PREPARED BY: VAUGHANS CONSULTING

GROUP INC.

JULY 30,2013

Dynamic MotorsIs this business venture economically

viable?

Purpose

To determine whether the Canadian economic and sector factors are conducive to launch a luxury automotive business venture

To recommend or disapprove of a market entry

Economic Landscape

Economic factors are trending in positive territory Positive Highlights: Real Disposable Income,

Consumer Spending and GDP Negative Highlights: Exchange Rate, Consumer Price

Index and Overnight Target Rate %2014F 2013F 2012 2011 2010 2009 2008

Gross Domestic Product 2.6 2.3 2.2 2.5 3.2 -2.7 0.6Consumer Spending 2.6 2.6 1.8 2.2 3.3 0.4 3.4Consumer Price Index 2.2 2.2 1.9 2.9 1.8 0.3 2.4Exchange Rate (US$/CDN$) 1.02 1.07 0.99 101.1 97.2 87.9 94.3Real Disposable Income 2.4 1.7 1.2 1.1 3.3 1.2 4.2Unemployment Rate 6.3 6.4 6.7 7.5 8 8.3 6.1Overnight Target Rate (%) 1.5 1.0 1.0 1.0 0.9 0.4 3.0

CANADAEconomic Data

Sources: Canadian Conference Board, RBC and TD Economics, Statistics Canada

Automotive Vehicle Segmentation

Compact Luxury Utility – Honda: CRV, Land Rover: Freelander, Mazda: Tribute

Intermediate Luxury Utility – Toyota Highlander, Jeep: Grand Cherokee

Large Luxury Utility – Land Rover: Range, Discovery, Lexus: LX470, Mercedes Benz: G/M Class, BMW X5, Dodge Durango

Luxury High – Audi: A6, A8, BMW: 5/7 Series, Infiniti: Q45, Mercedes Benz: C/E/S Class

Luxury – BMW: 3 Series, Audi: A4, Infiniti G20, Lexus IS300

Luxury Sport – Audi: TT, BMW: Z8, Mercedes Benz: Roadsters, Porsche: All Models

Sport – Acura: Integra, Chevrolet: Camaro, Ford: Mustang

New Luxury Vehicles by Segment

Luxury vehicle sales continue to reboundTotal % of luxury vehicle sales in comparison

to non luxury vehicle sales has increased by 27.5% since 2007

Vehicle Segment 2007 2008 2009 2010 2011 2012 12/11Compact Luxury Utility 0.8 1.0 1.5 2.0 2.0 2.8 40.0%Intermediate Luxury Utility 3.0 2.9 2.9 3.4 3.4 3.4 0.0%Large Luxury Utility 0.5 0.5 0.3 0.5 0.6 0.7 17%Luxury High 1.5 1 0.8 1.3 1.4 1.5 7.0%Luxury 6.7 7.6 5.9 6.9 6.8 6.1 -10.3%Luxury Sport 0.7 0.6 0.4 0.5 0.4 0.5 25.0%Sport 4.1 3.2 3.0 3.5 3.4 3.2 -5.9%Total Passenger Car 92.6 98.3 75.3 70 75.6 76.4 1.1%Total Luxury Car Sales 17.3 16.8 14.8 18.1 18.0 18.2 1.1%Total Percentage of Luxury Car Sales 19% 17% 20% 26% 24% 24% 27.51%

April Monthly Sales By Segment

New Luxury Vehicle Sales - Canada

New Luxury Vehicle Sales - Canada

Compact luxury utility vehicles lead sales volume percentage growth

Aggregate New Luxury Vehicle Sales - Canada

Used Vehicles - Automotive Consumer Market

Increasing size of the used car market 2003 – 2012 vehicle sales grew from 58.4 to 63.2 of

the total vehicle market (8.2% increase) Contributing trends: vehicle quality, availability of

*credit & financing options and the growing premium and luxury marketplace

Record residual values of vehicles 36 month passenger car residuals measured in 2012

53.6%

Further data can be obtained on sales volume however, not by vehicle segment

Canadian Automotive Price Trends

Canadian Automotive Price Trends

Vehicle Maintenance & Repair – Canada 2012

Average vehicle operating expenditure reached $744 a decrease of 7% ($796) from 2011 30% of maintenance and repair was performed by operator

– 2012 an increase of 2% from 2011 In 2012, owners of vehicles aged 1-3 years reported the

lowest average cost of maintenance and repair; location service preference (48.7%) new car dealers

Most costly repair for Canadians were brake replacements averaging $252 in 2012

Vehicle brand and segmentation influence the average cost of maintenance and repair

Independent repair shops market share (36.7%) vs. New car dealers 34.5% in 2012

Source: National Survey 4500 vehicle owners – DesRosiers Light Vehicle Study

Recommendation

Dynamic Motors market entry is recommended based on the following factors: Aforementioned positive economic variables Used vehicle market size and growth trend Growing luxury segment for new and used vehicles in

Canada Specialized business venture on the luxury and sport

vehicle segment Residual value growth trend Consumer preferences indicate an attraction to

luxury used and new vehicles Consumer financing flexibility

Next Steps

Business Model Development How will Dynamic Motors create value for future consumers?

Customer Segments, Value Proposition, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partnerships and Cost Structure – Required Consulting Session

Business Plan Development Given the market assessment and the business model

functions noted above, how will this be executed ? Conduct market research to define and validate business model

and to formulate business strategy Outline the marketing strategy based on market research

findings Develop proforma statements including expenses and revenues

for the first 3 years based on the target market.

Entrepreneurship Tips

1. Complete a market assessment Who will you sell to? Talk to people, do a survey.

2. Start slow, grow slowly Don’t go out buying the most expensive items Have a part-time gig to decrease risk

3. Plan and think ahead4. Invest in your staff

Invest in your partners

5. Treat clients well Ensure that the value of money a client pays is delivered

6. Be passionate, but profit focused

Resources of Interest

Canadian Finance & Leasing Association http://www.cfla-acfl.ca/ Governs the financing and leasing vehicle landscape in

Canada Provides business owners with educational resources in the

area of asset-based financing, equipment and vehicle leasing business in Canada

National business network Canadian Black Book

http://www.canadianblackbook.com Source for vehicle information used by the industry Advertising and future partners Specialized industry reports available currently widely used

in the industry