roland berger global automotive supplier study 20110911

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September 2011

Short version

Global Automotive Supplier Study

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2Global Automotive Supplier Study 2011_SHORT_final.pptx

Management summary

> Driven by booming car sales, the global automotive supplier industry achieved record profitability in 2010 (6.2% EBIT margin on global average)

> However, financial performance of suppliers differs heavily depending on headquarter region, company size and product focus.

– European suppliers achieved an EBIT margin of almost 7%, while North American and Japanese suppliers remain below global average

– Small and medium-sized suppliers have significantly improved their profitability compared to pre-crisis levels

– Chassis focused suppliers achieved the highest profitability, while Interior and Electric suppliers remain below average

> Revenue outlooks for 2011 full-year and for 2012 are relatively stable. Also profitability is expected to stay at a reasonable level, but drop below 6% EBIT margin on a global average

> Besides keeping profitability at a high level and ensuring real global delivery capability, suppliers need to put an even stronger focus on product innovation. Only suppliers who can differentiate themselves from competition via superior product functionality will be able to sustainably achieve EBIT margins in the range of 6% and above. Most other suppliers will get further pushed into the commodity corner, where their profit will be locked-in at a 3-4% level

Source: Roland Berger/Lazard

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Key supplier performance indicators 2000-2010 (n = ~600 suppliers)

Revenue growth [2000=100] EBIT margin1) [%] ROCE2) [%]

2000 2002 2004 2006 2008 2010

156

129

154

162

148

136

125

114

108103

100

2000 2002 2004 2006 2008 2010

1.61.1

5.7

4.75.15.2

4.74.2

3.1

5.3

6.2

2000 2002 2004 2006 2008 2010

2.52.0

10.1

8.18.8

9.3

8.3

7.2

5.0

8.4

11.1

1) EBIT after restructuring items 2) EBIT after restructuring items/capital employed

Driven by booming car sales, the global automotive supplier industry achieved record profitability in 2010

Source: Company information; Roland Berger/Lazard

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However, financial performance of suppliers differs heavily depending on region, company size and product focus

1 2 3> European suppliers improved

average EBIT margin to ~7%

> Chinese and Korean suppliers achieved double-digit EBITmargins

> Nafta suppliers improved, but still have the lowest profitability

> Japanese suppliers also below average

> Small/mid-sized suppliers (below 1bn EUR revenues) achieved highest profitability

> Suppliers with >10 bn EUR revenues show lowest profitability levels

> Chassis and Exterior focused suppliers with strongest margin improvements

> Powertrain and Tire suppliers still above average

> Interior and Electric/Infotainment suppliers significantly below average around the world

REGION COMPANY SIZE PRODUCT FOCUS


Profitability trends in the global automotive supplier industry

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European suppliers achieved an EBIT margin of almost 7%, while North American and Japanese suppliers remain below global average

Supplier EBIT profitability by headquarter region 2010 vs. 2007

EBIT1)

margin[%]

Change 2010 vs. 2007 [%-pts.]

Europe NAFTA Japan China Korea Rest of Asia WORLD

+3.0 +0.4 +0.5-0.4 +2.4+0.4 +1.0

6.96.5

2007 2010

4.33.3

2007 2010

5.66.0

2007 2010

11.5

9.1

2007 2010

8.8

5.8

2007 2010

9.99.5

2007 2010

6.25.7

2007 2010

1 REGION

1) EBIT after restructuring items


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Small and medium-sized suppliers have significantly improved their profitability compared to pre-crisis levels

Supplier EBIT profitability by company size 2010 vs. 2007

<0.5 bn 0.5-1.0 bn 1.0-2.5 bn 2.5-5.0 bn 5.0-10.0 bn >10.0 bn ALL

+1.2 0.0 +0.5+0.6 +0.6+1.1 +2.2Change 2010 vs. 2007 [%-pts.]

2007 2010 2007 2010 2007 2010 2007 2010 2007 2010 2007 2010 2007 2010

2 SIZE


EBIT1)

margin[%]

6.25.7

6.2

5.1

7.3

5.1

6.55.9 6.1

5.5

6.7

5.55.95.9


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Chassis focused suppliers achieved the highest profitability, while Interior and Electric suppliers remain below average

Change 2010 vs. 2007 [%-pts.]

2007 2010 2007 2010 2007 2010 2007 2010 2007 2010 2007 2010 2007 2010


EBIT1)

margin[%]

6.25.7

6.66.9

7.8

6.77.4

5.1

6.66.7

5.04.4

4.85.3

3 PRODUCT FOCUS

Supplier EBIT profitability by product focus 2010 vs. 2007

Electric/info.Powertrain Chassis Exterior Tires Interior ALL

-0.1 +0.6 +0.5+1.1 +2.3 -0.5-0.3


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Global supplier performance 2000-20101)

Revenue growth [2000=100] ROCE [%]

6.3

2008

-5.6

8.3

2007

2.9

15.2

2006

-0.2

12.9

2005

2.3

13.0

2004

3.7

14.0

-1.5

4.1

13.6

2002

4.3

13.1

2001 2010

2.7

17.1

2009

0.8

9.8

2000

6.7

11.7

2003

255

239247

193

120106

100

218

166

74

99112

10499102999694 90

2008

207

2009 20102006200520042003

136

200220012000 2007

TOP

LOW

TOP

LOW

Industry average

The 2008/2009 crisis has further broadened the gap between Top and Low performers in the supplier industry

1) Top = Top quartile, Low = Bottom quartile


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9Global Automotive Supplier Study 2011_SHORT_final.pptxSource: Company information; Roland Berger/Lazard

156

129

154

162

148

136

125

114108

103100

01 02 03 04 05

~160

0600 07 08 09 10 11

5.3

060504030201

3.1

6.2

1.61.1

5.75.15.2

4.74.2

4.7~5.5

00 1110090807

2.0

10.1

8.18.8

9.38.3

09 1110

11.1~10

2.5

08070605

7.2

5.0

8.4

00 01 02 03 04

1) EBIT after restructuring items 2) EBIT after restructuring items/capital employed

Our forecast for 2011 full-year financial performance: global average profitability is expected to drop below 6% EBIT

Key supplier performance indicators 2000-2011e

> Still very good sales in BRIC markets> Stable mature markets

> Cool-down in China> OEM price pressure back to pre-crisis levels> Increased raw material prices

Negative drivers:

Positive drivers:

Revenue growth [2000=100] EBIT margin1) [%] ROCE2) [%]

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The general industry framework for automotive suppliers will remain challenging


Trends shaping the supplier industry in the future

Car buyers

Regional shift

Price sensitivity

Legislation

CO2 reduction

Emission reduction

Safety regulations

OEMs

Localization of production (to sales markets)

Overcapacity/ restructuring (triad)

Increased technological complexity

Raw material markets

Provider consolidation

Rising demand (from other industries)

Capital markets

High volatility of capital markets

Loss of confidenceof investors

SUPPLIERS

Further increased MARGIN

PRESSURE and stronger need for differentiation via

INNOVATION

Reduced price level

Additional cost

Increasing prices

Increasing capital costsNew opportunities

Additional cost saving measures

Increased price pressure

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This presentation was prepared by Lazard & Co. GmbH ("Lazard") and Roland Berger Strategy Consultants ("RBSC") exclusively for the

benefit and internal use of our clients and solely as a basis for discussion of certain topics related to the automotive supplier industry

described herein. This presentation is strictly confidential and may not be reproduced, summarized or disclosed, in whole or in part,

without the prior written authorization both of Lazard and RBSC, and by accepting this presentation you hereby agree to be bound by the

restrictions contained herein.

This presentation is based on publicly available information which have not been independently verified by Lazard or RBSC. Any

estimates and projections contained herein involve significant elements of subjective judgment and analysis, which may or may not be

correct. None of Lazard, any of its affiliates, or any of its direct or indirect shareholders, or any of its or their respective members,

employees or agents nor RBSC provide any guarantee or warranty (express or implied) or assumes any responsibility with respect to the

authenticity, origin, validity, accuracy or completeness of the information and data contained herein or assumes any obligation for

damages, losses or costs (including, without limitation, any direct or consequential losses) resulting from any errors or omissions in this

presentation.

The economic valuations contained in this presentation are necessarily based on current market conditions, which may change

significantly over a short period of time. Changes and events occurring after the date hereof may, therefore, affect the validity of the

conclusions contained in this presentation and nor Lazard nor RBSC assume any obligation to update and/or revise this presentation or

the information and data upon which it has been based.

roland berger global automotive supplier study 20110911

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