Automotive News Europe SupplierBusiness Fourth Annual OEM-Supplier Relations Study Automotive News Europe Congress Turin, May 20th 2008

Overview Study conducted April – May 2008 Surveyed senior sales and marketing executives at suppliers Asked to rate OEMs on a variety of topics, scoring on a five-point scale We surveyed a range of representative suppliers, asking them to rate OEMs on a variety of different attributes. For example, the suppliers were asked how attractive it is for them to work for various OEMs. A rating of very attractive or very unattractive earned a score of 1 or 5 respectively, whereas a neutral rating earned a score of 3. Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Respondent Demographics Headquarters Location Fourth annual OEM-Supplier Relations Study 134 suppliers responded Company Size This has been the most successful survey in terms of the number of respondents. The survey has grown each year. Remember respondents can click multiple options for sector an this is often the case. That is why the total is greater than 134. Respondents by sector Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Choice of OEM “How important is it for the long-term success of your business to choose the right OEMs?” “Is this becoming more or less important?” Most suppliers think OEM choice is important / very important Supplier opinion remained fairly stable over the last 3 years Most suppliers expect this to become more important Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Choice of program “How important is it for the long-term success of your business to choose the right program?” “Is this becoming more or less important?” Similar to choice of OEM, most suppliers think this is important / very important Most suppliers expect this to become more important Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

OEM Attractiveness 2006 2008 Toyota and BMW maintain top positions Rank OEM % of leader 1st BMW 100 2nd Toyota 94 3rd Audi 71 4th Mercedes-Benz 62 5th Honda 55 Rank OEM % of leader 1st Toyota 100 2nd BMW 95 3rd Audi 80 4th Mercedes-Benz 78 5th Honda 72 Toyota and BMW maintain top positions But the gap is closing “Which carmakers are most attractive to work with?” Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

OEM Attractiveness II Increasing attractiveness “Which carmakers are most attractive to work with?” Increasing attractiveness The bars in red are to help you move between the bullet points and the relevant data on the graph. I have put in speech bubbles on the slides, these show the questions the suppliers were asked Japanese carmakers and high-end European brands dominant Suppliers cautious about AvtoVaz and Chrysler Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Change in attractiveness 2007-2008 Suppliers appear generally more negative Some OEMs are viewed more positively, including Ford, GM and Fiat “Which carmakers are most attractive to work with?” Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Change in attractiveness 2006-2008 Change in attractiveness since 2006 These are graphs to illustrate change. So, in 2006 the graphs start at 0. Chrysler, Volvo, PSA, BMW, Renault Jaguar/Land Rover declined the most 2006-2008 Most of Jaguar/LandRover decline over the last 12 months Chrysler in the preceding 12 months Fiat, Ford Europe shown steady improvement over the last two years, against the trend Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Demands to reduce price “Which carmaker makes the highest demands to reduce price? “ Increasing demands GM still the toughest with regards to price Ford become softer on contract negotiations BMW has hardened its purchasing the most over the last 2 years Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Return on investments Increasing opportunity “How good is the opportunity to make acceptable return on investments with the following carmakers?” Increasing opportunity BMW considered most highly GM Europe /North America and Renault performed the worst Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

How this opportunity changed since 2006 “How good is the opportunity to make acceptable return on investments with the following carmakers?” GM/Ford’s significantly improving from a low position Renault and BMW being viewed as less attractive prospect for ROI Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Quality Increasing quality “Which carmaker makes the highest demands to achieve high quality? ” Japanese and high-end European brands dominate 12 Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008 13

Quality: change from 2007 Consistent decline in focus on quality Mercedes, Audi and Hyundai/Kia showed significant increase “Which carmaker makes the highest demands to achieve high quality? ” Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Product technology Premium carmakers perform the best Increasing technology demands Premium carmakers perform the best Mercedes improved the most from 2007 “Which carmaker makes the highest demands for the best product technology?” Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Trust “How highly do you trust the commercial partnerships with the following carmakers?” Increasing technology demands Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Trust: change 2006-2008 The bullet points refer to other questions, e.g. “How good are the OEMs at keeping to price agreements?” These factors are likely to affect a supplier’s trust in an OEM, and so have been mentioned briefly here. We have an extra slide on this, which we could refer to. GM better at keeping price agreements and protecting IP BMW got worse in those area, while Chrysler seen a much greater IP risk “How highly do you trust the commercial partnerships with the following carmakers?” 16 Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Who wants to work with whom? Suppliers' desire to work with the OEM OEM's openness to new suppliers Toyota 1st 22nd BMW 2nd 9th Audi 3rd 18th Honda 4th 23rd Mercedes-Benz 5th 20th OEM's openness to new suppliers Suppliers' desire to work with the OEM AvtoVAZ 1st 19th GM North America 2nd 20th GM Europe 3rd 16th Ford North America 4th 18th Fiat 5th 14th These show how the suppliers ranked. Fore example, in the first table Toyota was the OEM with which most suppliers wanted to work. However, it ranked 22nd (near the bottom ) in terms of openness to new suppliers . Consequently, there is an inverse relationship between the two. Maybe best to identify this trend on this slide, but on the next slide ask “Why?”, and then refer to Edmund and myself. “Which carmakers are most attractive to work with?” “Which OEMs are most open to new suppliers in your product area?” Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Who wants to work with whom? Suppliers’ desire to work with an OEM OEM’s openness to new suppliers WHY is there an inverse relationship? Refer to Edmund and myself. Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Summary OEM and program choice highly important to suppliers, and expected to become more so with time Supplier’s opinion of an OEM’s long-term prospects correlates most closely with the OEM’s attractiveness Toyota and BMW are still the suppliers’ choice, but the gap is narrowing Suppliers perceive BMW to have adopted a tougher purchasing policy Ford and GM improving in the eyes of suppliers Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Acknowledgements Thanks to everyone who participated in the 2008 OEM-Supplier Relations Study Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Attractiveness related to long-term prospects “Which carmakers are most attractive to work with?” “How do you rate the following carmakers with regards to long-term prospects” OEM Attractiveness Ranking Long-term prospects Ranking Audi 3 AvtoVAZ 22 20 BMW 2 Chrysler 21 Fiat 15 Ford Europe 11 Ford North America 17 18 GM Europe 14 16 GM North America Honda 5 Hyundai\Kia 9 Jaguar\Land Rover 19 Mercedes-Benz 4 Nissan 7 8 Porsche 10 PSA 13 Renault 12 SEAT Skoda Toyota 1 Volvo How suppliers’ view the long-term prospects correlates most closely with attractiveness Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008

Factors affecting attractiveness: changes 2006 -2008 Increasing Decreasing BMW Ford Europe Ford North America GM Europe GM North America Demands to reduce price Opportunity to make acceptable return on investments Willingness to pay for development costs Willingness to reward cost-saving ideas Automotive News Europe / SupplierBusiness OEM-Supplier Relations Study 2008