Mick Vigliotti

1. Mick Vigliotti Session Senior Director

2. J.D. Power Driving Loyalty

3. Agenda • Generation Y Satisfaction Across Industries • Sales Satisfaction by Generation • Technology Trends in the Sales Process • Impact of Feature Explanations • Loyalty Impact of • Sales Satisfaction • Vehicle Quality • Service Satisfaction by Generation • Technology Trends in the Service Process • Impact of Service Satisfaction on Brand Loyalty • Recommendations

4. Gen Y Satisfaction Across Industries • Satisfaction among Gen Y customers varies by industry - automotive retail has larger negative satisfaction gaps • Industries that have a lower frequency of interpersonal interactions (e.g., life insurance, utilities, and credit card) tend to earn higher satisfaction scores among Gen Y -4 6 18 23 -9 -45 -16 -9 19 38 1J.D. Power defines the generations as Pre-Boomers (born before 1946); Boomers (1946-1964); Gen X (1965-1976); Gen Y (1977-1994).

5. Sales Satisfaction by Generation • Younger customers report lower satisfaction scores than older customers (which is historically consistent) and points to gaps between expectation and reality • Satisfaction gaps between Gen Y customers and other generations are widest in those measures based more on personal interactions - Salesperson and Working Out the Deal • Developing positive personal relationships and reducing negotiation friction are particularly critical for younger customers

6. Gen Y Mix by Brand

7. SSI Buyer Performance by Generation • Buick and Cadillac perform well across all generations, where Chevrolet and GMC struggle with Gen Y buyers

8. Technology Trends in the Sales Process • Millennials continue to grow as a percentage of new-vehicle buyers • Technology applications throughout the buying process are becoming increasingly important and expected • Younger customers are more likely to use the internet and shop on a mobile device

9. Technology Trends in the Sales Process • Technology adoption and approval ratings continue to climb • The use of technology increases for both Non-Premium and Premium brands in 2016 • Non-Premium brand dealers are moving quickly to use technology as frequently as Premium brands

10. Tablet Usage by Brand • Tablet usage is fairly consistent across GM brands • Buick customers are less likely to report that vehicle features were demonstrated on a tablet • Satisfaction with tablet usage is highest when the device is used throughout the process, not just to capture personal information

11. Impact of Technology on Satisfaction • Gen Y buyers are the least likely to indicate their salesperson used a tablet during the sales process. Gen Y buyers report the lowest satisfaction with how their dealer used technology • Just as technology content in entry-level vehicles has increased to cater to younger buyers, it is critical for dealers to make better use of technology during the sales process to satisfy younger buyers • Conversely, while more Pre-Boomer vs. Boomer buyers indicate tablets being used, differences in satisfaction are negligible • Given that tablet usage is a key driver of sales process satisfaction for all buyers, and dealers would likely benefit the most by increasing tablet usage, how they use the technology is vital

12. ROI of Tablet Usage • Non-Premium:Usage of tablets has increased YOY(+7 percentage points) • Both front end gross profit (+$40) and service contract income (+$29) are higher when tablets are integrated into the sales process +$40 +$29 Note: Number in parentheses on x-axis denotes incidence. Source: J.D. Power 2016 U.S. Sales Satisfaction Index (SSI) Study and Power Information Network Data

13. Impact of Feature Explanations on Sales Satisfaction • Satisfaction is highest when a thorough explanation of vehicle features is completed • Tablets can help provide consistency, accuracy and thoroughness during vehicle delivery

14. Impact of Feature Explanations on Sales Satisfaction • Satisfaction declines when a customer has to return to the dealer for further explanation. This is especially true when the lack of understanding is caused by an insufficient explanation at delivery Returned to Dealership Why Returned to Dealership

15. Impact of Feature Explanations on Vehicle Quality • A thorough explanation can improve vehicle quality scores by reducing the incidence of difficult to use (DTU) issues (in addition to increasing overall buyer satisfaction)

16. Impact of Vehicle Quality on Loyalty • Actual brand loyalty decreases as the number of problems reported in IQS increases

17. Impact of Sales Satisfaction on Customer-Paid Service Loyalty • Highly satisfied buyers indicate a strong likelihood of returning to their selling dealer for customer paid service 1.5X Loyal At Risk Lost

18. Service Satisfaction by Generation • Satisfaction gaps between Gen Y customers and other generations are consistently wide across all factors, once again indicating a disconnect between expectations and actual experiences

19. Gen Y Mix by Brand (Service customers)

20. CSI Performance by Generation • Although satisfaction for younger customers still lags, GM brands are improving relative to competition. Cadillac’s Gen X performance is a concern

21. Technology Trends in the Service Process • Technology adoption in the service department continues, with both service scheduling and the use of tablets increasing since 2015 • The percentage of customers who scheduled service online has increased 4 percentage points since 2015 (from 9% to 13%)…How is this being handled (BDC, etc.)? • Conversely, telephone appointment scheduling has declined by 4 percentage points • All generations show an increasing preference for scheduling appointment via the internet, which increases customer satisfaction

22. Technology Trends in the Service Process • Tablet usage has increased from 17% in 2015 to 24% in 2017 • Cadillac has the second highest rate of tablet usage - Buick is the lowest • Similar to Sales, satisfaction with tablet usage is highest when the device is used throughout the process, not just to capture personal information

23. Technology Trends in the Service Process • A huge opportunity exists to leverage technology when keeping customers informed of vehicle status • 56% of service customers leave the dealership while service work is being completed • And yet, among those customers who do receive a service update communication, only 5% received a text message or email to provide status, up from just 2% in the 2015 study • How are you capturing customer preferences?

24. Technology Trends in the Service Process • Internet service scheduling and communicating with customers via text message have not kept pace with customer preferences • Dealers that communicate service updates via text and email have the highest future intended loyalty (i.e., “definitely will” return for paid service); and yet, they remain the least common methods of communication (3% and 2%, respectively)

25. Impact of Service Satisfaction on Brand Loyalty • “The ROI of CSI”: among Non-Premium brand owners, brand loyalty is 15 percentage points higher when satisfaction reaches “951 and higher” vs. “700 and less.” Source: J.D. Power and Associates 2016 Customer Service Index (CSI) Study (CSI Index Scores are based on 1-3 years owners) 1J.D. Power and Associates Power Information Network (PIN) trade-in VIN data matched to 2016 CSI Study

26. Recommendations • Strong delivery processes of high quality vehicles start a Loyalty trend for dealers… • Properly integrating technology into your current processes has proven important, especially younger customer • How can you use the current GM apps and other technology GM offers to provide the best experience for your customers? • Evolve your customer handling process with the changing needs of your customers • Is your facility strategy and employee training aligned with changing customer expectations and preferences? • Dealers and GM need to work together to provide a level of service that earns you both “Customers For Life!”