Society of Motor Manufacturers and Traders Limited 71 Great Peter Street London SW1P 2BN SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED The UK Automotive Scene Supplementary data for Auto Expo 2012

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 2 UK Market Overview key vehicle manufacturing sites: seven volume passenger car, 11 commercial vehicle, bus, coach and taxi manufacturers. Global base for engine manufacture, 2.3m. in of the world’s top 20 industry suppliers and 7 global volume vehicle manufacturers located in UK. Motor sport cluster for development and manufacture: eight F1 teams supported by >300 specialist motorsport companies. 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. – and Jaguar-Land Rover 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 3 UK Market Overview - 2 Majority of UK automotive manufacturing foreign-owned. Mature market, 4th largest car producer in EU*. Exports average >£25 billion annually, over 10% of UK exports car production nearly 1.3mn, up from 75% in Commercial vehicle production consistently > 200,000 between , but just 90,000 in 2009 (not supported by scrappage scheme) production back to c123,000, with exports c70%. UK had fourth highest R&D spend in Europe at over £1.5 billion p.a. * Source OICA

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 4 UK Market Overview - 3 SMMT 12th Annual Sustainability Report 18 signatory companies - across the broader industry, shows year on year: Manufacturing turnover up 20% to £49bn. Output up 27.8%, returning to pre-recession volumes. Number of vehicles exported up 31%, totalling £29bn in value. Energy use per vehicle produced down 8%. Manufacturing CO 2 emissions down 10.5% per vehicle produced. Manufacturing waste to landfill produced per vehicle down 8%. New automotive apprenticeships up 9% adding to the 737,000 jobs dependent on the sector.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 5 Key elements of the sector Strong independent design engineering and testing base. Significant foreign manufacturing investment and R&D investment / spend. Efficient manufacture and high export ratios of both volume and premium / niche vehicles. Strong powertrain sector with technological innovation and scale. Low carbon technology and electric vehicle development and manufacture, with strong government support. Comprehensive OEM aftermarket component manufacture, distribution, service and repair capacity. In depth HE academic study & research and FE sector training. Highly sophisticated retail and distribution logistics import / export services.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 6 UK Production Restructuring, Rebirth, Recession, Recovery Vehicle Production in Millions Years

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 7 Long-term commitment to UK – major announcements in BMW: £500m investment across all 3 UK facilities for the 3 rd generation MINI; expansion of range to include Coupe and Roadster Minis Ford: 5 year £1.5bn investment in engineering and manufacturing facilities. GM: next generation Vivaro confirmed for Vauxhall’s Luton plant from 2013/4. Honda: commitment to new Civic and CRV, following total £1.4bn investment at Swindon. Nissan: £420m investment to make LEAF and batteries; £192m investment for new Qashqai Tata JLR: retaining three vehicle assembly sites, build new engine factory, widen product range, creating >2,000 new jobs; >£2bn of supply contracts for the Range Rover Evoque; £490mn investment for C-X75 hybrid supercar Tata: establishment and expansion of European Technical Centre. Aston Martin: Cygnet production to create 150 new jobs; Rapide production moving to Gaydon from Austria. McLaren: MP4-12C to be produced in Woking. SAIC MG: MG6 GT to be designed engineered and assembled in Longbridge. Optare: new 1,200 capacity bus manufacturing facility in Yorkshire..

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 8 Key issues for the UK automotive industry Economic crisis in Europe, USA, Japan, alongside market decline / overcapacity in some markets. Sustainable Government support? Problems with suppliers’ access to finance. Low cost economy countries / High growth markets – both opportunity and competitive threats. Local supply chain fragmented - erosion “hollowing out”/ overseas head office decision making. Some SMEs lack 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 9 Key UK technology opportunities Build and retain capacity in “sticky” technologies, ie: –Energy storage and management –Electric motors and power electronics –Lightweight technologies –CO2 and emissions reduction technology Other key technologies in which UK has potential: –In-vehicle communications and management systems, driver communications; congestion warning systems; navigation; telematics. –Materials; composites and alternative materials / jointing technology –Environmental protection / emissions –Rapid prototyping and manufacturing process improvement.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 10 Changing Dynamics of UK Car Sector Demise of the old UK ‘Big 3’ - Growth of Japanese & BMW UK Vehicle Production in Thousands

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 11 UK vehicle manufacturers’ product ranges VOLUME CARS BMW - Mini range, incl. Clubman, Coupe and Roadster Honda - Civic, CR-V & Jazz Jaguar – XJ, XK XF Land Rover - Defender, Discovery, Freelander, Range Rover, Range Rover Sport & Evoque Nissan – Note, Qashqai & Juke (and Leaf electric from 2013) Toyota - Auris, Auris Hybrid & Avensis Vauxhall – Astra COMMERCIAL Alexander Dennis - buses & coaches Dennis Eagle - refuse trucks Ford - Transit van, Transit Minibus Vauxhall – Vivaro van and minibus, plus Renault Trafic versions Leyland Trucks - trucks London Taxis Int - TX4 taxi and hydrogen fuel cell demonstrator Optare - single & double deck buses Wrightbus - buses PRESTIGE / NICHE LOW VOLUME CARS Aston Martin - DB9, Vantage, Virage, Cygnet Bentley – Continental, Mulsanne Caterham - Classic, Super 7 Ginetta - F400, G50EV & G50R road cars & G20, G40, G40 Junior, G50 & Zytek race cars Lotus - Elise, Evora, Exige ; new Elan, Elise & Esprit McLaren Automotive MP4-12C sports car (from 2011) Morgan – Supersports, 4/4 Sport, 4 seater, Plus4, Roadster & Roadster Sport sports cars Rolls Royce - Phantom & Ghost SAIC - MG6 saloon FORMULA 1 McLaren racing Mercedes F1 - formerly Brawn Red Bull Williams F1 Renault F1 Force India Lotus F1 Virgin Racing

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 12 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 13 UK Design and Engineering Skills Product planning and development. Vehicle conceptualisation and styling. Rapid prototyping services. Manufacturing engineering/feasibility. Structural analysis & vehicle simulation. Vehicle body, chassis, powertrain & trim. Vehicle component development. Electrical and electronics, chip designing. Engine engineering. Testing and validation, homologation. Special training packages (for CAE, CAM).

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 14 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 15 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 16 Vehicle production – moving annual total Car production rolling year total CV production rolling year total

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 17 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 18 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 19 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 in 2010 has risen 1.8% to 2.03m vehicles matching 2009 SMMT prediction

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 20 November 2011 Registrations - new cars market down - but fuel efficiency better than ever New car demand fell by 4.2% in November to 134,000 units, but was some 5,000 units above forecast. Diesel and alternatively fuelled cars both took record market shares in the November market. Average new car fuel efficiency improved 29.3% in last 10 years, giving the highest ever mpg. New car registrations over the first 11 months of 2011 were down 4.5%, at 1,822,000 units. Market looks set to better full year forecast of million units, but caution remains over 2012.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 21 November 2011 Registrations van and trucks market continues upward trend, growing 19.1% Van and truck registrations up 19.1% to 27,187 units in November, rolling year up 18.6% to 300,331. Truck registrations up 21.5% to 4,503 in November month, rolling year up 24.4% to 41,507. Van registrations up 18.6% to 22,684 units in November, rolling year up 17.7% to 258,824.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 22 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 23 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 24 Automotive Council – A very powerful industry and government partnership Has helped to transform automotive business environment to provide a more compelling investment proposition for related industries; Expanding technology roadmaps for low carbon vehicles and fuels, to help promote the UK as a strong candidate to develop these and other technologies; Developing commodities roadmap helping to develop a stronger and more competitive automotive supply chain; Providing a very strong public voice for the industry to support the value of the industry to the UK and to global partners; Ensuring high level, strategic, continuous conversation between government and the automotive industry in the UK.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 25 Moving to a lower carbon transport network Meeting EU legislation: Average of 144.2g/km in 2010 – 3.5% down on 2009 and 20.3% on Q at 138.5g/km, down 4.0% on 2010 and 23.5% on g/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 26 History and levels of Euro standards for cars Euro Standards Entry into force (new type approvals) Emission limits New car types All new cars Petrol NOx Diesel NOx Diesel PM Euro 01 Oct '911 Oct ' mg/km1600 mg/km(no limit) Euro 11 Jul '9231 Dec '92490 mg/km780 mg/km140 mg/km Euro 21 Jan '961 Jan '97250 mg/km730 mg/km100 mg/km Euro 31 Jan '001 Jan '01150 mg/km500 mg/km50 mg/km Euro 41 Jan '051 Jan '0680 mg/km250 mg/km25 mg/km Euro 51 Sep '091 Jan '1160 mg/km180 mg/km5 mg/km Euro 61 Sep '141 Sep '1560 mg/km80 mg/km5 mg/km

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 27 UK air quality is improving Since 2000 – levels of pollution are falling. New Car - average CO 2 emissions have fallen by over 20% - dropping 3.5% in Diesel engines have contributed to this improvement. A car built today (Euro 5), compared to one built in 2000 (Euro 3) has reduced its CO2 by 13% and emissions of other pollutants by at least: nitrogen oxides (NOx) 64% particulates (PM10) 90% carbon monoxide (CO) 22% Road transport emissions have also been reduced: nitrogen oxides (NOx) 40%, particulates (PM10) 30% carbon monoxide (CO) 60%. Source: Government figures (DfT – Transport Statistics GB)

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 28 UK average new car CO 2 emissions UK average new car CO 2 emissions (Source SMMT)

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 29 Car CO 2 emissions, parc and distance travelled Reduction despite increase in distance travelled and parc size since Further declines expected, as distance travelled curbed and efficiency improves. Source DECC/SMMT/DfT

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 30 Distribution of market by VED bands Band E ( g/km) most common, in 2000 it was Band G ( g/km). Band A (<100g/km) share doubled in 2010 and again in Distribution of the new car market by VED bands (Source SMMT) BandABCDEFGHIJKLM CO2 g/kmUpto Over 255 Standard rate £ st year rate £

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 31 UK performance vs European average UK making better progress than EU average % ch ‘10 vs ’09 % ch ‘10 vs ’00 UK144.2g/km149.7g/km185.4g/km-3.7%-22.2% EU140.3g/km145.7g/km172.2g/km-3.7%-18.5% France130.5g/km133.5g/km163.6g/km-2.2%-20.2% Germany151.2g/km154.0g/km182.0g/km-1.8%-16.9% Average new car CO 2 emissions across the EU (Source EC)

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 32 Existing CO 2 Regulations for cars and Vans EU has adopted CO2 Regulations for cars and vans. Individual manufacturer targets add up to deliver EU fleet average target. New car fleet 130g/km in 2015 (19%) 95g/km in 2020 (39%). New van fleet 175g/km in 2017 (14%) 147g/km in 2020 (28%).

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 33 Existing CO 2 Regulations for cars and Vans Important flexibilities Targets phased in (cars), (vans). Derogations for small volume and niche manufacturers: targets consistent with their economic and technological potential. Eco-innovations, super credits, pooling. Integrated approach includes CO 2 based tax, consumer information. (labelling new and used cars, databases), MAC, LRRT, GSI etc.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 34 Outlook for car emissions EU-wide target for 130g/km by 2015 and 95g/km 2020 (subject to IA). Note EU, not UK specific targets. 38.2% of 2010 UK market <130g/km. EU-wide van target - 175g/km by and 147g/km by 2020 (subject to review). UK average new car CO2 emissions and EC wide regulation targets ( Source SMMT/EC )

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 35 Next Challenge: Heavy Duty Vehicles (HDVs) HDVs are not yet regulated for CO 2 in Europe. Measurement method is the bottleneck in policy making. Research ongoing, likely to use computer simulation and validate with physical testing. EU Commission policy development timetable: February/March measurement methodology stakeholder meeting. May/ June draft EU strategy stakeholder meeting. End impact assessment. First half Commission to propose strategy.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 36 Longer Term Strategy for 2030 and 2050 EU ambitions and UK binding targets EU committed to 20% CO 2 cut by 2020 (or 30% if global targets) and 80-95% by UK is legally committed to: Carbon Budgets for each five year period to % CO 2 cut by % cut by 2050 (both relative to 1990, all sectors) (Cannot stop there, need more cuts by 2100). UK government will set out it’s strategy to meet the Carbon Budgets (“Autumn Strategy” due 1 December). UK Automotive Council technology roadmaps for cars, commercial vehicles, off-highway.

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 37 High Level Technology Roadmap - CARS OEMs share a common view (Individual manufacturers will prioritise certain technologies to fit with brand values)

SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE Low carbon Commercial Vehicle & Off-highway roadmap has parallel technology streams depending on duty cycle UK CO 2 Target CO 2 and GHG reduction Air Quality Improvements LD Van CO 2 Regulation Possible HD/MD CO 2 Regulation Drivers CO 2 reductions limited by air quality regulations Fuel cell vehicles Fuel Cell APUs H 2 infrastructure DemosPlug in hybrid Micro/Mild hybrid Full hybrid Medium Duty Cycles Niche EVs Commercial/Off-Highway EV’s Light Duty Cycles Powertrain efficiency improvements/ancillary electrification Advanced highway vehicle aerodynamics/selective lightweighting Sustainable liquid/gaseous fuels Waste heat recovery Advanced thermodynamic cycles Biofuels Intelligent vehicles logistics – operational efficiency (On & Off-highway) Heavy Duty Cycles IC Engine efficiency improvements “Zero” Air Quality Impact Technology Roadmap

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