Society of Motor Manufacturers and Traders Limited
71 Great Peter Street London SW1P 2BN
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED

• 31 key vehicle manufacturing sites: seven volume passenger car,
11 commercial vehicle, bus, coach and taxi manufacturers.
• Global base for engine manufacture, 2.3m. in 2010.
• 19 of the world’s top 20 industry suppliers and 7 global volume vehicle manufacturers located in UK.
• Motor sport cluster for development and manufacture: eight F1 teams supported by >300 specialist motorsport companies.
• Many foreign vehicle manufacturers now have UK-based R&D centres: Nissan at Cranfield; Ford at Dunton; SAIC at Longbridge;
Changan at Nottingham; TATA at Warwick. – and Jaguar-Land
Rover
• Creation of UK Automotive Council – framework for collaboration with Government to improve the UK investment offer and positioning of UK as centre for ultra low carbon development.
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 2

• Majority of UK automotive manufacturing foreign-owned.
• Mature market, 4th largest car producer in EU*.
• Exports average >£25 billion annually, over 10% of UK exports.
• 2010 car production nearly 1.3mn, up from <1m in 2009 recession; exports have increased from c65% 2000 to >75% in 2010.
• Commercial vehicle production consistently > 200,000 between
2004-8, but just 90,000 in 2009 (not supported by scrappage scheme). 2010 production back to c123,000, with exports c70%.
• UK had fourth highest R&D spend in Europe at over £1.5 billion p.a.
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED
* Source OICA
PAGE 3

SMMT 12th Annual Sustainability Report 18 signatory companies
- across the broader industry, shows year on year:
• Manufacturing turnover up 20% to £49bn.
• Output up 27.8%, returning to pre-recession volumes.
• Number of vehicles exported up 31%, totalling £29bn in value.
• Energy use per vehicle produced down 8%.
• Manufacturing CO
2 emissions down 10.5% per vehicle produced.
• Manufacturing waste to landfill produced per vehicle down 8%.
• New automotive apprenticeships up 9% adding to the 737,000 jobs dependent on the sector.
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 4

• Strong independent design engineering and testing base.
• Significant foreign manufacturing investment and R&D investment / spend.
• Efficient manufacture and high export ratios of both volume and premium / niche vehicles.
• Strong powertrain sector with technological innovation and scale.
• Low carbon technology and electric vehicle development and manufacture, with strong government support.
• Comprehensive OEM aftermarket component manufacture, distribution, service and repair capacity.
• In depth HE academic study & research and FE sector training.
• Highly sophisticated retail and distribution logistics import / export services.
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 5

1,8
1,6
1,4
1,2
1,0
0,8
0,6
0,4
0,2
0,0
SMMT Production Outlook 2011 - 16
90 91 92 93 94 95 96 97 98 99 '00 '01 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Years
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 6

Long-term commitment to UK – major announcements in 2010-11
• BMW : £500m investment across all 3 UK facilities for the 3 rd generation MINI; expansion of range to include Coupe and Roadster Minis
• Ford : 5 year £1.5bn investment in engineering and manufacturing facilities.
• GM : next generation Vivaro confirmed for Vauxhall’s Luton plant from 2013/4.
• Honda : commitment to new Civic and CRV, following total £1.4bn investment at Swindon.
• Nissan : £420m investment to make LEAF and batteries; £192m investment for new Qashqai
• Tata JLR : retaining three vehicle assembly sites, build new engine factory, widen product range, creating >2,000 new jobs; >£2bn of supply contracts for the Range Rover Evoque; £490mn investment for C-X75 hybrid supercar
• Tata : establishment and expansion of European Technical Centre.
• Aston Martin : Cygnet production to create 150 new jobs; Rapide production moving to Gaydon from Austria.
• McLaren : MP4-12C to be produced in Woking.
• SAIC MG : MG6 GT to be designed engineered and assembled in Longbridge.
• Optare : new 1,200 capacity bus manufacturing facility in Yorkshire..
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 7

• Economic crisis in Europe, USA, Japan, alongside market decline
/ overcapacity in some markets.
• Sustainable Government support? Problems with suppliers’ access to finance.
• Low cost economy countries / High growth markets – both opportunity and competitive threats.
• Local supply chain fragmented erosion “hollowing out”/ overseas head office decision making.
• Some SMEs lack global trade awareness / global competitiveness / skills and training.
• Maintaining manufacturing efficiency, investment in UK based design engineering, research and development.
• Environmental / Low carbon legislation, Alternative fuels, ICE hybrids, Electric vehicles.
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 8

• Build and retain capacity in “sticky” technologies , ie:
– Energy storage and management
– Electric motors and power electronics
– Lightweight technologies
– CO2 and emissions reduction technology
• Other key technologies in which UK has potential:
– In-vehicle communications and management systems, driver communications; congestion warning systems; navigation; telematics.
– Materials; composites and alternative materials / jointing technology
– Environmental protection / emissions
– Rapid prototyping and manufacturing process improvement.
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 9

Demise of the old UK ‘Big 3’ - Growth of Japanese & BMW
2500
2000
1500
1000
Others
BMW
Honda
Toyota
Nissan
Land Rover
Jaguar
Vauxhall
Peugeot
Ford
Rover
500
0
1972 1982 1999 2006 2007 2008 2009 2010
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 10

VOLUME CARS
•
BMW - Mini range, incl. Clubman, Coupe and Roadster
• Honda - Civic, CR-V & Jazz
•
Jaguar
– XJ, XK XF
• Land Rover - Defender, Discovery, Freelander, Range
Rover, Range Rover Sport & Evoque
• Nissan – Note, Qashqai & Juke (and Leaf electric from
2013)
• Toyota - Auris, Auris Hybrid & Avensis
•
Vauxhall
– Astra
PRESTIGE / NICHE LOW VOLUME CARS
•
Aston Martin - DB9, Vantage, Virage, Cygnet
• Bentley – Continental, Mulsanne
•
Caterham - Classic, Super 7
• Ginetta - F400, G50EV & G50R road cars & G20,
G40, G40 Junior, G50 & Zytek race cars
• Lotus - Elise, Evora, Exige ; new Elan, Elise & Esprit
• McLaren Automotive MP4-12C sports car (from
2011)
•
Morgan
– Supersports, 4/4 Sport, 4 seater,
Plus4, Roadster & Roadster Sport sports cars
•
Rolls Royce - Phantom & Ghost
• SAIC - MG6 saloon
COMMERCIAL
• Alexander Dennis - buses & coaches
•
Dennis Eagle - refuse trucks
• Ford - Transit van, Transit Minibus
•
Vauxhall
–
Vivaro van and minibus, plus Renault Trafic versions
•
Leyland Trucks - trucks
• London Taxis Int - TX4 taxi and hydrogen fuel cell demonstrator
• Optare - single & double deck buses
•
Wrightbus - buses
FORMULA 1
•
McLaren racing
• Mercedes F1 - formerly Brawn
• Red Bull
•
Williams F1
• Renault F1
•
Force India
• Lotus F1
• Virgin Racing
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 11

2.39 million engines manufactured in 2010 (up 16% from 2009).
Key manufacturing plants include:
• Ford, Dagenham & Bridgend
• BMW, Hams Hall
• Honda, Swindon
• Toyota, Deeside
• Nissan, Sunderland
• Cummins, Darlington
• VW, (Bentley) Crewe
1,640,197
385,051
136,658
114,254
105,766
43,525
4,791
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 12

• Product planning and development.
• Vehicle conceptualisation and styling.
• Rapid prototyping services.
• Manufacturing engineering/feasibility.
• Structural analysis & vehicle simulation.
• Vehicle body, chassis, powertrain & trim.
• Vehicle component development.
• Electrical and electronics, chip designing.
• Engine engineering.
• Testing and validation, homologation.
• Special training packages (for CAE, CAM).
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 13

• Car output in 2010 increased 27.1% to 1,270,444 (2009 -
999,460)
• Nissan highest production at 423,262 – increase of 25% on 2009
• Export market is 75.7% of production
2000000
1800000
1600000
1400000
1200000
1000000
800000
600000
400000
200000
0
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10
90%
80%
70%
60%
50%
40%
30%
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 14

• 2010 production increased by 35.7% at 123,019 vehicles
• Vauxhall and Ford = 85.7% of all CV production
• Export market is 69.5% of production (2009 77.5%)
250000
200000
150000
100000
50000
0
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10
80%
75%
70%
65%
60%
55%
50%
45%
40%
35%
30%
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 15

Total Export
1800
1600
1400
1200
1000
800
600
Car production rolling year total
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED
Total Export
250
200
150
100
50
CV production rolling year total
PAGE 16

• About 80% of all component types required for vehicle assembly operations can be procured from UK suppliers.
• The supply chain represents about 40% of the retail price of a passenger car.
• The UK automotive supply chain typically generates £4.5 - £5bn of added value annually.
• Around 2,350 UK companies regard themselves as ‘automotive’ suppliers, employing around 82,000 people.
• It is estimated that every job in a vehicle’s assembly supports 7.5 elsewhere in the economy.
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 17

The UK increasingly manufactures cars to export and imports cars to drive
76% production exported - 85% registrations imported
100,00
90,00
80,00
70,00
60,00
50,00
40,00
30,00
20,00
10,00
0,00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED
Exports
Imports
PAGE 18

• In 2010 the car motor parc was 31.14m (2009 31.04m)
• Diesel market remains strong for lower medium and above
• Super mini remains UK largest sector purchase (36.4%)
• MPV and 4x4 SUV market share continues to rise
• Hybrid and EV demand only slowly increasing and replaces LPG demand – AFV registrations in 2010 were 22,865 – 1.12% market share, of which 167 were Electric vehicles.
• Ford Fiesta, Vauxhall Astra and Ford Focus top 3 cars
• Market in 2010 has risen 1.8% to 2.03m vehicles matching 2009
SMMT prediction
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 19

• New car demand fell by 4.2% in November to 134,000 units, but was some 5,000 units above forecast.
• Diesel and alternatively fuelled cars both took record market shares in the November market.
• Average new car fuel efficiency improved 29.3% in last 10 years, giving the highest ever mpg.
• New car registrations over the first 11 months of 2011 were down
4.5%, at 1,822,000 units.
• Market looks set to better full year forecast of 1.923 million units, but caution remains over 2012.
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 20

• Van and truck registrations up 19.1% to 27,187 units in
November, rolling year up 18.6% to 300,331.
• Truck registrations up 21.5% to 4,503 in November month, rolling year up 24.4% to 41,507.
• Van registrations up 18.6% to 22,684 units in November, rolling year up 17.7% to 258,824.
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 21

• The scrappage scheme helped support volumes.
• Market down 7.3% to May and set to end 2011 at 1.93 million units.
New car registrations, 12 month moving annual total 2008 to 2012
UK new car registrations 2008 to 2012 - actual and SMMT forecasts rolling year totals - moving monthly annual totals
Actual data
SMMT forecast (Oct 10)
SMMT forecast (Jan 11)
SMMT forecast (Apr 11)
2200
2150
2100
2050
2000
1950
1900
1850
1800
1750
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 22

• Scrappage in place May 2009 to March 2010 (with some overhang).
• Represented almost 15% total sales over that period.
New car registrations, 2009 to 2011, with scrappage identified (Source SMMT)
500 000
2008 SIS 2009 SIS 2009 2010 2011
450 000
2011 forecast
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
0
J F M A M J J A S O N D
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 23

Has helped to transform automotive business environment to provide a more compelling investment proposition for related industries;
•
Expanding technology roadmaps for low carbon vehicles and fuels, to help promote the UK as a strong candidate to develop these and other technologies;
• Developing commodities roadmap helping to develop a stronger and more competitive automotive supply chain;
• Providing a very strong public voice for the industry to support the value of the industry to the UK and to global partners;
• Ensuring high level, strategic, continuous conversation between government and the automotive industry in the UK.
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 24

• Average of 144.2g/km in 2010 – 3.5% down on 2009 and 20.3% on
2000.
• Q1-3 2011 at 138.5g/km, down 4.0% on 2010 and 23.5% on 2000.
• 130g/km by 2015, the equivalent of 58mpg with a diesel engine and
52mpg in a petrol car.
• 65% of new cars averaging the 130g/km target by 2012 rising to 100% in 2015.
• Manufacturers exceeding the targets will be heavily fined per additional gram of CO
2 emitted, for every car registered across Europe.
• Specialist targets for small volume and niche manufacturers.
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 25

Euro
Standards
Euro 0
Euro 1
Euro 2
Euro 3
Euro 4
Euro 5
Euro 6
Entry into force (new type approvals)
New car types
1 Oct '91
1 Jul '92
1 Jan '96
1 Jan '00
1 Jan '05
1 Sep '09
1 Sep '14
All new cars
1 Oct '93
31 Dec '92
1 Jan '97
1 Jan '01
1 Jan '06
1 Jan '11
1 Sep '15
Emission limits
Petrol NOx
1000 mg/km
490 mg/km
250 mg/km
150 mg/km
80 mg/km
60 mg/km
60 mg/km
Diesel NOx
1600 mg/km
780 mg/km
730 mg/km
500 mg/km
250 mg/km
180 mg/km
80 mg/km
Diesel PM
(no limit)
140 mg/km
100 mg/km
50 mg/km
25 mg/km
5 mg/km
5 mg/km
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 26

New Car average CO
2 in 2010. emissions have fallen by over 20% - dropping 3.5%
Diesel engines have contributed to this improvement.
A car built today (Euro 5), compared to one built in 2000 (Euro 3) has reduced its CO2 by 13% and emissions of other pollutants by at least:
• nitrogen oxides (NOx) 64%
• particulates (PM10) 90%
• carbon monoxide (CO) 22%
Road transport emissions have also been reduced:
• nitrogen oxides (NOx) 40%,
• particulates (PM10) 30%
• carbon monoxide (CO) 60%.
Source: Government figures (DfT – Transport Statistics GB)
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 27

2
UK average new car CO
2 emissions (Source SMMT)
190
185
180
175
170
165
160
155
150
145
140
135
130
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 YTD-
11
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 28

2
• Reduction despite increase in distance travelled and parc size since 2000.
• Further declines expected, as distance travelled curbed and efficiency improves.
CO2 Parc Distance travelled
115
110
105
100
95
90
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Source DECC/SMMT/DfT
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 29

Band E (131-140g/km) most common, in 2000 it was Band G (151-165g/km).
Band A (<100g/km) share doubled in 2010 and again in 2011.
Distribution of the new car market by VED bands (Source SMMT)
A B C D E F G H I J K L M
YTD
2011
2010
2000
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Band A B C D E F G H I J K L M
CO2 g/km
Standard rate £
1st year rate £
Upto 100 101-110 111-120 121-130 131-140 141-150 151-165 166-175 176-185 186-200 201-225 226-255 Over 255
0
0
20
0
30
0
95
0
115
115
130
130
165
165
190
265
210
315
245
445
260
580
445
790
460
1000
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 30

UK making better progress than EU average.
Average new car CO
2 emissions across the EU (Source EC)
2010 2009 2000 % ch ‘10 vs ’09
144.2g/km 149.7g/km 185.4g/km -3.7% UK
EU
France
140.3g/km 145.7g/km 172.2g/km
130.5g/km 133.5g/km 163.6g/km
Germany 151.2g/km 154.0g/km 182.0g/km
-3.7%
-2.2%
-1.8%
% ch ‘10 vs ’00
-22.2%
-18.5%
-20.2%
-16.9%
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 31

2
EU has adopted CO2 Regulations for cars and vans.
Individual manufacturer targets add up to deliver EU fleet average target.
New car fleet
130g/km in 2015 (19%)
95g/km in 2020 (39%).
New van fleet
175g/km in 2017 (14%)
147g/km in 2020 (28%).
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 32

2
Important flexibilities
• Targets phased in 2012-15 (cars), 2014-17
(vans).
• Derogations for small volume and niche manufacturers: targets consistent with their economic and technological potential.
•
Eco-innovations, super credits, pooling.
Integrated approach includes CO
2 based tax, consumer information. (labelling new and used cars, databases), MAC, LRRT,
GSI etc.
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 33

EU-wide target for 130g/km by 2015 and 95g/km 2020 (subject to IA).
Note EU, not UK specific targets. 38.2% of 2010 UK market <130g/km.
EU-wide van target - 175g/km by 2014-17 and 147g/km by 2020 (subject to review).
UK average new car CO2 emissions and EC wide regulation targets
200
175
150
125
100
75
50
25
0
2000 2005 2010 2015 2020
(
Source SMMT/EC
)
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 34

• HDVs are not yet regulated for CO
2 in Europe.
• Measurement method is the bottleneck in policy making.
Research ongoing, likely to use computer simulation and validate with physical testing.
• EU Commission policy development timetable:
•
February/March 2012 - measurement methodology stakeholder meeting.
• May/ June 2012 - draft EU strategy stakeholder meeting.
•
End 2012 - impact assessment.
•
First half 2013 - Commission to propose strategy.
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 35

• EU committed to 20% CO
2 and 80-95% by 2050. cut by 2020 (or 30% if global targets)
• UK is legally committed to:
•
Carbon Budgets for each five year period to 2027.
•
50% CO
2 cut by 2025.
• 80% cut by 2050 (both relative to 1990, all sectors)
•
(Cannot stop there, need more cuts by 2100).
• UK government will set out it’s strategy to meet the Carbon
Budgets (“Autumn Strategy” due 1 December).
• UK Automotive Council technology roadmaps for cars, commercial vehicles, off-highway.
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 36

High Level Technology Roadmap - CARS
OEMs share a common view
(Individual manufacturers will prioritise certain technologies to fit with brand values)
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 37

Low carbon Commercial Vehicle & Off-highway roadmap has parallel technology streams depending on duty cycle
2010 2020
Niche EVs
2030 2040
Commercial/OffHighway EV’s
2050
H
2 infrastructure
Fuel cell vehicles
Fuel Cell APUs
Demos
Full hybrid
Plug in hybrid
Micro/Mild hybrid
Technology Roadmap
IC Engine efficiency improvements
Waste heat recovery Advanced thermodynamic cycles
Sustainable liquid/gaseous fuels Biofuels
Powertrain efficiency improvements/ancillary electrification
Intelligent vehicles logistics – operational efficiency (On & Off-highway)
Advanced highway vehicle aerodynamics/selective lightweighting
CO
2 reductions limited by air quality regulations
LD Van CO
2
Regulation
Possible HD/MD
CO
2
Regulation
“Zero” Air
Quality Impact
UK CO
2
Target
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED
38
Air Quality Improvements
CO
2 and GHG reduction
PAGE 38

Society of Motor Manufacturers and Traders Limited
71 Great Peter Street London SW1P 2BN
SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED