Central & Eastern Europe Developments Automotive News Global Conference - Detroit Jan ’08 Chris Lacey – General Motors

Today :

• Central & Eastern European Markets

−What are they

−How are they developing

−GM’s go-to-market strategy

−Conclusions

…..and finally ………

GM’s “Central & Eastern Europe” • 29 countries

− East of Germany, North, West & East of both India & China!

− 12 time zones / 25 million sq. kilometers

− 475 million population [8% of the world, 54% of Europe]

− 84 million vehicles in car parc today [Average age = 12+ years]

− 30 languages, 4 religions

• GDP range (nominal 2006)

GDP Total (million USD) Per Capita (USD)Russia 986 940 Slovenia 22 079Moldova 3 266 Uzbekistan 753

• Complex legislative environment

• Less than 20 years ago private vehicle retailing illegal –now one of the fastest growing vehicle markets in the world !

To put the Region in perspective

Diverse demand and usage

How are they developing ?

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2001 2002 2003 2004 2005 2006 2007 (0+12)

CE EE Russia

Automotive Industry Market – C&E Region

13,30% of Europe4,60% of Global

25,10% of Europe8,70% Global

Annual Growth 20%

GM’S “Go-to-market approach”

• Our 5 P’s

− The right Partners within GM to provide products for the range of price points required

− The right Partners in market place for manufacturing

− The right Partners for component supply

− The right Partners in the market for vehicle distribution and repair

− The right Partner philosophy with our customers

The right Partners within GM for Product : • European Opel & SAAB

• North American Cadillac / Hummer /Chevrolet SUVs

• Asian [GM DAT] Chevrolet cars and SUVs

• Russian [GM AvtoVaz] Chevrolet Niva

Real evidence of GM’s Globalisation and “One Company” approach.

The right Partners within GM for Product:

The right Partners for manufacturing

• GM and GM DAT (formerly Daewoo) have a long history of manufacturing in the C&E Region from early 90’s

• GM in late 90’s actually stopped vehicle manufacturing in 3 GM plants in the region – Hungary, Poland (Warsaw), and Turkey

• Daewoo had 4 regional plants (licensed assemblers) all still operating (in Ukraine, Poland (FSO), Uzbekistan, & Romania)

• 180,000 GM DAT vehicle kits assembled in these plants are not recorded in GM Sales in the region

• Recent developments include the new GM plant in St Petersburg and manufacturing licenses being granted to Zastava in Serbia, Azia Avto in Kazakhstan, and FSO in Poland

• Currently GM vehicles are manufactured or assembled at 9 locations in the region

GM Manufacturing Footprint in C&E Region

Non-GM CKD/SKDZAZ (Ukraine)

Azia Avto(Kazakhstan)

Non-GM SKD

St. Petersburg Shusari

Avtotor (Russia) Non-GM SKD/CKD

Zastava (Serbia)

Non-GM CKD/SKD

FSO (Poland)Non-GM SKD/CKD

Gliwice (Poland)

UZDW(Uzbekistan)

Non-GM CKD/SKD

GM Avtovaz (Russia)

Non-GM CKD/SKDZAZ (Ukraine)

Azia Avto(Kazakhstan)

Non-GM SKD

St. Petersburg Shusari

Avtotor (Russia) Non-GM SKD/CKD

Zastava (Serbia)

Non-GM CKD/SKD

FSO (Poland)Non-GM SKD/CKD

FSO (Poland)Non-GM SKD/CKD

Gliwice (Poland)Gliwice (Poland)

UZDW(Uzbekistan)

Non-GM CKD/SKD

GM Avtovaz (Russia)

JV CKD

The right Partners for component supply• GM’s Global Purchasing and Supply Chain group

aims to increase component sourcing close to where we build

• They extend supply channels, identify local suppliers and develop to GM standards for local and global manufacturing

• Purchases in C&E region increased by 81% from 2003 to 2007, now 21.4% of total GME purchases

• 440 TIER 1 Suppliers in C&E region • Resident Global Purchasing staff in C&E region

increased by 305% • C&E region purchasing transactions 100%

integrated in GPSC processes

Innovative customers need to be served well !

The right Partners for Distribution & Repair • GM network growth [contracts]

‘95 = 202 ‘01= 402 ‘07 = 765

• In depth blueprinting

• Best applicant selection:Management focus / site location / funding / customer service attitude

• Full multi-brand approach appropriate to location & opportunity

• Facilities to full European standards from day 1

• Communication / motivation / training & guidance

The right Partners for Distribution & Repair

NPBT

n.a.

2,07%

2,75%

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700

800

1997 2001 2007

un

its p

er

deale

r

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100

200

300

400

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800

No

of

sit

es

Average Throughout

No of sites

The right Partner philosophy with our customers.• Changing the “old image” of the pre ’90’s

industry & treating customers with respect− Transparent retail pricing [no premiums]

− Warranty & “Policy”

− Realistic labor / repair rates

− Satisfaction survey

− CRM activities

− Retail finance and leasing options

− Vehicle exchange or “buy back” policy

− Excellent parts warehousing and fast delivery

− Open communication /dialogue / CAC’s

− G2 used car programme

Self Assessment / Learnings & Observations Could we have done better?

• Dealer in house systems• Full portfolio - only in 60%

of market covered- Full CV range - Low cost product < $8,000

• Wholesale & Retail finance in all markets

• Faster manufacturing capacity increases

• More training & more training

Learnings & Observations

• No phones to mobiles • Cash to credit cards • Brand is King • High % Internet use• Mobile / clothes / travel /

car / apartment / house• Millionaires Show [Russia]• Distribution partners’

positive can do attitude and investment policy

• Entrepreneurs everywhere

Operational Difficulties and Legislation

We try hard not be lost in the complex maze…

9.0%

7.6%7.1%7.2%

5.7%

4.4%

3.8% 4.0%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2001 2002 2003 2004 2005 2006 2007*

0

100,000

200,000

300,000

400,000

500,000

600,000

GM volume GM Mkt. Sh. Opel Mkt. Sh. Chevrolet Mkt. Sh.

100K

522K*

2001 through 2007 – A Success StoryGM Volume & Share Development – Central & Eastern Europe

*Excludes 180K GM Daewoo Kits sold in the region in 2007

……………..and finally

• Market Volumes :

- Russia = 2,708,659

- Ukraine = 584,823

- Turkey = 625,843

- Poland = 372,054

- China = 8,190,436

- Brazil = 2,220,481

- India = 1,812,375

….and finally ….Emerging Markets ??

……………..and finally

Request:

Can all of the Global Automotive Industry stop calling these markets & Brazil, China and many others:

“Emerging” Fact:

They have “Emerged” and are our markets of

“Growth & Opportunity”

We forget / ignore/ mistreat them at our peril.

Playing To Win

Central & Eastern Europe