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Morgan StanleyMorgan StanleyGlobal Automotive ConferenceGlobal Automotive Conference
Phil MartensPhil MartensPresident, Light Vehicle SystemsPresident, Light Vehicle Systems
Jim DonlonJim DonlonSenior Vice President and CFOSenior Vice President and CFO
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Forward-Looking StatementsThis presentation contains statements relating to future results of the company (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,”“anticipate,” “estimate,” “should,” “are likely to be,” “will” and similar expressions. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to global economic and market cycles and conditions; the demand for commercial, specialty and light vehicles for which the company supplies products; risks inherent in operating abroad (including foreign currency exchange rates and potential disruption of production and supply due to terrorist attacks or acts of aggression); availability and cost of raw materials, including steel; OEM program delays; demand for and market acceptance of new and existing products; successful development of new products; reliance on major OEM customers; labor relations of the company, its suppliers and customers, including potential disruptions in supply of parts to our facilities or demand for our products due to work stoppages; the financial condition of the company’s suppliers and customers, including potential bankruptcies; possible adverse effects of any future suspension of normal trade credit terms by our suppliers; potential difficulties competing with companies that have avoided their existing contracts in bankruptcy and reorganization proceedings; successful integration of acquired or merged businesses; the ability to achieve the expected annual savings and synergies from past and future business combinations and the ability to achieve the expected benefits of restructuring actions; success and timing of potential divestitures; potential impairment of long-lived assets, including goodwill; competitive product and pricing pressures; the amount of the company’s debt; the ability of the company to continue to comply with covenants in its financing agreements; the ability of the company to access capital markets; credit ratings of the company’s debt; the outcome of existing and any future legal proceedings, including any litigation with respect to environmental or asbestos-related matters; rising costs of pension and other post-retirement benefits and possible changes in pension and other accounting rules; as well as other risks and uncertainties, including but not limited to those detailed herein and from time to time in other filings of the company with the SEC. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.
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Agenda
• Light Vehicle Systems Overview
• Performance Plus – Enhancing Revenue
– Engineering, Research & Development
– Product Strategy & Growth
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Today’s Portfolio of Businesses
Wheels
Door Systems
Roof Systems
Chassis Systems
Mar
gin
s
Bel
ow
Ave
rage
Abo
ve
Ave
rage
Low HighGrowth
LVS Overview
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Customer Base Before ET Divestiture
2006 SalesCommercial Vehicle Customers Light Vehicle Customers
DaimlerChrysler10%
Volkswagen10%
Ford 7%
Asian Based OEMs 3%
BMW 2%Fiat 3%
Other LVS 9%
General Motors9%
Other CVS15%Ford 1%
Volkswagen 1%
General Motors 1%
PACCAR 2%
International 3%
Volvo 11%
DaimlerChrysler8%
Fiat 2%
Asian Based OEMs 3%
47% Commercial
Vehicle
53% Light
Vehicle
LVS Overview
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Customer Base After ET Divestiture
2006 SalesCommercial Vehicle Customers Light Vehicle Customers
DaimlerChrysler8%
General Motors 3%
Volkswagen7%
Ford 3%
Asian BasedOEMs 4%
BMW 1%
Other LVS 7%
Other CVS22%
Fiat 2%
Asian Based OEMs 4%
Ford 1%Volkswagen 1%
General Motors 1%
PACCAR 2%
International5%
Volvo 17%DaimlerChrysler
12%
67% Commercial
Vehicle
33% Light
Vehicle
LVS Overview
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Top 10 Light Vehicle Platforms After ET Divestiture
Platform Key Vehicles
VW PQ34/35 Golf, Touran, Audi A1, Skoda Octavia
Hyundai NF/CM Santa Fe, Sonata
Renault C Megane, Scenic
Dodge DR-DE Ram
Ford C1 Focus, C-MAX, Volvo S40/V50
Peugeot PF1 207
VW PQ24/25 Polo, Ibiza, Audi A2, Skoda Fabia
GMT 380/390 TrailBlazer
Honda CYR2/UM Accord, Odyssey, Pilot
VW 7L Audi Q7
LVS Overview
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Electronic Door Control Module
(EDCM)
25 MillionAutomotive Latches
Door Systems
15 MillionElectric Motors
25 MillionWindow Regulators
4 MillionDoor Modules
LVS Overview
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Complete Range of Roof Systems
• Large Roof-Opening Systems– Near-convertible sensation
without sacrificing acoustics, styling or comfort
• Multiple glass panels and side-guided roller blind
• Electric anti-squeeze technology
• Integrated beam for energy absorption
• Low-cost Asian sunroof– Competitive solution for
global OEM programs
LVS Overview
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Steel Wheels
• Available up to 24.5 inches• Attractive alternative to
aluminum– Safer, stronger and
more durable– Less costly
LVS Overview
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LVS EBITDA Margins ImprovingContinuing Operations Before Special Items
Q1 Full Year
FY07 3.2%
FY06 2.6%
FY07 B/(W) FY06 0.6% ≥ 1.0%
LVS Overview
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Source of YOY ImprovementEBITDA Margins Before Special Items
FY07 FY08-FY09 (per year)
0.5%
1.8%
Customer Disruption (TBD)
Risks/Other (1.0)% (1.0) - (1.5)%
≥ 1.0%
2005 Restructuring Benefits -
Cost Reductions and Benefits of Performance Plus, Net of Price Downs 2.0 - 2.5%
Total ≥ 1.0%
LVS Overview
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Revamped Global Contender
• Reconstruction of operations– Competitive footprint– Global sourcing strategies
• Achieving labor efficiency gains through lean manufacturing
• Acceleration of improvements with Performance Plus
LVS Overview
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Performance Plus
Steering Committee
Operational ExcellenceCost Improvements
Commercial ExcellenceRevenue Enhancement
Materials Mfg. OverheadProduct
Strategy & Growth
Aftermarket
C. Reinhardt
C. Reinhardt J. Craig P. Martens P. Martens J. Craig
ER&D
J. Craig J. Donlon R. Ostrov C. ReinhardtP. Martens
Sponsor: R. Ostrov
Talent Excellence
App
roac
hFo
un
dati
on
Sponsors: J. Craig and J. DonlonProgram Office
R. Sachdev
Sponsors
Goa
l Top Quartile Financial Performance Among Peer Companies
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ArvinMeritor Product Development System
• Align dispersed resources and fragmented practices– Reduce operating and product warranty costs– Produce more engineering output for the same expense– Increase customer satisfaction and new business acquisition
• Establish central program management office– Accelerate implementation of common processes
• Generate five “Gotta Have” products– Create value for customers through innovative, cost-effective
solutions– 126 patents received in 2006
Engineering, Research & Development
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LVS Smart Systems
• Emphasize delivery of solutions through systems integration and electronic controls
• Shift from high-volume mechanical products to high-margin electronic products
Electronics and Controls that Enhance Vehicle Performance
Engineering, Research & Development
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LER - Low Energy Release Latch
Integrated Features
• Software controlled actuator
• Power release
• Power lock
• Power double lock
• Power child safety
• Low effort manual release
Engineering, Research & Development
Design Highlights
Fast, low-cost keyless entry
Compact packaging
Easy door opening after crash
Figures of Merit
• Up to 30% reduction in package size
• Up to 65% reduction in components
• Up to 30% reduction in weight
Small Latch Package – Maximum Functional Content
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Evolution per Customer StrategyVision
Integrated Features
• Partial glass guidance • Drum housing / motor
attachment• Pulley / ramp mounting• Locating pins• Wiring harness attachments• Speaker base• Pull handle / trim attachments• I/S handle base• Glass support channel
Figures of Merit
• Up to 30% reduction in weight**
• Reduction of up to 50 components due to high integration**
• Design flexibility
Design Highlights
Pin Less I/S Handle
Rail Less Guide “A”
Plastic Door Module
** Compared to steel module.
Pulley Attachments
Engineering, Research & Development
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New Offerings in Chassis Systems
IntegratedAir Strut
Active Air Suspension
Active Roll Control
Modular Corner System
Multilink Independent Rear Suspension
Adaptive Damping
Engineering, Research & Development
Advanced Engineering Programs Development Programs
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Chassis Systems Integration
Air Suspension Systems– System integration for
standard air suspension and innovative products such as Active Air Suspension and Package Constrained systems
Active Roll Control Systems– Hydraulically controlled stabilizer bar
systems provide increased safety and improved ride and handling
– Self contained system reduces complexity and allows for easier packaging
Adaptive Damping Systems– Computer-controlled damping system
uses unique, modular and continuously-variable piston to improve ride and handling
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Engineering, Research & Development
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Expanding Engineering, Research and Development
Expand Technical Center in India
Establish Technical Center in China
Engineering, Research & Development
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ArvinMeritor Global Growth Strategy
• Triple sales in Asia and with Asian OEMs within five years
– $1 billion+ added sales in Asia Pacific
– $1 billion in sourcing
– Healthy mix of local OEMs and global OEMs in region
• Generate compelling new products that create exceptional value for customers
• Increase systems, controls and electronics capabilities
Product Strategy & Growth
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New Business Wins with Asian Customers
First Auto Works
Product Strategy & Growth
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Transforming ArvinMeritor – Asia Pacific Strategy
• Aggressively pursue and manage growth with focus on higher margin product lines– Optimize sourcing– Local design and engineering– Global R&D and shared
services• One regional office for Asia
Pacific– Rakesh Sachdev, named
President, Asia Pacific
Product Strategy & Growth
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Q & A
