1. John Holt, CEO Automotive News World Congress 2006

2. Today’s Takeaways: Observations from 10 + Years in this Business > The Internet has arrived – at long last! > Its short-term effect was exaggerated; its long-term impact has been under-estimated > A comprehensive Internet strategy requires focus on both creating and converting opportunities -We have opportunities to transform existing spends and create opportunities for unheard of value -The average dealership is losing far more opportunities than it’s winning; conversion matters too > Internet impact and ROIs justify our attention and commitment

3. Cobalt CRM Cobalt CRM Cobalt Strategy Create and Convert Opportunities Create Opportunities 3 rd Party Leads Convert Opportunities Dealix Leads Website Leads (phone, email, walk-up) OEM Portals Websites Search

4. Topics > State of the World -Overall Internet Usage / Ad Spending -Automotive Industry Trends > Insights from Recent Surveys and Research -eBusiness Performance Data > Implications / Actions

5. State of the World: Internet Usage Keeps Growing Growing Internet Usage (Millions) Source: Nielsen NetRatings, ITU 2000 2005 ► 68% of total population ► More than doubled in five years Internet Users

6. Internet Ad Spending ($ Billions) Internet Ad Spending (and Paid Search) is Growing, Primarily at Expense of Newspapers Ad Spend Budget by Medium Source: American Advertising Federations 19952005 NewspaperTVInternet Radio Other Source: Park Associates. Jupiter 20052010 Other InternetPaid Search

7. Automotive Internet Ad Spending Driving Car Sales 2003 Source: Jupiter, Borrell Assoc. 2007 Automotive Internet Ad Spending ($ Billions) 20032009 18%* 33%* * Percent of total car sales. Source: Jupiter Internet-Generated New Car Sales (Millions)

8. Most Retailers Are Doing OK, But… ► High Sales Volumes – 8 th consecutive year of 16+ M vehicles sold ► Manageable Margin Pressure – OEM incentives – Low interest rates – Profit diversification Sales ($ M) Net Profit (%) Source: NADA Average Dealership Profile Success Factors

9. ► Growing Pressure – Identify advertising / marketing efficiencies and efficacy ► Internet’s Appeal – Buyers are there – Efficient, measurable means to attract in-market car buyers Implications Dealer Ad Spend per Vehicle Increasing Faster than Rate of Inflation CAGR: 7% Source: Park Associates. Jupiter

10. Third-Party Leads Growing in Importance Great ROI 2002 Source: Jupiter 8/05 2003 3 rd Party Leads as % of Total Dealer Internet Marketing Budget 20042005 Source: Jupiter 8/05 Percentage of Dealers Using 3 rd Party Leads 2006E 2004

11. The Huge and Coming Impact of Search Great ROI ► 67% of Auto Buyers Research Online* ► 70% Start at a Search Engine** * JD Power 2004 Autoshopper.com 2004 study ** Yahoo! Complete 2005 auto study Dealership Auto Buyers Dealer Website 3 rd Party Website OEM Website

12. Insights from Cobalt Research

13. Research Overview: Approach > Studied 12 months of leads to 1,329 dealerships -Over 1.1 million leads matched to actual vehicle sales by R.L. Polk -Analyzed close rates, sales cycle, brand defection, cross shopping > Telephone survey – interviewed 4,000 customers that submitted leads to evaluate their perceptions of dealership lead handling > Industry-wide eMystery Shop – over 4,000 dealers / 22 brands -Responsiveness, response times, quality of response > Conducted 20 onsite evaluations of high performers -Determined common best practices that lead to higher conversions

14. Research Overview: Key Findings 1. The majority of leads turn into sales 2. Most customers have a very short purchase timeframe 3. Most dealerships are experiencing a significant amount of “lost opportunities” 4. Dealership responsiveness to leads is improving, but the quality of those responses is not 5. High performers utilize a remarkably common set of absolutely teachable best practices

15. Based on registration information supplied by R.L. Polk & Co. Sales/leases have been adjusted for matching efficiency by a factor of 1.36, which represents a 73% historical match rate 56% of the leads resulted in a sale All New Vehicle Leads 56% 44% Leads not converted to a sale Leads converted to a sale Leads Are Real

16. Customers Have a Short Purchase Timeframe 0-3031-6061-9091+ 68% of leads closed to a sale within 90 days Elapsed time between the date of lead submission and date of lead closure Based on registration information supplied by R.L. Polk & Co. Sales/leases have been adjusted for matching efficiency by a factor of 1.36, which represents a 73% historical match rate

17. Based on registration information supplied by R.L. Polk & Co. Sales/leases have been adjusted for matching efficiency by a factor of 1.36, which represents a 73% historical match rate All New Vehicle Leads 56% 44% Leads not converted to a sale Leads converted to a sale Lost Opportunity is Significant 8% closed at the original dealership 92% closed at other dealerships = “lost opportunity” 8% Bought at Intended Dealer Sold at “Other” Dealer 92% All Leads converted to a Sale

18. Based on registration information supplied by R.L. Polk & Co. Sales/leases have been adjusted for matching efficiency by a factor of 1.36, which represents a 73% historical match rate All New Vehicle Leads 56% 44% Leads not converted to a sale Leads converted to a sale 8% Bought at Intended Dealer Sold at “Other” Dealer 92% 66% purchased the intended brand or a used vehicle at another dealership All Leads converted to a Sale Used (Any Make) Other Make (New) Intended Make (New) 42% 34% 24% Lost Opportunity All "Missed" Sales Lost Opportunity is Significant

19. *Source Cobalt 2004/2005 Industry-wide eMystery Shop Industry eMystery Shop Metrics 2004*2005* Overall Responsiveness60.0% 69.7% Response Time Average (hrs)9.5 6.5 Quality of Responses: Answered the Shoppers Questions38.2% 25.9% Used Brand or Product HighlightsNA 23.9% Dealership Responsiveness to Leads is Improving

20. *Source Cobalt 2004/2005 Industry-wide eMystery Shop Industry eMystery Shop Metrics 2004*2005* Overall Responsiveness60.0% 69.7% Response Time Average (hrs)9.5 6.5 Quality of Responses: Answered the Shoppers Questions38.2% 25.9% Used Brand or Product HighlightsNA 23.9% But Response Quality Has Slipped

21. Customers Cite Importance of a Quality Response What is the primary reason you bought a vehicle from the (intended) dealership? Price (price was competitive) Dealership Response (good, quick) Proximity (Dealership) Inventory

22. Customers Cite Importance of a Poor Response What is the primary reason you bought a vehicle from another dealership? Other Brand (customer decided to buy a different brand new vehicle) Dealership Response (poor) Price (too high)

23. Closing Remarks > What should you remember? The Internet matters! -It’s where the buyers are -It’s time to transform historic media spends; doing things the same old way “out of habit” is irrational and wasteful -The Internet requires focus on both creating and converting; doing it right means buying the right assets and making a commitment to people/process too -The ROIs justify the effort -We’re damn lucky to work on something so transformative

24. Thank You John Holt, CEO jwpholt@cobaltgroup.com