ALL FUTURE RESIDUAL VALUES INCLUDE VAT AND RELATE TO A CAP CLEAN CONDITION AND IN A DESIRABLE COLOUR

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1 November 2013 This is the CAP guide to future residual values for new cars. Individual forecasts are provided in pounds and percentage of list price for periods of twelve months to five years with mileage calculations up to 200,000. Each forecast is shown in grid format with specific time and mileage bands highlighted for ease of use. ALL FUTURE RESIDUAL VALUES INCLUDE VAT AND RELATE TO A CAP CLEAN CONDITION AND IN A DESIRABLE COLOUR Changes to Monitor New ranges: Audi A3 Cabriolet, BMW Alpina D3, BMW i3, BMW 4 Series, Ford EcoSport, Infiniti Q60, Infiniti QX70, Land Rover Range Rover Sport, Peugeot 3008, Peugeot 5008, Skoda Yeti, Skoda Rapid and Toyota Land Cruiser. There are numerous additions to the following model ranges: Audi A1, Audi TT, BMW 3 Series, BMW X5, Citroen C3, Citroen C4 Picasso, Fiat Doblo, Hyundai i30, Kia Sorento, Land Rover Range Rover Sport, Lexus IS, Lexus RX, Mercedes C Class, Mercedes S Class, Mitsubishi ASX, Nissan NV200, Peugeot 208, Peugeot 508, Seat Ibiza, Seat Leon, Vauxhall Astra, Vauxhall Corsa and Volkswagen Phaeton. Comment Future residual values in this edition of CAP Monitor are on average -1.53% lower than October at 36 months 60,000 miles, reflecting the overall traditional Monitor seasonal trend of -1.58%, but favourable to the expected future Gold Book seasonality of -1.98%. Central to CAP s forecast model is the reviewing of all forecasts against the latest available current New and Used Car Markets evidence, and shifts in market dynamic can result in future residual values being revised. Details of all values revised by ±5% can be found via the following link: Movement Reports. This is the last ever CAP Monitor Editorial. This time next month, we will be entering a brave new world and you will be reading the first ever Gold Book Editorial. As you read this, the CAP Forecasting Team are working flat out to produce the first forecasts in the new system and the initial information will be going out to all customers in the next few days, with an indication of what the expected forecast movements are in the Upper sector. We will be releasing results sector by sector as the forecasts are completed and pass through Quality Control. The order of the remaining sectors to be communicated will be MPV, Executive, Large Executive, SUV, Lower, Supermini, City Car, Luxury Executive, Coupe Cabriolet,, Sports and Supercar. With the Gold Book reforecasting process being upon us, there is no sector reforecast this month. However, we have widened the parameters of our monthly inter-product reporting and made some adjustments to some models

2 which demonstrated a significant deviation away from the expected position against current Black Book. Naturally, these vehicles are predominantly from sectors which have not already been reforecasted earlier this year. Increases to forecast values have been applied for Aston Martin DB9, Aston Martin DBS, Bentley Continental GT, BMW M6, Chevrolet Camaro, Jaguar XK, Maserati Quattroporte, Nissan 370Z, Peugeot 207CC, Porsche Panamera, Rolls Royce Ghost, Rolls Royce Phantom and VW Scirocco. There were decreases for the following models: Aston Martin Rapide, Aston Martin Vanquish, Audi TT, BMW M5 Saloon, Mercedes C-Class AMG, Mercedes CL AMG, Mercedes SLS AMG, Porsche 911 and Porsche Cayman. In addition there were changes to the subsidiary relationships for Fiat Doblo Maxi Combi, Honda Jazz, Hyundai IX35, Lotus Exige and Renault Captur, although the underlying forecasts for these models remain unchanged. Forecasting Model Development CAP Gold Book & iq Following communication with a number of customers over several months, we are enhancing our internal forecasting process and also introducing a brand new product, CAP Gold Book iq in December product. CAP Monitor becomes CAP Gold Book in December product and will include a new and more rigorous economic modelling element, but many of the existing features which are popular with our customers will be retained. The quality of the forecasts will be improved and new vehicles will be published direct into current month product, rather than having to wait for monthly publication deadlines. CAP Gold Book iq is a new customer product which is being developed to address concerns regarding a lack of transparency and the availability of market intelligence. It will deliver transparency on a scale which has never been seen before in our industry. Our customers will in future be able to access multiple levels of product, being able to view and interrogate our assumptions on a vehicle level like never before. Statistical rigour will continue to be combined with expert editorial opinion and market intelligence, but this will now be made available to customers with commentary added whenever a new vehicle is launched or changes are made to our existing forecasts. Gold Book iq will be available early in December. The feedback from customers to date has been extremely positive and we believe CAP Gold Book iq will represent a new benchmark in truly market leading forecasting. More details are available here: The answers to some Frequently Asked Questions on Gold Book and iq are also available on our website: Demand Outlook

3 The recent trend for positive news regarding the UK economy continues, but the outlook remains one of a sustained period of sluggish growth at best. Interest rates are therefore expected to remain low for the foreseeable future. Consumer Price Inflation remained flat at 2.7% this month, although upward pressure from food & fuel prices is expected to limit reductions in the near future. With wage growth at a little over +1%, this continues to have the effect of squeezing disposable incomes for most households. In the medium term, some additional increase in CPI may be expected due to the changing remit of the Bank of England MPC to promote growth, but inflation is expected to start to reduce again within the next 2 years, although it may not come down to the 2% target for some time after that. By tying future base rate changes to an unemployment figure of 7%, the Bank Of England may have stored up future problems for itself as the recovery pattern for this recession looks to be very different from previous ones and the employment market continues to evolve in terms of part time working, job sharing and zero hour contracts. However, unemployment improved this month from 7.8% to 7.7% and so is moving in the right direction. Consumer and Business Confidence have started to slowly increase as we had expected. Exports have increased through 2013 and although this has been largely driven by the service sector, there have been increases in manufacturing and domestic car output. Much of this activity reflects the shift in export focus from the Eurozone to emerging economies and this is likely to continue, even when Eurozone demand picks up (see below). House prices have been boosted by the government s Help To Buy schemes, although forecasts for future price increases vary dramatically by sector and especially by geography. The overall impact should be an eventual increase in disposable income for a small proportion of the population, provided interest rates remain low. Supply Outlook Exchange rates are a major influence on the profitability of the UK new car market and they strongly influence eventual used vehicle volumes. As Sterling looked to be climbing towards the tipping point of 1.30 during 2012, there were serious concerns that the UK new car market was going to be flooded with vehicles as the new car markets stalled and then shrank in mainland Europe. However, by the end of January 2013, the pound was trading at around 1.16 and has stayed relatively stable since then, typically trading between 1.16 and The UK economic situation looks likely to offset the continued weakness and on-going issues in the Eurozone and Sterling looks set to remain at a level which limits manufacturers scope for heavy discounting in the UK. New car sales in Europe are showing some signs of recovery, particularly in Germany and Spain, with Spain also officially coming out of recession. The major markets will pick up at some stage and there should be a significant release of pent up demand when they do, but mainland Europe looks likely to sell 1.7 million fewer cars this year than in 2011 roughly equivalent to the entire current markets of Austria, Belgium, Denmark, The Netherlands and Sweden combined. At this stage the UK remains a stubbornly unattractive market for manufacturers to sell into. Financial and other incentives from manufacturers continue unabated as the bleak choice before them is to sell volume in the UK (for little or no profit) or suffer the productivity losses from reduced production.

4 Forced registrations will continue for the rest of 2013, with increasing potential for a flurry of registration activity in the UK during December. Factor Impact Current Monitor Model The following examples offer greater transparency on some of the assumptions in the original Monitor economic model, using the Supermini sector for illustrative purposes. Oil and fuel prices: When these are rising it is a factor which makes Superminis, for example, more desirable than Lower and Upper cars. Vehicle volumes: Supermini tends to be one of the sectors most prone to oversupply when volumes are rising, due to the impact of short term rental. Therefore increasing volumes are likely to have a disproportionate effect on Supermini in comparison with other sectors. Interest rates: Rising interest rates make smaller, cheaper to purchase cars such as Superminis, more attractive than larger, more expensive, models. Unemployment: Rising unemployment does not lead to fewer cars required but instead adds to the interest in smaller, cheaper, cars such as Superminis. Conversely, rising jobless figures suggest greater pressure on larger vehicle types, such as those from the Upper segment. It is recognised that markets are not only made up of individual processes and influences but that sentiment can emerge from the combination of multiple factors. For example, where numerous negative factors are working together, this can be argued to have a greater impact than simply the sum of the individual factors. To illustrate this, if factors a b c d and e are each given a ranking of -2 the simple sum of the rankings would be -10. However, in such circumstances the combination of all 5 negative factors may have an even greater impact. For this reason an accelerator has been developed which applies additional sentiment impact in cases where multiple factors are working together. The results of all the preceding consideration of factors are represented by the following table, which illustrates the sector by sector impact and adjustment, which is afterwards translated into a percentage movement which is applied to the overall forecast for each sector.

5 City Car Supermini Lower Upper Small Exec Exec Large Exec Mini MPV MPV Large MPV % 0.40% -0.80% -1.30% -1.20% -1.70% -2.00% 0.30% -1.40% -1.70% % 1.10% 0.90% -0.10% -0.80% -0.80% -1.00% 1.40% 0.60% -0.90% % 2.10% 2.50% 1.50% -0.20% 0.20% 0.00% 2.10% 2.40% 0.20% % 2.20% 2.80% 2.40% 0.40% 1.30% 1.40% 2.20% 3.50% 1.30% Compact 4x4 Standard 4x4 Luxury Mass Market Sports & Executive Coupe & Prestige Coupe & Exotic Sports & Sports Performance Wghtd chnge % -2.20% 0.00% -2.50% -0.90% -0.70% 0.00% -2.00% -1.10% % -1.20% 0.00% -0.70% -0.50% -0.30% 0.00% -1.00% -0.10% % 0.10% 0.00% 1.30% 0.30% 0.40% 0.00% -0.30% 1.00% % 1.40% 0.00% 2.80% 0.90% 0.60% 0.00% 1.00% 1.70% These economic weightings are being phased out over time as we transition to our new forecasting model. The following sectors have been reforecast during 2013 and have had these weighting factors removed: Small, & Large MPV, Small, & Large Executive, Lower, Upper, Compact 4x4, Standard 4x4, City Car and Supermini. The remaining sectors will be reforecast as part of the transition process from Monitor to Gold Book. Parallel Imports Particular care must be taken when valuing parallel imports. Vehicles are often described as full UK specification when the reality is somewhat different. These vehicles should be inspected to ensure that the vehicle specification is correct for the UK. Parallel imports that are full UK specification and first registered in the UK can be valued the same as a UK-sourced vehicle. Grey Imports CAP Monitor does not include valuations for any grey import vehicles, (i.e. those not available on an official UK price list). New Prices All new car prices in Monitor include VAT and delivery.