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The Global Automotive Outlook Opportunity Identification in a Disruptive Market February 20, 2019 Joseph Mccabe, President 855.734.4590 Ext

The Global Automotive Outlook Opportunity Identification in a Disruptive Market February 20, 2019 Joseph Mccabe, President 855.734.4590 Ext

The Global Automotive Outlook Opportunity Identification in a Disruptive Market February 20, 2019 Joseph McCabe, President 855.734.4590 ext. 1001

Data that drives tomorrow. February 2019 Data that drives tomorrow. February 2019 Competing in a Disruptive Global Market Market Drivers, Enablers & Constraints • Consumer preference vs. market direction

• Shareholder value Economic Recovery • Supply chain importance to the VM strategy Ownership Financial • Innovation in product and strategy & Operating Markets Cost • Investment strategies Market Direction & • Regulations, incentives, and standards the need for Innovation • Geo-political impact on globalization Technology Gov’t Price Effects Investment • Future players Auto Supply • Minimize risk and maximize opportunities Chain • Defend core operations and identify areas for growth

3 Data that drives tomorrow. February 2019 4 Data that drives tomorrow. February 2019 NA Growth Outlook and OEM Group Contribution North America Y-O-Y Production Volume Impact 400,000 400,000 18 17.79 300,000 300,000 17.67 200,000 200,000 EV 100,000 100,000 EU 0 0 17.11 17.16 -100,000 -100,000 17.03 17 -200,000 -200,000

-300,000 D3 -300,000 Millions -400,000 -400,000 -500,000 -500,000 -600,000 -600,000

Production Volume Change by OEM Group OEM by Change Volume Production -700,000 AP -700,000 16 -800,000 -800,000 -900,000 -900,000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Calendar Year

D3 EU AP EV Total YOY Change

Source: AutoForecast Solutions – January 2019

5 Data that drives tomorrow. February 2019 NA Production by OEM Parent Base Location North America Light Vehicle Production

20 0.11 0.26 0.41 18 16 1.38 1.34 1.79 14 12 8.63 8.66 8.43 10

Millions 8 6 7.05 4 6.99 6.77 2 0

AP D3 EU EV

Source: AutoForecast Solutions – January 2019

6 Data that drives tomorrow. February 2019 North America: Passenger Segment Contribution Annual Volume 2018 = 5.3M • D3 reduce car footprint by 625K+ 2026 = 4.2M EV 5% D3 • Korean OEMs reduce 90K 16% 4% 2018 25% • European OEMs gain 120K 52% Japan Korea 12% 54% 14% • Japanese OEMs reduce by 490K+ 8% EU 10% • EV – primarily Tesla – reduce 8K

Japan European Korea D3 EV

Source: AutoForecast Solutions – January 2019

7 Data that drives tomorrow. February 2019 North America: Vehicle Segment Contribution Annual Volume • European OEMs add 400K units 2018 = 6.1M 2026 = 7.4M EV D3 • Japanese OEMs add nearly 485K units 2% 40% 43% 1% 2026 • Korean OEMs down 10K 2018 35% Japan • EV group – adding about 135K 4% Korea 36% 17% 3% • D3 add 310K (but loses market share?) EU • Consider these imported models… 19% • Renegade from Italy – 100K+ • Encore from Korea – 90K+ Japan EU Korea D3 EV • Ford EcoSport from India – 50K pace

Source: AutoForecast Solutions – January 2019

8 Data that drives tomorrow. February 2019 North America Production Highlights • U.S. Sales growth in 2018 • Import Substitution • th Over 17 million for 4 straight year • Subaru Impreza • Growing mid-sized Pickups NOT cannibalizing full • ES and RX sized trucks (yet) • BMW passenger in Mexico • Ford Ranger, expanded Jeep lineup, Ram entries

• SUV resurgence • Global Export Hub • Ford Bronco and Jeep Wrangler 4-door • VW Atlas • Jeep Wagoneer / Grand Wagoneer to take on • Subaru Ascent Escalade and Navigator • • Strong move for FCA • BMW CUVs

• VW Atlas (both 2 and 3-row variants) • Mexico • to offset slow selling Passat • Strong export hub • Multiple global free trade agreements • GM portfolio adjustment • Established supply base • Product mix and plant utilization • Strong government support

9 Data that drives tomorrow. February 2019 10 Data that drives tomorrow. February 2019 U.S. Light Vehicle Sales • U.S. light vehicle sales peaked in 2016 • 17.46 million

• 2018 marked the forth straight year over 17 million units

• Slowdown expected in 2019 and 2020 • 17 million not expected to return until 2024 • 2% decline in 2019

• Market being driven by light truck growth • squeezing car share to near 27% in 2019 • heading toward under 20% by 2023

• Import substitution offsetting future sales contributions

Source: AutoForecast Solutions – January 2019

11 Data that drives tomorrow. February 2019 Recession Risk When long-term and short-term treasury rates bonds converge, Recessions the odds increase for a recession • Recent recessions, including 2007- 2009, 2001, and 1990-1991, coincided with the bond rate convergence

• Convergence typically leads to a recession within 12-18 months

• Rates converged in late ‘18 and early ‘19, pointing toward a recession in early- to mid-2020

Source: United States Department of the Treasury/AutoForecast Solutions – February 2019

12 Data that drives tomorrow. February 2019 13 Data that drives tomorrow. February 2019 Domestic Investment Opportunity • Rogue • CX-5 • Sourced from Japan, South Korea, and the U.S. • Top selling Mazda product • Two-thirds of U.S. derived from imports • Sourced from Japan

• RAV4 • • Nearly 250,000 expected from Japan this year • Among the best selling Hyundai models • Sourced from South Korea • Toyota 4Runner • Potential for North American sourcing • Soul • Not enough factory space for 150,000 • Sourced from South Korea • Low-cost hampers North American sourcing • Subaru Forester • Only made in Japan • Honda Civic • Subaru U.S. plant running at full speed • Specialty models imported from U.K. • Strained production capacity in Japan • BREXIT - production justification still valid?

• Subaru Crosstrek • Jeep Renegade • Related to the U.S. sourced Impreza • Globally sourced from Italian plant • U.S. plant running at full-speed • Shares plant with related 500X • Strained production capacity in Japan 14

14 Data that drives tomorrow. February 2019 15 Data that drives tomorrow. February 2019 Global Light Vehicle Production (2010 – 2026)

GLOBAL LIGHT VEHICLE PRODUCTION Volume Growth (2010 – 2026) Millions -2 2 6 10 14 18 100 ASIA-PACIFIC 15.6 101.2 95.3 80 EASTERN EUROPE 2.6

Millions 60 59.9 MIDDLE EAST/AFRICA 1.3 40 NORTH AMERICA 5.7 20

SOUTH AMERICA -0.4 0

WESTERN EUROPE 1.8

Source: AutoForecast Solutions – January 2019

16 Data that drives tomorrow. February 2019 Global Segment Analysis Global Segment Contribution Segment Growth 2026 vs. 2018 Pickup 9% 2026 Van 4.59% 9% 2018 SUV 12% Pickup-5.31% 4% 2010 10% PC SUV 3.24% 4% 40% 59% 15% CUV 23.50%

PC -3.87% CUV 38%

Source: AutoForecast Solutions – January 2019

17 Data that drives tomorrow. February 2019 “1 Million Unit Club” Brand Owner Analysis (2018 vs. 2026) MILLION UNITS OF GLOBAL PRODUCTION RANKING BASED ON 2026 POSITION 20 90% 0 2 4 6 8 10 12 Brand Owners in Per cent of Toyota Motor 2026 producing -Nissan-Mitsubishi Total Global OVER 1 Million Production Hyundai Motor units/year Ford Motor FCA Top 10 Brand Owners Honda Motor Groupe PSA Daimler 73% of total market Group BMW SAIC-GM-Wuling Inductees Since 2010 Mazda Motor Maruti Suzuki Automotive Group Tata Great Wall Automobile Suzuki Motor Changan Auto Geely Group (with ) Subaru Great Wall Automobile Tata Subaru 2026 2018 Source: AutoForecast Solutions – January 2019

18 Data that drives tomorrow. February 2019 China – Vehicle Production Outlook China Vehicle Production Vehicle Manufacturers in China by year 30 28.7 71% GROWTH 27.7 26.0 2026 126 25 2018 113

20 2010 94 16.8

15

Millions Brand Owners in China by year

10 2026 105 5 2018 91

0 2010 75

Source: AutoForecast Solutions – January 2019

19 Data that drives tomorrow. February 2019 China: Fractured Decision Making

Volkswagen 2026 10% Geely 6%

Changan 2018 11% 5% 5% % of Total 5% Honda Production 5% 5% OTHER 50% 51% in China by 4% Brand 5% 4% 5% 2% Wuling 4% 4% 4% Buick 4% Ford Toyota 4% Navigating the Decision Making Process Nissan 4% 3% Geography, leadership, politics, regulation, language

Source: AutoForecast Solutions – January 2019

20 Data that drives tomorrow. February 2019 21 Data that drives tomorrow. February 2019 Global Light Vehicle Production by Fuel Type 2010 Other Fuels 2020 EREV 0.45% 0.19% Fuel Cell Hybrid - Gas BEV Hybrid - Gas 0.01% Diesel 0.94% 0.03% Diesel 4.02% 18.92% 18.00% Other Fuels 0.45% EREV 0.00% Gas Hybrid - Diesel Hybrid - Diesel 79.64% Fuel Cell 0.01% Gas 0.31% BEV 0.00% 74.53% 2.50%

Fuel Cell 2026 EREV 2017 0.00% Other Fuels 0.24% 0.45% Hybrid - Gas Hybrid - Gas Fuel Cell Diesel 5.39% 2.69% Diesel 0.01% 18.53% 16.69% EREV 0.17% Other Fuels 0.62%

Hybrid - Diesel Hybrid - Diesel Gas 0.19% 77.15% Gas 0.32% BEV BEV 72.19% 0.82% 4.54% Source: AutoForecast Solutions – January 2019

22 Data that drives tomorrow. February 2019 EV Market Sizing

BEV Market Outlook AFS Forecast vs. VM Announced Plans 12 48%+ Optimist Viewpoint

10 2026 BEV Market AFS = 4.6 Million Variance to Announced Plans = 6.4 Million 180%+ Start-Up (Plan Variance) 8 Optimist Optimist View = 10.4 Million Viewpoint

6 Variance to 25%+ Legacy (Plan Variance)

Millions Battery Price Parity Outlook

4 64 Start-Up (AFS Forecast) BEV 2 Production Outlook 281 Legacy VM (AFS Forecast)

0 EVEN AN OPTIMISTIC VIEW REQUIRES NEARLY 90% OF VEHICLES TO HAVE AN ENGINE

Source: AutoForecast Solutions – January 2019

23 Data that drives tomorrow. February 2019 Electric Platform Production Volume 5.0

4.5

4.0 VW MEB Platform Daimler’s EVA Platform 3.5 52% Shared Platforms 3.0

2.5

2.0 MILLIONS 1.5 Dedicated 48% EV 1.0 Platforms

0.5 75%

0.0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Source: AutoForecast Solutions – January 2019

24 Data that drives tomorrow. February 2019 Differing OEM Viewpoints Electrification Adopters The Resistance • Renault/Nissan • Mazda • Nissan Leaf and NV200 EVs • Reluctantly adding EVs and hybrids • Rather refine current technologies • Renault Kangoo, Zoe and Twizy EVs • CIDI gasoline engines • Growing diesel volumes • Volkswagen • New direction to avoid past diesel issues • FCA • Creating ID sub-brand to Volkswagen • Losing money on each hybrid and EV • “Electrifying” Audi, Porsche, and • Marchionne came out said not to buy Fiat 500 EVs • Recently started adding EV and hybrid programs • Most Chinese Manufacturers • Adding EVs • Toyota – Sort of • BAIC, BYD, Changan, , Dongfeng, Geely, • Fully embracing hybrids Jianghuai, Jiangling, SAIC, Zotye • Avoiding EVs as much as possible • Adding PHEVs • China forcing production • BYD, Chery, Dongfeng, FAW, GAC, Geely, SAIC

25 Data that drives tomorrow. February 2019 China BEV Market Sizing Manufacturers Adding BEVs • FAW Car (2) • (6) • BAIC Motor (10) • FAW Haima (1) • Kandi Electric Vehicles (1) • BAIC-Yinxiang (2) • • FAW Jiqing (1) LeapMotors (1) • (4) • LeEco (1) 219 • (1) • FAW Toyota (5) • Link Your (1) • Beiqi Foton (2) • FAW Volkswagen (11) • Nanjing (1) • Blue Sky NEV (5) • FDG Electric Vehicles (1) • NEVS (2) • BMW Brilliance (5) • Fujian New Longma (1) • NIO (2) 2026 BEV Models • Brilliance (1) • Future Mobility (3) • (2) • BYD (5) • SAIC Commercial (3) • GAC Changfeng (3) • BYD Daimler (1) • SAIC GM (2) • CH Auto (1) • GAC Honda (2) • SAIC GM Dongyue (2) • Changan Auto (7) • GAC Motor (5) • SAIC Motor (2) • (1) • GAC Toyota (6) • SAIC VW (10) • Changan PSA (1) • Geely Group (23) • SAIC-GM-Wuling (2) • Chehejia (1) • (3) Red Entries are OEMS • Great Wall Automobile (3) • Chery (6) • Sichuan Auto (3) only producing EVs • Chery-JLR (1) • Greenwheel (2) • South-east Automobile (3) • Lifan (2) • Guojin Auto (3) • Tesla (2) • (2) • Haima Zhengzhou (2) • WM Motor (2) • Dongfeng Limited (5) • (2) • Xiapeng (1) • Dongfeng Motors (3) • • Lotus (1) Some nameplates • HK Motors (1) Dongfeng Nanchong (1) • Youxia (1) • Dongfeng PSA (7) • Honda China (2) • (2) built by • Dongfeng PV (1) • Hozon Auto (3) • (3) • Dongfeng Yu’an (1) • Jianghuai (7) • (1) • Zotye-Ford (4) more than one OEM • Dongfeng –Luxgen (1) • Jiangjuai-VW (1)

26 Data that drives tomorrow. February 2019 Data that drives tomorrow. February 2019 NAFTA+ (2026) Light Vehicle Platforms containing NAFTA production and at least one other country in ROW

GLOBAL PLATFORMS NAFTA+ 14% 423 16 Platforms NAFTA+ produced Platforms worldwide Global

NA VOLUME NAFTA 14.4 Million Only NAFTA+ North America NAFTA+ 80% Volume

Source: AutoForecast Solutions – January 2019

28 Data that drives tomorrow. February 2019 NAFTA+ Opportunity/Risk (2026) GLOBAL NAFTA+ PRODUCTION

NAFTA 52.4 Million NAFTA+ Global Volume ROW 72%

GLOBAL LESS NA PRODUCTION 37.6 Million NAFTA+ 43% NAFTA+ volume

ROW Produced OUTSIDE North America

Source: AutoForecast Solutions – January 2019

29 Data that drives tomorrow. February 2019 30 Data that drives tomorrow. February 2019 Disruption: The Fine Line Between Risk and Opportunity

Balancing a fickle consumer with an impatient shareholder

All players are jockeying for position in a race with no clear finish line

The goal is to understand the opportunities, develop a value proposition to defend core operations, and identify areas for growth.

31 Data that drives tomorrow. February 2019 AutoForecast Solutions (AFS) provides vehicle, powertrain, and drivetrain production forecasting and advisory services to the global .

AFS Forecast AFS Portfolio

Global Automotive Business Intelligence Solutions & Advisory Services AFS Planning AFS Scenario

AFS helps our customer… Understand the opportunities Develop a value proposition to defend core operations Identify areas for growth.

32 Data that drives tomorrow. February 2019 33 Data that drives tomorrow. February 2019 Alternative Propulsion Applications A. BAS: Belt Alternator Starter (BAS) or Belt Starter ELECTRIFICATION LIGHT VEHICLE Generator (BSG) PACKAGING B. Central: ’s (BEV) traction motor in place of a traditional ICE Full HEV 2026 25% C. Crankshaft: Traction motor mounted on the side of the crankshaft 2020 BEV D. ISG: Traction motor mounted on the transmission 43% input shaft 2018 30% E. eTrans: Traction motor placed in or on the 43% transmission housing, acting on the gearset 3% F. eDriveshaft: Traction motor propels the output 15% shaft or driveshaft via drive chains or gears 9% Mild HEV G. eAxle (Reduction Gear): Traction motor added to, 9% or integrated with, the differential

H. eAxleDD: Traction motor provides direct drive, attaching directly to the axle(s) PHEV eREV 2% I. Hub: Traction motor mounted in wheel hub driving 21% the wheel directly Source: AutoForecast Solutions – January 2019

34 Data that drives tomorrow. February 2019 The Global Automotive Outlook Opportunity Identification in a Disruptive Market February 20, 2019 Joseph McCabe, President 855.734.4590 ext. 1001

Data that drives tomorrow. February 2019

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