Perspectives of Vehicle Production

Perspectives of Vehicle Production Germany and Beyond Björn Hütter, Senior Analyst, European Light Vehicle Production February 03 rd, 2011

Agenda Review 2010 and Short-Term Outlook Output drivers Sourcing Patterns Production footprint of European OEMs Platform and Partnership Developments Moving towards modularity Q & A 2

Agenda Review 2010 and Short-Term Outlook Output drivers Sourcing Patterns Production footprint of European OEMs Platform and Partnership Developments Moving towards modularity Q & A 3

Review 2010 and Short-Term Outlook Faster pace of recovery in European production levels Inventory levels needed replenishment Business sector and LCV demand provided some compensation Surge of demand by BRIC countries and US-market 4

Review 2010 and Short-Term Outlook German Production Germany 5.8 13.7% 15% 5.6 10% Y-O- -Y % Change llions) Output (Mil 5.4 5.2 5 4.8 4.6 4.4 5.6 5.4 2.7% 4.8-11.7% 5.4 3.1% 5.6 5.6 5% 0% -5% -10% 4.2 2007 2008 2009 2010 2011 2012-15% 5

Review 2010 and Short-Term Outlook Germany: Top 10 Production Nameplates 2012CY: 2.75 million 2013CY: 2.63 million 2014CY: 2.58 million 6

Review 2010 and Short-Term Outlook European Production Eastern 25 Central Western Change 20% 15% 15.2% 20 3.2 10% 2.8 2.6 2.8 15 3.4 3.0 1.7% 1.9 2.8 2.8 3.5% 2.9 2.6 5% 0% -5% 10-5.6% 15.9-10% 14.3 13.1 11.7 5 13.2 Y-O--Y % Change Output (Millions) 3.4 13.4-15% -20% - 20.7% 0-25% 2007 2008 2009 2010 2011 2012 7

Review 2010 and Short-Term Outlook Inventory Replenishment in Europe 7.0 6.0 Sales of Europ. Sourced Vehicles Europ. Production 5.0 illions) Units (Mi 4.0 3.0 2.0 1.0 0.0 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 8

Review 2010 and Short-Term Outlook Strong Exports Outrun Domestic German Demand % Change Quar rter over Quarter 40% 30% 20% 10% 0% -10% -20% -30% Non-Domestic Sales Domestic German Sales -40% 1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 9

Review 2010 and Short-Term Outlook Strong Exports Outrun Domestic European Demand % Change Quar rter over Quarter 40% 30% 20% 10% 0% -10% -20% -30% -40% Non-Domestic Sales Domestic European Sales -50% 1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 10

Review 2010 and Short-Term Outlook Russian Stimulus Has Positive Impact 0.9 0.8 0.7 Sales Production 0.6 0.5 0.4 0.3 0.2 0.1 0.0 Units (Mi illions) 1Q 2008 2Q 2008 3Q 2008 4Q 2008 1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 11

Review 2010 and Short-Term Outlook Short-Term Contingency Scenarios Production (Millio ons) 20 15 10 5 0 Base Pessimistic Optimistic Base Incentives ended except for Russia and reduced subsidy in France; little positive stimulus from domestic-european demand Inventory build continues but at more moderate pace could stabilize by 2Q 2011 Exports beyond Europe give opportunity to premium products Pessimistic Unemployment continues to rise and consumer confidence suffers Credit remains tight Eurozone debt crisis spreads Optimistic Positive developments prove sustainable Global exports accelerate 2010 2011 2012 Eurozone debt crisis is contained 18.7 19.0 18.8 19.3 19.7 19.5 20.1 12

Agenda Review 2010 and Short Term Outlook Output drivers Sourcing Patterns Production footprint of European OEMs Platform and Partnership Developments Moving towards modularity Q & A 13

Sourcing Patterns Global Production: Path to Recovery 290 Index of Recovery 2007 = 100 China 250 South East Asia 210 South America 170 Middle East/Africa Japan/Korea 130 North America 90 Europe 50 2007 2008 2009 2010 2011 2012 14

Sourcing Patterns Global Production: Path to Recovery 100 80 20,8 22,0 22,8 23,3 23,8 Millions 19,7 60 18,7 21,7 14,7 20,5 14,8 12,6 14,4 20 3,6 4,7 7,2 0 2007 3,7 5,2 7,5 2008 15,5 16,1 16,1 16,3 14,2 14,0 5,8 6,0 13,9 16,3 40 15,1 19,0 8,6 10,9 3,7 4,9 11,9 12,9 13,5 13,2 4,1 6,7 14,0 12,8 4,4 7,7 4,6 8,6 5,1 9,5 14,0 5,3 14,2 North America Japan/Korea Middle East/Africa 5,6 10,1 10,8 11,5 12,1 22,9 23,8 2016 16,3 18,1 19,7 21,0 11,3 14,8 22,0 2009 2010 2011 2012 2013 2014 2015 Europe South America South East Asia China 2017 15

Europe Production Profile Share Trend By OEM (2011 2014 2017) Daimler 6.9% Fiat 8,8% Ford 8.4% 6.2% 6.9% 6.8% 8.7% BMW 7.0% 8.3% 7.2% 8.2% PSA 12.4% General Motors 6.7% 6.5% 7.2% 7.1% 12.9% 12.5% 12.3% Volkswagen 21.0% 22.2% 11.4% 20.6% 2011 16.7% Ren/Nissan 11.7% 2014 18.1% 2017 Other 18.2% Europe Stabilizes: Additional production and whitespace vehicles will add volume. B and C-segment development continues to drive growth. Others: Hyundai/Kia are expanding quickly while Toyota is expected to stage limited recovery. Expansion points within the region limited for the generalist producers. Investments beyond Europe will accelerate. Eastern European activity expected to pick up.

Sourcing Patterns Contribution to Global Growth: 2010 to 2017 Mini and 1 Series expansions and UKL1 give incremental boost in Western Europe Exports of core ranges remains strong and product diversification: 5 Series GT, Gran Coupe Continues to expand Spartanburg plant to build more US-focused products, including the X3, X5 and X6. Single flexible line, gives capability to produce any model. Increasing localisation of 3 Series and adding X1 in China North America 17.3% Greater China 12.5% Rest of World 2.7% Western Europe 67.5% 17

Sourcing Patterns Contribution to Growth: 2010-2017 Central European growth as compact front-wheel-drive MFA platform introduced in Hungary and with second smart car program from Renault-Slovenia West Europe continues to support core ranges and their export; recovering LCV markets and expansion into car-derived vans provides support ML, GL and R-Class set to be joined in Alabama by C-Class [W205] and potential for GLK crossover. LCVs constrained by split from Chrysler but Renault/Nissan collaboration provides upside China focused on expansion of E- Class at Beijing and LCV at Fujian Greater China 17.3% Western Europe 29.9% Rest of World 3.8% North America 13.3% Central/ East Europe 35.6% 18

Sourcing Patterns Contribution to Global Growth: 2010 to 2017 Securing of Panda to Italy a major boost. Compact MPVs [330] move to Serbia. Limited impact from Lancia/Chrysler merger and Jeep production in Europe. Targets 1.0 million units per year from Brazil supported by domestic marketlead and upgraded programs increasingly on same timeline as Europe; plus improving export efforts Agreement with Guangzhou Automobile Industry Group (GAIG) for JV in Changsha adds 140,000 units of capacity the second half of 2011 supports revitalization Mexico to support sub-compact demand in NAFTA while US built crossovers exported back to Europe North America 30.0% Rest of World 7.7% Greater China 14.6% West Europe 27.3% South America 20.3% 19

Sourcing Patterns Contribution to Global Growth: 2010 to 2017 Securing of Panda to Italy a major boost. Compact MPVs [330] move to Serbia. Limited impact from Lancia/Chrysler merger and Jeep production in Europe. Targets 1.0 million units per year from Brazil supported by domestic marketlead and upgraded programs increasingly on same timeline as Europe; plus improving export efforts Agreement with Guangzhou Automobile Industry Group (GAIG) for JV in Changsha adds 140,000 units of capacity the second half of 2011 Mexico to support sub-compact demand in NAFTA while US built crossovers exported back to Europe North America 9.0% Greater China 19.8% Rest of World 8.1% South America 26.9% West Europe 36.2% 20

Sourcing Patterns Contribution to Global Growth: 2010 to 2017 Expansion in China overdue but accelerates in partnership with Dongfeng; adding 2 nd and 3 rd lines at Wuhan. Regional adaptations to be joined by global products West European output balanced against expansion in C/E Europe and serves to support domestic capacity utilisation; low-cost compact program M3/M4 to be built is Spain C/E Europe growing with partners Mitsubishi, Fiat and Toyota Expanding capacity in Brazil and Argentina to meet growing demand; program development being consolidated with efforts in China to better match market requirements South America 11.3% CE Europe 4.1% Rest of World 10.6% Western Europe 32.1% Greater China 42.0% 21

Sourcing Patterns Contribution to Global Growth: 2010 to 2017 Morocco is a major expansion point, closely followed by more politicallysensitive Iran, building derivatives from Logan family; supports local demand and global exports Positioning aggressively in Russia in association with AvtoVaz, Turkey becomes lead plant for Clio as France concentrates on EV manufacturing Duster SUV is major play in South America seeking to build on Sandero success and modernisation of operations and products EV s and new strategy for compact/mid-size programs off-sets lower forecast of core B-segment entries in West Europe West Europe 10.6% CE Europe 18.5% Rest of World 8.3% South America 21.9% Middle East/ Africa 40.8% 22

Sourcing Patterns Contribution to Global Growth: 2010 to 2017 Morocco is a major expansion point, closely followed by more politicallysensitive Iran, building derivatives from Logan family; supports local demand and global exports Positioning aggressively in Russia in association with AvtoVaz, Turkey becomes lead plant for Clio as France concentrates on EV manufacturing Duster SUV is major play in South America seeking to build on Sandero success and modernisation of operations and products EV s and new strategy for compact/mid-size programs off-sets lower forecast of core B-segment entries in West Europe Rest of World 31.4% CE Europe 12.9% China 14.8% North America 21.1% Middle East/ Africa 19.9% 23

Sourcing Patterns Contribution to Global Growth: 2010 to 2017 West Europe continues to benefit from expansion of Audi and Volkswagen brands and strong export demand Strong demand and market position calls for greater capacity to support localisation at both Shanghai and FAW ventures; Skoda successfully introduced alongside Audi and VW $1bn investments at both Chattanooga and Puebla as VW looks to get closer to North American customer; discrete program engineering to become apparent Central/Eastern Europe home to New Small Family PQ12 and Russian strategy looks well conceived; less reactive than others Rest of World 14.8% Greater China 24.4% North America 17.5% West Europe 22.7% Central/ East Europe 20.6% 24

Agenda Review 2010 and Short Term Outlook Output drivers Sourcing Patterns Production footprint of European OEMs Platform and Partnership Developments Moving towards modularity Q & A 25

Cadence, Design and Scale Increased Scale Affects Plants and Platforms Plant Count Platforms Over 50,000 Units Per Year 180 628 630 700 600 207 210 Volume/Plant In Thousands 170 160 150 140 130 120 110 459 114 479 117 510 128 128 157 600 500 400 300 200 100 Number of Active Plants (Lines) Volume/Platform>50,000 (Tho ousands) 500 400 300 200 100 190 279 282 181 203 330 379 479 201 205 200 195 190 185 180 175 170 Numb ber of Platforms >50,000 100 1997 2002 2007 2012 2017 0 0 1997 2002 2007 2012 2017 165 26

Platform Modularity 27

Platform Modularity: Volkswagen Group PQ35 C-Segment PL/PQ46-47 D-Segment PQ25 B-Segment PL/PQ46-47 D-Segment PL56 D-Segment PL62 E-Segment MQB A/B C and D-Segments MQB A0 B-Segment MLB B/C D and E-Segments MLB D E-Segment MQB MLB PQ12 A-Segment New Small Family 28

Platform Modularity: Daimler W169 B and C-Segments MFA B and C-Segments MFA W204 D-Segment W212 E-Segment W221 E-Segment MRA Mid-Size D and E-Segments MRA Premium E-Segment Luxury MRA smart A-Segment Edison: Rear-wheel-drive A and B-Segments developed with Renault 29

Platform Modularity: BMW L3 B-Segment L2/L7 C and D-Segments L1/L6 E-Segment L8 FWD (incl. UKL1) B and C-Segments L10 RWD D and E-Segments L9 E-Segment Luxury Project i: Megacity urban transport solutions 30

Platform Modularity: Fiat, Renault, PSA Type C/D C-Segment PREMIUM D-Segment C-Evo/CUSW C and D- Segments X65 A and B-Segments B Platform B-Segment Edison A and B-Segments B Platform B-Segment Type 178 B-Segment Type 199 B-Segment B-Evo B-Segment C Platform C-Segment D Platform D-Segment CMF1 C and D- Segments Type A A-Segment Type 169 A-Segment A-Evo A-Segment PF1 B-Segment PF2 C-Segment PF3 D-Segment BVH1 B-Segment BVH2 C and D- Segments 31

Agenda Review 2010 and Short Term Outlook Output drivers Sourcing Patterns Production footprint of European OEMs Platform and Partnership Developments Moving towards modularity Q &A 32

Thank You for Your Participation! Björn Hütter, Senior Analyst, European Light Vehicle Production February 03 rd, 2011