InterChina

Strategy | Corporate Finance

Auto Sector Group

www.InterChinaConsulting.com Exclusive China Partner of www.InterChinaPartners.com Index

• Sector Dynamics 1 • Our Auto Services & Team 2 • Perspectives On China’s Auto Sector 3 • Consulting Cases 4 • Deal Tombstones 5

Confidential © InterChina 2 Summary: Faster and more sophisticated in this maturing No. 1 auto market globally

• Still driven by China’s megatrends (urbanization) • OEM will grow at 3-4%. Local leaders are Identify specific new Continued consolidating and trading up (Geely,G.Wall,Chang’An). opportunities (NEV, AD, AF, growth, • Foreign Component Manufacturers planning double digit growth. Capitalize on better quality demand, LW etc.) and with the right Market finally time of window to enter pays for Green China trends and revamped localized (good Market enough, local R&D) product portfolios. Quality. • Increasing pressure on cost/price, quality, service, R&D. Find the right approach for inorganic growth in ICE consolidation and faster • Emerging local players (currently, too many, entry into new opportunities. future consolidation to come). Change in sector Speeding up status quo with uncertainty for foreign OEMs and China as suppliers. Out-of-box strategy development for traditional NEV- Global • Accelerated development through government Autonomous support and increased customer acceptance. business with step-change Innovation • BEV / PHEV are the key focus. drivers (e.g. deregulation in center • Autonomous/ connected driving early local AF). innovation trade ups. Localize operations and production, acquisition of • Likely to be a growth driver in next 3-5 years. • Many MNC players are forecasting high double local companies to be ‘more Tomorrow’s digit growth. Chinese’. Aftermarket battle field • Distribution and service capability will be key to success. Deal with cost inflation for both short-term optimization and long-term strategic • Smaller, low-quality players face challenges; moves. Aggressive natural attrition and now open to Sale outs. • Consolidation. Shift to quality, Environment and scale benefits international players. M&A (both inbound and “Re Emergence” Consolidation • Steady M&A and JV activity, mainly focusing outbound), JV and tech of the Joint on “Access to Chinese OEMs”. transfer for various Venture inorganic approaches.

Confidential © InterChina 3 Source: InterChina Interviews and Analysis Global Weighting: In both PV and CV, China takes a key role globally

PV Production China vs Global Heavy Truck Production China vs Global Bus Production China vs Global (Unit: million vehicles) (Unit: million vehicles) (Unit: million vehicles)

73.5 4.2 4.1 0.36 0.32 58.2 3.0 ROW 0.26 46.0 ROW ROW

2.3 2.3 China 0.18 (54%) (55%) 0.16 China 24.8 (56%) China (45%) 0.08 3.1 13.9 (34%) 0.6 (30%) (7%) (24%) (19%) 2005 2010 2017 2005 2010 2017 2005 2010 2017

Note: The definition by OICA is slightly different than CAAM in China. For both truck and bus sectors, the statistics above use OICA figures globally and in China. In Truck sector, it includes vehicles intended for the carriage of goods. Maximum authorised mass is over the limit (ranging from 3.5 to 7 tons) of light commercial vehicles, including tractor vehicles designed for towing semi-trailers. In Bus sector, Buses and coaches are used for the transport of passengers, comprising more than eight seats in addition to the driver's seat, and having a maximum mass over the limit (ranging from 3.5 to 7 tones) of light commercial vehicles.

Confidential © InterChina 4 Source: OICA, CAAM China Prospects: Likely further growth in ownership (though well below the levels of developed countries by 2035) will support the long-term development of China’s auto industry

Global Comparison of Auto Penetration and GDP

650

Cars owned per Cars1,000 per owned Italy 600 Canada Australia 550 Germany 500 United Kingdom France 450 Japan 400 USA S1 2035: 350 5-year disposal scenario people in 2015 in people 300 S3 2035 South Korea S2 2035: 250 7-year disposal scenario S2 2035 China 2020 200 S3 2035: 10-year disposal scenario 150 S1 2035 100 (Refer to the last slide) India China 2015 50 0 0 10,000 20,000 30,000 40,000 50,000 60,000 GDP per capita measured at purchasing power parity in 2015 (USD)

Source: Chinese Yearbook, World Bank, OICA, Trading economics, various other statistics collected by InterChina Confidential © InterChina 5 Global Gravity: Both the OEM production and the after-market value chains will be the global No 1 with 1/3 of global share

China PV production will still experience Ownership in 2035 will provide the next relatively strong growth, with the growth rate momentum for the market growth fluctuating around the GDP growth rate

China’s PV Production – History & Forecast China’s PV Ownership – History & Forecast

Unit: million cars Unit: million cars

45 350

33 220 24 160 14 58 4 19

2005 2010 2016 2022E 2035E 2005 2010 2016 2022E 2035E

CAGR 29% 10% 5% 3% CAGR 25% 18% 5% 4%

Confidential © InterChina 6 Source: CAAM, InterChina Interviews and Analysis Emerging Battlefields: Sector step-changes (e.g. NEV, AD, AF, LW etc.） bringing both opportunities and challenges require tailor-made solutions in China

China has a huge market for …it asks for FIEs to think globally these emerging tech market, but while acting locally not an easy one…

Dynamic regulatory environment (new policies, Global and In-depth deregulation etc.). China Strategy China Market Parity Assessment Immature but changing pricing mechanism.

Investment Vehicle & Government Localized solutions required. Partner Lobbying Selection

Growing Chinese competition.

Multiple tech routes for cars, On-going Operational but also along the supply chain. Competitive- Improve- ness ments

Other challenges (e.g. infrastructure etc.)

Note: NEV = New Energy Vehicle, AD = Autonomous Driving, AF = de-regulated after-market, and LW = Lightweight Tech Confidential © InterChina 7 Inorganic Growth: Cross-border transactions in automotive sectors is still a hot area

Volume of cross-border automotive deals in China Representative Recent Transactions

18 17 15 15 14 Sep. 2015 The electronic vehicles manufacturer NextEV 10 10 Asset deal secured a funding led by 9 USD 500 m US investment firm Sequoia Capital and Chinese firm Joy Capital.

2010 2011 2012 2013 2014 2015 2016 2017 Cooper Tire & Rubber Jan. 2016 Co acquired 65% stake in Qingdao Ge Rui Da Value of cross-border automotive deals in China 65% Rubber Co Ltd, a (RMB m) USD 92 m manufacturer of truck and bus radial tire tires based in Shandong. • Nio deal: RMB 3205 m 5,312.0 (USD 500 m) • Others: RMB 2107 m

Jun. 2017 Daimler AG announced 2,263.0 1,875.8 the acquisition of a 1,513.0 1,661.0 1,229.4 1,180.0 Minority minority stake in Beijing USD 92.61 m Electric Vehicle Co. The 176.5 deal has been approved by NDRC. 2010 2011 2012 2013 2014 2015 2016 2017

Source: FactSet, Mergermarket, Bloomberg, EMIS Deal Watch, InterChina Analysis Confidential © InterChina 8 Index

• Sector Dynamics 1 • Our Auto Services & Team 2 • Perspectives On China’s Auto Sector 3 • Consulting Cases 4 • Deal Tombstones 5

Confidential © InterChina 9 Service Needs (1/2): Our strategy and corporate finance teams support our client’s profitable top-line growth along the value chain of auto components and services

• What could be the “realistic” opportunity scale and the “right” time of window to enter (feasibility from all aspects e.g. regulatory, value-chain wise, competition, technically Business Opportunity etc.) Assessment (esp. • How to deal with dynamic and less transparent regulatory environment in decision- in emerging making, and in effective communication of China reality back to HQ battlefields*) • How to shortlist on the “right” tech to go forwards among various competition tech, which is often influenced by the drivers beyond tech advantages

• How to adapt the offerings and positioning to echo the needs in this maturing auto market Consolidate • How to develop in-China-for-China capability and capacity to deal with the speed of Commercial Strategy market development in China • How to profitably work with Chinese OEMs with more weighting in ICE and NEV but with rather different client behavior than JV OEMs

Capture • How to capture adjacent product opportunity into emerging battlefields Component • How to defend the existing portfolio against the threat from new battlefields (e.g. NEV Opportunity might make some ICE components redundant)

Note: The emerging battlefields refer to for example NEV (New Energy Vehicle), AD (Autonomous Driving), AF (de- regulated After-Market), LW (Light Weight tech and materials) and Service etc. Confidential © InterChina 10 Service Needs (2/2): Our strategy and corporate finance teams themes support our client’s profitable top-line growth along the value chain of auto components and services

• How to revamp the business model in China, adapting to the new trends in China (e.g. from multi-step distribution model in aftermarket to one-step model with efficiency and sustainability) Revamp Service • How to develop out-of-box initiatives to outperform the competition, (e.g. alliance with Strategy retail for growth, or distribution platform model in aftermarket, or diversified channels in auto assistance) • How to revamp or optimize the route-to-market structure and partners, to respond to the new differentiation needs

• How to capture the growth opportunity leveraging the sector’s consolidation trend?

Speed-up via • How to conduct bolt-on acquisition for further growth Inorganic • How to develop JV (OEMs, other partners with synergy) to accelerate the growth Approach • How to know and access below-the-radar targets or non-traditional-type targets to enter into emerging battlefields

Practical • How to develop new sourcing partners to deal with further localization needs Investment • Sourcing best practice benchmarking Support • How to divest the periphery assets, which is less fit with the core China strategy

Note: The emerging battlefields refer to for example NEV (New Energy Vehicle), AD (Autonomous Driving), AF (de- regulated After-Market), LW (Light Weight tech and materials) and Service etc. Confidential © InterChina 11 Cases: Deeply engaged with auto clients and projects in China’s front- line in the auto sector

Recent Auto Projects (Selection) • New Energy Vehicle (NEV) Strategy: We advised a leading European mechatronic players on the design of its roadmap into NEV. This compromised the assessment of e-mobility in China’s high dynamics regulatory environment, the opportunity product identification, and the investment vehicle strategy.

• Light-weight Component Strategy: We advised the client how to accelerate its development in the light-weight component sector via the localization strategy, via the full assessment of customer voices, the various competing technologies, and the likely competition landscaping with the associated key success factors required. • After-market Strategy: On behalf of a leading US after-market player, we identified the opportunity to deep dive in one-step distribution model in China’s de-regulating auto after-market. In addition, the investment strategy of regional cluster model via regional alliance and M&A is recommended with the partner screening and evaluation. • Localization Feasibility: Our client receives mandate to localize in China from one of its global key account OEMs, and our client has three investment options (different models with OEMs in different locations in China). We conducted the assessment of the possible revenues and production cost of the three options and recommended the preferred option.

• Strategy Workshop: For a top international component player, we facilitated a two-day Asia Strategy Workshop with country GMs and AP BD VP, and AP President by designing a systematic the strategic planning structure, process and tools, facilitating the efficient discussion on-site and concluding with a set of aligned strategic initiatives.

• Partnership Evaluation: For a leading auto electronics company, we conducted systematic screening and evaluation of the BMS (Battery Management System) related R&D companies in 22 related product sectors (e.g. BMS, DCDC, AutoSAR, ESP, ADAS etc.).

• Auto Service Strategy: Our client is the globally top 3 auto assistance company with the ambition to accelerate its China business. With the full-blown customer voices and competition benchmarking, the re-prioritization of the channels and the re-positioning of the offerings are recommended, with strengthened localization features.

Confidential © InterChina 12 Approach (1/2): Practical solutions to help our clients to tackle challenges & seek success

Client Issues InterChina’s Approach Client Benefits • What is the size of the • We use a primary research driven addressable market? approach to piece together a picture from • Regulatory monitoring? the bottom-up • What is the window of • Given the dynamic and complex evolution opportunity likely to be? of the auto sector, we use scenario analysis to assess the attractiveness of • How to maintain a sectors/segments and the client’s ability • Our clients are able to take well Opportunity competitive advantage in to compete informed ‘go or no go’ decisions on Assessment the long run? whether and how to proceed • In addition, the relevance of China in the • Whether to enter/expand in context of the client’s global strategy is • Along the way, we encourage the China or not? carefully evaluated client to participate in the process, • What is the likely downside allowing a transfer of understanding if no entry/expansion? to the client, and ultimately the buy- in of the client’s organization into the strategy • Moreover, we place our • The issues above, plus Based on the understanding of the recommendations within a strategic • What is the market market opportunity, InterChina develops framework, so that the client has entry/expansion point and tests a series of competitive and reference points for decision-making (target segments, product workable entry/expansion options for the not just for the initial next steps, but offering, value proposition, client also for expansion thereafter • etc.)? In addition, InterChina works with the • Ultimately, our clients benefit from a Strategy • What is the route-to-market? client to review the full range of issues practical solution in a complex and needed for the client to be ready to start Development • Which investment model? challenging environment implementation of the strategy • Expected financial return? • The role of China in the global strategy?

Confidential © InterChina 13 Approach (2/2): Practical solutions to help our clients to tackle challenges & seek success

Client Issues InterChina’s Approach Client Benefits

• Which partner to work with? • InterChina develops a comprehensive • Which form of alliance? and practical framework regarding potential synergies and risks in the • What trade-off in terms of alliance before starting the target search what to pay and what to process gain? Strategic • For each shortlisted alliance candidate, a • • Implications in terms of the Our clients are able to take well Alliance tailor-made approach will be developed threat to home markets in informed decisions on which and tested future? partners/ suppliers/ targets to • Finally, the implications of the alliance in pursue, knowing not only the the global context will be jointly explored associated strengths and risks, but with the client (e.g. the alliance partner also their relative significance in the might become a threat in future) China context • • The necessity for sourcing? • InterChina conducts a comprehensive Our clients have the advantage of us providing continuity from start to • stakeholder analysis to explore all the What synergies to achieve finish, putting execution within a through sourcing from relevant sourcing issues to come up with a realistic action plan strategic framework, and thereby Sourcing China? increasing the chances of a • Strategy • What portfolio? Then InterChina takes a hands-on successful outcome approach to searching for the right • Which partners? • partners and advising the client on how Ultimately, our clients benefit from • Potential risks and to best cooperate with these partners having the right partners/suppliers/ mitigation plan? targets, a good starting point for their relationships, and a robust • • Acquisition strategy? We conduct systematic target searches, structure to work within • Ideal target profile? adjusting the ideal target profile during the process according the realities we Merger & • Available targets? find, and select the best target using Acquisition & • Best target? comparative analysis Alliance • Deal breaking issues? • We also provide technical services (due • How to close in China? diligence, valuation) as well as transaction support (negotiation advisory, deal structuring) Confidential © InterChina 14 Our Value: Rely on a practical approach to align with the client’s decision-making process

InterChina’s 20-year experience in China’s consulting sector differentiates ourselves from the service by pure strategy firms or by market research firms

High senior involvement in projects (partners and sector group members). Value-added to Abundant sector experience in the various The Client’s Project traditional and emerging auto sectors. • Reliability Strong access to the different level of the market. • Credibility InterChina’s Service Senior interviewers; conducted hundreds • Depth senior-level interviews. Offerings • Strategic thinking, in addition to Practicality structured analysis data process. • Transparency Transparent process towards clients.

Practical thinking and solutions, aligned with the client’s decision-making.

Confidential © InterChina 15 Our Value: InterChina Corporate Finance is different from global and big-4 investment banking firms

InterChina Global Investment Banking Firms

• 90% buy-side advisory; skill sets more towards • 70% sell-side, 30% buy-side; skill sets more strategic considerations towards marketing • Has the boutique focus; Cross-border M&A • Investment banking is often a supplement to other advisory is the main service offering financing activities which are the core revenue drivers • Ability and resources to identify the below the • Deal radar acquisition targets Because of overhead structure, cannot commit to smaller deals. Attention is mostly focused on large Origination • Better access channels and databases than most transactions. POEs bulge bracket firms, and commit serious resources on target screening and identification (instead of • More analytical/desktop driven.. They lack the opportunistic) focus and skills to develop complicated family owned transactions, where subjective skills are • Knows how to understand and motivate the seller needed. and handle the early stage communication

• On the ground resources (sizeable team in China, • Fly in senior resources (HK or Singapore regional larger than some regional and global i-banks) team) • Commit senior resources to every stage of the • Mostly involved in valuation and structure; less transaction. Act as an extension to client’s in-house hands on day to day aspects. team. Easy to work with • Ivy league background. Interact with clients Transaction • Knows how to manage Target’s expectations well, but less effective with the Chinese target (perceived as too cold or distant on their Execution • Early red flag identification: Knows the intricacy approach). of dealing with local entrepreneurs, SOEs, and listed companies • In-depth sector and commercial knowledge

Confidential © InterChina 16 Customer Base: We provide tailored strategy and M&A advisory for over 100+ auto component and service players in China

OEMs & Organization

Auto Component Player

Auto Service / Materials

Confidential © InterChina 1717 Project Impact: We receive high notes from our clients regarding the impact on their development in China, on both our service quality and their actions upon our recommendations…

Company Sponsor Feedback

A global top 50 Asia & Europe BD "Your guys have done a pretty good job. The findings are quite solid in such a fragmented and auto component VP emerging market…This will be an important part of China strategy going forwards, and we have player already recruited a new director for distribution business…"

A leading Global BD "As you can see in our feedback on your performance sheet, we were highly satisfied with your European player Director work and the results and would work with you again in the future. We would like to highlight especially the insights from your interviews and market analysis, which clearly is a unique advantage. "

A top int’l glass Group Vice “I appreciate all the hard work you put in ... You have a hard-working and committed team that is company President polite, considerate and easy to communicate with ... We have been very comfortable working with InterChina ... Overall you have taken a very professional approach to our project”

A niche auto China Senior “Your team had done an outstanding job, even from the perspectives of the 'specialists' in our solution provider Advisor company.”

A leading US Global BD “I think the analysis and recommendation is very comprehensive…We are very happy and player Director satisfied with the work done by you"

A auto President & CEO "Very good conclusion... Thanks so much…I will send this to the board of the company, and I plan component to have a trip in China to further discuss about next steps." group in Nordic

A global top 3 Asia Director “We are pretty much satisfied with your work, though the project is a difficult one….You are very auto assistance serious…We worked with KPMG in India for the same type of project, and the solution they company recommended just can't be done (e.g. the recommendation to add 45 people for 3 new business lines)."

Confidential © InterChina 18 … 2/3 of our business is with long-term clients who regard InterChina as a trusted advisor

Long-Term Client Relationships (Selected Examples) MAP STP

• Nearly 20 year relationship from early • Worked with this global leading component 2000s to present, despite leadership players cross various BU. succession. • Projects were focused on both NEV 13 • Supported various JV, WFOE and M&A 4 components and after-market in China. Engagements engagements, with 5+ successful Engagements • Were trusted to advise on the fast changing transactions. market and competitive environment in China.

• Recently established relationship, • Maintained with a decade relationship with supporting this globally top 10 component various BU including auto glass and other players for their expansion in China. auto components. 3 • Supported in the acquisition in both 4 • Supported the expansion in this highly Engagements traditional components and next generation Engagements competitive China market. tech fields.

• Example of supporting the client with • Example of starting with inorganic growth strategic feasibility study and then moving support and moving to organic growth to M&A actions. support. 3 • Engagements spanned (a) opportunity 3 • Supported the client with M&A and JV with Engagements assessment and entry point identification Engagements OEMs for the growth in the traditional ICE (b) deal origination (c) transaction sector, and then supported organic growth advisory. strategy in NEV.

Confidential © InterChina 19 Contribution: Auto contributes between 15% - 20% of InterChina’s Net Revenues

Net Revenues By Sector Group

9% Automotive 16% 14% 15% 16% 23%

25% 29% 24% Chem/Energy 32% 40% 20% 14% 18% 21% 14% 22% C&R/F&B 23% 14% 20% 14% 13% 13% 31% Healthcare 19% 18% Industrials 17% 21% 20% Other 8% 8% 1% 1% 1% 2% 4% 2013 2014 2015 2016 2017 2018 YTD

Confidential © InterChina 20 SG Team: Our team of consultants and advisors focused on auto- related projects re. strategy issues and M&A projects

InterChina’s standing team of project managers and team members InterChina’s senior advisors

Mr. Simon Zhang, Partner, SH Mr. Eduardo Morcillo, Managing • 20 years of consulting/management experience in Partner, SH China. • 20 years China M&A experience in F&B, Machinery, • Specialist strategy consultant with focus on Chemical sectors, also some complex JV projects. chemicals/materials, auto and industrial sectors. • Expertise in negotiation with Chinese companies. • 7 years with Sinopec in corporate development in • Fmr Marketing manager of Carlsberg Huizhou Sinopec. • Fmr Head of Project Management Dept., Hong Kong • Manager and Supervisor of ~100 projects. Singlee Investment Management Co., Ltd Ms. Ling Wu, Senior Advisor • Auto Sector Group Leader. • >15 years of corporate development, Mr. Jan Borgonjon, President, BJ Mr. Luo Bo, Principal, SH capital markets and investment banking • Resident in China for over 20 years. • >10 years work experience in finance field. experience • Established InterChina in 1994. • Previously worked with Maersk, Hertz and investment • Previously leadership role in KPMG • Management of over 50 projects in various industries in bank with functions in M&A, JV, partnership and FP&A Advisory in China and Amherst Partners in China, including chemicals and auto. • Extensive experience in investment structuring, US • Top level negotiation and lobbying. financial modeling, project management and financial • Extensive experience in the automotive planning and analysis. related sectors

Ms. Jane Zhu, InfoCenter Head, BJ Mr. Sylvia Zang, S. Manager, SH • Specialist in industrial data and info research and • Over 12 years experience in InterChina. analysis. • Extensive consulting experience for M&A, strategic Mr. Jay Cheng, Senior Advisor • 10 year experience in supporting InterChina projects in advisory, target search, negotiation support and DD. • Over 25 years of management and auto, chemicals and machinery sector, incl. OEMs, comp, • Previous project experience in automotive sectors leadership experiences in top tier global aftermarket, machine tools, construction machinery, including automotive comp. and automotive design. automotive component companies home appliances, agriculture equipment, etc. • Advised overseas companies incl. Gentherm, • Currently the president of Halla Visteon Cooperstandard, IDIADA, Cikautxo, Metalsa, etc Climate Control in China • Formerly with Eaton, GE Hydro and several Mr. Anderson Mo, Analyst, SH Mr. Delia Zhang, Manager, SH Black Stone Group portfolio companies • Specializes in market intelligence of consumer goods • Over 8 years of investment banking, financial advisory and machinery, industrial equipment; working with and M&A advisory experience. clients sectors such as automotive components, railway, • Extensive project experience in M&A and Private Equity elevators, and chemicals. Financing in various sectors. • Fmr Supply Manager of Philips Healthcare • Fmr Process Improvement Analyst of Cleveland Clinic Mr. John Mack, Senior Advisor • Six Sigma green belt / LEAN certified. • Previously president and CEO of CIE Automotive in China • Previously president and CEO of Fiat Group Ms. Emily Zhang, Analyst, SH Mr. Angie Gao, Manager, SH in APEC region • 2 years with InterChina. • Actively involving in M&A deal sourcing, business • Other leading roles in GM, BMW and other • Previously working with BDO, UK development, financial analysis, business DD, working top automotive related companies in • Primary research expert involved in automotive & closely with overseas companies and domestic investors. Europe and Asia components, chemicals, manufacturing, F&B, • Deals involved in 1) Israel surgeon room interface for renewable energies, incl. clients such as Emerson, $25millions 2) tourism resort in Korean for sale, 3) SABIC, Gamesa, Dupont, Schindler, Hella, and Brose. China Top 500 corporation looking for overseas targets to acquire etc. Has been involved in post acquisition management in China & data analysis and project mngt. Mr. Shawn Zhang, Associate, Shanghai Mr. Dow Zhou, Associate, SH • Specialized in target search, negotiation and • 3 years of equity investment, M&A, and strategic coordination among parties planning experience. • Conducted CDD and investment research for clients, • Formally with the overseas investment team of Fosun. covering industry, HC and auto sectors. • Industry experience in consumer products, auto, • BA in Arts (Nanjing Normal Univ., China). MA in Finance intelligent manufacturing and TMT. and Management (University of Melbourne, Australia). Confidential © InterChina 21 Simon Zhang

Education & Qualifications Sector Competencies

• MBA, Cranfield School of Management (U.K.) • Leader of InterChina’s Chemicals Sector Group • Postgraduate Diploma in Marketing, Chartered • Energy and clean tech (incl. environment) Institute of Marketing (U.K.) • Automotive • BA, English Literature, Southeast University (China) • Industrial Equipment

Profession Experience Functional Competencies

• Partner In Charge, Strategy Practice of InterChina • Opportunity identification. Consulting • Go-to-market strategy development. • Prior to joining InterChina, Mr. Zhang worked for • Investment feasibility study. SINOPEC Shanghai Petrochemical Co. Ltd, formerly as Marketing Manager and latterly as • Partnership strategy. Partner In Charge Enterprise Transformation Manager. • Lobbying strategy. Strategy Practice • Mr. Zhang is an Associate of the Chartered • Acquisition strategies, deal origination. Shanghai Office Institute of Marketing (ACIM) and in the process • Commercial due diligence. of qualifying to become a Certified Public • Business model transformation. Chinese Accountant (CPA). • Complexity management. Project Experience • Strategy Planning: Supervised and managed over 100 strategy projects in which he has helped to advise both global Fortune 500 and medium sized foreign companies on their organic and inorganic strategic needs in China and globally.

• Recent Clients served: BASF, Bayer, Dupont, Air Products, Honeywell, Johnson Matthey, Clariant, Hella, Federal Mogul, KSPG, Schindler, UTC, Gamesa, Zeiss, Abengoa, Warburg Pincus etc.

Confidential © InterChina 22 Tao Lin

Education & Qualifications Sector Competencies

• MBA, INSEAD (France & Singapore) • Digitalization • Management Programs, University of Chicago Booth • Sustainable manufacturing and automation School of Business (USA) • Industry 4.0 and Made in China 2025 • Chemistry & Biology, Illinois State University (USA) • Industrial Internet of Things

Profession Experience Functional Competencies

• Prior to joining InterChina, Mr. LIN was in • In 20 years in Strategy & Management leadership, business development and execution consulting, Mr. Lin has gained experience and positions for boutique European firms such as exceled in research-driven strategy work in goetzpartners and Value Partners in China. market entry, competition, transformation and • Mr LIN started his consulting career with Deloitte sustainability. Partner and was with the firm in the USA, UK/Europe and Strategy Practice China. Shanghai Office Chinese American

Project Experience • Strategy Planning: Managed 100+ strategy and management projects with a variety of companies including MNCs, SOEs, POEs and governments.

• Recent Clients served: John Deere, Cummins, Caterpillar, Swarovski, Schunk, BMW, Schaeffler, Triton, Riverland Capital, Yunnan Provincial Government, Taian (Shangdong) Government, Shaanxi Mining Corporation, MingR Jewelries, etc. Eduardo Morcillo

Education & Qualifications Sector Competencies

• BA in Law (Carlos III University, Spain). • Automotive (components- Stamping, HMI, Power • MA in International Trade & Investment Law (University of Train, Electrical) Newcastle upon Tyne, UK). • Chemicals (mid and downstream) • Executive MBA (IESE, Spain). • Infrastructure (environment, energy) • Healthcare (pharma, equipment). Professional Experience Functional Competencies • Sinclair Roche & Temperley (United Kingdom). • Credit Suisse (Spain). • M&A • InterChina: 1999-2001: Beijing. Director; 2002-2006: • Strategic Alliances and Investment projects Shanghai. M&A Practice Director; 2006- 2010: Shanghai/ • Corporate restructuring Managing Partner Madrid. EMEA Director; 2010- Current: Shanghai. Managing • Corporate lobbying Partner. Shanghai Office • Other Experience: Board of Director Member (in three China Spanish corporations); Member of Executive Board of Directors (three global organizations CWI, IMAP, EUCCC); Associate Professor MBA Schools (IE, Cheung Kong Business School) Project Experience

• M&A: 15 Transaction deals (Auto components, infrastructures, Chemicals, Steel, Foundry and Healthcare). Average Transaction Value: from 20 to 100 million Usd. • Strategic Alliances: Establishment of 12 Joint ventures (Auto components, chemical/petrochemical, franchise, machine tool, elevator industry, Energy and food business). Average Transaction Value: 50 to 300 million Usd. • 100% Controlled Investment Projects: 10 WFOEs (Auto components, chemical, petrochemical,). Average Investment volume ranging from 30 to 400 million Usd. • Corporate Lobbying: Corporate restructuring strategy and negotiation (energy, infrastructure, mining) with government bodies and institutions. • Recent Clients served: Faurecia, Hella, Grupo Antolin, Grupo Maier, Federal Mogul, Bimbo, Girbau, Maxam Corp, Air Products, Abengoa, etc

Confidential © InterChina 24 Jan Borgonjon

Education & Qualifications Sector Competencies

• MBA (Henley, UK) • Chemicals • Chinese Language Specialization, Nanjing University, • Automotive (components, Tier 1) 1983-1985 • Industrial (Machinery, Machine Tools, • BA Chinese Studies (Leuven University, Belgium) Components) Professional Experience Functional Competencies

• 1985-1987:China Europe Institute, KU Leuven, • Strategic Alliances and Investment projects Administrator • Strategic Advise • 1988-1994: Adminstrator and later Director China • Corporate lobbying President Europe Management Insitute (CEMI), Beijing • 1994: Acting President CEIBS, Shanghai Shanghai Office • 1994-current: President InterChina Belgian • Other : Advisor to the Minister of Foreign Trade of Belgium. Member of the Board of Directors CEIBS, Shanghai 2000-2014. Vice President and Member of the Executive Committee EUCCC (2002-2006). Commander in the Order of Civil Merit of Spain Project Experience

• Strategic advise: Leadership of over 50 projects related to market entry or business expansion for western companies in China. CEO level advise to large western corporations related to China operations • Top level negotiation: corporate restructuring strategy and negotiation for several companies in China; alliances with Chinese groups; negotiation of numerous joint ventures and 100% controlled investments mainly in industrial sectors; acquisitions of Chinese companies. • Government contacts & lobbying: has been in charge of several projects involving government contacts at both national and local level. Obtained approval for automotive distribution company, government relations advise to one of the largest global steel companies, establishment of GR structure for large paper MNC.

Confidential © InterChina 25 Luo Bo

Education & Qualifications Sector Competencies

• Bachelor of Business Administration, Simon Fraser • Transportation University (Canada) • Automotive • MBA, INSEAD (France and Singapore) • Chemicals • CFA (Chartered Financial Analyst) chart holder • Industrial/ Mining Professional Experience Functional Competencies

• Senior Business Development Manager, Maersk • M&A • Associate Director, Somerley Investment Consulting • JV • Senior M&A Manager, Hertz China • Strategic Alliances and Investment projects • CFO, Xingwang Coal Mining Company • Corporate restructurings • Other Experience: the founder of a truck components • Corporate lobbying Director trading company; and military experience in Chinese Shanghai Office navy Chinese Project Experience

• M&A: Actively participated as lead negotiator in several Acquisition and Divestment projects: • Minority acquisition of the largest car rental company in China with the market value of USD 1 billion. • Establishment of Joint Venture via Acquisition between leading multinational and the sixth largest port worldwide. • Established a partnership via M&A with the largest chauffeur-served car rental company in Japan to enter into China. • Several M&A investments into coal mining (Jiangxi Province) and iron mine in China. • Participation in Divestment processes in the mining field in China. • Main Role: Support on identification of targets/ partners/ investors; Coordination of Due diligence, financial modeling and valuations; Key document drafting and coordination of service providers (ie. Lawyers); Negotiations, closure, and integration

Confidential © InterChina 26 MNC Base: Supported top global auto comp. leaders, while serving sector niche leaders as well; maintaining / expanding contact base

InterChina MNC Contacts (Auto) InterChina Client Base in Global 100 Chemicals Co. • 700+ active decision-maker contacts at international companies • Out of 80 non-JP/KR top 100, we work with ¼ of those leading in the auto sectors. players, while having regular contacts in China and globally • 40% of these decision-makers are China-based, with the from another ¼ of those leading players. balance at headquarters in Europe and the US.

ID Company Contact Contact T itle Position email Office Office Office Mailing Sector L-1 Sector L-2 Country 1152 Shanghai GM Hao Ren 任皓 Mr. Vehicle Line hao ren@s Shanghai Shanghai China 上海浦东金 Industrials Automobile Germany 419 Shanghai Udo von Mr Dipl -ing udo klot@c Shanghai Shanghai China 中国上海安 Industrials Automobile Germany 8690 SIEMENS Jeff Zhou 周建峰 Dr. Vice jeff.zhou@ Shanghai Shanghai China 上海闵行区 Industrials Automobile Germany 6816 Simoldes Jaime Sa Mr General Jaime sa@ Oliv eira de Portugal Portugal Rua Industrials Automobile Spain 2075 SKF Chenggui 柳承贵 Mr Project chenggui liu Shanghai Shanghai China 上海北京东 Industrials Automobile 7946 SKF Hawking 张晶 Ms. Head of hawking.zh Shanghai Shanghai China 上海半淞园 Industrials Automobile Sweden 6681 SKF Michel Ms BD michel zha Shanghai Shanghai China No 377 Industrials Automobile Sweden 6794 SKF Rakesh Mr. President rakesh.ma Sweden SE-415 50 Industrials Automobile Sweden 6682 SKF (China) Co., Ulrich A. 邬力 Mr. Director, ulrich.selig Shanghai Shanghai China No.377 Industrials Automobile Sweden 8054 Sogefi Eric Liu 刘正 Mr Sales KAM eric liu@so Suzhou Zhejiang China No 1028 Industrials Automobile 8141 Sogefi Marie- Ms. Head of marie- France Sogefi Industrials Automobile France 8052 Sogefi Oliv ier 欧苙玮 Mr. China oliv ier.cuzin Suzhou Zhejiang China No.1028 Industrials Automobile 8140 Sogefi RAUCY Mr Global cedric rauc France Industrials Automobile France 8053 Sogefi Sebastien 博文 Mr. General sebastien.b Suzhou Zhejiang China No.1028 Industrials Automobile 731 Somema Fernando Mr. Director somema@ Portugal Rualde Industrials Automobile Portugal 8331 SPJ Espejos y Victor Mr Area Sales victor pont Lleida Spain Poligono Industrials Automobile Spain 10157 SRG Jason Plating jyang1@sr Zone, Industrials Automobile Global 4259 SRG GLOBAL Dave Mr Business dingram@s Shanghai Shanghai China Room6F1 Z Industrials Automobile US 3287 SRG Global Jon Mr Vice jdegaynor US 23751 Industrials Automobile 10564 STABILUS Alex T ian 田学峰 CEO/ xftian@sta Changzhou Jiangsu China No.8 Industrials Automobile Germany 10589 STABILUS Thorsten Head of tschell@sta Koblenz Germany Wallershei Industrials Automobile Germany 10063 Standard Motor Hap Acee Mr. VP/ hap.acee@ Hong Kong Hong Kong China Unit C, Industrials Automobile US 1836 Strattec Thomas Mr. Product thermann WI US Strattec Industrials Automobile US 8387 Streparava Carlo Mr Senior c bignardi@ Brescia Brescia Italy 13 Via Industrials Automobile Italy 8386 Streparava Enrico Mr. Business E.Deltratti Brescia Brescia Italy 13, Via Industrials Automobile Italy 8808 Streparava Francesco Mr. Supplier contact@st Brescia Brescia Italy 13, Via Industrials Automobile Italy 6770 Streparava Pier Luigi Mr President contact@st Italy 13 Via Industrials Automobile Italy 8809 Streparava Renato Mr. Product contact@st Brescia Brescia Italy 13, Via Industrials Automobile Italy 2643 Sunred Joan Orus i Mr. General joanorus@ Barcelona Spain C/ Juan de Industrials Automobile Spain 4745 Sunwin Bus Rune General rune lundb Shanghai Shanghai China 上海市闵行 Industrials Automobile 9254 SUSPA Jin Shen 沈金鑫 Dr. General jshen@cn. Nanjing Jiangsu China No.2, West Industrials Automobile Germany 8897 TE Gary Li 李万祥 Mr Sr Dir Sales gary li@te Shanghai Shanghai China Building 5 Automobile US 8898 TE Kate Zhou 周宇君 Ms Manager kate zhou Shanghai Shanghai China Bldg 5 Automobile US 8900 TE Peter W. Mr. General peter.cirino Singapore No. 26 Ang Automobile US 7895 TE Thomas 刘沈明 Mr Vice thomas sh Shanghai Shanghai China Building 5 Industrials Automobile US 286 Tecniacero Francesc Mr. Director francesc.fa Barcelona Spain Ctra. Industrials Automobile Spain 994 Teco Barbettin Mr. General teco@teco. Italy Via Pio La Industrials Automobile Italy 2766 Think Global Richard P Mr MD U K & rbl@think n London UK Chenil Industrials Automobile Norway 2321 TI Group Enric Jornet Mr. Comercial ejornet@es Barcelona Spain Muntaner Industrials Automobile Spain 7143 Tianjin Santroll Guo Zhi Mr. Product yf16@sant T ianjin T ianjin China Industrials Automobile 1601 Troqueleria Oscar Mr Director juan tobia Barcelona Spain PL Industrials Automobile Spain 5472 TRW Mark Mr. Vice mark.stew Shanghai Shanghai China 6F, Building Industrials Automobile US 7324 TRW Automative Eric NI Mr. Aftermarke eric ni@trw Shanghai Shanghai China 5F 62 Industrials Automobile 7323 TRW Automative Kitty Zhu Ms Product kitty zhu@t Shanghai Shanghai China 5F 62 Industrials Automobile 5471 TRW Automative Laurent Mr. Vice laurent.cro Shanghai Shanghai China 5F, Building Industrials Automobile US 7325 TRW Automative T im Ward Mr Aftermarke tim ward@t Shanghai Shanghai China 5F 62 Industrials Automobile 7894 Tungray Shaojian Vice Chair shaojian z Shanghai Shanghai China City Industrials Automobile US 8896 Tyco Electronics Carl Smiley Mr. Senior Vice carl.smiley Singapore No. 26 Ang Automobile US 6699 UFI Filters Kelv in Mr Asia Pacific kelv in wang Shanghai Shanghai China 上海市青浦 Industrials Automobile 10306 UFI Filters Luca Biagini APAC COO luca.biagini No.9785 Industrials Automobile China 6697 UFI Filters Rinaldo Mr. Chief rinaldo.facc Italy 1-37060 Industrials Automobile Italy 3488 Ultra Parts Mark Mr Managing mpagliaroni US 33525 Industrials Automobile 10531 Uriel Inversiones Francisco Mr. Director fsoto@urieli Madrid Spain P de La Industrials Automobile Spain 4046 Uriel Inversiones Juan Felix Mr. Presidente jfhuarte@u Madrid Spain P de La Industrials Automobile Spain 3737 Valeo Ian Wang 王依润 Mr Director yirun wang Shanghai Shanghai China 上海市漕河 Industrials Automobile 331 Valeo Michel Mr. Group Asia michel pagl Shanghai Shanghai China Industrials Automobile France 1633 Veritas Jose Ma Mr. Director josemjane Barcelona Spain Av Industrials Automobile Spain 904 VOLKSWAGEN Bojun Song Mr Assistant bojun song Germany Volkswagen Industrials Automobile Germany 903 Volkswagen Kai Mr. Manager kai.grueber Beijing Beijing China 北京市建国 Industrials Automobile Germany 273 Volkswagen Klaus-Uwe Mr k Schaffrat Beijing Beijing China 北京建国门 Industrials Automobile Germany 902 Volkswagen Melanie Ms PR officer melanie be Beijing Beijing China 北京市建国 Industrials Automobile Germany 675 Volkswagen Zhang Mr. Ex ecutiv e suixin.zhan Beijing Beijing China 北京市建国 Industrials Automobile Germany 271 Volkswagen Zhao Mr Senior jiayou zhao Beijing Beijing China 北京市建国 Industrials Automobile Germany 7924 Volkswagen Bahong Su 苏巴鸿 Mr. Director, bahong.su Beijing Beijing China 北京朝阳区 Industrials Automobile Germany 7033 VOLVO Dzeki Mr. Vice dzeki.macki Shanghai Shangahi China No.2095, Industrials Automobile 5099 VOLVO Harry Li Mr VP harry li@vol Sweden Sweden 上海市嘉定 Industrials Automobile Sweden 5100 VOLVO Karin Malm Mr. Purchasing kribarit@vol Sweden China Dept Industrials Automobile Sweden 7034 VOLVO KATARINA Mr. Vice katarina.fjo Shanghai Shangahi China No.1180 Industrials Automobile 6914 VOLVO Lars Falk Mr Vice lfalk5@volv Goteborg Sweden Dept Industrials Automobile Sweden 5102 VOLVO Luc Mr. VP STA lsemeese@ Sweden Sweden Dept. Industrials Automobile Sweden 8000 VOLVO Nicolas 赵智国 Mr IT Director nicolas zha Beijing Beijing China 11F Tower Industrials Automobile 7032 VOLVO Sy lv ain Di Director sy lv ain di- Shanghai Shangahi China No 2095 Industrials Automobile 5103 VOLVO Thomas Mr. VP Interior thomas.gro Sweden Dept Industrials Automobile Sweden 5106 VOLVO Thomas Mr Director 40 thomas vq Sweden UK 53084 Industrials Automobile Sweden 4487 Webasto Christian Mr Strategic christian hai Germany Friedrichsh Industrials Automobile Germany 6833 Webasto Fernando Mr. Head of fernando.v San Spain C/Mar Industrials Automobile Spain 4260 Webasto Thomas Mr General thomas lue Beijing Beijing China A2103 Tow Industrials Automobile Germany 4283 Webasto Wang Mr. Head of x iaoming.w Beijing Beijing China 北京市朝阳 Industrials Automobile Germany 2016 Welly Automotive Mitchell Lou Mr. Chairman [email protected] Shanghai Shanghai China No. 60, Industrials Automobile China 532 Zadi Bruno Mr Consultani brunopr@t 138 Via C Industrials Automobile Italy 4376 Zanini Antonio Mr. Corporate amolon@z Spain Industrials Automobile Spain 3245 Zanini Conrad Mr. Strategic ctorras@m Barcelona Spain Marineta, Industrials Automobile Spain

Confidential © InterChina 27 Chinese Contacts (1/2): Maintained strong network with proactive and reactive Chinese investors and institutes

Example Chinese Investor List (Auto) Networking (Examples): Associations, Chinese OEMs, and Chinese component players)

No. Buyer Name Type Industry 1 Ningbo Joyson Electronic Corp Strategic Auto/Trk Prts&Equip-Orig 2 Zhejiang Geely Holding Group Co Ltd Strategic Auto-Cars/Light Trucks 3 Wanxiang Group Corp Strategic Auto/Trk Prts&Equip-Orig 4 SAIC Motor Corp Ltd Strategic Auto-Cars/Light Trucks 5 Jiangsu Olive Sensors High-Tech Co Ltd Strategic Auto/Trk Prts&Equip-Orig 6 Zhejiang Vie Science & Technology Co Ltd Strategic Auto/Trk Prts&Equip-Orig 7 Ningbo Huaxiang Electronic Co Ltd Strategic Auto/Trk Prts&Equip-Orig 8 Sailun Jinyu Group Co Ltd Strategic Rubber-Tires 9 ZMFY Automobile Glass Services Ltd Strategic Auto/Trk Prts&Equip-Orig 10 Shandong Yongtai Chemical Group Co Ltd Strategic Rubber-Tires 11 Zhejiang Shibao Co Ltd Strategic Auto/Trk Prts&Equip-Orig 12 Ford Motor Co Strategic Auto-Cars/Light Trucks 13 Dah Chong Hong Holdings Ltd Strategic Auto-Cars/Light Trucks 14 Weichai Power Co Ltd Strategic Auto/Trk Prts&Equip-Repl 15 Tianjin Motor Dies Co Ltd Strategic Auto/Trk Prts&Equip-Orig 16 Mubea Automotive Components Taicang Co Ltd Strategic Auto/Trk Prts&Equip-Orig 17 •Zhejiang80 Youngman+ deals Passengerfor topCar Group50 Coin Ltd the pastStrategic5 yearsAuto-Cars/Light… Trucks 18 Fuyao Glass Industry Group Co Ltd Strategic Auto/Trk Prts&Equip-Orig 19 •Beijing… Automotivewith deal Industryvalue Holding Cototally Ltd aboveStrategicUSD 130Auto-Cars/Lightbil … Trucks 20 Guangzhou Automobile Group Co Ltd Strategic Auto-Cars/Light Trucks 21 FAW CAR Co Ltd Strategic Auto-Cars/Light Trucks 22 •Hyundai… withMotor Cothe median deal value atStrategicUSDAuto-Cars/Light70 mil. Trucks 23 Fangda Special Steel Technology Co Ltd Strategic Auto/Trk Prts&Equip-Orig 24 •ShanghaiWe Fosunhave Pharmaceuticalmaintained Group Co Ltddecent relationsStrategic Medical-Drugswith 1/2 of 25 Northeast Industries Group Co Ltd Strategic Retail-Automobile 26 Chongqing Skyman Industrial Group Co Ltd Strategic Auto/Trk Prts&Equip-Orig 27 HNA them,Group Co Ltdplus other potential investorsStrategic . Airlines 28 Tencent Holdings Ltd Strategic Internet Applic Sftwr 29 Tianjin THSG Corp Strategic Investment Companies 30 PAG Financial Private Equity 31 GO Scale Capital Ltd Strategic Finance-Investment Fund 32 Daqing State-owned Assets Management Co Ltd Strategic Investment Companies 33 Aerospace Hi-Tech Holdings Grp Ltd Strategic Auto/Trk Prts&Equip-Orig 34 Transportation Technology Ventures LLC Financial Venture Capital 35 Shanghai International Group Co Ltd Strategic Investment Companies 36 Reliance Venture Asset Management Pvt Ltd Financial Venture Capital 37 Yuan Capital Financial Venture Capital 38 Shanghai Jiaerwo Investment Co Ltd Strategic Investment Companies 39 Ningbo Jifeng Auto Parts Co Ltd Strategic Auto/Trk Prts&Equip-Orig 40 Sichuan Bohong Industry Co Ltd Strategic Auto/Trk Prts&Equip-Orig 41 Xiaoju Kuaizhi Inc Strategic Investment Companies 42 China Taiping Insurance Holdings Co Ltd Strategic Multi-line Insurance 43 Cayman Engley Industrial Co Ltd Strategic Auto-Cars/Light Trucks 44 Chongqing Sokon Industry Group Co Ltd Strategic Auto-Cars/Light Trucks 45 Anhui Zhongding Holding Group Co Ltd Strategic Auto/Trk Prts&Equip-Orig 46 Xiangyang Automobile Bearing Co Ltd Strategic Auto/Trk Prts&Equip-Orig 47 Ningbo Joyson Automotive Electronic Holding Co Ltd Strategic Auto/Trk Prts&Equip-Orig 48 Qingdao Doublestar Co Ltd Strategic Rubber-Tires 49 Baidu Inc Strategic Web Portals/ISP 50 GSR Ventures Management Co Ltd Financial Venture Capital

Confidential © InterChina 28 Index

• Sector Dynamics 1 • Our Auto Services & Team 2 • Perspectives On China’s Auto Sector 3 • Consulting Cases 4 • Deal Tombstones 5

Confidential © InterChina 29 NEVs In China: China will most likely lead the global NEV wave, but needs more balanced efforts from all stakeholders…

China’s Government • Address the challenges of oil dependency. • Address the challenges of emissions controls. • Leapfrog China’s automotive tech globally.

5 million Consumers In China’s OEMs & Supply Chain Market • Investment in technology BEV (incl. PHEV) 0.5 million • Expectations of NEV’s development. performance. 2012 2015 2020 • • Technology route selection. Planned Planned Expectations of NEV’s safety Ownership Ownership and reliability. • New car models. * Actual BEV (incl. PHEV) ownership by 2015 is • Price-sensitive. • Supply chain development. slightly below 0.5 million * HEV: <20k in 2012; without gov. goals in 2015 • Occasional personal and 2020. image/activism-based decision making. Infrastructure • Who will fund and who will benefit? • The power consumption of NEVs is 10% of China’s grid power at maximum.

Note: The existing composition of NEV might have commercial vehicles (usually with demonstration projects and corporate purchases) taking the majority of sales; however, in 2015 - 2020, passenger vehicles will take the majority. The report doesn’t include low-speed electric vehicles produced by non-qualified players. Source: China’s NEV 12th FYP; MOST Confidential © InterChina 30 Future Direction in China: …Heavily influenced by the gov. policies, for both scale and tech routes…

Major Stakeholders Preference for BEV, including PHEV (i.e. Attitude & Achievements) Now Future

Now 2015 – 2020 • Determined government policies on NEV (especially BEV). NEV Vision • Will maintain the policy direction. China’s Government Subsidy/ • Largely in favor of BEV/PHEV; very little preference for HEV. Double-credit • Phase-out subsidy scheme with double-credit system taking over. System

• Large investment in BEV, as well as PHEV (according to industrial insiders). Chinese OEM • Many registered models . • Technology gap with the international market might begin to close.

OEMs For • Concerned with IPR now; might take opportunistic approach at this time. Non-JP China’s • However, might transfer some BEV/PHEV models to China upon initiation of Foreign OEM Market the market.

JP OEM • Significant focus on HEV.

• Price-sensitiveness + Mileage Anxiety + Perceived Tech Instability > current environmental concern. Consumers In China • With technology improvements and cost reductions, there will likely be more purchases. • Follow the market demands. Infrastructure investors • Various business models (different investor profiles; battery charging vs. battery swapping).

Largely favorable to BEV now Less favorable to BEV now Favorable development to Less Favorable development to BEV 2015-2020 BEV 2015-2020

Confidential © InterChina 31 Market Volume: …are we close to the tipping point?...

EV + PHEV Sales Volume Targets in China’s NEV 12th FYP

Actual ownership by 2015: (unit) 0.45 million units, close to targeted volume 330,200 0.5 million PV - PHEV planned ownership in 2015 is ? narrowly missed

PV - EV 5 million planned ownership in 2020 CV - PHEV possible? 74,763

CV - EV th 17,799 9,908 (China’s NEV 12 FYP) 168 2,153 3,785 2009 2010 2011 2012 2013 2014 2015

Source: CAAM, MOST Confidential © InterChina 32 Infrastructure: …Implementation has lagged behind the plan, coastal region takes the lead…

Lagging behind the plan significantly; land But policies with implementation measures are availability, possible low utilization rates and the “speeding up” in China, with a positive impact on coordination of various gov. bodies present the market challenges

Charging Stations Time Region Measures 12,000 Dec Jiangsu • Provincial gov. gives RMB 800-1200/kw 2014 of subsidies for construction of charging facilities • City gov. provides same amount of 3,600 subsidies as the provincial level 12 100 155 371 418 732 Nov National • Central gov. awards subsidies to local 2014 governments who reach NEV 2009 2010 2011 2012 2013 2014 2015 2020 application targets Goal • Budgeted subsidy amount is estimated to be RMB 10 bn for 2015 Charging Piles Jun Shanghai • Municipal gov. provides up to 30% of 2014 investment to charging/swap facility construction/operation companies in 4,800,000 their projects of building qualified charging/swap facilities 49,000 17,932 22,256 28,000 Jun Wuhan • City gov. gives subsidy to purchasers 2014 of charging poles through public bidding process, with the amount of 2012 2013 2014 2015 2020 Goal 20% of purchasing price, or max. RMB 3 m • The number of charging stations in 2015 is 23% of the Apr Shenzhen • City gov. gives 30% subsidies based 2020 target; charging piles are only 1% of the target. 2014 on equipment investment amount of a • SAIC recently invested RMB 300 m in establishing a new charging/swap station, or max. RMB company designated for building charging piles, with the 300,000 aim of completing 50,000 charging piles countrywide by Oct National • Central gov. awards annual subsidies 2020. 2015 to provincial governments reaching NEV application targets during 2016- 2020, max. RMB 200 million Notes: This applies to both private cars and vehicles of companies (e.g. taxi, bus). Source: MIIT, CSR of State Grid and South Grid, China NEV Yearbook 2012, NDRC, National Energy Administration, Confidential © InterChina 33 InterChina Consulting interviews and analysis. Opportunities Along Value Chain: …new and unique, which may open up new opportunities along the value chain

NEV will require a very different set of …which may present many opportunities along the new components… value chain…

Battery For Example: Pack NEV Exclusive • Battery Pack Components • Motor System Battery Battery BMS and • Control system modules (cells pack case electronic parts included)

ICE For Example: Components • Brake But Required • Inverter / Converter Tech • Air conditioner Modification CAN / Chips, PC board, MOS transistors, Isolation Top cover, Gasket, chips, CPU, Transformer, Insulator, Safety vent, Battery positive terminal, relays, CAN / Chips, PC Separator, Water based Battery negative terminal, board, MOS transistors, binder, Electrolyte, Anode Service plug, Main fuse, Isolation chips, CPU, For Example: negative electrodes, Relays, Current sensors, Transformer, relays, BMS Traditional Cathode positive • Engine case, Temperature Components Voltage sensor electrodes, Tab, Inner • Transmission System sensors, Thermal In ICE pack, Battery cell carrier • conductive materials, PTC Chassis heater, A/C chiller, Fan

Confidential © InterChina 34 Aftermarket Potential: Likely to gain much more importance in the automotive sector in China…

Sales of AF (Aftermarket) components in China are …and the industry is shifting to a more balanced growing faster than total component sales due to situation of OEM and aftermarket sales booming new car sales…

The Scale of The Component Industry in China The Profit Allocation Structure (Unit: bn USD)

CAGR (2009-2013) 437 100% AF Comp 80 37% Sales 20% New car sales 43%

After-services 12% 60% 177 Non-AF 357 23 Comp Sales 23%

Spare parts 45% 154 20%

2009 2013 China North Overall American

Sources: CAAM, Development Research Center of the State Council, InterChina Interviews and Analysis Confidential © InterChina 35 Geo. Focus: …but the future battlefield is around T2 cities (incl. provincial capitals in T3)…

T2 & T3 Provincial Capitals provide a strong growth platform, with decent size now and strong growth potential plus the moderate competition yet

PV ownership Average disposable Urban Population PV ownership # of 4S shops Competition of CAGR income per capita (2012, million) (2013, million) (2013) distributors (2008-2013) (2012, RMB 1,000)

68 9.8 22% 2,500 38 T1 Cities

T2+T3 provincial 327 34.8 27% 12,500 30 capitals

315 34.2 28% 8,000 25 Other Cities

T1 cities: Have already reached mature growth due to large ownership base and new purchase restriction, plus there is high density of distributor as competitors. T2+T3 provincial capitals: Have the high growth potential because of smaller ownership base and only few big cities have imposed restriction. And the competition is not so strong. The total in all other 600+ cities: Good new car growth rate but very small car ownership based due to low population and disposable income. And there is lack of qualified distributors.

Source: InterChina analysis Confidential © InterChina 36 Aftermarket Transformation: …and success in the aftermarket largely depends on quality and concentration of channels & distributors…

Existing automotive after market under OEM …Future automotive after-market with de-regulate monopolized model is mainly authorized with model will largely depend on concentrated co-existed varied quality… authorized and independent channel with quality

mainstream minor stream mainstream minor stream

Component maker Component maker

Large-Scale Large Distributor of OEMs Auto Part Volume OEMs Component Market Wholesaler makers

Authorized Authorized Parts Retailer Channel Channel 4S, 3S Dealer 4S, 3S Dealer

Non Authorized Channel, Non Authorized Channel including more quality chains

Car Owners Car Owners

Confidential © InterChina 37 Emerging Model: …1-step distribution model is likely to be the future winner, differing from western markets…

Current Mainstream Model: Emerging Model: 2-step or multi-step Distribution* 1-Step Distributor* Natural Distribution Quality Distribution

• Multiple products and brands. Multiple Manufactures Multiple Manufactures • Usually regional. • Tier-1 might have • Multiple products Tier-1 Distributor loose control over the and brands. Target – 1-Step Distributor workshop/retailers. • Usually regional. Tier-2 Distributor • Tier-2 might be too • Majority of small for acquisitions. business via direct W W W W W W • This natural W W W W W W sales to distribution model is workshop/retailers different from the with decent control. “designed” in-depth Car owners Car owners distribution model in the US.

Market Understanding Low High

Model Channel Control Comparison Weak Strong

Response To Market Dynamics Slow Fast

*Note: The above chart is just for illustration purpose and is simplified. The actual aftermarket distribution structure is much more complex. The 1-step distributors might also have a certain portion of the revenue from 2-step business. Confidential © InterChina 38 Key challenges – and success factors – for foreign investors

Insufficient market • Avoid boiling the ocean. understanding in 1 • Dig deep in a focused way. China’s complex aftermarket • Avoid investing either too ahead of or too far behind the trend.

Significant differences between China and • Fit for China: Local design of the distribution model. 2 foreign aftermarket • Tailor-made communication message to global HQ. business models

• Avoid waiting for the perfect target profile. Lack of acquirable • Focus on critical factors, e.g. sustainable channel access and control. 3 quality distributors • Systematic search and screening. • Warm-up and maintain relations with targets .

• Local team building with HQ trust and support. How to speed up China 4 • Result management, rather than process management. know-how building • Best practice learning via benchmarking.

How to effectively • China way… 5 mitigate possible risks • …but strictly following the home-country regulations such as FCPA.

Source: InterChina Consulting analysis. Confidential © InterChina 39 LW Drivers: Lightweight automobiles have become a global must-do in the recent future

Lightweight automobiles will help reduce Lightweight automobiles will also enhance the Greenhouse gas emissions, while China is one driving performance of the vehicles generation behind the EU and US

Lightweight automobiles will improve fuel consumption, Lowering the weight of automobiles has become a global acceleration and braking distance, which influence the trend in world’s major auto producing countries overall driving performance of the vehicles.

Research from Volkswagen has shown that lightweight automobiles will reduce CO2 emission per km by 8-11 grams

Emissions control targets of key countries (g/km) -100 Kg Fuel Consumption -0.4 L/100km

Acceleration +8%~+10%

200 200 200 200 Brake Distance -2~-7m 161 140 150 150 150 Drivability 110 117 95 100 100 100 Safety 65 50 50 50 Lower Better 2010 2020 2030 2010 2020 2030 2015 2020 2025 Weight Performance Euro Regulation 2009/443/EC US Regulation China: MIIT

Note: The emission control is either taken from the policy directly or calculated based on the capped fuel consumption by the gov. (e.g. 5 litre/km in 2020).

Source: InterChina Interviews & Analysis Confidential © InterChina 40 LW In Action: Various OEMs have set different automobile weight reduction goals

Major OEM targets are clear in their roadmap Some models from major OEMs have schedules reduced weight despite larger sizes

Toyota Target • Reduce weight by 100kg 2010-2015 for 3 types of cars Height • Reduce weight by 200kg After 2016 for larger car scope Length Width Mazda Target • Reduce weight by 100kg Polo GTI Mk5 (2014) Mk6 (2018) VAR 2011-2015 via body structure optimization Length (mm) 3,972 4,053 +81 • Reduce weight by 100kg After 2016 Width (mm) 1,682 1,751 +69 during each redesign Height (mm) 1,453 1,446 -7 Volkswagen Target • Reduce weight by 100kg Wheel Base (mm) 2,470 2,564 +94 MOQ Platform on each Golf model Weight (kg) 1,269 1,199 -70 • Reduce 79.8kg on new A3 Audi A3 Platform series Ford Motor Target Skoda Octavia Model 2014 Model 2018 VAR • Reduce weight around After 2020 Length (mm) 4,658 4,675 +7 318kg via new materials Width (mm) 1,814 1,814 +0 GM Target Height (mm) 1,459 1,460 +1 • Reduce weight by 100kg After 2016 via material improvement Wheel Base (mm) 2,684 2,686 +1 Chang’an Target Weight (kg) 1,215 1,200 -15 • Reduce weight by 40kg- After 2020 50kg for each new model

Source: InterChina Interviews & Analysis , OEM Interview Confidential © InterChina 41 LW Opportunity: Plastics play a significant role

Plastics play important roles in the … China still lags behind in the utilization of light weight evolution of lightweight automobiles… materials for cars, but has potential to grow faster…

• Plastics also face the competition from other • Technological innovation may expedite the penetration of lightweight materials for the lightweight of PV. materials in local OEMs, but penetration will slow down due to plastic replacement application caps.

Lightweight Technique Weighting 200 156 100% 139 Pure Chinese OEM Plastic 90 Usage per PV (kg)

Metal Alloy ～40% 2010 2016 2020 2035 Modified Plastics 250 PP,PE,PVC,ABS The basis of forecast (kg) 194 ,PBT… Realistic China OEM Plastic 178 130 Glass Fiber Usage per PV (Chinese OEMs Composite use less plastic, and JV OEMs in China might have “lower Plastics 50% Composite Carbon Fiber standards” plastics consumption Composite in China.) 2010 2016 2022 2035

450 Nature Hemp 364 Design 334 Optimization ～10% 230 Global OEM Plastic Usage per PV (kg)

Definition: Penetration rate of China is only for Local OEMs 2010 2016 2022 2035

Source: InterChina Interviews & Analysis & China Plastic Association Confidential © InterChina 42 Market Paradigm: China will catch up with int’l markets for plastic light weight (PLW) adoption … especially driven by Chinese OEMs

China lags behind in PLW adoption compared with other int’l markets, and will be picking up quickly, driven by Gov. Vision and Chinese OEMs increasing tech know

PLW Adoption geographic markets Chinese OEMs will be catching up with Illustrative comparison, 2017 Int’l markets quickly Unit: kg plastics per car in average x3 High 365

220 250 150 90 how - China US Japan France Germany Early Know Other Adopters PLWTechnology • China lags behind for PLW adoption for passenger cars Chinese compared with other international market. OEMs • This is because a) the OEMs technology know-how, followers mindset is weak, b) overall supply chain readiness is low Low Chinese Gov. sets up ambitious “Aggressively Low High weight reduction target for PV fleets promote the application of PLW Application high duty Mindset -30% steel..., • Chinese OEMs have been closing the gap in both plastics and 100% 90% PLW mindset and know-how. 80% 70% composite materials • Some Chinese OEMs like Geely, Chery among application.” others are more active in adopting PLW. ~ SAE • They will set up role models for followers, 2015 2020 2025 2030 together with improving readiness of supply chain will boost the overall adoption of PLW. *Note: PLW = plastic light weight Confidential © InterChina 43 Source: “Technology Roadmap For Energy Saving and New Energy Vehicles” by SAE, InterChina Interviews and Analysis Which Customer Base To Alliance?: Among Chinese OEMs’ early PLW adopters are Geely, Chang’an, and Chery… they will become role models for market followers

Though lag behind JV OEMs in PLW adoption, Chinese OEMs have been picking up PLW very recently, with front end carriers as initial focus

Unit: K units cars sold • Chang’an, CX30 • Chery, Aizerui7 • Chang’an, Yidong • Geely Boyue In China market • Front end • Front end carrier • Front end carrier • Beam carrier • LFT • -4kg, 40% • -2kg, 50% • -4kg, 40% • LFT Chinese • LFT 156 • Geely, Dihao GS OEMs 92 • Battery Tray 17 4 • Front end 2016 2017 2016 2017 • -1kg

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E

• VW, Magotan • Nissan, X-trail • Mercedez, Class E • Front end carrier • Rear door • Dashboard Frame • 20% weight reduced • From 38kg to 25kg • -3.2kg JV • LFT • LFT • LFT OEMs 171 211 180 185 113 57

2016 2017 2016 2017 2016 2017

• VW, Sagitar • Front end carrier

33 34

2016 2017 Confidential © InterChina 44 Source: InterChina Interviews and Analysis Which Products To Invest in R&D?: PLW will be more adopted by (semi-) structural parts

Auto parts applying PLW Key drivers of PLW

Not Fuel Consumption Targets • Fuel Saving: Lightweight is exhaustive for PV one of the most efficient ways Unit: L/100 KM to reduce fuel consumption. Frame of 1/3 Seat 8 To comply with Chinese Gov. Instrument Board 2/3 Seat Rear Door 6 regulation on CAFC U.S. (5L/100km, 4L/100km, 4 Door China 3.2L/100Km in 2020, 2025 2 EU 2030, OEMs need to apply Front-end various engine optimization Carrier 0 2015 2020 2025 2030 technology incl. PLW.

Front-end Carrier • Efficiency improvement: Spare Tire Well Unlike metal parts, the more 1/3 Seat flexible processing technology Seat Back make it possible for plastic Anti-collision 2/3 Seat parts to integrate dozens of beam auto part into one. Engine Cover Battery Frame

Rear Door “LFT is mainly used in semi-structure parts, while IMC can be • Cost Saving: Reducing the used in structural parts with higher strength coefficient, so auto parts need means a the substitution target for IMC is both LFT and metal parts.” more efficient process and a better cost performance. ---- Ningbo Huaxiang

CAFC: Corporate average fuel consumption. Confidential © InterChina 45 Source: InterChina Interviews and Analysis Automated Driving Policy: China is on parallel with leading countries in the development of automated driving technology…

Automated Driving Vehicle Development Milestones

• US: Federal Automated Nevada of US Vehicles Policy World • UK: gov. invested • become world’s first UN: International Road GBP 19 m for road Transportation Treaty that testing in 4 cities region to allow allows automated driving automated driving • France: Roadmap under conditions cars on ordinary released, gov. to • South Korea: issued first roads. driver license to an automated invest EUR 100 m driving car; invest KRW 145.5 in three years US, UK and • US: DARPA had Google Google bn since 2017 for Germany achievement started released its development of automated • driving vehicles started Italy: AGRO automated first • Japan: Road map; by 2020 relevant project road driving automated allow automated vehicle research test research driving car driving on express ways.

1970s 1980s 1990s 20042005 2009 2011 2014 2016

China started Shanghai Baidu relevant Jiaotong started 2014-2016: many partnerships formed between OEMs and research University automated internet/tech firms, such as developed first driving Baidu-BMW, Dongfeng-Huawei, urban research BAIC-LeSee, etc. 1992: National automated University of Defense driving vehicle FAW conducted Technology developed • Apr 2016: Chang’an ran road test for its China’s first automated 2,000 km road test for its HQ3 automated China driving vehicle automated driving vehicle driving vehicle • Oct 2016: Technology Road Map released

Source: Analysys – China Automated Driving Industry Report 2016, public literature Confidential © InterChina 46 Emerging Value China: Chinese enterprises from relevant segments have formed a ecosystem for automated driving vehicle development

Chinese Enterprises Involved in the Development of Automated Driving Vehicles

Component Suppliers Vehicle Suppliers OEMs Internet/Technology Firms Intelligent Sensing Chips

Technology Suppliers

Algorithm Cloud Car Connectivity

Interaction Controlling & actuating Platform HMI

Contents Suppliers Entertainment, Navigation communication, service

Source: Analysys – China Automated Driving Industry Report 2016 Confidential © InterChina 47 OEM Partnership: Chinese OEMs’ are actively developing the automated driving vehicles in partnership with various technology firms

Chinese OEMs Involved in Automated Driving Vehicle Development Domestic OEM Progress and Partnerships FAW 2011: HQ3 286 km road test Changsha-Wuhan Targeting on 50% of all its models to be automated driving by 2025 Dongfeng 2014: Partnership with Huawei

Chery 2016: Partnership with APG which targets auto driving by 2018

BAIC 2015: Partnership with LeSee

Chang’an 2014: Partnership with Huawei 2016: completed 2000-km road test Chongqing-Beijing ZTE 2016: ZTE acquired 70% share in the Guangdong Granton Bus and established ZTE Smart Auto SAIC 2016: released Roewe RX5 with YunOS automated control system, jointly developed with Alibaba. Geely 2017: will start construction of testing ground in H2, targeting on fully automated driving by 2024 BYD 2014: Partnership with Singapore Agency for Science, Technology and Research 2016: Partnership with Baidu Great wall Started research in 2012, targeting on rolling out automated car for expressway by 2020 Confidential © InterChina 48 Supporting Policies: The government attaches high importance to the development of automated driving technology

Government Action Time Highlights Body National Natural Organization of tech Annually • A nationwide competition on the automated driving Science Foundation competition: Intelligent Vehicle since 2009 technologies • Participants: Universities, science and technology of China Future Challenge research institutions, enterprises 国家自然科学基金 智能车未来挑战赛 • Top winners: Tsinghua University, National 委 University of Defense Technology, Beijing Institute of Technology State Council Released Plan of Made in China 2015 • Automated driving vehicles is one of the important 2025 directions for the upgrade of China’s auto industry. Ministry of Industry Approved National Intelligent June 2016 • Function: a closed area for comprehensive testing and Information Connectivity Vehicles (Shanghai) of automated driving vehicles • Area: 5 square km (phase 1), will be extended to Technology (MIIT) Pilot Demonstration Area 100 square km by 2020 国家智能网联汽车（上海）试点 示范区

Society of Released Intelligent Connectivity October Targeted milestones: Automotive Vehicle Technology Road Map 2016 • 2020: Driver assisted/partial self-driving vehicles 智能网联汽车技术路线图 take 50% market share Engineers of China • 2025: Highly automated driving vehicles take 15% 中国汽车工程学会 market share • 2030: entirely automated driving vehicles take 10% market share National Technical Formulation of the Framework Drafting Framework structure: ， Committee of Auto of Standards for Intelligent started in • Basis: terms and definitions classification and codes, identification and symbols Standardization Connectivity Vehicle 2014, now • General specification: Grading of intelligent 全国汽车标准化技 completed connectivity, HMI, information security 术委员会 and pending • Product and application: Information collection, pre- approval by warning, vehicle control, information interaction MIIT • Relevant standards: Communication protocol, interface

Source: MIIT, public literature Confidential © InterChina 49 China Ambition: China’s latest Development Roadmap targets fully automated driving by 2025

Targeted Technology Milestones in China for Automated Driving Vehicles

Connectivity • Vehicle Road Collaborative Coordinated Control • Decision- Auto Driving in Making and Downtown Area • Fully Automated Control • Auto Driving on Driving Expressway • Auto Driving on Urban and Suburban Roads • Cooperative Queue Drive Cooperative • In-lane Auto Driving • Intersection Assistance Sensing • Lane Change Aid • Fully Automated Parking • Adaptive Cruise Control • Automatic Emergency Braking Information • Lane Keeping Exchange • Parking Aid Intelligence

Driver Assistance Partial Auto Driving Conditional Auto Drive Highly/Fully Auto (DA) (PA) (CA) Drive (HA/FA)

Source: Intelligent Connectivity Vehicle Technology Road Map, Society of Automotive Engineers of China (2016) Confidential © InterChina 50 End-game: By 2035, China is forecasted to assume 24% share in global market of automated driving vehicles

Forecasted Sales of Automated Driving Vehicles Global and in China (SAE level 4 and 5)

(million unit)

CAGR 48% 11.80 2.80 China (24%)

9.00 ROW (76%)

0.23

2025E 2035E

Source: IHS Confidential © InterChina 51 M&A: China Outbound Deals in Auto Parts Sector 2014-2016 (1/2) Ranked by transaction value

Ratio of Ratio of % of Value of Date Target Enterprise Enterprise Target Name Buyer Name Shares Transaction P/E Effective Nation Value to Value to Acquired (USD m) Sales EBITDA China National Tire & Rubber 11/06/2015 Pirelli & C. SpA Italy 73.79 6,904.02 1.117638 6.79365 23.64 Corp China National Tire & Rubber 08/11/2015 Pirelli & C. SpA Italy 26.21 2,017.67 1.36807 8.315916 19.24 Corp Key Safety Systems 02/02/2016 United States Ningbo Joyson Electronic Corp 100.00 920.00 Inc Hilite International 10/30/2014 Germany AVIC Mechanical & Electrical 100.00 643.36 GmbH Investor Group (Aviation Henniges Automotive 09/09/2015 United States Industry Corp of China and 100.00 572.00 Hldg Inc Bohai Harvest RST Shanghai) Aerospace Hi-tech Holdings 18/01/2016 IEE SA Luxembourg 100.00 217.39 Group Co Ltd Anhui Zhongding Holding 23/10/2015 EcoMotors United States 200.00 (Group) Co Ltd 03/24/2014 Fisker Automotive Inc United States Wanxiang Group Corp 100.00 150.00 01/28/2015 Quin GmbH Germany Ningbo Joyson Electronic Corp 75.00 111.31 Anhui Zhongding Sealing Parts 03/02/2015 WEGU Holding GmbH Germany 100.00 107.57 Co Ltd 11/29/2014 DSI Holdings Pty Ltd Australia Proper Glory Holdings Inc 100.00 82.82 1 Opcon AB- 10/30/2015 Sweden Shanghai XingXueKang Invest 100.00 48.85 Compressor & Waste 28/10/2015 NYX Inc United States Shanghai Shenda Co Ltd 48.66 35.00 United Shandong Yongtai Chemical 06/12/2015 UYT Ltd. 100.00 46.50 Kingdom Group Co. Ltd.

Confidential © InterChina 52 Source: FactSet, EMIS Deal Watch China Outbound Deals in Auto Parts Sector 2014-2016 (2/2) Ranked by transaction value

Ratio of Ratio of Date Target % of Value of Enterprise Enterprise Effective Target Name Nation Buyer Name Shares Transaction Value to Value to P/E Acquired (USD m) Sales EBITDA IMA Automation 17/06/2014 Amberg GmbH Germany Ningbo Joyson Electronic Corp 100.00 19.39 09/03/2016 Marval Srl Italy Mandarin Capital Partners 13.22 Anhui Zhongding Sealing Parts 25/03/2016 Green Motion SA Switzerland Co Ltd 42.87 12.30 Elaphe Propulsion Zhejiang Asia-Pacific Mechanical 02/12/2015 Technologies Ltd Slovenia & Electronic Co Ltd 20.00 10.59 Jiangxi Special Electric Motor Co 02/03/2016 Four Link Systems Inc Japan Ltd 50.00 5.17 Waldaschaff 09/02/2015 Automotive GmbH Germany Lingyun Industrial Corp. Ltd. 100.00 3.72 0.061904 Seoyon Top Metal 22/07/2015 Mexico SA de CV Mexico Shanghai Yongli Belting Co Ltd 20.00 2.50 05/30/2014 Kokinetics GmbH Germany AVIC Mechanical & Electrical 100.00 n/a Key Safety Systems 08/29/2014 Inc United States FountainVest Partners Asia Ltd - n/a 01/31/2015 Lamberet Sas France AVIC Henan Xinfei Electric 100.00 n/a Waldaschaff 05/01/2015 Automotive GmbH Germany Lingyun Industrial Corp Ltd 100.00 n/a Johnson Controls- 07/02/2015 Automotive United States Yanfeng Automotive Trim Sys Co 100.00 n/a

21/07/2014 KS Aluminium- Huayu Automotive Systems Co Technologie GmbH Germany Ltd 50.00 n/a KOKI TECHNIK 16/07/2014 Transmission Systems Germany Aviation Industry Corporation of 100.00 n/a GmbH China ABC Group Fuel State Development & 21/04/2014 Systems Inc United States Investment Corp 100.00 n/a JAC Motors do Brasil Anhui Jianghuai Automobile Co 26/03/2014 Automoveis Ltda Brazil Ltd 32.00 n/a

Confidential © InterChina 53 Source: FactSet, EMIS Deal Watch Consolidation in the Automotive Industry

Partial consolidation in the commodity segments – trend towards segmentation for future suppliers

Observations in the tier 2 to tier 4 segment Anticipated development

Investor restraint due to uncertain development . 1 New players from the fields of IT and new materials will (global financial crisis and EU crisis) appear on the supplier market (e.g. SGL Carbon) . Wave of consolidations ideal for Asian investors Limited availability of liquid assets in 2009 to finance takeovers – 2 . Companies with high innovation potential will be of restrictive lending interest to OEMs as well as cross-sector industries (see Google, Apple, IBM, etc.) Tier 2 to tier 4 with certain innovation potential and new 3 . Product life cycles adapted to consumer behaviour, i.e. uses of technology are often unaffected by the consolidation increasing pressure to innovate . Challenge of defining M&A strategies according to the Market power of OEMs and their view that many segments are 4 supplier industry – commodity vs. innovation adequately consolidated

Consolidation trend through overcapacities in commodity 5 product areas (supplier reduction, cost pressures, globalisation, etc.)

Limited management resources – focus on stabilisation and Further consolidation at the OEM and supplier levels is 6 restructuring anticipated, which will be particularly crucial for the OEMs, as they would otherwise become puppets of the Many PE assets were underfinanced for the volatility of the industry, large suppliers, who would more or less impose 7 resulting in more PE insolvencies than with family-run companies strategies and components on them.

Price pressure in tier 2 to tier 4 is often not as high as for tier 1 Great potential for future M&A transactions that will 8 suppliers as it is below the detection threshold take place across industries (game changers)

System change and radical transformation in the automotive industry will result in new challenges for the OEMs. Source: IMAP analysis, Roland Berger Confidential © InterChina 54 M&A Environment in the Automotive Supply Industry

Suppliers from the emerging markets are strengthening their technological expertise and local presence through M&A

Overview of M&A supply transactions with purchasers from Asia Acquisition rationale Investor Country Target company Description Year . Acquisitions of highly Anhui Zhongding Austria Druckguss . Die-casting components 2016 developed production and manufacturing technologies Ningbo Joyson TechniSat . Electronic components 2016 . Lingyun Waldaschaff . Systems and component parts 2015 Access to R&D expertise

Motherson Group Scherer + Trier . Thermoplastic moulded parts 2015 . Acquisition of well-known brands with the “Made in AVIC KOKI Technik . Gear components 2014 Germany” stamp of quality

AVIC Hilite . Engine and transmission components 2014 . Acquisition of market AVIC Kokinetics . Metal components for seating and gear units 2014 shares of European competitors Ningbo Huaxiang Helbako . Electronic modules 2013 . Diversification of the sales Ningbo Huaxiang HIB Trim Parts . Wood trim for interiors 2013 channels  access to Zhuzhou Boge . Rubber, plastic and metal components 2013 European sales markets

Amtek Neumayer Tekfor . Forming technology 2013 . Access to western OEMs and customer structures Consortium of investors IEE . Sensor safety systems 2013

Wanxiang Group A123 . Lithium ion batteries 2013 . Increased product quality and competitiveness in own . Exhaust manifolds and turbocharger Bohong Wescast Industries 2012 market housings

Hebei Lingyun Kiekert . Closing systems 2012

Ningbo Huaxiang Sellner . Interior trim 2011

Motherson Group Peguform . Plastic parts 2011

Joyson Preh . Vehicle systems, sensors and units 2011 Sources: S&P Capital IQ, mergermarket, IMAP research Confidential © InterChina 55 Outbound Chinese Acquires Face Key Challenges

M&A INTERNAL DEAL DUE BINDING & APPROVAL & STRATEGY & DEAL PMI SCREENING DELIGENCE NEGOTIATION CLOSING DEAL STRUCTURING SOURCING

APPLY MOSTLY TO M&A Lack of a clear M&A Insufficient planning NOVICES roadmap

Inefficient deal sourcing or Unclear governance screening structure

Lack of capability to manage due diligence

Lack of capability to identify key Talent shortage risks or support decision making

Difficulty in understanding the APPLY TO overseas business environment BOTH M&A NOVICES & Inefficient communication with Culture issues VETERANS regulatory bodies

UNCLEAR M&A STRATEGY LACK OF DUE DILIGENCE EXPERTISE INEFFECTIVE PMI

Confidential © InterChina 56 Index

• Sector Dynamics 1 • Our Auto Services & Team 2 • Perspectives On China’s Auto Sector 3 • Consulting Cases 4 • Deal Tombstones 5

Confidential © InterChina 57 Case Study: What opportunities are available for newcomers of foreign auto components makers in China’s maturing auto sector?

What opportunities are available while simultaneously The Client managing the challenges reasonably in China? • A PE firm 100% owned by the Swedish Government with dozens of auto component Increasing localization ratio portfolio companies. China automotive market means carmakers will purchase moving towards the maturity more in China. The Problem stage in 5 – 10 years • In response to the ‘Go East’ trend by 2 Localization rate reported and collected in InterChina’s European carmakers, the client would like to 1 interviews and industrial research understand the opportunities and challenges

of entering China by component players. 70% 70% >90% >90% 90% 80% >80% 60% 60% >60% 50% 2012 35% 2015E

SAIC GM VW Dongfeng GAC Honda PSA Company Company Company (excluding Nissan Toyota G I J Audi)

90% and Bus sectors, there are few localized 85% tion cases. 70% 70% 60% 60% 50% or the long established carmakers with 40% 40% on base in China, the localization rate now The Method e as high as 80% or more. 0% 0% 0% planned production plant in China, the Audi BMW Daimler Volvo Land Infiniti on goal might be set as below 40% in the • 15 interviews with China CEO/ Sourcing VP Benz Rover p. of foreign companies in the passenger cars, Confidential © InterChina 6 buses, trucks and construction machinery Decision-making: FIE carmakers welcome newcomers of foreign sectors in China. suppliers to be in China, but are cautious about offering special treatment • Systematic survey. The major opportunity for newcomers of component suppliers in

China is to supply foreign carmakers, though doing so may be … aiming to get lower 2 cost and good quality 7 5 6 quite challenging 1 The Entry Opportunity Two Add-on Opportunities After Entry + Global Short

quality lead time To Supply Foreign Carmakers In China 1) Trade-up Of Chinese OEMs standards

Solutions by InterChina • Leading Chinese carmakers with the presence in the medium-range segment or potential to move into the medium-

range segment. Examples could be provide to newcomers? Shanghai Auto (a leading state-owned 0% • Foreign component makers should follow No 6 carmaker and the acquirer of Rover). (0)

• To satisfy the needs of Chinese ned 22% (2) 1 Focus on 0 carmakers to get the component “Incremental” solution that Chinese suppliers are still carmakers to enter China, in accordance with Technology, cost Challenges need Small Other Big Demand, which not qualified yet; and in some cases, to and service are to be carefully promised support promised has a lower impact leverage the brand power of leading contract contract key handled in China foreign component players. of the entrenched the trend of increasingly aggressive supply relations Yes 78% (7)

2) Global Sourcing Do newcomers need export (such as to Asia) to stay afloat? localization. • Leading foreign carmakers with (existing base in China. or planned) global sourcing from China. Yes No • To satisfy the needs of carmakers to 57% (4) 43% (3) 7 • Focus on “incremental” demand given the increase the cost competitiveness globally while maintaining the global quality standards and supply chain best practices. This might not overlap with hina Consulting interviews and analysis. Confidential © InterChina 7 highly entrenched barrier of the incumbent the sourcing for the local production plants in China in most cases. market, with technology, costs and services Confidential © InterChina 8 3 as key. 4 Foreign carmakers welcome • Practical recommendations on dealing with newcomers, but no special various challenges in China such as IPR treatment is given in issues. The opportunity opens the door with manageable challenges advance.

Confidential © InterChina 58 Case Study: How to diversify into China’s dynamics NEV sector at the right pace?

How to diversify into China’s dynamics NEV sector at the right pace? The Client • A global top 30 auto component supplier It is also forecasted the InterChina forecasts that BEV hypothesized tech by the will be the market client HQ won’t gain popularity in China The Problem mainstream, though the gov. goal might be missed • This tech-driven company requires a 2 practical China roadmap for its NEV business 48V: 48V will play a limited role within HEV, as it is perceived as 1 a temporary transition HEV tech route in China, which is quite different from the NEV Market Forecast: Gov. NEV goal for 2020 will be difficult to materialize, goal for 2025~30 could be possible, while BEV will Only some selected Chinese and US/EU-JV OEMs will likely to This will be leading to a more adopt 48V as alternative for HEV, but will skip 48V for PHEV conservative 48V outlook ICE business (more market-driven, and remain as majority of NEV through to 2030 OEMs Perception towards 48V Rationale in HEV In in PHEV In Gov’t goal for NEV and our forecast based on our interviews suggests the Gov. goal is somehow China China • Despite the highly optimistic estimation of stretched • Focus on NEV. global clients) With NEV focus • Will pay some attention to HEV, but 48V adoption rate in China by some 48V like BYD, Geely biased towards heavy HEV. makers, different types of OEMs in China Gap 1: • Will skip 48V for PHEV. seems to have a rather conservative • Unit: NEV sales volume mil. (NEV % of PV sold) Most of senior interviews agree that the newly policy (double credit attitude towards 48V, and mainly driven system) is likely to achieve its goal in the long term. ICE focus but • Focus on ICE (SUV). by cost effectiveness. with huge NEV • Prefer to add NEV vs HEV (48V) to • Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx credit pressure cope with the double credit pressure. like GreatWall NEV target by MIIT • Will skip 48V for PHEV. 19.5 (40%) • Both 48V makers like XYZ, Johnson Gap 1: -12% NEV target by SAE • xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx • Might only consider to adopt 48V to Controls, and various types of OEMs With a more Assumed Subsidy Scenario small number of mid-high end HEV car diversified active in China have confirmed that 48V models due to the cost sensitivities. InterChina Froecast portfolios, e.g. will be mainly relevant to some HEV car (incl. 2017 Actual) • Will skip 48V in PHEV. Gap 2: SAIC. models, and for PHEV, majority of OEMs • will skip 48V due to cost effectiveness. 17.1 (35%) The interviews suggest that the double credit system is more effective • Focus on heavy hybrid HEV, might do than the previous subsidy system. more NEV to comply with policy. • 48V is not a cost effective choice for • Regarding the application of 48V in HEV, Gap 2: -49% • Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx both HEV and PHEV. Chinese OEMs might add 48V as one temporary transition HEV tech route, • Influenced by home country car models 7.6 (20%) while EU, US JV OEMs might not widely • xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx and platform, but also Chinese The Method consumers high level price sensitivities, adopt 48V in China due to the significant JV in extra cost (RMB ~5,000 per car) as 5.7 (15%) China EU and US JV OEMs are likely to have 8.7 (18%) less interests on 48V. Chinese consumers are highly price 4.9 (13%) • They might have minority level of sensitive. 2.1 (7%) adoption of 48V in China, but limited in Definition: HEV and will skip 48V in PHEV. • Comprehensive investigation of NEV Tech 3.3 (9%) • Assumed Subsidy Scenario: Assuming no double credit system, sales • For example, SAIC-GM indicates they affected by 1) subsidy withdraw policy up to early 2020s 2) NEV cost might have some level of 48V adoption 0.56 (2%) 1.3 (4%) (battery cost down with tech advance and other components cost down for selected mid to high end HEV car 1.1 (~4%) with economy of scale) drops over time. models to test the water. Confidential © InterChina 3 trend, and product opportunities 2017A 2020E 2025E 2030E Source: InterChina Interviews and Analysis • xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

*Note: MIIT does not specify HEV sales target, and NEV target for 2030. Note: In “InterChina Forecast”, the portion of PHEV in the NEV in 2025 and • Over 70 interviews with decision-makers in 2030 are 25% And 20%. Confidential © InterChina 2 Source: InterChina Interviews and Analysis

OEMs, semi-gov. entities (policy-making), Summary Of Product Opportunities: ECC stands out from the investment certainty and likely profitability perspectives and T1. ABC’s Opportunity In ECC: Subject to when ABC invest in a The Product Life Cycle Perspective For Next Few Years Vs Investment Time Of Window • Overall: In the next few years, these products are likely to stay in the suggested life-cycle stage, rather than to step-change to the next life-cycle stage, China plant, ABC is likely to win XXX% market share in 2025, or even with the fast growth of NEV. • ECC: The investment time of window for ECC might be just for a few years, until OEMs finish the expansion and stabilization of their supplier pool, in RMB XXX mil to RMB ~XXX mil Revenue… parallel to OEM’s progress to accumulate the tech know-how building related to this aspect. Note: the list of features in this slide are applied to the studied products ONLY, rather than a generalized rule for other auto components.

ABC Likely Sales Forecast Key Forecast (with the quali recommendation on the next slide) • Decent investment • Right time of window for (ECC, 2017 – 2025) uncertainty comes from investment in the next few BTMS ECP both demand and dominant years by a player like ABC • Too mature (esp. Solutions by InterChina competition sides • To take actions quickly relatively weak Likely Revenue Forecast Of ABC ECC In • To wait and monitor for 1-2 profitability of ECP) to Key Forecast Items Base Scenario (ABC ECC Express Scenario ( ABC years. ECC invest Plant will kick off only ECC Plant in EU and China (for mainland sales only) EBB (?) • To skip after ABC EU SOP in China will both kick off 48V Booster 2020, resulting into a in 2018, resulting into a relatively slow entry relatively fast entry and • Gained transparency over the practical and thereby miss part thereby gain the most Emerging Growth Pre-maturity Maturity of time of window of of time of window of • • • Base Scenario the opportunity) the opportunity) High tech barrier. High tech barrier. Medium tech barrier. Tech Barrier • Dominated by a few giant • Decent share taken by • Thereby decent share taken by Express Scenario When to have the revenue by ~2022 (1-2 years after ~2020 (1-2 years after  players with high market share foreign players, and likely to Chinese players. China’s NEV roadmap by reading between ABC China China plant kick-off) China plant kick-off) • Competition with overwhelming first-mover maintain in future. Thereby possible Rivalry advantage (e.g. XYZ). • Thereby possibly decent dissatisfactory profitability 2025E ABC Volume Forecast XX units XXk units  • The profitability might be high in profitability. (Note: BTMS is mainly supplied In China Likely future if reaching economy of by battery makers itself, and less Profitability scale and still with tech barrier, transparent on the profitability of the lines 2025E ABC Revenue Forecast RMB XX mil RMB XX mil but might be too early to say. BTMS only).

ABC in All China • The demand is small, either • Good growth with NEV market. • Good growth with NEV market Sales (incl. in- XX% XX% due to the small HEV (e.g. 48V • No evidence of the likely (e.g. BTMS) or with extra driver • Supported the effective communicate back to house supply) booster) or the low penetration substitution technology to (e.g. ICE with turbo with liquid ABC in all China rate (e.g. VP vs EBB). replace ECC soon. cooling for ECP). ABC Demand • • 2016 2019 2022 2025 3rd-party Sales For EBB, XYZ is taking a game- OEMs are still in the process Market XX% XX% Perspective Note: (excl. in-house changer initiative to re-define to build their qualified Share • The starting revenue point and the revenue supply) demand landscape, however, supplier pool, which might Measure- HQ in Germany to have buy-in forecast based on ABC’s likely market positioning the interviewees we talked to last for another few years ments are forecasted per the table to the right side. ABC in MNC are not so optimistic. only (refer to Slide 21). (incl. MNC local • However, the revenue in-between might have XX% (as a leading player Confidential © InterChina 4 supply only, i.e. XX% (as an average player) Source: InterChina Interviews and Analysis many varieties, thereby no specific figures are after the first mover) given, but assumed that the in-between years will 35% of the total • Evaluated 5 potential components and market) have 1 or a few contracts (car models) won by ABC. Note: Given the strengths of ABC in JV OEMs, it is assumed that ABC’s market share in JV OEMs for NEV is also higher than in Chinese OEMs. Confidential © InterChina 5 recommended an express entry strategy to Source: InterChina Interviews and Analysis 3 capture the China time of window For the product opportunity, • Recommended best practices of serving 4 only the component with Chinese OEMs To realize the strategy, a clearly the right time of window is defined roadmap in “express recommended to match our scenario” is developed to facilitate client’s competitive the communication to HQ advantages

Confidential © InterChina 59 Case Study: China market expansion strategy on how client can capitalize on its opportunity for Dealer Management System

How can the client quickly grow its existing business in China? The Client • One of the leading solution providers in the automotive sector globally InterChina forecasts that the A tailor-made forecast of the Chinese Auto market will opportunity value The Problem continue rapid growth until 2010 • After initial success in China with sales to DMS Offering Options: Opportunity Value 2 OEMs via global contract, the Client would The client’s total opportunity value roughly estimated at RMB 450 to 500 1 million

like to tap into the booming automotive Carmaker Needs By DMS Estimation of the Client Opportunity Value Starting Point Over Time for each Carmaker Need dealer sector for its Dealer Management Carmaker Short Medium Long Opportunity = Number Of Carmakers x Forecast sales of cars (per year) Market Segments term term term the Client Success Rate x in China (2006 – 2010) Fee Per Carmaker (Initiation) Unit: thousand Focus on Sales 9,000 Systems (DMS) in China 1) A B Revenues, with The Client Scenario of 10% CAGR DMS Number of Fee Per Opportunity No (Poor) DMS Success Scenario of 15% CAGR Need Carmakers Carmaker Value 7,500 Rate Scenario fo 20% CAGR Geely, Chery 2) Partial DMS C D A 50% RMB 10 million RMB 10 million 6,000 ~2 SAIC, Dongfeng, Chang’An… Focus on Profit 4,500 B 50% RMB 20 million RMB 40 million 3) Margin, with Full E F ~4 DMS Chang’An Ford, Chang’An 3,000 Suzuki, FAW, Brilliance… 2006e 2007e 2008e 2009e 2010e Equivalents to D 33% RMB30 million RMB 250 million ~25 4) Client and G Dongfeng Citroen, Forecast car ownership in China Mercedes Guangzhou Honda, SVW, SGM The Method (2006 – 2010 accumulated) F 50% RMB30 million RMB 60 million ~4 Unit: thousand • A: simple DMS (push) 43,000 DMS • B: advanced DMS (Pull) Audi, Lexus, Infiniti Scenario of 10% CAGR • C: ‘Trojan Horse’ Offering (Push) G 66% RMB 60 million RMB 120 million • D: replace existing DMS with Scenario of 15% CAGR ~3 Module advanced DMS (Pull) • Tailor-made forecast methodology (quali and Scenario fo 20% CAGR 33,000 • E: ‘Trojan Horse’ Offering (Push) RMB • F: replace existing DMS with very Application advanced DMS (Pull) Total Opportunity Value 450 – 500 Million

quanti) in this fragmented market 23,000 CONFIDENTIAL © InterChina Consulting 13

• Over 30 interviews with OEMs, top 10 13,000 2006e 2007e 2008e 2009e 2010e CONFIDENTIAL © InterChina Consulting 12 The Client China Strategy: DMS Payment Structure leading dealer groups, and 4S individual Two models for different market segments dealer shops in China 1) The Client Payment Structure China DMS Payment Structure Comments Strategy Realization: Acquisition Target I For High-End Market

China’s DMS payment structure is focused on the • Same as BMW and Mercedes. lump sum payment during the initiation stage. • ‘Western Model’ This is preferred due the following reasons: General Profile Location License • ------• One time budgeting is a more simple Implementation fee: Carmaker pays Establishment Year 1992 (DMS was launched in 2002) • process for carmakers to handle than one time payment. having to consider future budgets. Implementation Maintenance Ownership POE, owned by Mr. Zhong • Easier for the responsible manager to take • License & maintenance fee: Carmaker Solutions by InterChina credit for the success of the DMS pays license fee annually, dealer pays Initiation Recurring Revenue USD XXX million Headquarter (China) implementation project. maintenance annually. No. of Employees 100 persons in total Address: Guandong • ‘Growth’ mentality means that lump sum Tel: xxx purchases appears better value for money 2) The Client Payment Structure Fax: xxx with network expansion. For Low-End and Medium-End Markets • Hybrid ‘Western & Chinese Model’. • A phased growth strategy with different • Suppliers prefer to have payment at the Offering time of purchase in China, rather than • Aiming to increase total investment by risking the uncertainty of future payments. sharing costs between carmakers and dealers. • Main Software Products: emphasis on “push” or “pull” strategic Carmakers benefit from perceived lower • DMS (for carmakers). • Purchase & Purchase & License purchase & implementation price. • 4S management software (for multi-franchise groups / Key Carmaker Customers independent 4S shops). • Dealers benefit from perceived lower • Quick repair management software (for chain groups / license fee. options in the short-, medium- and long-term independent shops). Implementation Maintenance Implementation Maintenance • Automotive accessory management software (for chain groups • The Client benefits from network / independent shops). expansion. • Automobile service management software (for chain groups / Initiation Recurring Initiation Recurring • ------• For different market segments, tailor-made independent shops). • Vehicle sales management software (for multi-franchise groups • Purchase & implementation fee: Carmaker / independent 4S shops). Paid By Carmaker pays one time payment. models are recommended Paid By Dealers • License & maintenance fee: Dealer pays • Payment Structure: license fee and maintenance fee annually. • DMS Fee: RMB 300,000 to RMB 800,000 (paid by carmaker). CONFIDENTIAL © InterChina Consulting • Payment Structure: Development fee (~80%, one time 14 • Strategic target acquisition is recommended payment) plus implementation fee (~20%, per shop).

as the practical investment model, with CONFIDENTIAL © InterChina Consulting 15 Source: Company Website, InterChina Analysis 3 shortlisted targets 4 For the high-end market, the payment model relevant To realize the strategy, two POE for China in the prioritized software and information companies segment is recommended are selected as acquisition targets

Confidential © InterChina 60 Case Study: What investment model would enable a successful entry strategy for the car trim sector?

How to start a successful business in China The Client In an already consolidated and entrenched market? • A top 3 European car trim supplier Highly entrenched relationships OEMs expect a complete range between car trim suppliers and of capabilities in China, OEMs would lock access to The Problem including products, in which our customers for a new player • Our Client is positioned as a specialist in client has limited expertise 2 Europe in their product sector, but the China But relationships between top OEMs in China and their car trim 1 suppliers are likely to remain very entrenched in the next 5 years Leading competitors all provide OEMs with all types of wheel market is still at the generalist stage Status-quo of Consolidated Main wheel trim suppliers “Competitor 1 has been trims (and other trims and/or auto parts)… Supplier Network: for top 10 OEMs. our supplier for over 5 years, and despite • Due to the commodity nature of • The Client would like to understand what Real Competit Swell Minth Chengdu minor quality issues, we WT, OEMs prefer to achieve are quite satisfied with supplier management synergy or 1 Aviation An extensive Offer… … expected by OEMs their level of service and to limit number of wheel trim and have no plan to suppliers. practical strategy to enter China would be Typical WT Other Other Other Other Estimated SVW   switch suppliers” national WT external internal auto non- WT OEMs require suppliers to ——Chery • Consequently OEMs have a limited supplier WC CC/BC trims trims parts auto capacity provide them with an Technical Manager number of wheel trim suppliers, parts (million extended car components providing them with the full range FAW VW   units) best range for two main reasons: of WT, other trims and even other Competitor 1 Y Y Y Y Y - 25-30 non-trim components. “We have been working Dongfeng   with Real for many Wheel trims are considered as Nissan non strategic parts, managed by years already and have Competitor 2 Y Y Y - - - 20-25 progressively expanded junior team. In order to limit Forecasted Stable Supplier from wheel trims to  supplier management costs, Network in future: Chery other trims.” Competitor 3 Y Y Y Y Y - ~10 OEMs tend to keep a low ——SAIC VW • number of suppliers and thus OEMs in our interviews didn’t Purchasing Manager Competitor 4 Y Y Y Y Y - ~10 demonstrate the trade-up needs SAIC GM   require these suppliers to extend aggressively, which shows they their range of components. have a low degree of motivation Competitor 5 Y - Y Y - - ~5 to switch to new suppliers. FAW “We are currently The Method    developing a few new OEMs also seek to obtain price Toyota… • The cost saving by getting a suppliers for small Competitor 6 Y - Y - - Y ~5 reductions through economies of lower-price supplier will be limited quantities of button scale. Consequently for small for this considered low-value Geely   caps/center caps, but components such as wheel trims, component and the added main supplier remains • 40 primary interviews with OEMs and Real.” OEMs expect supplier to sell an complexity in supplier management might not justify this Chang’An   ——Purchasing extended range. Ford Mazda “We keep expanding from our logo/letter trims into other “We will have large limited cost saving. Manager of SVW trims, including WTs, and other auto parts to secure our capacity to meet multiple industry players growth target.” ——Swell OEMs’ needs, whereas we CONFIDENTIAL © InterChina Consulting 3 “Although we originated from WTs, we are now will keep building our new Source: InterChina interviews and analysis. expanding into other external trims, and further into additional capacity during • Practical approach to test partnership other auto parts in the future.” —— Competitor 1 2012.” –——Competitor 1

CONFIDENTIAL © InterChina Consulting 2 Roll out for WFOE business model might begin by as late as feasibility Source: InterChina interviews and analysis. 2015 for local sales, meaning that a X to Y million EUR turnover might be reached by 2015 , far from client’s expectation

JV with Partner 1: the JV could generate a total wheel trim sales Base scenario: X million EUR turnover by 2015: Optimistic scenario: Y million EUR turnover by 2015: • Developing factory and other capabilities would require up to 12 • Reaching access could be accelerated by XXX brand reputation of EUR XXX million, ~25% would be for export months. and track-record with GSCs. This could be the case with more ‘open’ OEM SGM. • Given high level of entrenchment of JV-OEMs, one additional year sales approach would be necessary to gain access. • Players like Ford or Volvo might also not require complete homologation in China, which would reduce time for XXX to • Finally, OEM homologation and product development would take qualify to projects. one year, and first wins in China would happen by 2015. • Consequently, first domestic wins would happen starting in 2014. • Consequently, sales would still be driven mainly by exports and Greenfield until 2015.

Solutions by InterChina 27-33 XXX China 2012 2013 2014 2015 2016 ~10% Obtain license [6 months to 1 year] Development of Chinese Build Chinese factory [1 year] structure Hiring top management • A global alliance model that allows our client & sales team [1 - 2 years] 37-46 Electroplating/aluminum partnership setup Sales [6 months to 1 year] ~90% preparation Reach access to key JV customers [1 year]

to enter China by adopting a JV with one process Reach access to GSCs [6 months]

Homologation process [6 months – 1 year] Product development process [1-2 years] 27-33 Sales wins Win JV-OEM 1* (Greenfield sales) Chinese leader to gain access and localized Base scenario Start achieving sales at export ~19 Win JV-OEM 2* Win JV-OEM 3* Win JV-OEM 1* (Greenfield sales) production capability… 12 10-13 • Competitor 1: projection of GM GSC’s Sales wins Start achieving sales at export Domestic ~20% volume plus possible further GM GSC Optimistic penetration. scenario Win OEM 2* Export • 10-13 XXX: Identified OEM GSCs (e.g., GM Win OEM 3* ~80% GSC, VW GSC) would be interested in • … while jointly developing the export 7 sourcing from XXX if there’s a China operation. • 2011 2015 Product offering: BC only (mainly Source: InterChina interviews and analysis. CONFIDENTIAL © InterChina Consulting 4 electroplating and aluminum foil). potential to the agreed markets to customers that XXX • Pricing: JV partnership would probably tangible assets: stabilize the pricing at 2011 level.

CONFIDENTIAL © InterChina Consulting 5 InterChina interviews and analysis. 3 We helped Client to understand 4 that its original idea, a WFOE While we could identify two investment model, would potential JV partners that would require catch up time and would enable the Client to reach not likely reach sales objectives expected turnover by 2015

Confidential © InterChina 61 Case Study: What out-of-box strategy would take the advantage of aftermarket deregulation?

How to leverage the market deregulation opportunity for top-line growth? The Client • A global leading player in auto after-market

The de-regulation will shake up The in-depth insights along the China’s after-market, and value chain are also critical The Problem brings unique opportunities to • Our Client has 15-year experience in China’s our client 2 after-market 1 Retail Structure is under shaping in China • Given the maturing needs and the IAM Distribution Development: The shift is towards more complicated sales and wider geo. coverage, but faces challenges. Type of Typical retail maintenance Quick profiles Example deregulation of independent after-market, stores service cost 4S Store Mainly in T1 • “4S” include both sales and repair function. The Development Of China’s IAM Distribution Market Future Challenges & Possible Solutions 20,000~25,000 and T2 cities. • 4S stores have to apply for a license as any other maintenance and repair (In the past and future 10 years) 3,000~5,000 shop would. Challenge B: Cross-Province Expansion • Due to their nature, they are normally “Grade I” or “Grade II” according to 20,000~30,000 the Client would like to seek how to • Lack of local relations and know-how. the government classification system, which requires a high level of investment. B • Low-hanging fruits are gone with similar “Relations offerings (service level, pricing, sales Internatio Mainly in T1 • Usually set up by component makers . 1 Future Winners approach etc.). nal chain and T2 cities. • Components in store are usually from the player, the brand deputy of the Play” store player is one of the largest attractiveness points for customers. accelerate the growth in China • HR issues (trust vs HR cost). 70,000 • The store usually targets high-end customers who think highly of the service • Operation efficiency (DC, logistics etc.) quality. B 3 • It could provide quick maintenance service, usually in 1 hour. Challenge C: Proactive & Value-added C C Domestic Mainly in T1 • There are dozens of chain brands in the market at present. Large chain brand Sales

4 chain T2, and T3 might own 500~1,000 stores nationwide. “Future Stars store cities. • Some stores are owned by chain brand, while some are franchised and Moderate Wider Moderate • How to add new workshops efficiently. “Reactive Candidates” • How to strength cross-selling. owned by private store investors. • The store could provide different kinds of services, such as quick Model” • How to increase the retention of the maintenance, decoration, or simple wash and clean. existing workshops. A “Non-Exist” (?) • How to optimize the sales / operation (incl. Grade I / Mainly in T1 • Part of them are authorized to perform maintenance and repair by the logistics, IT etc.) to meet the fragmented II T2, and T3 automakers, but serve multiple car brands (not exclusive like the 4S stores); Thecoverage of typical distributors Limited demand. workshop cities. Most are independent and unauthorized by automakers. 150,000 • They are with good industry experience and certain brand image in their Low Moderate High regional aftermarket. The Method 3 Possible Path 3 • Components sold in maintenance company are more reliable for customers. The degree of proactive & value-added sales required • Cross-province expansion via M&A. Small Mainly in T1 • Usually they are not authorized by the automakers, but still have business Historical Movements – Slow shift to proactive model • Strategic alliance and/or franchises (?). player* T2, and T3 due to their cost competitiveness, helped by their use of unofficial and • Key Challenge A: To shift from reactive to proactive sales model, a • Operation improvements. cities. counterfeit parts. • As they are small in scale, they are usually “Grade III” according to the • 90 primary interviews with key aftermarket totally different system (sales team, sales approach, sales policy, financial A government classification system (only a small amount of investment

management such as cash flow, operational management such as inventory 4 Possible Path 4 required), and not all are licensed. management etc.) is required. Most distributors either didn’t have the right • Build value-added sales by organic • The charge is the lowest among all the types of stores, but components mentality or didn’t have the capability to deal with this challenge. approaches and learning from other quality cannot be guaranteed. 1 players, distributors, retailer etc. • Path 1: Most T1 distributors (mainly Makes Channel) added more T2 sectors. Notes: Small players include grade III or non-grade workshops mainly. • Sales innovations e.g. e-commerce. distributors to push the sales increase. Source: InterChina Analysis Confidential © InterChina 6 2 • Path 2: Some (e.g. Fenglian, Kanzhong) heavily invested in one-step • Operation improvements. channel with initial success. • Practically test partnership feasibility Confidential © InterChina 3

• Strategy workshop to align the key Screening Result: 2 recommended & 4 backup companies stakeholders Short List – Recommended: Comparison Overview The Comparison Matrix Highlights

• No Super Star: In the underdeveloped IAM distribution market, there are no strong-capability- strong-intention candidates. Evaluation Recommended The Description For High Scoring • Parameters Diverse Geo. Locations: The 6 stand-out companies AA BB are located in Shandong (2 companies), Henan, Hebei, Solutions by InterChina Track Record • Revenue over RMB 100 million, with strong Hangzhou and Liaoning. Some have a multi-province and Business brand portfolio; presence. Company Capability Model • Majority of sales from proactive one-step model; • Large-Scale Distributor’s Intention: 3 of the 6 A • Stable growth rate >30%. stand-out companies are large-scale (> RMB 100 mil) distributors and only interested in offering a minority D • An innovative “platform” strategy by buying E stake. If negotiations begin with a large-scale player, Sales Capability • Structured sales team with scalable size; it might be worthwhile to probe the possibility of an • Well-developed sales management system, plus earn-out scheme. KPI system; F • Large-Scale vs Medium-Scale: The sales and into aftermarket distribution chain, which • Systematic planning of sales activities with strong C B operation systems of the large-scale distributors are execution. relatively stronger than the medium-scale’s, partially

Operation • Clearly defined operation department structure Feasibility Cooperation because the growth experience provided trial-and- K error development opportunities. Capability with dedicated manager, scalable operation I create unique advantages in the post- assets, and IT system; strong stock turnover rate. N G Recommended companies Cooperation Feasibility Management • Stable management team with enough H Backup companies Team & Growth entrepreneurial spirit, and professional O M L J deregulation market in China… Plan management system; Discarded companies • Ambitious and well-designed business plan The bubble size refers to the relative indication of the without obvious red-flag issues. distributor’s revenue in 2013 (The smallest bubble is of XYZ at RMB 10+ million, and the largest bubble is of Cooperation • Serious consideration of M&A and realistic xyz at RMB 250 million). • …with the partnership identification and Intention and expectations of ABC or other investors; Company Capability Synergy • Open to acquisition models, e.g. minority, Confidential © InterChina 5 majority, or full acquisition; evaluation • Straightforward shareholding structure.

0 score  Scoring Per Evaluation Framework (Slide 7 & 8)  5 score Confidential © InterChina 7 3 4 We helped Client to identify the For the shortlisted partners, the best-fit partners for the level of insights are at the pre- “platform” strategy DD level

Confidential © InterChina 62 Case Study: How to expand quickly in emerging road-side assistance segment in China

How could the Client deeply develop its China business? The Client • One of top 3 leading assistance providers in the world Under this industry structure shift, A structured strategy the sales opportunities for automotive assistance are emerging The Problem development process with heavy involvement of the with potential challenges • Given the success in other assistance 2 Client China market overview business lines, the Client would like to Opportunities emerging for AA players, but AA remains a challenging business 1 The Key Conclusions Deliverable is centered around channels Service Providers 1 Business Model* accelerate the growth of its road-side and value propositions • 4S shops are the best service provider • International players taking market share, but mainly fee-per-benefits model. network, and will continue to be • Creative models evident e.g. “setup fee + fee-per-benefits”, reflecting immature assistance business in China strictly controlled by OEMs. market status. • Appears to be shifting away from B2C and towards B2B. Do Sales Channels • Will be difficult to maintain service • Business models and operation details (even contract terms) are likely Have Potential to level standards with most other types shared/copied among competitors. The Client in China? of service providers. Training in Europe • Opportunities are Customer Base 2 • Difficult towing culture, especially in tier-2 and tier-3 cities. emerging for AA players. • Car sales up 30% to 4 million in 2006 (imported car sales up 40% to 0.11 Segment of Sales • Some franchise repair shop (e.g. million). Bosch) could be a network option. • But AA remains a Joint Interview With Channels (Potential 4 challenging business. • But still immature auto culture, with a Development of The Client VS Less Potential) low awareness of AA. Initial Value Sales Channels Propositions •Demand collection • High-end car owners are less price •Testing value propositions • AA becoming a standard element in a) after-sales service portfolio of high-end sensitive to value-added services such •Sales opportunity car OEMs/importers b) VIP services of banks (especially Platinum Cards). as AA. Value Propositions The Method to Various Sales • However, AA players have weak bargaining power over B2B sales channels. Channels Shortlist of Potential • Winning sales channel contracts still requires time and effort, with no revenues Sales Channels to before the first contract is won. Interview • Structured and focused research, analysis, and • Winning car importers, and some JV OEMS, requires the strong support of the headquarter/overseas operation. 3 Action Plan for Specific Sales * Fee-per-customer for Chang’an Ford, Subaru, VW (imported) & fee-per-benefits iterative approach with Client for BMW (imported and Chinese), and Benz (imported and Chinese) have been Channels CONFIDENTIAL © InterChina Consulting 13 confirmed in interviews conducted by InterChina. • >30 primary competitor, sales channel, service CONFIDENTIAL © InterChina Consulting 12 provider IVs, including 15 Client joint visits Quantified AA Performance The annual revenue in 2010 is estimated at EUR XX million

• Systematic channel survey by 50 phone IVs Service Design (1/3) The Forecasted ADDRESSABLE Market Scenario and Performance in 20XX Economic package is almost a mini-version of premium package I.1 • Market share in addressable market is 35%, Medium/ while the forecasted revenue in 20XX is EUR XX The ADDRESSABLE market million. size of sales channel (unit: high-end cars) OEM • Low AA penetration. • Not lagging behind the competitors too much. PRECONDITIONS: PREMIUM SERVICES: I.2 I.3 • Scope of service. • Taxi. I.2 • 25% - EUR XX million. • AA period. • TA. Auto • Addressable market size is limited by low AA • Who is qualified for AA. • Train/Flight (continuity of journey insurers’ penetration rate. • Geographic coverage. to the planned destination or Exactly the same. Only taxi service with a I.1 branch • The large number of branches implies a less Solutions by InterChina • When AA is available. home address). shorter travel distance competitive market. • Arrival time. • Hotel. compared with premium • Information requested upon AA. • Vehicle repatriation or pick-up I.3 • 40% - EUR XXmillion. package. I.4 • The guideline for payment. cost reimbursement. Specialized • Limited number of companies as channels. It may auto insurer lead to the fluctuation in business performance. • 7 recommended channels with prioritization • Not lagging behind the competitors too much. BASIC SERVICES (I): OTHER SERVICES: I.5 I.4 • 30% - EUR XX million. • On-spot repair. • Urgent message delivery service. Specialized • Limited number of companies as channels. It may I.6 I.7 to focus with a B2B2C model allows the • Jump start. • Information service (including bank card lead to the fluctuation in business performance. • Send fuel/empty fuel box. travel & medical care). Exactly the same. Exactly the same. 0 5 10 15 20 • Not lagging behind the competitors too much. • Replace tyre. • Alert service. I.5 • 10% - EUR XX million. • Key service. The unit price in fee-per-customer model per channel (EUR per car per year) Imported • Most penetrated channel. Client to reach a decent market share in five car brand • Strong presence of competitors. I.6 • 30% - EUR XX million. BASIC SERVICES (II): EXCLUSIVITY CLAUSES: Branded • High risk sector in terms of high AA frequency. years • The size of bubble indicates the Client’s market share in each sales used car • Towing service. • Conditions that AA is not channel (I.1 – I.7) in 2010. I.7 • 10% - EUR XX million. • Winching. necessary. High-end • Limited market size with demanding sales channels. • Reimbursement of AA Limited towing. Exactly the same. bank card • Strong presence of ISOS. expenditure if can’t provide AA in • Conditions that AA is not • Tailor-made service offering design in China No winching. certain regions or certain periods. qualified. • EUR XXXmillion of turnover in 20XX. Less amount of Total • No prefect sales channel! reimbursement. CONFIDENTIAL © InterChina Consulting 14

Premium package. The more Economic package. The more LEGEND the blocks, the more and the blocks, the more and higher level of service included. higher level of service included. CONFIDENTIAL © InterChina Consulting 15 3 4 7 sales channels should be Tailor-made service offerings prioritized with a robust have been developed based on forecasting model unmet needs and the Client’s competitive advantages

Confidential © InterChina 63 Case Study: How to develop an effective sourcing system in China

How to develop an effective sourcing solution in China? The Client • An Italian T1 powertrain system and driveline component maker (CV mainly) Structured approach for component Holistic overview of categories as the basis of systematic The Problem suspension supply chain supplier screening process • One of the global OEM client invited our models in China 2 Client to have a new China plant for A rough sum-up of (as of now) collected quotes, simulating the cost for 1 one suspension unit suspension systems, requiring the Suspensions are usually assembled in-house at the OEMs in China (i.e. The cost of suspension components based on request from ABC Ford), or manufactured by suppliers that are OEM’s affiliates Component Type Units Cost per components (RMB, investment of EUR 20 mil, thereby a required Exclude VAT) for 1 QuadTor QuadLeaf suspens. * Major OEMs produce purchase components from tier 2 suppliers and assemble Lower control arm 2 75-100 n/a feasibility study on sourcing of suspension suspensions internally. Some components are also manufactured internally. Upper control arm 2 60-80 n/a

Stub axle 2 120-220 n/a Forged system components is required OEM Support 2 50-80 n/a Lower tie rod 2 20-30 n/a Suspension OEM’s in-house Component Upper tie rod 2 30-40 n/a assembly line Suppliers Bearing hub 2 40-60 n/a

Wheel hub Casting 2 100-150 n/a

Knuckle 2 n/a 120-200

Cross beam 1 500-700 n/a Whereas, some OEMs choose to use specialized suspension manufacturers, who Sheet Lower control arm 2 n/a 60-80 The Method purchase components, assemble and sell to OEMs Metal • In general, a reduction of 3-5% on price could be Upper control arm 2 n/a 50-70 OEM Specialized achieved if further negotiate with the suppliers. But it is Suspension very much depend on the effort made by the Direct Buy Items n/a n/a n/a procurement team, i.e. the more focus on a particular Suppliers Sum cost of required components 1,500-2,200 • Structured and focused research, and analysis Suspension supplier, the more potential the price can be negotiated, Component as opposite, if less attention is paid to a particular supplier, the less possible the price will be lowered. Suppliers • Systematically screen-down suppliers from 500 Yuejin* DF Dana* Hefei AAM* Confidential © InterChina Source: InterChina Interview and Analysis

* Though OEMs may choose specialized suspension suppliers, they are usually affiliates of the OEM, e.g. Yuejin is to 30 subsidiary of SIAC and Hefei AAM is subsidiary of JAC.

Confidential © InterChina • Received ~110 quotes from 20 suppliers and Source: InterChina Expert Interviews Component quotes from potential suppliers (4/4)

most components have 3-9 quotes The expected plant investment may vary significantly, Part Name Part No. Processes Supplier Quotation in Machining Shipping & Molding & Add. comments depending on choice of location and development zone RMB per part 1 Cost in RMB pka, RMB tooling Cost Shaoxing Jinjiang 88.03 50 2.8 Yuhuan Zhenfen 40.17 Shanghai Yunliang 136.93 90 1.92 50k & 30k Cutting tool cost: 10k Forged + Support 93803866 Zhejiang Qicheng 86.32 Machined Development Zones Jiangning Liuhe Lishui Ningbo Huasheng 75.88 30k molding Price based on 26k units Shandong Detai 82.65 Vol/price: 5k/87, 10k/84 Distance to NAVECO Daily 20 km 30-40 km 40-50 km Zhejiang Longhu 54.00 material: 40Cr Prod. Plant Yuhuan Zhenfen 25.64 Solutions by InterChina Cost of Land Shanghai Yunliang 60.01 1.92 50k Molding fee Support 93803866G Forged Zhejiang Qicheng 64.96 Land Cost per sqm ~950 – Liuhe ~345 ~240 Shandong Detai 63.85 Vol/price: 5k/67, 10k/65 (RMB)* 1,260 Nanjing Liju 44.36 1.2 30000 If vol.=20k, Mat: 25CrMo4 Total Land Cost (RMB, 9,459,000 – 3,450,000 2,400,000 Shaoxing Jinjiang 29.06 1.2 10,000 sqm) 12,600,000 • Structured recommendation on what NAVECO Yuhuan Zhenfen 19.66 Production Plant Land Cost Rent (Unit Cost, Zhejiang Huabang 23.93^ 0.95 Use 40Cr, mold available 20 15 11-12 for Daily RMB/sqm/month) Shanghai Yunliang 24.05 0.8 20k & 10k Cutting tool cost: 5k Lower tie rod 93822444 Forged Zhejiang Qicheng 17.95 Total Land Cost Rent 110,000 - Nanjing Liju 15.57 0.5 12000 Price if vol.=26k 200,000 150,000 suppliers to cooperate with (Total Cost, RMB/month) 120,000 Ningbo Huasheng 21.37 N/A 30k molding Price based on 26k units Shandong Detai 20.99 Vol/price: 5k/22, 10k/21 Jiangning Cost of Plant Construction Hubei Hongbo 20.50 0.65 22380 If tooling initial cost: 14K Cost of Plant Construction 3,000 – 1,500 - 900 - Shaoxing Jinjiang 46.15 1.5 • 15 recommended suppliers for 9 component (Unit cost, RMB/sqm) 4,000 2,000 1,200 Yuhuan Zhenfen 19.66 Zhejiang Huabang 30.94^ 2.0 Use 40Cr, mold available Cost of Plant Construction 30,000,000 – 15,000,000 – 9,000,000 – Shanghai Yunliang 15.63 0.52 20k & 10k Cutting tool cost: 5k Lishui (Total, RMB)** 40,000,000 20,000,000 12,000,000 Upper tie rod 93809441 Forged Zhejiang Qicheng 28.21 NAVECO Total Cost of Plant Investment Nanjing Liju 33.42 0.70 15000 Price if vol.=26k categories Ningbo Huasheng 35.32 30k molding Price based on 26k units Production Plant Total Cost (RMB, 39,000,000 – 18,000,000 – 11,000,000 – for Other Models Shandong Detai 28.50 Vol/price: 5k/30, 10k/29 Purchase) 53,000,000 23,000,000 14,000,000 Hubei Hongbo 40.70 1.00 22380 If tooling initial cost: 14K Total Cost (RMB, Rent 13,200,000 – 1 24,000,000 18,000,000 Quotes include shipping & packaging, but exclude VAT unless otherwise specified • Practical cost modelling is provided for final for 10 years)** 14,400,000 *Quote with different process; **Very rough estimate; ^Quote with different material used; ^^Quote provided by supplier who couldn’t manufacture such component and purchase on behalf of client; * Land costs are subject to local gov’t standards, which updated in 2012 and 2014. Each Note: According to Jiangning Dev. Zone, it is possible that ! Replacement quote, OE price quote is very roughly 30% higher. dev’t zone has different price levels and supporting policies that vary significantly. NAVECO’s Daily Plant could be relocated to its production Confidential © InterChina **Plant construction cost varies based on material used (steel or bricks), etc. Source: InterChina Interview and Analysis base in Jiangning, where the company already has land decision-making ** The rent cost is based on estimation provided by dev’t zones, the lease period and price reserved. However, we are not sure when they will move to term is subject to each landlord. Typical lease contract period is 1-5 years. new location at this point. Confidential © InterChina Source: InterChina Interview and Analysis 3 4 Systematic analysis and Related investment issues are verification of the collected well analyzed and modelled, to quotes complete the investment recommendation

Confidential © InterChina 64 Index

• Sector Dynamics 1 • Our Auto Services & Team 2 • Perspectives On China’s Auto Sector 3 • Consulting Cases 4 • Deal Tombstones 5

Confidential © InterChina 65 Transaction Credentials: Automotive Sector

Confidential © InterChina 66 … plus InterChina/ CWI Transactions on the Auto side globally

KLOKKERHOLM ANTOLIN GROUP INFUN GROUP BUCHBINDER DMB PRETTL GROUP PWG KAROSSERIDELE AUTOMOTIVE MANN+HUMMEL GROUP Leading distributor of auto Largest Spanish Leading producer of metal Development partner and German car rental company Private equity firm Manufacturer of automotive Manufacturer of automotive body parts to the manufacturer of vehicle parts and components for the original equipment supplier parts parts independent aftermarket for interior components automotive sector Clearwater International Clearwater International Clearwater International car parts advised Buchbinder on the advised Deutsche Mittelstand Clearwater International Clearwater International Clearwater International Clearwater International advised on the company on the assignment of the international Beteiligungen (DMB) on the advised Prettl Group on the advised the shareholders of Clearwater International advised the group on the advised on the corporate acquisition of Bengby Haoye Dollar and Thrifty Master sale of WEGU acquisition of GERDES PWG Profilrollen- advised the shareholders on acquisition of shares in Gong restructuring of the company Filter the sale to Danish PE fund Zhu Lin Automotive License for Germany to Hertz Leichtbausysteme to Anhui Kunststoff-Technik Werkzeugbau on the sale to Zhongding Sealing Parts Neumann Group Capidea Components

MT MISSLBECK HEBEI NANFENG DONGFENG MOTOR PARTS AND TRISTONE FLOWTECH BORGWARNER PMG GROUP APPLUS IDIADA Mi TECHNOLOGY COMPONENTS GROUP TECHNOLOGIES One of the biggest auto Specialists in design, Provider of testing and Manufacturer of parts for Provider of flow technology Global automotive Manufacturer of sintered parts manufacturers in engineering, testing and development equipment for the automotive industry Manufacturer of tools and parts for the automotive solutions for the automotive components and parts parts for the automotive China homologation services the automotive industry industry supplier industry Clearwater International sector Clearwater International Clearwater International Clearwater International advised Clearwater International advised advised on the sale of Clearwater International Clearwater International Clearwater International advised on the sale to advised the business on the the sale of Mi Technology to Tristone Flowtech on the Dongfeng Motor Parts and advised the shareholders of advised BorgWarner on the advised PMG Group on the Webasto acquisition of Shanghai EDI CSA structuring of credit facilities for the Components Group to Brose MT Misslbeck Technologies sale of Beru Electronics to Huf structuring of two term loans Automotive Technology International branches based in Turkey, Poland on the sale to capiton and Czech Republic Electronics and a revolving credit facility with a tenor of 5 years

AMTEK KROLL AIXAM AMTEK AUTO LIMITED AMTEK JOYSON NORMA GROUP UNITED NAVIGATION

Large integrated Large integrated Large integrated Leading global automotive Engineer of Joining Multi-award-winning, mobile Insolvency administrator European leader in the light automotive component automotive component automotive component supplier Technology solutions navigation systems quadricycle market manufacturers manufacturers manufacturers Clearwater International Clearwater International Clearwater International Clearwater International advised advised Kroll, the Clearwater International Clearwater International Clearwater International Clearwater International advised Ningbo Joyson advised NORMA Group on the the shareholder on the sale of administrators of automotive advised Ardian and Norbert advised Amtek Auto Limited advised Amtek on the Cross- advised management on the Electronic Corporation on its acquisition of Breeze Industrial United Navigation to DASQ supplier T&N, on the sale of Dentressangle on the sale of on the acquisition of Zelter border disposal of an management buy out of acquisition of Key Safety Products Corporation from Capital Partners loan notes to Federal Mogul Aixam Mega group to Polaris GmbH automotive manufacturing Amtek from Triplex Systems, a leading global Wind Point Partners Industries business for the Triplex Components Group supplier of advanced Components Group engineered safety products

BRÖKELMANN MAINOVA / ABG KING VEHICLE TRISTONE FLOWTECH TERSTAPPEN CAR RENTAL MOBILE CITY STARCO FINOBA ALUMINIUMWERK FRANKFURT ENGINEERING LTD Trailers & Transport One of Europe’s leading German machining specialist Aluminium manufacturer for Provider of flow technology German provider of car rental Car sharing service equipment solutions for Leading provider of wholesalers and distributors for automotive lightweight automotive and construction solutions for the automotive services automated payment components Clearwater International specialist applications of industrial tyres and wheels industries industry processes for several Clearwater International advised advised Mainova and ABG Clearwater International mobility related services Clearwater International Clearwater International Clearwater International Clearwater International Terstappen Car Rental Group on FRANKFURT HOLDING on the advised the shareholders of advised the owners of STARCO advised the shareholder of advised F.W. Brökelmann advised Tristone Flowtech on the sale of its car rental activities acquisition of shares in book-n- Clearwater International King Vehicle Engineering Ltd on in the divestment of major parts FINOBA Group on the sale of Aluminiumwerk on the sale to the structuring of a credit facility to Buchbinder drive advised the shareholders of the company to AE Industry, a its sale to HW Martin Holdings of their aftermarket business to KNAUF INTERFER for the Group entities and Mobile City on the sale of the Ltd German Bohnenkamp subsidiary of SINOMACH Group Holding company to EasyPark

DR. KARL GOLDSCHMIDT NORD HOLDING NORMA GROUP DK AUTOMOTIVE GRUPO SUNVIAUTO

Automotive components Financial holdings company Private equity firm Engineer of Joining Automotive supplier and parts manufacturer Technology solutions specialist for gear boxes Clearwater International Clearwater International Clearwater International has advised Vermögensverwaltung advised JH Automotive, a Clearwater International advised Clearwater International advised the management team Erben Dr. Karl Goldschmidt on subsidiary of NORD Holding, on NORMA Group (Rasmussen advised the shareholders of DK of Grupo Sunviauto on the MBO the acquisition of PMG from the sale of Heyform Bramsche GmbH and its subsidiaries) on Automotive on the sale to backed by the private equity firm PLANSEE and JH Automotive CZ to the sale to 3i Schmolz + Bickenbach Oxy Capital. DUBAG

Confidential © InterChina 67 Some of our Automotive Transactions: Faurecia takes majority share in Chinese infotainment leader Jiangxi Coagent Electronics

Transaction

Transaction: Control Acquisition Deal value: RMB1.45 billion Founded in 1997, Faurecia has grown to become a major Date: July， 2017 player in the global automotive industry. A leader in its three areas of business, the Group is backed by a R&D Faurecia announced on 19th July, 2017 that it had taken a and production network with sites in 35 countries. It is the majority share in the Chinese company Jiangxi Coagent preferred partner of the world's largest automakers, which Electronics for a total investment of 1.45 billion RMB (193 value its operational excellence and technological million euros). expertise.

Jiangxi Coagent Electronics is a private Chinese company specialized in infotainment and interior electronic solutions, including the integration of digital displays and InterChina served as one of Faurecia’s Investment HMI technologies. The company employs 1,300 people Banking advisors in this transaction. including more than 300 engineers. Jiangxi Coagent Our Role in this transaction was focused on identification Electronics is based in Foshan for its Research and of the target and shareholder negotiations. Development activities and in Jiangxi Province for its industrial production. The company is a supplier to leading Chinese automotive manufacturers and is seeing a strong growth in sales, which reached 148 million euros in 2016 and will rise to 270 million euros by 2019.

Confidential © InterChina 68 Joyson Acquired 100% Of Key Safety Systems

Transaction

Ningbo Joyson Electronic Corporation (SSE:600699) is a leading Transaction: 100% acquisition global automotive supplier headquartered in Ningbo, China with Deal value: USD 1.5 billion group company facilities in China, Germany, Mexico, Poland, Date: February, 2016 Portugal, Romania, and the United States. The company develops and supplies high quality products and systems in the Joyson entered into a definitive agreement to acquire the climate control, driver control, electronic control, industrial outstanding shares of KSS in a transaction valued at approx. automated assembly, sensor, and specialty sectors USD 1.5 bn on an enterprise value basis. The combination will create a global leader in the automotive supplier business with pro forma combined worldwide sales of approx. USD 3 bn and 20,000 employees

InterChina Involvement

Key Safety Systems (KSS) is a global leader in the system InterChina served as Joyson’s advisor and provided integration and performance of safety-critical components to comprehensive transaction advice the automotive and non-automotive markets serving the active safety, passive safety and specialty product sectors. Through Advisory included initial valuation, deal structure, highly specialized design, development, and manufacturing, negotiation support, definitive agreements, and KSS’ technology is featured in more than 300 vehicle models transaction process management produced by over 60 well-diversified customers worldwide. KSS is headquartered in Sterling Heights, Michigan, with a global network of 32 sales, engineering, and manufacturing facilities

Confidential © InterChina 69 Webasto Purchased Majority Stake Of Hebei Nanfeng

Transaction

Founded in 1901, Webasto AG is the global leader of Transaction: Acquisition automotive roof and thermo systems. Its thermo business has Deal value: USD 30 million covered worldwide markets, taking leading positions. Webasto Date: March, 2015 entered China in 2001, and is currently focusing on the high- end passenger vehicle segment Webasto and the shareholders of Nanfeng have agreed on a transfer of a majority stake of Nanfeng to Webasto. Parties all acknowledge that the transaction will not only give Webasto an immediate lead in the China market but also enhance its leading position in the global market, mainly including Russia and Korea

InterChina Involvement

Hebei Nanfeng Automotive System Group is the market leader InterChina served as Webasto’s advisor and provided of automotive thermal system in China. And it has also comprehensive transaction advice successfully expanded to North Asia market via export. It has dominant position in the bus segment in China and is also Advisory included company valuation, key terms and developing well the truck segment definitive agreements, and transaction process management

Confidential © InterChina 70 Maier & Huakai Formed 2 Joint Ventures In China

Transaction

Maier S. Corp is a member of Mondragon, an industrial Transaction: Joint Venture conglomerate group based in Basque Country, Spain. Maier is Deal value: USD 30 million one of the global leaders in plating and painting process of Date: March, 2016 automotive plastic trim products, and has extensive business relationship with major automotive OEMs worldwide Maier and the owners of Huakai have agreed to establish two brown-field joint venture companies in Cixi and Wuhan for the production and sale of automotive plastic trim products. Parties believe that the combination of Huakai’s local commercial capabilities and Maier’s production and technical expertise will make the joint ventures the leading force of automotive plastic trim market in China and potentially in Asia as well

InterChina Involvement

Ningbo Huakai and Hubei Huakai are two companies InterChina served as Maier’s advisor and provided (collectively “Huakai”) from Ningbo Huade Holding Group, a comprehensive transaction advice private industrial group controlled by a group of family entrepreneurs from the Ningbo region. Huakai focuses on Advisory included key terms (MOU) and definitive plastic based automotive components such as trims, door agreements, and transaction process management handlers, etc.

Confidential © InterChina 71 Brose Restructured Its JV With Dongfeng

Transaction

Brose International is the 5th largest family-owned automotive Transaction: Joint venture component producer, and is a global leader of automotive door Deal value: USD 300 million systems. It previously acquired the automotive motor business Date: April, 2015 from Siemens and became a major player in this sector. Brose has an extensive business in China, owning several WOFEs and Brose and DFPC have agreed to form a new joint venture JVs for automotive motor, door as well as seat products focusing on automotive door and seat systems to replace their previous joint venture, which produces on electronic motors, and which Brose has converted into a WOFE. Both companies believed this restructuring will optimize the strategic value of each joint venture partner and give the new joint venture a strong position in central China market

InterChina Involvement

InterChina served as Brose’s advisor and provided Dongfeng Motor Parts and Components Group (DFPC) is a comprehensive transaction advice member of Dongfeng Group. It is one of the largest automotive component producers jointly owned by Dongfeng and Nissan in Advisory included company valuation, transaction China. Before the transaction, DFPC and Brose used to have a structure and tax planning, terms and definitive 40%-60% joint venture, Shanghai Brose Motor, which is the agreements, and transaction process management leader of automotive electronic motors in domestic market

Confidential © InterChina 72 MANN+HUMMEL Acquired 100% Of Bengbu Haoye Filter

Transaction

MANN+HUMMEL has more than 50 locations worldwide, Transaction: 100% acquisition employing around 14,400 people and recording about EUR 2.5 Deal value: Undisclosed billion sales in 2011. MANN+HUMMEL offered leading filtration Date: August, 2012 technology to both automotive and industrial OE and aftermarket customers in China since 1996. In the independent MANN+HUMMEL signed an agreement with Bengbu Haoye aftermarket, the filtration specialist meets the customer’s Filter Co., Ltd to take over 100% of the filter manufacturer requirements through the premium MANN-FILTER brand based in the “China Filter City” – Bengbu, Anhui Province. products with clearly defined OE specification The acquisition of Bengbu Haoye is a logical step in the MANN+HUMMEL expansion strategy in China. A local well- known brand with focus on domestic applications together with an extended product range and well developed distribution network offers a good strategic fit to the established MANN-FILTER footprint in China

InterChina Involvement

For more than 16 years, Bengbu Haoye Filter Company has InterChina served as MANN+HUMMEL’s advisor and specialized in supplying various types of filters primarily to the provided comprehensive transaction advice automotive aftermarket. In 2011 the company generated a turnover of around EUR 13 million and employs more than 500 Advisory included initial target evaluation, deal people structure, valuation, negotiation of non-binding terms and definitive agreements, and transaction process management

Confidential © InterChina 73 Idiada Acquired 100% Of Shanghai EDI Automotive

Transaction

Applus+ provides solutions for clients in all types of sectors to Transaction: 100% acquisition ensure that their assets and products meet environmental, Deal value: Undisclosed quality, health and safety standards and regulations. The Date: December, 2012 company employs 17,000 with annual turnover of EUR 1.2 billion in 2011. Applus+ has been part of the portfolio of Idiada has successfully closed a transaction to purchase companies in The Carlyle Group since 2007. Applus+ Idiada 100% of Shanghai EDI Automotive Technology in December, specializes in providing design, engineering, testing and 2012. Through the acquisition, IDIADA can greatly enhance homologation services to the automotive industry worldwide. its automotive design and engineering capacity globally and They have an international team of more than 1,500 engineers offer its clients one-stop service through the whole and technical experts. Also an international network of automotive development process from the concept design, subsidiaries and branch offices in 20 countries styling to the testing and homologations. The acquisition also offers IDIADA good access to China’s local automotive manufacturers

InterChina Involvement

Since 2004, Shanghai EDI Automotive Technology, Co., Ltd. InterChina served as Applus+ Idiada’s advisor and provided has provided their clients with solutions in automotive comprehensive transaction advice engineering and design. Their service includes: Project plan book, program organization, timing/plan management, Advisory included initial target evaluation, deal budget/cost management, risk evaluation & management, structure, valuation, negotiation of non-binding program review & open issues management, change control, terms and definitive agreements, and transaction supplier integration process management

Confidential © InterChina 74 Follow Us InterChina To Get More Information

Contact Us

Simon Zhang Partner in Charge – Strategy [email protected]

+86 21 6341 0699

www.InterChinaConsulting.com www.InterChinaPartners.com