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GKN Driveline

Business overview and strategy


Steve Markevich | CEO GKN Driveline

Disclaimer
Cautionary statement
This presentation contains forward looking statements which are made in good faith based on the information available to the time of its approval. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a number of risks and uncertainties that are inherent in any forward looking statement which could cause actual results to differ materially from those currently anticipated. Nothing in this document should be regarded as a profits forecast.

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GKN Driveline An excellent global footprint


GKN Driveline end-2012 3.24 billion Sales c.22,000 Employees 45 Plants 22 Countries

United States

U.K. France Spain Italy Slovenia Turkey

Sweden Poland Germany

South Korea China India Taiwan Japan

Mexico Manufacturing plant Colombia Joint Venture Corporate office / Engineering centre

Thailand

Singapore

Malaysia

Brazil

Australia

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GKN Driveline performing as the market leader Delivering on a commitment


Clear and compelling strategy Integrated Getrag AWD into Driveline

Technology roadmap aligned to market needs


Global customers with strategic relationships Selective wins with pricing discipline

Prioritised investments
Integrated global network
people, process, systems, standards, etc.

Creating distinct competitive advantage

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Sales growth above market


3,500 3,000 2,500 2,000 1,500 1,000 500 0 2007 2008 2009 2010 2011 2012
Acquisition of Getrag Driveline in Q4, 2011

180 160 140 120 100 80 60 40 20 0 Global light vehicle production index (2007 = 100)

Driveline sales m

Organic growth of c.5% above market driven by:


Leading positions and share gains in growth markets Global customer mix and premium brands Increasing share and content of AWD
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Unrivalled driveline product and systems capability


Market leader in CVJ sideshafts and AWD systems Future hybrid and electric drivetrains

CVJ Systems

All-Wheel Drive

61% of Sales

39% of Sales

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Leading positions in our core product segments


CVJ Sideshafts
GKN NTN Nexteer Hyundai WIA Wanxiang/Neapco

Propshafts
GKN Dana IFA Rotorion American Axle JTEKT

AWD PTU/FDU
GKN Magna Dymos Hyundai Wia American Axle

AWD Couplings
JTEKT BorgWarner GKN Honda

Performance Diffs
GKN Eaton American Axle Dana

Electric Axle*
GKN Magna American Axle BorgWarner

Magna (inc. WIA JV)

JTEKT

Linamar
*Emerging product segment

Source: GKN estimated rankings on 2013 basis; excludes in-house.

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Balanced global footprint with excellent regional balance


Sales by region of origin 2012 Sales growth by region
Europe Customer mix Export demand AWD acquisition Asia 29% Europe 37% Americas NA market strength CVJ share gain AWD acquisition Brazil slowed by vehicle imports

919

1105

1196

2010

2011

2012

1115

668

815

2010

2011

2012

Americas 34%

Asia Strong growth in China Japan weaker m

846

875

925

2010

2011

2012

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Operational excellence on a global scale


Global best practices

Simplifying global supply chains


Mexico

Relentless focus on waste reduction World class quality disciplines


Defect parts per million (ppm)

19 14 10
2009

7
2010

6
2011

5
2012

2007

2008

China
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Expanding capability for high growth markets


CVJ Key investments

Mexico
Sideshaft capacity expansion and new forge

Poland
Sideshaft capacity expansion.
Add propshafts

Russia
Under review.

China
Sideshaft capacity expansion.

AWD Investment supports global growth


United States
Propshaft capacity expansion. New 4WD FDU supply.

India
Ramp-up new Pune plant and expand Oragadam.

Thailand
Sideshaft capacity expansion.
Add propshafts and 4WD FDUs

Italy
AWD and eDrive capacity expansion

Sweden
AWD capacity expansion

China
Extension of SDS JV to AWD and eDrive products

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Full driveline capability in China


SDS JV now includes AWD and eDrive Systems GKN Torque Shanghai now part of SDS

Participating in rapidly growing SUV and AWD market


Expanding local engineering capability

GKN Driveline sales


(China with SDS at JV share)

297

209

232

8 manufacturing plants 3,800 people


GKN/SDS locations
OEM plant locations

2010

2011

2012

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Well positioned with global customers and platforms


Sales by customer 2012
VW Group, 15%
RenaultNissan, 11% GM, 10%

Others, 20%
Volvo Car Geely, 4% JLR-TATA, 5% Mitsubishi, 5% BMW, 4% Toyota, 6%

FIAT Ford, 10% Chrysler, 10%

Footprint aligned with customer needs Value of global reach and scale Common platforms with optimised designs

Strategic relationships with early involvement


Global account management and program launch capability

Mega-platforms an opportunity to accelerate global growth


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The leading component, solutions and systems supplier


2015 2020

Components

Selective growth (BRIC) and disciplined with market opportunities Global customer and manufacturing footprint

Solutions

Greater deployment of advanced technology products Fuel-efficient, light-weight, high performance

Systems

Strategic development partner Next generation AWD systems and electric drivetrains

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Market leadership in CVJ systems


Global shares 2012
Other

Selective wins, controlled growth Reducing fixed cost structure

In-house
GKN 41% Wanxiang/ Neapco Wia Kofco Nexteer NTN

Optimising LCC sourcing strategy


Recovering material costs / inflation Driving operational excellence Favourable capacity / competitor dynamic Strong margin management actions

GKN positioning in key growth regions


N. America
Brazil China India

GKN Driveline

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Technology leadership in CVJ systems


Progressing with roll-out of new light-weight, fuel-efficient CVJ technology

FWD vehicles

GKN Driveline SX8


Lighter and smaller package space 1% fuel saving / CO2 reduction 50 for premium applications

3 MILLION/YEAR GROWING TO 8 MILLION IN 2018

RWD vehicles

GKN Driveline VL3


Lighter (up to 3.8kg per car set) Packaging space reduction (9%) Higher power transfer and efficiency

TARGET TO LAUNCH IN 2015

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The making of the global leader in AWD Systems


Major milestones
1985 Commercialisation of the viscous coupling begins becomes a global industry standard for AWD in 1990s 2011 GKN acquires Getrag Driveline Products 2013 Will launch 1st AWD disconnect system

2011 Launch of 1st electric axle

1990 .

2000

2010
2006 GKN establishes Torque Shanghai

2004 GKN acquires Tochigi Fuji Sangyo

2013 GKNs SDS JV expanded to include AWD

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Globally balanced sales and customer profile in AWD

453m
423m 384m

Americas

Europe

Asia

Based on 2012 sales

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Vehicle driveline content increasing


Front-Wheel-Drive (FWD) Rear-Wheel-Drive (RWD)
with independent suspension

Front sideshafts

Directional Value Index 100 500


Rear sideshafts

Rear Propshaft Rear Final * Drive Unit

* Limited slip

differentials (LSD) sometimes fitted in Rear FDU

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Vehicle driveline content increasing


All-Wheel-Drive (AWD)
Front sideshafts

Four-Wheel-Drive (4WD)
with independent suspension Front Axle* Front sideshafts

Power Transfer Unit Propshaft Coupling Rear Final Drive Unit Rear sideshafts

Directional Value Index 900 1200

Front Propshaft Transfer Case


(incl. Coupling or TMD)

Rear Propshaft

Rear Final * Drive Unit

* Option fitment
Rear sideshafts

of Limited Slip Differential (LSD) or Locker

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Growing demand for AWD


Consumers like AWD
Safety, assured driving, performance and image

OEMs like AWD


Improves vehicle performance and image Sellable feature with content and margin

Both want acceptable fuel economy and CO2

Front-wheel drive

Traditional All-wheel drive

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Technology roadmap addresses legislative challenges


The challenge of tougher legislation for emissions and fuel efficiency
2015
EU Legislation 130gCO2/km

2020
95gCO2/km

2025
75gCO2/km

GKN Drivelines technology response


Todays AWD

Optimised AWD

Disconnect AWD

Hybrid/electric AWD

Fuel / CO2 Improvement

< 1.5%

4% to 5%

20% - 40%

GKN can influence market technology uptake systems capability important


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Positioned to continue outperforming the market


Global LV market growth

Mega-platforms

AWD systems content

Mega-platforms and AWD growth and content

GKN Driveline target growth c.2% ahead of market


Unrivalled global positioning
Geographic footprint Broad customer base Strength in growth markets

Technology leadership / increasing AWD content


Response to tighter legislation Customer co-developments Fuel-efficient products

Globally competitive
Increasingly lean and agile cost structure

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GKN Driveline
All-Wheel Drive Systems
Lars Christiansson | MD GKN Driveline Kping & Bruneck

Joining GKN Drivelines AWD business


Highlights personal observations Kping and Newton plants integrated from October 2011

Worked together early to adopt best practices


Cultural fit with focus on safety and excellence Expanded product and development capability Well-received by customers business continuing to grow High employee satisfaction

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Technology leadership in AWD

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Technology leadership in AWD

Three key technologies for GKN Driveline AWD Disconnect systems Electric axle & hybrid AWD Full AWD systems integration

Link to video
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AWD Disconnect The best of both worlds


Traditional AWD is less fuel efficient than 2WD Additional weight Drag, friction and churn losses AWD Disconnect Eliminates many of the losses Improved fuel efficiency Seamless connect and disconnect

3 customer launches in 2013/14

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Mainstream AWD disconnect application

Targets broad market for SUVs and Crossovers

Challenging technology development with major fuel efficiency benefits

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Premium AWD disconnect application

With a twin-clutch, TWINSTER rear-drive module for enhanced vehicle dynamic Unique GKN capability
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AWD hybrid with electric axle


Full AWD performance

GKN patented disconnect system (e-Axle in-use only when needed)


Hybrid functionality Electric-only driving (short range) 40% fuel efficiency improvement 7 customer programmes launched or under development
Source: PSA

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New product launch 2-speed electric axle


Launching 2014
Performance & efficiency

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Unique full AWD systems capability


Design, manufacture and sourcing of components Complete development, test and validation capability

Vehicle dynamics tuning, software & electronic controls


Customer co-developments

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Summary
Technology leadership is aligned with market trends for fuel efficiency and low CO2 AWD disconnect systems launching this year Growing customer interest in hybrid AWD with electric axle Unique AWD system capability GKN has the product and the technology Important and successful acquisition of Getrag Driveline gives GKN a market leading AWD footprint

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GKN Driveline
Conclusion
Andy Reynolds Smith | CEO, GKN Automotive

GKN Driveline summary


Growth c.2% above market
AWD volumes with higher content Excellent position in growth markets Global footprint serving megaplatforms

Margin range 8% to 10%


Selective business wins Disciplined pricing behaviour Operational excellence Lean cost structure

ROIC >20%
Strategic outsourcing policy Prioritised investment Disciplined capital allocation

Business performance

Strong cashflow
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