Doing Business in Emerging
International Markets
Global Business Alliance
13th Annual Business Forum
Presented by
M. Sean Molloy
Regional Director, Asia Pacific
DATE 02-07-07
Agenda


Introduction
LoJack Corporate Overview
– Defining the challenge: Vehicle theft
– Company Information
– LoJack Products and Services

LoJack International
– Mitigating risk through Licensee relationships
– Key international initiatives

Emerging Market Opportunities
– China
– India

Global Economic Challenges
– Risk of no presence may be greater than operational risk
– Risk mitigation; leveraging community resources

2
Conclusions
Vehicle Theft
Problem
Vehicle Theft

North America
– A vehicle is stolen every 25 seconds
– 1.2M vehicles stolen per year
– $20B per year

Europe
– 1.5M vehicles stolen per year (Europol)
– $22B per year
– Countries with highest rate of stolen vehicles – UK, France,
Italy, Spain, Poland (Europol)

Asia Pacific
– Est. 600,000 vehicles stolen per year (approx. $10B per year)
– High theft rates and ratio of NVS to car parc in India & China
– Growing theft with income disparity in emerging markets
4
LoJack –
Corporate Overview
Mission
– To Be the Leading Global Provider of Products
and Services for the Tracking and Recovery of
Valuable Mobile Assets
6
LoJack Corporation (LOJN)

World leader in stolen vehicle
tracking and recovery

90+% recovery rate

20-year history of success

NASDAQ-listed company
― Symbol: LOJN

Global
― 26 States + Washington D.C.
― 28 Countries
7

Over 5 million units sold and installed
•
Over 180,000 vehicles recovered globally worth $3 billion
Core Strengths
• Proprietary covert Radio Frequency Technology
• Extensive Private Wireless Network
• Relationships with Law Enforcement
• Compelling Commercial Model
• Insurance Relationships
• Brand Recognition (see below)
97%
96%
94%
93.3%
93%
93%
91%
85%
77%
Duracell
Wal-Mart
U.S. survey - aided & unaided
8
Kleenex
Yahoo
AT&T
MasterCard
ebay
Amazon.com
Markets Served
Passenger Cars
Motorcycles
Mobile Assets
Commercial Vehicles
Construction Equipment
9
Cargo
Strong Revenue Growth
$200
$ in millions
CAGR (2001-2005) = 17.5%
$180
$160
$140
$120
$100
$80
$60
2001
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
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10
2002
2003
2004
2005
3 years of consistent quarter over quarter growth
in revenue and earnings
Revenue: 70% US – 30% International
Units Sold: 50% US – 50% International
Business Segments

Domestic
– Automotive Dealers
– Construction
– Motorcycle

YTD 2006
Boomerang
– Insurance
– Automotive Dealers

Consolidate Revenue
International
– Licensees
– Limited Investment
9%
21%
70%
Boomerang
Domestic
International
Segment
11
LoJack Recovery Network
Coverage Areas

LoJack works best in areas with:
– Greatest population density
– Highest number of new vehicle sales
– Highest incidence of vehicle theft
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Arizona
California
Colorado
Connecticut
Delaware
District of
Columbia
Florida
Georgia
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
Illinois
Louisiana
Maryland
Massachusetts
Michigan
Nevada
New Hampshire
New Jersey
New York
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LoJack operates in markets that
represent 70% of theft in the nation
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North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Virginia
Washington
LoJack’s Global Footprint
CANADA
UNITED
KINGDOM
GERMANY
RUSSIA
POLAND
BELGIUM
FRANCE
SPAIN
PORTUGAL
UNITED STATES
ITALY
MEXICO
CHINA
BELIZE
GUATEMALA
EL SALVADOR
COSTA RICA
PANAMA
HONDURAS
NICARAGUA
COLUMBIA
DOMINICAN
REPUBLIC
PUERTO RICO
TRINIDAD &
TOBAGO
CAMEROON
VENEZUELA
HONG KONG
UGANDA
KENYA
ECUADOR
MOZAMBIQUE
BRAZIL
PERU
PARAGUAY
ARGENTINA
SWAZILAND
LESOTHO
SOUTH AFRICA
URUGUAY
LEGEND
LEGEND
Licensed Countries
Countries with LoJack SVR Operations
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LoJack Brands
14
Products and Services
How LoJack Works


16
The LoJack system includes a small wireless transceiver that
is randomly hidden in your customer’s vehicle
When activated, the unit emits silent radio signals over the
LoJack network that allow the police to track and recover the
vehicle (complemented by Early Warning product)
1
2
3
4
5
Installation
Notification
Activation
Location
Recovery
• LoJack unit
hidden in
vehicle by
certified
technician.
• Registered in
LoJack or
police
database.
• Customer
reports theft
to police or
directly to
LoJack in
certain
regions.
• Police or
LoJack send
radio signal
from tower.
• LoJack unit
emits uniquely
coded signal.
• The signal is
tracked and
used to locate
the vehicle,
usually within
hours.
• The vehicle
is returned
to the
owner.
Market Drivers

Best Technology Choice - Proven
– Technology more robust than competitive technologies

Dealership Benefits
– Dealers make money on sale and installation
– Customer satisfaction

Insurance
– Many global markets are driven by insurance mandates
• Europe, Latin America, South Africa
– Insurance discounts are offered in many regions

Customers
– Provides asset protection and peace of mind
– Proven product with real consumer benefit
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LoJack International
Building a Global Brand
LoJack’s International Expansion



1992 expansion begins
Builds on Bill Reagan’s entrepreneurial origins
Early technology license & distribution model
–
–
–
–
–
–
–

Growing need to hedge against regional/global risks
–
–
–
–

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Licensing fees finance expansion
Seeking local experts allows for immediate market entry
Allows for local tracking and marketing flexibility
Leverages entrepreneurial innovation and R & D
Minimizes investment requirements
Allows for local relationship management
Cuts down on international administration costs
Need to leverage brand value globally (Global SVR leader)
“on call” and black box safety regulations
Demand for regional operational coverage
Telematics IT convergence and OEM relationships
Evolving model for emerging markets
Increasing International Market Penetration

Market Opportunity
– 66 Million New Vehicles Sold Annually
– For Every Vehicle Stolen in U.S., 2 are Stolen Globally

Licensee Strategies for Growth
– Develop Programs Enabling Licensees
to Increase Local Market Share
– Consolidating operations and establishing
subsidiary presence
– New product development
– Develop New Markets in Asia/Pacific Rim
– Seek Global Agreements with
Vehicle Manufacturers
20
Leveraging Global Presence

Ownership and Operation of
Select Markets
– Creating Shareholder Value

Italy First Step
– Operational in Rome and Milan

Pan-European Network
– Distribution and Recovery
Experience in U.S. Applicable

Develop key emerging markets
– China ’07
– India & SE Asia in development
21
Developing New Products in the Tracking
and Recovery Space
22

Knowledge of Police
Systems and Process

Proven Radio
Frequency (RF)
Technology

Brand = Tracking and
Recovery
SVR in Emerging Markets
Considering China and India
Emerging Market Opportunities

China and India
–
–
–
–

the two most populous countries,
account for 40% of the world’s population,
are the fastest growing economies in the world
Business objectives moving from outsourcing and supply chain
efficiencies to presence & market share
Challenges remain: developing economies in transition
– Formation of institutions (political and regulatory)
– Formation and maturity of markets

Impacts becoming material
– Impacts of continued Sino-Indian growth will become larger
– In 1980 when China grew ten percent, the absolute increment to global
GDP and global demand was insignificant.
– Now the GDP is over 1.88 trillion $, and a ten percent increment is large in
absolute terms (equivalent in terms of global demand of about a 1.4%
increment in US growth
24
Engines for Global Growth
China and India represent unprecedented growth opportunities
GDP per capita predicted to grow by a factor of 4 to 7 within next
20 years
Obvious impacts on global consumer spending trends
GDP per capita: China and India (constant 2000 US$)
1600
8000
1400
7000
2025
2004
2002
2000
1998
1996
1994
1992
0
1990
0
1988
1000
1986
200
1984
2000
1982
400
1980
China GDP per
capita (constant
2000 US$)
3000
2020
600
4000
2000
China GDP per capita
(constant 2000 US$)
5000
1995
800
India GDP per
capita (constant
2000 US$)
1990
1000
6000
1985
India GDP per capita
(constant 2000 US$)
1980
1200
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Future Growth
2015

2010

2005

China and India:
The Fastest Growing Vehicle Markets in the World
• China’s 2004 car parc was 24.1 Million
• China’s car parc grew at CAGR of 5% from 2000 - 2004
• China’s car parc is predicted to grow at CAGR of 9% from 2005 - 2015
• China already is the third largest light vehicle market by vehicle sales in the world
• China is expected to become the second largest auto market in 2007, surpassing
Japan
• India projected to grow to 3M in annual new vehicles sold by 2010
HISTORICAL AND PROJECTED CHINA CAR PARC — LIGHT VEHICLES
80.0
69.8
Car Parc (in millions)
70.0
60.0
49.0
50.0
44.9
40.6
36.1
40.0
30.0
20.0
12.3
13.7
15.3
11.1
1998
1999
2000
2001
17.5
20.7
24.1
27.8
31.8
10.0
0.0
2002
2003
2004
2005E
2006E
2007E
2008E
2009E
2010E
2015E
Source : Global Insight Asian Automotive Industry Forecast Report August 2005. Light vehicles include passenger cars and light trucks.
China and India:
Vehicle Theft Rates Among the Highest Worldwide
• “Automobile theft is rampant. In 2005, Chinese police authorities recorded 683,000
automobile theft cases” Source: People’s Daily Online January 20, 2006
• Over 2% of the vehicle car parc was stolen in 2005
• Theft rates among the highest in the world, comparable with South Africa and Brazil
• Market survey revealed that 50%+ of car owners know someone whose car was stolen
• Theft rates in India skyrocketing, now also approaching 2%
Estimated Global Theft Rates and 2004 Car Parc by Market
Source : Global Insight Asian Automotive Industry Forecast Report August 2005, Company and LoJack Corporation estimates
Global Economic Challenges
“The World is Flat”

Globalization as an opportunity and a challenge
– Opportunities will become threats if not engaged
– Avoiding emerging markets may be a bigger risk than
confronting the challenges they present

LoJack’s Approach
– Leverage maximum resources through partnership
– Maintain a focused, prioritized, and strategic approach to new
markets and product development
– Ensure leading position and brand recognition in developed
countries and commit to key emerging markets
– Identify and invest in good people
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Utilizing Community Resources
30

Market studies

Strategy consulting

Partner search

Regional networking

Sharing best practices

Regional consultants

References
Conclusions

Globalization as an agent of change
– The best companies will risk failure in order to gain
opportunity
– Risk is not a matter of choice, but strategy
– Partnerships allow companies to overcome risk by
leveraging shared resources and specialization
– Harnessing entrepreneurship drives creativity and
innovation in an increasingly competitive environment
– A company is only as good as the people it keeps.
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