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

Global Engine & Transmission Analysis

Global Engine Volumes (By Major Configuration) 198% Growth 3

Global Engine Trends Programs gravitating down similar paths Smaller engine programs looking fairly similar 2.0L I4 GDI Turbo Still replacing smaller V6s Offered as upgrade to non-turbo 2.0L 1.5L GDI Turbo Some are 1.4L or 1.6L Replacing larger I4s 1.0L GDI Turbo Replacing medium and small I3/I4s 3.0L 6-cylinder with GDI 3.0L is a global approach Fiat Chrysler (FCA), GM and Ford differ slightly V8s diverge Reserved more for sports cars and truck based vehicles Non-NA assemblers choosing GDI NA assemblers going different paths, embracing different technologies 4

Accelerated Global GDI Adoption 5

Light Vehicle Diesel Volume Analysis Most growth from Asia India and China lead the way West Europe stabilizing Mild growth in North America North America adding applications Small diesels on full-sized pickups Some car offerings increasing slightly Fuel and purchase price cost pressures still a factor 6

Light Vehicle Hybrid Volume Analysis Global growth expected 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 Many hybrids are exported from OEM’s home market North America is planning to add applications and volume Attempting to meet future fuel economy related mandates Recent significant pressure from low fuel prices and fickle consumers 7

Light Vehicle EV Volume Analysis Global growth expected China may finally be picking up some steam Many high-end sports car models being added All major OEMs adding applications and volume Strong North American growth Tesla and Renault/Nissan lead the way Smaller volumes from traditional manufacturers Low fuel prices hurt budget market vehicles 8

North American Engine Volumes (By Major Configuration) 742% Growth 9

North American Engine Trends OEMs developing similar programs Smaller engine programs looking fairly similar 2.0L I4 GDI Turbo 1.4L -1.5L GDI Turbo Replacing larger I4s 3.6L V6s for FCA and GM Ford taking a more fractured approach 2.7L V6 EcoBoost 3.3L V6 non-EcoBoost 3.5L V6 sticks around V8s 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

Global Transmission Trends By Type Manuals still dominate Europe and developing markets pushing volume DCTs and CVTs gaining ground 11

Global Automatic Adoption (Traditional Automatics) Influenced by North America and Europe Asia Volumes mostly from China North America prefers the traditional automatic Europe prefers manuals, keeping volumes low 12

Global CVT Adoption 13 Strong Japanese Influence Asia volumes mostly Japan with some in China NA a result of Japan Other regions prefer DCTs and automatics 13

Global DCT Adoption 14 Strong European Influence Asia Volumes mostly from China Europe volumes fairly low due to preferring manuals North America influenced some by Europe 14

North America Transmission Trends 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 3.0L V6 to combat current Ram and future GM offerings 16

Recent Powertrain Developments (cont.) Falling fuel prices – fuel economy less important Consumers choosing larger engines again 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 Small diesel programs being revived for pickups Sales of fuel efficient vehicles in North America are driven more by government incentives and mandates than by consumer preferences * From the Transportation Research Institute, University of Michigan 17

Global Drivetrain Analysis Systems and Market Trends

4WD/AWD Systems – Brief Overview There are three basic 4WD/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 F150 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 19

North American AWD/4WD Volumes (By Drive Type) Volvo effect Tesla effect 20

European AWD/4WD Volumes (By Drive Type) Porsche Pajun effect 21

European Market Trends Mild growth of AWD/4WD As vehicle prices rise, more new vehicle purchases have a greater amount of options, including AWD/4WD 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/4WD systems as much as other regions For example, UK consumers do not opt AWD/4WD systems 22

Full Size Truck Comparison (Best gasoline engine fuel economy) Ram Pickup (Base & Fuel Economy) Ford F-150 (Fuel Economy) Chevrolet Silverado (Base) Curb Weight (lbs.) 4,503 4,168 4,521 4,050 Length/Width/Height (in.) 209.0/79.4/74.6 209.3/79.9/75.5 205.6/80.0/74.0 Engine 3.6L V6 DOHC 2.7L V6 DOHC TwinTurbo 4.3L V6 OHV 3.5L V6 DOHC Transmission 8-Speed Automatic 6-Speed Automatic HP (SAE net) Torque (lb.-ft.) 305@6400 269@4175 325@5750 375@3000 285@5300 305@3900 282@6250 253@4250 GVWR (lbs.) 6,025 6,010 6,500 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 23 2015MY, Standard cab, 6.5 foot box, 2WD, width without mirrors

Powertrain Relationships

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 L850 I4 engines The “L” stands for Lotus, the primary designer GM has greatly refined the engine since Hyundai’s Zeta (Theta) I4 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 2.0L Turbo I4 Built in Decherd for MB and Nissan in North America 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 A6s Will extend to future A8s and A9s 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 26

Mandates

Can OEMs meet future MPG Targets? Misconceptions of the 54.5 mpg target for the 2025MY The 2025MY 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 2025MY 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 CO2 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 CO2 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 28

Can OEMs meet future MPG Targets? (Cont.) What are the hard targets? 2017MY – 2021MY have been mandated 2022MY – 2025MY have not been mandated Uses the CO2 Model 2017MY 2018MY 2019MY 2020MY 2021MY 2022MY 2023MY 2024MY 2025MY 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 2012MY-2016MY 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 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 2017MY to 2021MY timeframe – 2022MY+ uses no multipliers EVs and FCVs (2.0 in 2017MY going to 1.5 in 2021MY) PHEVs and CNG (1.6 in 2017MY going to 1.3 in 2021MY) Full-Size Pickup Hybridization Credits Mild HEV - 10g/mi credit for each vehicle, if used on at least 20% in 2017MY full-size pickups, ramping up to 80% in 2021MY Strong HEV – 20g/mi credit for each vehicle, if used on at least 10% of pickups Air Conditioning credits Using systems that reduce tailpipe CO2 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 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 SkyActive 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. 31

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