Overview of the European Automotive Industry Hervé SALKIN – September 2005

1. Overview of the European Automotive Industry Hervé SALKIN – September 2005 herve.salkin@isuga.fr

2. 1- Key features of the European market 2- Comparison EU vs USA vs Japan 3- Case study : Renault Nissan 4- Case study : Peugeot PSA 5- Case study : Valeo

3. 1- Key features of the European market

5. Main figures • Largest automotive production in the world (34%) • 7.5% of the manufacturing sector • Employment : 2 millions (direct), 10 millions (indirect) • Trade 2003 : export 67 billions € / import 34 billions € • Global vehicle production in units of 16.9 millions in 2002 • Volkswagen : 5 023 264 (world no. 4) • Peugeot PSA : 3 262 100 ( no. 5) • Renault : 2 343 954 ( no. 10)

6. Restructuring of the past 35 years 1970 1980 1990 2005 Abarth Alfa Romeo Alpine AMC AstonMartin BLMC BMW Chrysler Citroen Daimler Benz De Tomaso Fiat Ford Fuji GM Honda Innocenti Isuzu Lamborghini Lotus Maserati Mazda Mitsubishi Nissan Peugeot Porsche Prince Renault Rolls Royce Saab Seat Simca Suzuki Toyota Volvo VW Alfa Romeo AMC AstonMartin BLMC BMW Chrysler Daimler Benz De Tomaso Fiat Ford Fuji GM Honda Isuzu Lamborghini Lotus Mazda Mitsubishi Nissan PSA Porsche Renault Rolls Royce Saab Seat Talbot Suzuki Toyota Volvo VW BMW Chrysler Daewoo Daimler Benz Fiat Ford Fuji GM Honda Hyundai Isuzu Mitsubishi Nissan PSA Porsche Renault Rolls Royce Rover Suzuki Toyota Volvo VW BMW Daewoo Daimler Chrysler Fiat Ford GM Honda Hyundai PSA Porsche Renault / Nissan Toyota VW

7. New EU member states

8. 2- Comparison EU vs USA vs Japan

9. Forecast production

10. Value addedmillions €

11. Employment

12. Labour productivitybase 100 : USA

13. Hourly labour cost PPP $

14. Value added vs labour cost growth rates

15. Trade : export 2001 in billions $

16. Trade : import 2001 in billions $

17. EU trade historyimport – export in billions €

18. R&D expenditures 2001 vs 1995

19. 3- Case study : Renault Nissan

20. Sales worldwidein units

21. Revenues & net incomein millions €

23. Renault Nissan Alliance • NRP Nissan Revival Plan : 18/10/1999 • Purchases : - 20% • Distribution : - 10% • Personnel : - 14% • Plant capacity utilization : 53 to 82% • Number of suppliers : 8 000 to 4 000 • Return to profit • 50% debt reduction • Share in Yens : • Alliance 400………….580 • NRP 360…………..1200

25. Renault Logan : the 5.000 € car ! • Target of emerging markets • Dacia acquisition : target 5.000 € car vs Peugeot/Toyota 8.000 € project in Kolin • Sales in France with updated equipemnts (airbags, ABS, AC …) at 7.500 €

26. 4- Case study : Peugeot PSA

27. Sales worldwidein units

28. Revenues & net incomein millions €

29. PSA strategy • Marketing : clever portfolio with Peugeot & Citroen models • Export priority : 28% of sales outside Europe • R&D : environment friendly engines • Threat : increase in raw materials !!!

30. PSA strategy • Several alliances : • - Toyota : Kolin facility : 300.000 cars/year • - BMW : environment friendly gas engine • - Ford : diesel engines • - Fiat : family car 807 / Ulysse • - Fiat : Turkey Tolas project • - Mitsubishi : 4wd cars

31. PSA Slovakia project • Trnava new plant : 300.000 cars / year as of 2006 • Local market = 70.000 units • Low car ownership : 300 vehicles / 1.000 inhabitants • Ideal base for export • SK : future world leader vehicles per capita (PSA + VW + Hyundai = 900.000 units)

32. 5- Case study : Valeo

33. Revenues & net incomein millions €

34. Revenues breakdown • 82 / 18% : parts for new / used cars • Growth in Asia (+ 3%) & Latin America (+ 25%) • Stable in Europe • Decline in North America (-9%)

35. Valeo strategy • Production in low labour cost countries : 48% of 129 production sites • External growth in China & Japan • Strong R&D activity : LaneVueTM on new Nissan & Citroen cars, Start-Stop on Citroen car (65 R&D centers) • Threat : increase in raw materials !!!

36. THANK YOU FOR YOUR INTEREST !!!!!