Interactive Analyst Briefing Anil Valsan 25th June 2003 European Handheld Diagnostics Equipment Market © 2003 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

Today’s Presentation 01: Handheld Diagnostics Products Defined 02: Market Overview 03: Market Segmentation 04: Market Drivers and Restraints 05: Key Trends in the OE Market 06: Key Trends in the Independent Market 07: Market Size and Forecasts 08: Strategic Impact on Key Participants 09: Report Highlights 10: Questions 11: Take-Home Points

Handheld Diagnostics Products Defined

Market Overview Total hardware revenues in the market are expected to increase by 12 percent Total number of units sold in 2010 is expected to be more than double that in 2003 Software revenues are expected to be more than 50 percent of hardware revenues by 2010 Overall growth to be driven by the independent market for hand-held diagnostics equipment Significant opportunities for existing participants and new entrants - particularly vehicle manufacturers

Market Segmentation Two Key segments OE Handheld equipment Independent Handheld diagnostics equipment Key factors differentiating segments Customers Market penetration Brand coverage Latest model year covered and historical coverage Product functionality

Market Segmentation (Continued…) Fault Code Reader Live Data Component Actuation Reprogramming Price VM1 VM2 VM3 Functionality Below €1,000 €1,000 to €5,000 €5,000 to €15,000 Above €15,000 Vehicle Manufacturers OE Hand-held diagnostics Equipment EOBD / all Fault code reading and display and / or fault code resetting Above functions along with live data streaming Independent Hand-held diagnostics Equipment with different capabilities - Above functions along with component actuation

Market Drivers and Restraints Key Drivers Increasing electronic content in new vehicles Superior OE equipment diagnostics functionality Low penetration of diagnostics equipment in the independent market Wide vehicle coverage by independent handheld equipment Demand for independent equipment from franchised service centres post-block exemptions Demand for OE equipment from independent garages Key Restraints Cost of OE and independent equipment - initial and recurring Vehicle manufacturers will control distribution of OE equipment to independent market Durability of equipment hardware High penetration rate in franchised repair market Lack of training among independent garage technicians

Key Trends in the OE Market Highly competitive market with five participants sharing the demand pie Vehicle manufacturers expected to control demand for OE diagnostics equipment Hardware units and revenues expected to grow by less than 1 percent Shift from one-per-dealer to one-per technician products

Key Trends in the Independent Market Hardware revenues expected to grow by more than 15 percent Gradual shift in demand from low to high-functionality products Consolidation among independent market participants expected Key markets for independent equipment are likely to be Germany, UK, France and Italy Emerging markets include Scandinavia, Benelux, Iberia and Eastern Europe

Market Size and Forecasts Total hardware market is expected generate more than € 600 million by 2010 Lifting of Block Exemptions expected to have positive impact on demand for Independent equipment limited impact on demand for OE handheld equipment Price of handheld equipment expected to increase marginally - primarily driven by the independent market Software expected to become key revenue generator for the independent diagnostics market by 2010

Strategic Impact on Key Participants Significant opportunity for vehicle manufacturers to enter diagnostics market through subscription-based business model. Example BMW Online Service System Attractive opportunity for OE manufacturers to benefit from increasing demand for diagnostics software enter the independent market for handheld diagnostics equipment Need for independent manufacturers to improve their capability in product development reduce time-to-market for products strengthen relationship with end-users of equipment

Report Highlights Based on extensive primary and secondary research Includes Product Life Cycle analysis Forecasts available for units, prices and revenues Evaluation of competitive structure of individual segments Strategic recommendations included for existing market participants Key opportunities for new entrants - particularly vehicle manufacturers - highlighted Profiles of key market participants available - including new entrants OE market includes mapping manufacturer-supplier relationships Independent market chapter includes market sizes for different geographical regions

Thank You - Any Questions? Ask on the telephone - press * 1 on your keypad Ask online - use the Q&A tab on the left of your screen  +44 (0)  

Take-Home Points This report has been structured based on feedback from you, the market participants!  Where does your company stand today in the marketplace?  What is the potential of your product portfolio?  What are the strategic options and opportunities available to you?  How do you take advantage of the 12 percent growth over the next 8 years?