Adient China Business Review
June 28, 2017 Improving the experience of a world in motion Forward looking statement
Adient has made statements in this document that are forward-looking and, therefore, are subject to risks and uncertainties. All statements in this document other than statements of historical fact are statements that are, or could be, deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In this document, statements regarding Adient’s future financial position, sales, costs, earnings, cash flows, other measures of results of operations, capital expenditures or debt levels and plans, objectives, outlook, targets, guidance or goals are forward-looking statements. Words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “forecast,” “project” or “plan” or terms of similar meaning are also generally intended to identify forward-looking statements. Adient cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond Adient’s control, that could cause Adient’s actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to: the ability of Adient to meet debt service requirements, the ability and terms of financing, general economic and business conditions, the strength of the U.S. or other economies, automotive vehicle production levels, mix and schedules, energy and commodity prices, the availability of raw materials and component products, currency exchange rates, and cancellation of or changes to commercial arrangements. A detailed discussion of risks related to Adient’s business is included in the section entitled “Risk Factors” in Adient’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016 filed with the SEC on November 29, 2016 and quarterly reports on Form 10-Q filed with the SEC, available at www.sec.gov. Potential investors and others should consider these factors in evaluating the forward-looking statements and should not place undue reliance on such statements. The forward-looking statements included in this document are made only as of the date of this document, unless otherwise specified, and, except as required by law, Adient assumes no obligation, and disclaims any obligation, to update such statements to reflect events or circumstances occurring after the date of this document.
In addition, this document includes certain projections provided by Adient with respect to the anticipated future performance of Adient’s businesses. Such projections reflect various assumptions of Adient’s management concerning the future performance of Adient’s businesses, which may or may not prove to be correct. The actual results may vary from the anticipated results and such variations may be material. Adient does not undertake any obligation to update the projections to reflect events or circumstances or changes in expectations after the date of this document or to reflect the occurrence of subsequent events. No representations or warranties are made as to the accuracy or reasonableness of such assumptions or the projections based thereon.
This document also contains non-GAAP financial information because Adient’s management believes it may assist investors in evaluating Adient’s on-going operations. Adient believes these non-GAAP disclosures provide important supplemental information to management and investors regarding financial and business trends relating to Adient’s financial condition and results of operations. Investors should not consider these non-GAAP measures as alternatives to the related GAAP measures. A reconciliation of non-GAAP measures to their closest GAAP equivalent is included in the appendix. Reconciliations of non-GAAP measures related to FY2017 guidance have not been provided due to the unreasonable efforts it would take to provide such reconciliations.
China Business Review / June 28, 2017 2 Adient – Improving the experience of a world in motion Meeting agenda
˃ Company & business overview
˃ China market overview
˃ Adient in China
˃ Adient’s unconsolidated financial strength
˃ Innovation
˃ JV overview
˃ Panel discussion
China Business Review / June 28, 2017 3 Adient – Improving the experience of a world in motion Adient today
The largest global automotive seating supplier, supporting all major automakers in the differentiation of their vehicles through superior quality, technology and performance.
FY 2016 230+ 25+ 75,000 ~$17 billion locations globally million seat highly engaged Consolidated revenue systems a year employees ~$8 billion Unconsolidated seating revenue
~$8 billion Unconsolidated interiors revenue
China Business Review / June 28, 2017 4 Adient – Improving the experience of a world in motion Adient’s vision and mission bring focus to our success
Vision
Improving the Experience of a World in Motion
Mission We will be the world-class automotive seating supplier through leadership in cost, quality, launch execution, and customer satisfaction. We will leverage our capabilities to drive growth, both within and beyond the automotive industry.
China Business Review / June 28, 2017 5 Adient – Improving the experience of a world in motion Broadest and most complete range of Seating & Interior Products
Adient Automotive Seating Yanfeng Global Automotive Interiors
> Complete Seat / Just-In-Time > Instrument Panels Manufacturing > Floor Consoles > Front & Rear Seat Structures > Door Panels > Track, Recliner, Manual Height Adjuster > Overhead Consoles and Lock Mechanisms > Decorative Trim > Foam Cushions & Backs > Head Restraints & Armrests > Trim Covers & Fabrics > RECARO High Performance Seating > Commercial Vehicle Seating
China Business Review / June 28, 2017 6 Adient – Improving the experience of a world in motion Global market leader with diversified geographic exposure
Global market share Revenue by geography
Adient Americas Lear Europe / Africa
33% 34% 29% Faurecia
Toyota 7% Asia / Pacific Boshoku 30% Other China Magna
Early investment in emerging markets allowed Adient to take advantage of the globalization of the automotive industry
Adient share Includes non-consolidated revenue (mkt share based on FY16) Revenue by geography based on FY2016 (consolidated and non-consolidated) Source: IHS Automotive and management estimates
China Business Review / June 28, 2017 7 Adient – Improving the experience of a world in motion Global competitive market position
Global market share Americas Europe
In-house / small In-house / small In-house / <10% players players 10- small players 15% Adient Adient 21% 33% Adient 33% 38% 2016 market 2016 market 2016 market size ~ $22B size ~ $16B size ~ $65B
45% Traditional Traditional Competitors Traditional Competitors Competitors China SE Asia, Japan, Korea Content growth driving growth in the seating market > industry growth In-house / small In-house / small Adient Adient Market Share: players players 15% • Global: Responsible for approximately one Adient third of the global seating market; 35- 40% 45-50% 44% opportunity for continued growth 2016 market 2016 market • Americas / Europe: Challenged near-term size ~ $16B size ~ $11B due to prior year capital constraints; growth expected in 2019 and beyond Traditional • China / SE Asia: Opportunity for growth, Traditional Competitors primarily from in-house / small players Competitors
Source: IHS Automotive with management adjustments. Adjustments are based on management’s knowledge of customer schedule details and participation in the global automotive seating market, and include identification of the seating provider for certain vehicle models unidentified by IHS Automotive, among others. China Business Review / June 28, 2017 8 Adient – Improving the experience of a world in motion Our customer portfolio is the envy of the industry and closely mirrors our customer’s global market share
Others JLR 4% Ford BMW 3% 13% 4% Key Takeaways Volvo 4% > Industry leading diversification
Renault, Peugeot GM > By customer -- largest customer & Citroen 9% 5% accounts for 13% of total consolidated N. American European OEM's sales Mercedes OEM's 34% 7% 33% > By platform -- largest platform accounts
FCA for ~5% of total consolidated sales 12% Asian > Ability to leverage products across OEM's VW 29% customers and regions 10% > Scale provides leverage to optimize Toyota Honda 9% cost structure 6% Hyundai/Kia Nissan 6% 8%
Based on FY16 Consolidated Sales
China Business Review / June 28, 2017 9 Adient – Improving the experience of a world in motion Seating – growth market
1 Industry Growth1 2 Mix > Global light vehicle production remains robust > Mix of Foam/Trim/JIT sourcing and component sourcing and is expected to reach production levels of > Continued shift towards SUVs / MPVs globally 101 million vehicles by 2020 > Increase in luxury / comfort features > China continues to grow more rapidly than other major markets (4.9% CAGR), albeit at a lower but more sustainable rate than in past years
Content Growth 3 > Increase in passenger-focused technologies: ‒ Occupant sensing ‒ Seat heating / cooling ‒ Massage features ‒ Passenger health and wellness ‒ Advanced seat adjustability
> Connected car / autonomous driving provide large potential for content growth ‒ Adient offers complete interior solution to potential new entrants ‒ Autonomous trend likely to have a significant impact on interior content 1. Source: IHS Automotive.
China Business Review / June 28, 2017 10 Adient – Improving the experience of a world in motion Adient is well positioned to capitalize on a shifting industry
Traditional manufacturers ...... and the new players Industry trends
> Autonomous driving > Electrification > Internet of things > Connectivity > Urbanization > Alternative propulsion > Slim & lightweight > Smart materials > Individualization > New shapes We address the questions of the traditional OEMs and the new players > Safety who accelerate industry trends. > Shared ownership
China Business Review / June 28, 2017 11 Adient – Improving the experience of a world in motion Opportunities in new markets Growing outside traditional auto markets
West Coast New Commercial Players Vehicle Seating
Railway Seating Aircraft Seating
China Business Review / June 28, 2017 12 Adient – Improving the experience of a world in motion Value drivers for Adient stock
VALUE DRIVERS ~55% ˃ Margin improvement of 200 bps vs. LTM June 2016 results net earnings ˃ Strong order book in 2016, expected to drive top line growth in 2019 and beyond ˃ Proven ability to generate substantial cash flow Consolidated ˃ Largest market share with most capable global production / delivery Results capability
Focus of today’s VALUE DRIVERS review 45% ˃ ~44% market share with high growth opportunity ~ – Incremental content per vehicle driven by mix (CUV / SUV / luxury) net earnings – Shift away from local / in-house players as vehicles migrate to global platforms Unconsolidated ˃ Record of success (i.e. from 2012-2016) – ~14% CAGR in sales and EBITDA (stable and attractive margins) Results – ~34% CAGR in net cash despite ~16% CAGR in dividends
China Business Review / June 28, 2017 13 Adient – Improving the experience of a world in motion Unconsolidated results = higher quality earnings
UNCONSOLIDATED RESULTS = HIGHER QUALITY EARNINGS ADNT’s equity income
˃ ~25% of Adient’s EBITDA generated through equity income ~25% – Shown as EBITDA for accounting purposes, should be treated as net EBITDA income for valuation purposes (already reflects growth investments and taxes) ˃ ~65% of Adient’s equity income converts into cash dividends ~65% – Cash conversion rate significantly higher vs. peer EBITDA conversion cash conversion rate of ~37% 1 – Adient conversion rate expected to increase if growth in China slows
Adient’s joint venture income model makes us structurally unique
1. Represents peer median 5-year average; Peers include Autoliv, Faurecia, Lear, Magna, Tenneco.
China Business Review / June 28, 2017 14 Adient – Improving the experience of a world in motion Dissecting Adient’s 2017E earnings ($ in millions)
Base Business
2017E Consolidated Business EBITDA (Including Equity Income) $1,625 (-) 2017E Equity Income (400) 2017E Base Business EBITDA $1,225 Valued at Industry EV / EBITDA Multiple
China Joint Ventures
Valued at Industry 2017E Equity Income $400 China P / E Multiple (+) Illustrative Taxes (@ 18%)1 83 (+) Illustrative Interest Expense2 - >$1B net cash at JV’s 3 (+) Illustrative Depreciation & Amortization 96 Used for Consolidated 2017E Illustrative China Proportionate EBITDA $579 Leverage Purposes Source: Management estimates 1 Assumes 2017E unconsolidated sales of ~16bn and illustrative seating and interior operating income margins of ~10% and ~4%, respectively. 2 Assumes no net interest expense as the JVs are in a consolidated net cash position. 3 Assumes D&A represents 1.5% of total unconsolidated sales. Reconciliations of non-GAAP measures related to FY2017 guidance have not been provided due to the unreasonable efforts it would take to provide such reconciliations
China Business Review / June 28, 2017 15 Adient – Improving the experience of a world in motion Framework for valuing Adient
Primary - P/E Multiple Methodology Secondary - Blended Multiple Methodology
Base Business EBITDA Multiple EBITDA
Overview Adient EPS P/E Multiple
JV Equity P/E Multiple Income
Provides full value for JV equity income (key contributor Common method currently used by Wall Street to value and cash flow) research analysts
Captures benefit from lower corporate tax rate Provides easier comparison to core auto peers who are Considerations primarily valued on an EV / EBITDA basis Captures earnings impact from increased leverage at spin (as well as benefit from de-levering over time) Does not provide proper credit for tax rate decline, leverage at spin or JV equity income
China Business Review / June 28, 2017 16 Adient – Improving the experience of a world in motion Meeting agenda
˃ Company & business overview
˃ China market overview
˃ Adient in China
˃ Adient’s unconsolidated financial strength
˃ Innovation
˃ JV overview
˃ Panel discussion
China Business Review / June 28, 2017 17 Adient – Improving the experience of a world in motion The outlook for business environment in China remains promising
Stabilized economic growth Strong government support Potential in consumption “New Normal” “Made in China 2025”
˃ Sustainable economic growth ˃ Move China’s auto industry ˃ Continued urbanization
China GDP Growth Forecast 2017-2021 to the leading position – Target 60% by 2020 from ~56%
2016 2017F 2018F 2020F 2021F globally, focusing on quality in 2015 WB 6.5 6.3 6.3 6.0 of growth ˃ Middle-class explosion IMF 6.7 6.6 6.2 5.9 5.8 EIU 6.6 4.5 5.2 4.9 ˃ Strong push for NEVs and ˃ Still low vehicle ownership ˃ Focus on a more “consumer Chinese Brand led” sustainable growth ˃ More focus on innovation
We have optimistic view on business environment in China in the next decade
Data source: GDP Forecast : WB: World Bank; IMF: International Monetary Fund; EIU: Economist Intelligence Unit Urbanization number : China National Development and Reform Commission
China Business Review / June 28, 2017 18 Adient – Improving the experience of a world in motion Market trends: China light vehicle production and short-term outlook
Light Commercial Vehicle YoY (PV+LCV) % Passenger Vehicle
Production CAGR ,% Production CAGR ,% Production CAGR ,% Passenger Vehicle: 2000-2007: 35% Passenger Vehicle: 2008-2016: 19% Passenger Vehicle: 2017-2022e: 3.2% YoY Growth Light Vehicle Total: 2000-2007: 24% Light Vehicle Total: 2008-2016: 15% Light Vehicle Total: 2017-2022e : 3.0% Light Vehicle 40,000 60.0% 50.0% Production 30,000 40.0% Trend (units) 20,000 30.0% 20.0% 10,000 10.0% K units 0 0.0% CY2000 CY2001 CY2002 CY2003 CY2004 CY2005 CY2006 CY2007 CY2008 CY2009 CY2010 CY2011 CY2012 CY2013 CY2014 CY2015 CY2016 CY2017 CY2018 CY2019 CY2020 CY2021 CY2022
Production Growth 5% purchase tax in 2009 5% purchase tax since Q4 ’15 till CY16 End Brand YoY Growth % Jan-May 17 2017/2016 (Production) 7.5% in 2010 7.5% in CY17 and back to 10% in CY18 Nominalized 10% from 2011 . Lower growth in CY17&18 is expected BMW 150,000 +51% Short-Term Slower growth in 2011-2012 . However, hard-landing is unlikely Daimler 164,000 +36% slower down 46,2 Volvo 32,000 +28% 34,5 risks but not Geely 458,000 +78% 24,7 without 18,3 19,5 GAMC 202,000 +58% 11,2 opportunities 8,5 7,8 8,6 4,0 3,2 5,4 5,0 Hyundai 298,000 -30% 0,1 Kia 138,000 -42% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F Jan-May. 17 Act. BYD 151,000 -14% Brilliance 51,700 -47% Market is witnessing Data source – Light vehicle production volume forecast : IHS Forecast April 2017; Jan-May China PV Production data: CPCA (China Passenger Car Associations) uneven growth
China Business Review / June 28, 2017 19 Adient – Improving the experience of a world in motion We are prepared for the uncertainties
> Growth to slow down in 2017&2018, but hard landing is not likely > Competition will increase and price headwind will continue > We are capable of dealing with the market headwinds through: 1. Operational excellence (AMS; Industry 4.0) 2. Supply chain management / vertical integration / economies of scale 3. JV partnerships and global customer relationships 4. Flexibility in manufacturing 5. Product mix 6. Innovation
China Business Review / June 28, 2017 20 Adient – Improving the experience of a world in motion SUV trends are beneficial to Adient’s growth
China SUV Development Trend % share based on production volume Seating content per vehicle: ~$1000-$1,100
Share of SUV of total market (Left) Gobal OEM's share in SUV (Right) ~$500-$600 ~$550-$650 60.0% 60.0% 47% 44% 45% 40% 40.0% 33% Average SUV SUV Local Brand JV Brand 20.0% 46% 43% New business wins enable Audi Q5 Great Wall 0.0% 40.0% $68,000 Havel H6 us to further gain growth 2015 2016 2017 2018 2021 $18,000 in China from the SUV trend 1. Penetration of SUV in total PV market will VW Teramont Great Wall continue to increase from 40% today to 47% by $60,000 WEY 2021 $26,000
2. Global OEM’s share in SUV segment is BMW X1 F49 $51,000 Wuling expected to increase by ~3% in the next 5 BAOJUN years $12,000 Toyota RAV4 3. Competition will intensify in this segment $32,100 Adient has the complete seating Data source: IHS Forecast business of those vehicles Data source: Car price - OEM Website
China Business Review / June 28, 2017 21 Adient – Improving the experience of a world in motion Premium market will continue to outpace the volume market in China
China PV Production YoY Growth ( Average market vs. Premium) Segment share 2016 vs. 2021e
PV Avg.YoY Growth % Premium YoY Growth % 28.2% 28.1% 29,6 29,3 26,7 65.0% 62.3% 6.8% 21,1 9.6% 19,0 18,6 17,6 13,9 2016 2021e ˃ Premium segment will 11,2 Premium Segment 8,0 8,6 continue to outpace the mass Medium Segment 3,5 Entry Segment market in the next 10 years, Data source: IHS Forecast powered by the growing Passenger vehicle only 2012 2013 2014 2015 2016 2017e middle class as their Adient market share in each main premium brands disposable income increases ˃ Our backlog ensures our 2017 Volvo 100% leading position in this 2021 Incremental (awarded business) PSA DS 100% segment ˃ Growth opportunities with BMW 50% Volume 60% increase those later comers and new MFA volume 32% Daimler 17% increase OEMs
Audi 54% Growth Opportunities
New OEMs
Data source: IHS Forecast 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Adient internal information
China Business Review / June 28, 2017 22 Adient – Improving the experience of a world in motion Importance of Chinese market will continue to increase
Evolving of the Global Platforms Chinese OEM
Technology roadmap 2025: Leading Market New OEMs World’s biggest electric Of Electrification vehicle market with aggressive growth plans
China Business Review / June 28, 2017 23 Adient – Improving the experience of a world in motion Market trends: China technology roadmap 2025: focus on the development of lightweight materials
Categories 2020 Objectives 2025 Objectives 2030 Objectives Vehicle weight reduction rate (In comparison to 2015) By 10% By 20% By 35% 50% use of AHSS w/ a strength of 30% use of 3-genereation HTS for Use of steel w/ a strength of High Tensile Strength Steel Light- 600mpa or more body in white 2000mpa or above at a fixed ratio Aluminum Alloy Weight 190KG AL used 250KG AL used 350KG AL used (Usage per vehicle) Magnesium Alloy 15KG Mg used 25KG Mg used 45KG Mg used (Usage per vehicle)
Carbon fiber-reinforced Carbon fiber will account for 2% of Carbon fiber will account for 5% of - composite material the vehicle body weight the vehicle body weight
The weight of seating structures will have to reduce significantly - which presents challenges but also opportunities
Data source: Marklines; “China technology roadmap 2025” was issued by SAE (Chinese Society of Automotive Engineers)
China Business Review / June 28, 2017 24 Adient – Improving the experience of a world in motion Development of New Energy Vehicle
Sales of New Energy Vehicle in China China’s NEV Brand Market Share in 2015 ˃ NEV market in China was Data source: China Association of Automobile Manufacture (CAAM) Chery, 3.9% Lifan, 3.1% surging since 2014 JMC, 2.7% +342,9% 507.000 JAC, 4.9% Others, 4.0% ˃ Local brands supplying >90% 331.092 SAIC, 6.0% +53,1% BYD, 28.5% ˃ Government incentives play a BAIC, 8.7% 2015 74.763 large role in today’s market 8.159 11.375 17.642 Zotye, 12.5% Geely, 24.7% 2011 2012 2013 2014 2015 2016
Outlook: > Government will continue to push the development of NEV > Subsidies will be gradually receding > Global OEMs will enter the market > Consolidation will likely to happen in the coming years
Data source: China Industry Plan; Marklines etc.
China Business Review / June 28, 2017 25 Adient – Improving the experience of a world in motion Summary:
˃ The entire automotive industry is on the brink of a major transformation, technology is driving this shift, shaped by demographic, regulatory and environmental pressures. ˃ China’s auto industry will also evolve thus bring profound impact both domestically and globally. ˃ We are equipped to capitalize on the trends and continue to outpace the market growth over the next decade.
VEHICLE SEATING CONSUMER
> The car will become smarter and > Seating will become an integral > Younger generations. greener with high-efficiency component of connectivity and engines, lighter materials and autonomous – which requires increased > New mobility concepts. autonomous driving systems. features such as: safety; health; > Consumers become more > The driver will look at cars comfort and entertainment. sophisticated and expect more differently – sharing cars and value in product with a more > Seating structure is one of the key using them as space to consumer competitive price. elements to weight reduction of the media and make calls. vehicle. > Expanding of upper/middle class will continue to power the > The usage of seat will increase as a consumption. consequence of ride-sharing.
China Business Review / June 28, 2017 26 Adient – Improving the experience of a world in motion Meeting agenda
˃ Company & business overview
˃ China market overview
˃ Adient in China
˃ Adient’s unconsolidated financial strength
˃ Innovation
˃ JV overview
˃ Panel discussion
China Business Review / June 28, 2017 27 Adient – Improving the experience of a world in motion Adient is the largest automotive seating supplier in China
We enjoy a clear leadership position in China
We generated We employ $7.5B 31,000 sales revenue in FY2016 highly engaged employees including >1,300 engineers
We have We have 17 45% seating joint ventures PV market share
Note: excluding YFAI
28 We operate through 17 joint ventures, 67 manufacturing plants and 4 global tech centers in 37 locations
YFAS SJA
CQADNT BJA CFAA HQ & Plant FAA HQ & Plant CFAA Daqing GAAS Employees: 7,210 Employees: 1,075 Harbin FAA AYM Engineers: 247 Engineers: 10 Fabrics Changchun SJA HQ & Plant Tech Center (Global) Capabilities incl.: > Industrial Design BJA HQ & Plant Beijing Shenyang Employees: 2,270 > Engineering Dalian Engineers: 37 > Innovation Employees: 710 Langfang > Benchmark Engineers: 21 Tianjin > Craftsmanship > Prototyping Yantai YFAS HQ & Plant > FEA & Testing Yancheng Qingdao Huainan Zhengzhou Yizheng Employees: 8,649 Nantong Nanjing Engineers: 487 CQADNT HQ & Plant Hefei Changshu Haining Shanghai Employees: 3,243 Wuhu AYM HQ & Plant Hangzhou Cixi Engineers: 114 Chengdu Wuhan Employees: 2,130 Chongqing Nanchang Taizhou Engineers: 95 Changsha Fuzhou
Guangzhou Dongguan GAAS HQ & Plant Liuzhou Fabrics*
Employees: 1,181 Foshan Employees: 441 Notes: ADS (located in Engineers: 12 Shanghai) trim plant was not displayed here
Note: excluding YFAI
China Business Review / June 28, 2017 29 Adient – Improving the experience of a world in motion We partner with all major auto groups in China
China Joint Ventures Joint Venture Name Chinese Group Partner Joint Ventures’ Customers
YFAS SAIC
CFAA FAW
CQADNT Changan
Complete Seat BJA BAIC
SJA Brilliance
GAAS & CAA GAC
GZDFAS Dongfeng
AYM SAIC
FAA FAW Serving all major OEM customers Components WFAD Wanfang
ADNNG NNG
Note: excluding YFAI Where Adient has an exclusive partnership with customer Individual OEM (no alliance with those big auto groups)
China Business Review / June 28, 2017 30 Adient – Improving the experience of a world in motion Adient China’s current seating market share in each big auto group
% Adient’s JIT market share in each big auto group, based on 2016 production volume (PV) Where competitors have alliance with the auto group
PV seating market share per each major auto group
4816K 3495K 3057K 2037K 1999K 1734K 100%
78% 61%
32% 32% 27% 26%
SAIC Dongfeng FAW Changan BAIC GAC
> Since 1997, JV model has advantaged us in each main auto group > Our partner relationship has worked well and we expect to maintain our position
Source : IHS Forecast, traditional passenger vehicle Market share information: Adient internal information
China Business Review / June 28, 2017 31 Adient – Improving the experience of a world in motion Leading position with western OEMs with opportunities with Asian and Local OEMs
Seating* market share among each OEM Group
European OEM 70% LEAR FSA Sitech
Adient Share at In-House N.A. OEM 77% LEAR FSA Global OEM 6.5% 23.5% C OEM Japanese OEM 31% Toyota Boshoku TS-Tech Tachi –S FSA JV Others 56% KR OEM 2016* 31.5% OEM MIX Korean OEM 35% DYMOS LEAR DAS Daewon / Others JP OEM 13.1% N.A. OEM 7.9% 17.5% EU OEM Chinese OEM 30% LEAR Opportunity for topline growth In-House
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%
> Leading position with European and U.S. based OEM groups > Opportunity to grow share w/ Asian OEMs through strategic initiatives aligned w/ Adient global CGs > White space with local Chinese OEMs
*All Market share data is calculated based on 2016 actual PV production volume – total market size = ~22million; “In-House OEM” refers to BYD and Great Wall Motor
China Business Review / June 28, 2017 32 Adient – Improving the experience of a world in motion Unparalleled customer diversity and relationships in China
Customer Mix by Volume
Asian OEMs (w/o China) 19% European OEMs 40% Chinese OEMs 19%
North American OEMs 22%
China Business Review / June 28, 2017 33 Adient – Improving the experience of a world in motion Customer awards and recognition
2016: 24 awards in total
No JV Customer Award No JV Customer Award 1 YFAS-Shanghai SGM Best Supplier 1 YHAS JAC New Model SOP Contribution Award 2016 2 YFAS-Yantai SGM Gold Partner Award 2 YHAS JAC Excellent Supplier Award 2016 3 YFAS-Shenyang SGM Best Supplier 3 YHAS JAC Excellent Supplier of M4 Project 4 YFAS-Wuhan SGM Best Supplier 4 YHAS JAC Excellent Supplier of S7 Project 5 YFAS-Yantai SGM PC&L Award for “Powerful Support” YHAS 6 YFAS-Yantai SGM Excellent Supplier No JV Customer Award 7 YFAS-Changshu CJLR CJLR Excellent SQT Award 1 CFAA FAW-VW 2016 IAQ Improvement Award *IAQ: Indoor Air Quality CFAA 8 YFAS-Changshu CJLR Excellent Supplier YFAS 2 CFAA-Chengdu FAW-VW 2016 Excellence Quality Award 9 YFAS-TC Honda Supplier Award for 2TW
No JV Customer Award No JV Customer Award 1 AYHS Chery Excellence Performance of 1 CQADNT Changan 2016 R&D Contribution Award Development Award 2016 CQADNT Suzuki 2 AYHS Chery First Prize of Quality Performance 2 CQADNT Volvo 2016 Excellent Supplier (Seating System) 2016 3 CQADNT Volvo Volvo Cars Quality Excellence Award (VQE Award) No JV Customer Award 4 CQADNT Lifan 2016 Special Contribution Award 1 FFAA Delta- Award for the Best Performance in CFAA Quality Month No JV Customer Award No JV Customer Award 1 GZDFAS-Wuhan Dongfeng- 2016 Annual Excellent Supplier 1 JARC-Shenyang SGM Quality Award Renault
34 Key Takeaways
We have been successful in China over the Our goal is to continue to outpace the past 20 years making us the industry leader, market, further expanding our share because we do things right: and strengthening our leadership.
> Unique and longstanding position in China through Joint Venture structure > Unparalleled customer diversity and relationships driving growth ~45% > Unmatched manufacturing footprint and presence in market share China making us a true partner for our customers in China > Vertical integration enhancing competitiveness > Global tech centers offering world-class capabilities and solutions > Standardized operating systems ensuring best-in-class cost, quality and on-time delivery
35 Our Commitment
> We will continue to focus on growth, building on our strengths > Customer Focus > Partnerships and Global Team > Products / Technology / Innovation > Operational Excellence > We will be nimble and influence market changes > We will leverage our strength in China to grow in the rest of the world
China Business Review / June 28, 2017 36 Adient – Improving the experience of a world in motion Meeting agenda
˃ Company & business overview
˃ China market overview
˃ Adient in China
˃ Adient’s unconsolidated financial strength
˃ Innovation
˃ JV overview
˃ Panel discussion
China Business Review / June 28, 2017 37 Adient – Improving the experience of a world in motion Adient China’s unconsolidated financial strength 1 FY2012 – FY2016
Industry CNY in billions Adient Results Sales Net Cash 3
48.9 > Top-line growth > Well capitalized Units, Millions 5.8 in excess of balance sheets China Light Vehicle 29.1 industry growth across the Production 2 expected to various joint continue 1.8 ventures 26.2 FY FY FY FY 18.4 2012 2016 2012 2016 Net > NI supported by Dividend Income strong operating 4.1 FY FY performance (14% 1.4 > Dividend growth 2012 2016 EBITDA growth, expected to 2.5 and margins continue between 11-12%) 0.8 > Expect to sustain strong margin
1 – Excludes YFAI; includes SJJ and BJC Interiors prior FY FY performance FY FY to July 2015 2012 2016 2012 2016 2 – Based on IHS volumes 3 - Net cash at 12/31/16 was approximately $1.1B
China Business Review / June 28, 2017 38 Adient – Improving the experience of a world in motion Financial Returns from China JVs
China Foundation Incredible Growth
1997- 2006 2007-2016
Invest. Capital $73.8M $74.1M
YFAS/SJJ/CFAA/BJA YHAS/YFAT/FAA/GAAS/WTAS CQADNT/GZYFAS/AYHS DLYFAS/CAA/WFAD/AYM/ADNNG
Cumulated Adient Dividends YTD:$1,226.3M
$147.8M invest turned into $1.226B return over 20 years Nearly 830% return over 20 years!
China Business Review / June 28, 2017 39 Adient – Improving the experience of a world in motion Financial Strength Expected to Be Continued – Sales
Adient is expected to continue realize sales growth in China
> China automotive industry slows down but is expected to continue to grow > Adient’s future growth is expected to continue outpace industry growth ‒ Adient has high and increasing market share with premium brands ‒ Adient has very good coverage with SUV / CUV segment ‒ Seating content per vehicle is expected to increase ‒ Adient has manufacturing plants close to all OEMs’ plants in China > Opportunity to grow market share with Chinese OEMs, in-house OEMs and Asian OEMs > Strong business booked in FY16: unconsolidated seating backlog 2017-2019 >$2B > Growth in China has not be impacted by prior year capital constraints ‒ Adient as an independent company ‒ Strong cash positions at Adient JVs
China Business Review / June 28, 2017 40 Adient – Improving the experience of a world in motion Financial Strength Expected to Be Continued – Margin
Adient is expected to continue maintain sustainable margin with sales growth > Advanced & standardized operating systems in place to drive operational improvements
6 Sigma
Operational BBP Systems/ AMS Tools
VA/VE KAIZEN
> Operational flexibility with 67 manufacturing plants in China > Strong engineering supports with 4 global tech centers in the region > Strong partnerships with all major auto groups in China > Supply base localization / vertical integration – cost advantage vs. peers
China Business Review / June 28, 2017 41 Adient – Improving the experience of a world in motion Financial Strength Expected to Be Continued – Dividends
Strong and Growing Dividends
Increasing Equity Well Capitalized Income to Adient Balance Sheet
Top Line Sales Strong Margin Growth Performance
China Business Review / June 28, 2017 42 Adient – Improving the experience of a world in motion Meeting agenda
˃ Company & business overview
˃ China market overview
˃ Adient in China
˃ Adient’s unconsolidated financial strength
˃ Innovation
˃ JV overview
˃ Panel discussion
China Business Review / June 28, 2017 43 Adient – Improving the experience of a world in motion Agenda: Driving Technology & Innovation in China
˃ The Race for Autonomous & Electric is on ˃ Industry Trends and how Adient is ahead of the game – Short-term – Mid-term – Long-term ˃ Adjacent markets
China Business Review / June 28, 2017 44 Adient – Improving the experience of a world in motion Innovation & Technology is what drives us forward
Innovation will be a significant driver of our global growth. We will surprise and delight our customers globally, introducing our innovative products at the world's major automotive shows.
China Business Review / June 28, 2017 45 Adient – Improving the experience of a world in motion The race for electric and autonomous is on ... and the paradigm shift is already underway GM to start autonomous vehicle manufacturing and testing in Michigan China pushes for homegrown driverless cars Tesla Is Testing Self-Driving Cars on California Roads Autonomous car startup NIO unveiled its self-driving concept vehicle
Bosch and Baidu join forces to accelerate Ford moves straight to Level 5 autonomous driving breakthroughs in China for its autonomous vehicles Nissan trials new driverless car in London
Chinese car maker Haval working on Uber’s first self-driving fleet arrives driverless technology in Pittsburgh BMW is creating an autonomous vehicle test center in Munich China Business Review / June 28, 2017 46 Adient – Improving the experience of a world in motion OEMs start announcing market entry dates for
autonomous vehicle models ... with increasing dynamics
5 Level
* Other autonomous driving projects Level 4 Level Timing / level not identified:
Nissan
pilot w/Uber Infiniti SAE autononmous level autononmousSAE
Level 3 Level pilot w/Lyft
Other Chinese OEM working on
AV technology_ Level 2 Level planned market entry 2016 2018 2020 2022 2024 2026
Chinese OEM / Chinese backed startup
Source: research/inhouse estimate
China Business Review / June 28, 2017 47 Adient – Improving the experience of a world in motion Mid-term, requirements will focus on new seat functionalities and convenience content for passenger seating
Mid-term Trends: (Start-of-production 2022-2025) > Autonomous level 3 (partial automation) > Increase of full electric with increasing mileage range > Seating functionality in 1st, 2nd and 3rd row passenger seats expands to sleep, work, relax modes features > Significant content increase in 1st, 2nd and 3rd row passenger seats (tray tables, vents, heating, cooling, controls, lights, storage, phone charging, phone support, ...) > Shared mobility models with customized interior solutions > Full scope of seating integrated safety devices
China Business Review / June 28, 2017 48 Adient – Improving the experience of a world in motion Long-term, autonomous mobility will open a vast spectrum of new opportunities for the seating and interiors business
Long-term Trends: (Start-of-production 2025-2030) > Autonomous level 4 & level 5 > Full electric vehicles, fast charging, high mileage range > Range of sophisticated seating functionality in all rows (sleep, work, relax, lounge, cargo etc.) > Massive increase of content features (tray tables, vents, heating, cooling, controls, lights, storage, phone charging, phone support, ...) > Drive by wire controls for driver seat > Shared mobility with specific vehicle architecture, and vast range of customized seating offering as well as new Service and Maintenance business models > Full scope of seating integrated safety devices
China Business Review / June 28, 2017 49 Adient – Improving the experience of a world in motion Global industry trends ask for new design solutions in seating
Global Industry Trends Implications on seating Changes in vehicle architecture & power ˃ •SafetySafety management ˃ Electrification – Light-weight •– ElectrificationSlim & lightweight – Low block height •– SlimConnectivity & lightweight – Smart, individualized heating & cooling • Connectivity • Urbanization ˃ Safety Changes in vehicle features ˃ Electrification • Shared ownership/ride – Passenger health & safety status sensor – Slim & lightweight •– InternetConnectivity of Things – Pre-adjustment of seat for shared mobility • Smart materials Changes in seating functionality & safety ˃ •SafetyAutonomous driving – Multi-purpose swivel structure ˃ •ElectrificationIndividualization – Slim & lightweight – “Business-class” type comfort seats •– NewConnectivity Shapes – New safety standards (crash requirements)
China Business Review / June 28, 2017 50 Adient – Improving the experience of a world in motion Adient innovation domains are aligned to the customers’ needs
Safety Emotional, sensorial experience Seamlessly integrate our products Pursue excellence in the execution of within vehicle safety systems to meet design theme, harmony, craftsmanship or exceed all government and OEM (sensorial experience), and intuitiveness standards for crashworthiness within the vehicle interior
Comfort and well-being Function and flexibility Improve the seat-to-occupant Develop unique, multi-functional seat interface through refinements in solutions to enable easy re-configurability, postural support, climate, and improved storage, and interior spaciousness intuitive control interfaces
Being driven Sustainability Support new seated behaviors Develop products that have minimal enabled by increasing levels of negative impact on the global or local driving automation and other environment, society, economy, or wellness; connected mobility options positions Adient as socially responsible leading company.
Foundation Best Value: Cost / Mass / Function
China Business Review / June 28, 2017 51 Adient – Improving the experience of a world in motion Our concept design proposals outline innovative functionalities with multiple integration capabilities for EV and AV technology
> Low block (H point) dimension for electric vehicles > Baseline belt integrated seat > Powered seats with multi-function adjustment > New generation of power adjuster/transmissions, capable of comfort adjustment and „safety“ adjustment > Integration of multimedia in seat
> Flexible seats > Swivel Seats with roll movement > Slouch function > Full relax position > Adjustable foot rest
China Business Review / June 28, 2017 52 Adient – Improving the experience of a world in motion China has a strong case to become a pioneer in autonomous mobility
Globally, the technology is (almost) ready > Sensors > Motors / Actuators > Seating Functionality & Convenience > Advanced Safety Systems are WIP
Autonomous & Electric technology enablers … … and road blocks: > Legislation / regulations > Legal liability / warranty > Technical standards > Connectivity strategy & standards / cyber security > Infrastructure investments > Consumer adoption
Shanghai Investor Presentation June 28, 2017 53 Adient – Improving the experience of a world in motion New technologies and changing consumer behaviors will converge to drive the adoption of three major mobility models China 1. Shared autonomous 2.2. Owned autonomous 3. „Traditional/vintage“ autonomous
Where > Mega cities (China) / congested areas > Medium cities / long-distance driving > Outside of Mega / large cities Motivation > High utilization > Increased comfort / convenicence > „Driving experience“ > Urban space efficiency > Increased functionality > Driving comfort / ease of operation > Increased safety > Increased safety > Increased safety Enablers > Fast maintenance / service fleet > Work / sleep / relax / social mode > Brand / Look & feel > Seating & Interior refitting / durability functionality > Craftsmanship
How Adient will win: Light-weight (hybrid/carbon structure / thin foam,...)
Safety (belt-integrated seats...)
Removable components / smart surfaces Full-scale „business-class“ seat functionality RECARO brand value
Adient has the right product portfolio, engineering and execution footprint to support the new mobility concepts globally.
China Business Review / June 28, 2017 54 Adient – Improving the experience of a world in motion Adient’s global Product Development network -with industry leading capabilities in China- delivers excellence in product design
Global capabilities to deliver excellence in product design – while understanding regional market requirements. Around the globe as well as in China
> 4,500 Engineers > 1,300 Engineers
12 Global Tech Centers 4 Global Tech Centers China Global 34 Customer Front Offices 5 Customer Front Offices
>1,500 Projects per year >350 Projects per year
Adient / Hong Kong meeting / April 7th, 2016
China Business Review / June 28, 2017 55 Adient – Improving the experience of a world in motion Our Global Tech Centers drive technology leadership in China market by integrating our JV partners deeply into the global network
Plymouth Global Tech Centers Fully owned (USA) Joint Venture Burscheid (Germany) Changchun Kaiserlautern (CFAA) (Germany) 350 engineers
Solingen Shanghai (Germany) (AYM) 115 engineers Kirchheim (Germany) Shanghai (YFAS) Trencin 670 engineers (Slovakia) Chongqing (CQADNT) Pune 150 engineers (India)
Torihama (Japan) China Tech Centers are fully integrated into Adient‘s global Development network: Ansan ... transferring global knowledge to support global and local programs (Korea)
Queretaro ... and leveraging China local BBP for global roll-out
(Mexico)56 :
China Business Review / June 28, 2017 56 Adient – Improving the experience of a world in motion At the Shanghai Auto Show, we showcased our capabilities to win in China‘s growing content market – in the short/mid, and long-term
China Business Review / June 28, 2017 57 Adient – Improving the experience of a world in motion China‘s short-term & mid-term trends translate into significant growth opportunities for Adient
1. 2. 3. SUV segment Increasing safety Electrification content growth standards in China EV / Plug-in
˃ Functionality with mechatronics ˃ Local brands with global safety ˃ Light-weight / hybrid structures ˃ Comfort features requirements ˃ New vehicle architecture requires ˃ Power actuation ˃ Technology development drives complete seat design adaptation vehicle product safety standards
Carbon fibre
Complex Rear Seat Structure Recliner Taumel 3000® Power Z headrest to be world’s biggestCarbon electric fibre composite vehicle market Easy Package 2
China Business Review / June 28, 2017 58 Adient – Improving the experience of a world in motion RECARO’s renowned and innovative portfolio drives content penetration in China from three angles
Light-weight: RECARO brand : RECARO aftermarket: Innovative composite structures, “China Luxury” ultimate comfort High-performance sports seats e.g. carbon fibre experience solutions for large variety of vehicles
China Business Review / June 28, 2017 59 Adient – Improving the experience of a world in motion In the China CV market, we will capture share with our heavy & medium duty truck seating capabilities
Adient is well positioned to capture share in heavy truck seating > Rapidly growing in Europe > Low-cost experience based Entering the HC market in China: on India (Tata) > Unique capabilities in China > Investing into Asia-focussed CV seat platform with CFAA JV > CV lead organization to coordinate activities within China and connect ‚ globally > CV demonstrator at SHIAS with very positive customer feedback > First China truck seat SOP this calendar year
China Business Review / June 28, 2017 60 Adient – Improving the experience of a world in motion In adjacent markets, our strong competencies translate into competitive advantage for the Aerospace industry
By leveraging our global expertise in automotive seating and interiors, we will raise the bar on aviation passenger experience, and provide competitive advantage, in terms of > Comfort & craftsmanship > Operational excellence & quality > Global just-in-time, sequenced delivery > Complex supply chain management > World-class engineering & innovation
In the future, we are committed to expanding our aircraft seat activities to China, including manufacturing and validation.
China Business Review / June 28, 2017 61 Adient – Improving the experience of a world in motion Innovation & Product Development - Summary
> Adient’s global Technology & Product Development capabilities drive our growth opportunities in China, while we execute on industry-leading product design for global and local customers, jointly with our Joint Venture partners. > Short-/mid-term, we will continue to grow in China by delivering increasing vehicle content to the passenger vehicle seating market – driven by ever stricter safety regulations and the desire for more convenience. > Mid-long-term, China will be a rapid driver of new mobility models and we are ready to execute on the industry trends of: ‒ Electrification ‒ Safety ‒ Convenience ‒ Autonomous mobility ‒ Shared ownership > Furthermore, we will leverage our global Tech Center network and our China footprint to grow in adjacent markets outside of the passenger vehicle seating market , e.g. commercial vehicle, aircraft, railway and other specialty seating applications.
62 China Joint Ventures
1. YFAS 2. AYM 3. Global YFAI
63 Yanfeng Adient Seating (YFAS) Company Overview
2017 Equity Structure
Founded Time: 18th Dec. 1997 Registered Capital: 445 million RMB
Shanghai Detroit*
*ADIENT Global HQ Detroit, Michigan, USA Renovation to be completed by late 2018 or early 2019
65 Business Performance
The largest automotive seating supplier in China, supporting almost all major automakers in differentiating their vehicles through superior quality, technology and performance.
29.1B 18,000 ~31% Sales revenue in CY2016 Highly engaged employees, incl. Market share in passenger vehicle complete seat business 540 in China 1.1B Engineers Export Sales revenue in CY2016
Unit: RMB
66 Product Mix Trim
Complete Seat Headliner
Headrest
Foam Sun Visor
Structure
67 Milestone
Established Shanghai Yanfeng Johnson Controls Seating Co., Establish Wuhu JCYH Ltd. • YFJC TC nominated as • SAIC SOP in Anting JIT • SGM SOP in Kangqiao JIT municipal level technical center • Establish 1st JV- CQYFJC • Establish Guangzhou DFJC • Establish Hefei YHJC SVW SOP in Anting JIT
1997 1999 2002 2003 2005 2006 2007
2008 2009 2010 2011 2012 2013 2017
• Establish Jiangsu • Annual sales exceeds 20B RMB • Establish 1st overseas manufacturing site Establish Nanjing YFJC Yueda YFJC (HR) - Yanfeng (Thailand) Co., Ltd. • Establish Wuhan DFJC • Start to support Honda and Volvo business • Establish Dalian YFJC
Established Zhejiang JCHD Company Name change to Yanfeng • SGMW SOP Adient Seating Co., Ltd. due to JCI business spin-off
68 Customer Mix
Domestic Key Customers Complete Seat & Components Overseas Customers Components
Europe:
Other operational income, 2.0% Export, 3.8% Asian OEMs, 7.7% EU OEMs, 29.2% America: Asia(excl. China）:
Chinese OEMs, 24.3%
US OEMs, 33.1%
PIP HR Trim Overhead System Seat Structure
69 New SOP Model
Roewe i6 Roewe RX5 Peugeot 5008
Chevrolet Equinox Buick NewGL8 SVW Teramont
DF Nissan New LIVINA Skoda Kodiaq Zhengzhou Nissan CEFIRO
70 Buick New GL8
YFAS AYM
• 9 Patents Authorization & Applied • Manual recliner: L3000
• 3 Patents in Process • Power recliner : T2000
• ABTS Seat • Manual/ Power height adjuster
• Long Travel Floor Rail • Leg support : Tilt 2000 • Full Size Power Leg Support
• Low Process Molding Back Panel
• Side Cup Holder YFAI • … • 2 Patents Authorization & Applied
• EIPP for Front Door
• CNSL plastic sliding
• CNSL vacuum forming
• Double soft storage bin door
• …
71 Global Footprint Subsidiaries63
No. of Plant 80
Complete Seat 37 Trim 4
Seat Structure 12 Headrest 2
Overhead Foam 17 System 8 Overseas Plant 1
Thailand Headrest Front Office 2 America , Germany
72 Manufacturing Capability
We have the manufacturing capability from seat components to complete seat, covering the entire automotive seating value chain
73 Manufacturing Capability - JIT
Match detection online Robot automated unloading ASRS
Robot automated Backrest press machine Automated infrared tightening online heating
Automated receipt Automated select Automated loading Information system
Process data information collection and control
Establishment and standardization of logistics information management structure
Based on automation construction and information construction, to Base on standard layout , simulation technique and automation achieve intelligent factory and intelligent manufacturing application
74 Manufacturing Capability – Seat Structure
We have manufacturing capability with high automation, flexibility, modularization and systemization level to ensure our seat frame products competitiveness
75 Manufacturing Capability – Soft Trim
Three-Mould Foam Production Chengdu 30 Station LF line Automated Blending System Preassemble headrest kitting in Line home made sequence
NON PIP Headrest Production Line Riact Headrest Assembling Line NC leather cutting machine with auto scan & auto nesting & three cutting head to improve leather usage.
76 Management System
QS9000 TS16949 VDA6.1 OSHAS BBP SAP 18000
1998 1999 2001 2001 2003 2005 2009 2013 2015
GB/T ISO ISO/IEC 29490 QAD BOS 14000 17025 TSO 27001
6 Sigma
BBP Management AMS Systems
VA/VE KAIZEN
77 AMS
YFAS ME Model Our Mission
Achieve Manufacturing Excellence One Yanfeng Adient Way of manufacturing to Improve Manuf./Logistics Man./IT/People Ability
attain world class performance. We are Knowledge Management & Team Collaboration
engaging employees, driving manufacturing Manufacturing & Management Technology Integration excellence and growing our business. Process Integration, Synergy, Reengineering
AMS Maturity Model & Assessment
Value
CI Culture CI
Design for Design
StreamFlow
Sustainability
Total Quality Total
Visual FactoryVisual
Manufacturing
Environment & & Environment
Safe WorkplaceSafe
Material Material Control EmpowerPeople
JCMS Tools AMS Tools
AMS Foundation Customer focus - Zero tolerance for waste - Stable operations environment – Organize around pull
78 Quality Achievements - 2016
Adient SVW Chery Best Material Control Best Supplier Excellence Development Award FY17 MEBP Summit
FBAC DPCA JAC Best Supplier Best Supplier General Manager Award New Model Production SAIC GM Commitment Award DF Renault M4 Great Supplier Best Supplier S7 Great Supplier Best Support Award Great Supplier
SGM Beisheng CJLR
Best Supplier Great Supplier
79 YFAS Tech Center Footprint
Global Onsite Office YFAS Tech Center Shanghai – YFAS Established 1997 Headcount: 663 Avg. experience: 8 years Seating Exp: 5 years Engineers: 540 NA Office Euro Office Expats: 6 Established 2015 Established 2012 SMTE: 22
Regional Tech Center
Shenyang Test Lab Established 2016
Hefei YHAS Established 2013 61 engineers Wuhan DFAS Established 2011 26 engineers
Chongqing CQADNT Established 2003 88 engineers
Liuzhou LZYFAS Established 2015 6 engineers
80 YFAS Tech Center H/Q - Capability
We have the full complete seat and component engineering capability: complete seat package; the design of component part, mechanism, soft trim…; Prototype Building / Mini JIT; Test Lab; Benchmarking; Advanced Engineering; Industrial Design; Comfort Simulation & Development; Craftsmanship Assessment ; CAE/FEA; Innovation Capability.
81 Technical Center – Bench Mark
• Go-Bench System • Sample part library • Tear down analysis • Share data globally
Shared Database with EU/JP/NA Teardown Analysis of Seat Systems Sample Part Library for Reference
82 Technical Center - Studio • Customer oriented studio • Creative styling design • Craftsmanship process • 3D CAD/CAID systems
Customer Oriented Studio Creative Styling Design VR Review Stage
Craftsmanship Process Color & Material design Comfort STO Design
83 Technical Center - Testing • 4,500 m2 Area • 84 Staffs • Got global OEM certification - GM / VW / PSA / DAIMLER… • All CS & Component Test • Regulation/Safety/Sled/Comfort/Material/NVH Test
All Seat Test programs Sled Test Regulation/Safety
Static Load, Comfort Material Test, CMM Semi-anechoic room
84 Technical Center – Mini JIT • 3,500 m2 Area • 70 Staffs • Assembly/ Foam/ Trim/ Frame Prototype (ED&DV Capability) • Quality Inspection • Reverse Engineering
Foam CNC Trim Cutter 3D Scanning
Simulated JIT Line Welding and Pressing Faro Arm H point
85 Innovation
• Innovation management Platform • Standardize innovation project management • Technology Development Trends& Roadmap • Improve Innovation Culture
Innovation management platform Technology Development Trends & Roadmap
Innovation projects management & development Innovation Culture improvement
86 Global Program Sharing and Communication
Smart Board Global EPIC/PLM/TcAE/EBP System
Global EPIC/PLM/E-room Load in YFAS Data Base/EBP
Obeya Room Engineer Onsite Support
87 Culture & Responsibility
Together with Adient program Blue Sky, YFAS encourage employees to support charities, for example, a book drive, environmental protection, helping poor students for further education etc. We hope to cultivate the sense of responsibility and leadership ability of employees by letting them plan and organize these activities and events without company control.
88 Vision: To be the excellent supplier of automobile component in the world, to commit ourselves to a more comfortable, safe and sustainable world. Mission: Continually exceed our customers’ increasing expectations. China Joint Ventures
1. YFAS 2. AYM 3. Global YFAI
90 Adient Yanfeng Seating Mechanism Company Overview AYM Overview
Partnership
50% 50% Company Name
Adient Yanfeng Seating Mechanism Co., Ltd
Formation Investment
JV Contract Signed: 9th.Sept 2013 Total Investment: 900M RMB (143M USD)
Formation: 19th.Dec 2013 Registered Capital: 300M RMB (48M USD) Headcount : 2,577
92 AYM Overview: June 2017 Our Mission
We will be the world-class automotive mechanisms supplier through leadership in cost, quality, launch execution, and customer satisfaction.
We will leverage our capabilities to drive growth, both within and beyond the automotive industry.
93 AYM Overview: June 2017 AYM Milestones
JV contract signed on AYM Kangwei Campus AYM Changshu Subsidiary Company name and LOGO AYM Changshu Plant 13th.Sept 2013 and formally Opening Ceremony 6th.Feb formed on 24th.March changed in May 2017 Opening Ceremony 2018 formed on 19th Dec 2013
2013 2015 2017 2017 2018
2014 2016 2017 2017
New office from Kanghua New track product GTS Certificated AMS Level 3 Plant AYM Changshu Plant started Plant to new bases launched and Track 3000 on 6th April 2017 to product on 20thJune 2017 Kangwei Road in Nov 2014 development moved to China.
94 AYM Overview: June 2017 Five Year Marker
INTEGRITY OPERATIONAL GLOBAL GROWTH PEOPLE AND LEADERSHIP We have a passion for winning but at EXCELLENCE Ensure Changshu Plant Building to fit Increase knowhow in teams all times will act with unquestioned Enforce strong safety mindset the timing needs Improve employee engagement and reduce integrity. Industry 4.0 Export growth to North America and employee turn over. SEA We will always do the right thing. Operational excellence
We will treat one another honestly and Achieve financial plan with respect and consistently meet our Excellent execution of programs and commitments. Launch CUSTOMER SHAREHOLDER VALUE
Enforce strong quality mindset and SATISFACTION We will deliver top quartile shareholder returns drive Quality fundamentals within our industry through market share We will be known for customer PRODUCT Develop supplier partnerships to growth, margin expansion, revenue satisfaction. DEVELOPMENT reduce cost, improve quality and diversification and strong free cash flow delivery AND INNOVATION Our leaders are expected to be generation. advocates for the customer and we will Launch new products including, Ensure We will pursue acquisitions to accelerate our work collaboratively with customers to SDT focus on core before customer growth. gain global market share. launch. We will have a strong balance sheet that We will be easy to do business with. Drive equipment / process affords financial flexibility to sustain the Flawless program management and standardization and automation. company through business cycles. launch execution will be a hallmark of Reduce product complexity. our organization.
95 AYM Overview: June 2017 Our OEM and Tier 1 Customers
OEM Customers – Global/ Local Brands Tier One – Local /Oversea
Other China North APEC7% 25% America 8% 34% North OEM Region Direct Customer America Location 23% China Europe 62% 23% APEC 18%
96 AYM Overview: June 2017 * Data from 2016 ABP Sales Overview
Unit: 100Mil RMB 60
50
40
Recliner $ 487M 30 $427M 19 % Track $ 308M 39 20 % $ 253M 22 % Adjuster & 10 Lock
0 2013 2014 2015 2016 2017 2020
Sales by Product (%) 2013 2014 2015 2016 2017 Forecast
Recliner 40% 42% 41% 39% 41% Sales growth rate expected Track 31% 30% 31% 32% 33% to be higher
Adjuster & Lock 29% 28% 28% 29% 27% than the market level Sales Export (%) 66% 57% 43% 38% 30%
97 AYM Overview: June 2017 * Data from 2016 ABP Volume & Market Share Overview
Volume Overview Market Share 2016
Unit: Mil Track Pcs AYM 33.5 37.1 12% 22% 40.0 26.2 30.0 19.3 Other 20.0 11.4 14.0 Growth Rate 78% 8.2 expected to 88% 10.0 5.8 be higher than Track Recliner - Market Rate 2013 2014 2015 2016 2017 2018 2019 2020 Actual Actual Actual Actual
3% 3% Adjuster & Lock 40.0 24.6 28.8 30.0 20.8 97% 97% 20.0 12.2 13.6 15.3 8.2 9.4 Growth Rate 10.0 expected to Adjuster Lock - be higher than 2013 2014 2015 2016 2017 2018Market Rate2019 2020 Actual Actual Actual Actual Markershare Growth * Data from 2016 ABP Recliner 30.00% 60.0 48.6 34.9 38.4 42.3 20.00% 40.0 25.0 30.5 14.9 18.8 Growth Rate 10.00% 20.0 expected to be higher than 0.00% - Market Rate 2013 2014 2015 2016 2017 2018 2019 2020 2014 Actual 2015 Actual 2016 Actual 2017 2018 2019 2020 2021 Actual Actual Actual Actual Recliner Track Adjuster lock
98 AYM Overview: June 2017 Organization Chart
Executive Committee
Standing General Manager Deputy GM Party Secretary Jim Hawkins &Union Chairman Ni Jiawen
Operations Operations Manufacturing TC Director Finance Human Resource Recliners/FB Track/Stamping Engineering Stefan Josten Qian Cheng Yu Caixia Tony Xu Chu Yonggang Zhang Ke
Operations(Acting) TC Director Quality Assurance Purchasing Lock/ HA Commercial Lu Jian Tang Zhenyi Shen Shenglin Shan Jue Zhang Sheng
Logistics IT Program Su Jiaming Zhu Lanfang Management Chen Bin
CI Jiang Lei
99 AYM Overview: June 2017 Technique Center Overview
AYM Tech Center is one of Adient global AYM EOS system flow Tech Centers with more than 150 employees.
Capability
• Core products development and support
• Mechanisms Application Support
• Series life support
• Full prototype capability
• Product Testing and FEA capability
100 AYM Overview: June 2017 Function Test Lab
AYM Function Lab is global test lab with full mechanism test capability with 25 employees.
Capability
• Test Equipment based on Adient Global Standard Strength Test Life Cycle Test • 11 Engineers, 14 Technicians QTY 3 QTY 21
• Key employees trained in Adient Global Test Center
• Investment more than 15 million RMB
• 400 m2 testing area
Environment Test Function Test QTY 4 QTY 10
101 AYM Overview: June 2017 Manufacturing Engineering Center of Competence (CoC)
AYM Manufacturing Engineering Dept. cover the process of fine blanking, heat treatment, stamping, E-coating, welding, assembly. Capability • Fine blanking and heat treating Welding Heat Treatment • Track stamping QTY 43 QTY 3 • E-coating painting • Welding process experts including laser, CD, projection, MAG welding • Track and recliner assembly and testing • Tool room • In house equipment and fixture build for “know how”
processes Stamping Testing QTY 8 QTY 34
102 AYM Overview: June 2017 Tool Shop
AYM Tool Shop specialized in fine blanking and high precision stamping tools.
Capability High-Speed Milling CNC Grinding EDM
• 11 engineers, more than 60 technicians
• High precision machining capability
• Complete new fine blanking and track profile tool manufacturing Wire Cutting CNC • Tooling trial and adjustment
• Tooling maintenance and TPM
• Tooling design and metal forming simulation Recliner Track Sector Transmission QTY 24 QTY 27 QTY 8 QTY 27
103 AYM Overview: June 2017 Recliner Value Stream Map (VSM)
Fine Blanking Heat Treatment Assembly Suppliers Laser Welding Small parts, Large parts Testing Customers 250T to 880T 16 Lines and Air quenching Qty 36
• 7 Fine blanking presses from 250T to 880T, full cleaning and finishing capability • Heat treatment Small part line, Air quench line • Recliner Assembly T3000 and L3000 lines, 2xT2000 and 2x L2000 lines, 2xL1000 lines, 8 DR2K lines
104 AYM Overview: June 2017 Track Value Stream Map (VSM)
Blanking Stamping Sub Assembly Assembly Suppliers E-coating Testing Customers 250T to 300T 8 Lines 30 Line 13 Lines
• Blanking Steel from Bao Steel and Europe • 3 blanking line. Latest generation with servo drive • Painting using thin film pre-treatment • Track Assembly 7 Gemini/GT lines,6 Track 2000 A lines and GTS Line
105 AYM Overview: June 2017 Operational Excellence
Design and Development of LEAN Direction — AMS Applications Level 3
Business Management Systems LEAN Logistics
AGV are operation for steel coil delivery with improvement in safety.
ISO/TS 16949 Small Train feed material Certificate from “supermarket” to the lines and to finish good area.
106 AYM Overview: June 2017 Product Portfolio – Overview
Recliner Adjuster
Track Lock
107 AYM Overview: June 2017 Product Portfolio – Recliner
3000 Series Recliner L3000 series • Light weight (-25% compared to the T2000 disc) Adient Latest • Optimized package Products fully • Superior load capability: best-in-class Strength/Weight Ratio localized in AYM T3000 series • Three load classes: ≥2000Nm;≥2500Nm; ≥4000Nm • Transmission element as a push-through element (simple assembly process)
Lever 1000 Recliner • Smaller application layout, outstanding application capability L1000 Recliner AYM Developed • Modular interface can significant decrease frame total weight • Easy to assemble with synchronous bar design Products Targeting RTA 2000 Power Growth & Emerging RTA2000 • Optimize package and weight • Optimize the cost Market • Performance meet the spec.TL 211 for T3000 and TL200 for T2000
108 AYM Overview: June 2017 Product Portfolio – Track
Joint Developed between Adient AYM Developed Products Targeting Adient Latest Products fully localized in AYM & AYM Growth & Emerging Market Track 3000 Series Track 2000 A GTS Track • Consistent manual and power profile • Consistent manual and power profile, including • Consistent manual and power profile full comfort • Small package size with internal looking system • Small package size with internal looking system • Manual version with 3-pin positive engagement • Advanced stamping technology guarantees locking system • Advanced stamping technology guarantees excellent stability excellent stability • Flexible integration(direct or with adapters, bolt- • Local high-strength raw material guarantees through to BIW) • Flexible integration (direct or with adapters, bolt- excellent performance with reduced weight through to BIW) allows lower structure package • Outstanding peel strength with minimized HTA 3000 section height HTA 2000 • Increased strength capability, weight reduction, • Increased strength capability, weight reduction, package optimization, bigger travel range and package optimization, bigger travel range and better acoustics performance better acoustics performance
109 AYM Overview: June 2017 Product Portfolio – Adjuster
Power Height Adjuster PHA3000 Power Height • Consistent manual and power profile, including full comfort Adient Latest Adjuster HA3000 • EMC capable 5+based on motor • High performance with assistant spring Products fully Manual Height Adjuster MHA3000 localized in AYM Manual Height • High crash strength:>180Nm static brake torque; Adjuster HA3000 • Modular interface with lever • Flexible attachment concept
Power Height Adjuster PHA2000 Power Height AYM Developed Adjuster HA2000 • High Static strength: ≥180Nm • Stable adjustment performance Product Targeting • Excellent stability: ≤3°@16Nm • Light Weight: 595g (depending on the application) Growth & Emerging • High performance w/wo assistant spring Market • Interchangeable with manual height adjuster
110 AYM Overview: June 2017 Product Portfolio – Lock
Lock 3000 Series • Weight reduction compared to Lock 2000® : -25% (30 kN load class) • Core mechanism package reduction compared to Lock 2000: -30% (30 kN load class) Lock 3000 Series • Integrated inversion of actuation direction (parallel actuation Adient Latest possible) • Full standardized modularity for plug & play add-on features Products fully • Flexible attachment concept
localized in Lock Compact • Low weight: 170g AYM • Small package size : 70mm×60mm×25 mm • Integrated inversion of actuation direction (parallel actuation Lock Compact possible) • Modular for dia 7mm striker • Load class: ≥15 KN • Tolerance compensation: ±3.5 mm,Φ7 mm striker
111 AYM Overview: June 2017 Company Footprint
1 Changshu 常熟市 2 AYM Kangwei Campus
Changshu, located in China • Headcount : 2,577 Jiangsu Province, possess a • Area 43,346 m2 unique geographical ： advantages. It takes 120 min’s drive from Changsu to 1 2 Shanghai. And it is 130 Km between two AYM plants. AYM Changshu Subsidiary
• Headcount : TBC
• Area：129,200 m2
112 AYM Overview: June 2017 Plant Layout – Shanghai – Kang Wei Plant
Factory Land Building Products (M2) (M2)
Fine blanking Heat treatment Building 1 10,883 20,635 Painting Profile stamping
Track 2000 Asymmetric Track Adjuster Track LW Gemini Track Building 2 Recliner 32,463 50,025 Painting DR2K Heat Treatment T/L 2000 T/L 3000 L2000 Finishing Washing Recliner LW Total All Lines 43,346 70,660 Building 2 Building 1
Stamping blanking Headcount 2,577 Fine blanking Stamping
113 AYM Overview: June 2017 Plant Layout – Changshu Campus
Building Function Space(M2)
Building 1 Track/Transmission Stamping, 81,800 (AYM) Painting, Assembly Utility Buildings YFAS Building 2 Structures Metal Welding & Stamping 26,900 (YFAS)
Office AYM Office (2 Floors) 7,700 Space Reserved Building Track and VTA manufacturing Social Buildings Social Canteen, Changing room… (3 6,000 Building Floors)
Utility Transformer, Water Treatment, Office Buildings 6,800 Buildings Chemical Storage…
Subtotal 129,200
Reserved Space 16,800
Total 146,100
114 AYM Overview: June 2017 Thank you! China Joint Ventures
1. YFAS 2. AYM 3. Global YFAI
116 YFAI will continue to keep the leading position in the global automotive interior market with a share growth
Interior Market Share 2017 YFAI 13.0%
Other
Faurecia
Antolin
In-house IAC
Toyota Boshoku Mobis
Source: YPS as of March 16, 2017 Kasai Seoyon
China Business Review / June 28, 2017 117 Adient – Improving the experience of a world in motion Diversified Customer Base, Matching Global Footprint
Top Customers by Region APAC
N. America No Customer Lost Since Establishment
Europe
China Business Review / June 28, 2017 118 Adient – Improving the experience of a world in motion 113+ Global Locations Footprint of the facilities highly matched with customers 18 33,000 1 Countries Global employees Seamless global network
Americas Europe & South Africa Asia Pacific
28 Locations 15 Locations 70 Locations around 12,000+ Employees around 8,000+ Employees around 13,000+ Employees Global HQ Regional HQ Tech Center Plant Up to Nov，2016 Business Center
China Business Review / June 28, 2017 119 Adient – Improving the experience of a world in motion Megatrend Impact on Interior
Interior will become higher priority in terms of car consumers differentiations.
Smart surfaces and included core product functions, are under development with most customers.
New players from West Coast disrupts current car industry with INTERIOR approaches like E-car tech., self driving, connectivity… Combination of traditional interior parts and smart intelligence will require supplier integration capabilities, creating new business model.
This megatrend will run in parallel with current industry approaches for the next decade.
China Business Review / June 28, 2017 120 Adient – Improving the experience of a world in motion 2017 Finance Highlights - YFAI
> YFAI will continue to deliver strong results and strengthen it’s market position > Significant business wins driving top line growth > Strong backlog will result in revenue growth in excess of industry > Market share increasing +1-2% over 2016 levels and expected to increase over mid-term horizon > Higher margins expected going forward: ‒ Investments in new product technologies ‒ De-emphasis on low margin cockpit business ‒ Continued synergies and operational improvements
Increased equity income and dividends expected for Adient
China Business Review / June 28, 2017 121 Adient – Improving the experience of a world in motion Questions? Thank you
China Business Review / June 28, 2017 122 Adient – Improving the experience of a world in motion