MEMA Financial Services Group September 20, 2007 St. Louis, MO

1. MEMA Financial Services Group • September 20, 2007 • St. Louis, MO

2. Discussion Outline • 1. Brief Overview of AASA • 2. Defining the aftermarket • 3. State of the industry • 4. Health of the supplier base • 5. Open discussion & Questions

3. AASALeadership in the Global Automotive Aftermarket • Automotive Aftermarket Suppliers Association • Aftermarket Market Segment Association (MSA) of MEMA • HDMA, OESA • Nearly 300 Member Manufacturers • Represent 80% of North American Aftermarket Volume • Approximately $154 Billion in Sales

4. Automotive Aftermarket Suppliers Association • AASA serves as the voice of the automotive aftermarket suppliers and: • is a recognized industry change agent • promotes a collaborative industry environment • provides a forum to address issues • serves as a valued resource for members

5. AASA Value Proposition • Government Affairs • Image of AASA Member Manufacturers in the Automotive Aftermarket Industry • Market Research, Industry Analysis, Benchmarking & Best Practices • Manufacturing Standards • Industry Collaboration on Issues Important to AASA members • Brand Protection and Intellectual Property Rights • Global Opportunities and Challenges for AASA Members • Education & Training • Member recruitment, retention & satisfaction

6. Defining the U.S. Aftermarket2006 • New vehicle parts market = $193 billion • Light vehicle aftermarket sales of products and service $209 billion • Sales of Heavy Duty aftermarket products and services $59 billion • Combined light/heavy duty aftermarket products and services $268 billion

7. Primary Drivers of Aftermarket Sales Volume • Vehicles in Service • Miles Driven

8. Source: R.L. Polk

9. Vehicle Miles of Travel in the U.S.

10. Total Light Vehicles in Use by Age Automotive Aftermarket Sweet Spot Source: R.L. Polk

11. Average age of light vehicles in use in the U.S.

12. Shares of Vehicles in Service Source: R.L. Polk

14. Shares of New Vehicle Sales Source: Ward’s Automotive

16. Growth in the U.S. Automotive Aftermarket

17. Aftermarket Distributor Sales Source: MFSG * MEMA Est.

18. Unperformed Maintenance (Billions)

19. Producer Price IndexMotor Vehicle Parts and Accessories Base = 12/1/2003

20. U.S.-World Parts Trade 1998-2006 Source: U.S. Bureau of the Census

21. U.S.-EU Parts Trade1998-2006 Source: U.S. Bureau of the Census

22. U.S. - China Auto Parts Trade, 1995-2006Since 2000, the auto parts trade deficit with China increased 333% Source: U.S. Bureau of the Census

23. AASA Automotive Aftermarket Index

24. State of the Industry • Aftermarket large and growing modestly • Primary aftermarket drivers—vehicles in use; miles driven—continue positive • Significant period of transition and challenge • Still a relationship business at the store to buyer level • Fundamentals of quality, availability and service still mean something • Balance of power has shifted; “power buyers” WD’s and retailers in the driver’s seat • Aftermarket mergers and acquisitions continuing at a record pace; transactions first 6 months of 2007: 55; up 28% over 2006 • Private equity creating churn in the aftermarket; 21 of 55 transactions • Service Dealer demand for form, fit and function driving increased SKU count and inventory investment • Insistence on lowest invoice price accelerating low cost country sourcing • Value-adds being stripped from prices at all levels

25. Parts Suppliers: The Largest Manufacturing Sector in the USA

26. Supplier Jobs: Midwest Focused, but Moving Southeast Source: MEMA, “Motor Vehicle Suppliers: The Foundation of U.S. Manufacturing,” January 2007

27. Health of the Supplier Base • Manufacturers are struggling to maintain profitability • Margin erosion at all levels • Globalization impacting acquisition and sourcing • Raw material costs rising • Value added suppliers are competing for lowest price business • NA manufacturing shifting focus to emerging international markets • Little collaboration to address industry issues • Many are well under way in transforming themselves into global manufacturers/”provisioners”

28. The NA Table of Pain Business models must survive through . . . Source: CAR and OESA at the 2005 Management Briefing Seminar; Updated by OESA through February 2007 Note: Auto accounts for 41% of US steel consumption, 31% of US iron consumption, 32% of US aluminumconsumption and 4% of US plastic consumption (CAR – Fall 2003 economic significance report)

29. AASA Supplier BarometerQ3 2007 • Question 4. Accounts receivable activity has been:

30. 5 Q-1 Q-2 Q3 4 3 2 1 Healthcare costs Availability and cost Lack of pricing Weak sales Globalization Labor cost & Excess inventory Regulatory & Product returns Counterfeit of raw materials power availability legal issues products AASA Supplier BarometerQ3 2007 • Question 8: How significant are these issues facing your company? 1= Not important 5 = Very important

31. Risks and Critical Issues • Rising gasoline prices • Counterfeit Automotive Aftermarket Parts • Rising Imports

32. Rising Gasoline Prices

33. Rising Gasoline Prices

34. Conclusion:Gas Prices & the Aftermarket • Generally speaking, gas prices and aftermarket growth tend to trend positively over time • There is a point at which gas prices negatively impact the aftermarket and it appears that the threshold is $2.60 per gallon • Over $2.60 per gallon, discretionary spending is curtailed and optional repairs are deferred

35. Counterfeiting: Industry Infringement Facts • The automotive industry loses an estimated $12 Billion in revenue annually (75% from Asia) to service parts counterfeiters, $3 Billion in the U.S. alone. • Projected to grow to $45 Billion by 2011. • Massive increase in global counterfeit activity in last five years. • It is estimated that over 250,000 NAFTA automotive manufacturing jobs are lost to counterfeiters diluting the market with counterfeit parts which drives demand down for genuine parts. • Counterfeit parts are sold at 50-85% of Genuine pricing and are estimated to deliver at only 20-30% of their value (performance, wear, system integration).

36. Counterfeiting: Industry Infringement Facts • Maintenance & high volume items most often faked • Oil filters, air filters, fuel filters • Disc brake pads • Wheels and tires • Spark plugs • Shock absorbers • Belts and hoses • Automotive fluids (motor oil, brake fluid, steering fluid, windshield wiper fluid) • Windshields • Bearings • Gaskets

37. Counterfeiting: Danger of Counterfeit Parts • Counterfeit brake pads, made of grass clippings and saw dust, have caused fatal accidents. • Counterfeit suspension parts and wheels break when made with substandard materials. • Counterfeit vehicle hoods without crumple zones penetrate the passenger compartment. • Counterfeit windshields without safety shatterproof glass cause injury or death. • Counterfeit oil filters lead to premature engine wear and failure. • Federal agents in Queens and Manhattan (New York City) seized unsafe counterfeit brake parts, tail lights and other parts being installed by dealers on taxi cabs.

38. Counterfeit Autoparts 2006 was a record year for the number of IPR seizures and domestic value of goods seized. The domestic value of products seized for IPR violations increased by 67% compared to FY 2005.

39. Rising Imports

40. Opportunities for Suppliers • Collaboration with channel partners • Use technology to reduce cost and for competitive edge • Low-cost manufacturing strategy • Strategic alliances/partnerships • Revenue diversification • Leading market position (product, technology and process)

41. “The best way to predict the future is to create it”.

42. Questions?

43. Thank You!