Swindon closure, and Europe All confidential information blanked

1. 1
RATIONALE AND
ALTERNATIVES TO
THE PROPOSAL OF
CLOSURE OF HUM
THIS DOCUMENT IS CONFIDENTIAL AND FOR THE EXCLUSIVE AND PERSONAL
USAGE OF DESMOND QUINN, NATIONAL OFFICER AT UNITE THE UNION
Redacted version

2. 2
LOOKING BEYOND THE OFFICIAL
RATIONALE …
#1

3. 3
INTRODUCTION : THE CLOSURE OF
SWINDON IS NOT A QUESTION OF
SURVIVAL FOR HONDA

4. 4
SWINDON IS A PROFITABLE BUSINESS
31/03/2018
th GBP
31/03/2017
th GBP
Turnover 2,608,166 2,161,249
Profit (Loss)
before
Taxation
24,860 9,048
} The profit shown by HUM is the
result of the transfer price policy
allocating a ”certain” value of the
through net margin to the
operations in the UK
} Swindon is a profitable operation
with a 6.11% return on capital
employed (well above Honda’s cost
of capital) and 9.74% return on
equity.
} In 2018, HUM has disclosed £24.6m
profit before tax despite a significant
allocation of the through net margin
in other locations.
Extract of the P&L of HUM
Source : Companies House

5. 5
HONDA’S AUTOMOTIVE OPERATING PROFIT YTD FY18 VS FY19 (9 MONTHS)
IS DECREASING BUT MAINLY DUE TO ADVERSE CONDITIONS ON KEY
MARKETS OUTSIDE OF EUROPE AND THE IMPACT OF THE FLOODING IN
MEXICO (US442M)
HONDA GROUP FINANCIAL RESULTS

6. 6
HONDA SHOWS A STRONG FINANCIAL POSITION.
HONDA GROUP FINANCIAL RESULTS

7. 7
AUTOMOTIVE CAPEX CUT 5.1% FY18 YTD VS FY19 YTD. HONDA INVESTMENT HAS
BEEN STRONG OVER THE LAST YEAR WITH KEY INVESTMENTS IN JAPAN AND CHINA
(NEW PLANT) AND SIGNIFICANT INVESTMENTS TO RESHAPE THE US OPERATIONS.
Currency: Yen (billion)
HONDA GROUP FINANCIAL RESULTS

8. 8
THE AMBITION OF 100% ELECTRIFIED
VEHICLES BY 2025 IS NOT REASONABLE
#1-1

9. 9
EV DEFINITIONS
} Mild hybrid (MHEV/48V) :
• Further improvement in stop-start, including regenerative braking, engine off
coasting, launch assist and facilitation of high-power ancillary loads
} Hybrid Electrical Vehicles (HEV)
• or Conventional hybrid vehicles include both a conventional engine and a
battery powered electric motor. First to emerge : Prius in 1997
} Plug-in Hybrid Vehicles (PHEV) :
• powered by an electric motor and an internal combustion engine. The battery
can be charged from the grid, and the combustion engine supports the
electric motor when higher operating power is required or when the battery's
state of charge is low.
} Battery Electrical Vehicle (BEV) :
• powered solely by an electric motor, using electricity stored in a battery. The
battery must be regularly charged.
} Fuel Cell Vehicle (FCEV) :
• entirely propelled by electricity. In this case, the electrical energy is not
stored in a large battery system, but is instead provided by a fuel cell 'stack'
that uses hydrogen from an on-board tank combined with oxygen from the
air. The main advantages of FCEVs over BEVs are their longer driving ranges
and faster refuelling.

10. 10
THE CURRENT TREND IS OF THE DECLINE OF DIESEL, REPLACED BY PETROL
0
10
20
30
40
50
60
70
80
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Diesel vehicles rate in the main European
markets (%)
UK Italy
West Europe Germany
Spain France
} Currently, we are witnessing a decline in
diesel fuel that began several years ago, but
has accelerated sharply in the last two years
(following the scandals that have affected
several manufacturers).
} This decrease in diesel fuel directly benefits
petrol and still to a lower extent hybrid
vehicles.
} Alternative energy vehicles (including LPG)
are on the rise. Nevertheless, hybrids and
electricity represent less than 10% of the
European market and BEVs and PHEVs less
than 3%...
2 016 2 017 2018
% of fuel alternative
vehicle 4,0% 6,1% 7,8%
% HEV 1,8% 2,9% 3,9%
%BEV/PHEV 1,2% 1,9% 2,5%
Source : ACEA

11. 11
IN 2025, HYBRID AND ELECTRIC WILL ACCOUNT FOR LESS THAN A
QUARTER OF THE EUROPEAN MARKET
BEV < 1 million
veh in 2021
(~4% of EU
market)
Hybrids <1,5
million veh in
2021 (~7% of EU
market)
BEV < 2 million
veh in 2025
(~10% of EU
market)
Hybrids ~2
million veh in
2025 (~11% of
EU market)
Electrification forecast of the EU market
(source : IHS Markit, March 2019)
} According to IHS forecasts, 1 out of every 4 or 5 vehicles will be full hybrids, rechargeable or
full electric in 2025
} Hybrid and electric
vehicle sales will chiefly
develop in the main
historic countries, but
will not have a large
market share.
} We will especially see
the development of
mild hybridisation (12-
48 volt batteries for
combustion engine
optimisation).

12. 12
ICE WILL REPRESENT ALMOST 80% OF THE PRODUCTION IN EUROPE BY
2026
0
1
2
3
4
5
6
7
2018
2019
2020
2021
2022
2023
2024
2025
2026
2018
2019
2020
2021
2022
2023
2024
2025
2026
2018
2019
2020
2021
2022
2023
2024
2025
2026
Germany France United Kingdom
BEV
Full Hybrid
Gasoline
Engine production in the three main
countries in Europe (in millions)
by fuel type & propulsion system
(source: IHS, March 2019)
0
5
10
15
20
25
30
2018 2019 2020 2021 2022 2023 2024 2025 2026
Engine production in Europe
(in millions)
by fuel type & propulsion system
(source: IHS, March 2019)
Electric
Full hybrid
Gasoline
Diesel

13. 13
PLANTS CAN ALSO BE A HYBRID (PRODUCING ICE / HYBRID / ELECTRIC
VEHICLES)
} In 2019, forty or so plants in Europe (25% of
total) assemble electric vehicles, mainly in
western Europe. Most do so manufacturing
combustion engine vehicles and hybrid
vehicles.
} According to IHS, almost double the number
of plants will have converted to electric by
2025, but without abandoning the
combustion engine and with a large share of
mild hybrid manufacturing.
• Pure electric vehicle manufacturing is
expected to represent 11% of volumes, as are
"full hybrids".
} 8 engine plants make electric engines (but not
batteries), with half specialising in electric.
The same should be true in 2025.
Source: IHS, March 2019
0% 20% 40% 60% 80% 100%
Mosel
Sunderland #2
Leipzig
Douai
Emden
Hambach
Valencia #2
Mirafiori
Neckarsulm #1
Zaragoza
Poissy
Solihull
Torslanda
Ingolstadt
Oxford
Brussels
Rastatt
Ghent
Trnava
Munich
Dingolfing
BEV FHEV MHEV ICE
% of propulsion by type
in plant assembling more than 40 k BEV in 2025
source : IHS, march 2019

14. 14
EUROPE STARTED TO INVEST IN BATTERY CAPACITIES.
X

15. 15
THE KEY DRIVER OF THE CLOSURE OF
SWINDON IS THE TRANSFER OF THE
CIVIC KA TO THE US IN 2021
#1-2

16. 16
HONDA HAS LOST APPETITE FOR
THE EUROPEAN MARKET?
A

17. 17
HONDA SALES AND PRODUCTION WORLDWIDE HAVE INCREASED BY ONE
MILLION VEHICLES OVER THE LAST FIVE YEARS GROWING FASTER THAN
THE GLOBAL MARKET
4,000
4,200
4,400
4,600
4,800
5,000
5,200
5,400
5,600
13-14 14-15 15-16 16-17 17-18 18-19
Units Sales & Production (worldwide)
in thousands
Sales production
source : FactBook & Annual Reports

18. 18
HONDA HAS HIGH AMBITIONS IN CHINA.
} Production levels change regularly and can face disruptions. However, it is certainly not reasonable to aim for
production in excess of capacity on a long period(China, Canada).
} Honda has significant sales and production
ambitions in China.
} HONDA’S CEO declared targeting higher
sales in China than on the US market (this is
already the case for production)
(https://auto.economictimes.indiatimes.co
m/news/passenger-vehicle/cars/hondas-
china-sales-likely-to-catch-u-s-sales-in-2-3-
yrs-ceo/68853215)
} Chinese capacity is fully utilised and this is
the reason for the investment in Wuhan
(http://www.autonewschina.com/en/articl
e.asp?id=18894)
0
200
400
600
800
1,000
1,200
1,400
1,600
Dec-2013.
May-2014.
Oct-2014.
Mar-2015.
Aug-2015.
Jan-2016.
Jun-2016.
Nov-2016.
Apr-2017.
Sep-2017.
Feb-2018.
Jul-2018.
Dec-2018.
Monthly evolution of production by georgraphic
segment (annual level, in thousands)
China
USA
Japan
Asia
Canada & Mexico
Europe
Others
Source :
Honda,
monthly
data

19. 19
EUROPEAN MARKET STABILISED IN 2018 MARKING THE END OF A
GROWTH CYCLE
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Germany
United Kingdom
France
Italy
Spain
13 new EU
Members
Sales of Passenger Cars (in millions)
2,6
2,1
1,9
1,2
3,4
But the situation differs
from one country to
another...
and Honda has lagged
for longer in the UK
After years of growth, and a peak in car registrations in August before WLTP
standards came into effect, the European market is seeing a downturn. Overall, the
market was stable in 2018 and probably will be in 2019
Source : ACEA

20. 20
0
50,000
100,000
150,000
200,000
250,000
300,000
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Honda Sales in
Western Europe
(source: ACEA)
HONDA’S DECLINE IN SALES IN THE EU STARTED A FEW YEARS AGO
Honda sales in Europe fell by half
between 2007 and 2011
... and Honda did not exploit the
market recovery
(0.9% of the market in 2018
vs. 1.55% in 2008).
What explains this loss in market share?
Worldwide, Honda has actually gained in
market share, moving from 4% to 5.5%
between 2010 and 2018
(source: Autofacts)
What efforts has Honda made (or not made) in
its European sales network?
Has Honda sufficiently diversified its offer in
Europe?

21. 21
… WITH A STRONG COMMERCIAL
STRATEGY IN EUROPE, HONDA
COULD COME BACK IN THE GAME
B

22. 22
HONDA’S GLOBAL COMMERCIAL GROWTH POTENTIAL WILL BE
REDUCED WITH THE CLOSURE OF SWINDON
LEAVE
GM strategy
PRODUCE
Toyota/ Hyundai
Strategy
EXPORT
Mazda Strategy
0
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
1 600 000
1 800 000
GM Honda Mazda Mitsubishi Nissan Toyota Hyundai
European PC Registrations evolution
1997 2007 2017
+ Mitsu
projects from
2020
The closure project of Swindon means no perspectives of susbtantial growth. Only OEM with
strong EU footprint are able to sell a significant volume of cars.
Mazda never
reached the level of
sales achieved by
Honda before the
crisis

23. 23
OTHER ASIAN MANUFACTURERS HAVE FOLLOWED A
DIFFERENT PATH
0
200
400
600
800
1,000
1,200
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Production
Sales
Hyundai-Kia chose to set up
industrial facilities in Europe
... a choice which helped develop its
sales, along with an aggressive sales
policy
Production & Sales (in
thousands) of Hyundai-Kia
in Europe 2008 - 2018

24. 24
THE PROSPECT OF A FULLY ELECTRIC OFFER ONLY, IN EUROPE IN 2025
IS FAR REACHING TARGET …
} We looked at what Honda's market share in electrified vehicles (BEV and full hybrid) will have to be in order to
meet the two terms of its strategy:
• Selling 100% electrified vehicles in Europe by 2025 and two thirds in the US by 2030 (the ambition for
Europe being really much more aggressive)
• Maintaining the volumes in these two markets
} If Hybrids and electric vehicles actually represent between 20% and 25% of the market in Europe in 2025, this
means that Honda will have to quadruple or quintuple its market share (to almost 6% of the electrified vehicles)
to sell around 150k units.This is not unachievable but would require a significant investment in access to
market (brand awareness, dealership coverage, …).
} This commercial boost could also benefit to Honda’s petrol cars and would surely allow to have higher
ambitions. Offering only hybrid cars whereas the market is still showing appetite for traditional ICE does not
make sense. In March 2018, Philippe Webb, head of Automotive Honda UK , was stating : “Diesel remains an
integral part of the UK market and particularly the corporate market, so we are committed to diesel in the
current Civic. “ a first step could be to move to ICE …
} In North America, even if the objective is more distant (2030) and less ambitious (2/3 of electrified vehicles),
the target will be difficult to achieve: with 10% of the market today and 1.65 MV sold in the United States,
Honda should capture a quarter of the hybrid and electric market.
} If Honda wants to defend its market share, it will have to keep selling traditional cars for at least the next
decades in Europe. Toyota has phased diesel but launched last year the new Auris with a hybrid but also a
petrol option …

25. 25
HONDA IS ALREADY DEVELOPPING AN ELECTRIFICATION STRATEGY.
THIS WILL REQUIRE FURTHER INVESTMENT AND PARTNERSHIPS.
} This plan is far more
ambitious than the
roadmaps of other
European manufacturers
even if most of them are
speeding up their
strategy

26. 26
HONDA SHOULD BENEFIT FROM ITS POSITIONING ON ELECTRIFIED
VEHICLES IF IT MAKES A REAL COMMERCIAL EFFORT
} With its new strategy Honda would become one of the European leaders in electrification
(alongside Volvo).

27. 27
CO2 EMISSIONS : HONDA IS BEHIND OTHER OEM BUT HAS ALREADY
DEVELOPED ITS HYBRID AND ELECTRIC OFFER
} PA Automotive's analysis Honda is not one of
the ‘good students’
... but PA Consulting
claims that Honda
will be one of the
rare few to meet
their 2021 targets

28. 28
Manufacturing in the USA for the
USA became a priority with the
risk of seeing a recourse to
Section 232 tariffs
C

29. 29
HONDA'S GROWTH WORLDWIDE
WAS DRIVEN BY EMERGING ASIAN COUNTRIES, INCLUDING CHINA
(JV)
} Growth was achieved mainly in emerging markets/countries in Asia, and in
particular in China, through its JVs (Dongfeng and GAC)
} EU has always been marginal and 2018 was not the worst year
1,029 841 958
730 820 818 891
441
586
627
700
731 786 795
144 147
134
158
133 145
188
1,691 1,781
1,807 1,862
1,956 1,851
1,821
187 155
132 132
149 195 160617
788
856 961
1,209
1,442 1,502
0
1,000
2,000
3,000
4,000
5,000
6,000
2012 2013 2014 2015 2016 2017 2018
Production (in thousands)
China
Europe
N.A.
S.A.
Asia (excl.
China)
Japan
source : FactBook
818 761 688 668 696 695
529 637 670 663 715 750
293 269 251 242 252 260
1,757 1,750 1,929 1,970 1,902 1940
169 161
172 184 183 170
737 789
1,053
1,301 1451 1470
0
1,000
2,000
3,000
4,000
5,000
6,000
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019…
Sales (in thousands)
China
Europe
N.A.
S.A.
(&RoW)
Asia (excl.
China)
Japan
source : Annual Reports

30. 30
JAPAN REMAINS THE MAIN EXPORTER WITHIN THE HONDA GLOBAL
ORGANISATION, PARTICULARLY TO THE USA
} There are no major differences between production and sales by zone with only
250k units being exchanged on a production of 5m units
} Nevertheless, Japan is the main exporter within the Honda system mainly to the
United States (more than 50 kV per year on average) and increasingly in Europe.
} Until 2018, China was an importer.
89
10
27
82
27
86
8
5
23
41
35
68
8
7
10
13
11
11
21
9
8
11
9
12
0
20
40
60
80
100
120
140
160
180
200
2013 2014 2015 2016 2017 2018
Export from Japan (in thousands)
Others
Asia
Europe
USA
source : Honda reports, monthly data
data differ because of the difference between the
fiscal year and the calendar year
23
197
42
152
122
196
57
-10
30
68
71
45
-146 -135
-93 -109 -107
-72
24
57
-67 -14
-51 -119
-14 -29
-40
-35
12
-10
51
67
-92
-92
-9
32
-300
-200
-100
0
100
200
300
400
13-14 14-15 15-16 16-17 17-18 18-19
Gap Production - Sales (in thousands)
China
Europe
N.A.
S.A. (&RoW)
Asia (excl.
China)
Japan
source : FactBook & Annual Reports

31. 31
EVEN WITHIN THE N.A. ZONE, THE USA IS A MAJOR IMPORTER
} The analysis of 2017 data, shows that the North American
region produces more than it sells.
} The production/sales balance is positive for Canada
(Alliston produces more than 400 kV) and Mexico (more
than 200 KV produced for a market of less than 100 kV).
} Within this zone, the United States imports a very large
volume of vehicles (from Canada and Mexico, but also from
Japan and Europe): nearly 300 kV (net of exports) in 2017 .
PRODUCTION FY 2017 TOTAL
USA 1208
Canada 430
Mexico 213
Total N.A. 1 851
SALES FY 2017 TOTAL
USA 1 489
Canada 177
Mexico 90
TOTAL N.A. 1 756
FY 2017 TOTAL
Gap Prod / sales US -281
Gap Prod/Sales N.A. 95
Source : Honda Fact Book 2018

32. 32
THE US PRODUCTION DEFICIT IS MAINLY DUE TO THE CIVIC AND
THE CR-V (CANADA AND EUROPE)
U.S.A. Civic CR-V Accord Odissey Pilot Ridgeline HR-V Fit Others H. Acura TOTAL
Production 147 242 327 119 163 39 1 169 1208
Sales 377 378 323 100 127 35 93 49 6 155 1 489
gap -231 -136 5 19 36 5 -93 -49 -5 14 -281
Source : Fact Book 2018
} The US produces around 1.2 MV but imports nearly 400 kV.
} Imports focus primarily on CIVIC and CR-V, mainly imported from Canada... but
also from Europe.
} The relocation of the CR-V from Swindon to the US as allow to decrease the
reliance on imports
} The other major US imports concern HR-V and Fit,
produced in Mexico.

33. 33
THE US-JAPAN TRADE DISCUSSION IS MAYBE MORE A DRIVER OF
THE DECISION TO CLOSE SWINDON THAN THE JAPAN-EU
AGREEMENT
} The EU-Japan agreement will remove EU tariffs of 10 percent
on Japanese cars and 3 percent for most car parts.
• This agreement will support more import from Japanese companies
even if it should mainly benefit to the EU manufacturers (premium
and city car which could find a new market)
• Mazda is a “success story” of Japanese export only .
• At the same time it will allow to organise a hassle-free supply chain
for components from Japan for the EU. This, together with
electrification (lower amount of components and strong Asian
footprint for battery) and e-sales (increased customisation), could
support a new model where Europe would still play a key role.
• The Korean-EU FTA has removed all tariffs on car parts and cars by
2014 but this did not hinder the development of Korean production
Europe.
} On the other hand, the ongoing talks between the US and Japan
and the current tensions are an incentive for a relocation of
Honda’s production in the US
} Duties could be imposed as early as mid-May on automotive
under section 232. They could be as high as 25%. Given the size
of the export from the US the threat is significant.
} In 2018, U.S.-made vehicles representing nearly two-thirds (64.6
percent) of U.S. sales for Honda
65%
35%
US SALES HONDA
US made Imported
In H1 2018, the market share of Honda’s
Japanese made cars in the EU was of 0.24%
… in 2017, HONDA US has exported 2076
vehicles to Europe

34. 34
REINFORCING THE FOOTPRINT IN THE US TO MITIGATE THE RISK OF
TRADE WAR… BUT THIS WILL REQUIRE A SIGNIFICANT INVESTMENT.
} The NA operations are key for Honda, it is its biggest market but reaching
production capacity limit
} Only 38% of the Civic sold in the US are produced locally …. The exposure
to trade tariffs is significant
} The spare capacity is estimated at 50-60k
} Sites producing the Civic have less than 15k spare capacity
} In 2017, around 90k Civic sold in the US have been imported.
} The closure of Swindon will surely create a need for a major investment of
Honda in the US….
2017
Production Capacity Unused capacity
US 1207762 1270000 95% 62238
Mex 213449 263000 81% 49551
Canada 430164 400000 108%
Site producing Civic Volume 2017 Unused capacity
Greensburg (US) 146,580 10,279
Alliston (CA) 210,198 -
356,778
Sales of Civic in US 377,266
Sales of Civic in Canada 69,030
Total 446,296
Import 89,518

35. 35
There is no structural
overcapacity at global or US level
D

36. 36
“ The new measures will trim global capacity to 5.1
million, requiring a utilisation ratio exceeding 100
percent through overtime.”
Honda CEO Takahiro Hachigo
https://europe.autonews.com/automakers/hondas-european-plant-closings-shifts-work-north-america
25/02/2019

37. 37
THERE IS NO OVERCAPACITY IN 2018
THERE IS A RISK OF LONG-TERM UNDERCAPACITY.
} Honda's production worldwide in 2018
amounted to 5.36 MV, for an installed
capacity of 5.4 MV.
} Even adding the 0.12 MV capacity of the
new plant built with Dongfeng in China,
the current margins of manoeuvres are
limited.
} There is even a serious risk of
undercapacity after the closure of
Sarayama and the relocation to Yorii
(created in 2013) and even more so
following that of Swindon
} Estimated overcapacity of more than 400 kV includes
the utilisation of JV’s capacities at more than 100%. De
facto, there is no overcapacity in China… but
bottlenecks.
(http://www.autonewschina.com/en/article.asp?id=188
94)
} It also includes Sayrama due to be closed in 2022
3667 kV
1,066 891 816
930
795 930
1,923
1,821 1,923
200
160
200
151
188
151
1,130
1,502 1,250
5,400 5,357 5,270
5,549 5,619
0
1,000
2,000
3,000
4,000
5,000
6,000
Capac. 2017 Prod. 2018 2020 Capac. Plan '22
Capacity 17 & Plan '22 Vs Prod 18
(in thousands of vehicle)
China
S.A.
Europe
N.A.
Asia (excl.
China)
Japan
Forecast
PWC
4119 kV
Source :
Annual report
2018
+ PWC analysis

38. 38
THE LIMITED OVERCAPACITY IN NORTH AMERICA IS NOT SUFFICIENT
TO INTEGRATE THE PRODUCTION OF CIVIC WITHOUT ADDITIONAL
COSTS
} It is not enough to show overcapacity in the US to consider that Civic's production will be
done without any real additional costs on US production lines.
• Overcapacity was of 60 kV at December 2018 (4th april document and Syndex’s estimation), of
120 000 at March 2019 (Letter to Syndex) but will be of 65kV following the shutdown of one line
in Marysville in August 2019. Production fluctuates significantly, not even mentioning the event
of an incident, such as the flooding in Mexico.
} At present, only the Greensburg site produces the Civic KA in the US. There is little
room for manoeuvre (10 kV on the 2017 data).
} Moreover, the management has not yet clarified which site would host the KA in 2021,
and with which costs of installation and possibly duplicating of tools.
PRODUCTION FY 2017 Civic CR-V Accord Odissey Pilot Ridgeline Others H. Acura TOTAL Capacity % of users
sur-
capacity
Employment
Marysville (including
PMC) 327 1 52 380 440 86% 60 4300
East Liberty 149 81 231 240 96% 9 2500
Lincoln 119 163 39 36 357 340 105% -17 4500
Greensburg 147 93 0 240 250 96% 10 2500
Production US 147 242 327 119 163 39 1 169 1208 1270 95% 62
Source : Fact Book 2018

39. 39
THERE IS LITTLE ROOM FOR MANOEUVRE AND CANNOT BE SERIOUSLY
FOUND ON THE CANADIAN OR MEXICAN SIDE
} While overcapacity is in fact very limited worldwide and in the United States, it is
also very limited in the North American region.
} Apart from the accident in Mexico, which temporarily reduced their production (with
an impact on the Group's accounts of £270 million), there is no room for manoeuvre
in the North American region.
} Despite the new negotiations on NAFTA, threat of taxes on vehicle imports into the US
from Mexico are still tangible
} This situation is an incentive to look for an alternative scenario to the closure of
Swindon, while maintaining production in Europe.
PRODUCTION FY 2017 Civic CR-V Accord Odissey Pilot Ridgeline HR-V Fit Others H. Acura TOTAL Capacity % of users
sur-
capacity
Employment
Production US 147 242 327 119 163 39 1 169 1208 1270 95% 62 13 800
Alliston (Canada) 210 220 430 400 108% -30 4 200
El Salto (Mexico) 37 37 63 58% 26 4 000
Celaya (Mexico) 121 56 177 200 88% 23 4 100
Production N.A. 357 462 327 119 163 39 157 56 1 169 1 851 1 933 96% 82 26 100
Source : Fact Book 2018

40. 40
If we consider the real reason,
it becomes easier to find the right
solution
E

41. 41
140
55
42
76
123
138
106
88
75
90 86 77
64
0
50
100
150
200
250
300
2007 2010 2013 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Swindon Civic Swindon CR-V Gebze Civic Others Total Swindon
Historical and projected
manufacturing at Honda
in Swindon and Cayirova
according to IHS
(in thousands of vehicles)
THE RELOCATION OF THE CR-V WAS A TURNING POINT… A
SOLUTION BASED ON THE CIVIC ONLY IS HARDLY SUSTAINABLE
The decline in Honda manufacturing in
Europe (including Cayirova/Gebze in Turkey)
began when the CR-V was not replaced
(in 2018-2019)
Nevertheless, if production is
concentrated on one site
and volumes are found on
other models, the Swindon
plant can remain viable

42. 42
WE UNDERSTAND THAT THE TRANSFER OF THE KA CIVIC BUT THIS
SHOULD NOT CONDEMN SWINDON NEITHER TO UNDERESTIMATE
THE RISK AND DIFFICULTIES OF THE PROJECT
} As the discussions between March and April, and the responses prepared by management,
the decision to transfer KA Civic from 2021 onwards, appears to be the key factor of the
proposed closure of Swindon. This relocation is not the consequence of the closure of
Swindon but the trigger of the process.
} However, taking this perspective into account
is not enough to validate the Swindon closure
project.
• On the one hand, we dispute the existence of
overcapacity in NA but also the estimation of
logistics savings.
• On the other hand, the challenge of closing
Swindon is very important for the local
economy, employees and subcontractors;
making this decision without any guarantee
that there will be no other capacity built, and
without being sure of the future location of
these productions (US? Japan or China?) is
not fair.
• Finally, there are other models that could be
relocated to Swindon other than those that
are for the US market.

43. 43
AN ALTERNATIVE SCENARIO
#2

44. 44
ASSESSMENT OF THE CONDITIONS FOR
A VIABLE SCENARIO
AND THE SAVINGS OF CLOSURE
ESTIMATED BY THE MANAGEMENT OF
HONDA
#2-1

45. 45
HONDA’S MANAGEMENT CLAIM TO BE OPEN TO ANY ALTERNATIVE
DELIVERING THE SAME RESULTS AS THE CLOSURE OF SWINDON…
UNFORTUNATELY THE INITIAL ASSUMPTIONS NEED TO BE CHALLENGED.
n In any other alternatives according to the management we would face the following :
The £1.25bn savings
are not rock solid.
In fact most of it would
come from variable
costs which will have
to be replicated in the
new location
Honda's overcapacities
are indeed limited
Rather, there may be a
risk of undercapacity in
the long term
The two principles are in contradiction of Honda’s model,
notably in the US. Honda tries to optimise the right balance
between site specialisation/volume and production for the
local market.
The Honda system is based on flexibility and relative
specialisation of the sites (several sites make several models;
several models are made on different sites).
Yes, some model produced elsewhere could be relocated to
Swindon to supply the EU market as well as the european
periphery
Our approach – based on the information available
Source :
4th April
document,
p34

46. 46
FIXED COST SAVINGS ARE SIGNIFICANTLY OVERESTIMATED …
} Cost savings are an important element in the economic equation of the closure. Management
considers that of the £292m annual costs (excluding purchases), £252m will be saved. This
implies that the production of 132 k Civic can be integrated with only £39 million per year,
including only £14 million direct workers.
} Based on our experience we believe that this savings are largely overestimated, and that a production site could not integrate
between a fifth and a third of volume variation, without real additional costs (except that the sites and their employees are
really unoccupied at the moment).
} According to our information all Honda’s site in NA are working on 2 shifts and the creation of third shift would be rather
difficult. Overtime shift (Saturday) was in place until the end of 2018. The recourse to overtime has even been acknowledged
by the CEO of Honda (https://www.autonews.com/manufacturing/honda-plant-closings-shift-work-north-america)
Source :
4th April
document,
p20
According to the
company, the relocation
of 132k Civic would
require only around
10% of the current
workforce required to
produce similar volume
in Swindon …. Whereas
in 2018, NA plants were
working overtime…

47. 47
AND WOULD DELIVER A POTENTIAL SAVINGS OF £200M OVER A 5
YEARS PERIOD
} This is evidenced by the
evolution of Swindon's costs
during the variations in its
production over the last two
years despite the plant's
acknowledged flexibility.
} Only two cost items were
found to be fixed in this
episode of high production
variation: the indirect staff
and the depreciation (which
depends on the initial
investment. )
} Real fixed costs (non-
necessary for relocated
production) are of £XX
million/year.
Source :
fact books
And
P&L
Swindon
Source : P&L Swindon
120 119
134
162
130
144
1,411
1,981
1,653
2,544
1,958
0
20
40
60
80
100
120
140
160
180
FY 14 FY 15 FY 16 FY 17 FY 18
Production at Swindon
(in thousands of vehicle)
and Revenue (M£)
Production
Capacity
Revenue
The table shows how costs have
evolved over the two years of
strong variations in Swindon's
activity.
It also shows their weight in
overall income (calculated on
standard costs).
% of
revenue
FY18
Var.
FY 17
/ FY16
Var.
FY 18
/ FY17
Comments
2018-19
(M£)
Revenue 100% 54% -23% Higfh variation of production 1 958
Bought out cost 81% 57% -20% Totally variable, with inflation cost 1 589
Logistic 2% 50% -23% Totally variable 37
Direct Payroll 5% 57% -29% Totally variable 97
Depreciation 1% -14% -7% fixed ; underinvestment 25
Royalty 5% 40% -11% Variable ; inflation (for the benefit of Honda) 108
Sec Mats 1% 50% -34% Totally variable 11
Other directs 2% 49% -4% Variable ; inflation 33
Indirect Payroll 2% -5% 1% Fixed 39
Other Indirect 1% 45% -12% Not fixed 23
Total Cost 53% -19% 1 962

48. 48
IT WILL BE DIFFICULT FOR AMERICAN PLANTS TO INTEGRATE
80 K CIVIC WITHOUT ADDITIONAL COSTS
} No American site is able to integrate the production
of 80,000 Civics without increasing capacity and/or
duplicating tooling.
} The integration of this production would indeed
lead to significantly exceeding current capacity as
acknowledged by the CEO of Honda*
} ... except for Marysville, which produces Acura and Accord.
} This volume represents 20% to a third of the
capacity of the sites. For Greensburg, which
produces Civics and CR-Vs, this effectively
represents one third of its current production and
capacity.
18%
33%
24%
32%
0
50
100
150
200
250
300
350
400
450
500
Marysville East Liberty Lincoln Greensburg
Prod2017 + 80 kV (KA Civic) Capacity 80 kV (% of capacity)
Production 2017 & capacity of US plant of Honda
and with 80 kV Civic in addition
} We therefore consider, in the light of this, that:
n Fixed cost savings are limited to £40 million per year
n The transfer of production to US plants involves tooling costs equivalent to those planned for
Swindon (£150 million) and could probably be accompanied by investments in capacity or further
transfers between the US plants (while also having to cover the costs of Swindon's closure).
Source : fact book 2018
* https://www.autonews.com/manufacturing/honda-plant-closings-shift-work-north-america)

49. 49
IT IS THE STRENGTH OF THE HONDA SYSTEM TO HAVE INTER-REGIONAL
COOPERATION.
} Honda is widely promoting a system that allows the optimisation of capacities
throughout the world.
Source :
FY18 Financial Results, p.15

50. 50
THE FLEXIBILITY OF THE HONDA MODEL IS A SUBTLE BALANCE IN TERMS
SPECIALISATION / LOCAL PRODUCTION (2/2)
} However, Honda wants to
produce as close as possible
to its markets and adapt its
vehicles to the needs of local
consumers.
• This also serves its concern to limit
gaz emission resulting from long
distance shipping ("sustainability
report").
} Honda develops global
models (global vehicles) that
are produced in many parts of
the world.
Source :
Honda Corporate Update –
2018 autumn

51. 51
THE FLEXIBILITY OF THE HONDA MODEL IS A SUBTLE BALANCE IN TERMS
SPECIALISATION / LOCAL PRODUCTION (1/2))
} In short, the specialisation of sites / platform / region is part of the model, but it must also take into
account a local dimension (adaptation to the market; logistics costs). As such, the lack of production in a
market like Europe is problematic.
} Moreover, it is never good to put all your eggs in the same basket and make the delivery of a model
vulnerable to a site's inability to produce.
} It is important for Honda to have room for manoeuvre,
even if it means generating some « inefficiencies» :
n Swindon meets the target is terms of standard costs even on a
capacity utilisation rate of ¾; fully loaded it could become one of the
most productive plants of the group.
n The flooding of the Mexican site in El Salto generated £270 million in
lost revenue for a few months of downtime.
} For this reason, the group has never refrained from
producing the same vehicle in several factories or even in
the same country.
} Wanting to eradicate « inefficiency » (ie. the current low spare capcitity of 3% ) and the duplicating
of investment at the same time is questionable from several points of view:
} This is contrary to Honda's usual way of working and its search for flexibility.
} This overestimates the fixed nature of production costs (see Swindon example) and denies
friction and loss of efficiency when capacity is fully used (theory of constraints)
} ... but also the risks involved in concentrating a model in a single place.

52. 52
HONDA’S PLAN NEEDS FURTHER CLARIFICATION.
} According to the consultation document dated April 4, page 46,, the remaining volume (KE/KG) will be
transferred to Japan
} Surprisingly in March, Honda has proposed another solution, a relocation to China with the following
rationale :
} Necessity to improve efficiency of resources invested into EU business & profit (High cost of developing EU
exclusive models & sourcing JPN CBU)
} Similarity in the trends of future technologies & legislations between Europe and China (China follows EU
legislations)
} China’s national interest : Shift to Electrification & Expand export business
} Shift from Japan to China sourcing to improve cost competitiveness
} Exploit China’s global leading cost competitiveness in Electrification
} Re-establish EU line-up built around China line-up, supported by electric models
} Commonise spec’s between China & Eu to reduce total development cost
} Is this limited to electric models ?

53. 53
THE BASIS OF ALTERNATIVE SCENARIOS#2-2

54. 54
BASIS FOR ALTERNATIVES
} Volumes are based on sales in EMEA including current import
} Fixed savings are based on actual flexibility at Swindon
} Cost savings from concentrating production at another site (US for KA, Japan for
KE/KG and 4dr (?)) are compared against the potential savings that Swindon could
deliver.
} Logistics costs are factored according to management’s estimation of costs per
vehicles. Logistics costs into the CIS+ MEA are supposed equal to import from
Japan/NA/SA
} The transfer of production from Swindon will not take place without set-up costs
and tooling. Tooling is considered independant of the currently existing local supply
chain as any other approach would require an analysis of the global supply chain
organisation.
} The cost of closure is part of the equation

55. 55
74 71
92 84
100
121 111
90
67
47 41 43 42 44 45 41 43
43 52
83
87
80
68
59
75
59
57
49 43 38 31 37 35 38
31
31
33 50 43
77
55
42
39
36
37 48 49
47
43
35 29
10 7
7
4 1
0
0
0
0
0
0
0 0 8
33
29 26
0
50
100
150
200
250
300
350
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
HONDA European PC Sales volumes
Civic Jazz CR-V HR-V NSX Agreement CR-Z FR-V Stream S2000 Legend City Insight
IF HONDA HAS KEPT ITS MARKET SHARE OF 2007 IT WOULD SELL
ALMOST 300K UNITS IN THE EU
136k
veh.
312k
veh.
Mkt share =
0.9%
Mkt share
= 1.9%
Volumes if
Honda had
maintained a
1.9% market
share
+160kveh
Source: Carsalebase, ACEA

56. 56
THE ELECTRIFICATION STRATEGY SHOULD BE ACCOMPANIED BY
A COMMERCIAL OFFENSIVE AND VOLUME GAINS
} Honda's sales volumes in Europe have been halved in less than 10 years. Honda
has refocused on "global models" and has not benefited from the clear market
rebound from 2014 onwards.
} If Honda pursues a commercial offensive to be able to achieve its strategy of
100% electrified vehicles by 2025, in particular with hybrid versions, this should
be accompanied by an increase in volumes sold on the European market.
} Especially since Honda can try to take advantage of the continued growth of the
SUV segment, by boosting its offer on CR-V and HR-V.
} Based on sales in Europe by models (EU31, source ACEA and datacarsales) and
data on import from Honda , we estimate the following volumes for Europe
Strong Growth
for SUV in the
European
market : from
21% in 2014 to
29% in 2017 of
the vehicles
registered
+ commercial
offensive
Total Source
Europe + EFTA MEA + CIS Total
Civic 4D 20 20 0 20 Consultation
Civic 5D 43 8 51 4.3 55.3 ACEA/Datacarsales/ Honda data on import
CR-V 38 12 50 20 70 ACEA/Datacarsales/ Honda data on import
HR-V 29 2.1 31.1 20 51.1 ACEA/Datacarsales/ Honda data on import
Jazz 26 2 28 6.5 34.5 ACEA/Datacarsales/ Honda data on import
156 24.1 180.1 50.8 230.9

57. 57
ADDITIONAL ACTIVITIES CAN BE FOUND WITHOUT MAJOR
INEFFICIENCY
} If the trade offensive was not enough, Swindon could find additional business,
either from Canada or Mexico, without creating large losses of inefficiency.
PRODUCTION FY 2017 Civic CR-V Accord Odissey Pilot Ridgeline HR-V Fit Others H. Acura TOTAL Capacity
Alliston (Canada) 210 220 430 400
El Salto (Mexico) 37 37 63
Celaya (Mexico) 121 56 177 200
Production N.A. 357 462 327 119 163 39 157 56 1 169 1 851 1 933
} Option 1: Swindon produces the Civic and
CR-V. A variable volume can be taken over
at Alliston, with little loss of efficiency for
the Canadian "double site" which is at the
limit of its capacity. 30k CRV could be
relocated to Swindon leaving more
capacity to absorb the new Civic KA.
} In 2017, Honda had a capacity of 462k CR-
V in NA and Mexico against a demand for
433k. In 2018, Marysville started the
production of the CR-V.
} Option 2: Swindon would benefit from
producing HR-V, which certainly has
good potential in the European market,
sensitive to SUVs.
} The HR-V is produced in Mexico at two
sites, with a duplication of the tools.

58. 58
TO SAVE ON LOGISTICS, THE BEST SOLUTION IS TO PRODUCE FOR
EUROPE IN EUROPE
} In comparing the different options, management considers that:
• The Swindon closure scenario would result in logistics savings of £XXXmillion (over 5 years). This scenario is based on
80 kV and £XXX vehicle being exported to the US.
• The costs of importing XXXkv vehicle into Europe is estimated at £XXXm (over 5 years) with an average of £XXX/vehicle
• In all our alternatives, the Civic KA is relocated into the US and therefore the XXXm£ are not a difference between the
model
} With the proposal of the management, any increase in sales in Europe would reduce the
savings in the future.
} In each of our proposal the logistics costs of import into Europe are lower than in the
management’s proposal
Exportation costs of
Civic KA = £XXXm=>
£XXX per vehicle
Importation costs
est. In Option 1 =
£XXXm=> £XXX per
vehicle
Source : HUM, in the Consultation meeting document of
the 4th of April

59. 59
COST OF INVESTMENTS IN TOOLS AND ELECTRIFICATION
} Each of the scenarios we proposed are based on 2 (CIVIC 5D and CR-V as before) or 3
models.
} The amount of investments is based on data provided by management in the consultation
documents.
} We share the view that the commonality of the platform (XX% between the Civic and the CRV
and XX% with the HRV) is not fully factored in some cases (HRV)
CIVIC 4DR HRV CR-V
Tooling cost (management) 150 60 90 120
Commonality 70% ? 40% 20%
In £millions
Commonality will be
higher in future platforms.
Electrification costs are not factored as engine/
transmission/ batteries will surely be sourced
externally and gradually.

60. 60
THE ASSUMPTIONS OF THE COMPANY’S PROPOSAL ARE HARDLY
RECONCILABLE WITH THE CURRENT SITUATION.
Statement Comment Impact Conclusion
The £15m tooling investment is the incremental tooling investment needed in the US (£51m) and Japan
(£26m), divided by 5 years (full model life). This is low due to commonality with the Civics already built in
these locations. These assumptions were advised to HUM by Honda Motor.
It is expected that the destination plants will be Yorii for the European models and either Indiana or Ohio
for the North American models. This is currently under study by Honda Motor.
Yorii is currently producing only the Civic 4d. Based on
commonality reference used for Option 1 of the management, the
investement will be of £90 for the KE/KG}
Greesnsburg (Indiana) has limited spare capacity (and even less
with the transfer of the CRV from Marysville) and manufactures
only the Civic Sedan. None of the plants in Ohio (Marysville/EL) is
producting the Civic.
The location of the Civic KE/KG +
Civic Sedan in Japan will require
the same amount of investment
than in option 1 : £150m + £60m
The location of the Civic KA will
require £150m in the case of Ohio
or £90m in the case of Indiana +
£50m to increase capacity
De facto all options
propsosed by the
management requires a
duplication on
investment for the Civic
KA
Honda Motor has confirmed that it will reorganise its model allocation between production facilities within
North America to accommodate the KA Civic and that in the long term it anticipates maintaining sales
volumes in North America and Europe.
US Sales at the beginning of 2019 are slowing. Nevertheless 2018
was a record. At march 2019, the overcapcity was of 120k.
Nevertheless, the shutdown of one line in Marysville will take out
55k and require the transfer some CRV to Greensbrug
The CRV is produced in 4
plants in the US , with
the new proposal the
duplication could also
concern the Civic Ka
As per the information that we have already provided to you, there was excess capacity of 237,000 vehicles
in Japan in the year to 31 March 2018. The likely destination in Japan is the Yorii plant which is currently
under study by Honda Motor. There are no plans currently to relocate any of the HUM volume to
China. The European Civic volumes that will be relocated to Japan are up to 50,000 units per annum.
The closure of Sarayama will reduce the overcapacity by 200k
Limited spare capacity for current
volume of KE/KG
Honda Motor has advised that there will be sufficient excess capacity in 2021 to transfer the KA Civic
volume. It does not expect to meet demand via overtime in North America.
"The new measures will trim global capacity to 5.1 million,
requiring a utilization ratio exceeding 100 percent through
overtime"
Labour costs at destination are
surely underestimates. The model
assume 0 additional hours for the
prduction of 82k in the US and only
£14m in Japan. Japan is supposed
to have higher overcapacity…if
enough labour capacity has been
kept available in Japan and in the
US, the retention costs must be
factored.
Variable labour costs are
underestimated

61. 61
ALREADY A SIGNIFICANT LEVEL OF DUPLICATION IN N.A. WITH LOW
VOLUMES IN SOME CASES
NORTH AMERICA LIGHT VEHICLE PRODUCTION FORECAST BY MFR, PLATFORM AND PLANT
UNITS
12-MONTH PERIODS
1/2018 - 1/2019 - 1/2020 -
PLATFORM PLANT 12/2018 12/2019 12/2020
HONDA
2SL EAST LIBERTY 62,976 59,831 25,775
2SL LINCOLN 361,472 344,240 339,890
2SL TOTAL 424,448 404,071 365,665
2SL 2 EAST LIBERTY 0 0 30,711
CCA EAST LIBERTY 53,445 77,046 75,336
CCA GREENSBURG 23,736 32,476 30,523
CCA TOTAL 77,181 109,522 105,859
CIVIC 9 EAST LIBERTY 20,743 0 0
CIVIC 9 MARYSVILLE 11,877 13,760 11,167
CIVIC 9 TOTAL 32,620 13,760 11,167
GCP ALLISTON 1 209,543 220,641 212,009
GCP ALLISTON 2 223,228 213,136 199,970
GCP EAST LIBERTY 97,767 93,464 94,054
GCP GREENSBURG 217,723 205,335 199,109
GCP MARYSVILLE 24,330 78,765 71,438
GCP TOTAL 772,591 811,341 776,580
GFP MARYSVILLE 367,641 293,530 256,482
GFP 2 MARYSVILLE 0 18,255 38,691
GSP 2 CELAYA 106,945 155,319 95,710
GSP 2 EL SALTO 40,576 42,507 21,670
GSP 2 TOTAL 147,521 197,826 117,380
GSP 3 CELAYA 0 0 45,785
GSP 3 EL SALTO 0 0 12,197
GSP 3 TOTAL 0 0 57,982
NSX 2 MARYSVILLE PMC 433 439 428
WQ3 MARYSVILLE 0 0 932
TOTAL 1,822,435 1,848,744 1,761,877
LMC/Ward

62. 62
THE NEW PLANTS IN BRAZIL (ITIPARINA)… AN INTERESTING
EXAMPLE
Location
Itirapina, São Paulo, Brazil (200km
northwest of São Paulo city)
Production Capacity 120,000 units/year
Investment amount Approximately £200m
Products
Civic, Fit, City, HR-V, WR-V …Honda
intends to produce all of its locally
marketed models at the facility by
2021

63. 63
PRESENTATION OF THE DIFFERENT SCENARIOS AND ASSOCIATED COSTS
} Proposal: Closure of Swindon
• the closure of Swindon delivers limited net savings (£40 million in fixed costs/year)
• The closure leads to the import of XXX kV (European market assumptions by the management; but 183 kV already sold in
2018).
• A duplication of the tools for the Civic KA is necessary in NA and KE/KG in Japan
} Option 1: focused on Civic 5D and CR-V, with additions from North America to reach 132 kV in production (91% of
capacity)
• Investments remain limited,
• Slightly limited productivity gains.
} Option 2: Civic 5D + CR-V + HR-V, without any particular commercial offensive
• More investment, but fewer imports.
• Good capacity utilisation.
} Option 3: focused on Civic 5D and CR-V with a commercial offensive, and complemented from North America.
• Limited investments but a lot of imports
• Good capacity utilisation
} Option 4: Civic 5D + CR-V + HR-V, with commercial offensive
• Larger investments, very large volumes.
} Option 5 : Civic 5D + 4 D + CR-V
• Significant investments, including those to produce the Civic 4D. Too much import.

64. 64
OVERVIEW OF DIFFERENT OPTIONS
Proposal Option 1 Option 2 Option 3 Option 4 Option 5
Commercial and Production assumptions
Civic 4D 20 20 20 20 20 20
Civic 5D 52 52 52 55 55 55
CR-V 21 50 50 70 70 70
HR-V 22 31 31 51 51 51
Jazz 25 28 28 35 35 35
TOTAL 140 181 181 231 231 231
Production from N.A. (CR-V) 30 25
Volume of Production 140 132 133 150 176 145
% of capacity (144 kV) 97% 92% 92% 104% 122% 101%
Costs Assumptions
Fixed costs savings (40m£/year) 200
Self Help (proportionate to load factor) 183 185 200 200 200
Logistic cost (import into Europe) -126 -98 -71 -118 -95 -95
Investment (tooling) -100 -270 -360 -270 -360 -330
Relocation costs
(machines, tooling, capacities) -50
Gap with Proposal (5 years cumulated) -109 -170 -112 -179 -149
Models included in
Syndex’s option

65. 65
COMPARISON WITH MANAGEMENT’S PROPOSAL
(PAGE 32 IN DOCUMENT DATED APRIL 4TH)
} Once taken into account the closure
costs and production relocation
costs, the gap between the closure
project and the scenarios we
propose is in favour of the
alternative.
} The additional net investment will
be between £120m and £210m in
our scenarios compared to the
management proposal
} This gap could be lowered with
external support
200 183 185 200 200 200
-126
-98
-71
-118 -95 -95
-100
-270
-360 -270
-360
-330
-109
-170
-112
-179
-149
-500
-400
-300
-200
-100
0
100
200
300
Proposal Option1 Option2 Option3 Option4 Option5
Savings & investment cost, 5 years (M£)
Proposal Vs Option Syndex
Relocation costs
(machines, tooling,
capacities)
Investment (tooling)
Logistic cost (import
into Europe)
SelfHelp
(proportionate to load
factor)
Fixedcosts savings
(40m£/year)
Gap with Proposal (5
years cumulated)

66. 66
ESTIMATED COSTS OF CLOSURE – CONSERVATIVE APPROACH
Item
Cash /
non cash Basis Assumption Costs Comment
Severance payments cash 7400 employees average £80k per person 592
Closure of Opel
Bochum in 2014, HR
costs of £500m for a
smaller workforce
EHS costs cash Similar closure in EU 20
Employee retention costs cash 3 month salary 41
Impairment of work done on Civic21 and other
projects non cash
£6m at march 2018 and £4m
additional 10
IT impairment Non cash 0
Lease termination cash to be clarified
Pension cash
Only DB scheme taken into
account
Defined obligation of £700m.
Separation of the scheme and
increase buffer via a RAA. Deficit of
£80m 300
Supply chain contract termination cash
Assets write off non cash
fixed assets of £204m. Estimated
value of land and building at
£200m with current usage
against £35m in books.
full write off of machine and
industrial usage of site in the
future loss of 50% value 122
Legal fees / consultants cash EY / KPMG …. 1
Accrrued holidays payment cash 34 days per year accrued 1
Bonus pro rata cash tbc
Site clearance cash Similar closure in EU Decommission / security . Archives 30
P&L closure costs cash Rents /utilties / … 5
Tax considerations non cash tax credit, … 129
Total £m 1251
Cash £m 1119
Sensitive for the
consultation process
Average severance
payment estimated by
Syndex was considered
“conservative” by Unite

67. 67
THE NET PRESENT VALUE OF THE INVESTMENT REQUIRED FOR THE
COMPANY’S PROPOSAL IF 5 TIMES HIGHER THAN SYNDEX’S OPTION
2 AND 4
Proposal year 1 year 2 year 3 year 4 year 5
Cost of closure -1120
Investment -100
Savings on fixed costs 40 40 40 40 40
Relocation costs -50
Logistics costs -25.2 -25.2 -25.2 -25.2 -25.2
self help -39.2 -39.2 -39.2 -39.2 -39.2
Total -1294.4 -24.4 -24.4 -24.4 -24.4
NPV -1315.163
option 2 year 1 year 2 year 3 year 4 year 5
Cost of closure
Investment -360
Savings on fixed costs
Relocation costs
Logistics costs -19.6 -19.6 -19.6 -19.6 -19.6
self help 39.2 39.2 39.2 39.2 39.2
Total -340.4 19.6 19.6 19.6 19.6
NPV -257.9994
option 4 year 1 year 2 year 3 year 4 year 5
Cost of closure
Investment -360
Savings on fixed costs
Relocation costs
Logistics costs -19 -16.6 -16.6 -16.6 -16.6
Logistics costs revision
self help 39.2 39.2 39.2 39.2 39.2
Total -339.8 22.6 22.6 22.6 22.6
NPV -247.29668
With £40m fixed
costs/ year this
project will never
be profitable.
Even with the
assumptions of
savings on fixed
costs of
£250m/year it
would take 8 years
to have a pay back

68. 68
ALL OPTIONS ALLOW HUM TO BREAK EVEN
} With >125k units HUM will be able to deliver the unit at standard costs
• HUM costs basis was not an issue prior to the decision
• HUM was 1:1 with US plants on costs for Civic 21 as per the costs analysis realised for
the purpose of the investment case
• HUM can be further challenged on costs as shown by the self-help measure
• With the decrease of the pound value, HUM has significantly gained in competitiveness.
1.1%
0.4% 0.5%
2.1%
-1.6%
-0.3%
1.1%
0.7% 1.0%
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18
Swindon : turnover (M£) & % profitability Turnover
% of Operating profit
Source :
P/L HUM

69. 69
POTENTIAL PUBLIC SUPPORT
} Estimation based on previous support : 80m£ to Nissan
} Maximum direct support : €125m but other ways of supporting
being considered (regional fund, lease buy back, …)
} based on potential return of investment :
• HUM contribution to the UK economy is of £1.2 to £1.5bn. The tax to GDP ratio
of the UK is above 33%, as a consequence a return of £250/year would be
conservative
• HUM alone contributes to c.50m£ in taxes (CIT and NI) each year.
• Costs of capital close to 0%
• Tax return over 5 years : 250m£ for HUM alone
} Public support could be necessary to bridge the gap in option 2
and 4 and reduce the upfront risk