1. Introduction to:Management Three Results & Execution OrientedBusiness Strategy Consultants July, 2011

2. M3s strategy is to focus on customers, channels and market strategies in theAutomotive Aftermarket space, working for global or globalising clients Management Three at a glance Equity Partners Strategy Consulting Automotive Aftermarket Automotive Industry Wide IAM Innovation OES Emerging Markets& VM (Fiat Vice President) Marketing DeepMarco Neil Information TechnologyManagement3 Srl I.D. Results & Execution Oriented Business Strategy ConsultingIndustry Focus: AutomotiveSpecialty: AftermarketGeographic Focus: GlobalLaunched: March 2009Growth 2010/2009: + 180%Automotive AM Customers 2009-2011: 11Countries in scope of projects: Europe (>10); India; Middle East 3. Marco and Neil founded M3 based on a strong automotive aftermarket competence and started developing the firm as a global born start up Founders Professional ProfileMarco Bicocchi PichiNeil Fryer Languages Languages Italian EnglishStarted his management career in the InformationAutomotive industry career holding senior positions inTechnology and Services Industry with international ExperienceLucas, TRW, Bosal and Fiat Group Automobiles.business roles up to Marketing Director in EDSElectronic Data Systems, and VP Etnoteam where he20+ years experience in delivery of results inlead the start-up of Internet Consulting.Competence extremely competitive markets, often in adverseconditions, culminated in involvement in the turn-Management consultant with Ernst & Young workingaround of Fiat with Sergio Marchionne between 2004on Global Automotive programs, Principal with BoozFlexibility and 2008.Allen Hamilton Automotive and InformationTechnology practice recipient of the ProfessionalExcellence Award , Chief Marketing Officer with Speed Board member experience in large IAM distributor.Unicoop, Associate Director with AT Kearney.Held international and pan-European organizationMarketing, Strategy, Organization and InformationIndependentresponsibilities; strong capabilities of acting acrossdifferent cultures and in HQ to subsidiary dynamics;Technology; held senior management marketingpositions in business to business and business toJudgmentexcellent people skills; ability to develop the strongworking relationships needed to work successfully inconsumer. Active Business Angel board member ofstressful situations.different start-ups.AddedM.Sc. in Economics & Commerce, University of TurinValue B.A. in English, University of London (UK);MBA, Warwick Business School (UK)(ITA); MBA, Nyenrode Business School (NL) 4. M3 solid foundations are based on work done for automotive companies inthe past, adding significant value in different aspects of their business Founders Experience in the Automotive IndustryAutomotive Companies where Management3 Founders have project and management experienceExperience includes working and living in Europe, North America and Emerging Markets 5. We believe in using a combination of quantitative and qualitative analysistechniques and that go and see is a must do to define market strategiesPROJECT EXAMPLE: INDIAENGAGEMENT ACTIVITIESAPPROACHPrimary and secondary data collection data analysis and Data collection and analysis Primary Data Collectionreporting to address quantitative and qualitative dataneeds to satisfy engagement objectives. Extensive Secondary Data Collectionlibrary and web research has been performed including Data analysis and reportinglast 15 years issues of auto magazines published inIndia. In depth interviewsM3 Managing Partners personally performed a number of Top Management relevant interviews with Top Management representatives Associations Leaders of Vehicle and Components Manufacturers, Large Management along Value Chain Dealers, Independent Repair Workshops, Associations,complemented by local partners activities.Direct observationM3 Managing Partners visited relevant sites to gain a first Car repair workshopshand view of different representative situations in term of Parts logistic centersquality, approach and behaviors as far as the Parts and VM AftermarketServices value chain in India is concerned. A total ofabout 100 interviews, visits and observations wascompleted. 6. We work with a view on the big picture that influences the business ofautomotive aftermarket, but Automotive Aftermarket Economic Environment REGULATORY ENVIRONMENT DRIVERSTRADE COMPETITION EMISSION SAFETYINSURANCE LABOUR RESTRICTIONSLAW REGULATIONSREGULATIONS REGULATIONSREGULATIONS MACRO GEOGRAPHICOEM PARTS TECHNOLOGYREGIONAL LEGACY ANDVEHICLESQUALITYASSEMBLY FOCUSPLATFORMS / MODULES PART MODULESDECISIONS ASSEMBLYENGINEERING CHANGES PARTS MANUFACTURING LIFE CYCLEUSAVEHICLE MANUFACTURERS VEHICLESPARTSPARTSMANUFACTURERS NORTH AMERICA MANUFACTURING WARRANTYEUROPE and EU FOOT PRINTVEHICLES BADGES& BRANDS MAINTENANCEREPAIRPARTSand CAPACITYMANUFACTURING CRASH JAPAN and KOREA DRIVEN KMS SERVICE INTERVALSVEHICLESSALESAUTHORIZEDVEHICLESREPAIRS PARTS CHINADISTRIBUTIONOWNERS DEALERS WORKSHOPSDISTRIBUTORSIAM & USERS PARTS PARTS SALES FOOT PRINTBRASIL BANKS &CAR INSURANCEFINANCIAL COMPANIES INDIA and ROWCOMPANIES OES PARTS ECONOMIC AND FINANCIAL DRIVERS MARKETSFINANCIALCOST OFCOMMODITIES CAPITAL CURRENCY GROWTHMARKETSLABOURCOSTCOST EXCHANGESRATES SITUATION 7. ... we have also a pragmatic deep understanding of the complex aftermarketvalue chain and the multiple variables influencing one the otherAutomotive Aftermarket Services Demand and Supply Variables Influencing Costs and Market Share along the value chain INFRASTRUCTURE SPARE PARTS COSTS COST DRIVERSREPAIR BAYTECHNICIANPARTS STOCKDELIVERY WORKSHOP INVESTMENTS AVAILABILITY of(CAPEX) VOLUME (Economies of Scale)SPARE PARTS High(er)Vehicle BrandVehicle AgeSTOCKParts Brand(WORKING CAPITAL)RESOURCES COST to Perceived Quality of PartsSERVECustomer Service Experience Perceived Quality of Labor SATURATION PriceTimingLABOR COSTCompetition (OPEX Semi-Fixed)SERVICE MIX Low(er)PARTS COSTFast(er)Slow(er)(OPEX Variable)Time to delivery 8. Since M3 was founded several international clients have already engaged ourcompany to deal with complex strategic issues We deal with complex strategic issues . with a pragmatic yet rigorous fact based approachMarket Entry Managers experience Valuation New Geography Consulting approachPan EuropeanMarket Entry CommercialValuationStrategy OE to IAM Primary Search AUTOMOTIVE AFTERMARKET Field InterviewsSTRATEGIES Partners Delivered Price PositioningOES MarketData CollectionStrategy Multifunctional view Internationalisation Strategy Execution oriented 9. GLOBAL COMPONENT MANUFACTUREREuropean Commercial Policy SITUATIONThe client is a global component manufacturer and a Fortune 500 company with a leading position in the European IAMmarket willing to improve its commercial strategies, with particular reference to trade spending and pricing policies, for theEuropean market. M3 has been engaged thanks to its distinctive combination of automotive aftermarket industry and strategicbusiness consulting expertise to identify issues and propose solutions in a high-complexity and challenging environment. KEY ISSUESMANAGEMENT THREE CONTRIBUTIONS The client has undergone significant internal M3 conducted an extensive assessment of clients marketchanges in the last 15 years and has gained a practices and internal processes, through desk researchleading position in the European market that has to and field interviews, in order to highlight and prioritizebe further developed and protectedneeds for intervention. Intra-channel relationships within the distribution For this purpose M3 investigated:chain have been reshaped by the rise of largePricing strategies and differentials across 32 nationaldistributors and international buying groupsmarkets and branches; Pricing model is perceived to be a key issue but has Trade Marketing Promotion current practices,discounts, bonuses and incentive programsto be investigated in its fundamental drivers and Relationships within distribution chain, interviewingdynamics in order to understand how to balanceclients managers and customersdecision making between HQ and branches Clients competitive position in the European marketRESULTS Client have been provided with a fact based quantitative and qualitative comprehensive cross view of current situationgained also trough field research in the eight major European markets visiting clients and client organization A fact based recommendation to implement a business transformation aimed at addressing the challenges of Pan-European and International clients while managing a still relevant local domestic market of small players 10. LEADING BRAKE FRICTION MANUFACTUREROES Strategy and Account Management SITUATIONThe client is a leading friction materials manufacturer with a strong position in both OEM and OES markets but changes inmarket practices are impacting its market position and needed to be understood and addressed with a conscious structuredstrategic approach. The decoupling of OEM/OES sourcing was the main issue on the spot but other changes taking place inthe business model called to action. M3 has been engaged to support the client in the identification of key strategic dynamicsand success factors in order to align enterprise strategy to the on going changes and exploit areas of opportunities.KEY ISSUESMANAGEMENT THREE CONTRIBUTIONS Changes in the OEM/OES paradigm M3 has helped the customer in identifying and understanding impact of changes in business model and Architectural best practices: modularity and VM customer relationshipscommonalities vs. proliferation of variants As such M3s role was to: Service strategy models in the service business Prepare and lead meetings with VM clients to discuss(OES and IAM) and competition with VMs and othermarket view and supplier role;actors to capture market share in the AM services Highlight the changes taking place in intra-channelmarket (esp. for older vehicles)relationships, in both the parts distribution market and OE Brand equity vs. IAM manufacturer and mega-the service market;distributors image Assess market environment changes: technology, Opportunities implied by emerging markets growthprocess, geography, regulatory, customers .. Provide client with a comprehensive framework ofstrategic analysis tools to support decision-makingRESULTS M3 delivered a broad analysis focused on both industry and market global trends and customers core competencies fromwhich derived recommendations to approach the OES market within the changing scenario The assignment deliverables conveyed a wide range of tools and frameworks to support strategic thinking and address theissues of alignment of organization, process and technology 11. LEADING COMPONENTS MANUFACTURERIAM European market expansionSITUATIONThe client is a market leader present in three continents, with a portfolio of several brands it is organized in two divisionsmanufacturing and marketing distinct automotive components technologies. One division is present in the OE and IAM marketwhile the other is only operating as OE supplier. Having reacted in a positive way to the 2008 automotive market crisis andobserving an higher resilience of business of the division with an IAM presence, the client was willing to evaluate the IAMmarket entry opportunity for the second division. Management Three (M3) was asked to evaluate the strategic options.KEY ISSUESMANAGEMENT THREE CONTRIBUTIONS Entry in new market/channel: from a OE-only M3 has been engaged thanks to its coverage of keybusiness to competing in the IAM market;competence domains required to answer the clients Strong competition in a relatively small market due request: a specific industry expertise combined with ato strong specialization and long lifecycle ofmarket strategy knowledge. The aim was to provide theproducts. Impacts on economies of scale;client with: Different possible production processes bearing A clear identification of all the drivers for decision- makingdifferent cost and quality levels, with a direct relationAn assessment of revenues and profit potential ofof volume to technology (different for OE and IAM); alternative opportunities Future product and process innovations forThe definition of a set of strategic options (from purelightweight vehicles is expected to have significant organic growth to M&A initiatives)impact in product and processes (change inmaterials and production technologies)RESULTS A fact-based in-depth analysis of the market, the competition arena and the technology has been carried out so that theclient gained a deep insight on opportunities and threats The project highlighted the risks and complexities of an organic market entry and defined a framework to evaluate possibletargets for M&A as well as alternative growth strategies 12. LEADING AUTOMOTIVE COMPONENTS MANUFACTURERMarket entry evaluation (India Aftermarket)SITUATIONThe client, a component manufacturer, with a global footprint, was seeking business expansion opportunities. Afterestablishing more than a bridgehead in the Indian market by establishing strategic JVs with local manufacturing companies theclient was looking to develop the aftermarket business line. Management Three (M3) was asked to present a proposal tosupport the international expansion strategy focusing on the Indian market potential opportunity and the evaluation ofalternative options. KEY ISSUES MANAGEMENT THREE CONTRIBUTIONS The target market was and still is growing at a quick M3 was engaged thanks to the expertise and industryrate but players in the IAM distribution chain need knowledge of its managing partners in automotivesubstantial improvements in standards and aftermarket and strategic marketing and was asked toperformance;evaluate opportunities and challenges of India market Competition from major players aiming at capturingentry options focusing in particular on a potential JV:the service market is increasing: significant As such M3s role was to:investments are being made in the building of Conduct a thorough assessment of the automotive aftermarketorganized IAM networksvalue chain in India (including prices and costs); Approach and timing where decisive and the client Analyse client business model and test its componentsagainst Indian market conditions;was looking for a professional and detailed Transfer lesson learned to management, discuss alternativesassessment in order to take an informed decisionand recommend action planRESULTS The assignment conclusions highlighted the opportunities and challenges to enter the market on a first-mover basis giventhe projected development of the IAM in following years and the elapsed time required to built a credible operation M3 hands-on approach allowed the client to have a visual (photo diary) and factual (parts prices, car population size anddistribution by brand and model, market structure of repair shops ..) view of the market and take a well grounded decision 13. AFTERMARKET INFORMATION SERVICES PROVIDERIndian Automotive Aftermarket Market Analysis SITUATIONThe client, a European based service provider to the global automotive aftermarket value chain, is expanding internationally,and has recently established a presence in North America and in China. Management Three (M3) was asked to present aproposal to support the international expansion strategy focusing on the Indian market potential opportunity.KEY ISSUESMANAGEMENT THREE CONTRIBUTIONS The client organization was stretched with important M3 was engaged because of the deep industrydevelopment programs and the on goingknowledge of its partners in automotive aftermarket andinternational expansion initiatives; digital services strategies and asked to take over a Client is a digital value chain service provider program management back to back - role to define anfocusing on providing data based services to the appropriate market entry strategy in India.automotive aftermarket value chain; As such M3s role was to: The successful business model of the client is tunedConduct a thorough assessment of the automotiveto the market conditions of the European domesticaftermarket value chain in India;marketAnalyse client business model and test its components against Indian market conditionsTransfer lesson learned to management, discuss alternatives and recommend action planRESULTS The assignment provided the client with a well researched and lively hands-on picture of the Indian Automotive Aftermarketallowing for a fact based, reality rooted discussion on possible strategic options. The project approach based on a mix of desk and field direct observation allowed the client to realistically size theopportunity and understand the challenges of current business model to succeed in the Indian market 14. AFTERMARKET INFORMATION SERVICES PROVIDERIndian Automotive Aftermarket Market Entry ApproachSITUATIONThe client, a European based service provider to the global automotive aftermarket value chain, was expanding internationally,and had recently established a presence in North America and in China. Following a previous assignment to ManagementThree (M3) to evaluate the market potential in a second step the client asked for an overall evaluation of possible market entrystrategies in the Indian market and to outline an execution plan.KEY ISSUESMANAGEMENT THREE CONTRIBUTIONS A market overview has been produced in the M3 performed extensive field research involving a seriesprevious assignment, and execution planning wasof interviews to prospect partners on both supply andrequired as second stepdemand side. The target business model had to be defined and Based on findings M3:fine-tuned based on the identified key successDelivereda first proposal for the definition of servicefactorsoffering and pricing strategy Scope of service offering to be defined according toHighlighted level of awareness and willingness to adopt clients solutions of industry leadersdrivers and criteria (content, delivery platforms, dataIdentified additional areas of intrinsic opportunitiessources and formats) different when compared with related to Indian landscape (ITC platforms above all)those adopted in EuropeRESULTS The assignment conclusions showed a set of substantial opportunities to enter the market with a first-mover advantage anda strong relationships with global and local market leaders with a favourable role of local ICT developing environment M3 offered three distinct layers for market entry execution, from a full-speed plan to a phased one, all aimed at fosteringthe best opportunities for the client to achieve its strategic goals 15. LEADING BRAKE FRICTION MANUFACTURERIndian Automotive Aftermarket Market AnalysisSITUATIONThe client is a leading friction materials manufacturer with a strong position in both OEM and OES markets that is consideringan international expansion targeting the Indian market considering different alternative routes. M3 was asked to provide anoverall analysis of opportunities and success factors and to outline possible market entry strategies KEY ISSUESMANAGEMENT THREE CONTRIBUTIONS Strong and constant Indian vehicle park growth is M3 leveraged its experience and knowledge of the Indianexpected for coming years but a channel strategymarket to deliver to the client a structured analysistailored for the client has to be assessed andfocused on:deviseda fully detailed depiction of the Indian regulatoryenvironment; Indian market is still a relatively far environment an Indian automotive aftermarket overview, focusingfrom EU/US standards and practices with a specificon trends, distribution and customers and consumersregulatory system and a distinctive on-goingbehaviour;progressive process of transformation towards free- collecting and presenting a thorough assessment ofmarketthe brake friction market and its potential Complex evolutionary dynamics in the market Extensive field research activities have been performed inlandscape for each possible target market: Cars,order to acquire and present first-hand evidence andLCV, HCV, 2- and 3-wheelers knowledgeRESULTS From field-gathered evidence and desk research key success factors for a coordinated and strategically sound marketentry and a subsequent sustainable growth have been identified A range of tools and strategic decision tools have been delivered to the client together with a set of recommendations andindications for the development of a well-balanced entry strategy considering market size and price points of products 16. CLUTCH AND HYDRAULICS COMPONENTS MANUFACTURERMarket entry evaluation (Italy Aftermarket)SITUATIONThe client is a global manufacturer of clutch and hydraulics components, with a core focus on the HCV market, active on bothOE and IAM channels with facilities in India, UK, USA, that was evaluating expansion opportunities after acquisition of theEuropean operations. One target market was the Italian market but the client had no experience of continental Europemarkets. Management Three (M3) was asked to support the client in the identification of opportunities and strategic optionsand in the organization of contacts with potential buyers. KEY ISSUES MANAGEMENT THREE CONTRIBUTIONS Mature market during recent years yet still M3 was engaged thanks to its expertise and industry attractive: business models and efficiencyknowledge of its partners in automotive aftermarket in performance play key rolesEurope in general and Italy specifically Competitors and distribution channel performance As such M3s role was to: with uneven performances.Conduct an assessment of the HCV aftermarket value Brand strategy definition and key success factors chain in Italy for gaining robust reputation on a new marketAnalyse client business model and test its components against Italian market conditionsTransfer lesson learned to management, discuss alternatives and recommend action plan RESULTS The assignment was carried out by producing a detailed picture of the Italian HCV market (distribution chain, players,regional/local specificities) and en evaluation of the market and growth potential for the client products Evidence gathered via both desk and field research combining quantitative and qualitative approaches allowed to transfer toclients management an adequately complete knowledge of the market, and form realistic expectations for the business case 17. OIL PRODUCTS RETAILER (ISRAEL)Italy Retail Study TourSITUATIONThe client markets petroleum products and operates a chain of gas stations and convenience stores in Israel. In order toexpand knowledge and gain insight on current best practices across the international landscape the top management of theclient wanted to visit Italian retail outlets and arrange meetings with top managers of key companies in the gas retail andconvenience stores industries. M3 has been asked to set up the program for the tour and the meeting and documentation onItalian and international best practices and the rationale behind new store conceptsKEY ISSUESMANAGEMENT THREE CONTRIBUTIONS Client needed to gain both first-hand experience and M3 has been engaged for its specific automotive guided insights on a wide range of retail concepts expertise and its strong network of relationships with innovation examplesindustries and key people from related industries. The client needed to have quick results with a Thanks to its capabilities M3 was been able to provide the limited amount of time and effort that could beclient with: invested in the projectA time-efficient delivery of the required scope of work Commonalities and differences between Italian andA thorough analysis of the store concept evolution in Israel markets and hints on the applicability of newItaly and the underlying strategic drivers retail concepts in IsraelMeetings with key people from leading international companies (Italian Headquartered MNC or MNC with a significant presence in Italy) active with store concept innovationRESULTS Preparatory analysis conveyed a detailed overview of the Italian landscape, a description of current trends and latestinnovations with a comparison with relevant international cases, all summed up in the final project documentation The tour mixed together visits to retail outlets in Central and Northern Italy and a series of meeting with retail marketingmanagers and experts from leading companies to full satisfaction of client CEO and CMO that participated in the visit 18. Data gathering and quantitative analysis are an important foundation of ourfact based approach *Note: This document is confidential and solely meant to represent Management3 capability and expertise. This document may not be reproducedtotally or partially without mentioning the source. 19. as well as direct observation and interviews that are irreplaceable if you are willing to understand and challenge myths and superficial conclusions*Note: This document is confidential and solely meant to represent Management3 capability and expertise. This document may not be reproducedtotally or partially without mentioning the source. 20. Eyes, earsand brains in the market for our clients 21. Management3 srl Via Barnaba Tortolini, 5 00197 ROMA (Italy)Marco Bicocchi PichiNeil Fryer www.management3.com