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3.77% 24.70% State of the Industry – July, 2012: Delivery Rate Bounces to 14.3 Million Hailing the recovery of the new-car industry may well be good for.

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Presentation on theme: "3.77% 24.70% State of the Industry – July, 2012: Delivery Rate Bounces to 14.3 Million Hailing the recovery of the new-car industry may well be good for."— Presentation transcript:

1 3.77% 24.70% State of the Industry – July, 2012: Delivery Rate Bounces to 14.3 Million Hailing the recovery of the new-car industry may well be good for the soul and the bottom line, but there is a long way to go to recapture the true strength automakers had just a decade ago. Based on new-car sales as a share of total U.S. population, the industry remains well off the mark. Even at 14.2 million units in 2012, sales would represent only 4.5 percent of the U.S. population making an acquisition. Compare that to over 7.5 percent in 1986 and 6.2 percent in 2000. In the year just prior to the recession – 2007 – sales were fully 5.4 percent of the population. Conversely, for the industry to hit the cy2000 share would require selling 19.5 million new units. New-Used Combined While it could well be said these lower shares are caused by people acquiring a used car instead of a new one. That would be a solid alternative explanation and to some degree, true. But a look at the combined new and used sales as a share of population shows there has been a significant deterioration here as well. (Click Chart Box C at right.) C

2 19.27% 11.55% -1.64% 21.4% (continued from previous page) As the graph at the right shows, combined new and used sales from 1997 through 2004 held reasonably steady in the 21 percent range. At the height of the recession in 2009-2010 it had fallen to under 16 percent and remains under 18 percent this year even with a strong used-car market. CONTEXT: Double digit increases in new and used sales are unquestionably worth a cheer or two. But the industry is far from the healthy, robust athlete it was just a few years ago. The key hold back among consumers remains having well- paying jobs and solid confidence in the economy. Today, the industry is feeding off of those who need a car, not want one. July Outlook As for July, the first half of the month had some strong positives. Floor Traffic is up as was same-store sales vs. year ago. Both of those metrics were offset only a little by a slightly lower closing ratio. Combined, a double digit increase in sales – hitting 1.28 million or about 20 percent higher than last year – is likely. BUT HERES THE RUB: The CNW Jitters Index jumped 3.8 percent with double-digit increases for Federal Taxes, Meeting Day to Day Needs, and Condition of Invest- ments. Food concerns cant rise much more since they are already at 9.48 on a 10-point scale.. The only metric below a year ago is concern about gas prices; down 15.8 percent. (Doc. 102m on Also working in the auto industrys favor this month was a massive 24-plus percent spike in the number of sub-prime loan application approvals. As we said last month when approvals were down, this roller- coaster for sub-prime will continue at least until December when C Page 2… CNW Research: Retail Automotive Summary July 2012

3 Page 3… CNW Research: Retail Automotive Summary July 2012 financial institutions get a clearer picture of medium-term economic activity and conditions. Today its a matter of keeping the portfolio flexible and conservatively balanced. Used Days Supply For Franchised New-Car Dealers, improving new sales have brought a welcome number of trade ins, replenishing badly depleted inventory. That, along with a shortage of five-year-old and newer models at independent dealerships has boosted the overall industry to 47.5 days supply. And the change in attitude about gasoline prices has succeeded in shifting the mix of cars and trucks. When gasoline prices were rising, trucks sat on lots longer and cars were in short supply. Now the reverse is true with trucks Days Supply at 90 percent of the overall average and cars at 120 percent. Detroit Brands Inventory Building The U.S. makes now are above the Days Supply average with 48 days while Asian makes are at 47.2 days and European brands at 46.9 days. A glut of lower-priced, budget and economy cars is hampering some dealers while older full-size cars such as Crown Victoria and Mercury Marquis are in fairly high demand with younger used-car shoppers. Finance OnlyPrime Near PrimeSub Prime % Change v year ago3.0%3.2%24.7% % Change v previous month0.70%0.22%17.35% C

4 Page 4… CNW Research: Retail Automotive Summary July 2012 Note: This is a Graphs Page. Throughout this issue you will see a C symbol in a table, graph or chart which will take you to an appropriate Graphs Page. Days' Supply - - Used DetroitAsianEuro May40.9144.8752.36 June41.5743.7952.74 July41.0643.9250.03 August43.3441.2848.62 Sept44.9742.0546.32 Oct45.6242.0946.58 Nov45.0544.2845.32 Dec45.0846.3945.47 Jan. 1243.2244.9245.76 Feb43.7145.0245.66 Mar44.8246.8745.61 Apr45.3646.7245.29 May44.0645.2244.97 June44.5146.2945.71 July48.0647.2446.94 Days% Chng vDays Sup % Dif% Car% Truck SupplyPrev. Yr.CarTruck Car vf Trk January '12 44.16-12.9%45.9242.377.7%52.01%47.99% Feb44.82-9.9%43.2846.01-6.3%48.47%51.53% Mar45.22-6.3%41.0248.36-17.9%45.89%54.11% Apr45.51-5.2%41.1748.52-17.9%45.90%54.10% May44.27-2.57%42.3447.29-11.69%47.24%52.76% June 46.182.78%45.6244.013.53%50.90%49.10% July 47.5111.55%49.1345.297.82%52.03%47.97%

5 Economy, Budget Cars Continue to Trend Downward Leasing is sending many Budget and Economy car intenders into bigger and somewhat less fuel efficient models, CNWs monthly Purchase Path surveys show. In June, Budget cars had their lowest share of total sales of 2012, 1.54 percent vs. 2.13 in February, the high-water mark for the segment. Economy cars were down to 12.13 percent of total sales, off from Marchs high of 13.81. That trend looks to be holding into July, early sales returns indicate. For those segments intenders, a new-vehicle budget is a given. And the budget is measured in monthly payments not overall price of the car or truck. Enter leasing. For the same budget, a somewhat nicer vehicle is within reach and a large share of those Page 5… CNW Research: Retail Automotive Summary July 2012 consumers are making the leap from a Honda Fit to a Civic, for example. Luxury, Pickups Rise After stumbling in April, Luxury cars are once again having consecutive monthly increases and registered the best month of the year to date. Commercial vehicles such as pickup trucks and full-size vans also had a good month, both registered improvements in share of total sales.

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10 Anticipated JulyActual July% ChngYTD % Chng Document 106mcy12cy1112v11cy2012cy201112v11 Franchised Dealer Sales 1,767,000 1,666,6876.0% 8,720,074 8,387,2504.0% Independent Dealer Sales 1,500,000 1,651,778-9.2% 7,987,992 8,402,552-4.9% Casual (Private) Sales 1,275,000 1,177,7398.3% 7,247,694 6,323,87614.6% Total Sales 4,542,000 4,496,2041.0% 23,955,760 23,113,6783.6% Page 10 CNW Research: Retail Automotive Summary July 2012 Getting some of May and June trade-ins through the reconditioning process and onto the lots has helped franchised dealers post a six percent gain in sales vs. year ago (based on the first 20 days of July). Thats well ahead of the year-to-date increase of 4 percent. For Independent dealers, the story wasnt quite as bright. They had a 9.2 percent decline thus far in July and if the figures hold for the month, it will mean a near 5 percent decline in year-to-date vs. 2011. As pointed out elsewhere in this edition, part of the issue is the ability to receive loan approvals for sub-prime borrowers. The 9.2 percent shortfall for Independents this month is linked to the ability in some major states to get the loan through financial institutions. Add to that the demand for more trucks and lower interest in small, older cars and the net result is an unbalanced inventory compared to the desires of the local market. Private Party sales are bouncing like a rubber ball. Weak one month, sky high the next. Used Sales Bump into July: Franchised Dealers, Casual Up; Independents Down C One major factor in the casual market is the run-up in used prices registered earlier this year. Many private sellers are basing their current asking price on the inflated values of late 2011 and early 2012. Not able to get what these sellers expected has forced many to reconsider selling a car or truck. But that was last month. This month, a wave of repriced models hit the likes of and sales volumes picked up by more than 8 percent. While still running behind the year-to-date figure of 14.6 percent, the Private Party market is now back on track. Prices Slip Again Retail used-vehicle prices continued to be soft with Franchised dealers seeing their transaction prices drop a touch – 0.37 percent even though they were asking 4.5 percent more than a year ago. Independent dealer transaction prices slumped 8.5 percent vs. a year ago and 1.4 percent vs. June.

11 FranchisedIndependentFranchised Independent Doc 107m Asking Price Trans Price% of AskingTrans Price% of Asking Jan. '12$11,516$10,483$10,85594.26%$9,71592.67% Feb. '12$11,653$10,516$11,09095.17%$9,78493.04% Mar '12$11,826$10,592$11,25495.16%$9,87493.22% Apr 12$11,507$10,216$10,95895.23%$9,57693.74% May '12$12,119$9,987$11,29693.21%$9,07190.83% June '12$11,684$9,937$10,80292.45%$9,06991.27% July '12$12,136$9,842$11,18592.16%$8,94390.87% July '11$11,619$10,246$11,22696.62%$9,77895.43% August '11$11,458$10,172$11,02196.19%$9,59894.36% Sept '11$11,253$10,219$10,80796.04%$9,57293.67% Oct. 11$11,394$10,384$10,95296.12%$9,74493.84% Nov. '11$11,186$10,148$10,65495.24%$9,45293.14% Dec '11$11,058$10,039$10,54795.38%$9,38493.48% Percent Change Yr over Yr4.45%-3.94%-0.37%-4.62%-8.54%-4.78% Month Over Month Price3.87%-0.96%3.55%-0.31%-1.39%-0.44% Page 11… CNW Research: Retail Automotive Summary July 2012

12 June 2012 Kontos Kommentary Current Used Vehicle Market Conditions Page 12… CNW Research: Retail Automotive Summary July 2012 Summary Wholesale used vehicle prices continued to soften cyclically and seasonally. The average sales price for all vehicles sold at auction fell below $10,000 for the first time since February, signaling an end to this years characteristically strong Spring/Tax season. Details According to ADESA Analytical Services monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class 1, wholesale used vehicle prices in June averaged $9,893 – down 3.7% compared to May and down 3.6% relative to June 2011. As gasoline prices softened in June, prices for car segments fell more dramatically (down 4.4% month-over-month and 6.9% year-over-year) than for truck segments (down 3.0% and 0.9%, respectively). Manufacturers registered a 1.9% month-over-month price increase and a 5.6% year-over-year rise, reflecting continued tight supplies of late-model off-rental and off-lease vehicles. Fleet/lease consignors experienced a 5.7% sequential price decrease and a 2.4% annual decrease. Dealer consignors saw a 1.6% average price decrease versus May and a 4.4% downturn versus June 2011. Based on data from CNW Research, retail used vehicle sales in June were up 8.1% month-over-month and 1.9% year-over-year for franchised dealers, but down 1.6% and 8.0%, respectively, for independent dealers – an indication that both inventory and traffic favors franchised dealers in the current used vehicle market environment. June sales of certified used vehicles were up 3.3% month-over-month and 8.9% year-over-year based on data from Autodata. Wholesale Used Vehicle Price Trends Average Prices ($/Unit) Latest Month Versus: Jun-12May-12Jun-11 Prior Month Prior Year Total All Vehicles$9,893$10,271$10,259-3.7%-3.6% Total Cars$9,121$9,546$9,793-4.4%-6.9% Compact Car$6,955$7,280$7,605-4.5%-8.5% Midsize Car$7,703$8,142$8,356-5.4%-7.8% Fullsize Car$5,779$6,449$5,970-10.4%-3.2% Luxury Car$13,552$13,782$14,253-1.7%-4.9% Sporty Car$12,935$13,728$13,582-5.8%-4.8% Total Trucks$10,708$11,038$10,761-3.0%-0.5% Mini Van$7,184$7,757$7,405-7.4%-3.0% Fullsize Van$9,731$9,711$8,8690.2%9.7% Mini SUV$10,247$10,561$10,470-3.0%-2.1% Midsize SUV$9,662$10,147$9,736-4.8%-0.8% Fullsize SUV$13,510$13,752$12,614-1.8%7.1% Luxury SUV$18,745$18,891$19,820-0.8%-5.4% Compact Pickup$7,139$7,373$7,376-3.2% Fullsize Pickup$11,056$11,123$10,833-0.6%2.1%

13 Page 13… CNW Research: Retail Automotive Summary July 2012 Used TotalFranchisedIndependentCasual Apr '11 3,689,102 1,367,997 1,345,577 975,528 May 4,126,844 1,503,084 1,490,749 1,133,011 June 4,493,842 1,653,644 1,601,990 1,238,208 Total Q 12,309,788 4,524,725 4,438,316 3,346,747 Shr for Qtr 36.8%36.1%27.1% Apr '12 3,792,604 1,367,543 1,237,725 1,187,336 May 4,309,684 1,579,133 1,479,055 1,251,496 June 4,382,519 1,684,843 1,474,409 1,223,266 Total Q 12,484,807 4,631,519 4,191,189 3,662,098 Shr for Qtr 37.1%33.6%29.3% Q2-11 NewQ2-12 New% Change v 11 3,269,497 3,803,22416.32% Total New/Used Q2 11 15,579,285 Total New/Used Q2 12 16,288,031 Percent Change4.55% It was a Good Quarter for New and Used vs. Year Ago On the whole, new and used sales had a decent second quarter. New sales were up 16.3 percent vs. the second quarter of last year while used sales climbed a more modest 1.4 percent. Overall, the light-duty transportation segment of the economy was up 4.6 percent. Considering the state of the economy, both figures are acceptable and at least point upward. Neither, however, is the kind of barnstormer one would prefer. Cant Build on Current Data The problem with the data is that it provides little if any solid foundation on which to build a plan into the future. Fragile would be the best way to describe what the industry is going through. Nothing in these numbers or ancillary metrics give a good indication of future sales. For example, the consumer confidence numbers as well as CNWs Jitters Index show an underlying deep-seated concern about home-centric economic issues. That results in a very strange phenomenon: A Vacillation Factor. Vacillation Factor CNW measures how many times a new-car intender changes his or her mind about making the acquisition before actually buying a car or truck. In 2000, a new-car buyer had a change of heart 1.61 times during the Purchase Process. In 2012, that figure is 4.92 times. The result: The slightest shift in the economic breeze can send a shopper home. Such thin ice produces an outrageously fickle market.

14 Page 14… CNW Research: Retail Automotive Summary July 2012 Retail Share Up in July v Last Year Total retail sales are on track to represent 60.5 percent of total sales in July compared to 61.29 percent in June, but well ahead of the 53.3 percent of last year. Translated into units, the July retail sales are set to be in the neighborhood of 787,580 units compared to 564,174 in July of last year. June Fleet Sales With a total value of $13.83 billion, fleets saw an 85 percent increase over last year thanks in large part to a higher fleet-vehicle core value (excluding upfitting). Government fleets were up 10.8 percent – best showing of the year – while small business commercial sales were higher by 81 percent (on a share of total sales basis). Other segments in the fleet/commercial sales arena also had significant gains over year ago. FLEET COMMERICAL SALESJanFebMarchAprilMayJune All Sales912,8741,148,9751,404,1001,184,069 1,334,1501,285,005 Percent Change v Previous Year11.4%15.7%12.7%2.4%25.9%22.0% Fleet and Commercial Use39.52%36.48%36.92%38.09%36.41%38.25% Total Fleet (Monthly Approximates) 360,768 419,146 518,394 451,012 485,764 491,514 Percent Change v Previous Year32.7%40.5%31.6%22.4%63.5%77.2% FLEET COMMERCIAL VALUE -- Per Unit $27,219 $27,254 $27,614 $27,943 $27,904 $28,147 FLEET COMMERCIAL VALUE -- Total $Bllns $9.82 $11.42 $14.31 $12.60 $13.55 $13.83 Percent Change v Previous Year40.92%48.55%39.68%30.13%69.34%84.70% Government Fleet 18,805 23,439 28,222 24,747 25,616 25,315 Share Gov't of Total Sales2.06%2.04%2.01%2.09%1.92%1.97% Percent Change v Previous Year-27.6%-17.5%-16.7%-18.0%3.3%10.8% Small Business Fleet and Commercial Use 35,967 47,338 59,815 51,152 59,770 58,082 Share Small Business of Total Sales3.94%4.12%4.26%4.32%4.48%4.52% Percent Change v Previous Year34.3%29.1%24.1%13.1%72.4%81.4% Medium Business Fleet and Commercial Use 88,731 116,736 150,520 124,682 142,887 124,388 Share Medium Business of Total Sales9.72%10.16%10.72%10.53%10.71%9.68% Percent Change v Previous Year-3.6%57.5%67.6%48.5%104.6%88.1% Large Business Fleet, Daily Rental, Commer. 217,264 231,633 279,837 250,431 257,491 283,729 Share Large Business of Total Sales23.80%20.16%19.93%21.15%19.30%22.08% Percent Change v Previous Year71.0%45.5%26.1%19.8%53.5%81.5%

15 Page 15… CNW Research: Retail Automotive Summary July 2012 Mobile Devices Part 2: Massive Growth as a Source of Auto Information There is no question consumers are using their mobile devices for automotive (and other product) searches. But just how fast has it grown? And does the medium have any legs? cy08 saw only 2.4 percent of new-car shoppers turning to their smartphone or iPhone to collect information. During the first half of this year, that figure skyrocketed to nearly 27 percent. Looking at individual markets and brands, Los Angeles is among the strongest for use of a smartphone for auto data searches. In L.A. including the entire DMA and the San Fernando Valley, Chevrolet buyers, for example, climbed from just below 9 percent in 2008 who used a smartphone for car or truck information searches to well over 41 percent in the first half of this year. (CNW has data for most of the countrys DMAs. Call or email for details.) Mobiles Problem For automakers, getting to these shoppers poses a number of hurdle. First, consumers are vehemently opposed to unsolicitedpop up ads or any mobile text messages. While not against solicited texts, the vast majority – over 90 percent – say they would prefer and will visit automakers or dealers who have a clean, easy to use, mobile-specific web site adapted for the small screen. As we pointed out last month, the mobile user also has a fluctuating use of this device depending on where he or she is in the purchase funnel. Finally, mobile marketing has to be consistent and well funded. For more details, see the Purchase Path White Paper this Fall. (The complete spreadsheet is on

16 Page 16… CNW Research: Retail Automotive Summary July 2012 Median Age of Primary Drivers: Mixed Bag, but Industry Gets Older When it comes to reaching the person who will buy a new car or truck, many marketers concentrate on who signs the contract, not necessarily the person who will become the Primary Driver of the vehicle and holds great sway in the make/model selected. Yet the two are often distinctly different people. A key metric is age. For example, the average age of the typical Mercedes buyer is nearly five years older than the average age of the typical Mercedes primary driver. Why? In many cases, a vehicle is acquired and financed jointly by husband and wife, but for a majority of vehicles the first signer on the contract is the one who is calculated in age demographics even if the car is being driven by a spouse, son, daughter, or other household member. Overall Age Climbs Since 2000, the average age of the primary driver of a new car or truck has risen approximately 1.5 years. (See Doc 1088.) Some automakers have strived to lower the age of primary drivers with excellent success. Ford, for example, has seen a 16 percent drop in the age of its car buyers in the first half of this year vs. 2005 to 45.2 years. Conversely, Toyota Car is up 9 percent to 54.7 years of age. Honda Car is up 12.2 percent to 55 years. Hyundai Continues to Increase Hyundai has been seeking higher demographic consumers in order to round out its lineup with more expensive and upscale models. That requires older shoppers with greater incomes. And the Korean brand has succeeded. C cy00cy05cy12 1st H Cy12 v 05 Median Age Ford car 51.753.945.2-16.1% Ford truck 45.748.745.1-7.4% Lincoln car 62.665.860.2-8.5% Lincoln truck All Total55.158.453.1 -9.1% Chevrolet Car 49.849.248.2-2.0% Chevrolet Truck 46.447.149.34.7% Buick car 58.760.657.6-5.0% Buick truck 58.358.2-0.2% Cadillac car 59.761.758.2-5.7% Cadillac truck 57.359.13.1% GMC truck 59.855.554.4-2.0% All Total50.555.755.0 -1.3% Chrysler car 63.658.155.4-4.6% Chrysler truck 48.154.753.4-2.4% Dodge car 55.952.347.9-8.4% Dodge truck 49.247.548.72.5% Jeep truck 40.442.642.5-0.2% All Total51.451.049.6 -2.9% CNWs latest tabulation shows Hyundai Cars primary drivers are now 42.4 years of age, up 15 percent from 36.7 years in 05 and 32.3 years old in cy2000. Also noteworthy is Chrysler Corps nearly 3 percent decline in age since 05 to 49.6 years, the first time below 50 years of age since 1995.(continued next page)

17 Page 17… CNW Research: Retail Automotive Summary July 2012 (Continued from previous page) Cadillac has, for the first time in many years, been able to reduce its primary driver age below that of Mercedes. The luxury GM brand is likely to continue this trend with a steady stream of younger-oriented models. cy00cy05 cy12 1st H Median Age Toyota car 44.350.254.79.0% Toyota truck 42.747.350.97.6% Lexus car 52.353.659.511.0% Lexus truck 55.857.63.2% Scion car All Total46.447.651.3 7.8% Honda car Honda truck 45.849.88.7% Acura car 52.851.254.76.8% Acura truck All Total49.549.654.0 8.9% Nissan car 45.342.338.8-8.3% Nissan truck 40.240.938.6-5.6% Infiniti car 47.843.847.99.4% Infiniti truck All Total44.443.543.9 0.9% Mazda car 41.839.637.6-5.1% Mazda truck 36.739.141.25.4% All Total39.339.4 0.0% Mitsubishi car 44.446.348.85.4% Mitsubishi truck 47.849.74.0% All Total44.447.149.3 4.6% Subaru car 47.738.4441.58.0% All Total47.738.441.5 8.1% Suzuki car 35.737.96.2% Suzuki truck 32.236.338.45.8% All Total32.23638.2 6.0% Hyundai car 32.336.742.415.5% Hyundai truck 38.443.713.8% All Total32.337.643.1 14.5% Kia car 38.136.6-3.9% Kia truck 37.536.7-2.1% All Total37.836.7 -3.0% cy00cy05cy12 1st H Median Age Volvo car 49.348.255.916.0% All Total49.348.255.9 16.0% BMW car 46.346.849.35.3% BMW truck 45.847.94.6% All Total46.3 48.6 5.0% Mini 39.945.915.2% All Total39.945.9 15.2% Land Rover 52.658.310.8% All Total52.658.3 10.8% Mercedes car 55.358.959.40.8% Mercedes truck 62.159.7-3.9% All Total55.360.559.6 -1.6% Jaguar car 62.759.158.6-0.8% All Total62.759.158.6 -0.8% Porsche car 41.243.2149.213.9% All Total41.243.2149.2 13.9% VW car 42.740.938.5-5.9% VW truck 58.260.654.6-9.9% Audi car 56.358.953.3-9.5% All Total52.453.549.3 -7.9% Euro Models Also a Mixed Bag For Volkswagen, after years of seeing the age of its primary drivers climb because of the high number oflegacy buyers, the age for both VW and Audi have fallen nearly 8 percent to below 50. This once had been a brand that had an average primary driver age below 30. Volvo, on the other hand, has seen a significant increase – 16 percent – in primary driver age, well above the industrys uptick. CONTEXT: While age is hardly the most important metric, it does provide a hint of who is being attracted to a particular brand. And it is equally telling how different manufacturers are addressing their aging owner/driver base. Toyota, for example, has finally realized that plain vanilla is fine for its legacy buyers, but when the age of its car buyers is approaching that of Cadillac, somethins gotta give.

18 Page 18… CNW Research: Retail Automotive Summary July 2012 Electric, Hybrid, Diesel Demand Slows Seeing headlines that electric or hybrid sales have hit all-time peaks may sound good, but a better measure of where these two alternative powerplants – as well as diesel – are going can be found in consumer consideration and what those consumers believe is a fair price for the technology. Electrics Need Fleets Consideration of an all-electric model has deteriorated among new-car intenders since January from a bit over 5 percent to approximately 4.5 percent. While that may seem like a relatively small decline, it can translate to a 25,000 to 40,000 smaller base of potential buyers. Considering the low volumes of electrics, the impact is proportionately quite damaging. Even more telling, among those who say they would consider an electric, they are are saying the premium they would be willing to pay over a like-sized ICE model is around $800 (after tax credits and incentives). Thats down from $850 in January. Should gasoline prices continue to decline, expect consideration and premium metrics to similarly fall. Is it any wonder that EV makers are promoting their vehicles to fleet and commercial and small-business owners? Diesel a Solid Alternative to Gas New-car intenders are almost as likely to consider a diesel as they are a hybrid. Fully 29 percent of new-car intenders say they would C buy diesel if the price were right and the engine came in a model they felt met their particular driving needs. Premium: Note quite what diesel automakers would like to see, but getting better.

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20 Stars Come Out for Buick/Ditto for Dart Automakers are releasing a slew of online videos, sometimes more than one a day. Jean Hallidays General Motors' Buick brand likes using big names in its advertising. Remember the marriage with golfer Tiger Woods? That lasted from 1999 through 2008. Aimed at helping to reel in younger buyers, Buick probably got some decent traction, getting golfers to take a look at the brand or at least participate in the many sweepstakes tied to Tiger. Some things never change. Of course Buick isn't the only car brand that does this. It's fine for special events like an over-the-top Super Bowl ad. But feeling the need to get a star in your ad is just borrowed interest. It can really detract from your brand, with the celeb getting the most attention. Now Buick has signed star NFL quarterback Peyton Manning for a new :30 television commercial to push the 2012 Verano. Manning calls plays while driving the Verano, using the car's voice- activated OnStar for navigation and IntelliLink to call a friend. Have a look Tim O'Neill, Buick's ad manager, was on site for the filming of the spot. He explained Buick's reasoning for connecting with Manning in the behind-the-scenes video about the production. Manning is perfect for the Verano because he embodies everything Buick is about, says O'Neill. He's authentic. He's genuine. He's a leader in what he does, which is what Buick has been about both in the past and also looking Page 20… CNW Research: Retail Automotive Summary July 2012 into the future. Okey Dokey then. Buick will no doubt get some attention from pro-football fans. But it's sad the brand feels it needs to hire a big name to get attention for its ads. Like it did this past spring with retired NBA star Shaq O'Neal for this LaCrosse ad. Buick and its ad agency, Leo Burnett USA, did a few touch-ups to this commercial for a July 4 th holiday sale,

21 Page 21… CNW Research: Retail Automotive Summary July 2012 smartly making a bigger deal out of the car's 36 mpg. Then there was this Verano commercial from last fall that didn't use any big names, called Running in Place to tout the eAssist feature and its gas-saving technology Now this ad is more like it. It's visually arresting and holds viewers' attention as they wait for the punch line. It shows off the smart technology in a smart way. Although it does remind me of Goodby, Silverstein & Partners' break-through, cool 2004 commercial for Saturn called Sheet Metal, down to the simple piano music used in both ads. Heres the Saturn version: Buick's work still isn't where it needs to be. Like other GM brands, the word from my sources is that the clients at GM headquarters in the Ren Cen aren't giving their ad agencies good direction. Those clients need to have a clear understanding what their brands stand for in order to write a decent creative brief for the agency. (continued next page) Running in place is more like it… Viewers wait for the punch line…

22 Page 22… CNW Research: Retail Automotive Summary July 2012 (continued from previous page) Buick, which celebrated its centennial in 2003, needs to figure out its niche. A recent press release described the brand like this : Buick is a modern luxury brand offering vehicles with sculpted designs, luxurious interiors with thoughtful personal technologies, along with responsive-yet-efficient performance. That's pretty general. You could say that about quite a few other auto brands. In spite of this below-average advertising, Buick sales are improving. Last month, it reported its best June in 6 years, with total US sales up almost 28% to 18,851 vehicles. For the year, Buick sales are up just 3.6% to 90,198. Buick's sales chief Brian Sweeney says buyers are coming from outside GM's four brands at a rate of as high as 1 in 2 for models like the Verano. At least they're going in the right direction. Now if they could just get the advertising to be as good as the products. Meantime, over at Chrysler Group, Wieden+ Kennedy, Portland, tapped a few big names for the launch of the new Dodge Dart. The :90 launch commercial spotlights the song No Church in the Wild, by J-Z and Kanye West. And see if you can spot the champion athletes with cameos in the commercial. (Click on photos below) Unlike Buick, Dodge and W+K and Dodge knocked it out of the park for this commercial. Like Buick, Chrysler isn't shy about tapping stars for its ads. The difference is even though Chrysler has really outpaced Buick in that department it has managed to get more oomph from its celebrity work because of a willingness to take risks, along with the the overall narration, tone and theme. Dodge and W+K are creating some of the industry's best advertising these days. Is anyone taking notes?

23 Page 23… CNW Research: Retail Automotive Summary July 2012 Back Page *Deliveries not sales July 1-15 % ChngActual SalesJuly '12Full Mo cy2012cy201112 v 11July '11SalesChange New Cars Extension Detroit 3 134,194 115,05016.6% 165,801 193,39016.6% Asian 154,361 117,68831.2% 279,452 366,53331.2% European 37,042 33,16211.7% 73,501 82,10111.7% Ttl Pass. Cars 325,597 265,90022.5% 518,754 642,02323.8% New Trucks Detroit 3 209,472 169,17223.8% 338,417 419,03423.8% Asian 42,111 39,3287.1% 174,450 186,7957.1% European 6,207 4,79229.5% 27,662 35,83029.5% Ttl Lt. Trucks 257,790 213,29220.9% 540,529 641,65918.7% Ttl Industry 583,387 479,19221.7% 1,059,283 1,283,68221.2% July 1-15Full July% ChngPrev Mo % Chng cy2012cy201112 v 11cy2012cy201112 v 11 Lease Share26.9%25.2%6.7%26.9%24.6%9.3% Floor Traffic - New91.566.0438.6%90.3566.7935.3% Floor Traffic - Used87.2476.9713.3%86.3177.0712.0% July 1-15Prev Yr% Chng Pent Up DemandUnits cy2012Full JulySame Mo '11Prev MoJune '12 98,250 Avg. New MSRP$37,124$34,1868.59%0.48%June '11 169,500 Total Discounts$4,941$4,5269.17%1.62% Change-42.0% Manufacturer Incentives$3,604$3,00619.89%2.13% Dealer Incentives$1,337$1,520-12.04%0.29%Purchase DelayMonths Core Transaction Price****$32,183$29,6608.51%0.31%June '123.19 % Mfg Incentive of MSRP9.71%8.79%10.4% June '115.11 % Ttl Discounts of MSRP13.31%13.24%0.5% % Change-37.6%

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