Cadillac Market Insights February 2, 2016 Prepared for Carat New York

Topics for Today Redefining Luxury: What A Recent KBB Study Revealed Where is Cadillac in the Market Place Today? Showcasing Cadillac on KBB.com Johan led Infiniti’s naming strategy….

KBB’s Insights Tools provide unique perspective Clients Analytics Studies Luxury Study conducted from May 6 – June 9, 2015; gathered 2,254 survey responses; Just one example of many studies we conduct on a regular basis Long-Term Brand “Stories” Every brand has a story, with successes and failures, wins and losses What can be learned from a look back at those ups and downs? Kelley Blue Book BrandWatch Consumer Perception Tracking Study (2007-Present) Ongoing survey-based tracker among new car shoppers on the KBB.com website 3,000 interviews per quarter, detailing consideration for and consumer perceptions of all major models on eleven core decision factors

What is a Luxury Vehicle? As Defined by the KBB.com Shopper KBB Luxury Study Conducted May-June, 2015

Consumers are Redefining Luxury ‘Luxury’ is redefined as perceived value, increased practicality1 Luxury is no longer an object IT IS AN EXPERIENCE2 BENEFITS OF OWNERSHIP often include3: ✓ Longer warranties ✓ Free scheduled maintenance programs ✓ Upgraded treatment at service departments including loaner cars Why has luxury been redefined? One influencing factor is the wider economic climate. When so many people have felt the full force of the global recession on household budgets, whether through unemployment, pay freezes, zero-hour contracts or escalating household bills, there is perhaps an inevitable impact on the way they view luxury. James Murphy, editorial director of Future Foundation, says: "The level of economic growth we enjoyed in the UK from 1993 to 2008 is still broken. There’s a debate taking place about what is an appropriate way to live, given these troubled ­economic conditions. In such circumstances, it becomes simply not cool to parade and show off opulent ownership of wealth. The germans are doing this so you should too Cadillac photo courtesy of Steve Siler 1: Forbes “How the Uncertain Economy is Changing the Definition of Luxury”, http://www.forbes.com/sites/bluecarreon/2011/11/15/how-the-uncertain-economy-is-changing-the-definition-of-luxury/ 2: Marketing Magazine, “The Rise of Discreet Luxury and a New Consumer Elite”, http://www.marketingmagazine.co.uk/article/1213629/rise-discreet-luxury-new-consumer-elite 3: Forbes, “Movin’ On Up: Cars That Draw the Most First-Time Luxury Buyers”, http://www.forbes.com/sites/jimgorzelany/2014/08/26/movin-on-up-upscale-cars-that-draw-the-most-first-time-luxury-buyers/

‘Luxury’ is redefined as perceived value, increased practicality1 Luxury brands addressing price-point with ENTRY-LEVEL LUXURY VEHICLES Examples: Audi A3 Mercedes CLA Volvo S60 Luxury Audi A3, $29,900 Mercedes CLA, $29,900 Volvo S60, $33,750 Sampling Info: A total of 2254 survey responses were gathered Field dates: May 6 – June 9, 2015 Non-Luxury Price points are blurry Why has luxury been redefined? One influencing factor is the wider economic climate. When so many people have felt the full force of the global recession on household budgets, whether through unemployment, pay freezes, zero-hour contracts or escalating household bills, there is perhaps an inevitable impact on the way they view luxury. James Murphy, editorial director of Future Foundation, says: "The level of economic growth we enjoyed in the UK from 1993 to 2008 is still broken. There’s a debate taking place about what is an appropriate way to live, given these troubled ­economic conditions. In such circumstances, it becomes simply not cool to parade and show off opulent ownership of wealth. Value prop – pricing pressure to create a diff value prop Luxury is moving downstream; pricepoint near non-luxury price point 1: Forbes “How the Uncertain Economy is Changing the Definition of Luxury”, http://www.forbes.com/sites/bluecarreon/2011/11/15/how-the-uncertain-economy-is-changing-the-definition-of-luxury/ 2: Marketing Magazine, “The Rise of Discreet Luxury and a New Consumer Elite”, http://www.marketingmagazine.co.uk/article/1213629/rise-discreet-luxury-new-consumer-elite 3: Forbes, “Movin’ On Up: Cars That Draw the Most First-Time Luxury Buyers”, http://www.forbes.com/sites/jimgorzelany/2014/08/26/movin-on-up-upscale-cars-that-draw-the-most-first-time-luxury-buyers/

Consumers are Blurring the Line of “Luxury” 78% This provides an opportunity to appeal to a broad audience Luxury Shoppers Are Considering Both a Luxury and Non-Luxury Vehicle Q: Which of the following options are you most likely to consider for your next vehicle? Q: Please select up to 2 vehicle segments you are considering for your next vehicle purchase. Q: How would you classify the following brands: non-luxury, luxury, or something in between (premium)? Source: KBB.com Luxury Study; N Luxury Shoppers = 311

Shoppers classified the following brands based on “Non-Luxury”, “Luxury” or “Something in between (Premium)” Non-Luxury Premium Luxury Luxury shoppers consider Buick a non-luxury brand; BMW and Alfa moved down market from luxury to premium Luxury shopper sees Buick as non-luxury; Luxury shoppers only then they shift BMW and Alfa into premium Q:How would you classify the following brands: non-luxury, luxury, or something in between ('premium')? Luxury Study N = 974

Cadillac is Well Positioned to Appeal to Luxury and Non-Luxury Shoppers Alfa Romeo Cadillac Lincoln BMW Audi Tesla Land Rover Infiniti Porsche Aston Martin LEXUS Jaguar Maserati Mercedes-Benz 85 75 65 55 80 70 60 KIA Buick Volvo Acura Rolls-Royce 10 20 30 40 50 60 70 80 90 100 Non-Luxury Premium Luxury Audi, BMW and Cadillac have moved downmarket; MB has as well but brand equity is strong enough to whether the perception Non-Luxury Premium Luxury Source: 2015 Luxury Study Thurstone Scaling, N = 2245 Q: How would you classify the following brands: non-luxury, luxury, or something in between ('premium')? Q: Based on the exercise you just performed, if the "premium" category didn't exist, and you had to place all of the vehicles you identified as "premium" into either the non-luxury or luxury buckets, where would you place them?

Premium Brand Pricing Bridges Luxury and Non-Luxury, Appealing to a Broad Range of Shoppers Where Shoppers Build and Price Models By Designated Brand Class $22k $36k $29k 938,449 Non-Luxury Shoppers $60k $47k $35k 126,584 Premium Shoppers $73k $56k $38k 143,086 Luxury Shoppers $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 Behavioral data – people pricing on the site; where they are actually pricing data on the website; removed exotics from this; this is a quarterly look; In Thousands of Dollars Source: KBB.com Omniture New Car Fair Purchase Price Analysis

Cadillac’s Market Position BrandWatch Perspective

Cadillac: Journey Through Eras 2004: Cadillac XLR-V debuts 2004: Cadillac CTS-V introduced, competes with M and AMG 1999: Cadillac Escalade built in response to Lincoln Navigator Early 1970’s: Cadillac cars reach new lengths, with some 1970s models growing almost 2 inches longer than previous iterations 1915: Cadillac creates a V8 with 70 horsepower, allowing Cadillac vehicles to travel faster than most cars of its day 2006: Cadillac STS-V debuts 2003: Cadillac CTS introduced, RWD with Manual offered 1980s-1990’s: Cadillac models shrink, improving fuel economy and handling, small models such as the Cimarron are also introduced 2000-2002: Cadillac races Northstar Le Mans Prototypes Early 1900s: Cadillac builds vehicles with a focus on style and luxury 1930s: Cadillac creates cars with V12 and V16 engines, offering power and luxury ESTABLISHING LUXURY ERA PERFORMANCE ERA Since inception, Cadillac’s focus has been on providing classy road comfort Cadillac’s evolutionary period, developing performance becomes a major focus

DEFINING RELEVANCE ERA Cadillac: 2007 - 2015 2010: Cadillac SRX re-designed 2011: Cadillac CTS-V Coupe 2012: Cadillac ATS introduced 2014: Cadillac CTS US Car of the Year 2015: Cadillac Escalade re-designed 2013: Cadillac Cue system introduced 2016: Cadillac CT6 launched, adding a new top range vehicle 2008: Cadillac CTS US Car of the Year 2014: Cadillac CTS re-designed 2008: Cadillac CTS Coupe 2017: Cadillac XT5 launches, replacing SRX 2007: Cadillac Escalade re-designed 2015: Cadillac “Dare Greatly” campaign launched 2015: Cadillac moves marketing to New York PERFORMANCE ERA DEFINING RELEVANCE ERA Consideration is a trend line. Cadillac’s evolutionary period, developing performance becomes a major focus Cadillac aims to reimagine the brand, downplaying associations with Detroit

Purchase Motivations are both Practical and Emotional

BrandWatch Blends Consumer Wants with Needs “Needs” tend to be practical and are very important to all shoppers “Wants” tend to be emotional and are very important at purchase EMOTIONAL PRACTICAL Ruggedness Reputation Safety Durability/reliability Fuel Efficiency Driving Comfort Driving Performance Interior Layout Technology Exterior Styling Prestige/ sophistication Affordability STRADDLES BOTH Formatting for charts Remove “almost” from practical line “wants” = not closer to purchase, but “very important at purchase”; “Wants” tend to be more influential Source: BrandWatch 2015 Q2 Principal Components Analysis, N = 3047 Q: Please review the list below and rate how important each of the factors are to you in deciding on your next new car.

Practical Factors are Table Stakes, Emotional Factors are Difference Makers Rating ★ Italian Location Romantic Italian image restaurant is cut off

Perceptions of Cadillac are Middle of the Road Trended Cadillac Ratings vs. Luxury Competitors Acura; Audi; BMW; Buick; Cadillac; Infiniti; Jaguar; LR; Lexus; Lincoln; Maserati; MB; Porsche; Tesla; Volvo Cadillac PRACTICAL Factor Ratings Cadillac EMOTIONAL Factor Rating Acura; Audi; BMW; Buick; Cadillac; Infiniti; Jaguar; LR; Lexus; Lincoln; Maserati; MB; Porsche; Tesla; Volvo Source: BrandWatch 2014 Q1 – 2015 Q3 N = 16854 Q: Please rate each of the following vehicles with respect to [factor].

Cadillac is not bad, but not outstanding either Highly Practical Highly Emotional

Cadillac: Selected BrandWatch Factor Ratings Driving Performance (E) Exterior Styling (E) Prestige/Sophistication (E) Reputation (E/P) Consideration is above average, but nothing stands out for this brand Source: 2007-2015 KBB BrandWatch

Durability/Reliability (P) Cadillac: Selected BrandWatch Factor Ratings Affordability (P) Driving Comfort (P/E) Durability/Reliability (P) Interior Layout (E) Source: 2007-2015 KBB BrandWatch

Audi: Journey Through Eras 1995: Audi nomenclature changes to a letter and number as is the case today 2005: Audi LED DRL introduced, a major styling development that is iconic for the brand 1989: Report with findings places acceleration blame on drivers is published; brand begins path to recovery 1999 -2014 Audi campaigns in Le Mans 1986: Audi 5000 Unintended Acceleration on 60 Minutes, hurts Audi’s credibility and sales tremendously 2006: Audi’s high performance halo R8 is introduced 1985 – Audi introduces the Audi Quattro rally car, the Quattro system helps Audi become a dominant force in the WRC. Quattro also comes to define performance for Audi. 1990 – Audi competes in DTM (German Touring Car Masters) racing series 1989 – Audi wins WRC mfg title DECLINE AND RECOVERY ERA PERFORMANCE ERA Decline and recovery era – “The Unintended Era”; “The LED/Performance Era” Audi’s period of decline due to scandal, sales decline 84% between 1985 and 1991* Audi competes in motorsport, begins to rebuild product and brand credibility Nomenclature change in 1995 and continued emphasis on performance help to evolve the brand *source: http://www.wsj.com/article_email/SB10001424052748704349304575115952186305536-lMyQjAxMTA2MDAwNDEwNDQyWj

1999 -2014 Audi campaigns in Le Mans 2013: Audi A3 sedan 2015: Audi R8 re-design 2010: Audi A8 L is made for China market 2011: Audi Q3 is introduced, the compact SUV segment is warming up 2009: Audi R8 used in The Wolverine movie 2015: Audi A4 re-design 2010: Audi A7 2008: Audi A4 re-design 2009: Audi Q5 STYLE ERA The brand receives styling acclaim and revolutionizes the way the industry designs headlights

Driving Performance (E) Audi: Selected BrandWatch Factor Ratings Driving Performance (E) Exterior Styling (E) Audi built its brand on emotional factors of style and performance Prestige/Sophistication (E) Source: 2007-2015 KBB BrandWatch

BMW: 2007 - 2015 2013: Debut of the BMW 6 Series Gran Coupe 2014: Debut of the BMW 4 Series Gran Coupe 2013: Debut i3 2007: Debut of the BMW X6 2012– DTM: BMW wins mfr championship 2014: Debut of the BMW 3 Series Gran Turismo 2015: BMW wins Int. Engine of Year 2014: Debut: i8 2013: Debut of 3 Series Gran Turismo 2012: BMW has 2 engines in Wards 2012 Top 10 Engine Awards 2010: Debut: X1 2014: BMW i3 Green Car of the Year Award 2015: BMW i8 Green Car of the Year Award DISRUPTOR ERA Traditional vehicle segments are challenged by the introduction of BMW’s new vehicle types starting with the X6 in 2007 1980

BMW: Selected BrandWatch Factor Ratings Driving Performance Exterior Styling BMW’s consideration is consistently high but some emotional factors are developing volatility Prestige/Sophistication

Renaming Strategy Risks & Opportunities

Consideration is showing the effects of the name changeover Infiniti: 2007-2015 Consideration is showing the effects of the name changeover “G” ERA “Q and QX” ERA Competition changes every year, but you control the changes you make

The Potential Impact of Transitioning Model Names When asked, just 40% of consumers associated “Q” with Infiniti nearly 2 years after rebranding Traffic on KBB fell nearly 50% from its peak and hasn’t recovered X, G, Q, F, M, J, E ?? Source: KBB Quick Poll 3/15. Q: When thinking about the luxury vehicle brand Infiniti, which letter resonates most with you when thinking about the carmaker’s current lineup? *Other letters include (in order of popularity): X, G, F, M, J, E Quick poll on KBB.com 3/15

share of Infiniti used car traffic Since G was removed from new car traffic, used traffic for G has been increasing… G now represents 53% share of Infiniti used car traffic +18% Used Car Visits

Insights Conclusions

Key Takeaways from Topics for Today Embrace your “premium”-ness Cadillac is well positioned; act on it! Take volume from non-luxury and luxury shoppers Break out of your “average” -ness Focus on key emotional and practical factors Solidify and defend strong consideration picture Support the naming convention campaign Awareness and associations Build the bridge between old and new names

Showcasing Cadillac on KBB.com Partners in Messaging

Appeal to high-end, non luxury brand shoppers

Focus Messaging on Practical and Emotional Factors

Build associations through high profile placement

Introducing A Unified Experience – NATIVE HOMEPAGE PACKAGE Drive more attention and boost awareness with native integrations High-profile package consisting of uniquely integrated sponsorships Includes prominent native sponsored placement in the Homepage Rotating Content Module and native Owners HP Takeover Homepage Rotating Content Module is one of KBB.com’s most effective traffic drivers for site content Homepage Rotating Content Module Owners Homepage Takeover Mocks are concept only. Actual design and layout of product is subject to change upon production.

NATIVE HOMEPAGE PACKAGE: Homepage Rotating Content Module Prominent homepage placement within a native site experience Sponsor owns the third slot in the HP Rotating Content Module and takes over the main header space above when selected Large sponsor photo Sponsor copy and link to OEM site with native look and feel 1 2 3 2 1 3 Mocks are concept only. Actual design and layout of product is subject to change upon production.

NATIVE HOMEPAGE PACKAGE: Owners Homepage Takeover Highlight multiple messages to potential shoppers at an early influence point Native billboard design resembling the Homepage Rotating Content Module and completely owned by OEM – Creative changes based on tab clicked by user Seamless inclusion of 3 messaging opportunities via tabs Clickable wallpaper – One creative MREC included 1 1 3 2 2 4 3 4 Mocks are concept only. Actual design and layout of product is subject to change upon production.

Thank You! Attendees: Contributors: Daniel Geiger Tamara Meyer Director, Advertising & BD daniel.geiger@kbb.com Melissa Couturier Sales Manager melissa.couturier@kbb.com Rebecca Lindland Sr. Director, Commercial Insights rebecca.lindland@kbb.com Contributors: Tamara Meyer Strategic Insights Analyst tamara.meyer@kbb.com Akshay Anand Manager, Commercial Insights akshay.anand@kbb.com

ATPs Shows Hyundai and Kia as Surprising Potential Non-Luxury Conquest Targets Cadillac ATS ATP: $40,689 Kia K900 ATP: $54,237 Hyundai Genesis ATP: $45,699 Cadillac CTS ATP: $51,778 Hyundai Equus ATP: $64,442

The XT5 Could Conquest VW, Dodge, Ford, and Jeep VW Touareg ATP: $48,491 Dodge Durango ATP: $40,983 Cadillac XT5 MSRP: $38,995 Ford Explorer ATP: $41,372 Jeep Grand Cherokee ATP: $41,906

M-Class traffic began declining once GLE ads appeared on new car pages Visits 12/3/15 GLE appeared on KBB.com