2009 outlook presentation

1Copyright 2008. The NPD Group, Inc. All Rights Reserved. This presentation is Proprietary and Confidential andmay not be disclosed in any manner, in whole or in part, to any third party without the express written consent of NPD.

2009 Aftermarket OutlookNovember 2008

$385 $493

52 wks ending 10/8/07 52 wks ending 10/6/08

Gallons: Gallons: --1.5% (2 Billion gallons less)1.5% (2 Billion gallons less)

28.1%28.1%IncreaseIncrease

$108 Billion$108 BillionIncreaseIncrease

Source: US Government and NPD Estimate

Estimated Gasoline Spending (Billions)

Consumers spent billions more on gasoline

61.6 61.2 59.3 57.7 53.4

2004 2005 2006 2007 1H08

Source: The NPD Group/ Motor Fuels Index

7.5%7.5%DecreaseDecrease

Consumer reported gallons have declined

Voice of the Consumer: Driving Patterns


Driving PatternsNovember 2008

Gallons:

59.548.6

21.120.2

16.313.413.311.4

7.57.26.86.56.23.93.32.10.43.3

Drove less

Reduced/consolidated shopping trips

Avoided idling

Drove 55 mph or less

Cancelled vacation plans

Removed excess weight from the vehicle

Vacationed closer to home

Carpooled

Rode a bike or walked

Worked from home/telecommuted

Bought a more fuel efficient vechicle

Took public transportation (bus, train, etc.)

Worked closer to home

Sold my less fuel efficient vehicle

Worked less

Moved closer to work

Bought an electric/hybrid vehicle

Other

Driving and vehicle behavior has changed

QUESTIONConsidering the price of gasoline over the past year,

which of the following have you actually done?

Source: The NPD Group

Gallons:

11.4

7.5

7.2

6.5

6.2

3.3

2.1

Carpooled

Rode a bike or walked

Worked from home/telecommuted

Took public transportation (bus, train, etc.)

Worked closer to home

Worked less

Moved closer to work

Changing commute/travel method




Gallons:

59.5

48.6

Drove less

Reduced/consolidated

shopping trips

Changing Shopping Patterns




Gallons:

21.1

20.2

13.4

6.8

3.9

0.4

Avoided idling

Drove 55 mph or less

Removed excess weight from thevehicle

Bought a more fuel efficient vechicle

Sold my less fuel efficient vehicle

Bought an electric/hybrid vehicle

Increasing Fuel Efficiency




Gallons:

16.3

13.3

Cancelledvacation plans

Vacationed closerto home

Changing Vacation Plans




Behavioral change occurs around $3.00/Gallon

Gallons:

Annual Miles Driven and Gasoline Prices


0

50

100

150

200

250

300

350

400

450

Jan

-79

Jan

-80

Jan

-81

Jan

-82

Jan

-83

Jan

-84

Jan

-85

Jan

-86

Jan

-87

Jan

-88

Jan

-89

Jan

-90

Jan

-91

Jan

-92

Jan

-93

Jan

-94

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

Jan

-08

Ce

nts

pe

r G

all

on

1,500

1,700

1,900

2,100

2,300

2,500

2,700

2,900

3,100Nominal Price Real Price Miles Driven

Voice of the Consumer: Gas Prices

Gallon Volume Trend suggests more mileage declines

Gallons:

Miles Driven and Gasoline Gallons (Pct. Change vs. Year Ago)


-7.00%

-6.00%

-5.00%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

8/10/07

8/24/07

9/7/07

9/21/07

10/5/07

10/19/07

11/2/07

11/16/07

11/30/07

12/14/07

12/28/07

1/11/08

1/25/08

2/8/08

2/22/08

3/7/08

3/21/08

4/4/08

4/18/08

5/2/08

5/16/08

5/30/08

6/13/08

6/27/08

7/11/08

7/25/08

8/8/08

8/22/08

9/5/08

9/19/08

10/3/08

10/17/08

Miles Driven (Millions) PCYA Gasoline Gallons (PCYA)

Gasoline spending, driving patterns and economic pressure have taken their toll on automotive spending

Gallons:


-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

Jan

-06

Feb

-06

Ma

r-0

6

Ap

r-0

6

Ma

y-0

6

Jun

-06

Jul-

06

Au

g-0

6

Se

p-0

6

Oc

t-0

6

No

v-0

6

De

c-0

6

Jan

-07

Feb

-07

Ma

r-0

7

Ap

r-0

7

Ma

y-0

7

Jun

-07

Jul-

07

Au

g-0

7

Se

p-0

7

Oc

t-0

7

No

v-0

7

De

c-0

7

Jan

-08

Feb

-08

Ma

r-0

8

Ap

r-0

8

Ma

y-0

8

Jun

-08

Jul-

08

Au

g-0

8

Se

p-0

8

Percent Change vs. Year Ago

Dollar Volume Unit Volume

Monthly Auto Parts Channel Sales Trend

What can we learn from the coffee business?

Gallons:

Source: USDA and Starbucks Annual Reports

0

5

10

15

20

25

20

06

20

02

19

98

19

94

19

90

19

86

19

82

19

78

19

74

19

70

19

66

19

62

19

58

19

54

19

50

19

46

19

42

19

38

19

34

19

30

19

26

19

22

19

18

19

14

19

10

Co

ffe

e P

ou

nd

s P

er

Ca

pit

a

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Sta

rbu

ck

s A

nn

ua

l R

ev

en

ue

(B

illio

ns)


Vehicle OutlookNovember 2008

Voice of the Consumer: Vehicle Trends

15.7

10.6

17.2

11.2

Plan/Might purchase new vehicle Plan to purchase used vehicle

2007 2008

Gallons:

More consumers would like to purchase a vehicle in 2009

QUESTIONAre you planning to purchase a vehicle (new or used) in 2009?


26.3

66.1

28.4

61.3

Plan/Might purchase New or Used Do not plan on purchasing a vehicle

2007 2008

Gallons:

More consumers would like to purchase a vehicle in 2009

QUESTIONAre you planning to purchase a vehicle (new or used) in 2009?


Gallons:

40.5

42.5

7.7

Yes

Possibly

No

Plan/Might buy New or Used

Fuel efficiency is driving vehicle purchase intent

QUESTIONAre you planning to purchase a more fuel efficient vehicle?


Gallons:

43.3

29.3

7.0

6.4

4.5

1.3

0.6

0.6

7.0

More fuel efficient car

Hybrid

More fuel efficient sport utility

More fuel efficient mini van/van

More fuel efficient truck

Smart car

Electric car

Motorcycle

Don't know

Plan to buy more efficient vehicle

Fuel efficiency is driving vehicle purchase intent

QUESTIONWhat type of fuel efficient vehicle will you purchase?


Vehicle sales trend is declining

Gallons:

Source: US Department of Commerce

New Vehicle Unit Sales

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

Jan

-05

Feb

-05

Ma

r-0

5A

pr-

05

Ma

y-0

5Ju

n-0

5Ju

l-0

5A

ug

-05

Se

p-0

5O

ct-

05

No

v-0

5D

ec

-05

Jan

-06

Feb

-06

Ma

r-0

6A

pr-

06

Ma

y-0

6Ju

n-0

6Ju

l-0

6A

ug

-06

Se

p-0

6O

ct-

06

No

v-0

6D

ec

-06

Jan

-07

Feb

-07

Ma

r-0

7A

pr-

07

Ma

y-0

7Ju

n-0

7Ju

l-0

7A

ug

-07

Se

p-0

7O

ct-

07

No

v-0

7D

ec

-07

Jan

-08

Feb

-08

Ma

r-0

8A

pr-

08

Ma

y-0

8Ju

n-0

8Ju

l-0

8A

ug

-08

Se

p-0

8


Passenger Cars Light Trucks/SUVs

Vehicle Trend Opportunities and Threats

� Opportunities

– Extend the life and/or enhance the performance of aging vehicles

– Improve Fuel Efficiency

� Threats

– Long term changes in the vehicle fleet


Maintenance and Repair OutlookNovember 2008

Voice of the Consumer: Automotive Maintenance

Gallons:

56.4

37.4

22.5

15.9

12.2

8.7

8.3

7.1

6.5

5.6

3.7

3.6

2.7

1.5

30.0

Checked tire pressure

Changed air filter

Replaced fuel filter

Changed spark plugs

Changed oil more oftenUsed fuel additive to clean engine/improve

performance

Used a more premium oil in vehicle

Used oil additive or engine treatment

Used fuel additive to improve gas mileage

Changed oil less often

Replaced O2 sensor

Purchased a more premium grade of gasoline

Purchased a higher quality brand of gasoline

Other

None of these

Automotive Maintenance Behavior Has Changed

QUESTIONWhen thinking about automotive maintenance what changes have you made?


Auto parts store sales show consumer demand for fuel performance and efficiency

Gallons:

Source: The NPD Group/AAIM

Gasoline Spending and Complete Fuels System Cleaner Unit Sales

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

Jul-

06

Au

g-0

6

Se

p-0

6

Oc

t-0

6

No

v-0

6

De

c-0

6

Jan

-07

Feb

-07

Ma

r-0

7

Ap

r-0

7

Ma

y-0

7

Jun

-07

Jul-

07

Au

g-0

7

Se

p-0

7

Oc

t-0

7

No

v-0

7

De

c-0

7

Jan

-08

Feb

-08

Ma

r-0

8

Ap

r-0

8

Ma

y-0

8

Jun

-08

Jul-

08

Au

g-0

8

Se

p-0

8


Gasoline Spending Avg Weekly Complete Fuels System Cleaner Sales

9.3

19.0

61.7

10.3

18.1

59.9

Yes Possibly No

2007 2008

Gallons:

Expectations for Repair is Steady in 2009

QUESTIONAre you planning to make major repairs in 2009?


6.9

20.4

69.0

12.1

21.4

62.8

Will do all repairs myself Will do some repairs myself Will have a professionalservice provider do all the

repairs

2007 2008

Gallons:

More Consumers Intend To Do Their Own Repair Work

QUESTIONWho will perform repair work in 2009?


19.3 17.1

60.0

8.1

23.9

64.4

Will do all repairs myself Will do some repairs myself Will have a professionalservice provider do all the

repairs

Vehicle Repair in 2009 - YES Vehicle Repair in 2009 - POSSIBLY

Gallons:

Among Those Who Say “Yes” They Will Make Major Repair in 2009, DIY Intentions Are Even Higher

QUESTIONWho will perform repair work in 2009?


96.4

16.2

1.8

5.4

5.4

2.7

0.9

4.5

3.6

91.5

21.5

2.3

2.3

1.5

1.5

1.5

0.8

0.8

Auto Parts Store

Mass Merchant

Convenience Store or GasStation

Warehouse Club

Home Improvement Store

Dollar Store

Drug Store

National Chains

Grocery Store

2007 2008Gallons:

Auto Parts Stores Remain The “Go To” Channel

QUESTIONWhere will DIY’ers shop for parts?


52.7

31.6

14.8

6.3

5.2

4.7

57.1

30.7

14.4

7.1

5.2

4.3

Repair Shop

Car Dealer

Tire Store

Auto Parts Store

Quick Lube

Mass Merchant

2007 2008

Trend Toward Repair Shops Will Continue

QUESTIONWhere will DIFM’ers go for service?


79.8

10.77.7

1.8

78.7

11.07.4

2.9

75.9

12.77.0 4.3

Miles Months Other Don't Know

2006 2007 2008

Most Consumers Look To The Odometer To Determine Oil Change Intervals

QUESTIONHow do you determine how often to change your oil?


41.4 42.244.5

2006 2007 2008

More Than 3,000

More Consumers Go Beyond 3,000 Miles



50.7

58.2

66.4

2006 2007 2008

More Than 3 Months

More Consumers Go Beyond 3 Months



63.859.4 58.6

30.733.4 35.4

2006 2007 2008

Yes No

Longer Intervals Are Reflected In Consumers Mind Set Too

QUESTIONDo you believe you should change oil every 3 months or 3,000 miles?


Repair and Maintenance Opportunities and Threats

� Opportunities

– Fuel efficiency message does motivate behavior

– Aging vehicle fleet could spur repair growth

– DIY minded consumers need your help

– Independent repair shops positioned for growth

� Threats

– Oil change intervals likely to grow


Automotive Spending Outlook and Attitudes

November 2008

$1,711

$1,240

2007 2008

Average Estimated Total Spending

Consumers Expect To Spend Less

QUESTIONHow much will you spend on vehicles (excluding fuel) in 2009?


46.6

30.5

22.8

51.1

30.7

18.1

Less Than $500 $500 to $1,000 More Than $1000

2007 2008

Lower Spending Expectations Is Driven By Big Ticket Repairs

QUESTIONHow much will you spend on vehicles (excluding fuel) in 2009?


29.3 28.7

22.5 21.218.0

15.9 15.2 15.012.9

9.5 9.3

Automotive

accessories

Car

wash/wax

Air

fresheners

Gasoline

Wheels

Professional

repairs

Automotive

parts

Fuel/oil

additives

Tires

Motor oil

Antifreeze

Plan To Spend Less

Consumers Look To Reduce Discretionary Automotive Spending

QUESTIONConsidering current economic conditions do you plan to spend…


33.4

14.410.0 8.1 8.1

5.6 3.7 2.9 2.9 2.2 1.0

Gasoline

Motor oil

Tires

Fuel/oil

additives

Professional

repairs

Automotive

parts

Wheels

Antifreeze

Car

wash/wax

Automotive

accessories

Air

fresheners

Plan to Spend More

Some Consumers See Maintenance, Performance, and Repair As Money Well Spent

QUESTIONConsidering current economic conditions do you plan to spend…


51.8 49.743.4 42.8

38.634.2 30.7

23.816.5 15.4

Is reasonably

priced

Increases gas

mileage in

vehicle

Is made with

quality materials

Increases

engine

performance

Easy to install

or use

Cleans the

engine

Is better for the

air/environment

Made with

environmentally

friendly

materials

Made with

recyclable

materials

Enhances the

appearance of

the vehicle

% Very Important

Price, Performance, and Quality Define the Value Proposition

QUESTIONHow important are the following characteristics?


8.7

35.8

47.8

I purchase the least expensive product

available

I purchase the product that has the highest

quality and will last the longest, even if it

costs a little more

I purchase the product that will make my car

perform its best

Automotive Parts

Reflects a Change Due to Economy/Gas Prices

13.8%

Price Is Secondary to Fit, Function, and Quality When It Comes To Parts

QUESTIONWhich statement best reflects your purchase behaviors?


13.4

27.3

52.9


available



costs a little more


perform its best

Automotive Maintenance Products

Price Is More A Factor In Maintenance, But Still Secondary To Performance

QUESTIONWhich statement best reflects your purchase behavior?



16.7%

27.4

20.8

28.4


available



costs a little more


perform its best

Appearance and Accessories

Appearance and Accessory Consumers Are More Focused On Price



Reflects a Change Due to Economy/

Gas Prices

18.0%

39.2

14.2

43.4


available



costs a little more


perform its best

Gasoline

Price and Performance Polarization Define Gasoline Consumers




34.6%

12.7

16.1

39.2


available



costs a little more


perform its best

Fuel/Oil Additives

Performance Is The Driver For Additive Sales




21.1%

Automotive Spending Opportunities and Threats

� Opportunities

– Maintenance and minor repairs will be money well spent

– Performance, quality, and efficiency value proposition resonates

– Differentiation is key

• Price/value

• Quality/performance

� Threats

– Consumers look to forego items viewed as discretionary

Final Thoughts

� Keys to growth in a challenging economic environment

– Differentiated product

• Performance

• Quality

• Value

– Differentiated Purchase Experience

51

Thank You

David Portalatin

Director of Industry Analysis

The NPD Group

[email protected]

713-576-5126

2009 outlook presentation

Technology

npd groupquestionconsidering

npd groupgallons

price of gasoline

past year

gallons less28

gallons less1

express written consent

gasoline pricessource