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Roger Penske on Smart

From the Penske Automotive Group conference call Ocober 25, 2007. Roger Penske speaking.

Let me give you a little insight on our Smart distribution business. We continue to make great progress under Dave Schembri's leadership in building our distribution network and we remain on track for the first quarter of 2008 for our launch.

The $99 reservation program we launch last March continues to exceed our expectations. In fact, we now have over 34,500 reservations to date as we sit here this afternoon. In August, we initiated a new process, and that was a reconfirmation whereby reservation holders are contacted through the Internet and asked to let us know the exact specifications of the vehicle they would like to purchase. We then use this information to order car from the factory, creating a real build-to-order system. It's interesting as we look at the mix on the reconfirmation that people are moving up from the standpoint of the cars they want to buy and have added more content. We believe this will allow for an official ordering and distribution process for us and will lead to outstanding customer satisfaction.

We also talked about our Smart road show during our last call. As most of you know, we launched a 50-city tour that started in May. We are nearing the completion of the tour, which has been well received and has led to an enormous amount of press and publicity. Our street teams have reached out to more than 70,000 potential customers during the process which allowed us to gain valuable insights about our customer base.

Many of you have asked about our first year volume. We currently expect to sell between 20,000 and 25,000 vehicles in 2008. We've announced a base retail pricing for the Smart line up. These prices exclude registration, title tax and destination charges. And for any of you who might have missed it, the pricing will be on our pure coupe at $11,590, that's our entry level; our passion coupe, $13,590 and $16,590 for our passion cabriolet.

Let's turn to the retail side of Smart. We have identified our retail network and have worked with our dealer candidates to ensure that their facilities meet our specifications. I am pleased to tell you that the dealers should be ready for the first Smart vehicles, which we expect to hit the showrooms in the latter part of December. I am really excited about the Smart business and believe we really have an opportunity to create a unique shopping and driving experience in the retail automotive space. And again, I think for this reason, we continue to believe the Smart distribution business will be another key differentiator within the Penske Automotive business model.
 
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