WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto WardsAuto North American Barometer ( Short-Term Outlook: Q Q4 2016) June 21, 2016

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto WardsAuto 6-Month North American Outlook (Q3/Q Industry Forecasts) Sales-N.America (Yr/Yr % Change) Q Y/Y: 4.1% Q Y/Y: 1.5%

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto North American Industry Sales Outlook Entire year forecast at 21.0 million, up from 2015’s record 20.6 million The 12-month trailing average begins to level – expect it to decline in 2017

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto North American Production Outlook Production Production Capacity Utilization 2016 production forecast at 17.7 million, 1.6% above 2015’s million – expect y/y declines to begin in 2017 Despite headlines of plants working through summer shutdowns, cars still flagging, taking the wind out of y/y gains – and import penetration still at long-time highs Based on 12-month trailing average, capacity utilization begins to level off – but in part because of new plants in Mexico (Kia and Audi) ramping up Utilization declines next year as North American demand falls

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto U.S. Sales Outlook Sales appear to be hitting their long-term peak since coming out of the recession Forecast 2016 volume (17.6 million) still will beat 2015’s 17.4 million, but with increased incentive activity Without increased incentives, sales tracking to 17.3-/17.4- million total 2017 volume now pegged at 17.1 million

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto Pent-up demand from recession now satiated/still a lot of old vehicles on the road  Positive effects of average vehicle age continue to outweigh the pushback of longer lasting vehicles until about 2020 YTD fleet volume rising faster than retail  Add pickups/full-size vans/SUVs bought for work-related or other business purposes not necessarily counted in fleet volume Off-lease volume continues as a positive for at least another three years  Could have the opposite effect after that Interest rates stay at historic lows  Likely remain relatively low for several years Fuel prices still below $3/gallon  Recent uptick could be good for job market U.S. Sales Trends

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto Used-vehicle prices likely to decline over next few years as market flooded with quality vehicles largely due to off-lease – typically a negative for new-vehicle sales. (Automakers also fear that by itself rising dealer inventory of certified pre-owned vehicles could impede on new-vehicle sales.) Uncertainty in the business community due to local and overseas indicators pointing toward slower economic growth, if not decline, and, to a certain extent, the U.S. presidential election U.S. Sales Trends - continued ULTIMATELY: Whether 2016 is above 2015 probably depends on how automakers react to a slowdown. Industry usually does not let go right away when demand shows signs of going into decline – WATCH GM  More incentive-fed sales create pull-ahead from 2017

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto Incentives and “New” Vehicle Share Market Penetration of New/Redesigned Vehicles vs. Incentive Activity Incentive data is average incentives as a percent of average transaction prices. Source. TrueCar

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto U.S. Sales by Month – Seasonally Adjusted YTD What to Watch for Expecting an upward spike in June-July, which also should reduce amount of ’16-model inventory to sell-off in late-summer If no spike, incentives get better in August/September, but also likely see more production cuts, and 2016 sales hard-pressed to match 2015’s total If industry still does not want to “let go” yet, could have repeat of Sept.-Nov – or a big December

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto U.S. Inventory - Cars May 31 car inventory (1.48 million units) 8.8% below year-ago – same decline as YTD sales SMALL CAR: More paring needed, especially in domestically made. MIDDLE CAR: Still a little high despite bigger Y/Y decline than sales LARGE CAR: largely determined by fleet demand LUXURY CAR: Inventory high in low- end priced vehicles and sport and specialty cars May 2016 Inventory and YTD Sales vs. Year-Ago

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto U.S. Inventory - Trucks May 2016 Inventory and YTD Sales vs. Year-AgoMay 31 truck inventory (2.29 million units) 21% above year-ago CUV: Could use more in some segments, but small-size CUVs – the biggest growth segment in the group - is full SUV: Big SUVs (GM) top-heavy in inventory PICKUP: Could use more Chevrolet Colorados and Toyota Tacomas VAN: Minivans riding higher Chrysler/Dodge inventory; Large Vans posting biggest market share in years

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto Canada Sales Outlook Forecasting 2016 sales at 1.93 million Believe sales are peaking in Canada market, too, since coming out of the recession But market is definition of resilient: Despite weak economic indicators, including ramped up job losses due to low oil prices and wildfires, May sales nearly matched the record high for the month

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto Mexico Sales Outlook Sales forecast for record 1.52 million units in 2016 Unlike U.S. and Canada, most likely alternate scenario is sales go higher Economic growth expected to outpace regional average

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto U.S. Sales Starts for New and Redesigned Vehicles BrandSeriesAction Production SourceSegment Estimated Sales Start Fiat124 SpiderNewJapanSmall SpecialtyJun 2016 HondaRidgelineRedesignUnited StatesPickup SmallJun 2016 MazdaMazda CX-9RedesignJapanCUV LargeJun 2016 VolvoVolvo 90NewSwedenLuxury MiddleJun 2016 MercedesE-ClassRedesignGermanyLuxury MiddleJul 2016 GenesisG80NewSouth KoreaLuxury LowerJul 2016 GenesisG90NewSouth KoreaLuxury MiddleJul 2016 NissanArmadaRedesignJapanSUV LargeJul 2016 AlfaGiuliaNewItalyLuxury LowerSep 2016 InfinitiQX30NewUnited KingdomCUV Luxury SmallSep 2016 JaguarF-PaceNewUnited KingdomCUV Luxury MiddleSep 2016 LincolnContinentalNewUnited StatesLuxury MiddleOct 2016 BuickLaCrosseRedesignUnited StatesLuxury LowerOct 2016 FordF-SuperDutyRedesignUnited StatesPickup Large, Medium-DutyOct 2016 HyundaiVelosterRedesignSouth KoreaSmall SpecialtyOct 2016 NissanKicksNewMexicoCUV SmallOct 2016

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto U.S. Sales Starts for New and Redesigned Vehicles (continued) BrandSeriesActionProduction Source SegmentEstimated Sales Start HondaCR-VRedesignCanada, United States CUV MiddleOct 2016 HondaOdysseyRedesignUnited StatesVan SmallOct 2016 InfinitiQ60RedesignJapanLuxury SpecialtyOct 2016 AudiA5RedesignGermanyLuxury SpecialtyOct 2016 AudiQ5RedesignMexicoCUV Luxury MiddleOct 2016 HondaFCX ClarityNewJapanLuxury LowerOct 2016 HyundaiIoniqNewSouth KoreaSmall UpperOct 2016 Land RoverDiscoveryRedesignUnited KingdomSUV Luxury MiddleOct 2016 Land RoverLR4RedesignUnited KingdomSUV Luxury MiddleOct 2016 LexusGXRedesignJapanSUV Luxury MiddleOct 2016 PorscheCaymanRedesignGermanyLuxury SportOct 2016 SubaruXV Cross TrekRedesignJapanCUV SmallOct 2016 HyundaiAzeraRedesignSouth KoreaLuxury LowerNov 2016 NissanQuestRedesignJapanVan SmallNov 2016 ChevroletBoltNewUnited StatesLuxury LowerDec 2016

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto North America Sales General Motors Outlook Market Share Production Capacity Utilization

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto U.S Inventory – General Motors May 2016 Inventory and YTD Sales vs. Year-Ago GM one of few automakers with inventory below year-ago levels – partly explains May market share drop Short on Cruze (Small Car) and Malibu (Middle Car) New CT6 should give a small boost to Luxury Car, but a lot of excess inventory; Corvette production likely headed for slowdown SUVs border-line high Can use more Colorados and Canyons; Silverado, Sierra demand waning – see what June incentives do Large Vans selling well despite being oldest products in segment

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto North America Sales Ford Outlook Market Share

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto U.S Inventory – Ford May 2016 Inventory and YTD Sales vs. Year-Ago Car production cuts likely to further pare dealer stocks in Small, Middle and Luxury High y/y CUV inventory likely alleviated through marketing (sales) rather than streamlining production Freeing up capacity by shifting Lincoln MKS replacement (Continental) to Flat Rock should allow Explorer stocks to finally catch up with demand High pickup inventory ostensibly in preparation for slow ramp-up of redesigned F-SuperDuty in July/August Inventory in line with surging demand for Transit full-size van; imported Transit Connect stocks could use some cutting

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto North America Sales Toyota Outlook Market Share Production

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto U.S Inventory – Toyota May 2016 Inventory and YTD Sales vs. Year-Ago Expect some additional incentive action to trim inventory – but production slowdowns are possible Prius sales (Middle Car) not growing as fast as we (me) expected Could use more Highlanders, but RAV4 inventory-sales ratio well above its long-term average Needs more Tacomas; slowed Tundra production has kept its inventory in line with lower sales Sienna sliding in recent months

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto North America Sales Fiat-Chrysler Outlook Market ShareCapacity Utilization

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto U.S Inventory – FCA May 2016 Inventory and YTD Sales vs. Year-Ago Always runs with robust dealer inventory, but inventory-sales ratios at high levels all year even for FCA Expect to continue pushing sales of older products (Compass, Patriot, Journey, Ram Pickup) while riding strong Jeep products and minivans (Pacifica) Except for Dodge Dart (Small Car) and Chrysler 200 (Middle Car), expect production remain robust nearly across the board.  Truck mix could rise to 85% in 2017 from 78% in 2016 after Dart and 200 cease production at end of this year

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto North America Sales Honda Outlook Market Share

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto U.S Inventory – Honda May 2016 Inventory and YTD Sales vs. Year-Ago Overall good balance of inventory-to- demand Civic has overtaken Corolla for leadership in the Small Car segment, and not lacking inventory – meaning its momentum can keep going through end of year Made good move switching Fit (Lower Small Car) sourcing to overseas plant, freeing up more North American capacity for HR-V small CUV High inventory of CR-V (Middle CUV) could indicate some strong sales prior to intro of the redesigned version in October Ditto for Odyssey, also being redesigned this fall

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto North America Sales Nissan Outlook Market Share

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto U.S Inventory – Nissan May 2016 Inventory and YTD Sales vs. Year-Ago Raising its market share, and inventory solid nearly across the board, though dealers are bloated with Infiniti luxury cars Redesigned Titan pickup yet to take off Cars up 5% YTD while industrywide cars down 8% (9% excluding Nissan) Murano inventory getting on high side – watch for sales volume uptick

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto North America Sales Rest of Industry Outlook Market Share

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto U.S Inventory - Rest of Industry May 2016 Inventory and YTD Sales vs. Year-Ago European brands cleaning up in Midsize Luxury CUVs and SUVs, but cars pulling down YTD sales at BMW and Daimler, while not doing well at most of the others Subaru continues to sell 100% of its inventory each month Small CUVs key at Hyundai and Kia Mazda should get better y/y sales comparisons with new CX-9 on sale – a lot of inventory to get rid of CUVs lifting Porsche and Audi brands above last year; VW brand pulling down entire company (new product coming in 2017 should turn it around)

WardsAuto Barometer Haig Stoddard, Senior Industry Analyst, WardsAuto Thank You, Haig Stoddard Senior Industry Analyst, WardsAuto