This document summarizes a presentation on trends in the independent aftermarket truck business in Southeast Europe. It finds that while knowledge and development of the markets is uneven, there are interesting growth opportunities, particularly in Hungary, Romania, and Turkey, where the independent aftermarket still holds strong positions despite increasing pressure from original equipment manufacturers. A main future challenge will be improving workshop quality standards and expertise through support initiatives to handle more complex repairs. Concerted efforts are needed to strengthen awareness of quality among workshops and fleets through persistent education.

1. Trends in the IAM Truck Business
2nd Independent Aftermarket Conference for SEE
BBE Automotive
Belgrade, March 26, 2015

2. Agenda
2
The Balkans – A Rug Carpet
On Different Development Paths in South East EuropeA
Aftermarket Development
Growing Parts Volumes, Increasing OE-PressureB
Future Challenges
Important Factors to be ConsideredC
Key Takeaways
What are key challenges for SEE?D

3. 3
TheBalkans–ARugCarpet
A

4. White Spots in the Market Landscape
4
“Our knowledge of
the Balkan markets is
generally too low”
“At the headquarter,
there is little knowledge.
Market know-how is
concentrated at the
respective subsidiaries.”
“Our market
know-how is only
moderate”
Basis: BBE Expert Talks with Manufacturers and Parts Wholesalers
with South-East European Truck Business
“Partly knowledge is
unsatisfying, information
can only be obtained by
direct activities in the
market”

5. 5
Turkey
20,0
11,1 9,9
8,5 7,3 7,2
Romania Greece Hungary Austria Bulgaria Serbia
Middle Range
4,3 3,8 3,2 2,8 2,1 2,1 1,8 0,6
Croatia Bosnia and Herzegovina Moldova Albania Macedonia Slovenia Kosovo Montenegro
Bottom Range
Top Range
75,6
Large Variation in Size of Country
Number Of Inhabitants in Million
Basis: European Commission – EU transport in figures 2014; BBE Desk Research

6. 9.501 – 11.500$
Different Development Paths
6
Albania
Bosnia & Herzegovina
Kosovo
Moldova
Austria
Greece
Hungary
Slovenia
Bulgaria
Montenegro
Romania
Macedonia
Serbia
Croatia
Turkey
Less than 9.500$ 11.501 – 14.500$
14.501 – 18.500$
More than 18.500$
Bottom Range Middle Range Top Range
GDP Per Person in USD (Adjusted to Purchasing Power Parity)

7. Greece – Between Anger and Gloom
7
„Each scenario is
possible“
Parts Manufacturer
„We look with
skepticism on Greece“
„Currently, the
payment behavior is
still good “

8. Hopes and Fears
8
"In the long term, we will include the
Balkan countries into the EU“
"The EU accession gives them a perspective
and is an important lever to peace in the
region“
Jose Manuel Barroso
President of the European Commission
"Putin's target is to be able to put Balkans
under so much pressure that they distance
themselves from the EU membership“
"This is part of a strategic comprehensive
approach of Russia to infiltrate the
countries economically and politically."
Elmar Brok
German Politician

9. Commercial Vehicle Parc – From Relevant to Nearly Nonexistent
9
3.546,3
Turkey
1.318,9
719,9
451,6 416,5 367,0
Greece Romania Hungary Austria Bulgaria
Goods Vehicles*
144,1 141,6 84,4 16,5 0,3
Serbia Croatia Slovenia Macedonia Montenegro
Registered Vehicles in 1.000 (2012)
* Heavy and light goods vehicles, lorries and road tractorsBasis: European Commission – EU transport in figures 2014

10. Commercial Vehicle Parc – From Relevant to Nearly Nonexistent
10
632,1
Registered Vehicles in 1.000 (2012)
Turkey
42,0
27,0 23,3 17,2 9,5
Romania Greece Bulgaria Hungary Austria
8,8 4,7 2,7 2,4 0,4
Serbia Croatia Macedonia Slovenia Montenegro
Buses and Coaches
Basis: European Commission – EU transport in figures 2014

11. 11
New Registrations – From Relevant to Nearly Nonexistent
Newly Registered Vehicles in 1.000 (2012)
7,8 4,0 3,1
Slovenia Greece Bulgaria
43,9
18,8 16,8
Austria Hungary RomaniaTurkey**
255,8
Goods Vehicles*
* Heavy and light goods vehicles, lorries and road tractors
** Heavy and light goods vehicles and pick ups
Basis: ACEA and Otomotiv Sanayi Dernegi (Turkey)

12. 12
New Registrations – From Relevant to Nearly Nonexistent
Newly Registered Vehicles in 1.000 (2012)
0,1 0,1 0,1
Greece Slovenia Hungary
5,5
1,3
0,5
Turkey Austria Romania
Buses and Coaches
Basis: ACEA and Otomotiv Sanayi Dernegi (Turkey)

13. Who are the Balkan Stars?
13
Vehicle Parc
GDP per Head
(percentage change to previous year)
Macedonia
Montenegro
Serbia
Croatia
Slovenia
Bulgaria
Romania
Turkey
Hungary
Austria
Greece

14. AftermarketDevelopment
B

15. Growing Parc in the Goods Vehicle Markets
15
Goods Vehicles*
Stock of Registered Vehicles - Change ‘11/’12
Basis: European Commission – EU transport in figures 2014
-9,6% -8,6%
-0,3%
-7,3%
10,7%
Serbia Croatia Slovenia MontenegroMacedonia
6,2%
-0,2%
3,4%
0,3%
2,2%
5,6%
Turkey Greece Romania BulgariaHungary Austria
Strong truck markets show an ongoing growth …
… whereas smaller truck markets tends to develop negatively!
* Heavy and light goods vehicles, lorries and road tractors

16. Old Vehicle Parc = High Demand of Replacement Parts
16
The Balkans is Europe’s
used car heap
 Old vehicle parc
 „Used car sector
grows stronger.
There is a lot to see:
old German trailers
which are older than
15 years”.
 „Significant need of
replacement“ of old
cars
 “Hesitant replacement
by new vehicles”
Basis: BBE Expert Talks with Manufacturers and Parts Wholesalers
with South-East European Truck Business

17. Old Vehicle Parc = High Demand of Replacement Parts
17
2,3% 0,8% 0,3%
Romania Bulgaria Greece
10,5% 9,2% 7,2%
4,2%
Austria Slovenia Turkey** Hungary
Goods Vehicles*
Basis: ACEA, Otomotiv Sanayi Dernegi (Turkey), European Commission – EU transport in figures 2014; own calculation
* Heavy and light goods vehicles, lorries and road tractors
** Heavy and light goods vehicles and pick ups
Share of Newly Registered Vehicles of Vehicle Parc (2012)

18. Old Vehicle Parc = High Demand of Replacement Parts
18
0,9% 0,6% 0,4%
Turkey** Hungary Greece
Buses and Coaches
Basis: ACEA, Otomotiv Sanayi Dernegi (Turkey), European Commission – EU transport in figures 2014; own calculation
13,7%
4,2%
1,2%
Austria Slovenia Romania
Share of Newly Registered Vehicles of Vehicle Parc

19. Balkan = Forwarder of Europe
19
*The Balkans = Bulgaria, Romania, Croatia, Greece, Hungary, SloveniaBasis: Toll statistics - Federal Office for Goods Transport Germany
Mileage Performance of Toll Vehicles in Germany
17% 18% 19%Share
The Balkans*
Total
26,6
27,2
28,0
Thereof
37% 38% 39%
Share Foreign
Thereof
2012 2013 2014
(in billion km)
+25%
+11%
Growth Rate (km)
2012/2014
+5%

20. The Positive Message: The Aftermarket is Growing
20
Growing vehicle parc
Old vehicles with repair requirement
Increase of wear
due to rising mileage performance
Slightly growing aftermarket
+
+
=

21. OE is Catching Up
21
“20 years ago,
everything
was IAM”
“The OE
influence is
increasing”
Basis: BBE Expert Talks with Manufacturers and Parts Wholesalers
with South-East European Truck Business
“But it differs
depending on
market”
Bosnia and H., Croatia,
Kosovo, Serbia
70%
80%
65% ?
79% ?
2010 2020
Bulgaria, Hungary,
Romania
Share IAM

22. FutureChallenges
C

23. The Customer Structure is Dominated by Small and Micro Customers
23
1
vehicle
2-10
vehicles
11-20
vehicles
21-50
vehicles
51-100
vehicles
>100
vehicles
Total 13.000 15.000 1.000 600 150 70
in % 44% 50% 3% 2% 1% <1%
Customer structure of Romania
60%
25%
15%
… Ownership … Leasing … Rental
40%
Share of…
50%Share of imported used cars:
Basis: BBE Desk Research; BBE Expert Talks with Manufacturers and Parts Wholesalers
with South-East European Truck Business; BBE Study “Commercial Vehicles Aftermarket” (2014)
“In Hungary,
by tendency
= larger fleets”
“In Bulgaria, the
average fleet size is
about three vehicles”

24. High Price Sensitivity in Vehicle Purchase
24Basis: Oliver Wyman
 Reliability
 Quality of service
 Consumption efficiency
 Availability of spare parts
 Production quality
 Safety
 Costs per KM
 Purchasing costs
 Total cost of Ownership
 Downtimes
Western Europe
 Reliability
 Consumption efficiency
 Purchasing costs
 Quality of service
 Production quality
 Guarantee
 Availability of spare parts
 Costs per KM
 Total cost of Ownership
 Downtimes
Eastern Europe
Importance
price & costsvehicleService
Top-10 Criteria For Purchase Decision

25. 25
High Price Sensitivity Also in Repair And Service
Basis: BBE Expert Talks with Manufacturers and Parts Wholesalers
with South-East European Truck Business
“There is a high price
sensitivity about parts
prices. The attention lies on
price aspects.”
“It exists a strong “market
of cheap articles“ in the
Balkans“
“Noticeable tendency to use
spare parts of vehicles
which are no longer in use”
“Sales difficulties of “nice-
to-have-products” - Focus
lies on wear parts”
“Many customers prefer
to repair their trucks do it
yourself”
At the wholesale level:
“Aggressive pricing”,
“permanent price wars”

26. 26
The Spectrum of Customer Expectations
Basis: BBE Expert Talks with Manufacturers and Parts Wholesalers
with South-East European Truck Business
Companies with larger fleets
(haulage) and with extensive,
lengthy transports
“Purchasing at fleet
customers is becoming
more professional. Pitches
are more frequent.”
“Are driving a huge price
pressure and at the same
time have high
expectations”
Smaller fleets
(among others transport for
'own account')
“Offer higher margin
opportunities”
“Have lower expectations
and prefer self-repairing”

27. 27
Zones of Quality-Orientation
Basis: BBE Expert Talks with Manufacturers and Parts Wholesalers
with South-East European Truck Business
“Second Quality is Enough”
• "Potential only for
second quality parts"
• No further development
towards higher quality parts
• Orientation towards the
Russian market
“Top Quality as Option”
• Strong tendency to
Do-It-Yourself
• If not possible / successful:
then purchase of top quality
• Orientation towards
Western brands
Bulgaria, Hungary, Romania
Bosnia and Herzegovina,
Croatia, Kosovo and Serbia

28. Workshops are Lagging Behind
28
 Many small and micro workshops
with poor facilities
 Small number of truck specialists
 No sustainable workshop system
 In Turkey, Hungary: "good level",
"almost Western European standard"
 In Romania, Bulgaria: in part good
workshops
 In the rest of the Balkans: too small
number of well-qualified workshops
 Workshops are “lagging 10-15 years
behind“, “Workshops are still on the
same level as 30
years ago”
Basis: BBE Expert Talks with Manufacturers and Parts Wholesalers
with South-East European Truck Business

29. Selection of Trading Partners and Locations
29
Strategy Options of Parts Manufacturers
 Partly restraint of direct engagement: “Trading partners instead of own
outlets or stocks.”
 “Trading partners have the required proximity to the market”
 „Selective approach to marketing and sales“
 Stepwise expansion of existing production and trading structures with
growing “market security”
Market Consequences
 Own sales companies are an exception
 “Partly no dealer structure (smaller margins)“
 Logistic function of a market for the surrounding smaller markets
(e.g.: Croatia for Bosnia - Herzegovina)
Basis: BBE Expert Talks with Manufacturers and Parts Wholesalers
with South-East European Truck Business

30. Selection of Trading Partners and Locations
30
ATR
AD
International
Groupauto Temot
Austria Austria Austria
Bosnia and
Herzegovina
Bosnia and
Herzegovina
Bulgaria Croatia* Bulgaria
Bulgaria Greece
Bosnia and
Herzegovina*
Croatia
Croatia Hungary Bulgaria Greece
Greece Moldova Greece Hungary
Hungary Romania Hungary Montenegro
Romania Turkey Macedonia* Romania
Slovenia Moldova Serbia
Turkey Romania Slovenia
Slovenia* Turkey
Serbia*
Turkey
* Groupauto AdriaBasis: BBE Desk Research
Main bases,
barely cultivated markets and white spots

31. Parts Wholesaler Outlets
Rapidex 8
Simplex 7
MetalRad 4
Total 19
Parts Wholesaler Outlets
Autonet 47
ATP Exodus 32
EVW Holding 12
Cefin Trucks 7
SKUBA 1
Total 99
ø number of
vehicles per outlet
abt.
7.600
ø number of
vehicles per outlet
abt.
7.300
Parts Wholesaler Outlets
Balkan Star 9
Cefin Parts 9
AUTO 1 Ltd. 7
Auto Profi-N Ltd. 1
V&D Auto 1
Total 27
Romania
Serbia
Bulgaria
Selection of Trading Partners and Locations
31
The Trade Density Differs from Country to Country
ø number of
vehicles per outlet
abt.
13.600

32. 32
KeyTakeaways
D

33. Key Takeaways
33
Balkan truck markets with potential
 The truck aftermarket in South East Europe is partly unknown and confusing terrain.
 However, there are interesting truck markets with increasing aftermarket potential.
These mainly include Hungary, Romania and Turkey.
 The aftermarket in these countries is characterized by a strong position of the IAM.
This position comes under increasing pressure however.
Professionalization as a main task
 For IAM, the main future challenge is to increase workshop quality.
Equipment and expertise need to be improved.
 For this, they need support: Starting with the implementation of standards through to
technical trainings to be able to repair more complex parts.
 Furthermore, the awareness and the relevance of the quality of parts on the side of
workshops and truck fleets must be strengthened.
 This can only be achieved in a concerted action and with persistent educational work
in the target groups.

34. 34
Markus Frömgen
Director Strategic Consulting
BBE Automotive
MFroemgen@bbe-automotive.de