Tom Webb www.manheimconsulting.com

Top five factors influencing acquisitions:
 Need to keep fuel costs within budgetary constraints

Corporate initiatives to reduce “carbon footprint”
 Right-sizing cargo-carrying vehicles and SUVs to improve fuel efficiency

Finding “van” replacements as manufacturers change or eliminate their product offerings
 Anticipating / maximizing manufacturer incentive monies
Source: Survey conducted by Automotive Fleet and published in June, 2007 issue
2

50 Years of Fleet Operating Costs
Depreciation Gasoline
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1955 1965 1975
* includes accident expense net of accident recoveries
Insurance * All other
1985 1995 2005
Source: PHH Arval, as reprinted in
Automotive Fleet 3

 Current wholesale pricing environment
– Overall market
– End-of-service fleet units
 Drivers of those changes

“Making the best of the hand your dealt”
4

A single measure of used vehicle price change that is independent of underlying shifts in the characteristics of vehicles being sold
 All Manheim U.S. sales (5+ million annually)
 Classify by market segment
 Account for shifts in mileage
 Weight to provide unchanging mix
 Seasonally adjust
5

Manheim Used Vehicle Value Index - January 1995 = 100
125
120
115
110
105
100
95
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Source: Manheim Consulting 6

Average Auction Price -
Commercial Fleet Units actual prices mileage and seasonally adjusted
$8,500
$8,000
$7,500
$7,000
$6,500
$6,000
$5,500
$5,000
$4,500
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07
Source: Manheim Consulting
7

Average Mileage -
Commercial Fleet Units
95,000
90,000
85,000
80,000
75,000
70,000
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07
Source: Manheim Consulting
8

Average Auction Price -
Mid-size Fleet Car actual prices
$8,500
$8,000
$7,500
$7,000
$6,500
$6,000
$5,500
$5,000
$4,500
Jan-02 Jan-03 Jan-04 mileage and seasonally adjusted
Jan-05 Jan-06 Jan-07
Source: Manheim Consulting
9

Full-size Pickups – Average Auction Price actual prices mileage and seasonally adjusted
$13,500
$12,500
$11,500
$10,500
$9,500
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07
Source: Manheim Consulting
10

Auction Volume and Price Change by
Vehicle Age
July 2007 versus July 2006
% Change in Price % Change in Auction Volume
20%
15%
10%
5%
0%
-5%
-10%
-15%
Current and previous model year
2 - 3 model years past
4 - 6 model years past
Source: Manheim Consulting
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 Demand
– Overall economy
• Labor market & credit conditions
• Tax policy, home refi’s, wealth effect
– Price of competing goods – new vehicles
• Past prices
• Current incentives
 Supply
– Off-lease volumes
– Off-rental volumes
– Overall level
– Match with demand
12

Percent of Total Auction Volume by Price Tier
2004 2005 2006 July ytd 2007
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
$4K - $5K $5K - $6K $6K - $7K $7K - $8K $8K - $9K $9K -
$10K
Source: Manheim Consulting 13

Number of Unique Buyers by Price Tier
Each year Manheim has approximately 100,000 unique buyers. The number of unique buyers within each price tier is evenly distributed even when the supply of vehicles is not.
30
25
20
15
10
5
0
50
45
40
35
$1
-
$2
K
$2
-
$3
K
$3
-
$4
K
$4
-
$5
K
$5
-
$6
K
$6
-
$7
K
$7
-
$8
K
$8
-
$9
K
$9
-
$1
0K
$1
0
- $
11
K
$1
1
- $
12
K
$1
2
- $
13
K
$1
3
- $
14
K
$1
4
- $
15
K
Source: Manheim Consulting 14

New Vehicles Sold into Non-Rental Fleet
Government
1,200
1,000
800
600
400
200
0
640
277
2001
558
269
2002
514
253
2003
594
241
2004
Commercial
717
692
-0.9%
267 294
2005 2006 July
YTD,
2007
Source: Bobit Business Media
15

Average Auction Price -
Subprime Repossessions actual prices
$8,500
$8,000
$7,500
$7,000
$6,500
$6,000
$5,500
$5,000
$4,500
Jan-02 Jan-03 Jan-04 mileage and seasonally adjusted
Jan-05 Jan-06 Jan-07
Source: Manheim Consulting
16

nonfarm payrolls (establishment survey) - in thousands
600
500
400
300
200
100
0
-100
-200
-300
-400
Jul-
91
Jul-
92
Jul-
93
Jul-
94
Jul-
95
Jul-
96
Jul-
97
Jul-
98
Jul-
99
Jul-
00
Jul-
01
Jul-
02
Jul-
03
Jul-
04
Jul-
05
Jul-
06
Jul-
07
Source: Bureau of Labor Statistics
17

Initial Jobless Claims –
4-week moving average
500,000
450,000
400,000
350,000
300,000
250,000
200,000
8/11/07
312,500
Source: Bureau of Labor Statistics
18

Retail Sales Remain Strong –
Annual growth rate
Total Total - ex autos
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2000 2001 2002 2003 2004 2005 2006
Source: U.S. Bureau of Census 19

Interest Rates
10-yr T note 3-mo T bill
9
8
7
6
5
4
3
2
1
0
Jul-93 Jul-95 Jul-97 Jul-99 Jul-01 Jul-03 Jul-05 Jul-07
Source: Federal Reserve Board
20

Interest Rate Yield Curve
Spread between 10-year and 2-year Treasuries
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
Jul-86 Jul-89 Jul-92 Jul-95 Jul-98 Jul-01 Jul-04 Jul-07
Source: Federal Reserve Board
21

Treasury Yields Plummet During Week of
Turbulence
Three-Month Treasury Bill - Daily Yield
5.0
4.5
4.0
3.5
3.0
7/24/07 7/27/07 7/30/07 8/2/07 8/5/07 8/8/07 8/11/07 8/14/07 8/17/07
Source: Federal Reserve Board
22

Change in New Unit Sales vs. Change in GDP –
1960-2006
30%
20%
10%
-4%
Real GDP
1982
-2%
0%
0%
-10%
2% 4%
-20%
-30%
6%
1984
1966
8%
Source: Automotive News & Dept. of Commerce
23

New Car & Light Duty Truck Sales millions of units
20
18
16
14
12
10
8
6
4
1957 1967 1977 1987 1997 2007
Source: Automotive News 24

New Vehicle Sales & New Home Sales
1.4
1.2
1.0
0.8
0.6
New Home Sales New Vehicle Sales
20
18
16
14
12
0.4
10
0.2
Jan-
77
Jan-
79
Jan-
81
Jan-
83
Jan-
85
Jan-
87
Jan-
89
Jan-
91
Jan-
93
Jan-
95
Jan-
97
Jan-
99
Jan-
01
Jan-
03
Jan-
05
Jan-
07
8
Source: U.S. Census Bureau & Automotive News
25

Housing Starts Fall to Decade Low
New Single Family Starts
3-month moving average – millions of units
1.9
1.8
1.7
1.6
1.5
1.4
1.3
1.2
1.1
1.0
Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07
Source: U.S. Census Bureau
26

Subprime Auto Lending
 Hard to over-emphasize importance
– $100 billion in annual originations.
– More than 40% of all used vehicle financing is subprime.

Industry currently in “sweet spot”
– Originations growing, defaults declining, recovery rates rising, credit ratings upgraded.
– Fragmented, but consolidating industry.
 Cautions
– Borrowers are highly leveraged and sensitive to gas prices.
– Growth in subprime mortgages adds a new wrinkle.
– Industry is prone to cycles.
27

Why Subprime Auto Loans Do Not Equal
Subprime Mortgage Loans
 Better loans
 Fixed rates versus adjustable
 Experience with previous cycles
 Mortgage broker / lender relationship versus F&I manager / lender relationship
 Collateral expectations and results
28

29

30

31

Gasoline Prices Decline From May Peak
Unleaded Gasoline
– Cost per Gallon – National Average
$3.35
$3.05
$2.75
$2.45
$2.15
$1.85
$1.55
$1.25
$0.95
$0.65
Aug-
97
Aug-
98
Aug-
99
Aug-
00
Aug-
01
Aug-
02
Aug-
03
Aug-
04
Aug-
05
Aug-
06
Aug-
07
Source: Oil Price Information Service
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33

34

Conclusions
 Slower growth, but growth
 Many conflicting forces impacting different demographic groups differently
 Further separation between good and great dealers
 The tailwinds that have pushed wholesale used vehicle prices upward will ease slightly.
35

Summary and Review of Economic and Industry
Events That Will Influence Used Vehicle Values
 Housing Market -the drag continues.
 Subprime Lending -the differences between mortgages and auto loans.
 Gasoline Prices -world demand continues to grow.
 UAW Negotiations -concessions for sure, but how willingly given?
 U.S. Economic Recovery -solid fundamentals, but slower growth ahead.
 Retail Used Vehicle Market -profitable, but higher acquisition costs increasingly difficult to pass on .
36