May 20, 2012 — 15 Pages

State of the Industry — May, 2012

Some of the steam seems to be out of the new-car market as of the 18th of May. While sales look to be up around 6 percent vs. year ago, closing ratios have slowed dramatically and floor traffic’s increase — 8.6 percent vs. 2011 — is somewhat anemic. Based on the first half of the month, the industry is on track to a 1.125 million unit month, down about 50,000 units vs April and at a True Delivery rate in the mid-to-high 13-million range.

New Floor Traffic For some mass-market brands, visitors to showrooms continue to be strong. Chrysler, Toyo-ta, Nissan are in the double digits while GM, Ford, Honda and virtually all of the second-tier Asian imports are lagging or barely ahead of their year-ago rates. This may change in the closing weeks of May as incentives by dealers perk up, but overall lighter floor traffic is at least worrisome this late in the month.

Closing Ratios With barely 30 percent of floor traffic closing, here’s another issue of concern. People are looking, but are hesitant about taking the plunge. The year-over-year increase of 3.7 percent is well below the 2012 trendline at this stage of the month. Many tax filers have already received their refund checks and are back to their paycheck-spending mode. Another impact on closing ratios: Manufacturers have pulled back on incentive spending vs. the first quarter of the year, down 13-plus percent vs. April even though still nearly 20 percent higher than year ago. (See Back Page for details.) Equally important: Dealers are offering less on trade-ins.

Jitters Index Home-centric economic and social concerns continue to plague the pool of potential vehicle buyers. The Jitters Index is up more than seven percent vs. year ago even though gasoline prices have stabilized. Food prices, local taxes and federal tax policies that impact family eco-nomic decisions — especially those attached to a long-term finance contract — have a large share of consumers unwilling to pull the big-purchase trigger.

Used Day Supply For the first time in more than six months, used-vehicle inventories are virtually flat in terms of days’ supply. While still down around 1 percent, this is a far cry from the past year and reflects both tighter inventory control by medium and large used-car dealers as well as somewhat slow-er floor traffic for used cars. It has also resulted in softening prices at wholesale.

Sub-Prime Approvals Slow As with most of the stats this month, sub-prime approvals have increased vs. year ago, but at a slower pace than we’ve seen in the past six to nine months. Up 5.6 percent, sub-prime ap-provals are critical to both new and used-car sales. CONTEXT: The industry is still on track to a 14.5 million unit year, but with a few caveats. It will take increased marketing effort and incentives to reach that goal. More than was thought would be necessary just four months ago. Incentive spending by dealers and automakers must rise. That will have an impact on profits, but as we see on the Back Page, those who are buying new vehicles are paying more even after incentives are deducted. Transaction Prices are up 8.74%.

Early Returns: May ‘12 v May ‘11

55%

New Floor Traffic

7%

Closing Ratio Change

Same Store Sales

4.9%

Used Days' Supply

-0.9%

8.6%

3.7%

Sub-Prime Approvals

5.58%

For additional details and

historical data, see

CNWbyWEB.net

Jitters Index

7.38%

Captive Lease Programs Continue to Generate Most Loyalty A tenet of many in the new-car business is that loyalty to the brand can significantly impact profits by lower-ing marketing costs and allowing the manufacturer to concentrate on bringing new business into the fold. And, as the years of Lease Trak studies have shown, nothing generates more return business than leasing. The reasons for this loyalty are many ranging from a set time to return the vehicle which provides the dealer the opportunity to lease another vehicle to the same customer to the manufacturer’s direct-to-lessee incentives that can be timed to the closing months of the contract.

Since 1992’s first Lease Trak study ‘til today, CNW has tracked those loyalty figures for leases from both captives and non-captives and compared them to the conventional financing from captives and non-captives. The most recent data continue to show strong return business to the brand or at least the same corporation.

Some Deterioration In 1996, when leasing was in its heyday, nearly two-thirds of all lessees returned to the same manufacturer for their next vehicle. That has deteriorated somewhat in 2011 to about 55 percent. (For the intervening years, see Document 15 at CNWbyWEB.com.) In follow-up interviews, the decline in 2011 can be traced to a number of factors, depending on the manufacturer. In GM’s case, for example, the closing of many dealerships and the loss of a few brands hurt the loyalty figures. Toyota’s situation was somewhat different: Stronger competition from the likes of Ford and Hyundai. Regardless of the reasons, the important comparisons are against conventional financing through a bank, credit union or other third party. While lease contracts from captives has a 55 percent return rate, financing from a non-captive is under 25 percent. While leasing from the captive for a Prestige brand, for example, is nearly 63 percent, it is only 30 percent if the buyer finances through a non-captive institution.

Captive Finance Also Strong When a dealer has a customer finance through a captive finance arm, nearly 42 percent will return to that brand at the end of term or when the vehicle is retired. Barely a quarter who finance through a non-captive do likewise. The reasons for this gap, the studies show, is that the automaker has a direct line to the buyer via the month-ly payment. While a bank might promote home equity loans or refinancing services or a new savings account option to the customer, automakers have a more narrowed focus: The next best thing in vehicles be it refreshed or redesigned models, loyalty incentives, technological advances, etc. In a nutshell: The ability to promote for another new car or truck. CONTEXT: Leasing is unlikely to reach the heights of the late ‘90s when more than a third of all new-vehicle acquisitions were leases. But we’re already seeing the beginnings of a lease war. Virtually every manufacturer has a special promotion on this type of acquisition. While leasing is currently at about 24 to 26 percent, it isn’t likely to increase much over the next year or so. Subvented leases generated nearly $12 billion in losses for the industry in 2001 alone because of overly ag-gressive programs including unsupported residual value projections. But the upside is truly enticing.

Page 2

Lease

captive

Lease non-

captive Finance

captive

Finance non-

captive

cy96 cy11 cy96 cy11 cy96 cy11 cy96 cy11 Industry 64.7% 55.2% 55.2% 46.8% 41.8% 34.6% 34.6% 24.6%

Prestige 73.4% 62.7% 62.9% 51.6% 69.4% 43.6% 68.2% 39.8%

Luxury 71.7% 57.4% 64.3% 42.3% 64.1% 35.4% 53.5% 37.4%

Non-Luxury 58.6% 38.9% 52.9% 37.1% 39.6% 23.1% 30.7% 18.0%

SUV 77.7% 57.2% 68.3% 44.4% 61.2% 32.6% 58.1% 22.6%

Minivan 61.3% 55.4% 58.9% 38.4% 57.1% 33.6% 52.2% 26.5%

FS Pickup 58.6% 52.3% 47.1% 45.7% 46.9% 37.1% 41.8% 25.1%

FS Van 55.2% 43.5% 47.6% 45.1% 56.4% 33.2% 51.1% 28.1%

2.09%2.13%

1.96% 1.93%

Budget Car

12.54%

13.45%13.81%

12.34%

Economy Car 12.09%

11.40%

11.87%

11.31%

Entry-level Utility Vehicle

0.14% 0.13%

0.21%

0.16%

Electric Car

10.90%

10.56%10.37%

10.19%

Full Size Pickup

1.56% 1.71% 1.68%1.99%

Full Size Van

1.32%

1.35%

1.38%

1.33%

Luxury Car

1.61% 1.54%1.37%

1.81%

Upper Mid Range Utility Vehicle

More Expensive, Less Fuel Efficient Cars Take Bigger Sales Share

Economy and budget cars took it on the chin in April seeing their share of total sales slip vs. March. In the case of Economy cars, April’s 12.3 percent share of all sales was the worst of the year after three consecutive months of sequential increases. Not surprising, this decline in share mirrors the decline in gasoline prices during the same peri-od of time and the April-May surge in the percentage of consumers who say they expect gas prices to either remain unchanged through the summer or actually decline over the next six months. (Continued after graphs.)

Page 3

10.78%

11.04%

11.43%

11.87%

Lower Midrange

8.51%

8.20%

7.99%8.20%

Lower Midrange Utility Vehicle

1.62%

1.46%1.33%

1.49%

Large Utility-Vehicle

0.24%0.20% 0.21%

0.24%

Midi-van

2.32%2.27%

1.98%

2.17%

Mid Range Utility Vehicle

3.47%

3.86% 3.85%

4.01%

Minivan

3.70%

3.52%

3.35% 3.35%

Near Luxury Car

0.37%

0.28% 0.30% 0.29%

Premium Car

Page 4

4.39%

4.64%

4.24%

4.63%

Premium Mid Range Car

0.25% 0.25%0.31%

0.34%

Premium Sporty Car

3.24%

2.73%2.50%

2.76%

Premium Utility Vehicle

12.56%

12.42%

12.87%

12.43%

Standard Mid Range

2.54%2.23% 2.07%

1.91%

Small Pickup

0.19%0.17% 0.16%

0.15%

Sport Utility Pickup

1.75%2.07% 2.19%

2.43%

Touring Car

0.07%

0.05%

0.03% 0.03%

Traditional Car

Page 5

0.02%0.01%

0.02%0.02%

Ultra Upscale Car

0.05%

0.04% 0.04%

0.05%

Ultra Luxury Sporty Car

0.04%

0.05%

0.02%

0.04%

Ultra Premium Utility Vehicle

0.17% 0.16%

0.12%

0.18%

Upper Premium Sporty Car

(Continued from Page 3) In the monthly survey of new-car intend-ers about the future prices of gasoline, less than one percent in January of last year said prices would either decrease or remain the same. That percentage slowly grew and hit a peak in January of nearly 12 percent. Then came the run-up in fuel costs and it fell to less than six percent in February and even further in March. In the past two months, however, con-sumers are feeling a bit better about the prices of gas stabilizing and the early May figures show nearly eight percent believing gas will either decline or remain unchanged over the coming six months. To be sure, these figures aren’t a majority by any stretch of the imagination. In fact, the last time fewer than 90 percent felt fuel costs would increase was in October of 2009 and below 70 percent in July of that same year. CONTEXT: There are sundry reasons for picking a particular type of vehicle and fuel costs or the expectations of fuel prices play a significant role. The share of total sales that tipped slightly away from the more fuel efficient mod-els in April can be traced almost certainly to the anticipation any gas price increases will be modest.

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

Jan

'11

Feb

Ma

r

Ap

r

Ma

y

Jun

Jul

Au

g

Sep

t

Oct

No

v

De

c

Jan

'12

Feb

Ma

r

Ap

r

Ma

y

Gas Price Perceptions -- Next Six Months

Decrease

Stay Same

Page 6

Page 7

What impresses 16-21 year olds the most about their peers? New cars used to be ‘it,’ but not any longer.

A new vehicle started dropping in CNW Research’s surveys in 2007, falling a full 15 percentage points below the hottest item, cell phones.

And they’ve been steadily declining on the “what’s hot” list ever since.

In 2009 they slipped another three percentage points and last year another four. Today, only 13 percent of 16-21 year olds say a new vehicle ranks as the num-ber one product projecting enviable sta-tus.

What did new cars beat? Used vehi-cles, digital camera’s and furnishings. Digital cameras in cy2000 held 22.5 per-cent of the “most wanted” votes. With cell phone cameras, however, a single-purpose camera has fallen on tough times and sinking fast.

In 2011, the most important item to wow a friend is a Tablet PC, like the iPad or a Samsung Galaxy Tab.

CONTEXT: Unsurprisingly, new (and to some degree used) car sales to the youth market have declined over the last sever-al years. Household economics being a key factor. And while 2012 projections show a slight increase in youth sales for the first time since 2005, that’s no reason to shout for joy as they only make up about 2.02% of the market. That’s a far cry from the 5-plus percent registered in the middle 1990s to early 2000s.

Another reason for anemic car sales: Only 16.75% of the youth market works full time; 21.63% work part time. A significant share — 20.29% — haven’t found full or part-time work in the past year. With numbers like these, its no wonder many parents aren’t rushing to float the bill for their child to get a new set of wheels.

When kids do get their own ride, its not usually their primary vehicle of choice. For males, only 25.37% picked their own car while 44.72% of females got what they wanted.

Considering brands like Porsche, Mini and Scion make up some of the youngest aspiration models, it’s not so hard to believe a parent will saddle them with a used Honda for the reasonable cost, good gas mileage and noteworthy quality. Not something they’ll ecstatically tweet to friends or post to their Facebook wall.

But kids are fickle. One day it’s a car, the next it’s a game console like an Xbox or a PS3, so its hard to pinpoint where the youth market will spend money next. Unfortunately, until the economy is booming again and parents are much freer with their cash, the glow of a owning and new car is going to have to wait.

What Impresses 16-21 Year Olds’ Friends? Cars Sink

Doc. 1255 cy2000 cy2007 cy2009 cy2011

Tablet PC 56.32%

Cell phone 30.17% 32.23% 36.91% 42.21%

Game sys 21.17% 26.69% 24.07% 22.93%

Footwear 25.29% 23.81% 24.69% 21.56%

Clothes 15.43% 16.72% 19.74% 19.86%

iPod 30.64% 25.61% 16.67% 18.88%

Computer (incl. netbook) 28.64% 22.29% 16.83% 15.44%

New Vehicle 34.17% 19.62% 16.56% 12.97%

Used Vehicle 13.56% 9.97% 8.59% 11.47%

Digital cameras 22.48% 14.28% 10.07% 8.52%

Furnishings 3.56% 3.49% 3.61% 3.65%

34.17%

19.62%16.56%

12.97%

cy2000 cy2007 cy2009 cy2011

Impresses Friends: New Vehicle

30.17%32.23%

36.91%

42.21%

cy2000 cy2007 cy2009 cy2011

Impresses Friends: Cell Phone

April 2012 Kontos Kommentary Current Used Vehicle Market Conditions Summary Average wholesale used vehicle prices in April re-mained near peak levels achieved in the Spring/tax season last year and in 2010. As we’ve discussed in sev-eral past commentaries (and as other analysts and data sources have begun to rein-force) used vehicle prices have probably seen their cy-clical and seasonal peak and, absent events like last year’s tsunami, have more downside potential than upside. Still, tight supplies are like-ly to keep used vehicle prices from falling dramatically the rest of this year and well into 2013. Details According to ADESA Ana-lytical Services’ monthly anal-ysis of Wholesale Used Vehi-cle Prices by Vehicle Model Class1, wholesale used vehi-cle prices in April averaged $10,577 – down 0.5% com-pared to March and flat rela-tive to April 2011. Among model class seg-ments with considerable vol-ume, compact cars, minvans, and smaller SUVs tended to yield stronger prices, perhaps reflecting ongoing selectivity among dealers in favor of more fuel efficient cars and trucks with which to stock their used car lots. Manufacturers registered a 1.2% month-over-month price increase and a 4.0% year-over-year rise. Fleet/lease consignors experienced a 1.4% sequential price increase and a 1.9% annual increase. Dealer consignors saw a 0.5% average price increase versus March and a 0.9% uptick versus April 2011. Based on data from CNW Research, retail used vehicle sales in April were flat year-over-year for franchised dealers and down 8.0% for independent dealers, possibly reflecting pushback from used vehicle shoppers facing high prices and in some cases opting for new vehicles as a result. Perhaps a reflection of this trend was that April sales of certified used vehicles, which are typically the closest substitutes for new vehicles, were down 18% month-over-month and 8% year-over-year based on data from Autodata. Nevertheless, total retail used vehicle sales were up by over 40% on a month-over-month basis, reflecting typical Spring weather and tax season demand. 1The analysis is based on nearly six million annual sales transactions from over 170 of the largest U.S. wholesale auto auctions, including those of ADESA as well as other auction companies. ADESA Analytical Services segregates these transactions using the J.D. Power and Associates Vehicle Segmentation Guide to study trends by model class.

The views and analysis provided herein relate to the vehicle remarketing industry as a whole and may not relate directly to KAR Auction Services, Inc. The views and analysis are not the views of KAR Auction Services, its management or its subsidiaries; and their accuracy is not warranted. The statements contained in this report and statements that the company may make orally in connection with this report that are not historical facts are forward-looking statements. Words such as “should,” “may,” “will,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “bode”, “promises”, “likely to” and similar expressions identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the company’s Securities and Exchange Commission filings. The company does not undertake any obligation to update any forward-looking statements.

Wholesale Used Vehicle Price Trends

Average Prices ($/Unit) Latest Month Versus:

Apr-12 Mar-12 Apr-11 Prior Month Prior Year

Total All

Vehicles $10,577 $10,625 $10,576 -0.5% 0.0%

Total Cars $9,955 $10,019 $9,990 -0.6% -0.3%

Compact Car $7,537 $7,389 $7,758 2.0% -2.8%

Midsize Car $8,501 $8,676 $8,670 -2.0% -1.9%

Fullsize Car $6,748 $6,272 $6,719 7.6% 0.4%

Luxury Car $14,150 $14,270 $14,344 -0.8% -1.4%

Sporty Car $14,309 $14,136 $13,645 1.2% 4.9%

Total

Trucks $11,245 $11,289 $11,229 -0.4% 0.1%

Mini Van $7,957 $7,803 $8,329 2.0% -4.5%

Fullsize Van $9,449 $10,016 $9,404 -5.7% 0.5%

Mini SUV $11,043 $10,918 $11,065 1.1% -0.2%

Midsize SUV $10,579 $10,456 $10,278 1.2% 2.9%

Fullsize SUV $13,319 $13,887 $13,333 -4.1% -0.1%

Luxury SUV $19,253 $19,364 $20,176 -0.6% -4.6%

Compact Pickup $7,732 $7,729 $7,473 0.0% 3.5%

Fullsize Pickup $11,286 $11,375 $11,089 -0.8% 1.8%

Source: ADESA Analytical Services. March revised.

Page 8

Used Vehicles Anticipated Actual % Chng YTD YTD % Chng

Doc 106m May '12 May '11 12 v 11 cy2012 cy2011 12 vs. 11

Franchised Dealer Sales 1,516,810 1,503,084 0.9% 5,205,689 5,066,919 2.7%

Independent Dealer Sales 1,310,963 1,490,749 -12.1% 4,823,225 5,148,784 -6.3%

Casual (Private) Sales 1,364,626 1,133,011 20.4% 4,857,044 3,907,927 24.3%

Sales 4,192,399 4,126,844 1.6% 14,885,958 14,123,632 5.4%

Franchised Independent Franchised Franchised Independent Independent

Document 107m Asking Price Asking Price Trans Price % of Asking Trans Price % of Asking

Jan. '12 $11,516 $10,483 $10,855 94.26% $9,715 92.67%

Feb. '12 $11,653 $10,516 $11,090 95.17% $9,784 93.04%

Mar '12 $11,826 $10,592 $11,254 95.16% $9,874 93.22%

Apr ‘12 $12,293 $10,289 $11,500 93.55% $9,379 91.16%

May '12 $12,119 $9,987 $11,296 93.21% $9,071 90.83%

May '11 $11,516 $9,954 $11,062 96.06% $9,530 95.74%

June '11 $11,582 $10,068 $11,178 96.51% $9,651 95.86%

July '11 $11,619 $10,246 $11,226 96.62% $9,778 95.43%

August '11 $11,458 $10,172 $11,021 96.19% $9,598 94.36%

Sept '11 $11,253 $10,219 $10,807 96.04% $9,572 93.67%

Oct. 11 $11,394 $10,384 $10,952 96.12% $9,744 93.84%

Nov. '11 $11,186 $10,148 $10,654 95.24% $9,452 93.14%

Dec '11 $11,058 $10,039 $10,547 95.38% $9,384 93.48%

Percent Change Yr over Yr 5.24% 0.33% 2.11% -2.97% -4.82% -5.13%

Month Over Month Price -1.42% -2.94% -1.77% -0.36% -3.29% -0.36%

Used Sales’ Cooling for Independents; Private Party Sales Spiking; Industry Up Independent dealers are on the verge of suffering another monthly setback in sales. Projections based on the first 18 days of May show Independent used-car sellers trailing year-ago by more than 12 percent. On a year to date ba-sis, Independents are off more than six percent compared to 2011. Franchised new-car dealers’ used-car operations look like they’ll be up about 1 percent compared to May of last year while Casual (Private Party) sales will have another double digit increase of 20.4 percent.

Prices Soften While transaction prices at franchised new car dealerships have increased about 2 percent vs. year ago, they fell by 1.8 percent vs. April to $11,296. This represents a slight decline in share of asking prices dealers are able to get. For Independents, mid-month May data show dealers are getting less than 91 percent of asking price and suffer-ing a near-5 percent loss in transaction prices even though asking prices were generally up a touch.

CPO Prices Steady The long-term trendline shows an ever upward premium being paid for CPO units with an occasional dip as we’ve seen in the April figures. The recent decline in overall CPO sales can be largely attributed to the increased price differential over same-vehicle Non-CPO models as dealers attempt to pad the profit margin on these better-than-average used vehicles.

Page 9

Non-CPO CPO CPO

Turnover Turnover Premium

Jan. '11 47.57 26.82 $1,384

Feb 45.26 25.37 $1,408

Mar 44.86 23.61 $1,493

Apr 42.53 23.15 $1,562

May 42.19 23.69 $1,607

June 40.58 21.87 $1,722

July 40.12 24.53 $1,597

August 42.37 23.16 $1,628

September 40.02 23.78 $1,884

October 40.55 24.01 $1,964

November 42.49 24.62 $2,003

December 43.16 24.92 $2,076

Jan. '12 42.05 24.37 $2,119

Feb 41.59 24.22 $2,238

Mar 41.22 24.76 $2,274

Apr 41.69 25.09 $2,206

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

$2,200

$2,400

CPO Premium Paid

Page 10

Fleet-Commercial up 22 Percent (Doc129m): The business sectors of fleet sales were all up in April versus the

same month of ’11, a clear indication that corporations small and large are finally feeling sufficiently confident to make ma-jor vehicle acquisitions. Of total sales, Fleet-Commercial jumped 22.4 percent compared to a year ago. Government fleets, on the other hand, suffered another double digit decline and reversed a three month improvement trend. Of all vehicle sales, government took barely 24,700 units, off 18 percent while new-car sales were up 2.4 percent and overall Fleet/Commercial sales rose 22.4 percent. On a dollar basis, the value of fleet sales soared 30 percent in April to $12.6 billion (excluding incentives). Fleet unit pur-chases average $27,943 per unit, a $300-plus increase over March and more than a $1,000 increase vs. year ago. Medium-sized business fleets were nearly 50 percent higher vs. year ago, a significant improvement considering these 100-plus employee corporations remained relatively strong vehicle buyers throughout the recession.

Fleet Loyalty to a Brand Suffers with Better, More Competitive Products For years, automakers could count on fleets to re-main fairly loyal to their brand. Once in the door, large percentages of fleet administrators found it easier to simply re-up with the same maker for replacement vehicles. That’s changed over the years with the recession a key, but not the only reason. Higher quality, decreasing “program” efforts by most manufacturers and a narrower gap between brands for Cost of Operation Per Mile have made the fleet market increasingly competitive. While medium-sized businesses remain the most loyal to a brand, even they have slipped from 2005’s 51.2 percent repeat rate to under 47 percent. Large businesses including daily rental companies are down by nearly 13 percentage points from 58.2 percent to 45.3 percent. Reflecting average consumers’ actions, small business (under 100 employees) have turned to a different brand more often over the past seven years — down from nearly 42 percent to 32.3 percent.

Jan '11 Feb '11 Mar '11 Jan '12 Feb '12 Mar '12 Apr ‘11 Apr ‘12

All Sales 819,271 993,375 1,245,719 912,874 1,148,975 1,404,100 1,156,568 1,184,069

Percent Change v Previous Year 17.3% 27.3% 16.9% 11.4% 15.7% 12.7% 17.8% 2.4%

Fleet and Commercial Use 33.19% 30.04% 31.62% 39.52% 36.48% 36.92% 31.86% 38.09%

Total Fleet (Monthly Approximates) 271,916 298,410 393,896 360,768 419,146 518,394 368,483 451,012

Percent Change v Previous Year 12.8% 4.2% -4.2% 32.7% 40.5% 31.6% -3.6% 22.4%

FLEET COMMERCIAL VALUE -- Per Unit $

25,626 $

25,769 $

26,018 $

27,219 $

27,254 $

27,614 $

26,282 27,943

FLEET COMMERCIAL VALUE -- Total $Bllns

$ 6.97

$ 7.69

$ 10.25

$ 9.82

$ 11.42

$ 14.31

$ 9.68 12.60

Percent Change v Previous Year 15.24% 4.62% -3.55% 40.92% 48.55% 39.68% -1.83% 30.13%

Government Fleet 25,971 28,411 33,884 18,805 23,439 28,222 30,186 24,747

Share Gov't of Total Sales 3.17% 2.86% 2.72% 2.06% 2.04% 2.01% 2.61% 2.09%

Percent Change v Previous Year -28.8% -25.5% -30.0% -27.6% -17.5% -16.7% -27.8% -18.00%

Small Bus Fleet and Commercial Use 26,790 36,656 48,209

35,967

47,338

59,815 45,222 51,152

Share Small Business of Total Sales 3.27% 3.69% 3.87% 3.94% 4.12% 4.26% 3.91% 4.32%

Percent Change v Previous Year 51.6% 48.7% 32.3% 34.3% 29.1% 24.1% 13.2% 13.10%

Med Bus Fleet and Commercial Use 92,086 74,106 89,816 88,731 116,736 150,520 83,967 124,682

Share Medium Business of Total Sales 11.24% 7.46% 7.21% 9.72% 10.16% 10.72% 7.26% 10.53%

Percent Change v Previous Year 41.6% 0.2% -16.1% -3.6% 57.5% 67.6% -14.6% 48.50%

Lrg Bus Fleet, Daily Rental, Commer. 127,069 159,238 221,987 217,264 231,633 279,837 209,107 250,431

Share Large Business of Total Sales 15.51% 16.03% 17.82% 23.80% 20.16% 19.93% 18.08% 21.15%

Percent Change v Previous Year 4.2% 6.4% 1.2% 71.0% 45.5% 26.1% 3.4% 19.8%

cy2005 cy2006 cy2007 cy2008 cy2009 cy2010 cy2011

Government 39.2% 37.6% 34.9% 34.2% 36.6% 37.1% 34.1%

Small Bus. 41.8% 42.3% 45.7% 42.2% 39.4% 34.8% 32.3%

Med. Bus. 51.2% 50.7% 50.9% 50.1% 46.3% 44.5% 46.8%

Large Bus. 58.2% 60.3% 61.7% 58.4% 55.2% 49.7% 45.3%

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Welcome to the new age of auto advertis-

ing. Marketers are realizing they can recycle older ads and save the cost of extra ad pro-duction.

One example is Subaru of America, which recently started to recycle a national TV com-mercials called “Baby Driver” that first aired almost two years ago in the summer of 2010.

The spot, from Carmichael Lynch in Minne-apolis, recreates the moment when a teenag-er first takes a solo drive and features real-life father Andy Lyons and his two daughters.

This commercial is reappearing at a time when young people's distracted driving is back in the news with the recent findings of two new studies released at the annual Pedi-atric Academic Societies meeting. One found there's no safe position for texting at the wheel, while the other suggests that even thinking about future cell phone calls and texts can be distracting enough to contribute to crashes.

“Baby Driver” seems to be a timeless commercial, especially since safety is one of Subaru's core brand values and the automaker also knows that many owners pass their cars to their children.

Audi Also Recycling Audi of America is also doing some recycling. The brand recently reintroduced a television commercial that broke a year ago, called “Car Carrier.” The ad, from Venables, Bell & Part-ners in San Francisco, touts Audi's momentum and conquesting from BMW, Lexus and Mercedes-Benz. This whimsical creative breaks

through the clutter and entertains. But

I'm still not a fan of snarky ads that

poke fun or call out rivals. I thought

Audi was over this phase that started

several years ago.

Audi's aim with such tactics was to

take a short cut to brand improvement

by comparing Audi to rivals. Seems to

me Audi has made enough progress

that it can stop resorting to this kind of

approach.

What's Old is New Again...and Other Musings

Once upon a time not too long ago, carmakers redid all their ads every year.

Jean Halliday’s

Baby Driver, click here.

Car Carrier, click here.

GM's Chevrolet hasn't recycled a complete ad, but has again dredged up one its famous ad jingles. The “Baseball, Hot Dogs, Apple Pie and Chevrolet,” which debuted in 1974, reappeared in April. This time around, Chevy tapped two Detroit Tiger standouts for rendi-tions of the song composed by famed jingle writer Ed Labunski. Here's the version with pitcher Justin Verlander. Both commercials aim to direct viewers online to www.chevybaseball.com.

The Big Idea It's easy to track the Big Idea path for developing Major League Base-ball ads directly to this old slogan. The last time Chevrolet resurrected

this slogan was July 2006 for the brand's sponsorship of MLB. That ad was done by Deutsch in Los Angeles, during the agency's baseball project period for Chevy.

Deutsch's IPG sibling Campbell-Ewald in Warren, Michigan, first created this line in the '70s.

Where’s “Chevy Runs Deep”?

Whither “Chevy Runs Deep,” the brand's ad theme created by Goodby Silverstein & Partners, San

Francisco?

The line hasn't exactly caught fire since its debut in 2010. Indeed one YouTube viewer of Chevy's

latest “Baseball” spots called for bringing back the “like a rock" slogan. Chevy used that line in a deal

with Motor City rocker Bob

Seger for its trucks from the

early 90s until late 2003,

when it introduced

“American Revolution” for

both cars and trucks.

Deep Thoughts

GM's CMO Joel Ewan-

ick said earlier this year

he'll decide the fate of

“Runs Deep” this summer.

Stay tuned.

While we're on the sub-

ject of GM, have you seen

the latest Cadillac commer-

cial? It touts the new Safety

Alert seat that “you won't

find in the Mercedes-Benz

E Class.” Take a look:

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Bells & Whistles, click here.

Wind Up, click here.

Maybe this is a patented feature that only

Caddy has, but what does it really do for the

brand? Wish Cadillac would get on with some serious brand building instead of this nonsense.

Seems this YouTube viewer hit the nail on the head: “So when there's danger your ass tingles? Love

Cadillacs, but that seems like a feature no one was asking for and one that will become the...? um... butt

of jokes by fans of competitors.”

Suzuki Fun Stuff Suzuki takes a light-hearted approach to beat the drums for one of its features in this new :30 TV

commercial called “Claw” from Siltanen & Partners Advertising in El Segundo.

Who doesn't wish they had one of those claws? This is simply a fun commercial that should appeal to

Suzuki's young audience.

Toyota Surprise

Now that the spring selling

season is upon us, it's refreshing

to see something different in the

category. And, surprise, surprise,

it's from Toyota.

Kudos to Toyota and Saatchi

& Saatchi Los Angeles for all of

this and the their other, smile-

enducing :15 TV spots for the

May Sale.

Shout Out to Smart Car

Congrats also to Daimler's

Smart arm and BBDO in Berlin for winning a gold at the

91st international Art Directors Club in Manhattan.

Smart won in the Interactive/Physical Innovations cate-

gory for its smart electric-drive fortwo eball, pong-like

game at the 2011 Frankfort auto show.

Here's how it worked. Looks like fun.

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Claw, click here.

Seat, click here.

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E-Bits: A Summary of Green Data and News

Aptera 2e resurrected by Zap Electric. Zap bought the molds to the failed specialty electric and has decided to build it along side their own lineup of electric vehicles.

Fisker out sells BMW, Mercedes and Audi, Q1, Dutch market. First time an electric auto has out sold regular production gasoline vehicles, anywhere.

Volt Sales decreased in April. Chevy lost some headway in sales for its Volt between March and April (65% loss). But has gained in sales from the previous year.

Leaf also dropped between March and April (36% loss) and in sales from the pervious year as well (35% loss).

Toyota Canada says sales are up 266.4 percent when compared with April 2011, for a total of 1,931 Hybrid vehicles sold.

Nissan Leaf sells in Norway, reaching 1,000 units in six months.

BEV’s have dropped from March, only selling 3,500 compared to the previous month’s 3,800. That only makes up for .3% total vehicle market.

iMiev sold only 79 units in April, and just 215 vehicles to date. Averaging 54 units a month.

Croatian company Rimac has designed a high-tech supercar called the Concept-one. Cost: $980,000. Rimac says the car will reach 371 mile range on one charge. Rimac will only sell 88 of these luxury electrics.

Ford Focus EV will be available nationwide by the end of this year. The five seater will set you back $39,200 and can go 110 miles in one charge.

Google’s self driving car was awarded its first license plate in Nevada. It’s all ready gone 200,000 miles and hasn’t had any significant problems, the company claims. The sensor and camera ladened vehicle is designed to avoid distracted driving. The tech company has a small fleet of Prius test vehicles designed and outfitted for autonomous driving.

Park and Charge. Wireless recharging technology is being adapted from a Nikola Tesla patent back in the 1890’s. Qualcomm Europe is busy adapting this technology which will erase the need to physically plug a vehicle into a wall socket. All a driver does is park on top of metal plates and the car charging begins.

Why the Hesitancy to Buy an Electric? Not Gas. Not MSRP. Try Grandma

Yes, there is range anxiety. And certainly prices that are far and away above a comparably sized fuel-efficient gasoline powered car. Fuel prices are wreaking havoc on many family budgets, although most of the actual upper-middle and upper-income electric-car buyers are ca-pable of making the payments. The-se are already multiple-car house-holds and an electric is more of a fashion statement than a real ne-cessity. So why are electrics so soft? Blame grandma. In extensive interview with cou-ples where one is in favor of buying an electric, the message is clear: Women over 50 just don’t trust the technology. She’s seriously worried the car will leave her flat by the side of the road. Not because of a concern about running out of juice. But worries about some electrical failure. This was especially true of women who have regular contact with grandchildren. In 90 percent of the interviews, the husband was in favor of an EV for both practical and technological reasons but his part-ner nixed the acquisition. CONTEXT: As we saw last month, the youth market is highly positive about electrics, but can’t afford them. In the older segment, it soulds like marketers need to send a message that EVs are trustworthy over an extended period of time. These are, afterall, the folks who can afford to buy electrics.

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Women Influence on New Vehicle Selection

Definitions of the above columns: “Line” is a reference and will be referred to in various stories and posts. “(Date) 1-15” are

deliveries in this time period. Deliveries are the number of vehicles actually delivered to customers. Deliveries and Sales are not neces-

sarily the same. One (Deliveries) shows actual activity include vehicles sent to fleet customers. “Sales” are those reported by automak-

ers. Auto companies frequently include contracted-for sales such as to rental car companies in their sales data for the month the con-

tract is signed even though the vehicles may not be delivered for months into the future. “Actual Sales (Date)” are manufacturer re-

ported sales. “First 15 Days % Actual” shows the number of deliveries as a percentage of reported sales for that month. “(Date) Sales

Extension” indicates the likely sales for the current month IF deliveries reflect sales share.

“Detroit 3” are the historic “Big Three” automakers excluding the likes of Volvo, Jaguar, etc. Asian and European include foreign-

headquartered automakers as well as those owned in part or entirety by Detroit 3 automakers.

“Lease Share” is the share of sales and/or deliveries through the date indicated. “Floor Traffic New” and “Floor Traffic Used” are

CNW Indices with 1985 equal to “100” adjusted for adult U.S. population, Key Market size and economic indices.

“Avg. New MSRP” is the average sticker price of vehicles sold and/or delivered during the indicated time period. “ Discounts” in-

clude manufacturer incentives as well as dealer add-ins (such as cash discounts coming directly from the dealership’s gross profit;

higher than book trade-in values, etc.). “Manufacturer Incentives” are those incentives as defined in CNW’s Incentive Document

(email for a copy). “Dealer Incentives” are add-ins coming from the dealership’s gross profit. “Core Transaction Price” is the price

of vehicles sold during the indicated time period after incentives but before finance charges. “% Mfg. Incentives of MSRP” is the

percentage of the average MSRP that Manufacturer Incentives represent. “% Ttl Discounts of MSRP” is the discount including both

manufacturer and dealer rewards to customers for making the acquisition.

“Pent Up Demand” is the number of new-vehicle intenders who were within a month of making an acquisition but postponed the pur-

chase until a time in the future. They have NOT cancelled plans to make that acquisition. “Months” indicates how long these postpon-

ers plan to stay out of the market before making a new vehicle purchase.

Line *Deliveries, not sales May 1-15 May 1-15 % Chng Actual Sales May '12 Full Mo

Based on 1st 15 Days cy2012 cy2011 12 v 11 May '11 Sales Change

1 New Cars Extension

2 Detroit 3 189,167 174,616 8.3% 211,099 228,690 8.3%

3 Asian 55,438 50,348 10.1% 275,701 303,573 10.1%

4 European 48,237 44,029 9.6% 74,195 81,286 9.6%

5 Ttl Pass. Cars 292,842 268,993 8.9% 560,995 613,550 9.4%

6 New Trucks

7 Detroit 3 215,392 211,418 1.9% 315,226 321,151 1.9%

8 Asian 52,773 51,382 2.7% 154,802 158,993 2.7%

9 European 6,378 6,239 2.2% 28,939 29,584 2.2%

10 Ttl Lt. Trucks 274,543 269,039 2.0% 498,967 509,728 2.2%

11 Ttl Industry 567,385 538,032 5.5% 1,059,962 1,123,277 6.0%

12 May 1-15 Full May % Chng Prev Mo Prev Mo % Chng

13 cy2012 cy2011 12 v 11 cy2012 cy2011 11 v 10

14 Lease Share 26.1% 24.1% 8.3% 25.3% 23.6% 7.2%

15 Floor Traffic - New 80.49 74.12 8.6% 84.2 76.55 10.0%

16 Floor Traffic - Used 86.41 83.48 3.5% 87.25 81.42 7.2%

17 May 1-15 Prev Yr % Chng % Chng Pent Up Demand Units

18 cy2012 Full May Same Mo '11 Prev Mo Apr '12 101,000

19 Avg. New MSRP $37,182 $34,196 8.73% 1.30% Apr '11 129,000

20 Discounts $4,800 $4,418 8.65% -15.98% % Change -21.7%

21 Manufacturer Incentives $3,450 $2,893 19.25% -13.79%

22 Dealer Incentives $1,350 $1,525 -11.48% -21.10% Purchase Delay Months

23 Core Transaction Price $32,382 $29,778 8.74% 4.49% Apr '12 94.02%

24 % Mfg Incentive of MSRP 9.28% 8.46% 9.7% Apr '11 94.88%

25 % Ttl Discounts of MSRP 12.91% 12.92% -0.1% % Change -0.9%

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