WardsAuto North American Barometer (Short-Term Outlook: Q2 2016-Q3 2016)

WardsAuto 6-Month North American Outlook (Q2/Q3 2016 Industry Forecasts) Sales-N.America (Yr/Yr % Change)

North American Industry Sales Outlook The 12-month trailing total continues hitting record heights Year-to-date sales through September projected at 4% above same-period 2015 Sales of domestically produced vehicles increase 3.6% YTD through September Entire year forecast at 21.2 million, up from 2015’s record 20.6 million

North American Production Outlook Production Capacity Utilization Q1 production stronger than expected. Increased demand for imported CUVs and a flat Y/Y outlook for cars still somewhat muting production growth relative to sales gains Fewer exports to South America and Europe also a capping output Capacity still tight for plants building CUVs and pickups; several plants building cars have excess Production Capacity Utilization

U.S. Sales Outlook March forecast at a 17.3 million-unit seasonally adjusted annual rate, or about 1.67 million units. March 2016 more selling days than usual, making SAAR factors tougher Q1 estimated at 17.4 million SAAR, but expected to surge in Q2 and Q3

What’s Driving U.S. Demand in 2016 Economic growth in general: more jobs, including more youth entering workforce U.S. to large extent immune from slowdowns in other countries Pent-up demand from the recession Low interest rates allowing longer finance contracts, increased leasing Fleet volume up (some talk of upping deliveries to rentals) Off-lease volume Gradually rising incentives with more room to increase Low fuel prices Strong used-vehicle prices

Strong Connection with 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. Incentive data: TrueCar

U.S. Sales Starts for New and Redesigned Vehicles

U.S. Sales Starts for New and Redesigned Vehicles (continued)

Feb. 29 Inventory and YTD Sales vs. Year-Ago U.S. Inventory - Cars Feb. 29 Inventory and YTD Sales vs. Year-Ago Even with total car inventory 5.5% below year-ago heading into March, it is still too high. There will be more production slowdowns and reductions in import shipments to keep inventory in line with flat declining volume

Feb. 29 Inventory and YTD Sales vs. Year-Ago U.S. Inventory - Trucks Feb. 29 Inventory and YTD Sales vs. Year-Ago Even with inventory 17% above year-ago, could use some more for several CUVs and some SUVs, vans and pickups

Canada Sales Outlook Volume continues to surprise on the upside But believe there will be some flattening in y/y comparisons, and eventually declines However, entire year forecast for another record Units in thousands

Mexico Sales Outlook Sales set more records in 2016 – y/y gains start to narrow only because going against huge y/y increases in 2015 Economic growth expected to continue mostly in line with the U.S.

General Motors Outlook North America Sales Production Market Share Capacity Utilization

Ford Outlook North America Sales Market Share

Toyota Outlook North America Sales Production Market Share

Fiat-Chrysler Outlook North America Sales Market Share Capacity Utilization

Honda Outlook North America Sales Market Share

Nissan Outlook North America Sales Market Share

Rest of Industry Outlook North America Sales Market Share

Is 2016 the Peak Year in the Current Cycle? Sales forecast to hit their rolling 12-month peak in Q3 this year since bottoming out in 2009 Annual volume in millions After seven straight increases, light-vehicle sales forecast to drop to a still-strong 17.2 million in 2017

Peak Year? – Historical Trends Point Higher

Peak Year? Millions New-vehicle sales per household have been trending down over time, but not bounced back so much since recession Household Data through 2015 from U.S. Census Bureau; projections by WardsAuto. The rise in the vehicle population per licensed driver likely indicates a lot of replacement ahead – or a lucrative used-vehicle market, especially with 3 million-plus leases entering the population annually, which could put downward pressure on new vehicles Note: Parc is vehicle population. Parc Data through 2014 based on R.L. Polk data. Licensed Drivers through 2014: U.S. Department of Transportation. Projections by WardsAuto.

Could Next Year be Better? POSITIVES: Full employment in 2016 could mean positive carryover effects in 2017, such as increased households and household wealth, disposable income, more need for reliable transportation Pullback in expected number of interest rate increases puts off the point of negative impact Relatively low fuel prices expected for several years Other indicators such as housing and construction expected to continue trending up next year NEGATIVES: Seven straight year-over-year increases (through 2016) unprecedented – can industry handle an eighth? Estimated pent-up demand from the recession will be satiated by end of 2016 Geo-political issues Potential fallout from interesting U.S. presidential race U.S. not totally immune to economic slowdowns outside its borders According to Experian, delinquencies in subprime rising Strong used-vehicle stock, with in-flux of high-quality off-lease vehicles, could swing demand away from new ULTIMATELY: Probably depend on how automakers react to a slowdown. Industry usually does not let go right away when demand shows signs of going into cyclical decline

Senior Industry Analyst, WardsAuto Thank You, Haig Stoddard Senior Industry Analyst, WardsAuto hstoddard@wardsauto.com 248-799-2619

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Global production by country, plant, program, nameplate VEHICLE FORECAST Global production by country, plant, program, nameplate Eight-year planning window, all updated monthly Medium and heavy duty truck volumes included for N.A. Talk with Lisa Williamson to learn more Lwilliamson@wardsauto.com - 248-799-2642

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All current and future product plans with SOP and EOP, updated monthly PRODUCT CYCLES All current and future product plans with SOP and EOP, updated monthly By Manufacturer, Brand, Platform, Program, Nameplate, Plant, Average Lifetime Volume Talk with Lisa Williamson to learn more Lwilliamson@wardsauto.com - 248-799-2642

GREEN POWERTRAIN STRATEGIES REPORT Green vehicle and powertrain technology product plans by OEM and segment US Light Vehicle Sales forecast by segment, powertrain technology and OEM Analysis of underlying assumptions, relative strengths, and the potential risks of each OEM’s green strategy Talk with Lisa Williamson to learn more Lwilliamson@wardsauto.com - 248-799-2642

Talk with us today to learn how WardsAuto can help you Lisa Williamson Lwilliamson@wardsauto.com 248-799-2642 Nakia Elsaidi Nelsaidi@wardsauto.com 248-799-2622