1. By Strada July 2010 Canadian Sales Mid Point 2010

2. The BuzzSales are horrible a comeback is imminent.Its just around the corner…the comeback! We said repeatedly that 2009 was not so bad, and obvious we did not expect 2010 to be a quantum leap from 2009. Whoever believed and abided by the mantra that 2009 was an horrible year, made specific decisions and deployed relevant tactics. The ones concluding that 2009 was not so bad, while providing insight into the “new normal” made decisions, and deployed tactics to evolve within a new reality.

3. Sales NumbersEveryone presents numbers to burnish their image. More pundits are increasingly involved in expressing opinions, and commenting on monthly sales numbers. Its becoming interesting and entertaining. Yes…there are a myriad of nuances on how numbers are presented, seen, perceived, disseminated, compared, analyzed….it depicts different images of the same results.

5. What Do We See at the Mid Point?At the end of the 1st Quarter + 15%End of 2nd Quarter + 9.1%What is the trend? April and May were comparable to 2009, and must have raised questions for some manufacturers. There are 786 K new vehicles sold in Canada which would indicate a year end total of 1.5 M it will be interesting to see how the second half develops. The Koreans are doing to the Japanese, what the Japanese did to the domestics. If a manufacturer loses sales in a recalibrated market will they ever regain the sales. For the first time in countless years, Ford is the leader at the mid point.

6. KoreansOnly 2 manufacturers, that are joined at the hip, they are both on an upward sales vector with appreciable momentum. The economic downturn was advantageous to the Koreans. They offer good products with numerous standard features, at reasonable prices, for a compelling value proposition. The styling of their latest offerings is leading edge, yes…the Korean understand that styling sells. If they want to sell additional units, they activate a monthly program to further stimulate sales. Thought: Who is losing sales to the Koreans?

7. JapaneseOne manufacturer (T) stepped on a “banana peel” its understandable that their sales are lagging. Although their luxury division is doing well. Another manufacturer (H) is an enigma, and inexorably becoming a shadow of its former self. The luxury division is in the same situation. Another manufacturer (N) is holding its own, with their luxury division having an appreciable increase in sales. Still another (M) is also holding its own with an increase in sales. The manufacturer (S) with dramatic sales increases is doing well, while selling less vehicles than a German luxury manufacturer. The manufacturers with less sales volumes, one is slightly behind last year, the other seems to have made a decision to concentrate on their motorcycle business.

8. DomesticsFair to say that change has been the operative word, as well as emerging from the brink of disaster for some. We expected Ford to displace GM as the sales leader in Canada, its now a done deal. Chrysler has regained its “mojo”. These guys know how to move iron when they want to. GM is still mourning the loss of Pontiac, and leasing. We are still observing Cadillac. These manufacturers offer good products, their market share is increasing. Thought: Who is losing market share to the domestics?

9. GermansWith a robust upward sales vector while raising entry barriers for the sweet spot of their market segment. Similar to the halcyon days of Detroit. They have the entry level luxury market be it for cars or CUV’s almost cornered . To compete amongst themselves they are fearless in putting “skin in the game” to augment their share of the entry level and luxury market. One manufacturer that is not in the luxury segment, is doing well with some of its newer models. The one that deals primarily with sports cars is ahead, aided by new models.

10. Dynamic PricingCanadians love “DEALS” Be it the price, the financial package, the optics of exceptional value. At the mid point some manufacturers have a clearer understanding of satisfying the insatiable craving for a “deal”. Manufacturers have the technology/personnel/ resources to analyse any and every aspect of individual models and markets across Canada. They disseminate their monthly sales (previous month), and their monthly promotions (coming month). Dynamic pricing can easily alter the monthly sales results + unsettle competitors. It’s the reason we prefer to look at quarterly results.

11. Recalibrated MarketThe Canadian Market has been adjusting for several months. The manufacturers that acknowledged a recalibration with a few exceptions are doing quite well. The manufacturers waiting for the 07 or 08 market to reappear are not doing as well. In a recalibrated market gaining new sales is the preferred direction, losing sales is not an option. Thought: If you lose sales to a competitor , when will you regain the lost sales? Thought: Would you rather sell 8 and make 90, than sell 10 and make 100…makes for a fascinating PPT.

12. Transcend WinterMost of the Canadian market endures several months of winter. Consumers seek to transcend winter conditions. Manufacturers that have grasped “transcending winter” by offering AWD vehicles with distinctive styling accompanied by “dynamic pricing”…have market winners. Turning a FWD platform into AWD is cost effective repositioning / rebranding. Transcending winter while being “green” is a win. Transcending winter with a multi purpose utility vehicle is another win. Transcending winter with a genuine 4x4 truck is another win. Fuel economy is not a win.

13. Certified Pre OwnedManufacturers are measuring their CPO sales. A trend that will continue while further enabling sales of new vehicles. Consumers are responding enthusiastically and positively to manufacturer supported CPO programs. Consumers perceive increased peace of mind with a CPO vehicle. Manufacturers and dealers love CPO vehicles for a myriad of reasons/agendas/ strategies. Yes…they are making money twice with the same vehicle. 1- Marketing when new, 2-Remarketing when used.

14. Compact Mid Size Sedans Honda Civic……..26,905 Mazda 3………….26,383 Toyota Corolla…...24,873 From our perspective the Mazda 3 is the undisputed leader in this segment, both the Civic and Corolla have less units this year than last year. While the Mazda 3 has increased. Fascinating to see how the second half will develop. Sales results from: Automtive News Ford Fusion………..11,109 Toyota Camry………7,915 Hyundai Sonata…….7,228 Honda Accord………7,058 Chevy Malibu……….6,969 Nissan Altima……….6,823 Mazda 6……………..3,014 Competitive segment, with good product offerings. The Sonata is ahead of the Accord. Why is the Mazda 6 so low? The most popular is the Fusion, way ahead of all the others. Some Numbers YTD June 2010

15. CUV/SUV Pick Ups Ford Escape…………22,078 Honda CR-V…………13,542 Hyundai Santa Fe…...13,416 Toyota RAV4…………11,987 Chrysler Journey…….10,524 Chevy Equinox………..9,297 A very competitive segment, Hyundai is breathing down Honda’s neck in this segment too. There are other offerings and competitors in this segment. Ford F Series……………46,610 Ram……………………...25,674 GMC Sierra……………...22,510 Chevy Silverado………...20,146 Pick up sales are through the roof compared to last year. Ford remains the undisputed leader in this segment. Ram has come from last to second place. Canadians want pick ups and are financing them for increasingly longer terms. Some Numbers – 1YTD June 2010

16. Entry Luxury Luxury CUV/SUV BMW 3 Series………….6,162 M-B C Class………...…4,376 Audi A4…………………2,642 Infiniti G…………………2,180 Buick LaCrosse………...1,695 Cadillac CTS……………1,643 Acura TL………………...1,351 Lexus IS………………....1,172 The numbers are revealing and self explanatory. Lexus RX………………..3,736 M-B GLK………………...3,075 Acura MDX…………...…2,983 Buick Enclave……….…..2,207 BMW X5……………….…2,101 M-B M Class………….….1,827 BMW X3…………….……1,656 Acura RDX……………….1,579 Audi Q5…………………...1,508 Cadillac SRX……………..1,297 The vehicles are popular, its competitive. Some Numbers – 2YTD June 2010

17. Pony Cars Did You Know? Mustang…………….2,667 Camaro……………..2,643 Challenger………….2,022 Still a reminder of the Trans Am races of 40 years ago. The strategy of offering and promoting the 6 cylinder engine is working. SLS AMG……………….39 Lamborghini……………..36 Maserati………..………..79 Ferrari…………..………..50 Panamera……….….…..201 GT-R…………….…….…40 R8…………………….….57 Bentley…………….…….38 Some Numbers – 3YTD June 2010

18. The DealerWhere the auto industry meets/interfaces with the customer. As the market recalibrates, dealers recalibrate. There have been numerous dealer recalibrations in Canada. With altering sales results from the manufacturers. The recalibration process continues. The values of the various franchises are in a state of flux. The product is more complex. While the customers is increasingly more demanding.

19. Our Thoughts Last year (2009) was tumultuous generating “sea changes” in the automotive landscape, mind you the sales results were acceptable. The sea changes provoked a dramatic recalibration of the Canadian automotive landscape, with the ensuing domino effect. Historically the auto industry abhors a “vacuum”, which is instantly filled by competitive forces. Some manufacturers created a vacuum, while other manufacturers immediately filled the vacuum. In 2010 there is no vacuum, its filled. Sales are acceptable since what one lost (vacuum creator), another immediately gained (vacuum filler). The ultimate winner is the consumer/customer. Thank You