MEMA Information Services Council October 15, 2007 Naples, FL

1. MEMA Information Services Council October 15, 2007 Naples, FL

2. Discussion Outline 1. Brief Overview of AASA 2. Defining the aftermarket 3. State of the industry 4. Health of the supplier base 5. Open discussion & Questions

3. AASALeadership in the Global Automotive Aftermarket • Automotive Aftermarket Suppliers Association • Aftermarket Market Segment Association (MSA) of MEMA • HDMA, OESA • Nearly 300 Member Manufacturers • Represent 80% of North American Aftermarket Volume • Approximately $154 Billion in Sales

4. Automotive Aftermarket Suppliers Association • AASA serves as the voice of the automotive aftermarket suppliers and: • is a recognized industry change agent • promotes a collaborative industry environment • provides a forum to address issues • serves as a valued resource for members

5. AASA Value Proposition • Government Affairs • Image of AASA Member Manufacturers in the Automotive Aftermarket Industry • Market Research, Industry Analysis, Benchmarking & Best Practices • Manufacturing Standards • Industry Collaboration on Issues Important to AASA members • Brand Protection and Intellectual Property Rights • Global Opportunities and Challenges for AASA Members • Education & Training • Member recruitment, retention & satisfaction

6. Defining the U.S. Aftermarket2006 • New vehicle parts market = $193 billion • Light vehicle aftermarket sales of products and service $209 billion • Sales of Heavy Duty aftermarket products and services $59 billion • Combined light/heavy duty aftermarket products and services$268 billion

7. Primary Drivers of Aftermarket Sales Volume • Vehicles in Service • Miles Driven

8. Source: R.L. Polk

9. Vehicle Miles of Travel in the U.S.

10. Total Light Vehicles in Use by Age Automotive Aftermarket Sweet Spot Source: R.L. Polk

11. Average age of light vehicles in use in the U.S.

12. Shares of Vehicles in Service Source: R.L. Polk

14. Shares of New Vehicle Sales Source: Ward’s Automotive

16. Aftermarket Distributor Sales Source: MFSG * MEMA Est.

17. Unperformed Maintenance (Billions)

18. Producer Price IndexMotor Vehicle Parts and Accessories Base = 12/1/2003

19. U.S.-World Parts Trade 1998-2006 Source: U.S. Bureau of the Census

20. U.S.-EU Parts Trade1998-2006 Source: U.S. Bureau of the Census

21. U.S. - China Auto Parts Trade, 1995-2006Since 2000, the auto parts trade deficit with China increased 333% Source: U.S. Bureau of the Census

22. AASA Automotive Aftermarket Index

23. State of the Industry • Aftermarket large and growing modestly • Primary aftermarket drivers—vehicles in use; miles driven—continue positive • Significant period of transition and challenge • Still a relationship business at the store to buyer level • Fundamentals of quality, availability and service still mean something • Balance of power has shifted; “power buyers” WD’s and retailers in the driver’s seat • Aftermarket mergers and acquisitions continuing at a record pace; transactions first 6 months of 2007: 55; up 28% over 2006 • Private equity creating churn in the aftermarket; 21 of 55 transactions • Service Dealer demand for form, fit and function driving increased SKU count and inventory investment • Insistence on lowest invoice price accelerating low cost country sourcing • Value-adds being stripped from prices at all levels

24. Parts Suppliers: The Largest Manufacturing Sector in the USA

25. Supplier Jobs: Midwest Focused, but Moving Southeast Source: MEMA, “Motor Vehicle Suppliers: The Foundation of U.S. Manufacturing,” January 2007

26. Health of the Supplier Base • Manufacturers are struggling to maintain profitability • Margin erosion at all levels • Globalization impacting acquisition and sourcing • Raw material costs rising • Value added suppliers are competing for lowest price business • NA manufacturing shifting focus to emerging international markets • Little collaboration to address industry issues • Many are well under way in transforming themselves into global manufacturers/”provisioners”

27. The NA Table of Pain Business models must survive through . . . Source: CAR and OESA at the 2005 Management Briefing Seminar; Updated by OESA through February 2007 Note: Auto accounts for 41% of US steel consumption, 31% of US iron consumption, 32% of US aluminumconsumption and 4% of US plastic consumption (CAR – Fall 2003 economic significance report)

28. 5 Q-1 Q-2 Q3 4 3 2 1 Healthcare costs Availability and cost Lack of pricing Weak sales Globalization Labor cost & Excess inventory Regulatory & Product returns Counterfeit of raw materials power availability legal issues products AASA Supplier BarometerQ3 2007 Question 8: How significant are these issues facing your company? 1= Not important 5 = Very important

29. Wild Cards • Impact of rising gas prices • Collapse of subprime mortgages and tightening of credit markets

30. Opportunities for Suppliers • Collaboration with channel partners • Use technology to reduce cost and for competitive edge • Low-cost manufacturing strategy • Strategic alliances/partnerships • Revenue diversification • Leading market position (product, technology and process)

31. Association/Industry Information Technology Leadership • MIS Council: 35 years of leadership • Growth and success of the Aftermarket eForum • Association push for data standards adoption • Growing number of 3rd party providers • Expanding technology capabilities of repair professionals • Increasing prominence of IT managers at the manufacturer level

32. “The best way to predict the future is to create it”.

33. Questions?

34. Thank You!