2015 Emerging Car Care Trends

Copyright 2013. The NPD Group, Inc. All Rights Reserved. This presentation is Proprietary

and Confidential and may not be disclosed in any manner, in whole or in part, to any third

party without the express written consent of NPD.

2015 Emerging Car Care Trends

The NPD Group

August 2015

2

The image should fill up the entire space of the gray box, no gray should be seen

■Consumer are on the Rebound

■New Cars are Creating New Opportunities

■ Aging Cars are Still Driving Sales

■Consumers Value Premium

■ Innovation Leads to Growth

■ The Evolving Installed (DIFM) Market Landscape


The NPD Group, Inc. | Proprietary and Confidential 3


Consumers are on the Rebound!


5

1$ Trillion Consumer Spend

Retailers

Outlets122,000

723

6

Apparel

+2.4%

$210.1B

Accessories

+2.8%

$53.1B $21.4B

+2.0%

Small Appliances

+2.8%

$21.8B

Home Textiles

+5.4%

$22.6B

Video Games4

$11.3B

+5.6%

Beauty2,5

+3.0%

$437.0B

Commercial Food Service8

a Year over year % change

a Dollars (proj.)

-5.4%

$106.6B

Consumer Electronics1

Office Supplies3

+2.2%

$23.8B

Housewares

+0.4%

$5.5B

Auto2

+2.6%

$14.2B

Source: The NPD Group/Consumer Tracking Service,

*Nielsen Scantrack, 52 weeks ending March 28,‘15

Last updated: May 2015

*Footnotes on Slide 6

TOTAL: $1,782.2B (+3.5%)

w/o Commercial Food Service: $1,345.2B (+3.6%)

Industry Trends

Total U.S. Market (all channels)12ME March ‘15

$24.5B

+8.2%

Toys

+3.9%

$63.3B

Footwear

$269.2B

+1.8%

*Dry Grocery6

+1.1%

$210.7B

*Household

Products6,7

+3.3%

*Health & Beauty

Aids6

$98.3B$189.0B

+3.9%

*Perishable

Grocery6

The NPD Group, Inc. | Proprietary and ConfidentialThe NPD Group, Inc. | Proprietary and Confidential

The NPD Group/Car Care TrackYTD June 2015 /% Transactions/n = 38,498 & 34,035

Do-It-Yourself market

7

Almost 2 out of 5 transactions made in the automotive aftermarket were for DIY product purchases.

Total DIY Industry

% Transactions

40% 37%

YTD June 2014 YTD June 2015


Three Factors are Highly Correlated to

Automotive Product Sales Volume

8

Forecast Model Drivers

Miles Driven

Retail Price

(NPD’s Retail

Tracking

Service)

CPI New

and Used

Vehicles

2,810

2,860

2,910

2,960

3,010

3,060

Annual Vehicle Mileage Volume (Billions)

May miles driven set a new record and is

now 42 billion miles over the pre-recession

high

Source: US Dept. of Transportation/ Federal Highway Administration

9

• Culture Shift

• Workforce Trends

• Generational Change

The last time real gasoline price was sustained at or

below today’s level miles driven was growing at 4%

10

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4

Nominal Gasoline Price Real Gasoline Price (Dec 2014) Vehicle Miles of Travel (Billions) 12 Month Moving Average

The NPD Group, Inc. | Proprietary and Confidential

In spite of a 3.7% increase in gallon

demand, consumers have spent $64 billion

less at the pump

$241

$177

$0

$50

$100

$150

$200

$250

$300

1st 26 Weeks 2014 1st 26 Weeks 2015

Billi

on

s

Gasoline Spending



Year to Date Weather

12

Weather had a big impact on sales Year to Date:

• 23 states had one of their 10 coldest February temperatures on record

• 12th warmest March in the Total US

• Wettest May in history for the Total US

• 2nd warmest June in the Total US

Year to Date Jul 04 2015 Pct. Chg. Vs. Year Ago

4.1% 4.3%

2.3%

5.6%

0.9%

3.4%

0.2%0.7%

Grand Total Accessories &Appearance

Chemicals,Additives & Fluids

Maintenance &Repair

Dollars Units

Source: The NPD Group/Retail Tracking Service

Year to date sales gains of more than 4%

are exceeding expectations



New Cars are Creating New Opportunities



Source: The NPD Group/Consumer Outlook Survey

One-Quarter Plan to Purchase a Vehicle in

2015, Half of Those will be a Used Car

15

14%

62%

24%

0%

20%

40%

60%

80%

100%

Might/Plan topurchase a new/usedvehicle

Do not plan onpurchasing a vehicle

Don't know

8%

4%

7%

6%Plan to PurchaseNew

Might PurchaseNew

Plan to PurchaseUsed

Might PurchaseUsed

-1

-1

+2


Sources: Autocare Association IIR March 2015 Report

More than 38 Million New Cars have Hit the

Road since January 2013

16

Automotive Sales Trends: 2004-2015

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD MAR15

New Car Sales (% Chg. Vs. Year Ago)

0 to 3 year Old Vehicle Purchase Index

106

140129

111

Glass Cleaners Tire Dressing Tire Foam Wax/Polish

Source: The NPD Group/Car Care Track

Newer car owners are more likely to buy

appearance products…


* Index = 0-3 years old vehicle transaction share___ * 100

all vehicle transaction share

Year to Date July 04 2015 Pct. Chg. Vs. Year Ago

4.1%

5.9%

3.7%

0.9%2.7%

2.7%

Grand Total Appearance Accessories Appearance Chemicals

Dollars Units

Source: The NPD Group/Retail Tracking Service

…Which is leading to gains in retail sales


Winter Merchandise,

Towels/Rags and Other

Wash/Detailing

products

Protectants, Wax/Polish,

Carpet and Fabric Care,

Cleaners, Glass Care,

Leather Care,

Lens/Plastic Care,

Tire/Wheel Care


Aging Cars are Still Driving Sales


0

10

20

30

40

50

0-3 years 4-6 years 7-9 years 10-15 years 15+ years

Pro

port

ion o

f O

wners

Age of Vehicle at Time of Purchase

Past 3 Years

More Than 3 Years Ago

Consumers today are purchasing cars that are already more

than 10 years old

Purchased Used Vehicle

20

Source: NPD Automotive “It’s New to Me” Topical Report

Age of Used Cars at Time of Purchase

The majority of todays older car owners

plan to keep for more than 4 years

32%25%

42% 47%

30% 44%

31%33%

11%10% 8%

8%27%

21% 20%12%

0-3 years 4-7 years 8-10 years 11+ years

10+ years

7-9 years

4-6 years

0-3 years


Age of Vehicle

Length of Intended Ownership


14%

17%14%

11%8%

2%

8%12%

15%22%

0-3 years 4-7 years 8-10 years 11-14 years 15+

Considering New Vehicle Considering Used Vehicle

And while almost half of older car owners want to

replace within the next 3 years, most are considering

another used car


Age of Vehicle

2015 Vehicle Purchase Intentions


Older car owners exhibit desirable

maintenance behaviors

12%

7%

7%

6%

5%

5%

23%

14%

14%

11%

10%

9%

% 5% 10% 15% 20% 25% 30%

Change my air filter

Replace fuel filter

Start using a fuel additive

Change spark plugs

Start using a more premium oil

Start changing oil more often

0-3 years

11+ years


Select 2015 Maintenance Behaviors by Age of Vehicle


Older car owners are twice as likely to

expect to spend more than $1,000


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

AllRespondents

0-3 years 11+ years

$1000+

$500-999

Expected 2015 Maintenance and Repair Spending


Driver Need Top Performing Segments YTD Dollar Growth

My car won’t start! • Automotive Batteries +6.3%

I need this car to last! • High Mileage Motor Oil +10.1%

My lights aren’t working!

• Capsules/Bulbs

• Miniature Replacement Bulbs

• Lens Restoration Kits

• Headlight Assemblies

• Tail Light Assemblies

+10.6%

I need a quick easy fix!

• Multisystem Additives

• Oil Stabilizers

• Emissions Control

• Engine Stop leak

• AC Charging Kits

+7.1%

I’m doing repair and

maintenance!

• Brake Cleaner

• Power Steering Fluid+8.9%

Top 14 aging related segments based upon YTD dollar gain

(Over $135 Million Gained YTD June vs. Year Ago)

Drivers of aging vehicles have needs...



Consumers Value Premium


71%

66%

64%

58%

55%

53%

42%

33%

33%

26%

3%

3%

5%

5%

6%

6%

12%

16%

17%

23%

Is reasonably priced

Is made with quality materials

Increases gas mileage in vehicle

Increases engine performance

Easy to install or use

Cleans the engine

Is better for the air/environment

Made with enviro-friendly materials

Enhances the appearance of the vehicle

Made with recyclable materials

Consumers today define value as more than

just price


Top 2 Box ImportanceBottom 2 Box Importance

Automotive Product Purchase Drivers


27%

19%

19%

15%

6%

9%

9%

11%

% 10% 20% 30% 40% 50%

Automotive parts

Automotive maintenance products

Fuel/oil additives

Appearance and accessories

Purchase Highest Quality Product Purchase Least Expensive Product

The quality oriented consumer is prevalent

in automotive categories


*Base: Those

who purchase

the category

Price vs. Quality


Consumer affinity for premium items is

broad based

Beauty

Blenders

Single Serve Coffee Makers

Restaurants


Source: The NPD Group

Top 8 premium differentiated segments based upon YTD dollar gain

(Over $96 Million Gained YTD June vs. Year Ago)

Consumers are opting for premium value


Premium Segment YTD Dollar Growth

• Premium Beam Wiper Blades

• Full Synthetic Motor Oil

• High Level Premium Spark Plugs

• Hybrid Wiper Blades

• Premium/Performance Oil Filters

• Full Synthetic HD Oil

• Performance/Extended Life Air Filters

• HID Capsules and Bulbs

+16.4%


Innovation Leads to Growth


Vent Clip Air Fresheners

32

Air Fresheners Two Year Dollar Growth – June 2015

8%

25%

12 ME June 2015 vs 2013

Total Air Fresheners Vent Clips

Source: the NPD Group/Retail Tracking Service

Three segments provide examples where

innovative products drive accelerated growth

33


Trim Care

34

Appearance Chemicals Two Year Dollar Growth – June 2015

8%

32%

12 ME June 2015 vs 2013

Total Appearance Chemicals Trim care




35



Other Coatings

36

Paint and Coatings Two Year Dollar Growth – June 2015

7%

173%

12 ME June 2015 vs 2013

Total Paint/Coatings Other Coatings




37


Future Growth

Aging Vehicles

Innovation

Premium Value


High Mileage Oil

Automotive Batteries

Capsules/Bulbs

AC Charging Kits

Beam Wiper Blades

Hybrid Wiper Blades

Synthetic Motor Oil

High Level Premium Spark Plugs

Premium/High Mileage Filters

Aftermarket Growth Trends


The Evolving Installed Market Landscape


Do-It-For-Me Market

40

As of June 2015, over 3 out of 5 transactions made in the automotive aftermarket were for DIFM services

The NPD Group/Car Care Track

Total DIFM Industry

% Transactions

63%

The top 6 services account

for 50% of transactions:

Oil Change

Tire Rotating/Balancing

Brake Service

Car Wash

Air/Cabin Filter Replacement

Tire Replacement

Dealerships lead the way in outlet shareService Transaction Share 12 ME Jun 2015

41

Dealerships • 27%

Quick Lubes

• 15%

Repair Shops

• 14%

Tire Shops • 15%


Source: NPD Group / Car Care Track

DIFM

Dealer share is skewed to newer vehiclesService Transaction Share 12 ME June 2015

0%

10%

20%

30%

40%

50%

60%

70%

0-3 years old 4-7 years old 8-11 years old 12-15 yearsold

16+ years old

Dealerships Repair Shops


43

24%

7%

5%

5%

5%

5%

4%

4%

4%

4%

3%

3%

3%

3%

3%

Oil Change

Tire Rotating or Balancing

Brake Service

Car Wash/Car Detailing

Air Filter/Cabin Filter Rplcmnt

Tire Replacement/New Tires

Air Conditioning or Heating Svc

Wiper Blade/Refill Installation

Veh Inspection/Emission Test

Steering and Suspen/Tire Align

Tire Repair

Battery Replacement/New Battery

Cooling System Service

Electrical/Ignition Service

Engine Repair

All Service Transactions –12 ME June 2015

Oil Changes are the most common type of serviceService Transaction Share – 12 ME June 2015


DIFM

13

29

2 5 4

87

71

98 95 96

Total PCMODIFM

Dealerships Quick Lubes Repair Shops Tire Shops

Free Oil Change Paid Oil Change

44

Free oil changes most common at DealershipsDIFM Outlet Quart Share by Free / Paid Oil Change–12 ME June 2015



DIFM

Dealerships lead the way in Oil Change

Quart ShareOil Change Quart Shares – 12 ME Jun 2015

45

Dealerships • 39%

Quick Lubes

• 20%

Repair Shops

• 12%

Tire Shops • 10%



DIFM

Tire Shops are not getting their “fair share”

of oil changesService Share Transaction Index – 12 ME June 2015

0

20

40

60

80

100

120

140

160


Oil Change



Repair shops may have some upside in the

tire businessService Share Transaction Index – 12 ME June 2015

0

50

100

150

200

250

300


Tire Rotating Tire Replacement(New) Tire Repair



Repair shops must defend leadership in the

brake service categoryService Share Transaction Index – 12 ME June 2015

0

20

40

60

80

100

120

140

160

180


Brake Service





Repair Shops Dominate Most Major Repair

Oriented Services

49

Leading Service Share Transaction Indices – 12 ME June 2015

Dealerships Quicklubes Repair shops Tire shops

• Tire rotating

• Oil Change

• Air Filter

• Car Wash

• Air Filter

• Oil Change

• Wiper Blades

• Brakes

• Engine Repair

• Electrical/Ignition

• Inspection

• Cooling System

• AC/Heating

• Steering/Suspension/

Alignment

• New Tires

• Tire Repair

• Rotating/balancing

• Steering/Suspension/

Alignment


Strategies for Growth


Strategies for growth in 2015

1. Close the oil change opportunity gap

Respondents who went to Dealerships for their oil change

service, tend to be very loyal to that outletChannel Loyalty - Buyer Share – 12ME June 2015

52

62%

76%

49%

60%

52%

21%

12%

32%

21%

28%

7%

4%

8%

6%

8%

0% 20% 40% 60% 80% 100%

Total

Dealerships

Quick Lubes

Repair Shops

Tire Shops

I always go to this outlet I usually go to this outlet I usually go to another outlet





Consumers Offer Very Different Reasons for

Selecting Their Oil Change Outlet

53

Reasons For Oil Change Channel Selection Indices


• Warranty/

Guarantee included

• Maintain vehicle

service history

• Cleanliness

• Speed of service

• Location

• Coupons/Offers

• Recommended by

someone I trust

• Knowledge of

employees

• Feel like a valued

customer

• Friendliness of

employees

• Quality of service

• Coupons/Offers




2. Defend your turf with aging vehicles


The NPD Group/Retail Tracking Service

Targeting the Aging Vehicle Consumer

55

Vehicles 8 years old and over

Services

Transaction Index

• Fuel systems, automotive lighting,

exhaust, engine repair

Reasons more likely to

choose outlet

• Recommended by someone I trust,

price, visited web site or used app

to get info

Demographic

Distinctives

• More likely to be under age 24,

and moderate to lower income,

just as likely to be female




2. Defend your turf with aging vehicles

3. Invest in the future by winning with Millennials

40%

17%

18%

17%

Non-Millennials

29%

23%

18%

22%

Older Millennials

25%

25%

20%

24%

Dealerships

Quick Lubes

Repair Shops

Tire Shops

Younger Millennials*

Millennial consumers typically do not prefer Dealerships


= significantly greater than other age groupsSource: NPD Car Care Track / 12MESep2013

Millennial consumers are more likely to have had most

vehicle services performed


Younger

Millennials*Older Millennials Non-Millennials

Oil Change 57% 63% 68%

Tire Rotating or Balancing 22% 20% 20%

Brake Service 24% 19% 12%

Air Filter/Cabin Filter Replacement 15% 17% 13%

Tire Replacement/New Tires 21% 17% 11%

Car Wash/Car Detailing 17% 16% 10%

Vehicle Inspection/Emission Test 14% 12% 9%

Steering and Suspension/Tire Align 15% 12% 8%

Wiper Blade/Refill Installation 15% 13% 8%

Air Conditioning or Heating Service 16% 13% 6%

Source: NPD Car Care Track / 12MESep2013

*Car Care Track data does not include 16-17 year old drivers


■Consumer are on the Rebound!

■New Cars are Creating New Opportunities

■ Aging Cars are Still Driving Sales

■Consumers Value Premium

■ Innovation Leads to Growth

■Opportunities to Explore in the Evolving Installed Market Landscape



In Summary

Industries

Automotive

Beauty

Consumer Electronics

Entertainment

Fashion

Food / Foodservice

Home

Luxury

Mobile

Office Supplies

Sports

Technology

Toys

Video Games

Countries

Australia

Austria

Belgium

Brazil

Canada

China

France

Germany

Italy

Japan

Mexico

Netherlands

New Zealand

Poland

Portugal

Russia

South Korea

Spain

Sweden

Taiwan

United Kingdom

United States

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Documents

2015 Emerging Car Care Trends