SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 1

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 2 UK Components industry – a snapshot SMMT - since 1902 representing the UK industry - vehicle manufacturers, OEM component and independent aftermarket manufacturers, suppliers and distributors Majority of UK automotive manufacturing capacity foreign-owned. Focus on quality, flexibility and exploitation of emerging technologies. Component industry fragmented and multi-tiered – 2600 companies; £3.8 billion annual revenue – 54% exports. Block Exemption Changes in “Tied aftermarket” and “Independent aftermarket”. Franchised dealers losing market to independents; rise in DIY for first time in 20 years; shrinkage in crash repair market. SERMI - Security related repair and service information

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 3 UK Automotive manufacturing – a snapshot UK vehicle production ranks 4 th in European volume. In 2010 exported over £27bn of vehicles and parts. 30 key manufacturing plants – 7 volume car, 11 commercial vehicle. 2.3 million engines manufactured 2010 – 72% exports. 1.39m vehicles made in 2010: –Car production rose to 1.27m in –CV production rose to 123,000 in % of cars and 73% of CVs manufactured in UK are exported. 11 of the global volume manufacturers have UK presence backed by 18 of the world top 20 suppliers UK had fourth highest R&D spend in Europe at over £1.5 billion p.a. – representing a fifth of core global automotive R&D activity.

Society of Motor Manufacturers and Traders Limited 71 Great Peter Street London SW1P 2BN SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED

PAGE 5 An introduction to SMMT The Society of Motor Manufacturers and Traders (SMMT) is the principal UK motor industry trade association Since representing the UK industry - vehicle manufacturers, OEM component and independent aftermarket manufacturers, suppliers and distributors Liaising with UK government – Automotive Council. Contact with EU Commission and trade bodies to influence national and international standards and legislation – and help members access UK and European government funding. Promoting industry - inward / outward trade delegations / exhibitor groups overseas, organising exhibitions including the annual Commercial Vehicle Show. Support on technical and vehicle legislation, e-business, quality, environment, education and training. Providing data services - acknowledged as reliable, accurate and comprehensive.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 6 UK Market Overview Majority of UK automotive manufacturing capacity foreign-owned. Mature market, 4th largest car producer in EU*. Exports worth an average of over £25 billion in the last five years - over 10% of the UK’s total exports. Car production rose to over 1.27m vehicles in 2010 (following decline to under 1m in 2009 due to global recession) – car exports increased in the past decade from almost 65% of output in 2000 to 75.7% in Commercial vehicle production consistently over 200,000 units for 5 years from 2004 (but fell back to 90,000 vehicles in 2009 unsupported by scrappage scheme). Production increased to 123,019 in 2010 with exports equating to 69.5% of production. UK had fourth highest R&D spend in Europe at over £1.5 billion p.a. – representing a fifth of core global automotive R&D activity. * Source OICA

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 7 UK Market Overview 31 key vehicle manufacturing sites: seven volume passenger car, 11 commercial vehicle, bus, coach and taxi manufacturers. A global base for engine manufacture with 2.3 million units in 2010 (reduced from high of >3.1m in 2008 – due to Japan effect). 19 of the world’s top 20 industry suppliers and vehicle assemblers including11 global volume vehicle manufacturers located in UK. Motor sport cluster for development and manufacture: eight F1 teams supported by over 300 specialist motorsport companies. Over 4,000 component suppliers Many foreign vehicle manufacturers now have UK-based R&D centres: Nissan at Cranfield; Ford at Dunton; SAIC at Longbridge; Changan at Nottingham; TATA at Warwick. Creation of UK Automotive Council – framework for collaboration with Government to improve the UK investment offer and positioning of UK as centre for ultra low carbon development.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 8 Key elements of the sector Efficient manufacture of both volume and premium / niche vehicles. Mature OEM component aftermarket and accessory manufacture. Strong power-train sector with technological innovation and scale. Low Carbon technology and electric vehicle development and manufacture. Comprehensive OEM aftermarket component manufacture, distribution, service and repair capacity. Strong independent design engineering and testing base. Significant foreign manufacturing investment and R&D investment / spend. In depth HE academic study & research and FE sector training. Construction equipment and components manufacture. Highly sophisticated retail and distribution logistics import / export services and finance.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 9 Some key issues for the UK automotive industry Economic crisis – Europe, USA, Japan market decline / overcapacity. Sustainable Government support – Access to finance. Low cost economy countries / High growth markets – both opportunity and competition. Local supply chain fragmented - erosion “hollowing out”/ overseas head office decision making. SME global trade awareness / global competitiveness / skills and training. Maintaining manufacturing efficiency, investment in UK based design engineering, research and development. Environmental / Low carbon legislation, alternative fuels, ICE hybrids, Electric vehicles.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 10 Some key UK technology opportunities In-vehicle communications and management systems – driver communications; congestion warning systems; navigation; telematics. Safety; driver / passenger / pedestrian protection. Fuel cells / powertrain / hybrid / electric vehicles. Materials; composites and alternative materials / jointing technology Environmental protection / emissions; sound and vibration technology Vehicle and engine management; monitoring technology Control and electronics and associated software. Rapid prototyping and manufacturing process improvement. Source : The United Kingdom Automotive Industries Report

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 11 Changing Dynamics of UK Car Sector Demise of the old ‘Big 3’ - Growth of Japanese & BMW UK Vehicle Production in Thousands

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 12 UK Production Restructuring, Rebirth, Recession, Recovery Vehicle Production in Millions Years

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 13 UK vehicle manufacturer range VOLUME BMW - Mini range of cars Honda - Civic, CRV, Jazz & Jazz Hybrid cars Jaguar – New XJ, XK XF & R cars Land Rover - Defender, Discovery,Freelander, Range Rover, Range Rover Sport & Evoque (from 2011) Nissan – Micra, Note / Tone, Qashqai & Juke (and Leaf electric in 2012) Toyota - Auris, Auris Hybrid & New Avensis Vauxhall – New Astra car plus Astra & Vivaro vans, Ampera EV (from 2013?) COMMERCIAL Alexander Dennis - Enviro, Primo, Centro, Javelin buses & coaches Dennis Eagle - Duo, Twin Pack, Beta 2, Elite 2, & Phoenix 2 refuse trucks Ford - Transit van, Transit Minibus GM/IBC – Renault Trafic Minibus, traffic Van, Vivaro Minibus, Vivaro Van Leyland Trucks - DAF CF, XF, LF & Hybrid trucks London Taxis Int - TX4 taxi and hydrogen fuel cell demonstrator Optare - Solo, Versa, Tempo, Olympus, Sirocco & Toro single & double deck buses Smith Electric Vehicles Edison 2.5t – 4.6t., Newton 7.5 – 12t. Wrightbus - Midi, Maxi, Full size, Double Deck, Hybrid Electric, Dual Purpose, Schoolbus, StreetCar & RTV buses PRESTIGE / NICHE LOW VOLUME Aston Martin - DB9, Vantage, Lagonda, Vanquish (from 2014,2011), Cygnet (from 2011) cars Bentley - Arnage, Azure, Brooklands, Continental & Mulsanne cars Caterham - Classic, Super 7, Roadsport, Academy, Superlight & CSR Coventry Prototype Panels – Saab Spyker C8 Aileron road and race cars Ginetta - F400, G50EV & G50R road cars & G20, G40, G40 Junior, G50 & Zytek race cars Lotus - Elise, Evora, Exige, Europa and new Elan and Esprit sports cars McLaren Automotive MP4-12C sports car (from 2011) Morgan – Aero 8, AeroMax, Supersports, 4/4 Sport, 4 seater, Plus4, Roadster & Roadster Sport sports cars Rolls Royce - Phantom & Ghost cars SAIC - MGF sports car & MG6 saloon FORMULA 1 McLaren racing Mercedes F1 - formerly Braun Red Bull Williams F1 Renault F1 Force India Lotus F1 Virgin Racing

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 14 Engine manufacture 2.39 million engines manufactured in 2010 (up 16% from 2009). Key manufacturing plants include: Ford, Dagenham & Bridgend1,640,197 BMW, Hams Hall385,051 Honda, Swindon136,658 Toyota, Deeside114,254 Nissan, Sunderland105,766 Cummins, Darlington43,525 VW, (Bentley) Crewe4,791

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 15 UK Design and Engineering Skills Vehicle conceptualisation and styling. Product planning and development. Engine engineering. Vehicle body, chassis, powertrain & trim. Structural analysis & vehicle simulation. Manufacturing engineering/feasibility. Rapid prototyping services. Testing and validation, homologation. Special training packages (for CAE, CAM). Electrical and electronics, chip designing. Vehicle component development.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 16 UK Car Production Car output in 2010 increased 27.1% to 1,270,444 ( ,460) Nissan highest production at 423,262 – increase of 25% on 2009 Export market is 75.7% of production

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 17 UK Commercial Vehicle Production 2010 production increased by 35.7% at 123,019 vehicles Vauxhall and Ford = 85.7% of all CV production Export market is 69.5% of production ( %)

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 18 Strengthening production volumes Output stabilising as VMs confirm ongoing investment

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 19 Vehicle Manufacturing Productivity (Average Selected Plants) Whilst UK is considered a higher-cost manufacturing location it has excellent productivity compared with other countries in Europe Source: World Markets Research Centre

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 20 Long-term commitment to UK plants Announcements in 2010: £1.5bn investment in engineering and manufacturing facilities by Ford. £1.4bn investment at Swindon by Honda. JLR to retain all three production sites, creating 1,500 new jobs. £420m investment by Nissan to make LEAF and batteries. McLaren Automotive MP4-12C to be produced in Woking. JLR award over £2bn of supply contracts for the Range Rover Evoque. Next generation Vivaro confirmed for Vauxhall’s Luton plant in Expansion of the TATA European Technical Centre in Warwickshire. Aston Martin Cygnet production to create 150 new jobs.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 21 Long-term commitment to UK plants Further announcements in 2010: MG6 GT to be designed engineered and assembled in Longbridge. JLR invest £490mn in Solihull for the C-X75 hybrid supercar. Optare opened new 1,200 capacity bus manufacturing facility in Yorkshire. Aston Martin Rapide production moving to Gaydon. Nissan’s £192m investment in the new Qashqai. BMW’s £500m investment across all it’s facilities for the new MINI Coupe and MINI Roadster.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 22 It’s not just about vehicle manufacturers Growing the UK supply chain: About 80% of all component types required for vehicle assembly operations can be procured from UK suppliers. The supply chain represents about 40% of the retail price of a passenger car. The UK automotive supply chain typically generates £4.5 - £5bn of added value annually. Around 2,350 UK companies regard themselves as ‘automotive’ suppliers, employing around 82,000 people. It is estimated that every job in a vehicle’s assembly supports 7.5 elsewhere in the economy.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 23 Production Exports / Registration Imports The UK increasingly manufactures cars to export and imports cars to drive 76% production exported - 85% registrations imported % of vehicle production and registrations

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 24 UK New Car Registrations In 2010 the car motor parc was 31.14m ( m) Diesel market remains strong for lower medium and above Super mini remains UK largest sector purchase (36.4%) MPV and 4x4 SUV market share continues to rise Hybrid and EV demand only slowly increasing and replaces LPG demand – AFV registrations in 2010 were 22,865 – 1.12% market share, of which 167 were Electric vehicles. Ford Fiesta, Vauxhall Astra and Ford Focus top 3 cars Market over past 12 months has risen 1.8% to 2.03m vehicles matching 2009 SMMT prediction

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 25 New car registrations The scrappage scheme helped support volumes. Market down 7.3% to May and set to end 2011 at 1.93 million units. New car registrations, 12 month moving annual total 2008 to 2012 Market stabilised, at lower level

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 26 New car registrations Scrappage in place May 2009 to March 2010 (with some overhang). Represented almost 15% total sales over that period. New car registrations, 2009 to 2011, with scrappage identified (Source SMMT) Impact of scrappage scheme

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 27 Automotive Council – An industry and government partnership Create a transformed business environment for the automotive industry in the UK to provide a more compelling investment proposition for related industries; Develop further the technology roadmaps for low carbon vehicles and fuels, and exploit opportunities to promote the UK as a strong candidate to develop these and other technologies; Develop a stronger and more competitive automotive supply chain; Provide a stronger public voice for the industry to support the value of the industry to the UK and to global partners; Ensure a strategic, continuous conversation between government and the automotive industry in the UK.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 28 UK automotive – driving economic growth A strong future at the heart of the low carbon agenda Low carbon growth through investment in R&D and technology will deliver long-term growth. Supporting suppliers and reinvigorating the automotive supply chain. Attracting international investment and growing business through trade. Increasing skills to equip a new generation.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 29 Moving to a lower carbon transport network Meeting EU legislation: 130g/km by 2015, the equivalent of 58mpg with a diesel engine and 52mpg in a petrol car. 65% of new cars averaging the 130g/km target by 2012 rising to 100% in Manufacturers exceeding the targets will be heavily fined per additional gram of CO 2 emitted, for every car registered across Europe. Specialist targets for small volume and niche manufacturers.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 30 Moving to a lower carbon transport network Average new car CO 2 emissions keep falling

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 31 Why Inward Investors Choose the UK Our industry capability. In EU / outside Euro / Internationally aware / globally connected / politically stable English speaking, flexible and diverse labour force. Extensive, sophisticated & established vehicle and parts cluster. World-leading hub of innovation and R&D. Strength and direction of the Automotive Council and Government support for automotive R&D and manufacturing. UK positioning as a world leader in the development, demonstration, manufacture and use of ultra-low carbon automotive technology. BMW Mini Jaguar C-X75 Prototype now to go into production The UK is leading the change for new transport low carbon technologies and reducing production and usage emissions.

Society of Motor Manufacturers and Traders Limited 71 Great Peter Street London SW1P 2BN SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED