AMM Automotive Supply Chain Conference

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AMM Automotive Supply Chain Conference Automotive Industry at the Crossroads 2017 LMC

3 Short-term: World Economy Slowly Turning Around Real GDP Growth USA 2.6% 1.6% 2.2% 2.4% Argentina 2.6% -2.2% 2.5% 3.5% Brazil -3.8% -3.6% 0.4% 2.2% Japan 1.1% 1.0% 1.4% 1.3% ASEAN 4.5% 4.6% 4.8% 4.9% China 6.9% 6.7% 6.8% 6.2% India 7.5% 7.9% 6.5% 7.5% Eurozone 1.9% 1.7% 2.1% 1.9% Russia -2.8% -0.2% 1.8% 1.3% UK 2.2% 1.8% 1.7% 1.5% Improving but political risk Recovery solidifying Fragile & weak recovery Slow but steady Improving slightly Managed slowdown Solid domestic, some export risk Improving now, stable Major recession, some recovery Slowing, further risk from Brexit World 2.7% 2.3% 2.8% 3.0% Source: Oxford Economics Gaining speed 2017 LMC Automotive Limited, All Rights Reserved. 3

Global LV Sales Current Environment World 2017 forecast: 94.7 mn, up 1.7 mn units from 2016. All major markets showing growth except NA and China, driving outlook momentum down since January.

4 Global LV Sales Current Environment World 2017 forecast: 94.7 mn, up 1.7 mn units from All major markets showing growth except NA and China, driving outlook momentum down since January. North America C&E Europe Western Europe 6% 2% -2% F South America -21% -12% 11% F 9% China US 6% 3% F 2017 Top 5 Countries LV Sales (Mn) % % 6% F 2% 5% -1% F 3% Asia Pacific minus China World 2% 5% 2% F China 9% 1% F Japan 5.1 = Revision Momentum Since January Germany India 2017 LMC Automotive Limited, All Rights Reserved

5 Global LV Sales Short-term Outlook Improves China USA Japan India Germany UK France Italy Brazil Canada Russia Iran % +1.8% Contribution of Growth % Global LV Sales % +2.0% 4% 2% 6% 5% 1% 10% 8% % +2.5% 27% 2017 LMC Automotive Limited, All Rights Reserved Short-term outlook remains positive through horizon Volume up 6.4% or 2.1% CAGR. Growth expected to be flat in 2018 (2.0%). Tax break easing in China. Past peak in US, but some storm help? Brexit/political risk in Europe. Growth returns to 2.5% in Global rate of growth continues to be heavily dependent on performance in China. 2 of top 10 countries are negative contributors, others bare risk. India, Russia and Iran add nearly 2mn of volume growth collectively (>30% of global).

6 Global LV Production Growth Walk millions ,159k 539k 337k 335k 8k -228k Volume growth spiked in 2H16, with year up 4.7% on strong growth in China (due to boost in demand from tax cut) and further recovery expected in Russia/Brazil growth slows to 2.4% on some weakness in NA. ROW driven by growth in Iran (22%) and Morocco (17%). Production in Iran could face risks. Growth slows in WE with volume up marginally, while Central and Eastern Europe sees growth restarting, including recovery in Russia (+17%). Brazil also expected to start recovery in 2017, up 18%, but remains risky. Contraction now expected in NA LMC Automotive Limited, All Rights Reserved. 6

7 Capacity Utilization Mixed Across World Capacity utilization improves overall but with previous investment in emerging markets, it is sub-optimal. Global 69.9% 71.6% % 86% 86% 91% 82% 80% 82% 84% 80% 80% 63% 61% 64% 71% 39% 45% US Mexico Korea Japan China WE EE SA Growth in demand slows if any investment in US, closures likely to result elsewhere. China remains well underutilized with old factories remaining after newer capacity push. Reduction in Japan/Korea improves utilization; much of SA investment to remain unused! 2017 LMC Automotive Limited, All Rights Reserved. 7

9 Millions North America Light Vehicle Sales Outlook US Canada Mexico NA YoY 2017 LMC Automotive Limited, All Rights Reserved. 9 10% 8% 6% 4% 2% 0% -2% -4% Slowing growth picture remains despite strong close to Stable volume outlook in near-term is holding though there is uncertainty risk across region. Only Canada grows in 2017, while fleet sales pull volumes down in the US and credit restrictions impact sales in Mexico. YTD performance causing caution, but not panic. Contraction in 2019 expected to be driven by the US used car substitution, possible hurricanes payback, slower economic growth and rising interest rates.

10 Hurricane Impact on US Short-Term Forecast Millions Monthly SAAR Monthly Sales -1.5% -0.3% 2.9% 2.4% 3.1% Aug 17 Sep 17 Oct 17 Before Storms Revised Aug 17 Sep 17 Oct 17 Nov 17 Dec LMC Automotive Limited, All Rights Reserved. 10

11 US Auto Industry Performance 1H Industry Sales Annual Industry Sales H = Fleet Pullback Fleet Retail H = Both in Decline Total % 4.5% 1.5% -2.2% % 5.8% 0.5% -2.7% Retail 5.8% 3.2% -0.6% -0.5% 5.6% 5.1% -0.8% -1.5%, JDP PIN 2017 LMC Automotive Limited, All Rights Reserved. 11

12 How Healthy is the US Auto Industry? YTD17 Vs. YTD16 Indicators showing risk, but slowly improving Total Light Vehicle Volume -2.9%, Retail Sales Volume -1.1% Retail Mix 81.4% +1.5ppts Lease Mix 30.0% -0.9ppts 72mo + Loan Mix 34.5% +1.6ppts FICO Sub-650 Mix 14.5% -1.4ppts Days to Turn days Lease Maturities 2,323k +12% Trans Price $31, % Incentive % of MSRP 10.5% +0.9ppts Source: JDP PIN 2017 LMC Automotive Limited, All Rights Reserved. 12

2017 US Sales Segment Share Movement 3.7% 42.

stable but with share growth 10.2% 32.8% share 0.6% 6.

9% share Cars: Small, Midsize and Large on average 15%

13 2017 US Sales Segment Share Movement 3.7% 42.3% share SUVs to break the 7- million level for the first time. Growth slows, but remains segment of choice with strong product activity 0% 15.7% share Stable gas prices and incentives keep pickups stable but with share growth 10.2% 32.8% share 0.6% 6.6% share 4.3% 11.9% share Cars: Small, Midsize and Large on average 15% down; Compact holding better MPVs continue to decline, even with the new Pacifica and Odyssey Premium SUVs flat, but Cars down 10% YoY 2017 LMC Automotive Limited, All Rights Reserved. 13

14 US Light Vehicle Demand at Crossroads Baseline Flat post peak CAGR of 0% (flat) Positive impact: economy, replacement, new households Negative impact: used car prices, tighter credit, trade/fiscal policy uncertainty Negative Mild auto recession Volume drops 9% from base to 15.4mn in 2019 CAGR -0.4% No fiscal stimulus boost and negative trade policy Used car interplay more severe, economy flat or slightly negative Recovery hampered by lower density growth Outperform Two-staged boost CAGR only 0.3%. Near-term boost from fiscal stimulus and lease maturities Stronger than expected economic growth Technology driven increase in mid-term as market transitions 2017 LMC Automotive Limited, All Rights Reserved. 14

15 SUV/Car Ratio to Reach 1.5 by 2022 Cars CAGR: -3.2% SUVs CAGR: 3.5% SUVs have grown strongly since 2010, but growth rate to slow down to its lowest level this year as the market cools down Cars grew strongly after the recession decline started in 2015 as gas prices stabilized at lower levels Several launches will make the Small SUV segment the fastest growing one, with a CAGR of 8.5%. Compact will keep its dominance, but the Midsize category will close their gap 2017 LMC Automotive Limited, All Rights Reserved. 15

17 Millions Electrification Over-Hyped? Rise in electrification strategy and planning a means to meet regulations 2017 LMC Automotive Limited, All Rights Reserved % 14% 12% 10% Despite the midterm assessment, California CO 2 requirements are not likely to change Possible return to 2-tier fuel economy regulations 8% 6% 4% 2% 0% PHEV EREV MHEV FHEV FCEV BEV Share of TLV Dieselgate and push toward autonomous vehicles accelerating growth but announcements and buzz exaggerated MHEV growth starts in 2018 driven by 48v systems

19 Weeks (July) Finding the NA Production Balance 17.8 NA Production -1.3% Summer Plant Shutdowns Increase, But Changeover/Upgrades Supply/Upgrades Down Weeks from September December September October November December Changeover Down Weeks Supply Down Weeks Inventory remains on watch as Days Supply is up 8 days over 2016, with 300k more unsold vehicles. Risk in the remainder of the year with additional down weeks possible. Additional shutdown risk greatest in Q4 as expectations may meet reality! Harvey and Irma impact inventory replenishment not expected to significantly alter current downtime plans LMC Automotive Limited, All Rights Reserved. 19

20 NA Short-Term Production by OEM Group Subaru continues expansion with Outback growth and new Impreza. Legacy pullback as Car demand slows. Hyundai/Kia localizing at Monterrey plant drives growth, Montgomery full year of Santa Fe. Daimler 17 pullback with aging GLE/GLS,/C-Class and R- Class exit after strong 16 with Metris. GM 16 gained on strong SUV and Pickup volume and new CT6/Bolt; 17 falls on extensive Car cuts. Ford declines slightly in both years - F-150, new Midsize SUV s positives in 16; 17 has new Continental, but many declines across the board. VW s 16 was under pressure, offset by new Audi capacity; 17 adds needed SUVs. FCA 16 off with Toluca and Sterling Heights downtime; 17 falls on sourcing shifts/changeovers. Toyota decline in 17 on Camry changeover and Corolla demand slowdown plus Venza and GCC Sequoia end LMC Automotive Limited, All Rights Reserved. 20

NA Production and Capacity Long-term Trend North America demand is expected to remain at a high level with no major contractions, helping to add a stability layer to the production forecast.

21 NA Production and Capacity Long-term Trend North America demand is expected to remain at a high level with no major contractions, helping to add a stability layer to the production forecast. Localization and exports drive production expansion in the mid- to long-term, with Mexico adding 1.2mn units. With lower demand outlook coupled with substantial investment, utilization falls to the 80% range. Production in US adds nearly 200k units and grows by 1.4%, while Canada contracts LMC Automotive Limited, All Rights Reserved. 21

North America Capacity and Sourcing Movement Mexico added 2 plants in 2016 and another 3

In addition, 3 plants get new investment to account for 52% of new capacity in region.

Ford has already pulled out, but will more investment withdraw?

US adds 9 new plants (7 low volume start-ups) from 2017 on and 7 with capacity investment and

22 North America Capacity and Sourcing Movement Mexico added 2 plants in 2016 and another 3 planned by In addition, 3 plants get new investment to account for 52% of new capacity in region. Export hub and B- and C- segment vehicles driving the expansion. Ford has already pulled out, but will more investment withdraw? Situation remains fluid under Trump Administration. US adds 9 new plants (7 low volume start-ups) from 2017 on and 7 with capacity investment and now accounting for 56% of the new capacity in the region. Capacity investment could grow further from Trump actions and policy, but offset from where? Costs and lack of incentives hurt Canada capacity down 275K and volume down 440k from LMC Automotive Limited, All Rights Reserved. 22

25 Summary Expectation Global demand growth is stable with most markets advancing. US demand revised upward to above 17mn w/hurricane impact. Short-term production in NA now expected to contract. Some further inventory risk in Q4. North America production volume continues to grow with localization pushing toward 19mn units. Risk Political risk remains across WE (Brexit) and Brazil Payback from tax incentive expiration in China Upside/downside from Trump administration Used car impact is more severe Downtime is already scheduled but could be more pronounced if OEMs don t balance incentive use New plant investment is curtailed based on policy Uncertainty around NAFTA decision LMC Automotive Limited, All Rights Reserved. 25