Automotive Industry Outlook

1 2019 IHS Markit. All Rights Industry Outlook :Managing Volatility and Leveraging Opportunities in a Dynamic Market EnvironmentMike WallExecutive Director, Automotive Analysis+1 248 728 8400 Direct+1 616 446 6885 2019 2019 IHS Markit. All Rights Picture: Global Automotive Outlook2 Implications for the Global Automotive IndustryCounter-synchronizationof auto sales cycles acrossworld regions continues with emerging markets and developed markets on opposite waves; wave amplitude likely to dissipate in timeRisk of broad retreat from globalizationTrump, Mexico, China Brexit, EurozoneIncreased risk of new disruptive business models breaking the forecast Risk of longer-term planning volatilitiesuncertainties hurt long-term planning 2019 IHS Markit. All Rights Economic Growth3 Global Economic Growth has Peaked and is Vulnerable; Trade Tensions Weigh on OutlookSource: IHS Markit Data InsightAnnual Real GDP Growth (in percent) Average 2019 = 2019 IHS Markit.

2 All Rights Light Vehicle Sales4 Volatility Impacts the Near-Term Outlook ; Mobility Dynamics Drive Slower Growth Long : IHS Markit Light Vehicle Sales ForecastsAnnual light vehicle sales (millions)Annual growth (%)Average growth rate peaks -downhill from here1109597 2019 IHS Markit. All Rights Changing Automotive World5 Emerging Markets Outlook is Key to Growth; Limited Potential in Mature Markets 0510152025303540455020062007200820092010 2011201220132014201520162017201820192020 202120222023202420252026 Mature MarketsChinaEmerging MarketsAnnual Light Vehicle Sale(in millions)Note: Mature Markets = US, Canada, Japan, S Korea, Australia, New Zealand, Western EuropeSource: IHS Markit Light Vehicle Sales ForecastMarket Growth2012- 152015- 182018- 26 Mature13%3%-3%China31%11%26%Emerging-10% 7%45% 2019 IHS Markit. All Rights Light Vehicle Production6 Marginal Growth Driven by Asia and South America; Material Risks Remain6570758085909510020172018 GreaterChinaSouthAsiaSouthAmericaJapan/ ,000281,000216,00015,000-168,000-176,000 -205,000 Production (millions)Source: IHS Markit Light Vehicle Production Forecast+ 2019 IHS Markit.

3 All Rights Production Growth7 Transition from Mature Markets to Emerging Markets Intensifies in the Longer ChinaSouth AsiaEuropeSouth AmericaMiddle East/AfricaNorth AmericaJapan/KoreaMillions36million 2019 IHS Markit. All Rights Reserved. Consumer confidence Economic growth Job growth Credit availability Vehicle fleet age/ compositionUS: Light Vehicle Sales Outlook8 Gauging the Health of the Market Fed action/interest rates Risk of policy mistakes Lease returns/used vehicle pricing/residuals Rising input costs Vehicle affordability pressures Wage growth Incentives vs. average transaction prices: can the discipline be maintained? Scrap rate/vehicle density Yield curve inversion? Tariff/trade tensions 2019 IHS Markit. All Rights : Light Vehicle Sales Outlook9 Market Shifting to a Declining Plateau ; Mobility Dynamics Factor in Longer TermUS Light Vehicle Sales Forecast Source: IHS Markit Light Vehicle Sales ForecastCarLight TruckPost market peak: weaker buying conditions, slower job creation, affordability driven by higher interest rates, legislated content and urbanization slows Sales, 2019 IHS Markit.

4 All Rights : Light Vehicle Sales Outlook10 Pool of Potential Buyers Remains Strong02,0004,0006,0008,00010,00012,0001 4,00016,00018,00020,000 ThousandsLight Vehicles in Operation (VIO) by VIN YearSource: IHS MarkitTotal VIO = 271M27%30%43% 2019 IHS Markit. All Rights Light Vehicle Sales in Alternative Scenarios Positives Consumer confidence Economic growth Housing recovery Job growth Credit AvailabilityNegatives New & used vehicle pricing Off lease returns Incentives Longer loan terms Interest rate Outlook Uncertainty11810121416182020062008201020 1220142016201820202022 Mill. of units, annual rateBaseline (60%)Pessimistic (25%)Optimistic (15%)Light Vehicle Sales (Quarterly SAAR)Source: IHS Markit 2019 IHS Markit. All Rights : Light Vehicle Sales OutlookAre We Reaching a Saturation Point for CUV Models? Differentiation will be Critical!

5 CUV Model Count by Sub-SegmentModel CountSource: IHS Markit Light Vehicle Sales Forecast19159735391136 2019 IHS Markit. All Rights American Light Vehicle ProductionShort-term pain, longer-term gain Finding balance Incentives Fleet Inventory Production planning ( car vs. light truck, electrification, etc.) Quality versus quantity Growth due primarily to localization and portfolio expansion Off-shoring Cancellations BackfillingSource: IHS MarkitNorth American Light Vehicle Production 2019 IHS volumePush to Reduce Exposure to Cars and Tariff/Trade Situation Impacts Near-Term Outlook 2019 IHS Markit. All Rights Outlook14 North American Light Vehicle Production by % ChangeOutput (millions)MexicoCanadaUSChange2018 2026-151,000 CAGR = +278,000 CAGR = : IHS Markit Light Vehicle Production +269,000 CAGR = 2019 IHS Markit.

6 All Rights American Light Vehicle Production15 Customer Mix is Changing; Opportunity Targeting is More Critical than Ever!77%18%3%2%Det 346%Asian 437%Germ 310%Others7%North AmericanProduction Share02468101214161820200020032006200920 122015201820212024NA LV Production (millions)Detroit 3 Asian 4 German 3 Others20002026 Asian, German and Other OEM production accelerates with continued localization and new white space products. Detroit 3 production declines due to plant rationalization, product realignment and vehicle production sourcing CTGCTG = Contribution to 2019 IHS Markit. All Rights American Light Vehicle Production16 Vehicle Mix Continues to Change; Segment Targeting is NecessaryCars Struggle; SUVs 2019 IHS Markit. All Rights Technology Outlook17 Regional Preferences and Incentives Result in a Varied Propulsion Mix; Watch the Model Count!

7 ICE Only & Stop-startMHEVFHEVPHEVE lectricSource: IHS Markit Powertrain Production Forecast27%20%10%3%40%Europe41%8%10%18%2 3%Japan/South KoreaGlobal Propulsion Design Islands in 203165%9%8%6%12%NorthAmerica25%20%9%3%43 %GreaterChina46%13%7%5%29%Global 2019 IHS Markit. All Rights You!Mike Wall Executive Director, Automotive 248 728 8400 Direct+1 616 446 6885 Mobile18 IHS Markit Customer 800 IHS CARE (+1 800 447 2273)Europe, Middle East, and Africa: +44 (0) 1344 328 300 Asia and the Pacific Rim: +604 291 3600 DisclaimerThe information contained in this presentation is confidential. Any unauthorized use, disclosure, reproduction, or dissemination, in full or in part, in any media or by any means, without the prior written permission of IHS Markit Ltd. or any of its affiliates ("IHS Markit") is strictly prohibited. IHS Markit owns all IHS Markit logos and trade names contained in this presentation that are subject to license.

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