GT - Automotive Messenger UK - October 2012

Automotive Messenger
October 2012

It’s impossible to ignore the crisis in the Euro Zone and the deterioration of economic
conditions across the EU, so in this issue we examine how Europe is affecting the
UK’s automotive retail industry.
This comes at a time when, paradoxically, hit heavily by European operations; it stronger. Inchcape, for example, has
the performance of the UK automotive is now forecasting a $1bn full-year loss been establishing stronger ties with key
sector is on an upward curve. Six in Europe. The more Europe-centric manufacturers, particularly those in the
consecutive months of growth to the PSA saw first-half automotive operating profitable premium segments.
end of August saw registrations up 3.3% income fall EUR 1.7bn, (406%), while It is this kind of approach which will
for the first eight months of the year. Renault’s net income for the period fell by protect dealer groups from the macro-
Encouragingly, this was not a result EUR 467m, 37.3%. Even VW reported economic forces of Europe and its ailing
of fleet business, which was static, but slowing earnings growth, attributing car industry, and the effect this will
private sales, which increased by almost it to technology investment costs and have on the UK. The car manufacturers
11%. the sovereign debt crisis, whilst BMW will increasingly stand or fall on the
However, the fact that the UK is reported the first drop in quarterly profit desirability of their products; dealers will
now back in recession is not the only for three years. succeed or fail on the basis of the brands
reason to be extremely cautious. We all Results in the UK’s retail sector have they represent and the quality of their
understand that the scale of Europe’s been somewhat better though. Inchcape people. To attract and keep customers
economic problems could infect the UK, has announced first-half sales of £3.1bn, requires both.
but if, as is now being mooted, Germany up 6.1%, and operating profit up 10.1% I hope you enjoy this issue of AM and
also goes into recession, confidence to £138.4m. The company does have find it useful. And, as ever, I would love to
could plummet to new levels. Combined significant operations overseas but others hear your views.
with the automotive industry’s perennial have also experienced success. Vertu
problem of overcapacity this would have a Motors increased revenue by 11.6% in
dramatic effect on car sales, and the weak the quarter to June, with 5.1% growth for
Euro would mean an increase in exports vehicle sales, and 4.7% in profitability.
to the UK, in turn creating over-supply In this issue of AM we also take look
and reduced margins for the UK. at how the top 100 dealer groups fared
The early signs for the remainder in 2011. There was a significant increase
of the year bring this scenario a step in transactions and some notably good
Daniel Taylor
closer: German registrations fell 4.7% in results for the biggest groups in terms Head of Automotive Advisory
August, year-on-year, against a backdrop of return on sales, partly as a result of T +44 (0)118 983 9601
of widening belief that its carmakers efficiencies necessitated by the economic M +44 (0)7976 225 265
www.grant-thornton.co.uk/automotive
have been engaged in large-scale self- downturn. In addition the practice by
registration to boost the figures. regional groups of strategic focus – Contents
And the latest financial results make typically on local markets or specific
for a chastening read. Ford’s second-half brands – has begun to be adopted by the 02 European Market Review
pre-tax operating profit fell by $1.6bn, larger groups, and the correlation between 05 Dealer Trends
42%, and net income by $ 2.5bn, 51%, focus and performance is becoming 07 Performance Commentary


European market review

UK performance
2012 performance in the UK has held up well against a backdrop in Europe which is
coming under increasing pressure. Registrations for the eight month period were up
by 3.3%, with private demand driving much of the growth, in contrast to last year,
suggesting that a more sustainable recovery is occurring. In August registrations
were up 0.1%, the sixth consecutive monthly increase, leading on from July figures,
when SMMT revised upwards its full year forecast to 1.97 million (compared to 1.94
million in 2011).

The figures look good, but as ever both in relation to vehicle sales and the Registrations in the region during
need to be interpreted with a degree aftersales business. the first eight months of the year were
of caution given the extent to which On the back of this pressure, down 6.6% on 2011, with demand in
pre-registrations can distort the business failures in the dealer space have France (-13.4%), Italy (-19.9%) and
picture. There is also some growing increased in the last eight months. Some Spain (-8.5%) underlining the Euro
evidence of supply push into the UK of this undoubtedly reflects a ‘catch-up’ Zone problems; Greece and Portugal
away from the troubled Eurozone from the years 2009 to 2011 which saw were both down by over 40%. Demand
markets, and to take advantage of the comparatively few failures on the back in Germany fell 0.6% and the UK
more favourable sterling exchange rate. of the many industry support measures increased marginally by 3.3%, but
Additionally, there remains a significant and manufacturer actions. Additionally, no-one is safe: to shift vehicle stock
range of performance across brands, the current pressures are beginning to many manufactures have engaged in
with premium brands continuing to tell on those dealers at the bottom end a damaging price war, with financial
significantly out-perform volume, of the performance spectrum. Given the losses as a result. Only a handful of
although even these now are finding the problems in Europe which we discuss manufacturers have maintained growth
going a little tougher. All these factors further below, it is likely that these in sales (interestingly predominated by
have an impact on the performance pressures will increase in the remainder the ‘value’ brands Skoda, Hyundai and
of dealers which does not necessarily of 2012. The scale of the fall out will Kia).
translate directly from the positive unit depend in part on the an effort by
headline figures. manufacturers to manage supply and Capacity and demand
As reported elsewhere in this issue, avoid a repeat of 2008. The core problem is not new, but
at a UK dealer level, profitability has come to the fore with renewed
across the board was down in European impact vengeance: there is too much capacity
2011, reflecting the tougher market The gloom in European may not always and the imbalance of production and
conditions compared to 2010 - this appear to have a direct bearing on the demand is bleeding profit (recent data
trend continued into 2012, impacted by UK, especially when performance shows a substantial gap re-emerging
the wider macro-economic pressures, across the individual markets varies so between production and sales). It is
and despite the sustained vehicle unit widely, but our retail automotive sector estimated that net pricing decreased
sales performance. This is indicative is unavoidably linked to Europe’s car by 1% in 2011 and is likely to worsen
of the margin pressure that persists, industry. this year. With forecasters expecting

2


registrations to decline by as much as reports of unprecedented discounts and could be key in restoring the brand’s
8% over the whole year, the problems incentives being offered by Opel, Fiat, UK fortunes. The state of the market is
will intensify. Renault, Seat and Peugeot, and in June prompting even Hyundai-Kia, which is
The overcapacity is simply even VW engaged in price cuts as the growing in almost all markets, to revise
illustrated. In 2007 around 16 million region saw a ninth straight monthly its strategy: short-term it is reducing
cars were sold; this year is likely to sales fall. its efforts in low-potential markets
total little more than 12 million. With Demand for the mainstream brands to focus on Germany, the UK and
strong political resistance to job losses, has been doubly squeezed – from above Scandinavia.
few plants have closed, and at the by the growing presence of premium
same time there is growing capacity brands entering mainstream segments Supply chain implications
in Eastern Europe. Broadly speaking, and from below by the increasing The supply chain has remained
car plants need to have a utilisation quality and aggression of the value remarkably resilient despite the
rate of over 80% to be profitable, but brands. Hyundai-Kia’s phenomenal European sales pressures. In part this
analysts believe that in 2012 and 2013 growth has continued – In Europe, is due to the work done in the crisis
the European average is likely to be Hyundai is up 10.6% and Kia up years to re-shape their business to
close to 70%, in contrast with the US at 23.4%, to 291,000 and 223,000 units match lower production levels, and to
over 90%. respectively, for the eight months to introduce a level of flexibility to better
There appears now to be a more August. manage demand fluctuations going
resolute drive to close plants and take Mainstream carmakers are reacting, forward. These strategies have in large
out capacity (steps that have been but recovery will require radical part been effective. However, the falling
firmly resisted in Europe until now). solutions in some cases. European volumes and manufacturer
Anticipated plant closures at the time GM Europe has formed an alliance production stoppages will undoubtedly
of writing include Bochum, Germany with fellow struggler PSA and replaced have an impact.
(GM) and Aulnay, France (PSA). its CEO, CFO and head of R&D. Uncertainty is now viewed as the
Additionally there remains a question There is even talk of the company new certainty in Europe and the supply
mark hanging over Genk, Belgium ultimately leaving the mature European chain is going to be placed under
(Ford) and Fiat’s Italian factories are market to focus on China and growth demanding requirements by the OEMs
reported to be running at less than markets; it already took advantage as they formulate their strategies for the
40% capacity, well below the 80% of demand in Russia in the first half future. The supply chain will need to
profitability benchmark. of the year to fill the gap in Western develop their own strategies that align
Europe, but cutbacks in production with the OEMs. These strategies will be
Brand and country performance are predicted. PSA is talking about a different across brands, with confirmed
The French car market is forecast to major push in Russia – indeed Russian plant closures noted above contrasting
drop by as much as 10% this year. For production shift across various with on-going expansion associated
Renault, with a 25% share, this will be manufacturers, including Volkswagen, with JLR and certain Japanese and
tough. Italy’s volumes were predicted is topical. Renault is talking once again German OEMs.
to fall by 18% (and are down 20%, of introducing upmarket models in the The multi brand supplier is therefore
year to date) to below 1.5 million units, quest for higher margins (a questionable likely to see an environment requiring
compared with a market size of 2.5 strategy based on past experience), but geographical restructuring and, at the
million in 2007, and Fiat’s domestic one bright spot is the Dacia value brand same time, investment. The funding
share is close to 30%. There are now which will reach the UK in January and demand around these events against a

Automotive Messenger October 2012 3


backdrop of lower output will place
significant financial pressure on the Concluding comments
supply chain. The situation in Europe may prove to be a highly influential factor in
The restructuring and investment how the balance of the year plays out - supply push and pre-registration
requirements coupled with the capital pressures could increase, exacerbated by any further widening of the
intensive nature of the industry is a Sterling/Euro exchange rate. Ironically, it may be Europe’s powerhouse,
major concern. The industry is under Germany, which now stifles UK growth: the Euro Zone crisis is
intensifying legislation and consumer- threatening Germany’s export sector, which has provided the foundation
driven demands for technology which of its strength since the introduction of the Euro. If Germany does go into
is resulting in the supply tiers being recession, it will be very damaging to the rest of Europe’s confidence and
more frequently requested to fund business sentiment.
research and development and tooling The recovery in Europe will be a long time coming - sales are at their
costs ahead of production. Availability lowest levels for 17 years, and recent analyst reports suggest further falls
of funding is therefore going to be a next year, with sales not returning to pre-crisis levels until 2020. In the
major issue for both the OEMs and UK, forecasts indicate that car market will not better 2008 levels until
the supply tiers, particularly given the 2015, and even then be around 200,000 units fewer than pre-crisis levels.
historic funding instruments available So any recovery will be long, but also, bearing in mind European factors,
to the sector. fragile.
There is therefore a resultant Restructuring of dealer networks is continuing in the UK to reflect
expectation that further supply chain market conditions and to position brands for sustainability. Renault
consolidation will occur to meet the were the first to really take steps to right-size their network, with plans
needs of OEM strategies as they unfold. to cut the network from 200 to 140 by next year firmly in train. No
In many respects this is essential in other manufacturer has announced such aggressive structural changes,
Europe to avoid the movement of but in time this will be unavoidable for some. Recent data reviewed by
overcapacity down from the OEMs Grant Thornton suggests that average registrations per franchised outlet
to Tier 1 and below and ensure a has fallen from 460 in 2002, to around 420 in 2011. But that average
competitive future environment. hides a huge range in movements for certain manufacturers, with some
experiencing a 50% drop in registrations per outlet, a clearly unsustainable
position.
The shape of the industry will continue to change across the value chain
- all stakeholders need to adapt to remain viable and ensure survival. In all
likelihood there will be a gradual transition to a new steady state - within
that transition however will be pockets of turmoil for those that cannot
adapt rapidly enough.

4


Dealer trends, further
consolidation and people

Last year was clearly a very difficult one. As we now know, the UK economy
returned officially to recession, business and consumer sentiment continued to
decline, with total car registrations down by almost 90,000 units, and 4.4%. However,
while the crisis in Europe has deepened, 2012 has been much brighter for the UK
automotive sector. Total registrations during the first eight months of the year were
up, and most significantly private sales were ahead of the overall market, posting
growth of 10.6%. This will come as some relief to retailers, because profitability
in 2011 was a considerable challenge. While the top 10 in the annual Automotive
Management 100 listing of automotive retail groups, compiled and published in
association with Grant Thornton, still achieved some striking return on sales results,
only the best nine exceeded 2%. Contrast that with 2010, when every one of the top
20 bettered that mark.

Emerging trends is heavily represented among those Transactions
One of the problems for analysts is that towards the top of the league table, so A significant difference from 2010 is
these figures are not enlightened by this approach does seem able to counter the number of transactions. Last time
clear and unambiguous trends, such as even long-term negative economic there was just one major change – the
a particular basket of brands providing conditions. The best results since the acquisition of Wayside Group by
a competitive advantage, or differences downturn have been delivered most Jardine – but this time there has been
in regional economies accounting frequently by groups which have put quite a number. Ridgeway leaps into
for sales performance. For example, that formula at the heart of operations, the top 20 after the acquisition of most
although certain prestige brands are and this has been especially noticeable of Woods Group’s BMW dealerships.
predictably represented among the both during 2008 in the teeth of the Group 1 also enters the top 20 after the
most profitable, so are volume brands, recession, and again in 2011 when acquisition of Hodgson Automotive.
paradoxically including those currently sentiment was hitting new lows. Already in the top 20, Benfield moves
among the most challenged in volume Many larger groups have up five places after buying Colebrook
terms. Similarly, a number of groups been following a similar strategy, and Burgess.
focused on the south of the country rationalising by brand and geography, Vertu continues to make progress
are featured, but so are groups from and four of the top 10 are among the with a number of smaller acquisitions,
the North, Wales, East Anglia and even best 20 performers for RoS. Sytner and pushing turnover beyond £1bn.
some with national coverage. Arnold Clark are rarely out of the table, Marshalls has also been on the
However, it is clear that there is a but are joined this time by Inchcape acquisition trail, adding a VW franchise
strong correlation between successful and Lookers, both of which have for the first time. Further down the
performance and focus. As has been notably been working to develop core table, H R Owen continues to rebuild
the case for many years, the ‘local hero’ manufacturer partners. with the purchase of long-time Bentley
formula of brand and geographic focus dealer, Broughtons.



Structural changes in the AM100 significance. Much of the improvement business – Sytner’s new flagship central
With this level of activity one might in results recently by some larger London digital showroom aside - and
assume that the centre of gravity of groups, and often the foundation so the basic business model continues.
the AM100 would have changed, of the continued good results of This may be understandable; it takes
demonstrating - possibly for the first the ‘local heroes’, is the quality much resolve, risk and disruption
time - the consolidation that so many and personalisation of process. The to change the physical parameters.
commentators talk about. Indeed, foundation of good process is the But what about the people factor?
despite the 90,000 fall in registrations knowledge, understanding and values of Those groups which have spent time
between 2010 and 2011, the combined the individuals who do the job, and the understanding how customer value is
turnover of the AM100 has increased distinguishing factor is the way process delivered, and have empowered those
marginally, from £37.4bn to £38bn. is taught and managed. A second part who design and teach process, appear
However, the underlying statistics of the equation is the matter of value. to be reaping benefits. An interesting,
have hardly changed at all. The Delivering value keeps customers, and statistic, not often publicised, is that the
threshold for entry remains at about it is people who deliver that value. more consistently profitable businesses,
£100m. The turnover of the top 10 Fewer people can equal less value and, not just in motor retailing, have more
groups actually accounts for a smaller in turn, lower customer retention. people per unit of turnover than the less
percentage of the total than last time – The backdrop to these statements, successful.
46% against 47%. The turnover of the and the movement in total numbers, is
largest 25 groups has changed but by the estimated level of staff retention.
only a single percentage point – from Better-performing groups seem to Concluding comments
65.6% last year to 65.5% this year. have good levels of retention; evidence So the good groups have been able
The number of franchised outlets otherwise suggests that turnover of to ride out the more challenging
controlled by the AM100 has increased sales staff can often be as high as 50%. 2011. The link to staff is, in reality,
– from 2495 to 2511. If groups were Turnover amongst the service advisor common sense, but delivery
striving to retain or build more group within aftersales is almost as is much more. So, despite the
economically viable units - closing high. By contrast, manager turnover positive first eight months of 2012,
smaller marginal sites, focusing on appears low, often just 10%. with the country now entering
increasing throughput, building market The economics of motor retailing a second period of recession,
areas - logically the direction of travel are a continuing challenge. Many say delivery will be key to success.
would be the other way. this is down to people performance.
North, south, east or west, premium
The value of people in the business franchise or volume, the profits are
The more challenging times also do not generally there when the people are
seem to have affected staff numbers. At ‘good’. Naturally, those good people
just over 94,000 the total has increased do follow a process but enjoy degrees
by about 1%. In 2008 and 2009 survival of flexibility where it really makes a
drove a substantial reduction, from difference.
nearly 99,000 to just over 92,000, but it It would seem that we find it
would seem that groups are continuing impossible to change the infrastructure
to manage with reduced numbers. – the number and size of outlets, the
This latter area is one of considerable underlying systems and ways of doing

6


Performance commentary
To August 2012

UK New Car Registrations
Aug 2012 YTD Aug 2011 YTD Regs. Δ FY2011 FY2010 Regs. Δ FY2009 Regs. Δ FY2008 Regs. Δ FY2007 Regs. Δ
Brand Units Share % Units Share % 2012/11 Units Share % Units Share % 2011/10 Units Share % 2010/09 Units Share % 2009/08 Units Share % 2008/07
Ford 176,999 14.0% 171,278 14.0% 3.3% 265,894 13.7% 280,364 13.8% (5.2)% 316,369 15.9% (11.4)% 322,514 15.1% (1.9)% 348,982 14.5% (7.6)%
Vauxhall 140,809 11.2% 150,641 12.3% (6.5)% 234,710 12.1% 247,265 12.2% (5.1)% 237,840 11.9% 4.0% 298,912 14.0% (20.4)% 331,321 13.8% (9.8)%
Volkswagen 115,296 9.1% 114,209 9.4% 1.0% 179,290 9.2% 174,655 8.6% 2.7% 161,137 8.1% 8.4% 179,189 8.4% (10.1)% 197,020 8.2% (9.1)%
Audi 79,107 6.3% 73,736 6.0% 7.3% 113,797 5.9% 99,828 4.9% 14.0% 91,172 4.6% 9.5% 100,845 4.7% (9.6)% 100,864 4.2% (0.0)%
BMW 75,265 6.0% 72,543 5.9% 3.8% 116,642 6.0% 109,418 5.4% 6.6% 98,683 4.9% 10.9% 113,132 5.3% (12.8)% 121,575 5.1% (6.9)%
Nissan 65,120 5.2% 58,611 4.8% 11.1% 96,269 5.0% 89,681 4.4% 7.3% 77,924 3.9% 15.1% 66,336 3.1% 17.5% 66,426 2.8% (0.1)%
Peugeot 63,045 5.0% 60,998 5.0% 3.4% 94,989 4.9% 109,324 5.4% (13.1)% 102,574 5.1% 6.6% 118,701 5.6% (13.6)% 146,094 6.1% (18.8)%
Mercedes-Benz 56,783 4.5% 49,789 4.1% 14.0% 81,873 4.2% 74,977 3.7% 9.2% 72,281 3.6% 3.7% 74,883 3.5% (3.5)% 82,321 3.4% (9.0)%
Toyota 53,022 4.2% 45,099 3.7% 17.6% 73,589 3.8% 87,396 4.3% (15.8)% 102,612 5.1% (14.8)% 105,717 5.0% (2.9)% 118,493 4.9% (10.8)%
Citroen 45,547 3.6% 43,429 3.6% 4.9% 68,464 3.5% 73,317 3.6% (6.6)% 72,450 3.6% 1.2% 81,237 3.8% (10.8)% 97,750 4.1% (16.9)%
Hyundai 42,639 3.4% 37,529 3.1% 13.6% 62,900 3.2% 61,752 3.0% 1.9% 56,726 2.8% 8.9% 28,036 1.3% 102.3% 29,765 1.2% (5.8)%
Renault 23,208 1.8% 42,096 3.4% (44.9)% 68,449 3.5% 95,608 4.7% (28.4)% 63,174 3.2% 51.3% 89,570 4.2% (29.5)% 126,816 5.3% (29.4)%
Kia 41,291 3.3% 33,524 2.7% 23.2% 53,615 2.8% 56,114 2.8% (4.5)% 50,637 2.5% 10.8% 31,324 1.5% 61.7% 29,372 1.2% 6.6%
Honda 32,542 2.6% 29,874 2.4% 8.9% 50,577 2.6% 63,652 3.1% (20.5)% 74,819 3.8% (14.9)% 83,805 3.9% (10.7)% 106,018 4.4% (21.0)%
MINI 28,717 2.3% 28,457 2.3% 0.9% 50,138 2.6% 43,894 2.2% 14.2% 39,866 2.0% 10.1% 40,736 1.9% (2.1)% 47,661 2.0% (14.5)%
Skoda 34,042 2.7% 29,347 2.4% 16.0% 45,061 2.3% 41,240 2.0% 9.3% 37,253 1.9% 10.7% 37,100 1.7% 0.4% 39,907 1.7% (7.0)%
Fiat 30,752 2.4% 27,167 2.2% 13.2% 41,612 2.1% 53,093 2.6% (21.6)% 60,337 3.0% (12.0)% 55,325 2.6% 9.1% 59,409 2.5% (6.9)%
Land Rover 30,102 2.4% 22,454 1.8% 34.1% 37,637 1.9% 37,272 1.8% 1.0% 29,185 1.5% 27.7% 32,567 1.5% (10.4)% 46,552 1.9% (30.0)%
Mazda 17,761 1.4% 19,962 1.6% (11.0)% 31,219 1.6% 45,449 2.2% (31.3)% 47,934 2.4% (5.2)% 49,858 2.3% (3.9)% 50,947 2.1% (2.1)%
SEAT 22,704 1.8% 22,250 1.8% 2.0% 36,089 1.9% 32,935 1.6% 9.6% 29,987 1.5% 9.8% 29,397 1.4% 2.0% 34,790 1.4% (15.5)%
Volvo 19,925 1.6% 20,672 1.7% (3.6)% 32,657 1.7% 37,435 1.8% (12.8)% 34,857 1.7% 7.4% 33,358 1.6% 4.5% 30,058 1.3% 11.0%
Jaguar 8,177 0.6% 8,042 0.7% 1.7% 13,787 0.7% 16,417 0.8% (16.0)% 18,234 0.9% (10.0)% 20,345 1.0% (10.4)% 18,712 0.8% 8.7%
Other 58,144 4.6% 58,911 4.8% (1.3)% 105,782 5.4% 148,880 7.3% (28.9)% 166,931 8.4% (10.8)% 188,650 8.8% (11.5)% 226,656 9.4% (16.8)%
Total 1,260,997 100.0% 1,220,618 3.3% 1,941,253 2,030,614 (4.4)% 1,994,761 1.8% 2,131,795 (6.4)% 2,404,007 (11.3)%
Excl. scrappage 1,260,997 1,220,618 3.3% 1,941,253 1,921,907 1.0% 1,811,074 6.1% 2,131,795 (15.0)% 2,404,007 (11.3)%

Source: SMMT

UK Registrations 2012 • Ford’s Fiesta was the best-selling car to August, ahead of
• New-car registrations in the UK rose for a sixth successive Vauxhall’s Corsa and Ford’s Focus
month in August with a 0.1% rise, suggesting increasing • Recently announced September results have reinforced
confidence this forward momentum, up 8.2% for the month and
• Registrations over the first eight months of the year pushing up the year to date improvement to 4.4%.
increased 3.3% to 1.261m units • The SMMT’s full-year forecast is for 1.97m units, which
• Private demand recovered for the year to August, up would be marginally up from last year’s 1.94m
10.6% over 2011
• Fleet volumes are static, while small business volumes are
down 15.4%
• Diesel cars increased their share from 50.3% to 51.0%
• Ford led the market with a 14.0% share, followed by
Vauxhall on 11.2%, as the former grew its volumes by
3.3% while the latter fell by 6.5%
• Notable falls were Renault (-44.9%), Mitsubishi (-41.3%),
Alfa Romeo (-35.0%), Mazda (-11.0%), and Subaru (-12.8)
• Double-digit winners included Toyota (17.6%), Mercedes-
Benz (14.0%), Land Rover (34.1%) and Nissan (11.1%)
• Small-car and value brands continued to prosper, with Kia
up 23.2%, Hyundai 13.6%, Skoda 16.0%, Suzuki 21.9%
and Fiat 13.2%



EU (EU27 + EFTA) sales by brand (passenger cars)
Volkswagen 1,109,901 12.9% 1,132,141 12.3% (2.0)% 1,684,150 12.4% 1,541,279 11.2% 9.3% 1,649,309 11.4% (6.6)% 1,572,132 10.7% 4.9% 1,632,353 10.2% (3.7)%
Ford 644,997 7.5% 732,807 8.0% (12.0)% 1,077,759 7.9% 1,109,588 8.0% (2.9)% 1,297,001 9.0% (14.4)% 1,232,535 8.4% 5.2% 1,302,703 8.1% (5.4)%
Opel/Vauxhall 573,793 6.7% 676,248 7.3% (15.2)% 989,261 7.3% 1,006,832 7.3% (1.7)% 1,064,305 7.3% (5.4)% 1,154,063 7.8% (7.8)% 1,343,885 8.4% (14.1)%
Renault 565,147 6.6% 702,617 7.6% (19.6)% 1,044,920 7.7% 1,147,486 8.3% (8.9)% 1,097,647 7.6% 4.5% 1,102,813 7.5% (0.5)% 1,209,663 7.6% (8.8)%
Peugeot 551,379 6.4% 644,673 7.0% (14.5)% 911,703 6.7% 1,005,916 7.3% (9.4)% 994,544 6.9% 1.1% 1,006,467 6.8% (1.2)% 1,106,652 6.9% (9.1)%
Audi 483,841 5.6% 457,060 5.0% 5.9% 680,262 5.0% 623,536 4.5% 9.1% 612,783 4.2% 1.8% 663,305 4.5% (7.6)% 661,676 4.1% 0.2%
Citroen 473,861 5.5% 538,626 5.9% (12.0)% 770,726 5.7% 838,147 6.1% (8.0)% 869,685 6.0% (3.6)% 856,522 5.8% 1.5% 943,300 5.9% (9.2)%
BMW 416,591 4.8% 426,879 4.6% (2.4)% 641,737 4.7% 609,196 4.4% 5.3% 572,285 3.9% 6.4% 676,829 4.6% (15.4)% 705,659 4.4% (4.1)%
Fiat 401,876 4.7% 483,535 5.3% (16.9)% 682,140 5.0% 825,376 6.0% (17.4)% 1,017,310 7.0% (18.9)% 958,991 6.5% 6.1% 978,450 6.1% (2.0)%
Mercedes 389,452 4.5% 390,737 4.2% (0.3)% 591,750 4.4% 586,146 4.3% 1.0% 588,510 4.1% (0.4)% 685,566 4.7% (14.2)% 729,557 4.6% (6.0)%
Toyota 349,215 4.1% 352,422 3.8% (0.9)% 527,206 3.9% 582,457 4.2% (9.5)% 710,374 4.9% (18.0)% 783,188 5.3% (9.3)% 945,492 5.9% (17.2)%
Skoda 335,381 3.9% 330,820 3.6% 1.4% 494,760 3.6% 468,034 3.4% 5.7% 483,597 3.3% (3.2)% 462,178 3.1% 4.6% 482,355 3.0% (4.2)%
Nissan 295,054 3.4% 306,035 3.3% (3.6)% 458,033 3.4% 402,654 2.9% 13.8% 368,373 2.5% 9.3% 336,922 2.3% 9.3% 311,794 1.9% 8.1%
Hyundai 291,276 3.4% 263,366 2.9% 10.6% 398,129 2.9% 358,284 2.6% 11.1% 345,896 2.4% 3.6% 271,296 1.8% 27.5% 306,696 1.9% (11.5)%
Kia 222,629 2.6% 180,381 2.0% 23.4% 293,960 2.2% 262,627 1.9% 11.9% 257,573 1.8% 2.0% 234,370 1.6% 9.9% 253,422 1.6% (7.5)%
Seat 179,240 2.1% 211,595 2.3% (15.3)% 305,730 2.3% 301,931 2.2% 1.3% 316,856 2.2% (4.7)% 335,984 2.3% (5.7)% 386,565 2.4% (13.1)%
Dacia 163,617 1.9% 165,734 1.8% (1.3)% 252,058 1.9% 262,777 1.9% (4.1)% 235,465 1.6% 11.6% 183,460 1.2% 28.3% 173,462 1.1% 5.8%
Volvo 151,567 1.8% 169,611 1.8% (10.6)% 254,732 1.9% 230,307 1.7% 10.6% 206,050 1.4% 11.8% 223,239 1.5% (7.7)% 265,966 1.7% (16.1)%
Suzuki 106,174 1.2% 119,417 1.3% (11.1)% 177,996 1.3% 195,458 1.4% (8.9)% 249,772 1.7% (21.7)% 249,269 1.7% 0.2% 286,708 1.8% (13.1)%
Honda 92,216 1.1% 97,583 1.1% (5.5)% 149,684 1.1% 187,408 1.4% (20.1)% 244,751 1.7% (23.4)% 265,010 1.8% (7.6)% 311,743 1.9% (15.0)%
Mazda 86,899 1.0% 96,713 1.1% (10.1)% 137,447 1.0% 182,684 1.3% (24.8)% 210,641 1.5% (13.3)% 244,111 1.7% (13.7)% 239,740 1.5% 1.8%
Other 707,862 8.2% 723,499 7.9% (2.2)% 1,049,407 7.7% 1,057,575 7.7% (0.8)% 1,096,144 7.6% (3.5)% 1,239,984 8.4% (11.6)% 1,425,596 8.9% (13.0)%
Total 8,591,968 9,202,499 (6.6)% 13,573,550 13,785,698 (1.5)% 14,488,871 (4.9)% 14,738,234 (1.7)% 16,003,437 (7.9)%

Source: ACEA

EU Registrations • VW sales actually fell by 2.0%, but combined VW Group
• August saw the eleventh successive monthly drop in sales increased overall by 1.6%
registrations in Europe, with a 6.6% decline in the first • Volume carmakers in general suffered by reduced demand
eight months of 2012 in the mainstream segments; year-to-date, Renault group
• Of the Big Five, only the UK was up by 3.3%; Germany fell by 16.1%, Fiat group by 16.6%, PSA Peugeot-Citroen
fell slightly by 0.6%; Italy fell by 19.9%, Spain 8.5% and by 13.4%, GM by 11.7% and Ford Motor Company by
France 13.4 12%
• Volumes in Greece and Portugal were both down by • Jaguar-Land Rover grew by 37%, while Hyundai and Kia
more than 40%, while significant markets in Belgium and posted increases of 10.6% and 23.4% respectively
Sweden experienced falls of around 10% • With the possibility of recession in Germany and the focus
• Central and Eastern Europe fared surprisingly well, with of economic uncertainty now shifting from Greece to the
Poland, Czech Republic, Romania, Hungary and Bulgaria major markets of Italy and Spain, forecasts for the full year
all up vary but are as low as 12.0m, down from 12.8m in 2011
• Germany still accounted for 24% of total volumes, so a and 14.8m in 2007
decline will be damaging to the region in volume terms as
well as to confidence
• VW remained comfortably the leading brand, with a
12.9% share, from Ford on 7.5%, Opel/Vauxhall on 6.7%,
Renault on 6.6% and Peugeot on 6.4%

EU (EU27 + EFTA) sales by country (passenger cars)
Var (%) Var (%) Var (%) Var (%) Var (%)
Aug 2012 YTD Aug 2011 YTD 2012/2011 FY2011 FY2010 2011/2010 FY2009 2010/2009 FY2008 2009/2008 FY2007 2008/2007
Germany 2,108,716 2,121,047 (0.6)% 3,173,634 2,916,260 8.8% 3,807,175 (23.4)% 3,090,040 23.2% 3,148,163 (1.8)%
France 1,293,973 1,493,745 (13.4)% 2,204,229 2,251,669 (2.1)% 2,268,671 (0.7)% 2,050,282 10.7% 2,064,543 (0.7)%
United Kingdom 1,260,997 1,220,618 3.3% 1,941,253 2,030,846 (4.4)% 1,994,999 1.8% 2,131,794 (6.4)% 2,404,007 (11.3)%
Italy 981,030 1,224,096 (19.9)% 1,748,143 1,960,282 (10.8)% 2,158,010 (9.2)% 2,160,131 (0.1)% 2,493,106 (13.4)%
Spain 520,216 568,349 (8.5)% 808,059 982,015 (17.7)% 952,772 3.1% 1,161,176 (17.9)% 1,614,835 (28.1)%
Belgium 353,073 399,119 (11.5)% 572,211 547,347 4.5% 476,563 14.9% 536,276 (11.1)% 524,795 2.2%
Netherlands 396,101 409,500 (3.3)% 556,123 483,619 15.0% 387,699 24.7% 499,983 (22.5)% 505,538 (1.1)%
Austria 239,796 242,784 (1.2)% 356,145 328,563 8.4% 319,403 2.9% 293,697 8.8% 298,182 (1.5)%
Switzerland 224,360 206,259 8.8% 318,958 294,239 8.4% 264,771 11.1% 287,803 (8.0)% 284,688 1.1%
Sweden 181,774 201,031 (9.6)% 304,984 289,684 5.3% 213,408 35.7% 253,982 (16.0)% 306,799 (17.2)%
EU11* (Central/Eastern Europe) 517,400 510,304 1.4% 760,706 803,707 (5.4)% 858,831 (6.4)% 1,180,173 (27.2)% 1,209,793 (2.4)%
Other 514,532 605,647 (15.0)% 829,105 897,467 (7.6)% 786,569 14.1% 1,092,897 (28.0)% 1,148,987 (4.9)%
Europe (EU27* + EFTA) 8,591,968 9,202,499 (6.6)% 13,573,550 13,785,698 (1.5)% 14,488,871 (4.9)% 14,738,234 (1.7)% 16,003,436 (7.9)%

Source: ACEA

8


US sales by brand (passenger cars and light trucks)
Ford Division 1,453,536 15.0% 1,366,780 16.1% 6.3% 2,057,210 15.1% 1,752,511 15.1% 21.6% 1,440,653 13.8% 21.6% 1,680,321 12.7% (14.3)% 2,087,048 12.9% (19.5)%
Chevrolet 1,270,582 13.1% 1,206,322 14.3% 5.3% 1,775,802 13.5% 1,563,881 13.5% 16.8% 1,338,612 12.8% 16.8% 1,790,519 13.5% (25.2)% 2,250,352 13.9% (20.4)%
Toyota Division 1,199,163 12.3% 918,651 10.9% 30.5% 1,396,837 12.8% 1,488,588 12.8% (0.5)% 1,496,211 14.3% (0.5)% 1,843,667 13.9% (18.8)% 2,161,467 13.4% (14.7)%
Honda Division 847,840 8.7% 691,129 8.2% 22.7% 1,023,986 9.5% 1,096,874 9.5% 5.0% 1,045,061 10.0% 5.0% 1,284,106 9.7% (18.6)% 1,371,439 8.5% (6.4)%
Nissan Division 697,426 7.2% 617,413 7.3% 13.0% 944,073 6.9% 805,159 6.9% 16.9% 689,014 6.6% 16.9% 838,361 6.3% (17.8)% 941,200 5.8% (10.9)%
Hyundai Division 479,789 4.9% 440,863 5.2% 8.8% 645,691 4.6% 538,228 4.6% 23.7% 435,066 4.2% 23.7% 401,742 3.0% 8.3% 467,009 2.9% (14.0)%
Kia 386,809 4.0% 331,795 3.9% 16.6% 485,492 3.1% 356,269 3.1% 18.7% 300,063 2.9% 18.7% 273,397 2.1% 9.8% 305,473 1.9% (10.5)%
Dodge 344,556 3.5% 305,369 3.6% 12.8% 451,040 3.3% 383,675 3.3% (26.6)% 522,686 5.0% (26.6)% 784,113 5.9% (33.3)% 1,058,402 6.6% (25.9)%
Jeep 325,945 3.4% 268,228 3.2% 21.5% 419,349 2.5% 291,138 2.5% 25.7% 231,701 2.2% 25.7% 333,901 2.5% (30.6)% 475,237 2.9% (29.7)%
Volkswagen Division 286,750 3.0% 208,423 2.5% 37.6% 324,402 2.2% 256,830 2.2% 20.3% 213,453 2.0% 20.3% 223,127 1.7% (4.3)% 230,571 1.4% (3.2)%
GMC 273,366 2.8% 261,740 3.1% 4.4% 397,973 2.9% 333,204 2.9% 31.7% 253,053 2.4% 31.7% 361,739 2.7% (30.0)% 484,932 3.0% (25.4)%
Mazda 185,349 1.9% 165,794 2.0% 11.8% 250,426 2.0% 229,566 2.0% 10.5% 207,767 2.0% 10.5% 263,949 2.0% (21.3)% 295,713 1.8% (10.7)%
Subaru 217,780 2.2% 174,616 2.1% 24.7% 266,989 2.3% 263,820 2.3% 21.8% 216,652 2.1% 21.8% 187,699 1.4% 15.4% 187,121 1.2% 0.3%
Chrysler Division 216,616 2.2% 133,992 1.6% 61.7% 221,346 1.7% 197,446 1.7% 11.5% 177,015 1.7% 11.5% 335,108 2.5% (47.2)% 543,011 3.4% (38.3)%
Ram 192,946 2.0% 163,401 1.9% 18.1% 257,610 na 212,952 na na na na na na na na na na na
Mercedes-Benz 182,077 1.9% 159,087 1.9% 14.5% 261,769 1.9% 225,026 1.9% 18.1% 190,514 1.8% 18.1% 225,005 1.7% (15.3)% 253,277 1.6% (11.2)%
BMW Division 164,636 1.7% 155,929 1.8% 5.6% 247,907 1.9% 220,113 1.9% 12.0% 196,502 1.9% 12.0% 249,113 1.9% (21.1)% 293,795 1.8% (15.2)%
Lexus 150,604 1.6% 120,652 1.4% 24.8% 198,552 2.0% 229,329 2.0% 6.2% 215,975 2.1% 6.2% 260,087 2.0% (17.0)% 329,177 2.0% (21.0)%
Buick 122,589 1.3% 126,493 1.5% (3.1)% 177,633 1.3% 155,389 1.3% 51.9% 102,306 1.0% 51.9% 137,197 1.0% (25.4)% 185,791 1.2% (26.2)%
Cadillac 90,933 0.9% 100,449 1.2% (9.5)% 152,389 1.3% 146,925 1.3% 34.7% 109,092 1.0% 34.7% 161,159 1.2% (32.3)% 214,726 1.3% (24.9)%
Other 621,946 6.4% 548,140 6.5% 13.5% 822,409 7.3% 843,417 7.3% (19.8)% 1,051,181 10.1% (19.8)% 1,612,641 12.2% (34.8)% 2,018,172 12.5% (20.1)%
Total 9,711,238 100.0% 8,465,266 14.7% 12,778,885 11,590,340 11.1% 10,432,577 11.1% 13,246,951 (21.2)% 16,153,913 (18.0)%

Source: Automotive News

Other regional sales (to June 2012)
June 2012 June 2011 Var (%) Var (%) Var (%) Var (%) Var (%)
YTD YTD 2012/2011 FY2011 FY2010 2011/2010 FY2009 2010/2009 FY2008 2009/2008 FY2007 2008/2007
Japan 2,525,764 1,612,368 56.6% 3,524,788 4,212,280 (16.3)% 3,923,741 7.4% 4,227,643 (7.2)% 4,400,299 (3.9)%
Brazil (incl. LCV) 1,716,916 1,737,217 (1.2)% 3,633,248 3,515,064 3.4% 3,141,240 11.9% 2,193,277 43.2% 1,975,518 11.0%
China (incl. LCV) 7,613,500 7,110,300 (7.1)% 18,505,100 18,061,900 2.5% 13,645,010 32.4% 9,380,000 45.5% 8,690,000 7.9%

Sources: JAMA, ANFAVEA, CAAM

USA China
• August sales rose 20% year on year, with Toyota Group • China’s registrations to June were up 7.1% on the same
improving 46% (30.5% YTD) to gain a 14.4% share of the period in 2011; this compares with growth of 5.2% for the
market, up from 12.7% in 2011. GM remains the highest full year but is a long way from 2010’s 30% growth rate
volume manufacturer, up 4% year on year, ahead of
Ford, up 6%, and Chrysler, which maintains a 26% YTD India
increase. • Sales in India rose in the first eight months of the year,
• Full year sales are now forecast to hit close to 15m units, following predictions of 10% 2012 growth.
significantly up on 2011 and the best year since the 16.2m
in 2007 Russia
• A 10% increase in June car and light commercial sales was
Japan followed by a record year-on-year July, recording growth
• Japan’s sales improved by 57%, as the automakers of 14%. Year to date sales were also up 14%, exceeding
continued to bounce back from severe quake-related France by volume.
product shortages last summer

Brazil
• Sales were down 1.2% to June, but have since increased
through August, due to tax incentives for autos which
have now been extended until end October.



Economic snapshot (in GBP)
Last share price (£) % change in last year Market Cap (£’million) Latest quarterly EBIT Previous year quarterly EBIT Latest Annual EBIT Previous year annual EBIT
OEMs
Audi AG 511.0 (5.9) 8,891 4,206 2,677
BMW AG 57.2 13.0 34,452 2,095 2,737 7,858 5,112
BYD Co. Ltd. 14.0 (7.4) 11,103 1,663 3,047
Daihatsu Motor Co. Ltd. 1,256.0 (1.6) 536,466 37,837 17,266 115,462 103,443
Daimler AG 39.3 21.4 41,930 1,830 2,216 7,240 7,012
Fiat SpA 4.5 21.6 5,582 886 235 2,445 1,112
Ford Motor Co. 9.9 (3.0) 37,113 2,568 3,450 11,406 12,810
Geely Automobile Holdings Ltd. 2.5 14.9 18,475 1,639 1,508
Honda Motor Co. Ltd. 2,472.0 5.7 4,477,851 176,013 22,579 231,364 569,775
Hyundai Motor Co. Ltd. 227,500.0 18.5 50,112,901 2,030,697 1,695,368 7,689,395 9,117,742
Mazda Motor Corp. 89.0 (39.5) 266,945 1,800 (23,086) (38,718) 23,835
Mitsubishi Corp. 1,386.0 (20.8) 2,291,759 1,629 84,197 271,122 316,141
Nissan Motor Co. Ltd. 722.0 10.2 3,263,956 120,675 150,372 545,839 537,467
Peugeot S.A. 6.0 (61.4) 2,143 1,315 1,796
Porsche Automobil Holding SE 41.5 (0.9) 6,358 (76) (86)
Renault S.A. 37.8 57.6 11,184 1,091 1,099
SAIC Motor Corp. Ltd. 11.9 (19.2) 131,425 6,128 5,316 29,358 19,228
Suzuki Motor Corp. 1,377.0 (7.0) 772,562 35,648 25,574 119,029 106,544
Toyota Motor Corp. 3,100.0 19.0 10,688,793 308,977 (107,963) 339,896 468,279
Volkswagen AG 129.0 34.2 38,052 2,821 2,300 9,471 4,527
Retailers
Group 1 Automotive Inc. 58.3 49.8 1,328 63 55 198 157
H.R. Owen PLC 0.6 (25.3) 15 2 2
Inchcape PLC 3.8 31.8 1,740 235 226
Lookers PLC 0.7 42.2 278 44 45
Pendragon PLC 0.2 51.2 214 80 61
Penske Automotive Group Inc. 28.5 66.8 2,573 90 71 298 241
Suppliers
Aisin Seiki Co. Ltd. 2,450.0 4.1 721,953 45,597 (4,803) 121,832 137,266
Denso Corp. 2,584.0 13.7 2,284,434 78,170 (4,374) 160,732 188,331
GKN PLC 2.2 24.4 3,605 406 429
Johnson Controls Inc. 27.5 (7.8) 18,801 545 407 1,974 1,445
Magna International Inc. 44.1 25.4 10,295 438 322 1,233 1,245
TRW Automotive Holdings Corp. 45.3 18.5 5,529 329 360 1,218 1,189
ThyssenKrupp AG 16.1 (21.6) 8,288 (84) 460 1,213 814

10


Selected retailers share price performance
200 Pendragon PLC

Inchcape PLC

Lookers PLC
Share price (rebased at 100)

150
H. R. Owen PLC

Penske Automotive Group Inc

100

50

0
1/1/10 4/1/10 7/1/10 10/1/10 1/1/11 4/1/11 7/1/11 10/1/11 1/1/12 4/1/12 7/1/12

Selected OEMs share price performance
200 Daimler AG
Toyota Motor Corp
Fiat SpA

150 Ford Motor Co
Honda Motor Co Ltd
Nissan Motor Co Ltd
100
Peugeot SA
Volkswagon AG
FTSE 100
50

0
1/1/10 4/1/10 7/1/10 10/1/10 1/1/11 4/1/11 7/1/11 10/1/11 1/1/12 4/1/12 7/1/12

Selected suppliers share price performance
250 Denso Corp
Magna International Inc
Johnson Controls Inc

200 GKN PLC

FTSE 100

150

100

50
1/1/10 4/1/10 7/1/10 10/1/10 1/1/11 4/1/11 7/1/11 10/1/11 1/1/12 4/1/12 7/1/12


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