J.D. Power 2/3/2012

“Capitalizing on Market Momentum”

- North America should have an 8% growth in 2012. Here is the breakdown:
13.8 million sales in 2012, 11.5 million will be retail.
Why the increase in 2012?
1. Production and increased demand.
2. Aging fleet / pent up demand.
3. More new products over the next 3 years.
4. Rebound in leasing.
5. Slight easing of credit.

Change and Opportunities in Our Industry
- Evolving consumer needs and technology are forcing change.
- 81% shop online before coming into the dealership. 24% use mobile phone, 19% use tablets.
- 51% Generation Y & 49% Generation X like to view online vehicle presentation before coming to dealership.

Earl Hesterberg
- President and CEO of Group 1 Automotive (83,000 employees)
- Mostly imports - $25 million in net profit in 2011, $.5 million in net profit in 2007.
Earl’s Views on Future of Auto Retailing
1. Looks a lot like the present.
2. Never changes as fast or as much as you think.
3. Facts:
Year Number of dealers
1950 47,500
1988 24,938
2011 17,700

Number of dealers
BMW 338
Mercedes 353
Lexus 231

Other examples:

Buick/GMC 2200 why?
Hyundai 780

- 33% of all consumers say their sales consultant did not know enough about their product.
- 29% of U.S. population has a 4-year college degree.
- Group 1 percentage of dealer managers with college degrees is 25% (that’s management).
- Group 1 percentage of managers with a 4-year degree is higher than the national average.

Earl’s Last Words of Wisdom

As an industry, we need to work hard to recruit quality, young, college educated team members so they can grow into managers.

Here is what we are doing to attract young college educated people:
1. College Management Training Program – work with universities and have a written career path.