MITTEL Market Research & Consulting

PASSENGER CAR MARKET IN RUSSIA, 2015KEY FIGURES - DESK RESEARCH REPORT

Based on Autostat and State Statistics Agency data, 2014 - 2016

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9000000Sales in Russia, 2015, pcs World sales 2015, pcs

1,2% 1,3% 0,6% 3,3% 1,9% 1,1% 5,2% 2,4% 5,7% 0,3% 1,4% 1,4% 0,2% 1,8% 0,4% 0,2% 0,5% 1,2% 3,3% 5,2% 0,3% 0,7% 0,2% 3,1% 2,0% 1,5% 1,0% 0,1% 2,9% 0,4%

In 2015 the world sales of new cars (including LCV) totaled 8.94 mln.

In Russia the new car sales marked only 1.6 mln level. Which is 1.8% of the world’s. In 2014 this figure was 2.9%.

SHARE OF RUSSIA IN THE GLOBAL NEW CARS SALES BY BRANDS

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14.0012.32

7.31

5.51 5.224.32 4.23 4.07 3.87 3.50 3.26 3.20 2.86 2.80 2.76 2.54 2.48 2.41 2.33 2.18 1.93

3.792.52

1.64 1.63 1.21 1.22 1.12 1.18 1.01 0.86 0.98 0.82 0.72 0.76 0.66 0.69 0.68 0.70 0.64 0.89

Population, Mln Number of cars, Mln

Dec 2015

Total passenger car fleet in Russia by 01.01.2016 was almost 41 millions of cars.

Moscow and Moscow region make 16% of total car fleet in Russia.

TOP 20 RUSSIAN REGIONS WITH OVER 1000K PASSENGER CARS

2008 2009 2010 2011 2012 2013 2014 2015 2016

2.74

1.36

1.78

2.482.75 2.61

2.34

1.5

Sales of new cars. Mln of pcs

Change Y2Y +16% -50% +30% +39% +11% -5% -10% -36%

Cost of barrel Millions of cars Difference

to 2015

70$ 1.45 – 1.50 0%

60$ 1.35 – 1.10 - 10%

40$ 1.10 – 1.20 - 30%

FORECAST

Influence of the global

crisis

Influence of local crisis

NEW CAR SALES (LOCAL PRODUCTION IMPORTS) IN RUSSIA 2008 – 2016F

2008 2009 2010 2011 2012 2013 2014 2015

593,880 360,000 629,200

1,088,500 1,325,810 1,386,660 1,253,300

893,750

876,120

240,000

580,800

661,500 644,190 523,340

406,700

356,250

Foreign makes Russian makes

Total , mln 1.47 0.60 1.21 1.75 1.97 1.91 1.66 1.25

Change +14% -59% +102% +45% +13% -3% -13% -25%

The largest volume of car manufacturing in Russia was in 2012. Currently in Russia 100 models of 23 brands are being produced. The share of foreign localized

makes was highest in 2014 toping 75.5%.

CAR MANUFACTURING IN RUSSIA IN 2008-2015

Total number of cars 40.9 mln

Average age 12.5 years

Foreign makes 58%

Above 15 years old 32%

Diesel cars 4.5%

Euro-4 28%

SUV 20%

41.5

22.1

9.7

9.3

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Russian makesJapanese makesGerman makesKorean makesAmerican makes

PASSENGER CAR FLEET IN RUSSIA, 2015

Segment   Share, % Dynamics 2015 to 2014 Leading model in segment Thousands

of pcsDynamics

Y2Y

В   39,8 -20,0% LADA Granta 120 -21,4%

SUV   36,2 -40,7% Renault Duster 43,9 -42,3%

C   11,5 -53,7% Nissan Almera 26 -43,8%

D   5,4 -31,6% Toyota Camry 30,1 -11,7%

LAV   2,8 -43,6% LADA Largus 39 -40,2%

E   1,3 -33,6% Mercedes E-class 4,9 -23,2%

MPV   0,9 -60,1% KIA Soul 6 -10,3%

PICKUP   0,8 -49,7% Toyota Hilux 3,8 -44,6%

A   0,5 -59,7% Daewoo Matiz 4,5 -52,5%

F   0,4 -17,5% Mercedes S-class 3 -29,1%

Coupe Cabriolet   0,3 19,9% Mercedes E-coupe 1,1 -29,0%

SRUCTURE OF RUSSIN CAR MARKET BY SEGMENTS, 2015

Group Sales* Change, Y2Y, % Share, %

AUTOVAZ-RENAULS-NISSAN 517 799 -32,20% 32,30%HYUNDAI-KIA 324 701 -13,50% 20,30%VW GROUP 164 806 -36,80% 10,30%TOYOTA GROUP 118 373 -34,60% 7,40%GM GROUP 67 589 -64,30% 4,20%GAZ LCV 51 192 -26,20% 3,20%MERCEDES-BENZ 50 414 -16,70% 3,10%UAZ 48 739 -2,20% 3,00%FORD 38 607 -41,50% 2,40%MITSUBISHI 35 909 -55,20% 2,20%

Top 10 manufacturers

Brand Model Sales* Change, Y2Y, %

1 LADA Granta 120 182 -21,40%2 HYUNDAI Solaris 115 868 1,10%3 KIA Rio 97 097 3,70%4 VW Polo 45 390 -23,00%5 RENAULT Duster 43 923 -42,30%6 RENAULT Logan 41 311 -31,60%7 LADA Largus 38 982 -40,20%8 LADA Kalina 35 869 -45,30%9 LADA 4x4 35 312 -17,70%

10 CHEVROLET Niva 31 367 -27,80%11 RENAULT Sandero 30 211 -18,00%12 TOYOTA Camry 30 136 -11,70%13 LADA Priora 28 507 -40,40%14 TOYOTA RAV 4 27 102 -30,40%15 NISSAN Almera 25 977 -43,80%16 SKODA Rapid 24 547 22,90%17 DATSUN on-DO 23 643 107,10%18 SKODA Octavia A7 21 373 -39,40%19 KIA Sportage 20 751 -32,20%20 NISSAN X-Trail 20 502 -13,00%

TOP 20 Models

* Including LCV

In 2015 the total car sales in Russian reduced by 35,7% comparing to 2014.GM Group faced the largest sales reduction (due to leaving the market) while Russian UAZ the lowest. Largest growth of sales was shown by Datsun on-DO model (market newcomer).

LEADERS AND OUTSIDERS BY MAKE-MODEL, 2015

-2.2%-10.3%

-16.4%-30.5%

-34.8%-35.9%

-38.1%-38.3%-38.8%-39.4%

-41.5%-43.8%

-45.7%-46.1%

-53.1%-55.2%

-59.6%-61.0%

-67.2%-72.5%-72.6%-73.2%

-74.3%-77.6%

-79.2%

UAZ 48 739Huyndai 161 201KIA 163 500LADA 269 096Skoda 55 012Lifan 15 131Renault 120 411Geely 11 617VW 78 390Toyota 98 149Ford 38 607Nissan 91 100Daewoo 20 451Mazda 27 358FIAT 3 799Mitsubishi 35 909Chevrolet 49 765Subaru 6 852Suzuki 6 540Citroen 5 528Chery 4 964Peugeot 5 645Opel 16 682Honda 4 622SsangYong 5 194

Total market share

90.2%

Mass segments

Dynamics: –37.5%Total sales: 1 385 311 pcs

12.40%

5.60%

-13.70%

-15.40%

-22.60%

-22.90%

-24.60%

-34.80%

-38.80%

-40.30%

-45.10%

-49.20%

Cadillac 1 142Mercedes-Benz 41 614

BMW 27 486

Mini 1 350

Audi 25 650

Acura 721

Infiniti 5 495

Jaguar 972

Land Rover 11 605

Volvo 7 831

Porsche 5 290

Lexus 20 224

Premium segments

Dynamics: –23%

Total sales: 149 895 pcs

Total market share

9.8%

RUSSIN CAR MARKET DYNAMICS IN 2015 (JAN-DEC)

Brand Total sales in 2015 Y2Y 2014

15 131 -52%

11 617 -38%

4 964 -73%

3 181 -79%

1 365 Entered in 2014

1 202 +26%

Others 1 293

TOTAL 38 753 -52%

The most popular Chinese model in 2015 is Lifan X60. Total sales equal to 8300 cars.

Market share of Chinese cars in the Russian market in 2014 and 2015

Year 2014 2015 Total passenger cars sales 2 340 000 1 500 000 Total Chinese passenger cars sales 81 292 38 753 Market share (%) 3,5% 2,6%

Almost 40% of current owners of Chinese cars changed to them from LADA.

Main alternative considered brands were Renault, KIA and LADA.

35% of current owners are ready to consider Chinese car as their next purchase.

The share of Chinese makes on the market is growing. Immediately after market entry the level of rejection was extremely high. But with passing of time the opinion of Chinese makes is improving. However the forecasts are not good. Only 2 brands are expected to remain in the market – Lifan and Geely

CHINESE BRANDS IN RUSSIA

Crossover / SUV 48%4WD 71%Gasoline engine 69%Power 150 - 200 hp 34%Automated transmission 70%Color - black or white 48%Average price, Rubles 837 000

Among 26 000 Russian car drivers surveyed in October 2015 almost half would dream of Сrossover / SUV.

Autostat and drom.ru online survey across all Federal Districts in Russia, 10.2015

The other characteristics the dream car should have are following:

In fact, Russians do love crossovers and SUVs. On focus group discussions respondents explain their love by rational advantages of vehicle type – poor road condition in the country on the one hand and all-terrain maneuverability, solidity of carbody, on the other hand. But actually, on the emotional level, the feeling of superiority on the road given by the high rising seat and larger size of SUV are more important for respondents.

DREAM CAR FOR AVERAGE RUSSIAN CAR DRIVER IN 2015

Total market reduction in 2015: – 35%Market in 2016:

Pessimistic scenario – the market is expected to reduce on another -15% (comparing to 2015 results).

Optimistic scenario – the sales will be the same as in 2015.

Withdrawal from the market: GM / Opel Seat

Loosing positions and reducing presence in the market: Honda & Acura SsangYong Suzuki Chrysler Jeep Ford – 4 times sales reduction comparing to 2008 Peugeot and Citroen – 6 to 8 times sales reduction comparing to 2010

New expected launches: Hatchback X-RAY (LADA) Sedan Vesta (LADA) new modifications Compact crossover Hyundai Creta New generation of business sedan KIA Optima New generation of crossover KIA Sportage Ravon brand (Uzbekistan) to replace Daewoo

Premium segment and brands- Mercedes - Benz- Lexus- Porsche- BMW- Audialmost do not lose their positions in the current market conditions.

But best of all lux cars are feeling:- All ordered for Russian market cars Ferrari, Lamborghini and Bentley were all sold out before even reaching the land of Moscow.

Retail prices on new cars during the period of 1,5 years (from Sep 2014 to Feb 2015) increased on 35%

MORE FACTS

Level of sales by Y2012

Optimistic ScenarioBasic Scenario

Recovery of car sales by the level of Y2012

Rehabilitation of new car sales in Russia (by the highest level fixed in 2012) is expected only by 2020. By the same year the manufacturing of new cars on the Russian market is expected to reach 2.8 mln of

cars (currently 1.25 mln). Car import is to be mostly replaced by local production of international brands after localization. The

more localization degree in brand production the more better perspectives on the local market is expected by the year 2020.

PERSPECTIVES OF CAR SALES IN RUSSIA (TILL 2025)

ClientsType of projects:

Car clinics: static and dynamic with car drive, photo clinic Fly-in car-clinics (Paris, Munich) New buyers satisfaction study After-service satisfaction study Market exploration study Ethnographic study (home visits, joint driving, day-in-life, video

dairies) Drive log survey Dealers surveys and audits Purchase journey study Marketing and communication strategy study On-line communities and BBs Monthly monitorings Brand health studyTotal number of implemented projects since 2010: 27

MITTEL EXPERIENCE IN AUTOMOTIVE RESEARCH

Independent full-cycle market research agency located in Moscow, Russia

Founded in 2006

ESOMAR member since 2006

Member of 3D international network since 2010

Member of Digital Insight Network since 2015

Number of stuff – 26 full time employees

Number of interviewers in Moscow - 900, in Federal Districts – over 3000

Annual turnover – over 1 000 000 USD

FACTS

Doing fieldwork in: Russia Belarus Ukraine Kazakhstan Uzbekistan Baltic States

We will be happy to answer any questions connected with this research proposal:

Lev AstafyevExecutive director

Head of qualitative research departmentE-mail: lev.astafiev@mittel-mgu.ru

Anna BordovskayaHead of quantitative research departmentE-mail: anna.bordovskaya@mittel-mgu.ru

MITTEL MGU Market Research & ConsultingRussian Federation, 115162, Moscow, 18, Khavskaya str, bld.2

Tel.: +7 495 792 5418 Fax: +7 495 958 6855 E-mail: info@mittel-mgu.ru www.mittel-mgu.ru

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