales in the independent aftermarket

Market Dynamics The Aftermarket is a very competitive sector of the industry with price playing

an important role in the purchasing decision

Recent economic pressures and lower levels of disposable income is forcing a buying trend with consumers buying “fit for purpose” products at lower prices

This trend is placing pressure on the known brands to maintain their market share and profitability

The manufacturing base for automotive components has reduced in recent years with prominent manufacturers discontinuing local manufacturing

Although consumers have made some compromises in quality in recent years the market still does not tolerate products of sub standard quality. Known brands are still the first choice.

Imports from lower cost countries such as China and India has increased significantly in recent years

With a widely proliferated model range stocking a full range of products are becoming increasingly difficult