Global Light Vehicle Overview

Transcription

1 Formerly J.D. Power Automotive Forecasting Global Light Vehicle Overview Prepared for Standard & Poor s October 2012 Volker Krueger Director LMC Automotive auto.com 2012 LMC Automotive Limited, All Rights Reserved. LMC Automotive

4 2011 Global Light Vehicle Sales Growth Global: 76.8M 4.3% N. America: 15.2M 9.3% Europe: 19.0 M 4.4% S. America: 5.2M 9.6% Asia: 30.4M 1.3% Russia: 2.6M 39% USA: 12.7M 10% Germany: 3.4M 9% Japan: 4.1M 15% China: 18.0M 5% India: 2.9M 7% Asean: 2.4M 4% Brazil: 3.5M 4% Source: LMC Automotive LMC Automotive Limited, All Rights Reserved. LMC Automotive

6 2012 Global Light Vehicle Sales Growth Global: 81.0M 5.5% N. America: 17.0M 11.3% Europe: 17.9M 5.4% S. America: 5.1M 1.7% Asia: 33.6M 10.7% Russia: 2.9M 8% USA: 14.3M 12% Japan: 5.1M 23% China: 19.3M 7% India: 3.2M 10% Asean: 3.0M 30% Brazil: 3.5M 0% Source: LMC Automotive LMC Automotive Limited, All Rights Reserved. LMC Automotive

7 Global Light Vehicle Sales Trend Market to break through the 100 million barrier by mid decade, almost doubling in size since the end of the 1990s. Emerging markets, led by China, India, Brazil and Russia, have driven much of the recent growth and are expected to remain key drivers to future growth. Light Vehicle Sales (Millions) Risk Source: LMC Automotive LMC Automotive Limited, All Rights Reserved. LMC Automotive

8 Global Production by Region Light vehicle production growth in Asia is expected to significantly outpace the other regions, despite sourcing changes which will see some Asian OEMs increase output outside of Asia. Share of Asian output to increase from 48% of global production in 2011 to 53% by Light Vehicle Production (Millions) Africa/M.E. Asia Europe North America South America Why 53% and not 56% Source: LMC Automotive LMC Automotive Limited, All Rights Reserved. LMC Automotive

10 UK Recoveries from Recession 8% 6% Real GDP, Relative to Pre Recession Level 4% % 0% Great Depression % % 6% 2008???? 10% Source: NIESR Months Elapsed Since Onset of Recession 10 8% 2012 LMC Automotive Limited, All Rights Reserved. LMC Automotive

15 German Car Market Sales Volume (mn) % 1% 23% Ave mn Year to date, registrations down 0.6% German unemployment lowest for 20 years But consumer confidence has deteriorated from last year. Source: LMC Automotive LMC Automotive Limited, All Rights Reserved. LMC Automotive

16 Spanish Car Market Sales Volume (mn) % 18% 11% Ave mn Source: LMC Automotive 16 Selling rate at around 0.73 mn units/year Confidence and economy dragged down by the scale of unemployment Will not return to 1.6 mn units/year rate this decade LMC Automotive Limited, All Rights Reserved. LMC Automotive

17 Italian Car Market Sales Volume (mn) % 11% 20% Ave mn Selling rate at just 1.3 mn units/year in recent months Tight credit conditions, fiscal austerity measures and climbing unemployment will continue to act as a drag next year. Source: LMC Automotive LMC Automotive Limited, All Rights Reserved. LMC Automotive

19 Volume Brands Under Siege 90% West European Car Market Share 80% 70% 60% 50% 40% 30% Economy Volume Premium 20% 10% 0% Source: LMC Automotive LMC Automotive Limited, All Rights Reserved. LMC Automotive

20 Europe s Volume Brands Under Siege 90% Share of Total Volume Brand Sales Only by Brand Origin 80% 70% 60% 50% 40% 30% 20% 10% 0% Brand Origin* E. Europe W. Europe North America Japan Korea * Note: Ford included as European brand (because of longevity in market); Opel included; Skoda East European. Source: LMC Automotive LMC Automotive Limited, All Rights Reserved. LMC Automotive

21 A Decade of Competitive Erosion 21 The consequences of Market Erosion: Source: LMC Automotive Catastrophic decline in W. European volume brand sales A need for geographical diversification Intense competition requires model proliferation Structural overcapacity 2012 LMC Automotive Limited, All Rights Reserved. Millions Car Sales, W. Eur, W. Eur Volume Brands % LMC Automotive

24 Major European OEMs Stock estimates: initial results Days Supply 80 Benchmark Brand A 2012 LMC Automotive Limited, All Rights Reserved. Brand B Brand C Brand D Brand E Brand F Brand G Brand H LMC Automotive

26 26Political stress Downside risks remain significant US fiscal cliff Stalemate in the House would imply much larger fiscal tightening than in baseline (up to 3.5% of GDP in fiscal year 2013) Business and consumer confidence negatively affected Additional QE and weaker US$ to provide only partial offsets Trade and financial linkages lead to global slowdown Oxford forecast Eurozone avoids breakup. ECB and governments take significant steps taken to ensure Eurozone survival Risk premia fall, and consumer and business confidence gradually recover Recovery limited by high debt, weak job growth and fiscal retrenchment EMs robust as policy eases and growing middle class support consumer spending and trade 2012 LMC Automotive Limited, All Rights Reserved. Corporate stress Multiple Eurozone exits Fiscal austerity in Greece becomes unbearable; government falls, defaulting on all external debt Financial contagion spreads Run on banks in peripherals leading to credit crunch Cyprus, Portugal, Spain, Italy and Ireland also forced out of the Eurozone China hard landing Commercial property crash & external weakness leads to banking sector stress Flight from risk leads to falling share & property prices Investment slumps in China as government recapitalises banks Asian supply chain affected as domestic engine of growth stalls Source: Oxford Economics LMC Automotive

27 Eurozone break up scenario Eurozone*: GDP % year 6 Forecast 4 Baseline Multiple exits -8 * Remaining countries Source : Oxford Economics/Haver Analytics LMC Automotive Limited, All Rights Reserved. LMC Automotive

28 Scenarios for W. Europe Car Market Base Case Greek Exit Multiple Exit Sales Volume (mn) Risk: 2.5+ mn 2011 TIV 12.8 mn Source: LMC Automotive LMC Automotive Limited, All Rights Reserved. LMC Automotive

29 Concluding Remarks It is not likely that the planned/announced actions by Europe s OEMs will be sufficient to address the structural overcapacity. Stock problems of 2008/2009 are not being repeated, for most. Fiat, PSA, Renault, Ford and GM are all under pressure. Not clear how EU can help significantly (as Mr Marchionne as suggested) while the capacity problem is focused on only part of the European industry. Watch for: Eurozone crisis developments (obvious), China slowdown (Premiums), further model slippage or cancellation, big decisions on European strategy by volume OEMs (speculative, but distinct possibility) LMC Automotive Limited, All Rights Reserved. LMC Automotive

31 Automotive Seminar & Live Webcast London Corporate Ratings 11 th October 2012 Copyright 2011 Standard & Poor s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved.

32 Heavy Duty Truck Makers Volatile Demand Flexibility Demanded Michael Andersson Director Corporate Ratings 11 th October 2012 Copyright 2011 Standard & Poor s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved.

33 Ranking Table - Rated Truck Makers Company Ranking Ratings GLOBAL TRUCK MAKERS Business Risk Profile Financial Risk Profile PACCAR Inc. 1 A+/Stable/A-1 Satisfactory Minimal Scania AB* 2 A-/Positive/A-2 Satisfactory Modest MAN SE* 3 A-/Positive/A-2 Satisfactory Modest AB Volvo 4 BBB/Stable/A-2 Satisfactory Intermediate Navistar International 5 B/Negative/-- Weak Highly Leveraged Daimler AG A-/Stable/A-2 Satisfactory Modest Fiat Industrial SpA BB+/Stable/B Satisfactory Significant *Scania and MAN ratings equalised with VW 3.

34 Continued slowdown, but no crash, expected in 2012 and 2013 All markets showing signs of slowdown, however no 2008/2009 repeat expected European and North American markets at normalised leveles European slowdown in line with general economic weakening From manageable levels, demand, inventories and production in balance, however the North/South divide is deepening creating worries about Southern weakness spreading north of the Alps North American market slowing, somewhat surprising, on future worries Despite huge replacement demand and healthy fundamentals Brazil downturn expected due to new emission standards How deep and how long will the slump be is an increasingly uncertain question coming from very high levels the last couple of years Lower debt levels and improved cost structure support ratings All companies have stated improved flexilibilty after Lehman, this will now be put to the test No major rating changes for investment graded names expected in the near term Rating actions in 2012 Scania and MAN outlook raised following same action on parent VW Navistar rating lowered on company specific problems 4.

35 Heavy trucks A roller coaster ride demanding flexibility from OEMs *Source: EU, ACEA, ACT, FTR, Truck OEMs 5.

36 Europe Modest decline in total order intake, but North-South divide increasing Volvo Group European order intake *Order intake for European business of Scania, Volvo, Daimler, MAN 6.

37 US - Order intake turning negative again despite high replacement needs Source: ACT,FTR,Bloomberg 7.

38 Margins deteriorating - Flexible production and pricing discipline key *Global EBIT margins of commercial vehicle unit 8.

39 Solid credit metrics fo IG names, but headroom needed Column1 AB Volvo MAN SE Scania AB PACCAR Inc. Daimler AG Navistar Fiat Industrial Rating as of Oct. 4, 2012 BBB/Stable/A-2 A-/Positive/A-2 A-/Positive/A-2 A+/Stable/A-1 A-/Stable/A-2 B/Negative/-- BB+/Stable/B --Fiscal year ended Dec. 31, (Mil. ) Revenues , , , , , , ,0 EBITDA 3 853, , , , ,4 783, ,8 Net income from cont. oper ,7 679, ,8 802, , ,2 624,0 Funds from operations (FFO) 3 224, , , , ,0 695, ,4 Capital expenditures 1 162,2 580,7 517,6 279, ,5 405,0 631,3 Free operating cash flow 1 921,4 260,1 665,8 541, ,5 340, ,1 Discretionary cash flow 1 351,6 (36,9) 216,3 374,5 193,5 340, ,1 Cash and short-term investments 860,0 320,0 106, , ,0 901, ,0 Debt 4 266, ,6 0,0 169, , , ,0 Equity 7 555, , , , ,6 (176,3) 3 905,5 Adjusted ratios EBITDA margin (%) 11,4 8,9 16,1 11,0 10,0 8,0 7,9 EBITDA interest coverage (x) 10,1 6,3 36,2 67,0 13,8 6,5 2,5 EBIT interest coverage (x) 7,7 4,9 31,7 59,0 11,6 5,0 1,9 Return on capital (%) 24,4 14,9 43,6 44,6 22,5 24,1 12,2 FFO/debt (%) 75,6 98,7 N.M. 636,5 155,3 21,4 19,9 Free operating cash flow/debt (%) 45,1 19,6 N.M. 321,3 40,2 10,5 17,7 Debt/EBITDA (x) 1,1 0,9 0,0 0,1 0,6 4,1 3,7 Total debt/debt plus equity (%) 36,1 20,1 0,0 6,5 16,3 105,7 63,2 --Average of past three fiscal years-- EBITDA margin (%) 7,5 8,0 14,9 10,1 8,1 8,0 EBITDA interest coverage (x) 5,0 5,2 16,2 40,4 6,9 4,4 EBIT interest coverage (x) 2,5 3,6 13,0 26,3 4,7 3,6 Return on capital (%) 8,7 10,6 31,3 21,1 12,8 28,3 FFO/debt (%) 33,0 56,2 285,1 738,6 92,5 22,3 Free operating cash flow/debt (%) 19,2 44,4 207,7 732,3 56,3 26,1 Debt/EBITDA (x) 2,4 1,4 0,3 0,1 1,0 4,3 Total debt/debt plus equity (%) 43,0 23,1 12,5 3,8 18,8 138,7 Source: S&P 9.

40 Appendix 10.

41 Company Focus Scania (publ), AB A- /Positive/A-2 (a- SACP) Business Satisfactory Financials Modest Rating leeway Key Strengths Leading market positions in Europe and South America in heavy trucks and buses Up-to-date product range and the highest degree of component commonality in the global truck industry A conservative financial policy and a modest financial risk profile, very strong profitability relative to peers' Key Weaknesses Operations within industries characterized by high volatility and high capital intensity Risk from sizable operations in economically and politically unstable regions (Latin America) Low High Short-Term Dev Stable Outlook Softening order intake Outlook linked to Volkswagen Brazil somewhat worrying Strong net cash posh Declining but still high profitability and cash generation 11.

42 Company Focus MAN SE A-/Positive/A-2 (bbb+ SACP) Business Satisfactory Financials Modest Rating leeway Key Strengths Strong market positions in commercial vehicles in Europe and South America Leading market positions in diesel engines Diversification supported by business units prone to different economic cycles Short-Term Credit Factors Key Weaknesses Operations within industries characterized by high volatility, cyclicality, and capital intensity Structural problems within the bus industry Mature and competitive markets High fixed-cost base for some operations Positive Outlook Low High Weak H on lower demand and competitive pressure Outlook linked to Volkswagen Brazil somewhat worrying Power Engineering remain stable 12.

43 Company Focus Volvo (publ), AB BBB /Stable/A-2 Business Satisfactory Financials Intermediate Key Strengths Leading market positions w/w in heavy CV, buses, and construction equipment Broad geographic diversity and up-to-date product line Strong liquidity, also in economic downturns Key Weaknesses Highly volatile, cyclical and capital intensive industry High operational gearing Large historical swings in profitability Rating leeway Short-Term Development Stable Outlook Low High Softening order intake (Weak US order intake surprising) Performing above ratios commensurate with rating Strong liquidity FFO/Debt > 35% Solid profitability and cash flow Debt /EBITDA < 3x expected in

44 US/EU market shares, US truck age, Iveco EU inventories 14.

45 S&P s Views On The State Of The Japanese and Asian Auto Sectors Osamu Kobayashi Director Corporate Ratings 11 th October 2012 Copyright 2011 Standard & Poor s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved.

46 Corporate Ratings Criteria Summary Business Risk Country risk Industry risk Competitive position Profitability/Peer group comparisons Financial Risk Accounting Financial governance and policies/risk tolerance Cash flow adequacy Capital structure/asset protection Liquidity 16.

47 Corporate Ratings: Business Risk/Financial Risk Matrix 17.

48 Ranking Table - Rated Automakers October 2012 Company Ranking Ratings GLOBAL AUTOMAKERS Business Risk Profile Financial Risk Profile Toyota Motor Corp. 1 AA-/Negative/A-1+ Strong Minimal Honda Motor Co. Ltd. 2 A+/Stable/A-1 Strong Modest BMW AG 3 A/Stable/A-1 Strong Modest Volkswagen AG 4 A-/Positive/A-2 Strong Modest Daimler AG 5 A-/Stable/A-2 Satisfactory Modest Hyundai Motor Co. 6 BBB+/Stable/-- Satisfactory Modest Nissan Motor Co. Ltd 7 BBB+/Stable/A-2 Satisfactory Intermediate Kia Motors Corp. 8 BBB+/Stable/-- Satisfactory Intermediate Ford Motor Co. 9 BB+/Positive/ Fair Significant Renault S.A. 10 BB+/Stable/B Fair Intermediate 18.

49 Ranking Table - Rated Automakers October 2012 Company Ranking Ratings GLOBAL AUTOMAKERS Business Risk Profile Financial Risk Profile General Motors Co. 11 BB+/Stable/-- Fair Significant Tata Motors Ltd. 12 BB/Positive/-- Fair Significant Peugeot S.A. 13 BB/Negative/B Fair Significant Jaguar Land Rover Plc 14 BB-/Positive/-- Fair Significant Fiat Spa 15 BB-/Stable/B Fair Aggressive Chrysler Group LLC 16 B+/Stable/-- Weak Aggressive Mitsubishi Motors Co. 17 B+/Stable/-- Weak Aggressive Aston Martin Holdings (UK) Ltd. 18 B+/Negative/-- Fair Aggressive 19.

50 Ranking Table - Rated Auto and Truck Makers October 2012 Company Ranking Ratings GLOBAL TRUCKMAKERS Business Risk Profile Financial Risk Profile PACCAR Inc. 1 A+/Stable/A-1 Satisfactory Minimal Scandia (pub.) AB 2 A-/Positive/A-2 Satisfactory Modest MAN SE 3 A-/Positive/A-2 Satisfactory Modest Volvo pub AB 4 BBB/Stable/A-2 Satisfactory Intermediate Navistar International Corp. 5 B/Negative/-- Weak Highly Leveraged 20.

51 Global Automaker Outlook Progression And Distribution Outlook Distribution: July October

52 Asian Auto Sector - Our View October 2012 Japanese automakers are on recovery path from supply chain disruptions of 2011 Japanese automakers and suppliers suffered from East Japan Earthquake and Thai floods in 2011 Market share losses occurred on less inventory Strong yen added pressures on profitability Recovering outputs and sales are supporting the results of many automakers and suppliers Korean automakers (Hyundai & Kia) continue to grow and improve position and profitability Success in fundamentally enhancing product quality and brands and advancing global marketing capability Some modest additional share gains while Japanese automakers suffered from supply chain disruptions Economic uncertainty remains the key variable globally Consumer confidence remains fragile Europe is headed for fifth consecutive year of registration decline; 2013 could be sixth year China is slowing, but how much and for how long? Worsening Japan-China diplomatic ties amid a territorial dispute may put another burden on Japanese automakers Rating outlook is stable for most Asian automakers, but outlook on Toyota remains negative Honda shows strong recovery in 2012 and Nissan continues to show robust performance Ratings on Hyundai and Kia were upgraded to BBB+/Stable in March 2012 Outlook on Tata is positive based on our expectation that Jaguar Land Rover (JLR), Tata s key subsidiary, will sustain its solid operating performance Outlook on Toyota remain negative because Toyota s overproduction in Japan has the potential to delay a recovery in its earnings 22.

53 Japanese Automakers - Challenges October 2012 Long-term decline in domestic demand and strong Japanese yen remain key challenges Domestic demand shows long-term decline since the peak in 1996 Total domestic sales during the first 8 months jumped 46% and we expect domestic demand recovers to 5 million units in 2012, but slowdown is anticipated after October as eco-car subsidies program ended Strong Japanese yen continues to add pressure on profitability Japanese yen appreciated more than 30% against US Dollar in the past 5 years (15% in the past 3 years) Around 40% appreciation against Euro in the past five years (25% in the past 3 years) Further expansion of overseas production and overseas procurement To minimize the effect of unfavorable exchange rates and declining domestic demand Overcapacity/ overproduction in Japan remain a major challenge Maintaining particularly strong position in ASEAN (Association of SouthEast Asian Nations) countries Can they maintain their leading positions in HV, PHV, and EV? Uncertainties in China China is slowing, but how much and for how long? Worsening Japan-China diplomatic ties amid a territorial dispute may put another burden on Japanese automakers 23.

54 Summary Of 2012 Regional Demand Outlook Region 2012 Estimate Comment and source U.S million light-vehicle sales First-eight months (SAAR) was 14.2 million Recession case is 12.9 million (S&P estimates) Europe European passenger vehicle registrations down at least 7% Down 6.8% for first six months 2012 (EU27). But registration % change varies widely by country--flat or up in some and down sharply in others. (S&P estimates, ACEA and LMC Automotive Ltd.) Japan Passenger vehicles rise 12%- 19% We expect improved supply conditions and the government's new eco-car subsidy program to boost new vehicle sales and recovery from 2011 supply disruption events. (S&P estimates) Brazil China India Passenger vehicles rise single digit % Passenger vehicles rise single digit % Low single digit % for passenger vehicles Brazilian economic growth and currency levels are key. Tariffs and prospective capacity additions pressure OEs even if sales do rise. (S&P estimates and LMC) Slower-than-expected growth than in recent years; growth will likely vary by sector - luxury versus domestic automakers for example. (S&P estimates and LMC) Passenger car market grew 2.2% in fiscal March 2012, due to multiple hikes in fuel prices and high interest rates. Car sales in India fell for the first time in 10 months in August 2012 (S&P estimates and SIAM) 24.

55 Japan Sales Should Recover in 2012 Annual New Car Sales in Japan (Unit) Source: Standard & Poor s based on data from Japan Automobile Manufacturers Association 25.

56 Japan Strong Yen Continues to Add Pressure on Profits Japanese Yen vs. US Dollar and Euro (in Yen) Source: Standard & Poor s 26.

57 Japan Further Expands Overseas Productions Global Production by Japanese Automakers (Unit) Source: Standard & Poor s based on data from Japan Automobile Manufacturers Association 27.

58 U.S. Important Market for Japanese & Korean Automakers U.S. Light Vehicle Sales (thousands) % % OPEC II % Gulf War % % % OPEC I 2003: 16.6 million 2004: 16.9 million 2005: 16.9 million 2006: 16.5 million 2007: 16.1 million 2008: 13.2 million 2009: 10.4 million 2010: 11.6 million 2011: 12.7 million 2012: 14.2 million (e) 2013: 14.8 million (e) Source: Ward s AutoInfoBank 28.

59 U.S. Demand Recovering U.S. Light Vehicle SAAR Trend By Month Cash for clunkers Source: Ward s AutoInfoBank 29.

60 U.S. Light Vehicle Market Share: Top 4 Automakers (%) 35.0 GM Chrysler Ford Toyota * Source: Ward s AutoInfoBank * 2012 data updated for YTD August 30.

61 U.S. Light Vehicle Market Share: Next Tier Competitors (%) 12.0 Honda Hyundai Nissan Kia * Source: Ward s AutoInfoBank * 2012 data updated for YTD August 31.

62 China Auto sales shows a low single-digit growth In 2009, Chinese auto market became the world #1 with million units 32.

63 China Market Shares 18.0% 14.0% 16.0% 12.0% 14.0% 12.0% 10.0% 10.0% 8.0% 8.0% 6.0% 6.0% 4.0% 4.0% 2.0% 2.0% 0.0% % Japanese 3 Detroit 3 Hyundai + Kia German 3 Toyota Honda Nissan Hyundai VW GM 33.

64 China Slow Down and Territorial Dispute with Japan Hard landing (5% GDP Growth) impact for Asian automakers Hard landing could impact ratings if lasts two years Hyundai and Nissan have relatively large China exposure currently Contagion effect of China hard landing excluded For Japanese Automakers, more risks and uncertainties Worsening Japan-China diplomatic ties amid a territorial dispute is putting another burden on Japanese automakers We view Japanese automakers are capable of absorbing the negative impact without significant damage to their creditworthiness Prolonged political confrontation may hurt Japan's macro economy and affect the credit quality of rated Japanese automakers 34.

65 Japanese and Asian Automakers 35.

66 Summary Of Four Rated Japanese Automakers Toyota is AA- / Negative. The negative outlook reflects our view: Toyota s overproduction in Japan has the potential to delay a recovery in its earnings Toyota continues to face adverse currency rates impacts Honda is A+ / Stable Strong recovery prospects in sales and profits over the next two years Honda solidly maintains its conservative financial policy and modest financial risk profile Nissan is BBB+ / Stable Robust financial performance expected in the next few years Renault s credit quality constraints upside potential in Nissan s ratings. Mitsubishi is B+ / Stable Gradual recovery in profitability expected over the next one to two years Strong position in ASEAN markets and cost reduction to support gradual improvement All four companies to show recovery in profits in 2012 Recovery in sales and continuous cost reductions support expectations for sustained profits Increasing production/procurement in vehicles produced overseas to gradually reduce exposures to Japanese Yen 36.

67 Summary Of Three Rated Asian (non-japan) Automakers Hyundai is BBB+ / Stable The rating was upgraded from BBB/Positive in March 2012 We expect that Hyundai will continue to maintain market position and profitability despite increasing competition In the first half of 2012, Hyundai increased its unit sales by 8% year-on-year Kia is BBB+ / Stable We equalize ratings on Kia and Hyundai, reflecting Kia s close relationship with, and expected strong support from, parent company (Hyundai) We expect that Kia will continue to maintain market position and profitability despite increasing competition In the first half of 2012, Kia increased its unit sales by 12% year-on-year Tata is BB / Positive. The positive outlook reflects our view: Tata will sustain its operating performance and maintain its debt protection measures despite an increase in engineering and product development expenditure at Tata fully owned subsidiary JLR (BB- /Positive/-) Tata s business risk profile is supported by JLR's improving competitive position and Tata s dominant position in the Indian commercial vehicle market 37.

68 Supply Chain Risk: Takeaways From The earthquake in Japan and floods in Thailand affected our ratings outlook on Japanese automakers and suppliers in Supply disruptions impaired some operations in 1H of fiscal 2011 Market share losses occurred on less inventory Some modest share gains for non-japanese automakers Market shares of Japanese automakers are recovering in the U.S., etc. Events in Japan and Thailand did not affect our ratings or outlooks on any of the non-japanese automakers or suppliers. Supply chain disruptions need to be watched! No widespread changes to the supply chain yet? But automakers should have better visibility into supply chain More dual sourcing or qualifying new suppliers? Costly! 38.

69 Asian Auto Suppliers 39.

70 Asia-Based Auto Suppliers Many companies are affiliated with large automakers (such as Toyota Motor and Hyundai Motor) Limited universe when compared with the U.S. Denso, Aisin Seiki and Toyota Industries: More than 50% of sales rely on Toyota Motor and its group companies Hyundai Mobis: 80% - 90% of its auto parts modules sales rely on Hyundai Motor/Kia Motors Majority of corporate credit ratings are in the investment grade, but high reliance on parent /group is one of constraining factors for Toyota and Hyundai group suppliers Economic uncertainty remains; historical challenges (production volatility) will return 40.

71 Global Auto Supplier Ranking (October 1, 2012) 68 public ratings globally, with 8 in APAC Issuer Ranking: Global Auto Suppliers As of October 1, 2012 Rank Company Name Corporate credit rating Business Risk Financial Risk Liquidity 1 Robert Bosch GmbH AA /Stable/A 1+ Strong Minimal Exceptional 2 Denso Corp. AA /Negative/A 1+ Strong Minimal Exceptional 3 Toyota Industries Corp. AA /Negative/A 1+ Strong Intermediate Strong 4 Aisin Seiki Co. Ltd. A+/Negative/A 1 Strong Modest Strong 5 Knorr Bremse AG A /Stable/ Satisfactory Modest Strong 6 Magna International Inc. BBB+/Stable/ Satisfactory Modest Strong 7 Hyundai Mobis Company Limited BBB+/Stable/ Satisfactory Modest Adequate 8 Autoliv Inc. BBB+/Stable/A 2 Satisfactory Intermediate Strong 9 BorgWarner Inc. BBB+/Stable/ Satisfactory Intermediate Strong 10 Compagnie Generale des Etablissements Michelin S.C.A. BBB+/Stable/A 2 Satisfactory Intermediate Strong 11 Johnson Controls Inc. BBB+/Stable/A 2 Satisfactory Intermediate Adequate 12 Valeo S.A. BBB/Stable/A 2 Satisfactory Intermediate Strong 13 Harman International Industries Inc. BBB /Stable/ Satisfactory Intermediate Strong 14 AutoNation Inc. BBB /Stable/ Satisfactory Significant Adequate 15 TRW Automotive Inc. BB+/Positive/ Fair Intermediate Strong 16 LKQ Corporation BB+/Stable/ Fair Intermediate Strong 17 Delphi Automotive PLC BB+/Stable/ Fair Intermediate Adequate 18 GKN Holdings PLC BB+/Stable/ Satisfactory Significant Adequate 41.

72 Global Auto Supplier Ranking Continued Issuer Ranking: Global Auto Suppliers As of October 1, 2012 Rank Company Name Corporate credit rating Business Risk Financial Risk Liquidity 19 Lear Corp. BB/Stable/ Weak Intermediate Strong 20 Group 1 Automotive Inc. BB/Stable/ Fair Significant Adequate 21 Dana Holding Corp. BB/Stable/ Weak Significant Adequate 22 Tenneco Inc. BB/Stable/ Weak Significant Adequate 23 TMD Friction Group S.A. BB/Stable/ Weak Aggressive Adequate 24 Piaggio & C. SpA BB/Negative/ Fair Aggressive Adequate 25 Continental AG BB /Positive/B Satisfactory Highly Leveraged Adequate 26 Shiloh Industries Inc. BB /Stable/ Weak Significant Adequate 27 Stoneridge Inc. BB /Stable/ Weak Significant Adequate 28 Cooper Standard Automotive Inc. BB /Stable/ Weak Significant Adequate 29 Penske Automotive Group Inc. BB /Stable/ Fair Aggressive Adequate 30 Pinafore Holdings B.V. BB /Stable/ Fair Aggressive Adequate 31 Asbury Automotive Group Inc. BB /Stable/ Fair Aggressive Adequate 32 Sonic Automotive Inc. BB /Stable/ Fair Aggressive Adequate 33 The Goodyear Tire & Rubber Co. BB /Stable/ Fair Aggressive Adequate 34 Cooper Tire & Rubber Co. BB /Stable/ Weak Aggressive Adequate 35 American Axle & Manufacturing Holdings Inc. BB /Stable/ Weak Aggressive Adequate 36 China Zhengtong Auto Services Holding Ltd. BB /Stable/ Weak Aggressive Adequate 37 Baoxin Auto Group Ltd. BB /Stable/ Weak Aggressive Adequate 42.

73 Global Auto Supplier Ranking Continued Issuer Ranking: Global Auto Suppliers As of October 1, 2012 Rank Company Name Corporate credit rating Business Risk Financial Risk Liquidity 38 Allison Transmission Inc. B+/Stable/ Fair Aggressive Adequate 39 KAR Auction Services Inc. B+/Stable/ Fair Aggressive Adequate 40 Federal Mogul Corp. B+/Stable/ Weak Aggressive Adequate 41 Visteon Corp. B+/Stable/ Weak Aggressive Adequate 42 American Tire Distributors Inc. B+/Stable/ Weak Aggressive Adequate 43 Remy International Inc. B+/Stable/ Weak Aggressive Adequate 44 Tower International Inc. B+/Stable/ Weak Aggressive Adequate 45 Mark IV LLC B+/Stable/ Weak Aggressive Adequate 46 Metaldyne LLC B+/Stable/ Weak Aggressive Adequate 47 Pittsburgh Glass Works LLC B+/Stable/ Weak Aggressive Adequate 48 FleetPride Corp. B+/Stable/ Weak Aggressive Adequate 49 Grede Holdings LLC B+/Stable/ Weak Aggressive Adequate 50 HHI Holdings LLC B+/Stable/ Weak Aggressive Adequate 51 Wabash National Corp. B+/Stable/ Weak Aggressive Adequate 52 Waupaca Foundry Inc. B+/Stable/ Weak Aggressive Adequate 53 Schaeffler Group B+/Stable/ Satisfactory Highly Leveraged Adequate 54 International Automotive Components Group, S.A. B+/Stable/ Vulnerable Aggressive Adequate 55 Hyva Global B.V. B+/Negative/ Weak Aggressive Adequate 56 PT Gajah Tunggal Tbk. B/Positive/ Weak Highly Leveraged Adequate 57 Europcar Groupe S.A. B/Stable/ Fair Highly Leveraged Adequate 58 Meritor Inc. B/Stable/ Weak Highly Leveraged Adequate 59 Transtar Holding Company B/Stable/ Weak Highly Leveraged Adequate 60 August Cayman Intermediate Holdco, Inc B/Stable/ Weak Highly Leveraged Adequate 61 Accuride Corp. B/Stable/ Weak Highly Leveraged Adequate 62 Affinia Group Intermediate Holdings Inc. B/Stable/ Weak Highly Leveraged Adequate 63 Commercial Vehicle Group Inc. B/Stable/ Vulnerable Aggressive Adequate 64 Autoparts Holdings Limited B/Stable/ Fair Highly Leveraged Less than adequate 65 UCI Holdings Ltd. B/Negative/ Fair Highly Leveraged Adequate 66 Exide Technologies B/Negative/ Vulnerable Aggressive Adequate 67 Diversified Machine Inc. B /Developing/ Vulnerable Highly Leveraged Less than adequate A.T.U. Auto Teile Unger Holding GmbH B /Negative/ Weak Highly Leveraged Less than adequate

74 Global Auto Supplier Ratings Distribution: Majority Are Spec Grade 44.

75 Global Auto Supplier Outlook Distribution: Majority Are Stable 45.

76 Auto Suppliers/Retailers Business & Financial Risk Profile Business And Financial Risk Profile Matrix Business Risk Profile Financial Risk Profile Minimal Modest Intermediate Significant Aggressive Highly Leveraged Excellent Strong Bosch, Aisin Seiki Toyota Denso Industries Satisfactory -- Knorr- Bremse, Hyundai Mobis, Magna JCI, Autoliv, Michelin, BorgWarner, Valeo, Harman Autonation, GKN -- Continental, Schaeffler AG Fair TRW, Delphi, LKQ Group 1 Piaggio, Goodyear Tire, Sonic, Pinafore, Asbury, Penske, Allison, KAR Autoparts Holdings, UCI, Europcar Weak Lear Tenneco, Dana, Shiloh, Stoneridge, Cooper- Standard Vulnerable International Automotive Components, Commercial Vehicle, Exide TMD, Axle, Visteon, Fed-Mog, Meritor, PT Gajah Tunggal, American Tire, HHI, Mark IV, Accuride, Affinia, August Metaldyne, Pittsburgh Glass, Cayman, A.T.U Auto-Teile Remy, Tower, FleetPride, Unger Handels, Transtar Grede, Waupaca, Wabash, Hyva, China Zhengtong, Baoxin, Cooper Tire Diversified Machine 46.

77 European Car Makers Update and Rating Drivers into 2013: A Tale of Two Worlds Eric Tanguy Director Corporate Ratings 11 th October 2012 Copyright 2011 Standard & Poor s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved.

78 Agenda European Global Auto Makers The European auto sector: Key credit factors and S&P expectations Individual Profiles: Investment Grade category Speculative grade 48.

79 The European Auto Sector 49.

80 Ranking Table - IG Auto and Truck Makers End September 2012 (1) Company Ranking Ratings GLOBAL AUTOMAKERS Investment Grade Business Risk Profile Financial Risk Profile Toyota Motor Corp. 1 AA-/Negative/A-1+ Strong Minimal Honda Motor Co. Ltd. 2 A+/Stable/A-1 Strong Modest BMW AG 3 A/Stable/A-2 Strong Modest Volkswagen AG 4 A-/Positive/A-2 Strong Modest Daimler AG 5 A-/Stable/A-2 Satisfactory Modest Hyundai Motor Co. 6 BBB+/Stable/-- Satisfactory Modest Kia Motors Corp. (bbb sacp) 7 BBB+/Stable/-- Satisfactory Intermediate Nissan Motor Co. Ltd 8 BBB+/Stable/-- Satisfactory Intermediate 50.

81 Ranking Table Non IG Auto and Truck Makers End September 2012 (2) Company Ranking Ratings GLOBAL AUTOMAKERS Speculative grade Business Risk Profile Financial Risk Profile Ford Motor Co. 9 BB+/Positive/B Fair Significant Renault S.A. 10 BB+/Stable/B Fair Intermediate General Motors Co. 11 BB+/Stable/-- Fair Significant Tata Motors Ltd 12 BB/Positive/-- Fair Significant Peugeot S.A. 13 BB/Negative/B Fair Significant Jaguar Land Rover Plc 14 BB-/Positive/-- Fair Significant Fiat Spa 15 BB-/Stable/-- Fair Aggressive Chrysler Group LLC 16 B+ /Stable/-- Weak Aggressive Mitsubishi Motors Co. 17 B+/Stable/-- Weak Aggressive Aston Martin Holdings (UK) Ltd 18 B+/Negative/-- Fair Aggressive 51.

82 Global Automakers Outlook Distribution Outlook distribution July 2009 to September Nber of issuers Watch Neg Negative Stable Positive Watch Pos Developping Watch Dev Jul-09 Mar-10 Jun-11 Oct-11 Sep

83 2011 and 1H 2012 European Auto North-South divide: IG German car markers reporting positive growth while southern European mass-market manufacturers are in negative territory Rebound in volumes is continuing primarily in premium and higher-end segment Non-European demand is partly compensating declining European sales (ACEA: -7.1% ytd Jan-August 2012). Favourable for car makers most diversified outside of Europe. Unit sold --Fiscal year First half Growth in units sold Growth in Automotive Revenues Unit sold Growth in units sold Growth in Automotive Revenues Credit assessment ASTON MARTIN 3,917-6% +7% 1,518-21% -20% Rating revised to B/Negative from BB-/Stable on Dec 13, 2011 BMW 1,668, % +17% 900,539 +8% +11% Upgrade to A/Stable from A-/Positive on Apr 12, 2012 VOLKSWAGEN 8,160, % +26% 4,644, % +23% Positive outlook on Aug 27, 2012 following full integration of Porsche AG DAIMLER 1,381,400 +9% +7% 708,690 +6% +9% Upgrade to A-/Stable on Feb 23, 2012 on strong credit metrics JAGUAR LAND ROVER * 305, % +37% 86, % +35% Positive outlook on 'BB-' rating since Jun 29, 2012 RENAULT 2,719,630 +4% +9% 1,328,440-3% -1% Stable outlook reflecting stable credit ratios PEUGEOT 3,549,400-2% +3% 1,619,400-13% -11% Downgraded to BB/Negative on Jul 25, 2012 on rapid cash burn and mounting operational challenges FIAT ** 4,213,800 NM NM 2,121,000 NM NM Downgraded to BB-/Stable on weak European performance and rising consolidated debt on Apr 26, 2012 * Fiscal year ends March 31 ** Including Chrysler (consolidated from 06/2011) 53.

84 2011 and 1H 2012 European Auto North-South divide in terms of profitability: IG German car markers still reporting broadly flat margins while southern European OEMs are struggling to achieve break-even in Autos (Fiat boosted by Chrysler and resilient contribution from Latin America). Operating Margin - Auto division (% of sales) H BMW AG Daimler AG Volkswagen AG Peugeot S.A. Renault S.A. Fiat SpA Ford Motor Co. Hyundai Motor Co. 54.

85 Market Conditions: no improvement expected FY 2012 Expectations In H2, S&P expects no improvement in market conditions in Europe compared with H1 No State interventions; austerity packages not supportive of any rebound in the coming quarters In our estimates, Italy (-20% in 2012 /-1% in 2013), France (-11%/+1%) and Spain (-13%/-5%) will be the countries most affected. The UK (0%/+2%) and Germany (-1%/+1%) will remain very sluggish and broadly flat. Need to focus on Asia-Pacific, North America and others (Russia, Turkey, South American countries outside Mercosur, ANZ) to capture growth and sustain earnings Source: LMC Automotive 55.

86 Sales outside Europe will be key Sales outside Europe Unit sales - FY

87 57. Profitable diversification Diversification needs to generate earnings: either through market share (eg VW in China, Fiat in Brazil) or a differentiated market positioning (eg premium / luxury or Dacia in EM) China - Market Shares by Automaker 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Volkswagen Group SAIC Group General Motors Group Hyundai Group Changan Automobile Group Toyota Group Nissan Group Dongfeng Motor Honda Group PSA Group Ford Group Suzuki Group Mazda Motors BMW Group Daimler Group Mitsubishi Motors Fiat-Chrysler Group Renault Group *Other Chinese Manufacturers Other South America - Market Shares by Automaker 25.0% 20.0% 15.0% 10.0% 5.0% e 2013e 0.0% Source: LMC Automotive * Other Chinese Manufacturers : Chery Group (3.6% market share in 2011) Beiqi Foton (3%), FAW Group (2.8%), Great Wall Motor (2.7%), Geely Group (2.6%), Brillance Jinbei (2.5%), BYD Auto (2.5%), Jianghuai Automotive (2.4%), and others e 2013e General Motors Group Volkswagen Group Fiat-Chrysler Group Ford Group Renault Hyundai Group PSA Group Toyota Group Nissan Group Honda Group Mitsubishi Motors Suzuki Group Chery Group Mazda Motors Daimler Group Changan Automobile Group BMW Group Other

88 The European Auto Demand Erratic correlation to GDP 2012 not as low as 2009 in terms of real GDP change Car market tends to overshoot ; largely based on expectations Source: LMC Automotive, Eurostat 58.

89 Hold-on to your market share in Europe Market share changes reflect company-specific country mix but also more fundamental factors (brand positioning, recent model launches and marketing efforts, perceived quality, residual value expectations, etc ) Recently, some have been doing better than others. PC Market - European Market Share 25.0% 20.0% 15.0% 10.0% 5.0% H % BMW Daimler Fiat Ford GM Peugeot Renault Volkswagen Toyota Nissan Hyundai-Kia Source: ACEA 59.

90 Excess capacity: no fast-track resolution in sight FY 2012 Expectations Excess production capacity in Western Europe: an industry-wide issue even if impact on companies differs Problem most acute for those manufacturers with limited premium pricing ability and losing market share Several measures and definitions of excess capacity. Probably in excess of 20% industrywide, more in Italy and France Sites under consideration (Fiat s Termini Imerese, PSA s Aulnay and Rennes, Opel s Bochum) represent some 600,000 capacity, less than 5% of current European production. Significant political dimension At best, a gradual process Source: Fiat SpA Harbour def: 235 days p.a./ 16 hrs per day 60.

91 Excess capacity Some companies have moved capacity outside of Western Europe faster than others (eg Romania, Turkey and Morocco for Renault, Eastern Europe for VW) Impact of industrial footprint to be assessed in conjunction with a company s ability to command a price premium Workforce - Breakdown by regions 100% 90% 80% 70% 60% 50% 40% 30% 20% Other Asia-Pacific Americas Other Europe (excl. Home country) Home Country (F, D, I) 10% 0% Renault Peugeot Fiat Volkswagen 61.

92 Industry Risks Volume Auto Main risk factors in our view Production overcapacity (estimated at min. 20%) High operating leverage Labor-intensity, with labor usually organized and powerful Complex and evolving political environment because of automakers' importance to national economies Volatile end-market demand Limited end-market pricing power Consumer preferences and perceptions (entrenched or shifting), coupled with long lead times to develop new vehicles, high R&D and marketing costs Tough regulatory environment, including increasingly stringent fuel economy standards (and costs) Sensitivity to raw material and energy costs and a limited ability to mitigate substantial exposures to commodity prices swings Reliance on a sophisticated, but also intertwined and vulnerable supplier system (eg Japan, Thai flooding, Evonik) Challenges of operating in both low growth mature markets and faster growing, more fragmented emerging markets. 62.

93 More challenging to meet internal targets for some All car makers have in place efficiency plans and ambitious strategic plans Effectiveness of these plans needs to be assessed over time Sometimes, difficult to interpret eg. Peugeot at end-june Profit measures are the real benchmark (margins and ROCE). Plan name BMW Daimler Fiat Peugeot Renault Volkswagen Strategy Number ONE Long-term guidance World Class Manufacturing Launch date September 2007 April 2011 April 2010 Targets Status by ROS 8-10% Auto - 6 bn efficiencies -RoCE 26% In 1H % EBIT mgin by ROS 10% auto -ROS 8% trucks -ROS 9% vans -ROS 6% buses In 1H 12 - Cars 10.0% - Trucks 6.9% by 2014 *about 1.9 bn in cost savings# * 6 m vehicles, 3.8 m FGA * 4.3%-5.1% EBIT margin for FGA In 1H 12 * 380 m FY trend * 2.1 m vehicles * Conso. not FGA EBIT margin Ok Performance Plan + Rebound 2015 Nov July 2012 * 2012: 1 bn costs savings * bn in CF terms by 2015 In 1H 12: on track to save 1.0 bn this year Drive the change Strategy 2018 February 2011 End 2009 * by 2013, by 2018 ~ 2 bn FOCF & 5% * largest car maker op. Margin. in the world * by 2016, * 8% ROS before over 3 m taxes Unit sales. FOCF target achievable Op. mgin target more challenging In 1H12, ~12% global market share and 6.7% op. mgin, MQB/MLB # Including FIAT Industrial 63.

94 Base case expectations for 2012/ Some moderation in earnings for all, more pronounced for some 64.

95 Base case expectations for 2012/ Sustained Capex spending 65.

96 Base case expectations for Some weakening in credit ratios most likely, but for several companies from a high base 66.

97 Downside case (1) Several events may affect OEMs in 2013 much further Full-blown recession in Europe 2013 as bad as 2012 for the European car market Erosion in premium pricing power, a 2009-like fall for the premium segments Tariffs and local content rules between Mexico / Brazil / Argentina Hard landing in China (see next slide) Further tensions within the Eurozone, adverse currency movements European Automakers' Downside case Guidance Threshold where guidance likely to be tested Aston Martin BMW FFO to debt 10% Debt to EBITDA > 5.5x EBIT Margin in the 8-10% range through the cycle FFO to debt 50%-60% Significant positive FOCF Dependance on launch of the new DBS (Q4'12) EBITDA Margin down from 18% (e) to less than 16% EBIT Margin < 8-10% range Negative FOCF from Auto More aggressive financial policy Daimler FFO to debt 50%-60% Debt to EBITDA < 1.5x JLR FFO to debt >25% 7% revenue decline 2% group EBIT margin vs 7.8% in 1H'12 Negative FOCF from Auto Evoque a firebrand and not a sustained phenomenon Failure to reposition Jaguar Revenue growth < 10% in fiscal 2013 EBITDA margin < 12% in fiscal 2013 Fiat Peugeot Renault Volkswagen FFO to debt 12-20% range Debt to EBITDA x range FFO to debt ~20% Negative FOCF to be halved in 2013 FFO to debt ~25% Debt to EBITDA < 4.0x FFO to Debt > 60% Debt to EBITDA < 1.5x Group EBIT margin > 6% Lower dependance on European market Further deterioration in European performance Liquidity situation no longer 'adequate' (excl. Chrysler) Execution issues wrt diposal & restructuring plan FFO to debt seriously < 20% 2012 group EBIT well below -1.0 bn (e) No marked reduction in negative FOCF in auto in 2013 FFO to debt < 20% 2012 EBIT margins 150 bps below 2011 levels Inability to maintain positive FOCF in auto for more than a year EBIT margin 200 bps below recent level More aggressive financial policy (eg future acquisitions in particular wrt trucks) FFO to debt < 50% 67.

98 Downside case (2): Hard landing in China Cf S&P article published May 29, 2012 Amongst European manufacturers, the 3 German IG names would be most affected in a Chinese hard landing scenario China: some 20% of consolidated earnings (exports + equity income from JV). Less so in CF terms, smaller dividends inflow. Economic hard landing (5% GDP growth for 1 year) 0% growth in car sales (vs. +8% in our BC) limited rating impact for all 3 companies that still have material headroom in their credit ratios. Rating changes likely for non-ig Asian auto suppliers Hard landing scenario to last more than 2 years, rating pressure with 1 notch downgrades possible Factors to consider: Duration of the downturn Removal of local competition or fiercer competition Ripple effects in other parts of the global economy 68.

99 European Global Auto Makers Investment Grade 69.

100 Company Focus BMW AG A/Stable/A-1 Key Strengths Key Weaknesses Business Strong Leading manufacturer in the luxury autos segment Broad geographic diversification and strong track record of successful products High demand volatility of the auto sector Stringent environmental requirements, which challenge product development Financials Modest Conservative financial policy, low leverage, strong FOCF generation and low dividend payments Positive momentum of the demand for luxury cars Rating leeway Short-Term Credit Factors Stable Outlook Low High We view liquidity as strong BMW does not report a standalone full set of results for the financial service units; financing activities of the industrial and The auto EBIT margin should be maintained in the 8-10% range and the FFO to Debt in the 50%-60% range. We expect the company to continue to generate FOCF. financial divisions are common 70.

101 Company Focus Daimler AG A-/Stable/A-2 Business Satisfactory Financials Modest Key Strengths Leading position in the luxury auto segment Broad geographic and product diversity with historically successful product range Good financial flexibility Key Weaknesses Volatile demand in the auto, truck, and bus sectors, High operational gearing, Stringent environmental requirements and still some way to go to achieve the EU new targets Rating leeway Low High Short-Term Credit Factors We view liquidity as strong. FOCF slighlty below dividends in 2012 (excl. EADS disposal) Stable Outlook FFO/debt 50%-60% and debt/ebitda < 1.5x even in difficult years Financials currently comfortably above indicative ratios headroom for 6%-7% sales drop 71.

102 Company Focus Volkswagen AG A- /Positive/A-2 Key Strengths Key Weaknesses Business Strong Financials Modest Multibrand strategy, offering wide product and geographic diversity >50% of earnings from premium 12% global market share, strong in Trucks, strong in China and several other EM Above-European average profitability and cash flow generation Aggressive Capex plans and ambitious growth objectives Importance of ongoing costs optimization Market positioning of Seat North American operations still loss-making Complex Corporate governance Rating leeway Commitment to a moderate financial leverage Low High Short-Term Credit Factors Positive Outlook VW group has strong liquidity 2-year time horizon and financial flexibility Adjusted FFO to debt close to 60% and debt/ebitda < 1.5x; 6% operating margin 72.

103 European Global Auto Makers Speculative Grade 73.

104 Company Focus Aston Martin Holdings (UK) Ltd. B+/Neg./-- Key Strengths Key Weaknesses Strong brand in niche market for Highly cyclical end markets Business Fair high luxury sports cars affording pricing power Good production flexibility Niche position for high-end luxury sports cars / low product diversity Financials Promising model pipeline supporting volume growth Highly variable earnings historically Aggressive Expected positive free operating cash flow Rating leeway Short-Term Credit Factors Negative Outlook Low High Adequate Minimal FOCF in 2012 Rating pressure when FFO/debt sustainably below 10% FFO/debt 2012: 12%-14% (base- case) 74.

105 Company Focus Fiat SpA BB-/Stable/B Key Strengths Key Weaknesses Business Fair Financials Aggressive Market leader in two unrelated markets, Italy and Brazil, for passenger cars and light commercial vehicles Chrysler, currently performing well, fully consolidated since 06/2011 Potential to develop operational and geographical synergies with Chrysler over time Exposure to depressed southern Europe and excess capacity EMEA currently loss-making High adjusted debt, including Chrysler s pensions obligations (but not cash, ring-fenced) Outflows related to Chrysler acquisition and integration, capex needs to refresh product line Rating leeway Short-Term Credit Factors Stable Outlook Low High Adequate liquidity Monitored debt maturity profile Challenging EMEA, Chrysler integration and financial outflows FFO/debt 12-20% range, net debt to ebitda x Close to break-even in FOCF terms 75.

106 Company Focus Jaguar Land Rover PLC BB-/Positive/-- Business Fair Financials Significant Rating leeway Low High Key Strengths Well recognized brands in the premium segment Positive momentum of the demand for luxury cars Positive track record of product renewals in Land Rover Maintenance of a solid operating margin Short-Term Credit Factors We view liquidity as adequate Key Weaknesses High demand volatility of the auto sector Need to continue to invest significantly to relaunch Jaguar and to enlarge LR product range Still limited diversification when compared to the larger peers Positive Outlook Includes some weakening in operating profit and impact of new investments JLR to maintain FFO to debt ~25% to consider upgrade 76.

107 Company Focus Peugeot S.A. BB/Negative/B Business Fair Financials Significant Rating leeway Key Strengths No. 2 market position in Western Europe, 1 st in LCV Diversifiction benefits from Faurecia (supplier) and captive BPF Track record of a moderate financial policy Key Weaknesses Severely loss-making in automotive activities No consolidated earnings benefit from improving revenue diversification outside Europe Exposure to volume decline, excess capacity and competitive pressure in a structurally oversupplied Southern European market Low High Execution risks around restructuring and disposal plan Short-Term Credit Factors We still view liquidity as adequate Unsustainably high rate of cash depletation Negative Outlook Target ratio of 20% adjusted FFO to debt Turnaround in FOCF expected from

108 Company Focus Renault S.A. BB+/Stable/B Business Fair Financials Intermediate Rating leeway Key Strengths Good market shares in Europe with a focus on small cars and the entry segment Location of industrial footprint (Romania, Turkey, Morocco) Except S. Korea, non-europe contributing to earnings Strategic alliance with Nissan Solid financing arm (RCI Banque BBB-rated) Key Weaknesses Weak profitability Relatively small size on its own Still high concentration on the European market, no direct presence in China Limited offer on premium segments Low High Short-Term Credit Factors Adequate liquidity Stable Outlook Current credit ratios leave some Generating positive FOCF leeway for the ratings Volvo A shares providing financial flexibility + stakes in Nissan and AvtoVAZ Improvement in core profitability as key rating driver going forward 78.

109 Appendix 1 - Peer Comparison European Car Makers -- Fiscal year ended Dec. 31, FYE 3/31/ Nissan Motor Toyota Motor Volkswagen BMW Daimler Fiat Renault Peugeot GM Co Corp. Rating (Sept. 2012) A-/Pos. A/St. A-/St. BB-/St. BB+/St. BB/Neg. BB+/St. BBB+/St. AA-/Neg. (Mil. ) Revenues 142,093 53,112 94,460 59,324 40,679 58, ,028 94, ,838 EBITDA 18,468 7,977 9,473 4,180 2,467 2,348 10,074 11,053 8,433 Op. income 12,335 6,742 6,662 1, ,333 5, Net income from continuing operations 15,409 4,881 5,667 1,651 2, ,096 3,414 2,836 Funds from operations (FFO) 19,796 7,194 9,433 2,587 2,255 1,611 6,331 9,714 10,089 Capital expenditures 9,141 3,123 4,674 4,548 1,646 2,846 4,787 3,001 8,681 FOCF 8,815 3,113 2, ,136-1,919 1,544 6, Debt 23,895-6,075 25,615 4,486 8,021 10,294 37,554 - Equity 52,029 18,071 31,128 8,638 22,440 12,067 29,432 34,500 91,520 Adjusted ratios EBITDA margin (%) Operating margin (%) EBIT interest coverage (x) EBITDA interest coverage (x) Return on capital (%) FFO/debt (%) FOCF/debt (%) Debt/EBITDA (x) yr average adjusted ratios EBITDA margin (%) EBIT interest coverage (x) EBITDA interest coverage (x) Return on capital (%) FFO/debt (%) FOCF/debt (%) Debt/EBITDA (x) USD = JPY = JPY = 0.01 Source: S&P 79.

110 Appendix 2 CDS 80.

111 Appendix 3 S&P Captive Finance Approach Industrial operations and captive finance operations analyzed separately Most beneficial for banking subsidiaries Financing activities segregated from corporate/industrial activities and numbers reviewed separately Pro forma captive finance unit is created and deconsolidated from group numbers Only finance-related revenues and expenses included in the pro forma finance company income statement Finance assets (e.g., loans receivable and leases)--along with appropriate amounts of financial debt and equity allocated to the pro forma finance company. Debt and equity of the parent and the captive are apportioned as if they were of identical credit quality Debt and equity allocated to the pro forma finance company based on our assessment of the quality of the finance assets Adjusted financial measures are sensitive to assumptions we make about the leverage appropriate to the finance assets in question Approach is most beneficial in terms of debt-based measures 81.

112 European Auto Suppliers Holding Up Despite Europe s Economic Woes Barbara Castellano Director Corporate Ratings 11 th October 2012 Copyright 2011 Standard & Poor s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved.

113 Agenda European Auto Suppliers The European auto supplier sector: Key credit factors and S&P expectations Individual profiles: Autoliv, Michelin, Valeo, GKN, Continental, and Schaeffler 83.

114 Global Auto Suppliers 84.

115 Global AutoSuppliers Rating Distribution Rating distribution (No. of issuers) Sept Jul AA A BBB BB B CCC CC SD D The auto supplier sector has been one of the most hit by the crisis in 2008 and The comparison between the ratings in July 2009 and in September 2012 gives a clear picture of the changes occurred in the sector. 85.

116 Global AutoSuppliers Outlook Distribution (No. of issuers) Outlook distribution 55 Sep-12 Jul Positive Stable Negative Developing Watch Neg *Dates represent current and previously published report card data. The current outlook distribution indicates that, notwithstanding the difficulties in Europe, at this stage we still expect the vast majority of the suppliers to be able to maintain their current ratings. 86.

117 Global AutoSuppliers - Risk Factors Cyclical industry High customer concentration Strong pricing and margin pressure Earning volatility Significant exposure to raw material cost fluctuations The competitive landscape can be fragmented Rising need to increase investments in R&D Increasing regulatory pressure on the OEMs, this is partially rebated on the auto suppliers While these factors apply to the whole industry, during the crisis the European suppliers have been hit less seriously than the North American peers because most of them had higher ratings. Several North American suppliers had large exposures to the Big 3 and in many cases they had very high financial leverages. Today out of 68 publicly rated auto suppliers, 12 are European and out of these 5 are rated investment grade. Globally only 14 rated suppliers out of 68 are rated in the investment grade area. 87.

118 Auto Suppliers What Has Changed In Five Years? In our opinion auto suppliers are stronger today than five years ago. OEMs globalization has resulted in the necessity for suppliers to follow their customers and relocate part of their production to lower cost countries. Geographic and customer diversity are mitigating cyclicality (particularly in Europe, given the current economic weakness) and counterparty risk. The globalization and the crisis have forced and speeded up the restructuring process in the industry. Some suppliers have disappeared, but those left have leaner cost structures, better diversification, and stronger negotiation power with the OEMs. Suppliers in strategic areas continue to have pricing power and to be strategic partners to OEMs. The ones in lower-value-added production are better protected than before (i.e. pass through clauses are a lot more common now) and more oriented to profitability than to pure volumes. There is still some consolidation but we don t see this as a key driver in the auto supplier industry. 88.

119 European Auto Suppliers EBITDA Evolution European Autosuppliers-EBITDA Margin (%) (5.0) Robert Bosch GmbH Knorr-Bremse AG Autoliv Inc. Compagnie Generale des Etablissements Michelin S.C.A. Valeo SA GKN Holdings PLC TMD Friction Group S.A. Piaggio & C. SpA Continental AG Pendragon PLC Schaeffler Group Europcar Groupe S.A. A.T.U Auto- Teile Unger Handels GmbH & Co. KG European suppliers operating margins were in the highest part of the historical range, on average, in 2010 and The rebound in demand for cars after the crisis is the main margin growth engine. Generally improved cost structures are also fueling margin growth. However, the tense to cost improvement is a never ending effort. The pressure on prices from OEMs remains a big issue for most suppliers. 89.

120 European Auto Suppliers S&P FFO -To -Adjusted Debt Evolution European Autosuppiers- FFO to Debt (%) (50.0) Robert Bosch GmbH Knorr-Bremse AG Autoliv Inc. Compagnie Generale des Etablissements Valeo SA GKN Holdings PLC TMD Friction Group S.A. Piaggio & C. SpA Continental AG Pendragon PLC Schaeffler Group Europcar Groupe S.A. A.T.U Auto- Teile Unger Handels GmbH Wider margins have generally translated into strong cash generation. At end-2011 on average most of the suppliers had FFO to adjusted debt ratios above our targets for the ratings. Many suppliers have used part of operating cash to increase capex after the decrease in the crisis. A large portion of capex is expansionary, with suppliers continuing to invest in geographical development in new markets. 90.

121 91. European Auto Suppliers S&P Adjusted Debt Evolution 16 European Autosuppliers-Adjusted Debt ( billion) Robert Bosch GmbH Knorr-Bremse AG Autoliv Inc. Compagnie Generale des Etablissements Michelin S.C.A. Valeo S.A. GKN Holdings PLC TMD Friction Group S.A. Piaggio & C. SpA Continental AG Pendragon PLC Schaeffler Group Europcar Groupe S.A. A.T.U Auto- Teile Unger Handels GmbH & Co. KG Notwithstanding higher capital expenditures, the average stock of debt for several suppliers was lower at year-end 2011 than before the crisis. In 2011 and 2012, suppliers distributed dividends after most had suspended payouts in

122 Auto Suppliers Performance Outlook In 2012 Conditions in 2012 will be probably less benign than in 2010 and 2011 for auto suppliers. However, S&P still maintains stable outlooks on most of the auto suppliers it rates. Global auto sales should increase year over year in 2012, supporting the business prospects for auto suppliers. But we see downside risk in the operating environment, particular owing to weak auto sales in Europe. Growth prospects in 2012 outside of Europe remain largely intact, including the ongoing recovery in North American sales and growth in the major developing markets, China, Russia, and Brazil, albeit at slower rates than we initially estimated. A greater-than-expected slowdown in China in the final quarter could be the unpleasant surprise in For many companies, 2011 profits levels and cash balances were stronger than usual, and credit measures often exceeded our expectations for their respective ratings. We do not expect this to continue in 2012 and beyond, however, with credit metrics likely to weaken from these very solid level. 92.

123 Auto Suppliers Performances Beyond 2012 As positive element we expect the rising trend in the global auto sales continue in the next years. However, on the negative, the mix of the global demand will continue to shift in favour of new economies and the volatility in the auto demand in single countries could increase. Notwithstanding the geographical diversification, the European suppliers are more exposed than others to the weakness in the European auto sales. We do not expect that the compensation between European sales and non European sales can work perfectly and we believe that it cannot last forever. As consequence we expect that pressure on the European auto suppliers margins is likely to increase again. Suppliers will depend a lot on the production policies of the OEMs, and not all of the auto makers have a good geographical match between production and sales. Any sudden adjustment in the level of inventories from OEMs can impact suppliers. Today we see headroom in most of the current ratings to accommodate lower performances with respect to 2010 and This explains the vast majority of stable outlooks. However, in light of these risks we believe that too friendly shareholder policies or large acquisitions could jeopardize the ability to face tougher conditions. 93.

124 European Auto Suppliers 94.

125 Company Focus: Autoliv (BBB+/Stable/A-2) Business Satisfactory Key Strengths Leading market positions in automotive passenger safety systems. Good sales diversity across all major OEMs. Solid profitability and cash flow generation. Solid credit ratios. Key Weaknesses Limited after market sales and exposure to cyclicality of the OEMs demand. Track record of high shareholder payouts in the past. Financials Intermediate Rating leeway Low High Stable Outlook (April 2012) We anticipate that Autoliv will maintain solid credit ratios in a potential slowdown in the industry. We view a ratio of FFO to adjusted debt of above 40% on a sustainable basis, including in challenging market conditions, as a key target. For the FOCF to debt ratio, we view it in the range of 15-20%. We would consider raising the rating if Autoliv demonstrated sustainably stronger and more stable profitability or commitment to maintaining what we consider a modest financial risk profile. Adverse market conditions, legal penalties, very generous dividend payouts, or share buybacks might weaken the company's credit measures to below what we see as rating-commensurate, leading to a negative rating action. 95.

126 Company Focus: Michelin (BBB+/Stable/A-2) Key Strengths Key Weaknesses Business Satisfactory Financials Intermediate Rating leeway Leading market positions, and strong pricing power, thanks to very well-known brands that convey high quality. A balanced geographic spread across the globe, with growing operations in emerging markets. Solid capital structure, improved following the 1.2bn capital increase (Oct. 2010) and the 400m sale of a stake in Hankook (Nov. 2011). Stable Outlook (April 2012) Exposure to volatile raw material prices, leading to potentially large working capital swings. Large capital expenditures expected for the coming years will weigh on free cash flow generation. Exposure of about 20% of sales to the cyclical and competitive automotive OEM market. We expect Michelin to be able to fund its large capex plan while generating positive FOCF in Low High We view a ratio of FFO to adjusted debt of above 40% on a sustainable basis, including in challenging market conditions, as a key target. Michelin has limited headroom at the current rating, given that FOCF is constrained by large capex and potentially large working capital swings. Any perceived significant deterioration in Michelin's operating margin, from the 2011 level, and in its credit metrics, would lead us to consider a downgrade. We see limited upside for the rating in the coming 12 months. Any upgrade would require a steady improvement in credit metrics over time thanks to recurring FOCF. 96.

127 Company Focus: Valeo (BBB/Stable/A-2) Business Satisfactory Financials Intermediate Key Strengths Solid market share in almost all the segments in which it operates. Good level of diversity, from a product, geographic, and customers standpoint (wide array of commercial relationships with almost all OEMs). Solid capital structure, with credit metrics at the high end of the «intermediate» category. Stable Outlook (September 2012) Key Weaknesses Highly competitive business environment. Profitability (6 to 7% operating margin) is in line with the industry average, but compares negatively with some of Valeo s peers, such as Schaeffler or Robert Bosch, better positioned in high value added segments Exposure to the cyclical automotive sector and still high fixed cost base. Rating leeway Low High We anticipate Valeo will maintain credit ratios that we consider commensurate with the 'BBB' rating, such as adjusted FFO to debt of more than 35% and debt to EBITDA lower than 2.5x, even under a scenario of flat revenues in We see a relatively comfortable headroom for Valeo at the current BBB rating. We could lower the rating if Valeo's operating performance weakened markedly, which is not our base case, resulting in adjusted FFO to debt of less than 30%. We see limited upside for the rating in the coming 18 months. Any upgrade would require strong profitability improvement following its efficiency programs. 97.

128 Company Focus: GKN Holdings PLC (BB+/Stable/--) Business Satisfactory Financials Significant Key Strengths Good end-market and geographic diversity. Presence in relatively stable aerospace segment. Strong market positions, particularly in the automotive segment. The moderate level of financial debt in the capital structure, with an extended debt maturity profile and adequate liquidity. Key Weaknesses Significant exposure to the cyclical automotive and highly fragmented offhighway markets. Limited presence in the profitable and less volatile aftermarket segments. Big pension deficit and volatile operating performance leading to volatility in key financial credit metrics historically. Aggressive financial policy, with a history of sizable acquisitions and high dividend spending. Rating leeway Low High Stable Outlook (July 2012) FFO-to-debt ratio of 20% or more in 2012 and at least 25% thereafter; leverage not materially higher than debt to EBITDA of 4x in the next 12 months. We anticipate limited headroom under GKN's credit metrics in Downside pressure on the rating if profitability and cash generation were insufficient to deleverage in line with our base-case scenario and if a generous dividend policy, further acquisitions, or share buybacks pushed debt to materially more than the 2.4 billion that we forecast in Rating upside is possible if, based on our forecasts, we deem GKN able to maintain FFO to debt of at least 30% and debt to EBITDA of no more than 3x on a sustainable basis. 98.

129 Company Focus: Continental AG (BB-/Positive), Stand-Alone Credit Profile bbb- Business Satisfactory Financials Highly Leveraged Rating leeway Key Strengths Strong market positions in certain automotivecomponent segments. Good record of implementing a low-cost production strategy and benefits from restructuring. Diverse portfolio of products at different stages of maturity. Positive Outlook (May 2012) Key Weaknesses Potential influence of 49.9% owner Schaeffler Group over financial policy. High dependence on the cyclical originalequipment auto market. Price pressure in the automotive systems division. Risks of high variability of earnings and cash flow. Low High Rating actions closely linked to Schaeffler, i.e. Schaeffler s rating as well as any potential evolution in Schaeffler s ownership in Continental. Positive rating actions could also result from continued discretionary cash flow generation, leading to further significant debt reduction. We could take a negative rating action if Continental's operating performance were to weaken to an extent that FFO to debt would fall to less than 15% (unlikely at this stage). 99.

130 Company Focus: Schaeffler AG (B+/Stable/--) Business Satisfactory Financials Highly Leveraged Key Strengths Strong margins, compared to both auto suppliers and to bearings manufacturers. Leading market positions and recognized technological leadership. Good geographical, product, and end-market diversity. Financial flexibility provided by Continental stake ownership. Stable Outlook (August 2012) Key Weaknesses High debt burden inherited from the acquisition of a majority stake in Continental AG. Low EBITDA cash conversion, due to large cash interest payments and large capital expenditures which limit Free Cash Flow generation. Exposure to the cyclical auto industry. Rating leeway Low High The stable outlook reflects our opinion that Schaeffler will be able to maintain a strong operating performance in , including an adjusted EBITDA margin close to 20% and slightly positive FOCF. We view a ratio of FFO to adjusted debt of around 10% and a ratio of adjusted debt to EBITDA of around 6x as commensurate with the 'B+ rating. Schaeffler has limited headroom in our view, given the very high level of debt, limited FOCF generation under the current capital structure, and hence limited deleveraging prospects. The sale of a 10.4% Continental stake announced in September has resulted in an improvement in the credit metrics, and provides Schaeffler with some leeway for the current B+ rating. 100.

131 Appendix 101.

132 Ranking Table Auto Suppliers End-September 2012 (1) Rank Company Name* Corporate credit rating Business Risk Financial Risk Liquidity 1 Robert Bosch GmbH AA /Stable/A 1+ Strong Minimal Exceptional 2 Denso Corp. AA /Negative/A 1+ Strong Minimal Exceptional 3 Toyota Industries Corp. AA /Negative/A 1+ Strong Intermediate Strong 4 Aisin Seiki Co. Ltd. A+/Negative/A 1 Strong Modest Strong 5 Knorr Bremse AG A /Stable/ Satisfactory Modest Strong 6 Magna International Inc. BBB+/Stable/ Satisfactory Modest Strong 7 Hyundai Mobis Company Limited BBB+/Stable/ Satisfactory Modest Adequate 8 Autoliv Inc. BBB+/Stable/A 2 Satisfactory Intermediate Strong 9 BorgWarner Inc. BBB+/Stable/ Satisfactory Intermediate Strong 10 Compagnie Generale des Etablissements Michelin S.C.A. BBB+/Stable/A 2 Satisfactory Intermediate Strong 11 Johnson Controls Inc. BBB+/Stable/A 2 Satisfactory Intermediate Adequate 12 Valeo S.A. BBB/Stable/A 2 Satisfactory Intermediate Strong 13 Harman International Industries Inc. BBB /Stable/ Satisfactory Intermediate Strong 14 AutoNation Inc. BBB /Stable/ Satisfactory Significant Adequate 15 TRW Automotive Inc. BB+/Positive/ Fair Intermediate Strong 16 LKQ Corporation BB+/Stable/ Fair Intermediate Strong 17 Delphi Automotive PLC BB+/Stable/ Fair Intermediate Adequate 18 GKN Holdings PLC BB+/Stable/ Satisfactory Significant Adequate 19 Lear Corp. BB/Stable/ Weak Intermediate Strong 20 Group 1 Automotive Inc. BB/Stable/ Fair Significant Adequate 21 Dana Holding Corp. BB/Stable/ Weak Significant Adequate 22 Tenneco Inc. BB/Stable/ Weak Significant Adequate 23 TMD Friction Group S.A. BB/Stable/ Weak Aggressive Adequate 24 Piaggio & C. SpA BB/Negative/ Fair Aggressive Adequate 25 Continental AG BB /Positive/B Satisfactory Highly Leveraged Adequate 26 Shiloh Industries Inc. BB /Stable/ Weak Significant Adequate 27 Stoneridge Inc. BB /Stable/ Weak Significant Adequate 28 Cooper Standard Automotive Inc. BB /Stable/ Weak Significant Adequate 29 Penske Automotive Group Inc. BB /Stable/ Fair Aggressive Adequate 30 Pinafore Holdings B.V. BB /Stable/ Fair Aggressive Adequate 31 Asbury Automotive Group Inc. BB /Stable/ Fair Aggressive Adequate 32 Sonic Automotive Inc. BB /Stable/ Fair Aggressive Adequate 33 The Goodyear Tire & Rubber Co. BB /Stable/ Fair Aggressive Adequate 34 Cooper Tire & Rubber Co. BB /Stable/ Weak Aggressive Adequate *The European suppliers are highlighted in yellow 102.

133 Ranking Table Auto Suppliers End-September 2012 (2) Rank Company Name* Corporate credit rating Business Risk Financial Risk Liquidity 35 American Axle & Manufacturing Holdings Inc. BB /Stable/ Weak Aggressive Adequate 36 China Zhengtong Auto Services Holding Ltd. BB /Stable/ Weak Aggressive Adequate 37 Baoxin Auto Group Ltd. BB /Stable/ Weak Aggressive Adequate 38 Allison Transmission Inc. B+/Stable/ Fair Aggressive Adequate 39 KAR Auction Services Inc. B+/Stable/ Fair Aggressive Adequate 40 Federal Mogul Corp. B+/Stable/ Weak Aggressive Adequate 41 Visteon Corp. B+/Stable/ Weak Aggressive Adequate 42 American Tire Distributors Inc. B+/Stable/ Weak Aggressive Adequate 43 Remy International Inc. B+/Stable/ Weak Aggressive Adequate 44 Tower International Inc. B+/Stable/ Weak Aggressive Adequate 45 Mark IV LLC B+/Stable/ Weak Aggressive Adequate 46 Metaldyne LLC B+/Stable/ Weak Aggressive Adequate 47 Pittsburgh Glass Works LLC B+/Stable/ Weak Aggressive Adequate 48 FleetPride Corp. B+/Stable/ Weak Aggressive Adequate 49 Grede Holdings LLC B+/Stable/ Weak Aggressive Adequate 50 HHI Holdings LLC B+/Stable/ Weak Aggressive Adequate 51 Wabash National Corp. B+/Stable/ Weak Aggressive Adequate 52 Waupaca Foundry Inc. B+/Stable/ Weak Aggressive Adequate 53 Schaeffler Group B+/Stable/ Satisfactory Highly Leveraged Adequate 54 International Automotive Components Group, S.A. B+/Stable/ Vulnerable Aggressive Adequate 55 Hyva Global B.V. B+/Negative/ Weak Aggressive Adequate 56 PT Gajah Tunggal Tbk. B/Positive/ Weak Highly Leveraged Adequate 57 Europcar Groupe S.A. B/Stable/ Fair Highly Leveraged Adequate 58 Meritor Inc. B/Stable/ Weak Highly Leveraged Adequate 59 Transtar Holding Company B/Stable/ Weak Highly Leveraged Adequate 60 August Cayman Intermediate Holdco, Inc B/Stable/ Weak Highly Leveraged Adequate 61 Accuride Corp. B/Stable/ Weak Highly Leveraged Adequate 62 Affinia Group Intermediate Holdings Inc. B/Stable/ Weak Highly Leveraged Adequate 63 Commercial Vehicle Group Inc. B/Stable/ Vulnerable Aggressive Adequate 64 Autoparts Holdings Limited B/Stable/ Fair Highly Leveraged Less than adequate 65 UCI Holdings Ltd. B/Negative/ Fair Highly Leveraged Adequate 66 Exide Technologies B/Negative/ Vulnerable Aggressive Adequate 67 Diversified Machine Inc. B /Developing/ Vulnerable Highly Leveraged Less than adequate 68 A.T.U. Auto Teile Unger Holding GmbH B /Negative/ Weak Highly Leveraged Less than adequate *The European suppliers are highlighted in yellow 103.

134 S&P s Views On The State Of The U.S. Auto Sector Robert Schulz Managing Director Dan Picciotto Director Corporate Ratings October 2012 Copyright 2011 Standard & Poor s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved.

135 Corporate Ratings Criteria Summary Business Risk Country risk Industry risk Competitive position Profitability/Peer group comparisons Financial Risk Accounting Financial governance and policies/risk tolerance Cash flow adequacy Capital structure/asset protection Liquidity 105.

136 Corporate Ratings: Business Risk/Financial Risk Matrix 106.

137 U.S. Auto Sector - Our View October 2012 Economic uncertainty remains the key variable globally Europe is headed for fifth consecutive year of registration decline; 2013 could be sixth year Latin American trade war (tariffs) is potential complication for some manufacturing footprints China is slowing, but how much and for how long? We assume a gradual sales recovery in U.S. This is supporting the results of many automakers and suppliers Consumer confidence remains fragile and volatile and unemployment high What is the new normal SAAR? In the U.S.? In Europe? And when? We believe current ratings are sustainable if 2013 sales and production are nearly flat with 2012 there is some cushion in most ratings Our base case is for a U.S. sales and production increase in 2012 and 2013 Will automakers maintain production-inventory-sales discipline? Volatility will return; the question is when and where? How receptive will capital markets remain for auto retail finance, automakers and suppliers? Timing is everything lots of refinancing has been done No U.S. auto sector defaults since mid 2009; few downgrades 107.

138 U.S. Corp. Spec-Grade Default Rate % And 12-Mo. F cast {The U.S. corporate trailing 12-month speculative-grade default rate is 2.7% as of June 30, 2012} Chart 5. U.S. Trailing 12-Month Speculative-Grade Default Rate And June 2013 Forecast (%) 14 U.S. Speculative-Grade Default Rate (actual) 13 Base Forecast (3.7%) 12 Pessimistic (5.5%) Optimistic (2.2%) Shaded areas are periods of recession as defined by the National Bureau of Economic Research (NBER). Source: Standard & Poor's Global Fixed Income Research; Standard & Poor's CreditPro

139 Ranking Table - Rated Auto and Truck Makers October 2012 Company Ranking Ratings GLOBAL AUTOMAKERS Business Risk Profile Financial Risk Profile Toyota Motor Corp. 1 AA-/Negative/A-1+ Strong Minimal Honda Motor Co. Ltd. 2 A+/Stable/A-1 Strong Modest BMW AG 3 A/Stable/A-1 Strong Modest Volkswagen AG 4 A-/Positive/A-2 Strong Modest Daimler AG 5 A-/Stable/A-2 Satisfactory Modest Hyundai Motor Co. 6 BBB+/Stable/-- Satisfactory Modest Nissan Motor Co. Ltd 7 BBB+/Stable/A-2 Satisfactory Intermediate Kia Motors Corp. 8 BBB+/Stable/-- Satisfactory Intermediate Ford Motor Co. 9 BB+/Positive/ Fair Significant Renault S.A. 10 BB+/Stable/B Fair Intermediate 109.

140 Ranking Table - Rated Auto and Truck Makers October 2012 Company Ranking Ratings GLOBAL AUTOMAKERS Business Risk Profile Financial Risk Profile General Motors Co. 11 BB+/Stable/-- Fair Significant Tata Motors Ltd. 12 BB/Positive/-- Fair Significant Peugeot S.A. 13 BB/Negative/B Fair Significant Jaguar Land Rover Plc 14 BB-/Positive/-- Fair Significant Fiat Spa 15 BB-/Stable/B Fair Aggressive Chrysler Group LLC 16 B+/Stable/-- Weak Aggressive Mitsubishi Motors Co. 17 B+/Stable/-- Weak Aggressive Aston Martin Holdings (UK) Ltd. 18 B+/Negative/-- Fair Aggressive 110.

141 Ranking Table - Rated Auto and Truck Makers October 2012 Company Ranking Ratings GLOBAL TRUCKMAKERS Business Risk Profile Financial Risk Profile PACCAR Inc. 1 A+/Stable/A-1 Satisfactory Minimal Scandia (pub.) AB 2 A-/Positive/A-2 Satisfactory Modest MAN SE 3 A-/Positive/A-2 Satisfactory Modest Volvo pub AB 4 BBB/Stable/A-2 Satisfactory Intermediate Navistar International Corp. 5 B/Negative/-- Weak Highly Leveraged 111.

142 Global Automaker Outlook Progression And Distribution Outlook Distribution: July October

143 Global Auto Sector: Selected Threats S&P Perspectives Probability Time Frame Effect Double dip recession in 2012/2013 (US and/or Europe). Hard landing in China. Adverse product mix shifts (Gas Price Driven) U.S. 20% - 25%; Near certain in Europe? China? High Near to medium term Ongoing, but inconsistent Unsettled capital markets High Anytime? Moderate if brief Less severe than 2008? Positive for now, but this can swing quickly. Affected Parties Automakers and Suppliers Automakers and some Suppliers Automakers and Suppliers Shifting global competitive landscape High Upon us Developing Automakers Rising emissions, fuel economy and safety standards Raw material price impact Cross-Currency Exchange Rate Volatility High Moderate - High High Medium to long term Near term Ongoing, but inconsistent Moderate Moderate Moderate for most Automakers Automakers and many Suppliers Automakers and many Suppliers 113.

144 Global Auto Sector: Selected Opportunities S&P Perspectives Probability Time Frame Effect Affected Parties Rising sales in developing markets Varies by geography Ongoing; Pace varies Moderate Automakers and Suppliers U.S. auto sales rise to 15 million units High 2014? High Automakers and Suppliers Favorable Currency Trends Moderate Intermediate term Moderate New product introductions High Near term Moderate All Over next 4 New UAW and CAW contracts Moderate years Moderate Europe sales rise, rather than fall Moderate 2014? Moderate? Many Automakers and Suppliers U.S. Automakers 114.

145 Summary Of 2012 Regional Demand Outlook Region 2012 Estimate Comment and source U.S million light-vehicle sales First-eight months (SAAR) was 14.2 million Recession case is 12.9 million (S&P estimates) Europe European passenger vehicle registrations down at least 7% Down 6.8% for first six months 2012 (EU27). But registration % change varies widely by country--flat or up in some and down sharply in others. (S&P estimates, ACEA and LMC Automotive Ltd.) Japan Passenger vehicles rise 12%- 19% We expect improved supply conditions and the government's new eco-car subsidy program to boost new vehicle sales and recovery from 2011 supply disruption events. (S&P estimates) Brazil China Passenger vehicles rise single digit % Passenger vehicles rise single digit % Brazilian economic growth and currency levels are key. Tariffs and prospective capacity additions pressure OEs even if sales do rise. (S&P estimates and LMC) Slower-than-expected growth than in recent years; growth will likely vary by sector - luxury versus domestic automakers for example. (S&P estimates and LMC) 115.

146 China Hard Landing (5% GDP Growth) Impact? For the U.S. Automakers Hard landing not expected to impact ratings Only GM has significant China exposure currently Ford is investing though Hard landing that lasts two full yeas could impact ratings Contagion effect of China hard landing excluded For the U.S. Auto Suppliers Same as OE impact for one year event not expected to impact ratings Many global suppliers are investing heavily in China so hard landing contribution to potential excess capacity needs to be watched 116.

147 Europe Hard Landing Impact Looming? 2012 is 5th consecutive year of decline the 6th? Europe is important source of vehicle sales for GM and Ford We already assume losses in 2012 and 2013 for both companies But incremental years of additional sales decline could impact ratings For some U.S. suppliers, outlooks could be revised; downgrades most likely for B category Compared to most suppliers have better liquidity, somewhat better cost structures Playbook from ; lessons not likely forgotten Most suppliers not heavily reliant on French or Italian automakers 117.

148 S&P U.S. Forecast For forecast is 14.2 million light vehicles 37% increase from 2009 but a 35% drop from forecast is 14.8 million Up 16.5% from 2011, 4% from light vehicle sales comfortably above scrappage - first time since 2008 Important negatives remain High unemployment S&P expects at least 7.7% until 2014 and still 7.0% in 2015 Housing recovery uncertainty Consumer behavior on large-ticket purchases how has the consumption function changed? Gas prices impact mix. Is $5.00/gallon the new $4.00/gallon? Positives Base case assumes continued economic improvement in Credit market challenges for consumer credit solid improvement ABS market for lease and floor plan now normalized Improved used vehicle prices (but off of record high levels) Improved fuel economy in all vehicles, including light trucks 118.

149 Cross Sector: U.S. Auto Recovery In Third Year. Housing? 119.

150 Consumer Sentiment Off The Bottom, But Around Historic Lows 120.

151 Demand: U.S. Light Vehicle Sales U.S. Vehicle Sales (thousands) % % OPEC II % Gulf War % % % OPEC I 2003: 16.6 million 2004: 16.9 million 2005: 16.9 million 2006: 16.5 million 2007: 16.1 million 2008: 13.2 million 2009: 10.4 million 2010: 11.6 million 2011: 12.7 million 2012: 14.2 million (e) 2013: 14.8 million (e) Source: Ward s AutoInfoBank 121.

152 Demand Recovering: U.S. Light Vehicle SAAR Trend By Month Cash for clunkers Source: Ward s AutoInfoBank 122.

153 The New Normal U.S. SAAR: 15 Million? 15.5 Million? When? Vehicle population declined when demand was below scrappage Scrappage data can be volatile Range of 4.3% to 6.7% per year over a 10 year period (R.L. Polk & Co.) This broadly equates to between 10 million and 13 million per year Amid lower sales, average age of vehicles increased to 10.8 years Average age is up from nine years in 2002; increased yearly since 2002 The economy and financing are factors recently, but we believe vehicle quality and durability improvements are also reasons Vehicle population will now slowly expand given sales levels Greater credit availability for consumers helps SAAR But miles driven still weak (YTD May 2012 vs %) 123.

154 Miles Driven Have Ticked Up; But Still Below Peak (U.S. DOT) 124.

155 Product Mix Shifts: Cars Up (Over 50% Market Share Vs. Light Trucks) U.S. market mix Units Share (%) Units % Change First Eight Months 2011 Share (%) Units First Eight Months 2012 Share (%) Units Share (%) % Change Small car 2,051, ,324, % 1,619, ,937, % Midsize car 2,368, ,532, % 1,718, ,136, % Large car 339, , % 167, , % Luxury car 876, , % 644, , % Total Car 5,635, ,090, % 4,149, ,945, % CUV 2,835, ,127, % 2,069, ,254, % SUV 801, , % 623, , % Van 698, , % 482, , % Pickup 1,600, ,779, % 1,108, ,221, % Total light truck 5,919, ,641, % 4,286, ,732, % Grand total 11,554, ,732, % 8,435, ,678, % Source: Ward s AutoInfoBank 125.

156 Top 10 Best Selling Light Vehicles (2011 & First 8 months of 2012) No. Vehicle 2011 (Units) % chg YoY 1 F SERIES 552, % 2 SILVERADO 415, % 3 CAMRY 308, % 4 ALTIMA 268, % 5 ESCAPE 254, % 6 FUSION 248, % 7 COROLLA 240, % 8 RAM 237, % 9 ACCORD 235, % 10 CRUZE 231,732 N.M. No. Vehicle YTD Aug 12 (Units) % chg YoY 1 F SERIES 385, % 2 CAMRY 280, % 3 SILVERADO 261, % 4 ACCORD 218, % 5 CIVIC 212, % 6 ALTIMA 209, % 7 COROLLA 199, % 8 CR-V 191, % 9 FUSION 181, % 10 RAM PICKUP 180, % N.M. - Not Meaningful (new model) Source: Ward s AutoInfoBank 126.

157 Full Size Pick-Ups Recovering But Still Constrained The U.S. full-size pickup market is smaller, recovering, still very profitable Demand rising after housing market bottom (?) Casual pickup buyers left; not too likely to return However, pickups functionality should support sustainable sales level over the long term Heavy duty pick-up transaction value ~$41,000 vs ~21,000 for small car (Bloomberg) GM, Ford, and Chrysler still control over 90% of the market GM and Ford shares are very close New product ebb and flow among domestic competitors assumed Pickups stay over 12% (FS pickups 10%) of industry for now FS Pick-up 10.5% share (through Aug vs. 11.6% in 2011) Below industry growth for 8 months of 2012 Still down over 33% down from 2006 Fuel efficiency has improved dramatically in last few years 127.

158 Full Size Pick-Up Trucks: Discretionary Users Gone U.S. Market Share (YTD August 2012) Chrysler 18% ToyotaNissan 6% 1% GM 37% Ford 38% Source: Ward s AutoInfoBank * 2012 data updated for YTD August 128.

159 Demand Outlook: Pick-Up Trucks And Housing Starts 129.

160 Small Cars: Domestics Are Competitive, With Share Source: Ward s AutoInfoBank * 2012 data updated for YTD August 130.

161 Small Car Segment: Plenty of Competitors Source: Ward s AutoInfoBank * 2012 data updated for YTD August 131.

162 U.S. Light Vehicle Market Share: Top 4 Automakers (%) 35.0 GM Chrysler Ford Toyota * Source: Ward s AutoInfoBank * 2012 data updated for YTD August 132.

163 U.S. Light Vehicle Market Share: Next Tier Competitors (%) 12.0 Honda Hyundai Nissan Kia * Source: Ward s AutoInfoBank * 2012 data updated for YTD August 133.

164 The U.S. Automakers 134.

165 Summary Of The Three U.S. Automakers Ford is BB+ / Positive. The outlook reflects our view: Ford will act with increasing decisiveness and commitment to restructure Europe Late 2013 upgrade possible; prospects for more geographically diverse profitability key GM is BB+ / Stable Profits and cash flow in N.A., losses in Europe Evolving ownership, capital structure and finco strategy Chrysler is B+ / Stable Benefits from NA. Strategic execution with Fiat (BB-/Stable) is main rating driver All three companies have returned to profitability in N.A. Cost reductions support expectations for sustained profits in North America North America provides critical support to all three companies Europe remains a challenge Developing commitment by many OEs in Europe to reduce assembly capacity? Financial policies appear to be focused on lowering financial risk, again, to varying degrees GM and Ford ratings up from D or SD to BB+ in 2.5 years 135.

166 Company Focus: Ford Motor Co. BB+ / Positive Business Risk Fair Financial Risk Significant Key Strengths Reduced cost base in N.A. is leading to profits and positive cash flow Improved product diversity Improved consumer perception Mgt continuity and strategy Key Weaknesses Losses in Europe Profit mix still weighted to light trucks Still high debt + pension Limited exposure to certain attractive developing markets Existing Rating Leeway Liquidity: Adequate Positive Outlook Low High Auto cash June 30, $23.7 billion Gradual reduction of debt More diverse profitability Adjusted Debt to EBITDA of 2.5x, Cash flow positive among other factors FMCC funding channels appear stable 136.

167 Ford: Liquidity/Capital Structure Snapshot As of June 30, 2012 (unless otherwise indicated) ($ billions) Gross cash 23.7 Industrial debt 14.2 Net cash (debt) 9.5 Unfunded pension liability (YE 2011) (15.4) Unfunded retiree medical liability (YE 2011) (6.6) Consol. book equity and non-controlling int Market capitalization (Sept. 26, 2012) 38.2 Equity allocated to Ford Credit 9.1 Available Automotive Credit Lines 10.2 Source: Ford & Bloomberg 137.

168 Company Focus: General Motors Co. BB+ / Stable Business Risk Fair Financial Risk Significant Existing Rating Leeway Key Strengths Reduced cost base and debt burden in N.A. supporting profits and positive cash flow Geographic and product diversity Strong positions China - Brazil IPO completed. Pfd stock raised cash Key Weaknesses Losses in Europe Profit mix still weighted to light trucks High unfunded pensions Ownership mix temporary Elevated level of mgt turnover Low High Liquidity Stable Outlook We view liquidity as adequate Outlook incorporates assumption Cash at June 30, $33.8 billion Voluntary funding of pension Cash flow positive of continued profitability in N.A. and Auto FCF For a higher rating: Adjusted Debt to EBITDA of 2.5x, among other Evolving captive finance ops factors 138.

169 GM: Liquidity/Capital Structure Snapshot As of June 30, 2012 (unless otherwise indicated) ($ billions) Gross cash 33.8 Industrial debt + Pre-IPO Pfd 10.2 Net cash (debt) 23.6 Unfunded pension liability (Dec. 31, 2011) (25.4) Unfunded retiree medical liability (Dec. 31, 2011) (7.3) Consolidated book equity and non-controlling interest 36.1 Market capitalization (Sept. 26, 2012) 36.6 Equity allocated to GM Financial 4.2 Available Automotive Credit Lines 5.9 Source: GM & Bloomberg 139.

170 Company Focus: Chrysler Group LLC B+ / Stable Business Risk Weak Financial Risk Aggressive Existing Rating Leeway Key Strengths Reduced cost base and debt burden leading to profits and positive cash flow Fiat (BB-/Stable) ownership a positive for business risk Solid positions in certain segments (e.g. Jeep, pickups and minivan) N.A. recovery Key Weaknesses Still uncertain outlook for U.S. economy Profit mix very weighted to light trucks Limited geographic diversity Needs to improve consumer perception in U.S. after 2009 Low High Liquidity Stable Outlook We view liquidity as adequate Assumes profits in N.A. Cash at June 30, $12.1billion Fiat - Chrysler rating difference Cash flow positive will not increase No captive finance ops For higher rating: FCF $1 bil; Margins higher; Fiat rating and degree of separation is major factor 140.

171 Chrysler: Liquidity/Capital Structure Snapshot As of June 30, 2012 (unless otherwise indicated) ($ billions) Gross cash 12.1 Industrial debt 12.5 Net cash (debt) (0.4) Unfunded pension liability (Dec. 31, 2011) (6.5) Unfunded retiree medical liability (Dec. 21, 2011) (2.7) Consol. book equity and non-controlling int. (5.1) Market capitalization N.A. Equity allocated to Finance Op N.A. Available Automotive Credit Lines 1.3 Source: Chrysler 141.

172 U.S. Automakers Cost Base Now Supports Profitability Ford example: Profitable and selling fewer vehicles (2.8mm in 2006 vs.. 2.1mm in 2011) 142.

173 Supply Chain Risk: Takeaways From Events in Japan and Thailand did not affect our ratings or outlooks on any of the non-japanese automakers or suppliers. Some modest supply disruptions impaired some operations Some modest share gains for non-japanese automakers Market share losses occurred on less inventory Some share recovery is expected Supply chain disruptions need to be watched! No widespread changes to the supply chain yet? But automakers should have better visibility into supply chain More dual sourcing or qualifying new suppliers? Costly! 2012 example: CDT, a key element of PA-12 resin 143.

174 Automotive Finance Operations Finance remains a critical aspect of the vehicle sales process Retail and floor plan financing are most critical Lease financing is a more discretionary but important - competitive dynamic for some brands. Returning after lease residual performance and financing markets forced cutbacks Provides dedicated source of financing when banks and other lenders are less willing to make loans But the captive business model still carries significant risks: Dependence on external, largely wholesale sources of funding to carry out their day-to-day operations Potential for turbulent profitability based on credit losses or lease residuals Auto ABS Far more upgrades than downgrades 144.

175 Three Different Strategies For Financing Consumers + Dealers General Motors Relies on subprime lender General Motors Financial Co. (BB / Stable/--), former unit Ally Financial, and various banks GM sold its finance arm, GMAC LLC, several years ago Strategy is evolving; bidder for Ally Europe assets. We believe GM will continue to expand GMF Ford Assets $14.6 billion at June 30, Capital sufficient for some near term growth Ford Motor Credit is a traditional captive finance company; assets around $100 billion Chrysler FCE Bank PLC is BBB-/Pos We view Chrysler's lack of a captive finance unit as a strategic complication; no obvious impact from lack of a captive so far Synthetic approach: third-party financial institutions provide financing (including lease financing) for the majority of consumers and dealers We assume less bank interest for sub-prime and leasing segment than for prime customers 145.

176 Trends In Consumer Auto Loan ABS Standard & Poor s Ratings Services Observations 1) Increases in demand for both new and used vehicles and improved access to capital have helped auto finance companies continue to increase origination volumes 2) Credit tightening that started in the second half of 2008 has moderated, however, underwriting standards appear relatively robust compared to pre ) The subprime auto lending sector continues to enjoy a rebirth 4) Securitization performance remains strong 5) Upgrades continue to surpass downgrades by a wide margin 146.

177 147. U.S. Auto ABS Spreads Declined Auto ABS 'AAA' Spreads vs. Swaps AAA 1yr AAA 2yr AAA 3yr Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Source: Barclays Capital.

178 Auto Loan Upgrades/Downgrades by Class (Credit Only)* Upgrades Downgrades (YTD through end of June) 35 0 Total Does not include downgrades based on bond insurer ratings 148.

179 S&P Rated Auto Loan ABS Ratings Have Been Relatively Stable As of May 2012, 98.7% of the 900 ratings we issued on auto loan ABS since 1983, excluding bond insured transactions, have either remained AAA or have paid in full. We ve downgraded 1.3% of the AAA rated auto loan ABS and none of these have transitioned to default. 149.

180 U.S. Retail Auto Loan ABS Volume (Public and Private) Through 7/31/ Transactions - $40.45 Billion (In subprime was 4% & 6% respectively) Through 7/31/ Transactions - $30.60 Billion Note: Domestic Captives include Ally Bank. Source: Standard & Poor s. 150.

181 U.S. Subprime ABS Market Is Growing 151.

182 Standard & Poor s Ratings Services Auto Loan ABS Outlook We expect the trend of upgrades significantly outweighing downgrades to continue as many 2010 and 2011 vintage securitizations are performing better than expected Tighter underwriting standards, a continuously strong used vehicle market and an improved economy have helped fuel stronger performance. Underwriting trends and the economy will continue to impact future performance We expect 2012 retail auto loan ABS volume to increase approximately 15% to $56 billion due to an 12% increase in expected unit sales to 14.1 million units from 12.7 million in 2011 We expect the trend of new subprime auto finance companies securitizing to continue Threats to issuance are: double-dip recession, European debt crisis, and regulatory issues 152.

183 Summary U.S. Automakers Ford compared to GM: Many similarities; both are now profitable and generating cash in N.A. GM s adjusted debt burden > Ford. Net debt ~ more similar; optionality for cash allocation Ford traction w consumers in N.A. > GM GM s presence in Brazil and China > Ford GM s perceived challenges in Europe > Ford s Ford Motor Credit strategy well tested. GM s finance strategy evolving Ford s track record of management continuity and strategy execution > GM Biggest risks for the sector Economies in major markets falter or worse (U.S., China, EU) sending sales lower Volatility returns! Scenario: automakers lose production - sales discipline; incentives increase What to watch Pace of U.S. economic recovery; sales have been recovering in U.S. at 7+% unemployment SAAR level, dealer inventories, automaker production Financial policy allocation of cash to shareholders/growth/debt reduction 153.

184 North American Auto Suppliers 154.

185 North American-Based Auto Suppliers About 50 rated companies; diverse mix of OE suppliers, aftermarket companies, auto retailers, truck component makers and auto auction companies Majority of corporate credit ratings are B+ or lower Only five are rated BBB- or higher (AN, BWA, HAR, JCI, MGA) We believe most North American OE suppliers have adequate prospects for their ratings in 2012 and into 2013 Cost structure; Liquidity; Lesson learned from Economic uncertainty remains; historical challenges (production volatility) will return Auto retailers: different business model; well proven 155.

186 Global Auto Supplier Ranking (68 Public Ratings; October 1, 2012) Issuer Ranking: Global Auto Suppliers As of October 1, 2012 Rank Company Name Corporate credit rating Business Risk Financial Risk Liquidity 1 Robert Bosch GmbH AA /Stable/A 1+ Strong Minimal Exceptional 2 Denso Corp. AA /Negative/A 1+ Strong Minimal Exceptional 3 Toyota Industries Corp. AA /Negative/A 1+ Strong Intermediate Strong 4 Aisin Seiki Co. Ltd. A+/Negative/A 1 Strong Modest Strong 5 Knorr Bremse AG A /Stable/ Satisfactory Modest Strong 6 Magna International Inc. BBB+/Stable/ Satisfactory Modest Strong 7 Hyundai Mobis Company Limited BBB+/Stable/ Satisfactory Modest Adequate 8 Autoliv Inc. BBB+/Stable/A 2 Satisfactory Intermediate Strong 9 BorgWarner Inc. BBB+/Stable/ Satisfactory Intermediate Strong 10 Compagnie Generale des Etablissements Michelin S.C.A. BBB+/Stable/A 2 Satisfactory Intermediate Strong 11 Johnson Controls Inc. BBB+/Stable/A 2 Satisfactory Intermediate Adequate 12 Valeo S.A. BBB/Stable/A 2 Satisfactory Intermediate Strong 13 Harman International Industries Inc. BBB /Stable/ Satisfactory Intermediate Strong 14 AutoNation Inc. BBB /Stable/ Satisfactory Significant Adequate 15 TRW Automotive Inc. BB+/Positive/ Fair Intermediate Strong 16 LKQ Corporation BB+/Stable/ Fair Intermediate Strong 17 Delphi Automotive PLC BB+/Stable/ Fair Intermediate Adequate 18 GKN Holdings PLC BB+/Stable/ Satisfactory Significant Adequate 156.

187 Global Auto Supplier Ranking Continued Issuer Ranking: Global Auto Suppliers As of October 1, 2012 Rank Company Name Corporate credit rating Business Risk Financial Risk Liquidity 19 Lear Corp. BB/Stable/ Weak Intermediate Strong 20 Group 1 Automotive Inc. BB/Stable/ Fair Significant Adequate 21 Dana Holding Corp. BB/Stable/ Weak Significant Adequate 22 Tenneco Inc. BB/Stable/ Weak Significant Adequate 23 TMD Friction Group S.A. BB/Stable/ Weak Aggressive Adequate 24 Piaggio & C. SpA BB/Negative/ Fair Aggressive Adequate 25 Continental AG BB /Positive/B Satisfactory Highly Leveraged Adequate 26 Shiloh Industries Inc. BB /Stable/ Weak Significant Adequate 27 Stoneridge Inc. BB /Stable/ Weak Significant Adequate 28 Cooper Standard Automotive Inc. BB /Stable/ Weak Significant Adequate 29 Penske Automotive Group Inc. BB /Stable/ Fair Aggressive Adequate 30 Pinafore Holdings B.V. BB /Stable/ Fair Aggressive Adequate 31 Asbury Automotive Group Inc. BB /Stable/ Fair Aggressive Adequate 32 Sonic Automotive Inc. BB /Stable/ Fair Aggressive Adequate 33 The Goodyear Tire & Rubber Co. BB /Stable/ Fair Aggressive Adequate 34 Cooper Tire & Rubber Co. BB /Stable/ Weak Aggressive Adequate 35 American Axle & Manufacturing Holdings Inc. BB /Stable/ Weak Aggressive Adequate 36 China Zhengtong Auto Services Holding Ltd. BB /Stable/ Weak Aggressive Adequate 37 Baoxin Auto Group Ltd. BB /Stable/ Weak Aggressive Adequate 157.

188 Global Auto Supplier Ranking Continued Issuer Ranking: Global Auto Suppliers As of October 1, 2012 Rank Company Name Corporate credit rating Business Risk Financial Risk Liquidity 38 Allison Transmission Inc. B+/Stable/ Fair Aggressive Adequate 39 KAR Auction Services Inc. B+/Stable/ Fair Aggressive Adequate 40 Federal Mogul Corp. B+/Stable/ Weak Aggressive Adequate 41 Visteon Corp. B+/Stable/ Weak Aggressive Adequate 42 American Tire Distributors Inc. B+/Stable/ Weak Aggressive Adequate 43 Remy International Inc. B+/Stable/ Weak Aggressive Adequate 44 Tower International Inc. B+/Stable/ Weak Aggressive Adequate 45 Mark IV LLC B+/Stable/ Weak Aggressive Adequate 46 Metaldyne LLC B+/Stable/ Weak Aggressive Adequate 47 Pittsburgh Glass Works LLC B+/Stable/ Weak Aggressive Adequate 48 FleetPride Corp. B+/Stable/ Weak Aggressive Adequate 49 Grede Holdings LLC B+/Stable/ Weak Aggressive Adequate 50 HHI Holdings LLC B+/Stable/ Weak Aggressive Adequate 51 Wabash National Corp. B+/Stable/ Weak Aggressive Adequate 52 Waupaca Foundry Inc. B+/Stable/ Weak Aggressive Adequate 53 Schaeffler Group B+/Stable/ Satisfactory Highly Leveraged Adequate 54 International Automotive Components Group, S.A. B+/Stable/ Vulnerable Aggressive Adequate 55 Hyva Global B.V. B+/Negative/ Weak Aggressive Adequate 56 PT Gajah Tunggal Tbk. B/Positive/ Weak Highly Leveraged Adequate 57 Europcar Groupe S.A. B/Stable/ Fair Highly Leveraged Adequate 58 Meritor Inc. B/Stable/ Weak Highly Leveraged Adequate 59 Transtar Holding Company B/Stable/ Weak Highly Leveraged Adequate 60 August Cayman Intermediate Holdco, Inc B/Stable/ Weak Highly Leveraged Adequate 61 Accuride Corp. B/Stable/ Weak Highly Leveraged Adequate 62 Affinia Group Intermediate Holdings Inc. B/Stable/ Weak Highly Leveraged Adequate 63 Commercial Vehicle Group Inc. B/Stable/ Vulnerable Aggressive Adequate 64 Autoparts Holdings Limited B/Stable/ Fair Highly Leveraged Less than adequate 65 UCI Holdings Ltd. B/Negative/ Fair Highly Leveraged Adequate 66 Exide Technologies B/Negative/ Vulnerable Aggressive Adequate 67 Diversified Machine Inc. B /Developing/ Vulnerable Highly Leveraged Less than adequate A.T.U. Auto Teile Unger Holding GmbH B /Negative/ Weak Highly Leveraged Less than adequate

189 Global Auto Supplier Ratings Distribution: Majority Are Spec Grade 159.

190 Global Auto Supplier Outlook Distribution: Majority Are Stable 160.

191 Auto Suppliers/Retailers Business & Financial Risk Profile Business And Financial Risk Profile Matrix Business Risk Profile Financial Risk Profile Minimal Modest Intermediate Significant Aggressive Highly Leveraged Excellent Strong Bosch, Aisin Seiki Toyota Denso Industries Satisfactory -- Knorr- Bremse, Hyundai Mobis, Magna JCI, Autoliv, Michelin, BorgWarner, Valeo, Harman Autonation, GKN -- Continental, Schaeffler AG Fair TRW, Delphi, LKQ Group 1 Piaggio, Goodyear Tire, Sonic, Pinafore, Asbury, Penske, Allison, KAR Autoparts Holdings, UCI, Europcar Weak Lear Tenneco, Dana, Shiloh, Stoneridge, Cooper- Standard Vulnerable International Automotive Components, Commercial Vehicle, Exide TMD, Axle, Visteon, Fed-Mog, Meritor, PT Gajah Tunggal, American Tire, HHI, Mark IV, Accuride, Affinia, August Metaldyne, Pittsburgh Glass, Cayman, A.T.U Auto-Teile Remy, Tower, FleetPride, Unger Handels, Transtar Grede, Waupaca, Wabash, Hyva, China Zhengtong, Baoxin, Cooper Tire Diversified Machine 161.

192 What If? 2013 Double-Dip Scenario For 11 Companies We used aggregate data for 11 OE suppliers Impact on individual companies would vary Global revenues assumed to decline 10% - 15% Exceeds our previous recession forecast of 7% drop in U.S. sales to 11.7 million. Our recession forecast is now 12.9 million in 2013 Margins assumed to decline basis points After sales drop in 2013, sales are assumed to recover in 2014 Rating impact would vary by company No impact Negative outlook (1/3 chance of downgrade) Downgrade Recovery in 2014 is important assumption Separately - European down scenario also recently reviewed 162.

193 Supplier Margins Flattening Out 163.

194 Double-Dip Raises Leverage By About One Turn in Aggregate 164.

195 Debt Maturities In 2014 Rise (All U.S. Suppliers) 165.

196 Debt Maturities In 2014 Rise (All U.S. Suppliers) As of Dec. 31, 2011 (updated for refinancing completed by Aug. 31, 2012) 166.

197 Selected 5 Year CDS Spreads Over Last Two Years (source: Bloomberg) 167.

198 Is Credit Quality Flattening? Tracking Suppliers in Upgrades (mid-2009 YE 2009) from crisis lows driven by improved liquidity Another round of upgrades ( ) reflected evidence that profitability can be sustained Fewer upgrades in likely Business Risk is a key focus Navigating Europe For we are watching: Pace of economic recovery or decline by region SAAR level, Dealer inventories, Automaker production Commodity cost exposure and recovery power Profitability margin compression? Financial Policy Lots of cash, but no quiet period to have spent it. Earthquake supply challenges segued into resurgence of sovereign debt uncertainty and a weakening economic outlook Capital allocation possibilities: shareholder friendly actions (outright sale/recap/dividend reinstatement); acquisitions; maintain excess liquidity 168.

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