This document summarizes a presentation given by Phil Martens, President of Light Vehicle Systems at ArvinMeritor, and Jim Donlon, Senior Vice President and CFO of ArvinMeritor, at the Morgan Stanley Global Automotive Conference. The presentation provides an overview of Light Vehicle Systems, its performance and margins, strategies for improving performance through initiatives like Performance Plus, new product development focusing on smart systems and expanding engineering capabilities, and a strategy for growth in Asia.
1. Morgan Stanley
Global Automotive Conference
Phil Martens
President, Light Vehicle Systems
Jim Donlon
Senior Vice President and CFO
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2. Forward-Looking Statements
This 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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3. Agenda
• Light Vehicle Systems Overview
• Performance Plus – Enhancing
Revenue
– Engineering, Research & Development
– Product Strategy & Growth
3
4. LVS Overview
Today’s Portfolio of Businesses
Wheels
Average
Above
Door Systems
Margins
Average
Below
Roof Chassis
Systems
Systems
Low High
Growth
4
5. LVS Overview
Customer Base Before ET Divestiture
2006 Sales
Commercial Vehicle Customers Light Vehicle Customers
DaimlerChrysler
Other CVS
10%
Ford 1%
53%
15%
Volkswagen 1% Light
Volkswagen
Vehicle
10%
General Motors 1%
Fiat 2%
PACCAR 2% General Motors
9%
International 3%
Asian Based
OEMs 3%
Ford 7%
DaimlerChrysler
8%
47% Asian Based OEMs 3%
Commercial Fiat 3%
Volvo 11%
Vehicle BMW 2%
Other LVS 9%
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6. LVS Overview
Customer Base After ET Divestiture
2006 Sales
Commercial Vehicle Customers Light Vehicle Customers
33%
DaimlerChrysler
8%
Light
Other CVS Volkswagen
Vehicle
22% 7%
Asian Based
OEMs 4%
Ford 1%
General Motors 3%
Volkswagen 1%
Ford 3%
General Motors 1%
BMW 1%
Fiat 2%
PACCAR 2%
Asian Based Other LVS 7%
OEMs 4%
International
67% 5%
Commercial Volvo 17%
Vehicle DaimlerChrysler
12%
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7. LVS Overview
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
VW PQ24/25 Polo, Ibiza, Audi A2, Skoda Fabia
Ford C1 Focus, C-MAX, Volvo S40/V50
GMT 380/390 TrailBlazer
Honda CYR2/UM Accord, Odyssey, Pilot
VW 7L Audi Q7
Peugeot PF1 207
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8. LVS Overview
Door Systems
25 Million
Automotive Latches
25 Million
Window Regulators
15 Million
Electric Motors
4 Million
Electronic Door
Door Modules
Control Module
(EDCM)
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9. LVS Overview
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
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10. LVS Overview
Steel Wheels
• Available up to 24.5 inches
• Attractive alternative to
aluminum
– Safer, stronger and
more durable
– Less costly
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11. LVS Overview
LVS EBITDA Margins Improving
Continuing Operations Before Special Items
Q1 Full Year
FY07 3.2%
FY06 2.6%
FY07 B/(W) FY06 0.6% ≥ 1.0%
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12. LVS Overview
Source of YOY Improvement
EBITDA Margins Before Special Items
FY08-FY09
FY07
(per year)
2005 Restructuring Benefits 0.5% -
Cost Reductions and Benefits of Performance
1.8% 2.0 - 2.5%
Plus, Net of Price Downs
Customer Disruption (TBD)
Risks/Other (1.0)% (1.0) - (1.5)%
Total ≥ 1.0% ≥ 1.0%
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13. LVS Overview
Revamped Global Contender
• Reconstruction of operations
– Competitive footprint
– Global sourcing strategies
• Achieving labor efficiency
gains through lean
manufacturing
• Acceleration of improvements
with Performance Plus
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14. Performance Plus
Top Quartile Financial Performance Among Peer Companies
Goal
Steering Committee
J. Craig J. Donlon P. Martens R. Ostrov C. Reinhardt R. Sachdev
Operational Excellence Commercial Excellence
Approach
Cost Improvements Revenue Enhancement
Product
Strategy & Aftermarket
Materials Mfg. Overhead ER&D
Growth
C. C.
Sponsors J. Craig P. Martens P. Martens J. Craig
Reinhardt Reinhardt
Talent Excellence
Foundation
Sponsor: R. Ostrov
Program Office
Sponsors: J. Craig and J. Donlon
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15. Engineering, Research & Development
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
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16. Engineering, Research & Development
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
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17. Engineering, Research & Development
LER - Low Energy
Release Latch
Figures of Merit
Integrated Features Design Highlights
Fast, low-cost
• Software controlled • Up to 30% reduction in
keyless entry
actuator package size
• Power release • Up to 65% reduction in
Compact
components
• Power lock packaging
• Up to 30% reduction in
• Power double lock
weight
• Power child safety
Easy door opening
• Low effort manual after crash
release
Small Latch Package – Maximum Functional Content
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18. Engineering, Research & Development
Plastic Door Module
Vision Evolution per Customer Strategy
Integrated Features Design Highlights Figures of Merit
• Partial glass guidance
Pin Less I/S Handle • Up to 30% reduction in
• Drum housing / motor
weight**
attachment
• Reduction of up to 50
• Pulley / ramp mounting
Rail Less components due to high
• Locating pins
Guide “A”
integration**
• Wiring harness attachments
• Design flexibility
• Speaker base
• Pull handle / trim attachments
• I/S handle base Pulley Attachments
• Glass support channel
** Compared to steel module.
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19. Engineering, Research & Development
New Offerings in Chassis Systems
Development Programs
Advanced Engineering Programs
Integrated Active Roll
Air Strut Control
Modular Adaptive
Corner Damping
System
Multilink
Active Air
Independent
Suspension
Rear
Suspension
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20. Engineering, Research & Development
Chassis Systems Integration
Air Suspension Systems
1
– System integration for
standard air suspension
and innovative products
such as Active Air Suspension 1
and Package Constrained systems
Active Roll Control Systems
2
– Hydraulically controlled stabilizer bar
systems provide increased safety
and improved ride and handling 2
3
– Self contained system reduces complexity
and allows for easier packaging
Adaptive Damping Systems
3
– Computer-controlled damping system
uses unique, modular and continuously-variable
piston to improve ride and handling
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21. Engineering, Research & Development
Expanding Engineering, Research
and Development
Establish Technical Center Expand Technical Center
in China in India
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22. Product Strategy & Growth
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
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23. Product Strategy & Growth
New Business Wins with Asian
Customers
First Auto Works
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24. Product Strategy & Growth
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
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