Bo AnderssonCEO

AvtoVAZ

Bo Inge Andersson

President & CEO of AVTOVAZ

10 June 2015

ТВОЙ ГОД

ТВОЕ БУДУЩЕЕ

AVTOVAZ

The Russian Automotive Industry Today & Tomorrow

Current Macroeconomic Situation

• Global Oil Prices have fallen by over 50 %• In Q1 2015 Russian Income from oil export reduced by 43.5%

• Imposed Sanctions on Russia from the West• In 2015 estimated affect can reach 75 B-EURO or 4.8% of GDP

• RUB Rate has plunged vs. EUR and USD• In Q1 2015 EUR/RUB and USD/RUB grew up to 90-100%

• Cost of Borrowing has increased substantially• In 2014 key interest rate was increased by Russian central bank from 5.5% to 17.0%.

Current rate is 12.5%

• Increasing Inflation and Russian Recession• Annual Inflation in May was 15.8%

• GDP decrease in Q1 2015 is 2.2%, annual forecast is -2.5 to -5.0%

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2

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4

5

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Passenger Vehicles Market Outlook

4

1.3

1.4

1.8

2.4

2.7

1.4

1.8

2.5

2.8

2.6

2.4

1.59

1.85

2.20

2.552.60

2.682.77

2.90

3.00

3.10

1.50

1.70

2.10

2.402.46

2.522.58

2.70

2.80

2.90

1.0

1.5

2.0

2.5

3.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Actual Optimistic Forecast Pessimistic Forecast

• AVTOVAZ forecast the Market to drop by 32-36% in 2015 vs. 2014

M-units

Who we are 2015

Market Share in Russia (4M 2015)

18.7%

Dealer Network in Russia

336

dealers

Own Brand Name

Controlling Shareholder

Headquarters Togliatti, Russia

Leading Manufacturerof vehicles in Russia

Export 29

countries

Market Share in <600 k-RUB segment

51%

585,000

Cars & CKD

Alliance Rostec Auto B.V., a part of

Alliance Renault-Nissan

LADA

5

Typical plant in other Markets

200 – 400 k-units / year

The Russian Automotive Industry

Majority of Russian plants have problems being cost competitive due to

low production capacities k-units / year

Production Capacities of Russian Plants

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910

300

200 190 175150 150

120 110 100 10075 75 75

50

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100

200

300

400

500

600

700

800

900

1000

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LADA and the Alliance are gaining market share in Russia

Alliance Market Share 2014 and 2015

16.2% 15.6% 16.0% 17.2% 17.8%16.0% 16.3% 16.3%

19.6% 19.0%

14.1% 14.0%15.7%

19.3%20.7%

18.3% 19.2%

8.8%8.4% 7.1%

8.0%8.4%

8.6% 8.8%7.5%

8.2% 8.3%

8.8%7.5%

7.9%

7.4%7.1%

8.2%7.9%

7.6% 8.7%7.5%

5.5%6.6%

6.3% 5.3% 6.8%

6.3% 6.0%

7.2%8.0%

8.1%

7.7% 6.5%

5.3%6.6%1.9% 2.0%

2.6%

2.4% 2.6%

2.0%

2.8%32.8% 33.1%

31.0% 31.0%

33.1%

31.3%30.6% 30.9%

34.7% 34.6%

32.3% 32.2%

35.0%

37.1% 37.4%

34.2%

36.8%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

2014 2015

LADA Renault Nissan Datsun Infiniti7

TOP-10 Russian Automotive Market 5M 2015

5 out of TOP 10 cars are produced by AVTOVAZ

4 out of TOP 10 cars are LADA branded

5.0%

4.5%

3.4%

1.9%

1.8%

1.7%

1.7%

1.7%

1.6%

1.2%

Granta

Solaris

Rio

Kalina

Largus

Duster

4x4

Logan

Polo

Camry

2

3

4

1

8

9

Improved LADA Customer Opinions

5.9

6.7

6.2

6.9

5.6

6.06.0

6.3

5.8

6.1 6.1 6.0

5.6

5.9

5.7

5.9

5.3 5.3

5.2

5.8

5.0

5.2

5.4

5.6

5.8

6.0

6.2

6.4

6.6

6.8

7.0

Q1 2014 Q2 2014 Q3 2014 Q4 2014

LADA Largus LADA 4х4 LADA Granta LADA Priora LADA Kalina

Overall Opinion by Brands in 2011-2015 Overall Opinion by Models in 2014

3.5

3.7 3.7

4.4

4.6

3

4

5

6

7

8

2011 2012 2013 2014 1Q'2015

10

Key Priorities in 2015

• Launch Vesta & XRAY on time, with right Quality and Cost

• Restructure the Supply Base

• Continue to Change Management Culture to Drive Continuous

Improvements

• Improve Customer Satisfaction

• Improve Quality in Engineering, Purchased Parts and Production

• Reduce Cost in all Business Areas

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2

3

LADA Vesta

SOS – 25 November 2015

SOP – 25 September 2015

LADA XRAY

SOP – 15 December 2015

SOS – February 2015

Using benefits of the Alliance

• Implementation of Global best practice processes in

production, quality and other business areas

• Use Global benchmarks to drive continuous improvement

• Consolidation of purchasing volumes to increase purchasing

power

• Fill up unused production capacity to cover fixed costs and

supply Alliance with both vehicles and components

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Russian Automotive Market – Key Points

• Russia is still and will keep being Top 10 markets in the world

• Russian Customers are very demanding but Represent a large

Opportunity

• Number of Cars per 1000 people is 284 in Russia

• Russia will continue to be an Important Strategic Market for the

Renault-Nissan Alliance

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