Strategic Outlook of the Global Medium-heavy …

1 Strategic Outlook of the Global Medium-heavy commercial truck market in 2013 Despite Strong Headwinds Sales Volume Poised to Touch Million Sandeep Kar Global Director- commercial Vehicle Research 2 NA53-18 NC37-18 Objective of Frost & Sullivan s Global commercial Vehicle Growth Partnership Services Track commercial vehicle > Technologies > Econometrics > Application > Markets Provide information and insights > Key and emerging market > Technology trends > Competitive landscape Help identify and develop sustainable growth strategies for our client partners Our industry-focused research, combined with extensive experience in all aspects of the commercial vehicle industry, helps our clients find areas where they can grow despite the challenges of technology, price, competition, and regulation. Research to Offer Mission Critical Growth Strategy Development and Execution Support 3 NC37-18 Big 5 Predictions 2 MCV and HCV sales in Next 11, Russia, and Rest of World markets (outside of TRIAD and BRIC) are poised to increase by 10 to 13 percent.

2 China s percent growth rate, although moderate in comparison to previous years, will provide upside boost to Global demand. 3 1 The Global economy is expected to grow by 3 to percent in 2013, resulting in medium and heavy truck demand to increase by and percent, respectively. Sales in 2013 for Medium-heavy trucks will reach million units. Source: Frost & Sullivan analysis. 4 Daimler s 2013 MD-HD truck sales are expected to reach 350,000 units in 2013; Volvo s acquisition of Dong Feng could take Volvo Group s MD-HD truck sales over the 400,000 units mark. 5 Twenty-eight percent of all heavy -duty trucks sold in 2013 will feature platform-based lineage, showing tectonic changes in Global truck production. Significant growth in the Global low-cost truck market (an percent CAGR) will lead to developments and fine-tuning of several BRIC market -based platforms.

3 Nearly 6,000 CNG/LNG-powered natural gas trucks will be sold in North America, while Global sales for MD-HD natural gas-powered trucks will reach 16,000 units. Hybrid truck sales will trail NG truck sales. 4 NC37-18 Region GDP Growth Estimates: 2013 (%) MCV Growth (YoY%) HCV Growth (YoY%) Overall CV Growth (YoY%) market Opportunity North America 2 8 Moderate South America 4 5 Moderate Europe 1 ( ) ( ) ( ) Low China 8 Moderate India Moderate Russia 4 6 High Next 11 6 7 High RoW 4 5 High Global 3 Moderate 2013 Global GDP and commercial truck market Growth Outlook : Growth in BRIC and Next 11 economies are expected to offer strength to Global truck demand. Source: World Bank, Frost & Sullivan analysis. Global CV 2013: World GDP and CV Growth Outlook Overview, Global , 2013 5 NC37-18 Global medium and heavy truck market Forecast 2013 Despite strong Global headwinds, improving Chinese manufacturing indices and strength in BRIC and Next 11 countries will elevate Global MCV and HCV sales to Million by 2013.

4 Note: All figures are rounded; the base year is 2012. Source: Frost & Sullivan analysis. Global CV Outlook 2013: Unit Shipments Global : 2012 2013 YoY Growth 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 North America South America China India Russia Europe Next 11 RoW MCV HCV 2012 2013 Regional Shares % 2013 ~ million ~ million 43% 33% 27% 47% 21% 20% 49% 54% 35% 34% 66% 57% 67% 73% 53% 79% 80% 51% 46% 65% Next 11 includes the following countries: Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, Vietnam, and Bangladesh. Units MCV: 6T to 16T HCV: 16T and above 6 NC37-18 Next 11 Markets: Indonesia, Turkey, Mexico, and Egypt offer strong growth potential in 2013, as these economies expect rapid economic development, leading to freight movement expansion. 0 10,000 20,000 30,000 40,000 50,000 Egypt Indonesia Iran Mexico Nigeria Pakistan Phillipines Turkey South Korea Vietnam 2012 2013 As the most populous Arab nation, Egypt offers an attractive opportunity for truck OEMs, as its focus has shifted toward modernizing the economy.

5 Investment in infrastructure is necessary to drive demand for new trucks. Global CV Outlook 2013: Unit Sales Forecast Next 11: 2013 Indonesia is set to double its demand for MCV and HCV by 2018. The Mexican CV demand is set to triple over the 2011 to 2018 period. Economic growth and rise in construction activity, coupled with the need for replacement of aging fleet vehicles, will drive growth. Note: All figures are rounded; the base year is 2012. Bangladesh data is not present, owing to lack of availability at the time of publication of this study. Source: Frost & Sullivan analysis. Turkey will experience a rising demand for MCVs and HCVs in 2013, which is based on both export-oriented production and local sales. Unit Sales 7 NC37-18 Global MCV and HCV market Powertrain Technology Forecast: Diesel is expected to retain dominant leadership in the powertrain space; natural gas and hybrid/electric technology are expected to experience rising proliferation in 2013.

6 0% 20% 40% 60% 80% 100% NA SA China India Russia Europe Next 11 RoW Gasoline 8 2 0 0 0 2 HEV 1 0 0 0 0 NG 0 0 Diesel 98 100 97 97 Global CV Outlook 2013: Powertrain Technology Split by Region Global : 2013 Note: All figures are rounded; the base year is 2012. Source: Frost & Sullivan analysis. Next 11 includes the following countries: Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, Vietnam, and Bangladesh. Percentage 8 NC37-18 Median range Analysis of Key Design Parameter Ranges for HD Engine market (North America), 2011 2018: Powertrain Downsizing Pushing Weighted Average Engine Displacement to Under 14 L in Class 8 Trucks by 2018 9 10 11 12 13 14 15 16 9 10 11 12 13 14 15 16 Displacement (in L) Torque (in lb. ft.) 2011 2018 2011 2018 2011 2018 Power (in bhp) 300 350 400 450 500 550 600 650 300 350 400 450 500 550 600 650 1100 1250 1400 1550 1700 1850 2000 2150 1100 1250 1400 1550 1700 1850 2000 2150 L L L L 2% 3% reduction 400 520 bhp 425 540 bhp 4% 6% increase 1250 1650 lb.

7 Ft. 1300 1750 lb. ft. 4% 6% increase Source: Frost & Sullivan analysis. heavy -duty Engine market : Diesel Engine market Overview, North America, 2011 9 NC37-18 0 10 20 30 40 50 2010 2011 2012 2013 2014 2015 2016 2017 Unit Shipment ( 000s) Optimisitc Scenario Frost & Sullivan Scenario Conservative Scenario Class 6-8 LNG/CNG Trucks Sales Volume Forecast by Scenarios- North America A steady increase in adoption is expected through the forecast period, and Class 6-8 natural gas truck shipments are expected to reach 35,429 units in 2017. Class 6-8 Natural Gas truck market : Unit Shipment Forecast by Scenarios, North America, 2010 2017 Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan analysis. 226,400 Units 446,100 Units 2010 2017 15,675 44,610 35,429 1,950 2017 Spark Ignition Compression Ignition Total CNG 11,028 2,757 13,785 LNG 11,904 9,740 21,644 Frost & Sullivan Scenario Breakdown 10 NC37-18 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 2011 2018 MD HD Total Units: 15,300 Total Units: 950 HD truck - 2018 MD truck - 2018 MD and HD LNG/CNG Trucks Volume Forecast- Europe The heavy -duty segment set to account for 75% of natural gas truck sales in Europe by 2018.

8 MD and HD Natural Gas CV market : truck Production Forecast by Category, Europe, 2011 and 2018 Units LNG 22% CNG 78% LNG 65% CNG 35% Total: 3,825 Total: 11,475 Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan 11 NC37-18 Global Production Volume Forecast by Drivetrain Combined Hybrid and Electric MCV, HCV, Transit Bus, and Other Bus Production is to Reach 307,000 by 2020; Parallel Hybrids and Pure Electrics Will Be the Largest Contributors to This Growth. Hybrid and Electric MCV, HCV, Transit Bus, and Other Bus market : Production Volume Forecast by Drivetrain, Global , 2009-2020 Note: All figures are rounded. The base year is 2010. Source: Frost & Sullivan analysis. 070,000140,000210,000280,000350,00020092 0102011201220132014201520162020 ElectricSeriesParallelSeries-ParallelTot al Units: 307,858 Total Units: 6,934 2020 Unit Shares EMEA 2020 Asia 2020 30,487 10,623 4,503 52,584 Outside of the big three (North America, Europe, and China), Brazil, Japan, India, and Korea are emerging as countries offering market penetration potential to hybrid and electric powertrain modules, systems, and components suppliers.

9 Americas 53% Europe 13% Asia 34% Americas EMEA Asia North AmericaBrazilRest ofAmericaAmericas 2020 132,859 10,921 5,962 ChinaKoreaJapanIndiaRest ofAsia14,277 26,825 16,869 1,948 Production Units WesternEuropeRussiaRest of EMEA12 NC37-18 Global Hot Spots: Continued economic uncertainty in TRIAD and moderation in growth rates in BRIC will lead to OEMs shifting focus to Next 11 markets; North America and China are expected to remain strong growth bets for OEMs. Source: Frost & Sullivan analysis. Europe Economic slowdown to prolong through 2013, thus impacting CV demand. EU OEMs are focusing on Next 11 and RoW for growth. North America CV market to improve marginally in 2013 with improving economic indicators. Stronger growth expected in 3rd and 4th quarters. Russia Russia to be the most attractive among the BRIC countries. market to grow by 10 percent in 2013. South America With the recovering Brazilian economy and renewed resource demand, trucking will experience Global growth in 2013.

10 China Strengthening manufacturing sector and infrastructure development to boost truck demand. Next 11 Several Next 11 markets to post near double-digit growth in new truck sales in 2013. Turkey and Indonesia looking attractive for long-term sustainable growth. India Domestic demand to remain strong in 2013 with improving economic activity. heavy -duty truck market to grow more quickly than MCV market . 13 NC37-18 HCV MCV 2009 2016 21 8 13 14 7 Source: Frost & Sullivan analysis TATA Prima MN 25/40 U- truck Sinotruk Howo AsiaMotorWorks Daimler Brand X HD IVECO LC HCV MAN Force Sinotruk HuangHe Hyundai HD DongFeng DFL GAZ-FAW HD Volvo-Eicher VE DongFeng Duo IVECO s Chinese Platform Based MD Daimler Brand X MD GAZ 3309c 2013 Fuso FG LCT ISUZU FTR Kamaz LCT HD VolvoDongFeng LCT HD Global CV Outlook 2013: Low-cost truck Model Timeline World: 2009 2016 Low-cost truck market ( Global ) Over 21 key Global low-cost MCV-HCV model ranges are expected to be introduced by Global OEMs between 2009 and 2016; 2013 is a critical year, as OEMs strive to introduce low-cost truck platforms for both developing and mature markets.