Automotive News World Congress www.pwc.com Megatrends and the art of the possible Automotive News World Congress January 13, 2015 Rick Hanna @Rick_Hanna

Topline assembly outlook Global light vehicle assembly is forecasted to reach 90m units in 2015, a 5.6% increase from 2014. Autofacts is forecasting 2021 light vehicle assembly to reach 110m units. Use the divider control box below to make the slide title appear in your primary TOC and section TOCs. Please follow these steps: Type ‘Divider’ in the control box provided below. Click the Divider command on the Smart ribbon. Enter the text that you’d like to appear in the TOCs and select a divider level. Click Update. The slide title should now appear on all TOCs. To remove the slide title from your TOCs, delete the ‘Divider’ text from the divider control box and hit Update. 2013 – 2020 Compound Annual Growth Rate (CAGR): 3.84% Autofacts is forecasting the next economic downturn to occur around 2018, but are not expecting the impact to be anywhere near as severe as the most recent one since the global automotive industry has, for the most part, been fundamentally restructured to succeed on lower sales / assembly volumes. Source: Autofacts 2015 Q1 Forecast Release

Regional outlook The lion’s share of the new volume is expected to come from developing markets, and in particular developing Asia-Pacific, providing over 62% CTG** from 2014-2021. Use the divider control box below to make the slide title appear in your primary TOC and section TOCs. Please follow these steps: Type ‘Divider’ in the control box provided below. Click the Divider command on the Smart ribbon. Enter the text that you’d like to appear in the TOCs and select a divider level. Click Update. The slide title should now appear on all TOCs. To remove the slide title from your TOCs, delete the ‘Divider’ text from the divider control box and hit Update. Regional Contribution to Growth* 2014 – 2021 (percentage share) Americas Europe, Middle East & Africa (EMEA) Asia-Pacific North America South America European Union Eastern Europe Middle East & Africa Developing Asia-Pacific Developed Asia-Pacific 11.2% 9.2% 8.2% 7.3% 4.5% 62.6% -3.1% Regional Topline Comparison & Volume Change 2014 vs. 2021 -2.9% CTG in Developed Asia-Pacific (Japan, South Korea, Australia) related to 1) relocation of assembly in Japan to current export markets…primarily North America, 2) growing political turmoil b/w North and South Korea combined with high labor costs, as well as GM’s announcement to remove the Chevrolet brand from Europe, with many of those vehicles being produced in South Korea, and 3) The collective announcements of GM, Ford and Toyota to shutter all of their assembly operations in Australia between 2016-2017 due to high labor and import / export costs. North America and European Union are expected to see a continued resurgence in assembly as those markets stabilize and, in the case of the EU, begin to take advantage of several years of pent up demand. ∆ +2.8m +2.3m +2.1m +1.8m +1.1m +15.7m -774k 19.8m 6.3m 18.9m 5.2m 2.9m 44.7m 12.5m 2021 17.0m 4.0m 16.8m 3.4m 1.8m 29.0m 13.3m 2014 Source: Autofacts 2015 Q1 Forecast Release *Region size not to scale **CTG = Contribution to Growth 5

Carolina Carolina’s is one story out of seven billion…

Megatrends

Our first megatrend: Cities are growing in population. At PwC US, we helped two major airlines join forces. To enter international markets for the first time, one well-known (and well-priced) airline wanted to expand by increasing its number of destinations, and increase its fleet size by 25% -- they wanted to reach their low-cost fares to more places in the world. So they asked PwC US to help assist in their journey to acquire and integrate another airline company, and we hit the ground running by pulling together several high-performing teams. There was the IT integration planning team to draw out a tech roadmap. There was the integration program management team to support applications like reservation systems, agent applications, loyalty programs, and its website. And they had to make sure it was all executed smoothly. This year their first international flights began! It’s the kind of work that empowers our people – these are big changes that shape companies and their futures. - As more companies continue infrastructure development to accommodate growth and lay the foundation for future expansion, this may affect future tax policy.....governments and policy makers treated as clients - Governments increasingly complete using tax, regulation as well as investment support

The rise in prominence of cities in the global economy has been truly unprecedented… More than half of the global population now lives in cities, compared to 2% in 1800. 1.5 million people are added to this total every week. Share of total global population living in urban areas Size of global urban population (bn) 8.1b 6.9b 57% 4.6 bn 51% 4.4b 3.6 bn 39% 1.7 bn 1980 2010 2025 (f) (f) Global population (billions) Proportion of global population living in urban areas (%) Sources: PwC analysis of United Nations, Department of Economic and Social Affairs, Population Division (2013)

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So what does this all mean?

3 things Relevance Business leaders can do Strategy Purpose

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