FOR RELEASE: Jan s1

FOR RELEASE: Jan. 18, 2006

CONTACT: Media Inquiries Lin Cummins (248) 435-7112 [email protected]

McClure: Challenges Breed Opportunities

The following is a transcript of remarks delivered by Chip McClure, chairman, CEO and president of ArvinMeritor, Inc., at the 2005 Automotive News World Congress event Wednesday, Jan. 18, at the Hyatt Regency Hotel in Dearborn, Mich., U.S.

I am an optimist; I tend to be a person who sees the glass as half full. I believe we can extract opportunities from the many challenges that face our industry today. If we don’t, we’re destined for failure.

As an industry, our backs are against the wall. We’re producing 17 million vehicles a year in North America at the lowest margins in history. In essence, we’re commoditizing our passion for the automobile. Some of our largest customers are losing market share, which is driving suppliers to seek new customers and new markets. Many companies in our industry teeter on the brink of bankruptcy. The rising cost of healthcare, pension liabilities, energy and raw materials continue to erode margins at all levels of the supply chain.

If I stop right there, that’s already enough bad news to make the most avid car and truck guy want to shift industries. But not me. I love the automotive industry and see a wealth of opportunity created by our current distressed situation.

The record number of vehicles we’re selling is not the problem. In fact, 2005 was the third-best sales year in history. Our challenge is making a profit on what we’re selling, and delivering respectable margins.

With our backs against the wall, suppliers and OEMs alike are moving quickly to change our business models – a clear sign that our industry is at a crossroads. We’re all restructuring and rationalizing our businesses at an astonishing rate – and those who move quickly and strategically will survive. As a result, we’ll have a stronger supply chain.

1 I see this time as an opportunity for us to change our direction for the better. I believe these challenging times offer opportunities – not despair. And, from the “cool” reaction we recently got from Washington for assistance, we now know we can’t count on help from the federal government. So we must do it on our own!

At ArvinMeritor, we’ve managed to stay ahead of the curve. We’ve worked hard to turn industry challenges into business opportunities.

We’re executing what we call our 3R Strategy to Rationalize, Refocus and Regenerate. We’ve focused on strengthening our manufacturing base and “right-sizing” our company. We’re taking out capacity from around the world and significantly cutting our costs.

In the past eighteen months, we’ve made significant progress with the first two R’s. We rationalized our business by taking aggressive restructuring actions to reduce our workforce, and close and consolidate several of our global facilities.

In 2005, we significantly reduced our salaried workforce, and we announced that we would close or consolidate 11 of our global facilities. As a result, we’ll save $50-60 million on an annual basis in 2007 and beyond.

In terms of refocusing, we’ve decided to concentrate sharply on our strengths, hone in on our core competencies, and strengthen our overall financial position. As a result, we’ve divested a number of businesses that are underperforming, or that are simply no longer core to our strategy, including selling our Roll Coater business, a stampings operation, and most recently our off-highway brake business.

We’re taking the necessary actions to ensure that we remain financially healthy now and in the future.

In addition to the significant strides we’ve made in rationalizing and refocusing our business, we’re also making progress on the third component of our strategy – Regeneration.

Regenerating our business means: expanding our global presence; diversifying our customer base; investing in profitable product lines; and, developing new and exciting technologies that will drive customer demand.

We’re looking at ways to increase our margins to better capitalize on the record volume of vehicle sales – not only here in North America, but in the rest of the world as well.

As some of our traditional OEM customers face declining market shares, our entire industry is faced with mounting pressure to expand its customer base in a growing global marketplace. This new industry dynamic is causing us to look at the world with a totally new perspective.

There are vast opportunities in emerging markets in every hemisphere, and new customers come into focus every day. Those suppliers astute enough to recognize and seize these opportunities will not only survive, they will thrive in the new world economy.

2 At ArvinMeritor, we’re taking this opportunity to accelerate our strategy to diversify, and strengthen our customer base – as well as our global presence. This is business which is in addition to, not in lieu of our traditional North American and European business.

However, we’re reducing our dependence on – and our exposure to – troubled customers or customers with low growth potential. We’re being very selective in choosing our customers. And, we’re willing to walk away from business that we believe wouldn’t be in the best interests of our company and our shareholders.

We’re also accelerating our strategy to take advantage of opportunities in global markets, especially in China, India, Korea and the Pacific Rim. These emerging markets offer huge opportunities. And those of us that are determined and disciplined enough to establish a strong presence in the region will capture new business and reap the benefits.

More than 50 percent of our company’s sales in 2005 were with global customers outside of North America. Our future strategy is to eventually have one-third of our business in the Americas, one-third in Europe, and one-third in Asia/Pacific.

Joint ventures offer another opportunity to quickly establish a presence and successfully grow our business with new customers both in established markets, as well as in new overseas markets. JVs are in fact a vital element of our global expansion strategy. For example, we significantly grew our business with a major OE customer through Arvin Sango, a U.S. joint venture. Currently, this joint venture has 75-percent of Toyota's North American exhaust systems production business – including the popular Camry.

New technology is another area that offers opportunities to regenerate and grow our business. Focusing on innovation and creating breakthrough technologies is not only the key to helping us differentiate ourselves from our competitors – it can also allow us to demand premium pricing, and help expand our margins.

But for peak success, for breakthrough results, you have to find the “White Space.” That means creating new markets.

At ArvinMeritor, for example, we recognized a huge white space opportunity in the area of emissions – and more specifically, in our commercial vehicle business. So, we applied our Light Vehicle emissions technology to our Commercial Vehicle business. In doing so, we delivered a solution to help our customers meet stricter emissions requirements – and created a new product area for our company, called Commercial Vehicle Emissions.

In just two years, we’ve already landed nine CVE contracts with seven different customers in Europe and the U.S. With our Light Vehicle Systems business group, we’re concentrating on diesel particulate filter technology. And with the new emissions regulations, we expect the demand for that product to grow significantly.

We’re anticipating an addressable market of approximately four billion dollars for Commercial and Light Vehicle Systems in 2010. It’s a great example of exploiting white space opportunities to regenerate our business, while delivering value for our customers and shareholders.

3 But of course, many tough industry-wide challenges remain. Higher raw material costs, downward pricing pressures, and unpredictable fluctuations in customers’ production schedules all have the potential to upset even the best laid plans. Few, if any, of us have any control over customer production fluctuations. And try as we may, we have little control over the cost demands that come with being in this industry.

We do, however, have control over our purchasing of raw materials. At ArvinMeritor, we’re turning this dilemma into an opportunity by moving quickly to change the structure of our Procurement organization. As we grow in emerging markets – especially in the Asia/Pacific region – we’re building relationships with excellent competitive suppliers that will support our growth in this area.

The cost-reduction opportunities that we see are substantial. We’re so serious that we relocated our vice president of Global Purchasing for our Light Vehicle Systems group to Shanghai, so he can personally lead this effort from that part of the world. We now have a Procurement presence in every major emerging market in the world.

It’s our intention to double the amount of our purchasing spend from Leading Cost Competitive Countries by 2008. In 2005, we increased our spend in these countries by more than 23 percent.

As part of our overall raw materials purchasing plan, we have initiated a purchasing strategy that takes us to nearly every part of the world to buy raw materials at the lowest costs possible. We refuse to stand by and become a victim of pricing, resulting from government intervention and regulation. We believe that the challenge of raw material costs must be faced on a global spectrum, and that the free market system will ultimately produce fair prices for all commodities.

Would we have made all of these strategic moves, if we weren’t being confronted with such enormous industry challenges – if our back was not up against the proverbial wall? We probably would have, eventually. But adversity has a way of instilling a sense of urgency – especially when your very survival is at stake.

We’re seizing the opportunities that are arising out of adversity – and slowly but surely, it’s paying off for us every day. Still, it’s painfully clear that not every company will survive. Suppliers and OEMs alike must seize the challenge and make the changes that are demanded in today’s tough environment.

For us, it was executing the 3R Strategy that made change – and progress – possible in our organization. Other companies will find strategies that will work for them.

In summary, I believe we must all do a few essential things. We must:

 Improve operational performance, and reduce excess capacity;

 Eliminate inefficiencies in all areas of our organizations, as well as our supply chains – this is even more important as we move to leading cost competitive countries;

 Deliver the highest quality parts and services to our customers;

4  Diversify our businesses to obtain optimal balance in terms of geography, product and customer mix; and

 Develop technology that creates demand and drives our margins.

To underscore what I said at the beginning…challenge breeds opportunity. As an industry, we need to see the glass as half full, not half empty.

If we’re going to not only survive, but thrive in this industry, we need to direct our collective resources toward developing a healthy global motor vehicle market. We must and we will. If we don’t, imagine what the situation we face in North America would look like on a global scale.

Thank you.

About ArvinMeritor ArvinMeritor, Inc. is a premier global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company serves light vehicle, commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets. Headquartered in Troy, Mich., ArvinMeritor employs approximately 29,000 people at more than 120 manufacturing facilities in 25 countries. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM. For more information, visit the company’s Web site at: http://www.arvinmeritor.com/.

Forward-Looking Statement This press release contains statements relating to future results of the company (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “estimate,” “should,” “are likely to be,” “will,” and similar expressions. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including, but not limited to, global economic and market conditions; the demand for commercial, specialty and light vehicles for which the company supplies products; risks inherent in operating abroad (including foreign currency exchange rates and potential disruption of production and supply due to terrorist attacks or acts of aggression); availability and cost of raw materials, including steel; OEM program delays; demand for and market acceptance of new and existing products; successful development of new products; reliance on major OEM customers; labor relations of the company, its customers and suppliers; including potential disruptions in supply of parts to our facilities or demand for our products due to work stoppages; the financial condition of the company’s suppliers and customers, including potential bankruptcies; successful integration of acquired or merged businesses; the ability to achieve the expected annual savings and synergies from past and future business combinations; success and timing of potential divestitures; potential impairment of long-lived assets, including goodwill; competitive product and pricing pressures; the amount of the company’s debt; the ability of the company to access capital markets; credit ratings of the company’s debt; the outcome of existing and any future legal proceedings, including any litigation with respect to environmental or asbestos-related matters; as well as other risks and uncertainties, including, but not limited to, those detailed from time to time in the filings of the company with the Securities and Exchange Commission.