Welcome to the 17th Annual AutoTeam America CEO

3. JOE HERMANCOO KUNI AUTOMOTIVE

4. 2011 - What’s Next Joe Herman COO Kuni Automotive

5. Agenda Review of 2008-010 Public Model - Survives the ‘Perfect Storm’ Takeaway Lessons & Why this is important going forward Where Are We ? 2011 Consolidation - What’s Next? Publics/Large Privates/Private Equity/’Other’ Regional Groups – Optimum Opportunity to Grow Now A 2011 -2012 Strategy Optimize Your Structure for Growth, Merger, or Sale 2011 Dealership Operations Challenges and Opportunities

6. 2008 - 2009The Foundation Crumbles BIG PICTURE -TRAILING: Financial Crash ‘D-day’ – 9/15/2008 Lehman Brothers Fails Disappearance of Asset Backed Securities (ABS) & Derivatives Markets Mortgage Crisis Housing Collapse Senior Credit Disappears Retail Credit Disappears Leasing Disappears GM and Chrysler file Bankruptcies US In Financial Crises – Unemployment Soars Potential for 2nd Great Depression in US - World Follows into Crises SAAR 9 M? 10 M? 11 M? Dealers Close Dealers Fail HEAD TO THE BUNKER! mentality prevails…Cu t Everything.

7. 2009 - 2010The Rebuilding Process BIG PICTURE – EMERGING: Fed Strategy - “TOO BIG TO FAIL” …Works for us. Citibank /Bank of America /AIG / Merrill GM / Chrysler Consumer Credit Reappears GM/Chrysler Re-emerge Public Company Auto Retail Model Survives Wall Street support of auto retail and OEMs returns General Motors IPO UC Wholesale Values Soar (Scrappage rate exceeding SAAR) Leasing Reappears Most Dealers Adapt and Survive…Many thrive. Top Private Groups Perform Well Dealer Body Shrinks = More Throughput for Survivors SAAR Rises Senior Credit emerging

8. Where Do We Stand We Today? Public Auto Retail Model Survives Essential validation for financial Community confidence Retail credit returning…More coming - Ally, Toronto Dominion/CFC Vehicle securitization (ABS) markets return Used Car shortages / Values rise: Enables financing for Leasing Domestic OEMs Profitable @ 11 M SAAR Senior Credit – Returning Shifts in consumer tastes still evolving Domestics will do better. CAFÉ forcing OEMs shift to smaller, fuel efficient, and EV Effect on Luxury of ‘downsizing’? Brand gainers/ Brand losers still in question Many dealers still need to sell / exit – With fewer buyers!

9. Public Auto Retail is ValidatedWhy is this Important in 2011? 1991/92 - “Auto Consolidation For Dummies”…Is unpublished. Newco leaders with no auto or auto retail experience “Model is outdated…needs to be re-invented” In the beginning opinions of retailers were minimalized Many early strategic decisions poorly conceived 1995 - Public Era Begins: Wall Street & Investor Expectations Auto retailing would become like other Big Box retail OEMs would become less influential. Low appreciation for impertinence and value of dealership talent. Higher PubCo operating costs (Sarbanes, management, CapEx…etc.)

10. The Public Model - Ctd. 1995 – 2007 Public Co Store Operations Publics monetize 100% of earnings No means to reward top GMs with ‘meaningful’ equity High turnover…Significant loss of top store talent Additional layers of management becomes necessary Difficulties recruiting talent into tightly controlled new working cultures Good performance with easier to operate ‘Blue Chip’ dealerships Luxury & Top Tier Import Poor/ or very poor operating performance with ‘harder to operate’ stores Domestics & Second Tier Brands Forces the disposal of previously high performing locations OEM Resistance –Result from declining performance at high volume stores -Framework Agreements Lots of Operating Challenges!

11. PubCo Retailers Survive 2007-2009 “The Worst of Times” SO!…How was the Public model able to survive…and thrive given some of the built-in challenges? Why are Publics currently performing at high levels? Why have share prices rebounded? What are the takeaway lessons for Retailers? Why is this important for 2011 acquisition activity?

12. # 1...Urgency on increasing shareholder value by striving to constantly improving operating results Operate Inside the Box – Strategize Outside the Box Constant Innovation Best Practices - Constant search and refinement Top tier Retail and Financial talent at Corporate and Regional levels Cross-pollination through experienced leaders who have wide Industry exposure Sophisticated metric development and benchmarking…Managing to identified metrics Rigorous ground-up budgeting processes and focus on driving performance to achieving performance benchmarks Sophisticated operating reports 100% Adoption and implementation of identified best practices Partnerships with Best-In-Class Vendors Access to best personnel from top national vendors Access to best-in-class systems and tools…Development of innovative and proprietary tools Public Core CompetenciesWhat They Do Well

13. Public Core Competencies - Ctd. Top level IT and MIS personnel Superb Balance Sheet management Acquisition Strategy – Own Only Top Stores Steady pruning of poor fits bad locations The acquisition desk is always open…Disciplined approach to growth Close cooperation with OEMs/lenders to seek opportunistic buys Dedicate resources to maximize scale to cost savings Wholesale and Retail Financing Financial Services Vendors Etc. Publics seek out and take advantage of every profit opportunity Work Ethic…Very few days on the Golf Course.

14.  Is this relevant for ‘What’s Next’? Yes Why? It will help enable Acquisition Financing

15. Lender Acquisition Financing Recent History 2006-07 A Competitive Credit Market 50%+ Financing of entire transaction was ‘normal’ (Incl. Goodwill, Working Capital, Transaction Costs) Liberal advances on RE ‘appraisals’ 2008 “We will NOT finance a **** Air Ball!!” 2009-10 Leverage returns ‘Risk Based Pricing’ 2011 Will open for solid organizations

16. Public Company Success Enables Acquisition Financing Limited credit will restrict the number of high multiple transactions in 2011 ‘Best’ stores still trading @ 4-5 x proforma – ‘Ask’ is still 6-7x for Legacy / Top luxury (Luxury sellers will wait) Private Equity returns require 1 to 1 leverage…PE is currently “Out” Acquisition credit leverage enables satisfactory ROE for high multiple transactions 2008 shook confidence of the Financial Community to the core Since Recession lenders are ‘Career Risk Adverse ‘ PubCo performance during downturn validated the Retail Model For Banks / Financial Press / Analysts \

17. Summary Banks continue to consolidate. Key decisions are being made at Credit Committees much further up the food chain than ever before…By Officers who frequently have less knowledge of our Sector than before, and therefore rely more on written analysis for support than previously. Analysts covering Public Auto Retailers provide written support. The validation of PubCo performance is helping everyone in our Sector with our Lenders. Solid Retailers with ‘Dry Powder’ can grow significantly in 2011

18. Acquisition Market Potential for Deals is Robust: Many Potential Sellers: Dealers with financial challenges Dealers with facility Issues Dealers in declining economies (tuck in potential for market survivors) Aging Dealers with Succession and Estate issues OEMs pushing for ‘White Knight’ solutions to fix problems Banks looking for ‘White Knight’ solutions to fix problems Etc. Current Acquirers Most are careful / strategic Few are aggressive.  Opportunity window for Groups that are prepared 2011 Consolidation ActivityCurrent Market

19. Scale is the biggest Challenge First step on a new IPO ladder will need to be $2B +/- Other Requirements Top Tier Financial Advisor (Goldman/Morgan/Merrill…etc) Not attractive without scale for a good Advisor ‘Payday” Strategic Leader…’Rock Star’ acceptable to Financial markets, OEMs, and acquisition candidates. A Story….‘Why We Will Be Different’ Operating Model and Focus? Geography? Etc A Cornerstone Legacy Group for the base to build on. Room for Another Public?Yes....’But’

20. IPO – ‘Cornerstone’ Candidates A Very Small Universe 2010 Auto News Top 100* *(Not all groups submit their numbers…Ex: DCH) $3.5 B+ (2) Van Tuyl Hendrick $1 B+ (7) Garff (Has Partnership with Leucadia National (LUK NASDAQ) Larry Miller Herb Chambers Staluppi Dave Wilson Braman Fletcher Jones $700 M-$1 B (15 companies) $500 M - $700 M (8 companies) The best IPO Candidate list is a short one.

21. Is a 2011 Roll-Up Possible? Yes...But Complex & Difficult Two Previous Models…Gp1 & ABG were very successful Roll-Up Issues Dealer group sellers have high expectations Assembling scale is similar to IPO but more time consuming and complicated Will also require a ’Rock Star’ acceptable to Financial markets, OEMs, and acquisition candidates. Governance issues during initial Private period Only really ‘works’ for participants IF there is an IPO Financial Sponsor with significant equity and long term horizon i.e. MSD, Cerebus, Warburg, etc. Will require sufficient leverage to enable satisfactory PE returns Key OEMs will make approvals difficult OEMs now sophisticated…They “know where the train is headed” Poor experiences with store performance post acquisition Framework performance agreements at onset will be a ‘must’

22. What’s Next With Private Equity? Private Equity is NOT a dead issue…It is on the sidelines PE witnessed and was surprised by Sector resilience and Model validation Auto market will eventually require new sources of additional Capital OEMs now understand but still do not like PE. But OEMs recognize PE as one avenue that could facilitate future market rep issues. Most PE Funds require an exit and will require you to have serious skin in game. You make your “real $” when they make theirs.…When they exit. Many PE Funds have problems with their Fund Investors over the OEM ‘Dealer Control’ requirement Some PE Groups with Sector knowledge made large returns buying PubCo bonds and stocks Normal returns may not be that exciting now Post- Recession environment has many other high return target opportunities for them

23. Private Equity –Ctd PE will be ‘OUT’ until acquisition leverage is fully available 1 to 1 is needed for acceptable returns PE cannot get the returns they require on higher multiple transactions w/o leverage Large Long-Horizon PE Funds ‘Not Interested’ unless they see a timely path to real scale Need to put large amounts of Capital to work Large investments require the same amount of involvement as smaller ones PE’s assessment of YOUR leadership and future engagement is paramount Model is to build and improve using their Capital to maximize everyone’s exit opportunity PE Partnerships are difficult and time consuming to negotiate and structure Conclusion….PE will return when Credit markets are active.

24. 2011 Acquisition ActivityPublics/Large Privates/Roll-Ups Publics: Will make disciplined strategic acquisitions that add immediate value Will return to domestic franchises Will optimize portfolios (buy/sell) where Framework limits are rigid Work closely with OEMs to solve market problems/benefit themselves Large Private Groups: Will continue to expand in a similar fashion as Publics Will be opportunistic with turnarounds They can take more time to ramp up performance Will get the ‘1st Call’ from OEMs looking for assistance with market rep Roll-Ups: One large roll-up was being worked on during 2010

25. Another Consolidation Option?Non-Sector Public If a Dealer was close with a Non-Sector Public Company CEO? And if that CEO was in control? And if a Partnership advantaged both parties? It could create an additional avenue. Thet model exists Garff /Leucadia (LUK-Nasdaq)

26. 2011 Consolidation Main ArenaLarge Private & Regional Groups  Well Capitalized and Top Performing Large Private and Regional Groups Are Nimble Many have acquisition lines Will keep growing Will get OEM /Lender ‘1st calls’ if Groups respond and act quickly Can pay competitive multiples on attractive opportunities Current Credit Restrictions Bad for overall market…But potentially good for these Companies ..If they are prepared Maximize dry powder availability before it’s needed Don’t start looking for the $ at the last minute. New growth Entries will need to sign OEM Framework agreements at some point Sales Effectiveness CSI CapEx

27. What Should You Do?Opportunity Window Is Open Position yourself to preserve all future options Take advantage of the moment…Grow while the window is open Maximize your future value by committing to elevate store performance Plan to maximize your value options when the next wave breaks Have Choices: Be a Consolidation Leader Merge Sell The preparation is the essentially the same for all paths Incremental value should be created regardless of the path you choose.

28. 2011 Store Operations What’s ‘Here and Now’? Web Sites have become the Primary Dealership ‘lot’ – Brick and mortar facility is still important but secondary. New digital marketing metrics and analysis are emerging…Knowing what they are and how to apply them will become key to maximizing sales performance. An ever-increasing focus on Pre-Owned sales : New tools (vAuto) –enabling sales increases - Commoditization Science and Process winning the war over a disappearing Art CPO availability thins in 2012-13 - Fewer leases during downturn Heavy competition for harder to source Pre-owned inventory Dealers who learn how to use the new tools well will dominate

29. 2011 Store Operations – Ctd. The Next Crises – Fixed Operations Declining Volume Better quality products with less warranty repair Longer service intervals Partial Solutions: Sell more to existing customers. Inspection tools Declined Service Marketing through CRM/DMS/Outside Vendors Increased marketing efforts to current owners Email capture initiatives are fundamental In the near future we will compete with OEMs, who are working 0n ‘cradle-to-grave’ owner retention solutions The Battle : THEIR Owners or OUR Owners Beyond CRM - Dealer Data Warehouses for Owner Communication

30. 2011 Store Operations - Ctd Performance advantages are shifting towards Groups with ‘Best-In-Class’ Technology & Process Vendor Partnerships. Require Mandatory Implementation at all Stores: Some current Leaders: vAuto DealerSocket DealerTrack Resource/JM&A MPi dealer.com JD Power Manage to Operating Benchmarks…Learn from the Publics! The Publics and large Private Groups are light years ahead of most in developing & managing to more sophisticated key operating metrics. Hire someone who has had a key financial/operating role with a Public. Learn from what they have been taught Bury your ego….You will perform better and make more money.

31. In Conclusion...

32. What Should You Do?Summary: Position yourself to preserve all future options Take advantage of the moment…Grow while the window is open Maximize your future value by committing to elevate store performance Plan to maximize your value options when the next wave breaks Have Choices: Be a Consolidation Leader Merge Sell The preparation is the essentially the same for all paths Incremental value should be created regardless of the path you choose.

33. Thank You! Joe Herman COO Kuni Automotive Questions?

34. ERICH J. MERKLEPRODUCT STRATEGY COMMUNICATIONS MANAGERFORD MOTOR COMPANY

35. DAVID L. ZUCHOWSKIVICE PRESIDENT, NATIONAL SALESHYUNDAI MOTOR AMERICA