GKN Automotive
Nigel Stein
Chief Executive Automotive,
GKN plc
GKN Automotive
Largest part of the business is GKN Driveline
Driveline - products; customers; competitors
Recent trends in Automotive Markets
Forecast shape of the recovery
Some points on China – soon to be largest market
Longer term market trends
Electrification
Q&A
2
GKN Automotive
GKN Driveline Product Portfolio
CVJ Sideshafts
Constant
Velocity Joints
Geared Systems
Torque Management
AWD/4WD
Couplings
Power Transfer
Units
Limited Slip and
Locking Differentials
Sideshafts
Final Drive Units
Propshafts
Differentials
Electric Drive Axles
for Transmissions
and Axles
M-4WD
3
Driveline Products in the Vehicle
Example: FWD-based AWD Vehicle
Sideshaft (with CVJs)
Power Transfer Unit (PTU)
Sideshaft (with CVJs)
Limited Slip or Locking
Differential (LSD)
(Mainly for RWD or 4WD)
Independent FDU
AWD Coupling
Differential
(in transmission)
4
Propshaft
The Global Light Vehicle Driveline Market
Market Value in 2008: ca. £13 bn
Rigid
Axles
Rigid
Axles
29%
29%
Sideshafts
Halfshafts
31%
31%
GKN – a leader
Propshafts
Propshafts
10%
10%
TMDs
TMDs
7%
7%
Some GKN presence
Transfer
Cases
Transfer
cases
8%
8%
PTUs
PTUs
3%
3%
Independent
FDUs
FDUs
12%
12%
Growth Targets
5
Top 10 Driveline Suppliers by Revenue
2008 Revenue Basis
Dana
13%
AAM
7%
Three global leaders by scale –
GKN, Dana and American Axle
GKN increased lead in 2008 as
Dana, American Axle fell back
NTN
6%
Magna
4%
Getrag
BorgWarner
GKN
17%
ZF
JTEKT
tedrive
By comparison, the company we
see as our most direct competitor
today – NTN – has less than half
the scale of GKN in Driveline
segment
Rotorion
Others/In-house
41%
Source: GKN estimates
Today GKN is the global market #1 based on sales revenues
for light vehicle driveline products.
6
GKN Driveline Sales by Product Line
Approximate
Propshafts
Geared Systems
TMDs & others
CVJ Sideshafts
Aftermarket
CVJ Sideshafts are largest share of revenue
Geared, TMD’s and other products driven mainly by AWD
7
Current Market Position
Overview by Key Product Line
Product Line
GKN
Position
Top 5 Competitors
GKN Driveline Focus
CVJ
Sideshafts
#1
(41%)
NTN, Delphi, Tedrive,
Wia/Kofco,
Global supplier – all segments
Propshafts
#3
(#1 in
JTEKT, Dana, AAM,
Rotorion, Hitachi
Focus on ‘Premium’ solutions with
CVJ – mostly AWD/4WD
n.a.
AAM, Dana, Getrag,
ZF, Magna
Mainly Japan-based business - AWD
specialist for Nissan and Mitsubishi
#2
JTEKT, Haldex,
Magna, BorgWarner,
Eaton
Global with broadest product range.
Grow share in Active AWD couplings
premium
segment)
Geared
Products*
Torque
Management
Long-term Global leader in CVJ Sideshafts.
We compete on a focused basis in other product markets.
8
Change in Light Vehicle Sales and Production
October 2009 on October 2008
80
70
60
50
40
Change (%)
30
20
Sales
10
Production
Br
az
il
In
di
a
Ja
pa
n
na
Ch
i
SE
O
NE
O
EE
U
W
EU
NA
-10
M
0
-20
-30
Notes:
- WEU sales cars only
- EEU sales only major markets &
Estimate
- Brazil sales and production estimate
-40
-50
Source: Global Insight /JD Power / Various / GKN Sales
9
Change in Light Vehicle Sales and Production
YTD 2009 on YTD 2008
40
Br
az
il
di
a
In
Ja
pa
n
a
Ch
in
SE
O
NE
O
EE
U
W
EU
M
0
NA
Change (%)
20
Sales
Production
-20
-40
Notes:
- WEU sales cars only
- EEU sales only major markets &
Estimate
- Brazil sales and production estimate
-60
Source: Global Insight /JD Power / Various / GKN Sales
10
Impact of Scrappage Schemes on 2010
Although ending the incentive
schemes will likely remove
many incremental buyers from
the market and negatively
influence sales demand next
year
AUTOFACTS currently
forecasts a 2010 EU total sales
decline of 4% (~13.3m units)
Some positive drivers including
the potential extension of
schemes in some markets,
improving economic
fundamentals, and continuance
of OEM incentives.
11
Forecast Shape of the Recovery
Vehicle Production by Region
90
80
Production Volume (m)
70
Market CAGR
09-11
Global
10.2%
4.7%
Developed
11.7%
3.1%
8.2%
6.9%
Developing
12-14
60
50
40
Africa/ Mid East
30
South America
Asia
20
Japan
East Europe
10
West Europe
North America
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Global Insight April 2009
12
China Vehicle Production Trend
Vehicles with CVJs - China production
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
Global OE's
19
20
18
20
17
20
16
20
15
20
14
20
13
20
20
12
11
20
10
20
09
20
08
20
07
20
06
20
05
20
20
04
0
Domestic OE's
13
Based on Global Insight March 2009 10 year forecast
Shift in Vehicle Mix
Global Vehicle Production by Segment
Small Cars
Sub-Mini (A)
Small (B)
Lower Medium (C)
Upper medium (D)
2007 (71.0m)
2009 (55.2m)
2014 (79.9m)
Executive (E)
LCV’s
Sports
LCV's
MPV
Pickup
Conventional SUV
Crossovers
Crossover SUV
0
2
4
6
8
10
12
14
16
18
Production Volume (m)
Based on Global Insight April 2009
14
The Car Industry
Annual Global production of Light Vehicles
100m
‘New’ Industry Growth
Restructuring
75m
Key Technology Drivers
50m
Fuel efficient,
environmentally-friendly
vehicles
Crisis
‘Traditional’
Industry Growth
Progressive hybridisation &
electrification
Safety
2000
Illustrative
15
2005
2010
2015
2020
Electrification
1912 Detroit Electric
-Thomas Edison
Electric vehicles
are not new
2005 Toyota Prius
Hybrid vehicle sales
now growing
BYD E6 (due 2010)
Electric Vehicles
are on the way
Progressive electrification of the vehicle now unstoppable.
Massive increase in product development & funding.
16
The Car Industry
Industry Development Roadmap – High Level
EU Fleet Average
CO2 Targets (g/km)
130
??
100
Fuel Cell Vehicle
Demonstrators
H2 Infrastructure
Fuel Cell Stack & H2 storage Breakthrough
Mass Market EV Technology
Niche EVs
Charging Infrastructure
Energy Storage Breakthrough
Plug-In Hybrid
Demonstrators
Energy Storage Breakthrough
Full Hybrid
Micro/Mild Hybrid
IC Engine and Transmission innovations (gasoline/diesel/renewables)
Vehicle Weight and Drag Reduction
2000
2010
Source: NAIGT
17
2020
2030
2040
2050
Electrification Scenarios
Common Themes – Directional Views
z
z
z
z
The ICE remains the predominant drive technology
Most early electrification will be in the form of traditional
hybrid architectures (stop-start, mild, full)
Vehicles with electric motor as main drive (EV, PHEV) could
account for 5-8% of market in 2020 (mid-ground scenarios)
Wheel motors not viable as a mass market solution before
2030 (Î CVJ sustainable)
Key drivers: Engine & transmission optimisation (lower CO2); CO2 emissions from
electricity generation; Oil Price evolution; Battery costs per kWh; Incremental vehicle
cost.
18
GKN Automotive
Appendix
Interim Results slides
Light vehicle sales and production –
first half comparison
Americas
12.0
Europe*
12.0
10.0
- 28% -44%
Japan
12.0
12.0
10.0
- 17% -34%
China
10.0
- 21% -40%
10.0
8.0
8.0
8.0
8.0
6.0
6.0
6.0
6.0
4.0
4.0
4.0
4.0
2.0
2.0
2.0
2.0
0.0
0.0
0.0
2008
2009
2008
Sales
0.0
2008
2009
+22% +13%
2009
2008
2009
Production
Global light vehicle sales down 14% - Production down 30%
*Data based on car volumes as light vehicles data not available
20 GKN HALF YEAR RESULTS – 6 MONTHS ENDED 30 JUNE 2009
Driveline
Subsidiaries & JVs (constant currency)
First half 2009
£m
First half 2008
£m
905
(32)
1,481
98
Sales
Trading profit
Driveline sales decline £576m (39%) – trading profit down £130m
Significant regional differences and market drivers
Driveline Sales
Light Vehicle Production
Americas
(39)%
(44)%
Europe
(36)%
(34)%
Japan
(61)%
(40)%
China
(2)%
13%
Americas – mix benefit from cars and strong market position in Brazil
Europe – fall off in export volumes and impact of small car incentives programmes
Japan – almost 70% of GKN supply destined for export markets
China – incentives boost small cars and non CVJ equipped minivans
Expect improvements relative to market as global economy recovers
21 GKN HALF YEAR RESULTS – 6 MONTHS ENDED 30 JUNE 2009
Driveline
Strong management action returns to profitability in June – sales down 29%
All regional markets except Japan breakeven or above
Restructuring activities extended
3 plant closures underway - 1,000 people released – further 800 by mid 2010
Short time working reduced from 2,800 FTE in Q1 – 1,500 in Q2
- plan 800 in Q3
Strong focus on business development
Limited new vehicle opportunities – 100% win rate on 12 replacement sideshaft
programmes
Heightened market interest in hybrid/electric drive products
PSA Hybrid 4 – rear axle power control clutch
Industry consortium – Government supported electric and hybrid vehicle technology
programme
Q3 sales similar to Q2 – step up in September schedules
22 GKN HALF YEAR RESULTS – 6 MONTHS ENDED 30 JUNE 2009