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© 2014 IHS / ALL RIGHTS RESERVED

MEXICO AUTOMOTIVE OUTLOOK Mexico Now

MAY, 2015

Guido Vildozo, Manager Latin America Light Vehicle Sales Forecasts, IHS

© 2014 IHS

Agenda

• Global Outlook

• US Sales

• NAFTA Production

• Mexico Production

• Key Takeaways

2

© 2014 IHS

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90

2005

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2015

World light vehicle selling rates Low oil will help weak global market; China remains the key to industry growth

World

World without China

Source: IHS Automotive analysis, monthly data with X12 Seasonal Adjustment

Global market, without China, finally back to pre-recession levels

LV s

ales

SA

AR

, mill

ions

sol

d

© 2014 IHS

Global light vehicle sales outlook 2014–15 sales volume

86.4

87.9

+ 1.6

+ 0.5

+ 0.5

+ 0.4 - 0.0 - 0.2

- 0.5

- 0.9

86.3

86.8

87.3

87.8

88.3

88.8

89.3

2014 Greater China North America West Europe South Asia MiddleEast/Africa

Japan/Korea South America Central/EastEurope

2015

Mill

ion

units

+2%

© 2014 IHS

Global sales

For February 2015, the positive picture continued, as global demand grew 1.3%, with year-to-date demand growing 2.2%, to 13.33 million units.

For 2015, our global sales forecast is set at 87.85 million units, up by a further 1.7%; this is a mild downgrade compared with the last update. We assume lower oil prices will be a net positive for the auto industry, although clearly not for oil exporters. Some of the recent downgrades to the macroeconomic forecasts—particularly developing countries and oil exporters—could provide a natural offset on vehicle sales volumes. Until the end of the forecast horizon in 2021, the global light vehicle sales market is expected to grow at a compound annual growth rate of 2.7% and approach 104.0 million units.

0.0%

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2012 2013 2014 February 2015 YTD 2015 2016 2017

Year-on-year change M

illio

n un

its

Global Change

© 2014 IHS

Global contingency forecast Stronger/weaker economic growth will have significant implications

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

100,000,000

110,000,000

120,000,00020

05

2006

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2015

2016

2017

2018

2019

2020

2021

2022

BaselineOptimisticPessimistic

2015-22 impact Optimistic: Low oil creates global rise in consumer/business confidence, higher

spending, adds 37m vehicle sales to forecast

Pessimistic: Oil price snaps back more quickly, euro crisis heats up, global credit

confidence falls, removes 45m vehicle sales

Source: IHS Automotive Q1 2015 Contingency Forecast

© 2014 IHS

Brent blend crude-oil forecast Abundant supply plus weak demand is causing further declines

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25

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75

100

125

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Dol

lars

/bar

rel

Source: IHS Energy

© 2014 IHS

Intention to buy in the next six months

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1.01.52.02.53.03.54.04.55.05.56.0

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2015

6 Month Moving Average Actual

(Percent Yes)

Conference Board

Not just a needs based recovery, but wants driven

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U.S. New Light Vehicle Inventory — Days Supply

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1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

(Days Supply)

Months — Seasonally Adjusted

Light Trucks

Cars

Inventory is back in balance

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89

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2016

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2020

8%

9%

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Total Volume - L Luxury Market Share - R

(Millions of Units)

US Light Vehicle Sales

© 2014 IHS

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U.S. Light Vehicle Sales — Cars vs Trucks

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1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Cars Light Trucks

(Millions of Units)

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U.S. Sales — Manufacturers Market Share

4%

8%

12%

16%

20%

24%

2005 2007 2009 2011 2013 2015 2017 2019 2021

GM FORD CHRYSLER/FIAT TOYOTA HONDA NISSAN HYUNDAI/KIA

(Light Vehicle Share)

Market share is wide open and up for grabs

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U.S. Sales — Manufacturers Market Share

0%

1%

2%

3%

4%

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6%

2005 2007 2009 2011 2013 2015 2017 2019 2021

HYUNDAI KIA SUBARU MAZDA MITSUBISHI VW GROUP

(Light Vehicle Share)

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U.S. Car Sales — By Segment

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2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Mill

ions

Compact Full-Size Mid-Size Sports Small

(Units)

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U.S. Light Truck Sales — By Segment

0.00.51.01.52.02.53.03.54.04.55.05.5

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Mill

ions

CUV MPV Full-Size PUP Mid-Size PUP SUV VAN

(Units)

Copyright © 2015 IHS Global Inc. All Rights Reserved.

NHTSA CAFE History Has Only Recently Begun to Trend toward Higher MPG Targets

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CAFÉ

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ndar

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PG)

Model Year

Cars

Trucks

Combined

• Two key milestones for the future are the 2016 requirement and then the more difficult 2017-2025 requirement

– Congress establishes CAFE 1978-1985 – DOT sets truck standard to max feasible 1979-1996 – DOT relaxes car standard 1986-1989 – DOT sets car standard to 27.5 mpg 1990-2010 – Congress freezes truck standards at 20.7 1997-2001

– Bush Administration sets new truck targets 2005-2007 – EISA changes CAFE to new footprint standard 2008- present – Obama Administration sets new car & truck standards 2012-2016 – Obama Administration sets new car & truck standards 2017-2025

Decline in the MPG target has happened in the past

Copyright © 2015 IHS Global Inc. All Rights Reserved.

There Are Now Two Targets for US Fuel-Economy Legislation – NHTSA MPG and EPA CO2 Levels

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Organization

Regulation

Limits

Measure

Credits

Fines

2016 - 34.1 mpg 2025 - 49.6 mpg

National Highway Traffic Safety Admin. (NHTSA)

CAFE

34.1mpg; total US fleet average in MY2016 / 49.6mpg in MY2025

Discrete OEM targets vehicle-size footprint

Trading between car and truck fleets FFV credits

Possible

2016 - 250 g/mile

2025 - 163 g/mile or 54.5 mpg

Environmental Protection Agency (EPA)

Greenhouse gas standard (GHG/CO2)

250g/mile total US fleet average in MY2016 / 163g/mile in MY2025

Discrete OEM targets vehicle-size footprint

Same as NHTSA, plus additional off-cycle and EV credits

Not possible NOTE: In the U.S. the MPG equivalent of 54.5 is often referenced in media reports

Copyright © 2015 IHS Global Inc. All Rights Reserved.

The Bulk of US Engines Are Dropping Cylinders While Simultaneously Reducing Displacement

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• IHS forecasts an increase of 4 cylinder engines to nearly 10 million units by 2024

• 3 cylinder engines also enter the market and grow to 1.6M units in a relatively flat market

• 8 cylinder engines lose 400K fitments while 6 cylinder engines decline from 5+ million to just over 3 million

• Average displacement across all numbers of cylinders drops more than 500cc by 2024

• The Average moves from 3.1 liters down to just over 2.5 liters

© 2014 IHS

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2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021

Milli

ons

Sales Production

Post Restructuring

Loca

lizat

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Exp

ansi

on

Exp

orts

• From 2001- 2009, regional sales eclipse output by 27% or 3.7 million units • 2017 – 2021, future sales levels outpace production by less than 7.0% or by ~1 million units • Positive sales trajectory tapers after peak in 2017 • Long-term output nears 18.5M units – far surpasses 16.0M unit pre-2009 levels

N. America - LV Sales and Production

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Y-O-Y %

ChangeOut

put (

Milli

ons)

United States Mexico Canada Change

CAGR 1.2%

CAGR 7.1%

CAGR -4.3%

2014 – 2020

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North American Market Structure

© 2014 IHS 21

OEM 2014 (000s)

2015F (000s) % ∆ ∆ Units

(000s)

GM 3,380 3,349 -0.9% -30 Ford 2,940 3,137 6.7% 196

Chry/Fiat 2,816 2,767 -1.7% -49 Detroit 3 9,136 9,256 1.3% 117 Toyota 1,986 2,037 2.6% 51 Honda 1,807 1,900 5.2% 93

Ren/Nissan 1,743 1,735 -0.5% -9 Hyundai 764 736 -3.8% -29 Asian 4 6,300 6,421 1.7% 107

VW 592 564 -4.8% -28 BMW 350 386 10.3% 36

Daimler 255 305 19.4% 50 German 3 1,197 1,255 4.8% 57

Others 395 507 28.3% 112 Total 17.0M 17.4M 2.3% ~393

• 2014 added a substantial 800K to production, 2015 is less

• Ford will charge ahead w new F-150

• Honda just launched production of HR-V

• VW in dire need of new product, X3 and C-Class boosting BMW and MB

• No new plants coming into operation in 2015, got to wait until 2016!

Source: IHS Automotive Light Vehicle Production Forecast

North America Light Vehicle Production 2014 vs 2015

© 2014 IHS

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2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

PROD

(Millions of units)

Forecast at risk due to Brazil

Mexico Light Vehicle Production More growth to come

© 2014 IHS

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Units

Mexico Light Vehicle Production By OEM

© 2014 IHS 24

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2014 2015 2016 2017 2018 2019 2020 2021 2022

EuropeSouth America Middle East/AfricaAsia North America

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th A

mer

ican

Veh

icle

Exp

orts

(Mill

ions

)

Mexico Vehicle Exports by Region

2.4 2.6

3.2

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3.3 3.6 3.7 3.8

• Greater use of global platforms allows for more “export ready” product

• 40+ Free trade agreements drive Mexican output

• Expansion of luxury segment capability across the region into Mexico

• SA exports hurt by Brazil and Argentina

• NA gains 1 million units; followed by SA with 250K; MEA will be 75K; Asia flat; SA gain of 25K

3.8

Source: IHS Automotive Light Vehicle Forecast

North America Light Vehicle Production Exports bolster prospects

© 2014 IHS

Global Top 10 Production Countries

2010 2014 2015 2020 1 China China China China 2 Japan United States United States United States 3 United States Japan Japan Japan 4 Germany Germany Germany India 5 South Korea South Korea India Germany 6 India India South Korea Mexico 7 Brazil Mexico Mexico Brazil 8 Spain Brazil Brazil South Korea 9 Mexico Thailand Spain Thailand

10 France Canada Thailand Spain

25

• Mexico is definitely on the industry’s radar

• Will continue to ascend among Top 10 in the 2015-2020 time period

• Could build more than Brazil!

© 2014 IHS 26

• Global growth is driven by TRIAD as opposed to emerging nations in 2015

• US has another solid year, we are now back to business as usual

• We have only seen the tip of the iceberg on legislation on emissions

• Luxury Segment is key

• NAFTA production sees more investment, particularly due to localization

• Mexican production is at 3 million unit mark quickly ascending to 5 million units!

• Continues to rely heavily on the US

Key Takeaways

Guido Vildozo Manager, Latin America Vehicle Sales guido.vildozo@IHS.com

Thank you! Muchas Gracias! Muito Obrigado!

© 2014 IHS

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