GKN
Delivering Sustainable Growth
GKN Driveline
Nigel Stein
GKN Capital Markets Day – 12 April 2011
GKN Driveline in 2010
Global Leader in Driveline Systems and Solutions
Revenue: > £2.4 billion
Global supply:
CVJ sideshafts
Propeller shafts
Torque management
Geared products
54 million
2.4 million
1.5m units
1.2m units
Manufacturing footprint:
44 locations in 21 countries
Engineering centres:
R&D: Germany, North America, Japan
Plus: 14 Product and Application Centres
Employees: c.20,500
Source: GKN Driveline estimates
GKN Capital Markets Day – 12 April 2011
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Broad Range of Products and Technology
GKN Capital Markets Day – 12 April 2011
3
Outstanding Geographic and Customer Base
2010 Sales by Region
2010 Sales by Customer
Other
Americas
27%
Asia
35%
VW Group
Geely
Tata
Suzuki
Hyundai
Kia
Honda
Renault
Nissan
PSA
Fiat Chrysler
BMW
Mitsubishi
Europe
38%
GM
Ford
Toyota
GKN Capital Markets Day – 12 April 2011
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Well-established Global Manufacturing Footprint
44 manufacturing locations in 21 countries
GKN Capital Markets Day – 12 April 2011
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Leader in Driveline Segment
GKN Driveline is global no 1 based on sales revenues
Selected Leading Suppliers of Light Vehicle Drivelines
Recent Sales Performance
3,000
2,500
2,000
£m
GKN Driveline
Dana Light Vehicle Driveline
1,500
AAM Axles & Driveshafts
BorgWarner Drivetrain
1,000
NTN CVJ
500
0
2007
2008
2009
2010
Source:
Company data, independent suppliers, GKN analysis and estimates. Actual average exchange rates for each year.
Notes:
AAM sales include some axles for heavy commercial vehicles.
BorgWarner Drivetrain sales include transmission components.
GKN Capital Markets Day – 12 April 2011
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Typical Vehicle Drivelines
Front-Wheel-Drive (FWD)
Rear-Wheel-Drive (RWD)
with independent suspension
With CVJ
Sideshafts
Front Halfshafts
Directional
Value Index
100
500
Rear
Propshaft
Rear
Halfshafts
Rear Final *
Drive Unit
* Limited slip
differentials
(LSD) sometimes
fitted in Rear
FDU
GKN Capital Markets Day – 12 April 2011
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Typical Vehicle Drivelines
All-Wheel-Drive (AWD)
Four-Wheel-Drive (4WD)
with independent suspension
Front Halfshafts
Front Axle*
Front Halfshafts
With CVJ
Sideshafts
Power Transfer
Unit
Propshaft
Coupling
Rear Final
Drive Unit
Rear Halfshafts
Directional
Value Index
900
1200
Front
Propshaft
Transfer Case
(incl. Coupling or TMD)
Rear
Propshaft
Rear Final *
Drive Unit
* Option fitment
Rear Halfshafts
GKN Capital Markets Day – 12 April 2011
of Limited Slip
Differential
(LSD) or
Locker
8
4WD Drivelines – examples supplied by GKN
Audi Q7
Jeep Grand Cherokee
GKN supply (both vehicles):
4 sideshafts, 2 propshafts  13 CV joints
GKN Capital Markets Day – 12 April 2011
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GKN Driveline – A Systems and Solutions Provider
GKN Capital Markets Day – 12 April 2011
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GKN Driveline Sales by Product Segment
CVJ Systems (sideshafts)
CVJ Systems
AWD Systems
Used on >80% of light vehicles
Transaxle Solutions
Global market leader with
around 42% share
eDrive Systems
AWD Systems/Transaxle Solutions
AWD/4WD is 13% of market
2010
£2.4bn
Differentials on 100% of vehicles
Broad range of products,
technology and competition
eDrive Systems
Nascent market segment
Long-term growth expected
Product development focus
Source: GKN directional estimate; 2010 sales total, 2011 budgeted segment sales.
GKN Freight Services incl. in CVJ Systems
GKN Capital Markets Day – 12 April 2011
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GKN
Delivering Sustainable Growth
Automotive
Trends and Drivers
GKN Capital Markets Day – 12 April 2011
Global Light Vehicle Growth
100.0
90.0
80.0
Vehicles (millions)
70.0
CAGR
2010 - 2014
60.0
50.0
40.0
RoW
5.4%
Developing
9.0%
Developed
4.0%
Global
5.9%
30.0
20.0
10.0
0.0
2007
2008
2009
2010
2011
2012
2013
2014
Source: IHS Automotive Forecast, January 2011.
GKN Capital Markets Day – 12 April 2011
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Light Vehicle Growth in Developed Regions
18.0
16.0
Vehicles (millions)
14.0
12.0
CAGR
2010 - 2014
10.0
8.0
North America
7.2%
West Europe
3.1%
Japan
1.6%
South Korea
2.3%
6.0
Developed
4.0%
4.0
2.0
0.0
2007
2008
2009
2010
2011
2012
2013
2014
Source: IHS Automotive Forecast, January 2011.
GKN Capital Markets Day – 12 April 2011
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Light Vehicle Growth in Developing Regions
25.0
Vehicles (millions)
20.0
CAGR
2010 - 2014
15.0
10.0
Brazil
6.6%
Russia
9.0%
China
8.7%
India
12.4%
Developing
9.0%
5.0
0.0
2007
2008
2009
2010
2011
2012
2013
2014
Source: IHS Automotive Forecast, January 2011.
GKN Capital Markets Day – 12 April 2011
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Major Industry Trends and Drivers
Smaller, more fuel efficient, lower CO2 vehicles
Growth shift from West to East (BRIC and low cost vehicles)
Increasing importance of global platforms
‘Premium’ market growth sustained by rising GDP / personal
incomes
GKN Capital Markets Day – 12 April 2011
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Major Industry Trends and Drivers
Electronics penetration continues and importance of
software grows
Lower weight and focus on new materials (e.g. composites)
Progressive electrification of the drivetrain
And as always in Automotive … quality and cost
GKN Capital Markets Day – 12 April 2011
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GKN
Delivering Sustainable Growth
GKN Driveline
“Driving to Win”
GKN Capital Markets Day – 12 April 2011
GKN Driveline Strategy
Leading Driveline
Systems and Solutions Provider
Profitable Growth at above market rates
Continued
Leadership
in CVJ
Sideshafts
TECHNOLOGY
OPERATIONS
PEOPLE
SPEED
GKN Capital Markets Day – 12 April 2011
Fast Growth
in AWD and
Trans Axle
Products
Develop
Position in
Hybrid and
Electric
Vehicles
Build on
Established
Position in
China
Strategic
Customer
Focus
Deployment of light-weight, efficient products
Systems Expertise and Grow Electronics, Electrical Capability
Evolve Global Footprint and Optimise Cost
Competitiveness Leverage growth in developing markets
Delivering Value through People
Accelerate growth with acquisitions and alliances
19
CVJ Systems – Planning to Outperform
Technology leadership
All-new, high-efficiency CVJ
Sideshafts for small vehicles and
low-cost platforms
Increasing global programmes
Best global footprint
Leadership in high growth regions
GKN Capital Markets Day – 12 April 2011
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Technology Leadership
countertrack™ CVJs
high efficiency and reduced fuel consumption
SX8 50° - ‘premium’: Roll-out accelerating - target 3m in 2015
SX6 47° - ‘standard’: Target first launch in 2013
Face spline – advanced wheel-hub interface
Weight, backlash and assembly advantages
Launched on some BMW models
Tailored solutions for Asia’s growth markets
TATA Nano supply growing in India
New customers for 3-wheeler vehicles in India
Developing local sideshafts for domestic vehicles in China
GKN Capital Markets Day – 12 April 2011
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Global Platform Support
Ford B-Segment: Fiesta, Fusion, EcoSport, Figo
Mexico
• GKN: Villagrán
• Ford: Cuatitlan
• 115,000 vehicles/yr.
Europe
• GKN: Vigo, Spain
• Ford: Cologne, Germany
• 25,000 vehicles/yr.
Brazil
• GKN: Porto Alegre
• Ford: Camacari
• 240,000 vehicles/yr.
Ford Vehicle Assembly Plant
GKN Sideshaft Manufacturing Plant
GKN Product Engineering Center / Support Location
GKN Capital Markets Day – 12 April 2011
India
• GKN: Chennai
• Ford: Chennai
• 115,000 vehicles/yr.
China
• GKN: GDC, Chongqing
• Ford: CFMA, Nanjing
• 85,000 vehicles/yr.
Thailand
• GKN: Rayong
• Ford: AAT, Rayong
• 50,000 vehicles/yr.
6 regions
630,000 vehicles/yr.
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Platform Complexity and Support
GM Delta (Europe): Astra, Zafira
One platform – many products
50 different sideshafts
CVJ size and type variants
performance and noise, vibration and
harshness (NVH)
Length and stem variations
fit to all engine/gearbox combinations
Critical competences
Managing complexity
Ability to react quickly to changes in demand
Supply chain management
50 sideshaft variants
350,000 vehicles/yr.
GKN Capital Markets Day – 12 April 2011
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Leadership in Key Growth Regions
2010 positioning
Americas
Increasingly robust position in
growing North American market
Continuing steady growth
in Brazil
China *
Asia
Well positioned in rapidly
growing China market
GKN
Source: GKN estimates
GKN Capital Markets Day – 12 April 2011
Accelerating expansion
in India
* JV brand vehicles only
24
Footprint Development in Mexico
Increasing capacity from 3m to over 4m car sets
GKN Driveline Celaya:
(Machining, Components)
Operations since 1979
GKN Driveline Celaya:
(Precision Forming)
Operations since 2000
GKN Driveline Villagran:
(Assembly)
Operations since 2006
GKN Capital Markets Day – 12 April 2011
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Footprint Development in India
Increasing capacity from 1.8m to nearly 3m car sets
Delhi
Dharuhera
GKN Driveline Dharuhera:
Operations since 1997
GKN Driveline Faridabad:
Operations since 1989
Faridabad
Kolkata
Mumbai
Pune
Land purchased for new
plant in Pune
Operations SOP: 2012
Oragadam
Chennai
GKN Capital Markets Day – 12 April 2011
Precision forging plant,
Oragadam
Operations SOP: Q4/2011
GKN Driveline Oragadam:
Operations since 2008
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Footprint Development in China
Increasing capacity from 4m to 7m car sets
GKN Capital Markets Day – 12 April 2011
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AWD/4WD Market Development
Principal AWD/4WD Architectures
6
Vehicles (millions)
5
4
CAGR
2010 - 2014
3
2
AWD
6.4%
4WD
4.6%
4WD (rigid axle)
2.4%
All 4WD/AWD
5.8%
Memo: All vehicles
5.9%
1
0
2007
2008
2009
2010
2011
2012
2013
2014
Source: IHS Automotive Forecast, January 2011.
GKN Capital Markets Day – 12 April 2011
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Growth in AWD Systems
Complete AWD systems capability
Propshafts - leading supplier of premium solutions
Launched DTF technology on Audi A8
New business wins with Volvo, Mercedes and Nissan
Growing in China and pursuing first win in India
AWD couplings, controls and ‘disconnects’
First EMCD launches in Europe: Dacia Duster, Mini Countryman
New more efficient EMCD gen. – two wins with Japanese OEMs
Pursuing AWD ‘disconnect’ opportunities in North America
Looking to grow position in geared products
2010 started PTU assembly in Shanghai
Reviewing FDU localisation in Thailand
GKN ‘system’ supply for the Dacia Duster (Renault)
GKN Capital Markets Day – 12 April 2011
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Growth in Trans Axle Solutions
Global leader in differentials for performance and mobility
Shift from passive to active limited slip differentials
Market constrained by availability of brake-based systems
Electronic lockers a big success in North America
Expanding open differential business driven by
global transmission programs and outsourcing
Production now in Japan, China, Italy and the US
New opportunities in Brazil and India
Gears from GKN Sinter Metals for some applications
Current order book
Trans Axle Solutions
c.£160m
Open
Diff.
Locker
LSD
2010
GKN Capital Markets Day – 12 April 2011
2014
30
Growth in eDrive Systems
Global escalation of customer development activity
Variety of market growth scenarios
20% to 30% of vehicles with some electric drive element by 2020
Up to 10% penetration of xEV-types (GKN targets) by 2020
eAxle for PSA HYbrid4 launching in 2011
Pursuing opportunities with four other OEMs
eTransmissions for Hybrid and Electric Vehicles
Three product families – three program wins in Japan, Europe, US
More than 20 active enquiries globally
Advanced developments and alliances
Broaden market participation
Alternative eDrive solutions
GKN Capital Markets Day – 12 April 2011
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Growth in China
Vehicle Production by Major Region
Global Growth 2011 – 2020
(from 2010 levels)
30
Vehicles (millions)
25
RoW
21%
Japan/S.Korea
1%
20
China
39%
32.8m
Vehicles
15
Americas
22%
10
Europe
17%
5
0
China
Europe
Americas
Japan/SouthKorea
Source: IHS Automotive Forecast, January 2011.
GKN Capital Markets Day – 12 April 2011
RoW
Importance of China
Sheer scale of growth!
Forecast to be 27% of global output in 2020
Expect move to more sophisticated vehicles
Electrification high on political agenda
32
Developing Full Driveline Coverage in China
Manufacture full CVJ portfolio and expand footprint
Localise latest technology
Develop local shaft range for domestic customers
Capacity expansion and new plant in Changchun
New business in rapidly growing AWD market
Propshafts, PTUs and couplings
Grow customer base for differentials and expand capacity
Establish position in eDrive systems
Expand our engineering capability
GKN Capital Markets Day – 12 April 2011
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GKN
Delivering Sustainable Growth
Summary
GKN Capital Markets Day – 12 April 2011
Summary – Driveline is positioned to outperform
Key growth drivers
Outperformance of the global CVJ business
Market growth in North America, China, India and Brazil
Broadening customer and product base in AWD and Trans Axle products
New product opportunities for drivetrain electrification
China as a special market in which to grow our presence
Strong relationships with customers underpin sustainability
Bolt-on acquisitions - focus on AWD and eDrive Systems
Driveline exceptionally well positioned to outperform global
markets
Targeting 2% to 3% p.a. outperformance relative to market
Move rapidly into target margin range of 8% to 10%
GKN Capital Markets Day – 12 April 2011
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GKN
Delivering Sustainable Growth
GKN Capital Markets Day – 12 April 2011