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Canadian Industry Trends

Greg Horn, Vice President, Industry Relations and Data Analytics, Mitchell International

Auto financing facts

• The average term of a light-vehicle loan in Canada is 69 months, with 62% of new loans being 72 months or longer.

• The average payment on a car loan in Canada is $549 a month

• The lifespan of some car loans these days (96 months, or eight years), is approaching the average lifespan of a vehicle in Canada, which is 9.8 years.

Source: J D Power & Associates

Auto Financing Facts

• The hottest growing loan length is 84 months with 96 month loans doubling in frequency

• 30% of trade ins are upside-down in the loan

• 19% of vehicles are leased.

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• The J.D. Power and Associates U.S. Auto Claims Satisfaction Study rates satisfaction based on 1,000-point scale

• The satisfaction average for those claiming a total loss is 811 – that’s 42 points lower than claimants with a repairable vehicle.

• The disparity between numbers can be blamed on the fact that total loss claimants weren’t happy with the settlement. Half of those polled said they didn’t receive enough to replace their wrecked vehicle with a similar vehicle.

Why it’s better to repair

4

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Key Repairable Severity Trends

5

Repairable severity –All loss types

Collision

Comprehensive

APD-3rd Party

Percentage of parts dollars

Number of parts by part type

Paint and Materials

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The first All Aluminum Ford

14

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2015 f-150- Saves 318kg’s. through use of “Military Grade Aluminum Alloy”

High-Strength, Military-Grade, Aluminum Alloy

16

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• The 2015 F-150 has achieved top five-star ratings in the Frontal Crash and Side Crash categories of the New Car Assessment Program.

• It’s earned five stars in all the subcategories of those, including the Side Pole test, which simulates a 20-mph crash hitting a narrow object like a tree or utility pole.

How’s it going for the F150

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• 1,550 new assembly line workers are being added to meet F-150 demand

• The second assembly plant just started production

• Currently only a 12 day supply of F-150’s

How’s it going for the F150

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• Seven out of 10 new pickup trucks produced in North American will be aluminum-bodied.

• Ford, General Motors and Fiat Chrysler will be the biggest users of aluminum sheet.

• Aluminum hood penetration will reach 85% and doors will reach 46%; complete bodies will reach 18%, from less than one percent today. This will drive total aluminum content to 547 pounds per vehicle.

Aluminum use by 2025

Source: Ducker Worldwide

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• Aluminum will comprise more than 75% of pickup truck body and closure parts, 24% of E Segment body and closure parts, 22% of SUV body and closure parts and 18% of minivan body and closure parts.

• On a volume basis, 26.6% of all the body and closure parts will be made of aluminum.

Aluminum use by 2025

Source: Ducker Worldwide

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What panels will be aluminum ?

Source: Ducker Worldwide Source: Ducker Worldwide

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What vehicle segments will go aluminum?

Source: Ducker Worldwide Source: Ducker Worldwide

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Passenger car growth by segment

C segment= Corolla D segment= Camry E segment= Avalon

Source: Ducker Worldwide Source: Ducker Worldwide

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What will drive repair costs in the next five years?

24

Damage location

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0

10

20

30

40

50

60

70

80

90

100

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Model Year

Percentage of side airbags

Side airbags in North America By model year

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Accident avoidance

April 21-22 Cedarbrook Lodge Seattle

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• A combination of three laser scanners are used to scan on coming traffic when the GPS and road signs indicate the driver wishes to make a left hand turn

BMW ‘Left hand turn assist’

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BMW Side View Camera

Images courtesy: Thatcham

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• Available on the 2013 S class

• A camera situated at the top of the windshield scans the 15 to 45’ of road ahead, for bumps and potholes as small as 0.4 to 0.8 inch.

• It feeds that data directly to the system's control unit.

• It pre-emptively adjusts the shock absorbers oil flow to neutralize the imperfection

Mercedes “Magic Body Control”

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• Everything from the tail lights to the headlights and every light on the interior of the S-Class will use LEDs.

• Each headlight has 56 individual LEDs, each taillight uses 25 LEDs, and there are about 300 LEDs on the interior of the vehicle.

The first car without incandescent bulbs

5/26/2015 | Page 31

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• The new ($100,000+) 2014 S-Class sedans come with the ($350) option of a built-in fragrance atomizer and four custom colognes

• Located in the glove box, the “active perfuming system” can be turned on and off by the driver, who can also control the intensity (low, medium, or high). The perfumed air passes into the cabin of the car through the A/C vents in five-minute intervals.

• Each atomizer lasts for a few months and can be replaced (for $110) at Mercedes dealers

What is that cologne you are wearing?

5/26/2015 | Page 32

Chevrolet Malibu “Teen Driver”

• Allows parents to set speed alerts, limit audio volume, and even receive vehicle reports

• “So parents could use it as a teaching tool with their kids—they can discuss and reinforce safe driving habits and have a meaningful conversation with their teen .”

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How long will it take to for accident avoidance technology to make a

difference in claims?

34

www.hldi.org

New vehicle series with front crash prevention

By model year

0%

20%

40%

60%

80%

100%

2000 2002 2004 2006 2008 2010 2012

standard optional not available

www.hldi.org

Registered vehicles with front crash prevention

By calendar year

0%

20%

40%

60%

80%

100%

2000 2002 2004 2006 2008 2010 2012

standard optional not available

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Self driving cars

37

Self driving cars can make you sick

• A new report from the University of Michigan Transportation Research Institute, or UMTRI, warns that as much as 12 percent of passengers may experience motion sickness while riding in autonomous vehicles.

• "By switching from driver to passenger, by definition, one gives up control over the direction of motion, and there are no remedies for this."

• The study suggests that travelers susceptible to the problem might try closing their eyes or even sleeping

Google crashes

• Google said Monday that its self-driving cars have been involved in 11 accidents over six years.

• The report came from Google the same day as the Associated Press reported four self-driving cars have been involved in accidents in California since September

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Pedestrian safety is shaping Asian and European vehicle construction

Volvo Pedestrian braking system

• Introduced on the 2011 S60, a $2,100 option that uses both radar and a forward looking camera to avoid hitting pedestrians

• The system can avoid a collision with a pedestrian at speeds up to 22 mph if the driver does not react in time

• Half of all pedestrian accidents occur at speeds below 16 miles per hour.

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Honda approach to pedestrian safety

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Volvo s40 Pedestrian Airbag

| Page 43

Chinese knock offs

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BMW 745 Geely 7

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Toyota or Dadi?

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Toyota Yaris GWM Florid

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Jianghuai Automobile Co; JAC

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JAC 4R3

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2008 Geely Otaka $9,995 MSRP

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Geely Otaka at 50kph

Geely Emgrand EC7

| Page 52

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So how did it do?

5/26/2015 | Page 53

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• China's Geely, which purchased Volvo, is once again setting its sights on selling cars in the United States. The Chinese automaker has announced plans to begin exports to the U.S. in 2016.

• Late last week Geely CEO Gui Shengyue confirmed that the company's first jointly developed vehicle with Volvo will hit the market in 2015, and now the executive is promising those cars will be available in U.S. showrooms just a year later.

• Geely is hoping to export 60 percent of its vehicles by 2018, with a big portion of that goal relying on acceptance in developed markets.

Geely to begin exporting cars to North America in 2016

5/26/2015 | Page 54

Look for my thought leadership articles in the following publications