Global Powertrain Analysis Engine Transmission Drivetrain Trends and

Global Powertrain Analysis Engine, Transmission, & Drivetrain Trends and Outlook September 16, 2015 Brian Maxim Vice President, Global Powertrain Forecasting Auto. Forecast Solutions

Global Engine & Transmission Analysis 2 Auto. Forecast Solutions

Global Engine Volumes (By Major Configuration) Top 4 Engine Configurations 90 000 Volume (000) 80 000 70 000 60 000 I 4 50 000 I 3 40 000 V 6 30 000 V 8 20 000 10 000 22 20 20 21 20 20 19 20 18 20 17 20 16 20 15 20 14 20 13 20 12 20 11 20 10 20 20 09 08 20 20 07 06 20 05 20 04 20 03 20 20 02 0 Calendar Year I 3 Total I 3 By Region Calendar Year Auto. Forecast Solutions 20 20 Calendar Year 22 WE 20 22 20 21 20 20 20 19 20 18 20 17 20 16 20 15 20 20 14 0 SA 18 I 3 NA 20 4 000 2 000 ME/A 16 6 000 EE 20 10 000 8 000 AP 14 198% Growth 20 14 000 Volume (000) 12 000 Volume (000) 16 000 10 000 9 000 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 3

Global Engine Trends • Programs gravitating down similar paths • Smaller engine programs looking fairly similar • 2. 0 L I 4 GDI Turbo • • Still replacing smaller V 6 s Offered as upgrade to non-turbo 2. 0 L • 1. 5 L GDI Turbo • • Some are 1. 4 L or 1. 6 L Replacing larger I 4 s • 1. 0 L GDI Turbo • Replacing medium and small I 3/I 4 s • 3. 0 L 6 -cylinder with GDI • 3. 0 L is a global approach • Fiat Chrysler (FCA), GM and Ford differ slightly • V 8 s diverge • Reserved more for sports cars and truck based vehicles • • Non-NA assemblers choosing GDI NA assemblers going different paths, embracing different technologies Auto. Forecast Solutions 4

Accelerated Global GDI Adoption Turbocharged GDI Adoption 9 000 8 000 AP Volume (000) 7 000 EE 6 000 ME/A 5 000 NA 4 000 SA 3 000 WE 2 000 1 000 22 20 21 20 20 20 19 20 18 Calendar Year GDI Adoption 25 000 20 17 20 16 20 20 15 0 Gasoline Turbo Adoption 12 000 20 000 Volume (000) 15 000 AP EE ME/A NA SA WE 10 000 5 000 0 10 000 Volume (000) 8 000 AP EE ME/A NA SA WE 6 000 4 000 2 000 Auto. Forecast Solutions Calendar Year 22 20 21 20 19 20 20 20 18 20 17 20 15 16 20 Calendar Year 20 22 20 21 20 20 20 19 20 18 20 17 20 16 20 20 15 0 5

Light Vehicle Diesel Volume Analysis Global Diesel 25 000 Most growth from Asia • • • Volume (000) 20 000 WE 15 000 SA India and China lead the way West Europe stabilizing Mild growth in North America NA 10 000 ME/A EE 5 000 AP 20 22 600 400 200 Calendar Year Auto. Forecast Solutions 22 20 21 20 20 20 19 20 20 18 0 20 Fuel and purchase price cost pressures still a factor 800 17 Small diesels on full-sized pickups Some car offerings increasing slightly 1 200 Volume (000) 1 000 20 • • 1 400 16 North America adding applications North America 20 Calendar Year 15 20 21 20 20 20 19 20 18 20 17 20 16 20 15 0 6

Light Vehicle Hybrid Volume Analysis Global Hybrids 4 500 Global growth expected 4 000 • Volume (000) 3 500 WE 3 000 • • • NA 2 500 EE 2 000 AP 1 500 China may finally be picking up some steam Many new hybrids planned Toyota is clear leader Ford planning significant increases Regional volumes are based on vehicle production 1 000 500 • Many hybrids are exported from OEM’s home market 20 22 20 21 20 20 20 19 20 18 20 17 20 16 20 15 0 North America Calendar Year 1 200 Auto. Forecast Solutions 200 Calendar Year 22 20 21 20 20 20 19 20 18 20 20 17 0 16 Recent significant pressure from low fuel prices and fickle consumers 400 20 Attempting to meet future fuel economy related mandates 600 15 • 1 000 Volume (000) 800 20 North America is planning to add applications and volume 7

Light Vehicle EV Volume Analysis Global EVs 600 Global growth expected • 400 WE 300 ME/A EE 200 China may finally be picking up some steam Many high-end sports car models being added All major OEMs adding applications and volume • NA • AP 100 20 22 North America Calendar Year Auto. Forecast Solutions Calendar Year 22 20 21 20 20 20 19 20 18 17 20 16 Low fuel prices hurt budget market vehicles 20 Tesla and Renault/Nissan lead the way Smaller volumes from traditional manufacturers 15 • • 20 Strong North American growth 200 180 160 Volume (000) 140 120 100 80 60 40 20 20 21 20 20 20 19 20 18 20 17 20 16 0 20 15 Volume (000) 500 8

North American Engine Volumes (By Major Configuration) Top 3 Engine Configurations 12 000 Volume (000) 10 000 8 000 I 4 V 6 6 000 V 8 4 000 22 20 20 21 20 20 19 20 18 20 17 20 16 20 15 20 14 20 13 20 12 20 20 11 10 20 20 09 08 20 20 07 06 20 05 20 04 20 03 20 20 02 0 Calendar Year H 4 Roughly 1/3 of global total 350 800 700 300 Volume (000) 247% Growth 200 600 Volume (000) 500 742% Growth 400 150 Calendar Year Auto. Forecast Solutions Calendar Year 22 20 21 20 20 20 19 20 18 20 17 20 16 20 14 20 22 20 21 20 20 20 19 20 20 20 18 0 17 0 16 100 15 50 14 200 15 300 100 20 250 I 3 9

North American Engine Trends • OEMs developing similar programs • Smaller engine programs looking fairly similar • 2. 0 L I 4 GDI Turbo • 1. 4 L -1. 5 L GDI Turbo • Replacing larger I 4 s • 3. 6 L V 6 s for FCA and GM • Ford taking a more fractured approach • • • 2. 7 L V 6 Eco. Boost 3. 3 L V 6 non-Eco. Boost 3. 5 L V 6 sticks around • V 8 s diverge • GM keeping OHV, but utilizing add-on technologies and reducing friction • Fiat-Chrysler keeping OHV but utilizing add-on technologies • Ford using more expensive OHC technologies 10 Auto. Forecast Solutions

Global Transmission Trends By Type Manuals still dominate • Global Share by Type 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Man Auto DCT Calendar Year Auto. Forecast Solutions 22 20 21 20 20 20 19 20 18 20 17 20 20 20 16 CVT 15 Global Share • Europe and developing markets pushing volume DCTs and CVTs gaining ground 11

Global Automatic Adoption (Traditional Automatics) Regional Consumption Volumes Influenced by North America and Europe 14 000 12 000 Volume (000) 10 000 AP • • EE 8 000 ME/A 6 000 NA SA 4 000 • WE 2 000 Asia Volumes mostly from China North America prefers the traditional automatic Europe prefers manuals, keeping volumes low 22 20 21 20 20 20 19 20 18 20 17 20 16 20 20 15 0 Calendar Year Automatic Share In Each Region 80% 60% NA 10% SA 0% WE Auto. Forecast Solutions 20 20 Calendar Year 22 20% 21 ME/A 20 30% 19 EE 18 40% 17 AP 16 50% 15 Regional Share 70% 12

Global CVT Adoption 12 000 Regional Consumption Volumes Strong Japanese Influence • 10 000 Volume (000) 8 000 AP • • EE 6 000 ME/A NA 4 000 SA 2 000 Asia volumes mostly Japan with some in China NA a result of Japan Other regions prefer DCTs and automatics WE 22 20 21 20 20 20 19 20 18 20 17 20 16 20 20 15 0 Calendar Year CVT Share In Each Region 25% AP 20% EE 15% ME/A 10% NA Calendar Year Auto. Forecast Solutions 22 20 21 20 20 19 WE 18 0% 17 SA 16 5% 15 Regional Share 30% 13

Global DCT Adoption Regional Consumption Volumes 12 000 Strong European Influence 10 000 • • AP Volume (000) 8 000 EE 6 000 ME/A 4 000 SA • NA WE 2 000 Asia Volumes mostly from China Europe volumes fairly low due to preferring manuals North America influenced some by Europe 22 20 21 20 20 20 19 20 18 20 17 20 16 20 20 15 0 Calendar Year DCT Share In Each Region 30% 25% AP SA 0% WE Auto. Forecast Solutions 20 20 Calendar Year 22 5% 21 NA 20 10% 19 ME/A 18 15% 17 EE 16 20% 15 Regional Share 35% 14

North America Transmission Trends NA Transmissions - 2005 12 000 Volume 10 000(000) CVT Auto Transmission Volume by Type 14 000 DCT Auto 8 000 CVT 6 000 DCT 4 000 Man 20 22 20 21 20 20 20 19 20 18 20 17 20 16 20 15 0 Calendar Year Automatics Breakdown 14 000 NA Automatics - 2005 A 4 A 5 Volume (000) 12 000 A 10 10 000 A 9 8 000 A 8 6 000 A 7 A 6 4 000 A 5 2 000 Auto. Forecast Solutions Calendar Year 22 20 21 20 20 20 19 20 18 20 17 20 16 20 A 7 0 15 A 6 20 A 3 A 4 15

Recent Powertrain Developments • Evolving transmission programs • GM/Ford FWD transmission agreement • Larger 9 -speed to be replaced by an 8 -speed • Ford to add small 8 -speed to lineup • • • To be built in 3 plants around the world Will replace some medium 9 -speeds, at lower end Primarily replacing automatic 6 -speeds and some DCTs • CVT programs for Ford and GM coming back • Both are planning CVTs again, in lower volumes • Ford applications are for non-North American vehicles • Magna acquisition of Getrag • Will greatly expand Magna drivetrain portfolio • Will lead to closer relationship with Ford through Getrag/Ford JVs • Ford to offer small diesel in F-150 • 3. 0 L V 6 to combat current Ram and future GM offerings 16 Auto. Forecast Solutions

Recent Powertrain Developments (cont. ) • Falling fuel prices – fuel economy less important • Consumers choosing larger engines again Small diesel programs being revived for pickups • Choosing different vehicles with larger engines • Choosing larger engines within the vehicle category • Hybrid and EV growth slowing • More difficult to justify added costs and/or compromises China is bucking the trend and growing • Monthly US Fuel Economy, Weighted by New Vehicle Sales* 26, 0 24, 0 22, 0 Auto. Forecast Solutions 5 й 1 15 ма в- 14 н- се Sales of fuel efficient vehicles in North America are driven more by government incentives and mandates than by consumer preferences ян 4 й 1 14 ма в- 13 ян н- 3 се й 1 13 ма в- 12 ян 2 нсе й 1 12 ма в- 11 ян н- 1 се й 1 11 ма в- 10 ян н- 0 се й 1 10 ма в- 09 ян 9 нсе й 0 09 ма в- 08 ян н- 8 се й 0 ма в- 08 20, 0 ян MPG 28, 0 * From the Transportation Research Institute, University of Michigan 17

Global Drivetrain Analysis Systems and Market Trends 18 Auto. Forecast Solutions

4 WD/AWD Systems – Brief Overview • There are three basic 4 WD/AWD systems • Transfer Cases • An additional “gearbox” in conjunction with the transmission which allows for the selection of neutral and at least one gear ratio, but usually two • • Ford F 150 Jeep Grand Cherokee • Torque Adjustable Couplings • Allows for sending mechanical forces to the other set of tires not normally powered by the transmission • • • BMW X-Drive Chevrolet Equinox Subaru Outback • Electronic AWD • Two or four wheels of the vehicles are powered by electric motors • • Toyota Highlander Hybrid Tesla Model X Auto. Forecast Solutions 19

North American AWD/4 WD Volumes (By Drive Type) AWD/4 WD Volume by Type 4 500 4 000 3 500 (000) Volume 3 000 2 500 2 000 1 500 AWD 4 WD AWD E 22 20 21 20 20 20 19 20 18 20 17 20 16 20 20 15 1 000 500 0 Calendar Year Electronic AWD Calendar Year Auto. Forecast Solutions Calendar Year 22 20 21 20 20 20 19 20 20 22 20 21 20 20 20 18 17 19 20 20 16 20 20 15 15 0% 18 AWD E 5% 20 4 WD Volvo effect 17 AWD 10% 16 15% 100 90 Volume (000) 80 70 60 50 40 30 20 Tesla effect 10 0 20 20% 20 Share of Total 25% 20 NA Light Vehicle Production 20

European AWD/4 WD Volumes (By Drive Type) AWD/4 WD Volume by Type 3 500 3 000 Volume (000) 2 500 2 000 AWD 1 500 4 WD 1 000 AWD E 500 22 20 21 20 20 20 19 20 18 20 17 20 16 20 20 15 0 Calendar Year European Light Vehicle Production 70 Porsche Pajun 60 effect Volume (000) 50 14% 12% 10% 40 8% AWD 6% 4 WD 4% AWD E 2% 30 20 10 Auto. Forecast Solutions Calendar Year 22 20 21 20 20 20 19 20 18 20 17 20 16 20 20 22 20 21 20 20 20 18 17 19 20 20 16 20 20 15 Calendar Year 15 0 0% 20 Share of Vehicle Total 16% Electronic AWD 21

European Market Trends • Mild growth of AWD/4 WD • As vehicle prices rise, more new vehicle purchases have a greater amount of options, including AWD/4 WD • Consumers looking to purchase less expensive products moving toward the used car market • Growth in “CUVs” not pushing AWD growth as much • Most European CUVs are just normal hatchbacks that have been raised higher • Most of these vehicles do not offer AWD systems • European consumers do not purchase vehicles with AWD/4 WD systems as much as other regions • For example, UK consumers do not opt AWD/4 WD systems 22 Auto. Forecast Solutions

Full Size Truck Comparison (Best gasoline engine fuel economy) Ram Pickup (Base & Fuel Economy) Ford F-150 (Fuel Economy) Chevrolet Silverado (Base & Fuel Economy) Ford F-150 (Base) 4, 503 4, 168 4, 521 4, 050 209. 0/79. 4/74. 6 209. 3/79. 9/75. 5 205. 6/80. 0/74. 0 209. 3/79. 9/75. 5 3. 6 L V 6 DOHC 2. 7 L V 6 DOHC Twin. Turbo 4. 3 L V 6 OHV 3. 5 L V 6 DOHC 8 -Speed Automatic 6 -Speed Automatic 305@6400 269@4175 325@5750 375@3000 285@5300 305@3900 282@6250 253@4250 GVWR (lbs. ) 6, 025 6, 010 6, 500 6, 010 Towing Capacity (lbs. ) 4, 970 7, 600 6, 100 5, 100 Payload (lbs. ) 1, 522 1, 800 1, 950 1, 910 Fuel Economy (mpg) (city/highway/combined) 17/25/20 19/26/22 18/24/20 18/25/20 Cost (MSRP) $25, 660 $26, 825 $26, 520 $26, 030 Curb Weight (lbs. ) Length/Width/Height (in. ) Engine Transmission HP (SAE net) Torque (lb. -ft. ) 2015 MY, Standard cab, 6. 5 foot box, 2 WD, width without mirrors Auto. Forecast Solutions 23

Powertrain Relationships 24 Auto. Forecast Solutions

OEM Agreements and Outsourcing Continues • Significant agreements for diesels • Ford heavily relies on PSA designs • Buys some from PSA, but builds most themselves • GM uses several different diesel designs • Builds and uses designs from Isuzu, VM Motori and FCA around the world • FCA sources diesels from Cummins and VM Motori for Ram Pickups • Gasoline engine designs • GM’s L 850 I 4 engines • The “L” stands for Lotus, the primary designer • GM has greatly refined the engine since • Hyundai’s Zeta (Theta) I 4 family • Used by FCA and Mitsubishi • Aston Martin will use Mercedes engines • Currently uses Ford based engines – from previous ownership • Nissan building and using Mercedes 2. 0 L Turbo I 4 • Built in Decherd for MB and Nissan in North America Auto. Forecast Solutions 25

OEM Agreements and Outsourcing Continues (Cont. ) • Transmission agreements • Significant cooperation between Ford and GM in North America • GM is primary designer of FWD transmissions • Ford makes adjustments to give them a Ford flavor • • • Started with the current mid and large A 6 s Will extend to future A 8 s and A 9 s Ford will produce them in their own plants • Ford is primary designer of RWD transmissions • GM will make adjustments to give them a GM flavor • • Includes 10 -speed units for trucks and large SUVs GM will produce them in their own plants • FCA heavily relying on ZF • FCA licensed designs and is producing them in their own plants • • 8 -speed RWD automatics for trucks 9 -speed FWD automatics for medium and larger FWD vehicles • Most recently Magna’s purchase of Getrag • Highlights how transmissions are becoming a huge area of growth • Significant experience and volume of DCTs Auto. Forecast Solutions 26

Mandates 27 Auto. Forecast Solutions

Can OEMs meet future MPG Targets? • Misconceptions of the 54. 5 mpg target for the 2025 MY • The 2025 MY target has not been mandated • A mid-term meeting in 2017 is when the EPA and NHTSA will determine what the target will be for 2025 MY and the schedule to get there • The 54. 5 mpg target is not a CAFE target • Future fuel economy targets are not directly mandated • OEMs must meet various emissions targets, including a CO 2 target which effectively equates to fuel economy (2025 = 163 grams/mile) • All light vehicles do not have to meet the 54. 5 mpg target • Actual CO 2 targets are based on footprint (shadow) of each vehicle • • Larger vehicles have an easier target than smaller vehicles Different targets exist for cars (143 g/mi) and light trucks (203 g/mi) • Each OEM does not have to meet the 54. 5 mpg target • Targets are determined by individual product lines and their footprints • • No pressure to build small cars to offset fuel economy of large cars No pressure to build cars to offset fuel economy of pickups and SUVs Auto. Forecast Solutions 28

Can OEMs meet future MPG Targets? (Cont. ) • What are the hard targets? • 2017 MY – 2021 MY have been mandated • 2022 MY – 2025 MY have not been mandated • Uses the CO 2 Model 2017 MY 2018 MY 2019 MY 2020 MY 2021 MY 2022 MY 2023 MY 2024 MY 2025 MY Cars (g/mi) 212 202 191 182 172 164 157 150 143 Light Trucks (g/mi) 295 285 277 269 249 237 225 214 203 Combined - Cars & Light Trucks (g/mi) 243 232 222 213 199 190 180 171 163 MPG Equivalent for Combined 36. 6 38. 3 40. 0 41. 7 44. 7 46. 8 49. 4 52. 0 54. 5 • Credit Banking and Trading (same as 2012 MY-2016 MY rules) • Credits may be carried for 3 years to offset a deficit in a previous year • Credits may be banked for 5 years for future offsets • Credits may be traded between companies Auto. Forecast Solutions 29

Can OEMs meet future MPG Targets? (Cont. ) • Credits for implementing new technologies • Credits can be earned to help achieve targets • Multiplier concept adopted for alternative powered vehicles • Each vehicle is multiplied by a factor in meeting emissions targets for the 2017 MY to 2021 MY timeframe – 2022 MY+ uses no multipliers • • EVs and FCVs (2. 0 in 2017 MY going to 1. 5 in 2021 MY) PHEVs and CNG (1. 6 in 2017 MY going to 1. 3 in 2021 MY) • Full-Size Pickup Hybridization Credits • • Mild HEV - 10 g/mi credit for each vehicle, if used on at least 20% in 2017 MY full -size pickups, ramping up to 80% in 2021 MY Strong HEV – 20 g/mi credit for each vehicle, if used on at least 10% of pickups • Air Conditioning credits • • Using systems that reduce tailpipe CO 2 through efficiency improvements Using refrigerants with much less hydrofluorocarbons (HFCs) • Off-Cycle credits (efficiency gains not reflected in test cycles) • • Solar panels on hybrids Start/stop systems Active aerodynamics Others – If OEM can provide proof that gains exist Auto. Forecast Solutions 30

Future Powertrain Technologies • Areas of significant promise • Compression ignition direct injected gasoline engines (CIDI) • Currently considered the holy grail for gasoline internal combustion • Mazda claims release of Sky. Active generation 2 around 2020 with CIDI • Electronic Valvetrain • Has been in development for a fairly long time • Difficulty meeting velocity of operation requirements • Innovative concepts • New battery chemistry for EVs and hybrids • Increasing power density and shortening recharge times • More a question of when, rather than if • Improved catalysts for better emissions • Greatly helping with cold start emissions • Resurgence of 2 -stroke • Possible revival using new technologies not previously available OEMS are continually going to push on their supply base to help meet current and potential future mandates and differentiate them in the market place. Auto. Forecast Solutions 31

Global Powertrain Analysis Engine, Transmission, & Drivetrain Trends and Outlook September 16, 2015 Brian Maxim Vice President, Global Powertrain Forecasting Auto. Forecast Solutions