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Headlines 2008

Headlines 2008. Lehman Brothers collapse sends shockwave round world. Credit lockdown puts companies in crisis mode. Auto Execs Fly Corporate Jets to D.C., Tin Cups in Hand. Economic Signs Point to Longer, Deeper Recession. Aid in Hand, Clock Ticks for Detroit;

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Headlines 2008

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  1. Headlines 2008 Lehman Brothers collapse sends shockwave round world Credit lockdown puts companies in crisis mode Auto Execs Fly Corporate Jets to D.C., Tin Cups in Hand Economic Signs Point to Longer, Deeper Recession Aid in Hand, Clock Ticks for Detroit; With $17.4 Billion, a Mandate: Restructure by March or Go Bankrupt 1

  2. Headlines 2009 Report: Obama Decides Bankruptcy Best for GM, Chrysler Chrysler files for bankruptcy protection, will partner with Fiat GM files bankruptcy; US to get 60% share Cash-for-clunkers bill passes, offers up to $4,500 for a new car 2

  3. U.S. Automotive IndustryEconomic Impact • $576 billion in retail sales in 2008 • More than 14% of total retail sales are generated at new-vehicle dealerships • 18,943 new-vehicle dealerships in U.S. • Over 1 million jobs at new-vehicle dealerships 3

  4. Number of Franchised New-Car Dealerships(Reduction from 50,000 in 1950) Recession1980-82 Recession1990-92 Recession2007 Recession2001 4 Source: NADA Industry Analysis

  5. 13.2 Million Light Vehicles sold in 2008(Truck/SUV accounted for 48% of Sales)Forecast for 2009 is 10.1-10.4 million 17.4 17.1 16.9 16.9 16.8 16.6 16.8 16.5 16.1 15.5 15.1 15.1 13.2 5 Source: NADA Industry Analysis

  6. CUV’s and Small Cars Sell Down during Clunker Program Source: Ward’s Automotive 6

  7. Sales of Hybridswere 315,688 in 2008 7 Source: R.L. Polk, Ward’s Automotive

  8. Total DealershipAdvertising Expenditures 8 Source: NADA Industry Analysis

  9. Dealership Advertising Expenditures Per New Light Vehicle Sold 9 Source: NADA Industry Analysis

  10. Advertising Expenditures at New Car Franchised Dealers Other 15.1% Other 16.6% Newspaper 23.2% Internet 17.2% Television 16.6% Newspaper 52% Direct mail 10.2% Radio 15.3% Radio 15.2% Television 18.8% 2008 1998 10 Source: NADA Industry Analysis

  11. Internet Advertising as a percentage of Total Advertising Expenditures Percentage 11 Source: NADA Industry Analysis

  12. National “Buy Now” PSA campaign • Most extensive public advertising campaign in NADA history • Extraordinary support from media • Ads are running: • In nearly 350 markets • On 343 TV stations or cable systems • On 189 radio stations or groups • In 172 newspapers or publishing groups 12

  13. U.S. Auto Industry 2009 • Industry has declined to 10.1-10.4 million units, but outlook is better for 2010: 12 million units • Dealer network continues to downsize as GM, Chrysler restructure • “Cash for clunkers:” 700,000 vehicles sold 13

  14. Advertising Outlook, 2009 and Beyond • Expect advertising spending to increase with new-vehicle sales in 2010. • Expect even higher rates of ad spending by 2012, lifted by new-vehicle sales reaching 15 million units for total advertising spending of well over $7 billion. • Larger dealerships use more TV, and industry consolidation will drive relatively higher TV use. • 2009 advertising spending has dropped 19.5 percent as of mid-year (June), but ad spending during Clunkers period will reduce this rate of decline slightly. 14

  15. “Cash for Clunkers” Top Sold: • Toyota Corolla • Honda Civic • Toyota Camry • Ford Focus • Hyundai Elantra Top Traded: • Ford Explorer 4WD • Ford F-150 Pickup • Jeep Grand Cherokee • Ford Explorer 2WD • Dodge Caravan 15 Source: Department of Transportation

  16. Clunkers Impact in August: August vs. Year-to-Date ShareShare of U.S. New Light Vehicle Market Source: Ward’s Automotive 16

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