Estimates of the impact of the crisis on the automotive market continue to deteriorate with a forecast for 2020 of -22,3% compared to 2019 volumes on a global scale with key markets such as Europe and the US particularly impacted (-24,9% and -26,6% respectively). The recovery will be long and will take 2-3 years Also prolonged factories’ shutdowns (gradually reopened between April and May) have led to a further contraction in production forecasts for 2020 (-22% compared to 2019) with a consequent negative impact on vehicles’ delivery times that are expected to add complexity to the market recovery

1. June 2020
Covid-19 impact on automotive
industry

2. 2
Highlights
Introduction
▪ Estimates of the impact of the crisis on the automotive market continue to
deteriorate with a forecast for 2020 of -22,3% compared to 2019 volumes on a
global scale with key markets such as Europe and the US particularly impacted (-24,9%
and -26,6% respectively).The recovery will be long and will take 2-3 years
▪ Dealers reopened in May in all geographies, however traffic in the showroom is
very low (and partially related to deliveries of pre-covid orders) and OEMs and
dealers are trying to counter it mainly by activating new digital tools and channels, with
additional economic incentives and new financial products
Sales
Production
▪ The prolonged factories’ shutdowns (gradually reopened between April and May) have
led to a further contraction in production forecasts for 2020 (-22% compared
to 2019) with a consequent negative impact on vehicles’ delivery times that are
expected to add complexity to the market recovery
▪ The powertrain mix forecasts could change given the recent and the possible
future softening of the regulation on emissions (targets, timing and fines). In the mid-
long term the need of OEMs to cover the huge investments already done on car park
electrification could impact on EVs production

3. 3
Agenda
1 Sales forecasts update
2 Impacts on global production
3 Main considerations

4. 4
Expected sales drop (May’20 forecast) due to
COVID-19 effects as of today is estimated to be
-22,3% between 2020 and 2019
2020
2008
2019
2009
2016
2017
2007
2010
2011
2012
2013
2015
2018
2021
2014
2022
2023
74,0
63,2
62,1
81,3
56,3
58,9
66,5
70,5
83,0
77,1
85,1
63,3
85,6
81,1
86,6
71,6
77,3
78,9
Efforts to contain Covid-19 continue to hummer the global economy
causing an unprecedented challenges for the Automotive sector
Sales forecasts update – Global overview
*) Source: Arthur D. Little analysis on IHS estimations and other available data; **) Source: World Health Organization ***) Delta forecast releases April 16th and May 20th
Global Passenger Car Sales 2007 – 2023F* (updated on May 20th, 2020)
Units, Mio
Global
recession
2008/2009
Expected
COVID-
19 effect
IHS Forecast
Δ YoY:
09/08: -4,3%
08/07: -5,2%
New PC Sales had a drop of
-9,4% between 2007 and 2009
◼ From mid-April till mid-May the number of new confirmed
COVID-19 cases on worldwide level has grown by +113%
(+2,88 Mln)** and keeps growing
◼ Though, at the moment it is difficult to foresee the
shape of the post pandemic recovery, which might be
V-shaped, U-shaped or L-shaped. Forecasts*** of May,
respect to April, anticipate that:
– in 2020 new car registrations are supposed to increase its
drop by -11,6% or 8,26 Mln units. The main contribution
to this drop can be attributed to USA (1,87 Mln), China
(1,13 Mln), India (770k), France (338k), Japan (299k),
Germany (281k), UK (263k), Canada (239k), Russia
(221k) and Italy (197k)
– in 2021, 2022 and 2023 new car registrations will
additionally drop by -6,2%, -4,3% and -3,8%
COVID-19 is still having an important impact on
global new car sales: during the beginning of May
countries have started to ease lockdown measures but the
final effect on financial situation of the market is still to be
verified during following months
-27,1%

5. 5
2017
2015
2016
2021
2018
2019
2020
2022
2023
16,0
15,4
12,1
14,9
14,5
15,9
16,1
17,5
14,5
13,7
New PC registrations bottom out across all European countries inApril.Italy was
hit particularly hard by the pandemic.2020 looks like a“write-off”
Sales forecasts update – Europe
*) Source: Arthur D. Little analysis on IHS estimations and other available data; **) Western Europe and Central Europe: Austria, Belgium, Bosnia-Herzegovina, Bulgaria, Croatia; Cyprus; Czech Republic; Denmark; Estonia;
Finland; France; Germany; Greece; Hungary; Iceland; Ireland; Italy; Latvia; Lithuania; Luxembourg; Macedonia; Malta; Netherlands; Netherland Antilles; Norway; Poland; Portugal; Romania; Serbia; Slovakia;
Slovenia; Spain; Sweden; Switzerland; United Kingdom; ***) Source: ACEA; ****) ACEA, CECRA, CLEPA and ETRMA
COVID-19 impact on PC Sales 2015-2023F*: WE+CU** (updated on May 20th, 2020)
Units, Mio
Expected
COVID-
19 effect
◼ April was the first full month with COVID-19 restrictions
in place and resulted in the strongest monthly drop in
car demand since records began
◼ All over the Europe car dealerships are reopening
after the lockdown (e.g. April 23rd in Germany, May 4th
in Italy, May 4th also for Portugal, May 11th in France,
reopening in Spain only if Dealer is smaller than 400 square
meters…)
◼ But the level of foot traffic is still low and still did not
reach pre-COVID levels: probably, “coming back to
normal” will take time
◼ Each of the 27 EU markets recorded double-digit declines
in April, but Italy and Spain endured the biggest losses,
with car registrations falling by 97.6% and 96.5%
respectively. Looking at the other major markets, demand
dropped by 61.1% in Germany, while France saw an
88.8% contraction in April. UK registrations were down
97.3%
Four main associations representing the EU automotive
sector**** on May 5th issued a list of 25 policy
recommendations to support industry restart, based
mainly on cross-border coordination, electrification,
digitalization and regulation flexibility/deregulation
IHS Forecast
Expected % GrowthYoY -24,9% 12,7% 6,3% 2,3%
During 2007-2009 period Western and
Central Europe** market droped by -9,9%.
After another recession in 2012, since 2013
PC Sales have been constantly growing till
the end of 2019 with CAGR of +4,3%
-30,8%

6. 6
2015
2019
2020
2016
2017
2018
2021
2022
2023
17,117,1
15,5
12,2
14,3
15,7
16,8 16,9
16,6
16,4
USA is still at the crest of the COVID-19 wave. Dealers are trying to push
sales offering incentives.The negative record of 2008 might be not beaten
Sales forecasts update – US
*) Source: Arthur D. Little analysis on IHS estimations and other available data;
COVID-19 impact on PC Sales 2015-2023F*: USA (updated on May 20th, 2020)
Units, Mio
Expected
COVID-
19 effect
◼ United States are still confirmed to be the new global
epicenter of COVID-19. Most states have at least
partially reopened (or about to reopen), with just a few
that are still under statewide lockdowns
◼ In April with consumers locked down at home and auto
plants shuttered, sales of new cars plunged to barely half
what they were in 2019
◼ To push the sales OEMs are been offering incentives
averaging about $5.000 on the typical new vehicle,
whether in the form of rebates, zero-interest loans or
other deals. Online sales & almost half of states not
limiting dealer activity helping to provide some cushion
against worst-case scenario
◼ In fact, zero-interest loans of 72 to 84 months have
become wildly popular lately, accounting for about one-
quarter of all new PC sales since the beginning of March
◼ Demand is expected to have a more positive recovery
in 2022 and 2023
At best, it will likely be mid to late summer 2020 before
demand returns to pre-pandemic trend lines and the
full year could see sales slip as low as 12.2 Mln, down from
16.6 million in 2019
Expected % GrowthYoY -26,6% 17,9% 8,4% 0,9%
During 2007-2009 period US market
dropped by -35,1%. After it, it was growing
constantly until the end of 2016 with CAGR
of +7,0%. Starting from the beginning of
2017 and till the end of 2019 new car
registrations decreased with CAGR of -1,0%
IHS Forecast
-25,7%
Jan ’20 forecast

7. 7
2016
2018
2015
2019
2020
2023
2022
2021
2017
23,7
20,7
24,4
21,6
20,0
23,5
18,4
22,0
23,4
20,0
23,3
In China there are concerns on secondary economic impacts from the
global contagion, which could further disrupt the recover are still high
Sales forecasts update – China
Source: *) Arthur D. Little analysis on IHS estimations and other available data; **) Source: China Automobile Dealers Association
COVID-19 impact on PC Sales 2015-2023F*: China (updated on May 20th, 2020)
Units, Mio
Expected
COVID-
19 effect
◼ According to China Automobile Dealers Association on
May 6th about 80-90% of foot traffic has recovered for
automobile Dealers across China as demand warms up**.
Nonetheless in April new vehicle sales increase, in the first
10 days of May, felt by 14% vs. 2019 YTD, partially due to
the new COVID-19 second wave of infections emerged
◼ The industry is changing with the times, prompting new
strategies and tactics:
– Pop-up auto shows: Beijing auto show was postponed
until September from its original April dates. Still several
OEMs staged its own events in open spaces (and not
inside the halls). Everyone is asked to wear a face mask
– Online moves: most OEMs are opting to connect with
Chinese customers through online channels, opening
blogs to pitch products and services. At the end of
March, nearly a quarter of dealerships surveyed were
using live-streaming services for sales and marketing*
In China the lockdown might have a catalyst-like effect on
the long-term change towards digitization of sales,
services and marketing in Automotive industry
Expected % GrowthYoY -15,0% 12,2% 6,4% 6,8%
Since 2007 and till 2017 China PC Sales have been constantly
growing with CAGR of +16,1%. The first slow down was
registered in 2018 and 2019 (-2,9% and -8,9% YoY respectively)
IHS Forecast
-21,1%

8. 8
Agenda
1 Sales forecasts update
2 Impacts on global production
2.1 Production forecasts
2.2 Focus on electrification
3 Main considerations

9. 9
2019 2020 2021 2022 2023
87,2
85,1
88,9
69,3
79,7
88,8
Units, Mio
Due to COVID-19, global OEM 2020 production against 2019 levels is now
cut by 19.6 million units or -22%, the impact is uneven among countries
Impacts on global production – Global outlook
*) Source: Arthur D. Little analysis on IHS estimations and other available data
Global LightVehicles Production Forecast (updated on May 24th, 2020)
IHS Forecast As of today, seems that among the Top 3 biggest market (USA, EU28
and China), USA is still be the most impacted. China (ex
epicenter of the outbreak) is having a quick recovery
# Country
Production 2020 FY:
∆ May vs. Feb forecast
∆ %
May vs. Feb forecast
1 Brazil - 974.821 -33,5%
2 USA - 2.987.930 -27,1%
3 Canada - 467.655 -27,8%
4 Russia - 366.414 -24,1%
5 EU 28 - 4.125.061 -23,6%
6 Mexico - 873.041 -23,0%
7 Turkey - 286.478 -21,2%
8 Japan - 1.638.159 -18,3%
9 South Korea - 602.547 -15,7%
10 China - 2.702.290 -11,6%
Rest of theWorld - 2.884.037 -25,5%
According to IHS estimations, OEM
production will not reach before-COVID-
19 levels in the next 3 years
-20,5%

10. 10
To date EU production losses due to factory shutdowns amount to at
least 2.4Mln vehicles so far*.Average shutdown duration is 30 working days
Impacts on global production – Focus on EU
Source: ACEA estimations; *) This figure includes passenger cars, trucks, vans, buses and coaches.
**) Source: ACEA;
EU production impact, by country (updated on May 18th, 2020)
XX Shutdown duration (so far), working days
Production losses are set to increase if shutdowns are extended
or additional plants are brought to a halt
UK
Netherlands
Belgium
France
Spain
Portugal
Austria
Germany
Poland
Czech Republic
Slovakia
Hungary
RomaniaSlovenia
Sweden
Finland
Italy
15
25
36
40
35
34
34
25
25
29
29
34
27 31
22
24
41
The jobs of at least 1.138.536
Europeans working in automotive
manufacturing are affected by
factory shutdowns as a result of
the current crisis**
# Country
As of today Motor
vehicles production lost
Delta vs. ACEA April
13th estimation
1 Germany 605.722 +107.712
2 Spain 452.155 +135.492
3 France 278.425 - 478
4 United Kingdom 250.792 +94.448
5 Italy 159.336 +50.741
6 Czech Republic 155.060 +15.976
7 Slovakia 114.632 +29.213
8 Poland 101.957 +60.000
9 Romania 68.673 0
10 Hungary 51.552 +3.857
Other EU 186.651 +27.901
+X Variation of Shutdown duration vs. ACEA forecast of April, 13th
-X
-2
-8
+13
+7
+15
+1
+15
+4
+3
+6
+4
+10
+6
+13
+4
0
0

11. 11
Agenda
1 Sales forecasts update
2 Impacts on global production
2.1 Production forecasts
2.2 Focus on electrification
3 Main considerations

12. 12
Possible Post-Covid regulation evolution:
▪ Possible fines for exceeding targets waived/reduced in
2020
▪ Possible removal of 2020 phase-in of regulation (100%
phase-in in 2021)
▪ Possible super-credit prolonged after 2022 or
postponed in line with regulation
2021 20252020 2022 2023 2024
7,4%
3,7%
5,7%
5,9%
8,5%
10,0%
10,1%
11,0%
12,9%
12,4%
15,5%
13,4%
BEV Pre-Covid
BEV Post-Covid
Plug-in/Full Hybrid Pre-Covid
Plug-in/Full Hybrid Post-Covid
Pre-Covid regulation:
▪ EU fleet-wide average emission target for new cars
will be 95 g CO2 /km from 2021 (phase-in apply from
2020 on 95% of least emitting new cars of each
manufacturer)
▪ 95€ premium apply for each g/km exceeding target
▪ Super-credit (cap 7.5 g/km) for ZLEV* 2020-2022
In Europe to counteract the effects of the crisis,CO2 regulation (key driver for
EVs development) might be partially delayed or mitigated in the short term
Focus on electrification – Europe
Source: 1) Arthur D. Little analysis on IHS data and reports and on the requests of ACEA, CLEPA, ETRMA,CECRA to the European Commission; 2) Arthur D. Little analysis on IHS data (pre-Covid Feb-20, post-Covid end
of Apr-20)
* Zero- and low-emission vehicle (emission lower than 50 g/km); ** Electric Vehicles (BEV, PHEV and Full-Hybrid)
Powertrain production forecasts – EVs** incidence 2020-2025
Covid-19: possible impacts on regulation and production
Post-Covid EVs production:
▪ Considering the current
regulation (no changes), it is
expected a drop of EVs
production incidence over the
next 2 years
▪ A loosened European regulation
and local government measures
and investments in “green”
infrastructures could impact on
EVs outlook
Regulation1
Production2
Europe
?
Post-Covid regulation evolution:
▪ No approved evolutions until now

13. 13
Post-Covid regulation evolution:
▪ SAFE rule the 31st of March 2020 “relaxed”
standards; MY 2021-2026 stringency from ~5%/yr
(Obama-era) to ~1.5%/yr
▪ MY 2025 new targets: 202g CO2/mile and 39.8 mpg
▪ BEVs-FCVs incentives extended to MY 2026
Pre-Covid regulation:
▪ Stringent CAFE and CO2 standards for Model Year
(MY) 2020-2025 (Obama-era)
▪ MY 2025 targets 163g CO2/mile and 48.7~49.7 mpg
(Obama-era)
▪ Incentives to Battery Electric Vehicles (BEVs) and
Fuel Cell Vehicles (FCVs) up to 2021
2021 20252020 20232022 2024
6,5%
2,9%
7,3%
3,7% 3,9%
3,8%
5,2%
4,9% 5,7%
5,8%
7,6%
9,0%
In North America the SAFE vehicles rule launched in March in the US has
softened emissions standards and is expected to reduce the focus on BEVs
Focus on electrification – North America
Source: 1) Arthur D. Little analysis on IHS data and reports and on EPA, NHTSA and CARB; 2) Arthur D. Little analysis on IHS data (pre-Covi Feb-20, post-Covid end of Apr-20)
* State/Local Governments can’t enact their own vehicle standards (Arthur D, Little analysis based on CARB and IHS); ** Electric Vehicles (BEV, PHEV and Full-Hybrid)
Powertrain production forecasts – EVs** incidence 2020-2025
Covid-19: possible impacts on regulation and production
Post-Covid EVs production:
▪ Regulation evolution is expected
to have a strong impact on BEVs
partially compensated by Hybrids
▪ OEMs could revise their
investments on EVs in the mid-
term (return to ICE programs)
further impacting EVs production
▪ End of year US elections could
radically change the scenario
Regulation1
BEV Pre-Covid
BEV Post-Covid
Plug-in/Full Hybrid Pre-Covid
Plug-in/Full Hybrid Post-Covid
North America
Production2
Possible Post-Covid further regulation evolution:
▪ One National Program* and SAFE rules could be
challenged by the greener US Countries
?
✓

14. 14
Post-Covid regulation evolution:
▪ Postponement of the China 6 to January 2021
▪ Extension of NEVs subsidies & tax exemption to ’22,
however with a decreasing incidence and with a car price
limit of 42K$
▪ After Beijing’s other main cities are rising license plate
quota (not specific for NEVs**)
Pre-Covid regulation:
▪ China 5 standards to be replaced by the more
stringent China 6 from July 2020
▪ NEVs*** subsidies & tax exemption planned to be
removed from 2021
▪ Car license plate restriction in 8 big cities
202320222020 2021 2024 2025
3,6%
6,3%
4,0%
5,4%
8,9%
6,9%
11,9%
8,5%
14,0%
9,6%
16,2%
10,9%
To support the market, China, after postponing China 6 standards and
extending NEVs’ subsidies up to 2022, could soften some restrictions
Focus on electrification – China
Powertrain production forecasts – EVs* incidence 2020-2025
Covid-19: possible impacts on regulation and production
Regulation1
Production2
BEV Pre-Covid
Plug-in/Full Hybrid Pre-Covid
BEV Post-Covid
Plug-in/Full Hybrid Post-Covid
China
Post-Covid EVs production:
▪ The extension of NEVs subsidies to
2022 in the short term (in 2020)
could weaken their demand
▪ Both NEVs and ICE cars will benefit
of license plate quota extension
▪ In the mid-long term EVs are
expected to gain share to cover the
investments already made by OEMs
Source: 1) Arthur D. Little analysis on IHS data and reports and on CAAM and Ministry of Ecology and Environment of the People’s Republic of China; 2) Arthur D. Little analysis on IHS data about Greater China
(pre-Covi Dic-19, post-Covid end of Apr-20)
*EV: Electric Vehicle (BEV, PHEV, Full-Hybrid); ** NEV: New Energy Vehicle (BEV, PHEV, Fuel Cell) *** CAFC: Corporate Average Fuel Consumption
Possible Post-Covid further regulation evolution:
▪ CAAM push for removal of license plate quota
▪ Softening of CAFC*** requirements
✓
?

15. 15
Agenda
1 Sales forecasts update
2 Impacts on global production
3 Main considerations

16. 16
Take-home for OEMs
Main considerations
Regulation on emissions is evolving and may
require for OEMs to review investments on
electrification (timing and amount) and product
launch strategies (powertrain, timing, etc.)
Be reactive on possible
powertrain mix changes driven
by regulation evolution
Electrification
The collapse of the market and the expected long
recovery time could call into question the
sustainability and structure of the current
distribution network model
Review distribution strategy,
there is an opportunity to anticipate
the “future retail”
Distribution
model
Given the deep economic crisis, customers
characteristics and needs are radically changing
Take care of your customers
monitoring the evolution of profiles,
behaviors and purchasing drivers
and adapting the selling proposition
Customer
Showroom visits are still very low and new
engagement and interaction models are required
leveraging digital tools and channels and
considering the current social distancing measures
Digitalize the customer
journey anticipating and possibly
increasing planned investments
Digital
transformation

17. www.adlittle.com
Fabrizio Arena
Partner Automotive
+39 335 123 2387
arena.fabrizio@adlittle.com
MassimilianoTortorella
Principal Automotive
+39 334 620 9636
tortorella.massimiliano@adlittle.com@
@
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