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

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1 September 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 RS7, Ford Grand Tourneo Connect, MG Motor UK MG3 and Rolls-Royce Wraith. There are numerous additions to the following model ranges: Audi A1, Ford Fiesta, Ford Kuga, Ford Tourneo Connect, Honda CR-V, Maserati Grancabrio MC, Nissan Note, Seat Leon, Skoda Fabia, Skoda Rapid, Vauxhall Adam, Vauxhall Corsa, Volkswagen Golf and Volkswagen Tiguan. Comment Future residual values in this edition of CAP Monitor are on average +3.27% higher than August at 36 months 60,000 miles, partly reflecting the expected overall seasonal trend of approximately +3% with the addition of the plate. 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. As our preparation for the transition to our new forecasting model continues, the 4x4 vehicle sectors were reevaluated this month. Supermini and City Car vehicles will be examined next month. Average movements at 36/60 from August to September were: Diesel Petrol Compact 4x4 +8.2% +10.6% Standard 4x4 +7.7% +8.5% It needs to be noted that these movements include the expected seasonal element as outlined above, so a diesel Compact 4x4 vehicle changing by +8.2% from August to September represents an underlying forecast change of +8.2% -3% = +5.2%. In many cases, the previous forecast position was heavily influenced by the macroeconomic weightings and it is the removal of these weightings which have driven the magnitude of the change. Our revised forecast position reflects a much more realistic position against current CAP Clean values.

2 Following review of recent Black Book data, forecasts on some models have been reduced to reflect updated market positioning. This includes BMW 6 Series Gran Coupe, Fiat Doblo Estate & Combi and Mercedes SL. The relationship between trims for Citroen DS4 were adjusted as a result of our interproduct reporting, with decreases for DStyle and DSport, but underlying forecasts for DSign remaining unchanged. The relationship between the hybrid and standard petrol vehicles was updated for Lexus GS following analysis of current Black Book values, resulting in an average decrease of -4% to the underlying forecast for the petrol derivatives. The relationships between trim levels was also revised, with larger reductions for F-Sport. Forecasting Model Development CAP Gold Book Recently, we formally announced the future of automotive forecasting CAP Gold Book. A copy of the press release is available here: Following communication with a number of customers over several months, we will be enhancing our internal forecasting process during 2013 and also introducing a brand new product, CAP Gold Book IQ. CAP Monitor becomes CAP Gold Book 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. More details will be shared as work continues, but the feedback so far has been extremely positive and we believe CAP Gold Book and IQ will represent a new benchmark in truly market leading forecasting. Demand Outlook Mixed signals continue and there is insufficient evidence to revise the current outlook of a sustained period of sluggish growth at best. Interest rates are therefore expected to remain low for the foreseeable future. The slight decrease in Consumer Price Inflation (2.8% vs. 2.9% last month) was largely driven by a reversal of last month s increase in clothing prices, and was in line with expectations, although upward pressure from fuel prices is expected to limit reductions in the near future. 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

3 that. Consumer and Business Confidence remain balanced, but are expected to increase after any extended period of positive economic news. Exports have increased in 2013 and although this has been largely driven by the service sector, there was also an increase in manufacturing and domestic car output hit a four year high in June. 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 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 continue to struggle and reports of new car sales increases in July were misleading due to the increased number of working days in most countries. However, the year on year decreases in Germany and France seem to be trending in the right direction. These major markets will pick up at some stage and there should be a significant release of pent up demand when they do. At this stage the UK remains a very unattractive market for manufacturers to sell into, notwithstanding modest increases in exchange rates. Financial and other incentives from manufacturers continue unabated as the bleak choice before them is to sell ever larger volumes in the UK (for little or no profit) or suffer the productivity losses from reduced production. Forced registrations will continue during 2013, but will still be limited to certain manufacturers rather than an industry-wide trend. However, should the situation in mainland Europe fail to improve, there is potential for a flurry of registration activity in the UK at the end of Factor Impact Current 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.

4 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. 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. 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

5 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.