US Market Update: Auction Academy Southern Auto Auction May 13, 2014

Topics of discussion Economy –Current Conditions New Vehicle Market –Sales –Incentives –Lease/Fleet Penetration Used Vehicle Market Outlook –Overall Market –Market Outlook 2

Economy 3

GDP Growth in the 1st Quarter was Stagnant. In the government’s 1 st estimate (advanced estimate), GDP increased in 2014Q1 by 0.1%, after increasing by 2.6% in 2013Q4. Contributing to this weaker than expected rate was the harsh winter weather experienced in the United States. Prices (CPI) saw an increase in March of 1.5% when compared to a year ago. * Federal Reserve Statistical Release ^ Bureau of Labor Statistics 4

Unemployment decreased in April while gas prices continued to climb. The unemployment rate fell to 6.3% in April. In April of 2013, the unemployment rate was at 7.5%. Gas prices increased to $3.74/gallon in April (from $3.60/gallon in March). Through the first week of may, gas prices are at $3.76/gallon. Consumer sentiment increased to 84.1, up from 80.0 in March. + University on Michigan # Department of Energy ^ Bureau of Labor Statistics 5

New Vehicle Market 6

Light vehicle sales were strong for the second straight month in April with million units (SAAR). Light vehicle sales in April fell by 2.1% (15.98 million SAAR) from March. When compared to last April, light vehicle sales increased 5.4%. This is the second month where light vehicles sales were near or above 16 million (SAAR). The last 2-month period with comparable sales figures was Oct- Nov Total Incentives in March were 15.43% of MSRP. Up from 12.34% in February. Incentives climbed for much of 2013 before dropping to 11.22% in January of Since January, incentives have climbed upward and are now above their 2013 level. * Federal Reserve; SAAR = Seasonally Adjusted Annual Rate & CNW Research 7

New car prices saw a small increase on a year-over-year basis. New car prices in March increased by 0.2% from a year ago. Since February, new car prices have remained flat. ^ Bureau of Labor Statistics 8

9 Cash incentives offered on new vehicles will increase through the 2017 model year. Cash incentives will increase through the 2017 model year before seeing a small decline. The major factors influencing the increase in cash incentives are: 1)A Forecasted increase in competition among manufacturers 2)Expected increases in interest rates on new vehicles

10 Both lease and fleet penetration increased in the 4 th quarter of The Lease penetration rate for 2013Q4 was 24.1%, up from 20.8% in 2013Q3 The fleet penetration rate for 2013Q4 was 18.0%, up from 15.3% in 2013Q3. The fleet penetration rate for 2012Q4 was 19.8%.

Lease Penetration will increase over the next 2 model years. Lease Penetration on a model year level are expected to increase from 18.5% for 2013MYs to 18.7% for 2014MYs. A greater number of redesigned vehicles along with higher forecasted interest rates will lead to greater leasing, offsetting increases in used vehicles supply. Source: Polk 11

12 Fleet Penetration will decrease over the next 2 model years. Fleet Penetration will fall from for the 2013 MY to 18.7% for the 2014 MY and 18.2% for the 2015 MY. Despite the predicted decrease in Fleet Penetration, the volume of fleet cars will increase for the 2014 MY. This is due to the strong light vehicle sales predicted over the next 2 years.

Used Vehicle Market Outlook 13

Our used car price index increased 1.0% from March and has increased 5.4% from last April. 14 RVI Used Car Price Index (nominal prices) - Our index (January 2001 = 1.0) measures the wholesale values of used cars (2-5 yr-old vehicles) adjusted for mileage, mix, and seasonality.

After adjusting for MSRP, our residual value retention index increased 1.0% from February, with an increase of 2.4% from April of RVI Residual Value Retention Index (real prices) - Our index (January 2001 = 1.0) measures the wholesale values of used cars (2-5 yr-old vehicles) as % of MSRP, adjusted for mileage, mix, and seasonality.

16 segments saw increases in April when compared to March. 16 In April, used prices in the Mid-Size Sedan segment increased slightly from March (0.4%). However when compared to April 2013, used prices in the segment increased by 3.0%. Used Small SUV prices remained flat from March (up 0.1%), but have increased 6.4% since April of last year. Used Compact prices also remained flat in April from March (down 0.1%) but have increased 3.0% since April of In April, the Luxury Small Sedan segment is the only segment to see a decrease in price from last April (a decrease 2.9%).

When adjusting for MSRP, the price changes are less dramatic but show similar trends. 17 After adjusting for MSRP, used Mid-Size Sedan prices have increased 1.7% from April In April, used Small SUV prices saw no change from March but have increased 3.4% since April of Used Compact prices increased 3.0% from April of 2013 on a nominal level. However, once adjusting for MSRP the year-over-year price increase is less dramatic (0.7%). In April, Luxury Small Sedan prices fell on a nominal level by 2.9% from last April. Adjusting for MSRP, our Retention index shows a more dramatic decrease in prices of 4.1%.

We expect to see used car prices begin to decline from current levels in % Bureau of Labor Statistics # Department of Energy *Federal Reserve ¹Moody’s Analytics Forecast ^RVI Analytical Services Positives 1.Unemployment declines through 2018 (wealth effect) Negatives 1.Used car supply steadily increasing from 2014 through New car prices are expected to decline throughout our forecast. 3.Higher new vehicle sales through 2015 (substitution effect)

19 We expect strong prices in the Mid-Size Sedan segment in 2014 and 2015 before beginning to decline in 2016.

20 Compact cars will also see a decrease in prices in as supply and competition go up.

21 Prices in the Small SUV segment will decline from current levels through 2017 as the supply of used Small SUVs will increase.

22 Full-Size Pickups will decline through 2019 due to increases in gas prices and the supply of used vehicles within the segment.

Appendix: RVI Used Car Price Index Forecast by Segment 23

24 Appendix: RVI Used Car Price Index Forecast by Segment

25 Appendix (Continued)