UK AUTOMOTIVE INDUSTRY THE OPPORTUNITY FOR GROWTH

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1 UK AUTOMOTIVE INDUSTRY THE OPPORTUNITY FOR GROWTH Michael Mychajluk, JLR Purchasing & Automotive Council Supply Chain September 2013

Jaguar Land Rover Company Overview 11 vehicle lines with ambitious expansion plans

as the 10th & 11th vehicle lines (know of 12 th +) 3 UK vehicle assembly plants,

employees recruited in past 2 years Employs 7,000 engineers and designers - up 1,000

2 Jaguar Land Rover Company Overview 11 vehicle lines with ambitious expansion plans to extend product offerings in C/D segment Jaguar F-TYPE and XF Sportbrake announced as the 10th & 11th vehicle lines (know of 12 th +) 3 UK vehicle assembly plants, with 2 UK product development facilities Employs 25,000 people globally - 9,000 employees recruited in past 2 years Employs 7,000 engineers and designers - up 1,000 on the prior year Global sales reach, worldwide network covering 180 countries, 85% Exports 2

Recent Company Highlights Investment in Operations, Recruitment & Community 3 shift operation at Solihull and Halewood 370 million investment, 800 new positions at Solihull (worlds biggest aluminium

3 Recent Company Highlights Investment in Operations, Recruitment & Community 3 shift operation at Solihull and Halewood 370 million investment, 800 new positions at Solihull (worlds biggest aluminium body shop, major upgrades to paint-shop, trim assembly and New Jaguar Land Rover customer handover centre) Increased investment at new Engine Manufacturing Centre UK to more than 500 million, creating almost 1,400 new highly skilled engineering and manufacturing jobs at the plant 2.75 billion invested in product creation during the year supporting growth plans that will see the business introduce eight new or refreshed products during 2013 JLR has established the largest electric/hybrid engineering team in UK approximately 240 JLR recruited 189 apprentices and 312 graduates in 2012 to develop the next generation of engineering and the same again in 2013 JLR promoted the STEM agenda and engineering careers to 200,000 young people in 2012, Achieved BITC Platinum Big Tick 3

Business Update Jaguar Land Rover Retail Volumes FY12 374,669 UNITS 22% INCREASE YEAR ON YEAR Retails EUR 81,027 China 77,075 Overseas 63,489 UK 72,270 NA 62,959 Asia Pac

4 Business Update Jaguar Land Rover Retail Volumes FY12 374,669 UNITS 22% INCREASE YEAR ON YEAR Retails EUR 81,027 China 77,075 Overseas 63,489 UK 72,270 NA 62,959 Asia Pac 17,849 TOTAL 374,669-3% + 9% North America - 14% + 20% UK + 19% Overseas % + 18% Europe + 27% Asia Pac + 48% China FY13 Forecast Production Double Digit % Growth Again 4

Business Update Half Year Sales Fast Start For 2013 CYTD UK's leading manufacturer of premium luxury

144k vehicles during the first third of 2013, an increase of 16% Sales up across every major market region.

119k vehicles (up 14%), with strong launch of all new Range Rover (up 50%)& continued strength of Range

5 Business Update Half Year Sales Fast Start For 2013 CYTD UK's leading manufacturer of premium luxury vehicles, sold c.144k vehicles during the first third of 2013, an increase of 16% Sales up across every major market region. 20% in UK, 18% in China, 13% in North America, 8% in Europe, 22% in ROW. Land Rover sold c. 119k vehicles (up 14%), with strong launch of all new Range Rover (up 50%)& continued strength of Range Rover Evoque & Freelander (up 20%). Jaguar sold c. 25k vehicles (up by 27%), increased sales of XJ (up 12%) and XF (up 37%), reflecting strong sales with recently introduced XF Sportbrake (now getting 50% + per month) 5

CAR CORP TOYOTA Group FORD PSA Group MITSUBISHI OTHER -47-2.9-3.4-3.6-4.5-5.2-8.1-9.6-10 -10.9-11 -11.3-13.3-14.4 Source: http://www.

6 Development of New Vehicle Registrations Europe (Jan-Jun 12 vs. Jan-Jun 13) JAGUAR LAND ROVER HONDA MAZDA KIA DAIMLER HYUNDAI BMW Group VW Group NISSAN RENAULT Group FIAT Group SUZUKI GM Group VOLVO CAR CORP TOYOTA Group FORD PSA Group MITSUBISHI OTHER Source: Jaguar Land Rover showed greatest percentage increase in new vehicle registrations in Europe of +25.8% for 11/12 fiscal year Data from Jan-Jun 12 to Jan-Jun 13 as a percentage. 6

7 JD Power 2012 Automotive Performance, Execution & Layout (APEAL) JD Power US APEAL Survey measures how gratifying a new vehicle is to own and drive. Excellent performance for both Jaguar and Land Rover. Jaguar 2nd highest scoring brand in industry-wide survey with Land Rover placed 6 th. Range Rover Evoque ranked Highest Entry Premium SUV Jaguar XJ is second in the large premium car segment 7

supply bases JLR in the Top Tier of the Supplier

8 SuRe (Supplier Relationship) Index 2013 SuRe index - a benchmark of OEM working relations with their supply bases JLR in the Top Tier of the Supplier Relationship Index (Improved 3 places from 10 th in 2012) 8

headroom for rear-seat passengers due to a new roof design and modified rear

9 Jaguar X250 Sportbrake A new 5-door estate bodystyle derivative to the XF family Designed for the European market Loadspace volume of 1,675 litres Extra 48mm of headroom for rear-seat passengers due to a new roof design and modified rear door frames and windows Sportbrake derivatives represent 36% of DE segment in Europe 9

10 All New 2012 Range Rover Enhanced performance and handling on all terrains and significant advances in environmental sustainability The World s first SUV with a lightweight all aluminium body Numerous Awards Won Top Gear Luxury Car of the Year 2012 What Car? Luxury Car of the Year 2013 Sunday Times 4x4 Award 2012 Hybrid announced at Frankfurt 10

Jaguar Land Rover at i54 Production Facility Footprint Home for a new generation of technologically advanced,

jobs at the plant State-of-the-art facility entirely designed and specified by Jaguar Land Rover Almost 100,000

sustainable production Jaguar Open Land later Rover s this year new with Engine the Manufacturing first engines

11 Jaguar Land Rover at i54 Production Facility Footprint Home for a new generation of technologically advanced, lightweight 4- cylinder low emission diesel and petrol engines 1,400 highly skilled engineering and manufacturing jobs at the plant State-of-the-art facility entirely designed and specified by Jaguar Land Rover Almost 100,000 m2, the plant will include engine testing centre alongside manufacturing and assembly highest standards of sustainable production Jaguar Open Land later Rover s this year new with Engine the Manufacturing first engines in Centre production in the UK 2015 is a clear demonstration of our business strategy guiding our investment plans. Not only does it bring our engine supply back to our production doorstep, but it gives us significant new resource as we continue to innovate with new products and markets. Dr Ralph Speth Jaguar Land Rover s Chief Executive Officer 11

Development of Product & Brands for Growth Growth Principles The Right Kind of Balance Investment G Major Replacement Products & Capacity Expansion Maintain existing market & meet legislative &

12 Development of Product & Brands for Growth Growth Principles The Right Kind of Balance Investment G Major Replacement Products & Capacity Expansion Maintain existing market & meet legislative & customer requirements. R O W T Technology, Innovation, Freshening - Electrification, consumer electronics & the connected car Additional Derivatives off Current Vehicles - Sportbrake, all-wheel drive, halo products All New Products - Exploit new markets and segments Gr owth H Product Downsizing - Smaller, lighter and more economical vehicles 12

Bringing it Back to Britain UK Growth is more than just JLR GM announced it will invest 125m in

Nissan confirmed production of an all-new hatchback model at its Sunderland facility from 2014,

BMW confirmed 250m investment in its UK manufacturing operations by the end of 2015 (Oxford,

13 Bringing it Back to Britain UK Growth is more than just JLR GM announced it will invest 125m in its Ellesmere Port plant and spend 1bn with UK suppliers. >3500 jobs in GM & UK supply chain. Nissan confirmed production of an all-new hatchback model at its Sunderland facility from 2014, investing 200m creating over 1000 jobs at the plant and UK supply chain. BMW confirmed 250m investment in its UK manufacturing operations by the end of 2015 (Oxford, Swindon and Hams Hall). Toyota announced a 100m investment in its Burnaston facility new jobs and c 100m invested with UK suppliers. 13

Challenge Significant supply capacity removed from the UK Many suppliers maxed-out (Evoque, Qashquai etc ).

14 Growth A once in a generation Opportunity Opportunity Over 50% potential growth in JLR UK supply chain by 2017, based on current UK purchasing proportion. Further potential growth based on improving competitive level of UK factories. Challenge Significant supply capacity removed from the UK Many suppliers maxed-out (Evoque, Qashquai etc ). Significant new capacity needed in all areas. Supplier capability management, workforce, financing. Structural gaps in UK supply chain e.g. engines parts. UK car manufacturing prospects positive relative to elsewhere. 14

15 Automotive Council Supply Chain Group Workstreams Joint Chaired by Vincent Cable & Richard Parry-Jones Technology Group & Supply Chain Group Members are from Government, OEMs, Suppliers, Bankers Objective is to Assist the Growth of the Automotive Industry in the UK Access to Finance Identify/ Advance Common Opportunities Optimise competitivenes s of UK Supply Chain Growth Strategies for UK Auto Supply Industry Encourage new entrants / re-entrants to UK Close sourcing gap Tier 1 to Tier n

Supply Chain Group Automotive Achievements to Date We don t claim the credit for

strong support Cross Industry Forum AMSCI & RGF Bids Collaboration, Clusters,

GROWING THE UK AUTOMOTIVE SUPPLY CHAIN Identifying & confirming the 3Bn per annum

16 Supply Chain Group Automotive Achievements to Date We don t claim the credit for these achievements but as a group of volunteers we have been proud to have provided strong support Cross Industry Forum AMSCI & RGF Bids Collaboration, Clusters, Support, Improvements Highlighting the Skills Gap Automotive Industrial Strategy GROWING THE UK AUTOMOTIVE SUPPLY CHAIN Identifying & confirming the 3Bn per annum supply chain opportunity Global automotive investments of 7.5 billion confirmed into the UK 16

17 Importance of taking the opportunity UK Automotive Industry needs to address a net 6Bn Trade Components Deficit on the back of this opportunity. Within the sourcing period suppliers need: To be convinced to invest; To find access to affordable credit. Without this the OEM will: Receive uncompetitive quotes; Receive no quote at all! This: 1. Will restrict the number of UK suppliers who can expand; 2. Leads to a missed opportunity for growth and job creation in the UK; 3. Does not secure the long term competitiveness of the UK supply chain. Need targeted Incentives delivered by an efficient system to allow successful access to funding within the time constraints of the automotive development & sourcing process. 17

18 The Sustainability Challenge JLR s technology & Innovation Policy In pursuing the aims of this policy, JLR will: (amongst other things!) Work closely with STRATEGIC SUPPLIERS and other relevant technology partners to support the in house resources and skills toward Technological Innovation Create a work climate that encourages EMPLOYEES and SUPPLIERS to come forth with innovative ideas and concepts. Adopt a strategy for effectively leveraging the UK's world-class University base in support of the aims of this policy. Proactively define and engage in publically funded collaborative research programmes in support of this policy.

19 Automotive Industrial Strategy July 2013 Publication Industrial Strategy: government and industry in partnership Driving success a strategy for growth and sustainability in the UK automotive sector Essential value comes from Industry members OEM/ Tier 1 / Tier n 19

20 Automotive Industrial Strategy Publication Align & Refocus Supply Chain Group Workstreams Existing Workstreams Industrial Strategy: Priority areas identified for Action: Quantifying and capitalising on the business opportunity for the UK supply chain In progress Improving long term supply chain competitiveness In progress Encouraging new and re-entrant suppliers to the UK and cross sector activity Growing UK supply chain business through increased exporting In progress + AIO New Improving access to finance for the supply chain In progress Innovative processes for premium manufacturers New 20

21 Conclusions The UK manufacturing industry, despite its setbacks is strong but it could be stronger! There are a number of factors, controllable and uncontrollable, which could support the UK supply chains continued growth. There is a will amongst OEMs to achieve greater levels of local sourcing. The Automotive Council in partnership with its industry members have a strong vision and strategy to continue to build the strength of the UK Automotive Industry 21

22 Presenter JLR 22

INVESTING IN GLOBAL GROWTH OPPORTUNITIES AND CHALLENGES FOR UK SUPPLY BASE.

INVESTING IN GLOBAL GROWTH OPPORTUNITIES AND CHALLENGES FOR UK SUPPLY BASE. Rob Johnson Purchasing Director Jaguar Land Rover June 2013 Topics. Update and overview on Jaguar Land Rover New JLR UK Engine