Canadian Automotive Sector Overview 2010 Canadian Automotive Sector Overview

Share of Total Manufacturing The Automotive Industry is a crucial economic driver Level (2009) Share of Total Manufacturing Share of Total Economy GDP $ 14.6 B 10% 1.2 % Manufacturing Shipments $ 56.8 B 12% n/a Investment $ 2.9 B 18% 1 % Exports $ 39.2 B 17 % 11 % Manufacturing Employment 109 111 7 % Auto industry is a key driver of Canada’s economy: The largest manufacturing sector in Canada, contributing to 10% of manufacturing GDP and 11% of total merchandise exports. 109,111 direct employment in auto sector manufacturing; a further 332,975 in aftermarket, and dealerships. Produced 1.4 million units vehicles; domestic sales were 1.5 million units. Automotive sector also creates significant demand for other industries: 37% of steel foundry production 17% of rubber production 14% of processed aluminum 13% of wire goods 9% of carpeting and fabric 8% of glass Passenger Vehicle Assembly Heavy Duty Vehicle Assembly Motor Vehicle Parts Production Truck Body & Trailer Employment 35 615 61 193 12 304 Number of Establishments 55 41 944 237 Production (Units) 1 479 161 11 321 na Shipments ($ Billions) $35.1 $19.1 $2.6 Exports ($ billions) $26.7 $1.4 $10.2 $0.9 Export Ratio (% of shipments) 81% 72% 53% 35% Canada stats Auto industry is Canada’s largest manufacturing sector. There are large economic spin-offs - each auto assembly job creates 5 indirect jobs. Auto industry creates demand in many other industries - 39% in other manufacturing, 27% in business services, 7% in wholesale trade, 7% in retail trade and 6% in transportation and storage. On average, for every one assembly plant opened in N.A., 19 direct suppliers open up within 60 miles of the plant.

Canadian light vehicle production shares by manufacturer Canada has five major light vehicle assemblers Assembly plants: Toyota 2 plants in Cambridge 1 plant in Woodstock Honda 2 plants in Aliston General Motors 2 plants in Oshawa 1 plant in Ingersoll Chrysler 1 plant in Brampton 1 plant in Windsor Ford 1 plant in Oakville 1 plant in St. Thomas 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 2000 2002 2004 2006 2008 2010(f) 2012(f) 2014(f) 2016(f) Canadian light vehicle production shares by manufacturer Source: Ward’sAuto, CSM Forecasting GM Ford Honda Toyota Chrysler Canada Assemblers 12 high volume assembly plants - 13th plant to begin production at the end of 2008. Canada is currently “punching above its weight” in vehicle assembly due to on-going investment, quality and productivity. Canada produces a range of vehicles, primarily in the mid-sized, larger segments.

J.D. Power Plant Quality Awards Exceptional Canadian Quality Canadian assembly plants have won about one-third (30%) of all J.D. Power plant quality awards for North America, which is about double the Canadian share of regional production (16%) since 1996. The only Toyota plant outside Japan to produce Lexus vehicles is in Canada. J.D. Power Plant Quality Awards 1991 Toyota Cambridge (Gold) 1992 Toyota Cambridge (Silver) 1993 Toyota Cambridge (Bronze) 1994 Ford St. Thomas (Silver) 1995 1996 Toyota Cambridge (Gold), Honda Alliston (Silver) 1998 Ford St. Thomas (Gold) 1999 GM Oshawa 1 (Bronze) 2000 2001 2002 GM Oshawa 2 (Gold) 2003 GM Oshawa 1 (Gold) 2005 GM Oshawa 2 (Gold), GM Oshawa 1 (Silver) 2006 GM Oshawa 2 (Gold), Chrysler Windsor (Silver) 2007 GM Oshawa 2 (Silver) 2009 GM Oshawa Car (Silver)

Canadian auto supply chain - a national industry In 2009, the Canadian auto parts sector: Had shipments $19 billion and almost 61,000 workers. Over 1000 establishments, 78% with less than 200 employees Representation throughout Canada, including: Metal stamping and electronic equipment manufacturers in Western Canada. Seats and interior trim manufacturers in Eastern Canada. Transmission and power train parts manufacturers in Central Canada. For every assembly plant opened in N.A., 19 direct suppliers open up within 60 miles of the plant. Each auto assembly job creates 4.9 indirect jobs e.g. rubber, plastics, fabricated metals and steel products. Dealers and aftermarket collectively employ more than 333,000 people. Auto parts As the Detroit 3 lose market share, so do the parts suppliers tied to them. Detroit 3 parts suppliers generally have not been successful in supplying Japanese assemblers. For example, Magna’s supply to Japanese firms is only 5% of Magna’s total sales. The parts sector can be divided into 4 segments: 1. less than five tier one, global companies 2. a handful (less than 10) tier 2 firms who need to expand and invest abroad with assemblers. 3. a significant net work of Japanese parts suppliers (approximately 80 firms) who are doing well given growth in market share of Asian firms 4. Smaller tier 3 and tier 4 SMEs who are struggling due to rise of CDN dollar, limited resources to innovate, and lack of diversified customer base.

Canada’s automotive sector is fully integrated in N.A. The Canadian market represents only 12% (1.5 million) of N.A. vehicle sales but is responsible for 17% (1.4 million) of N.A. production in 2009. Canada exports 81% of vehicle production and 53% of parts in 2009: Of these exports 99% of vehicles and 94% of parts destined for the U.S. Assembly plants and major parts companies are clustered in southern Ontario to allow an easy and efficient integration of supply chains. Integration of Canada – U.S. Supply Chain: Rear Suspension Assembly by Martinrea

Global Production by Segment Global Production Growth by Segment Vehicle demand varies in different markets Global Production by Segment (1997-2015) Vehicle demand in global market varies due to consumer preference, regulatory requirement, commodity/oil prices, and market structure. Relatively high demand in broad-based C- and D-segment in North America, while emerging markets like China, Central and Eastern Europe focus on smaller size vehicles like B- and C-segment. Global production growth on B,C and D-segment is expected to be high in the future. Global Production Growth by Segment (2009-2015) Source: CSM Worldwide Global Outlook, 2009

NA Vehicle Demand by Segment, 2011-2015 North America is expected to be an attractive market in the long run U.S. has a unique demand on vehicles due to its geographic remote, safety and fuel regulations, and sophisticated market structure: According to recent survey, value and safety are the most important considerations to final purchase decision for US consumers. Due to the new fuel efficiency regulations, high energy prices, and shifting consumer preference, OEMs are expected to adjust production: Small-sized vehicle (A-segment) sourcing to low-cost jurisdictions Small to Medium-sized (B-segment) volume surges next decade Medium-sized to luxury vehicles (C, D-segments) reach critical mass Large to full-frame vehicle (E, F- segment) production is expected to drop NA Vehicle Demand by Segment, 2011-2015 Data Source: CSM Worldwide

Canadian Automotive R&D Centres Ford Motor Company of Canada Ltd. Ford Manitoba Extreme Cold Weather Test Facility (Thompson MB) Ford Powertrain Engineering Research & Development Centre (Windsor ON) Ford Centre for Excellence in Manufacturing (Windsor ON) Chrysler Canada Inc. Automotive Research & Development Centre (Windsor ON) General Motors of Canada Ltd. GM Canadian Regional Engineering Centre (Oshawa ON) GM Cold Weather Development Centre (Kapuskasing ON) UOIT Automotive Centre of Excellence (Oshawa ON) Navistar / International Truck and Engine Corporation ITEC Center for Innovation (Windsor ON) Honda R&D Americas Inc. (Canada) Environmental testing laboratory (Dartmouth NS) Toyota Canada Inc. Toyota Canada Cold Research Centre (Timmins ON)

Vehicles Made in Canada 2010 Acura CSX Acura MDX Acura ZDX Chevrolet Camaro Chevrolet Equinox Chevrolet Impala Chrysler 300 Chrysler Town & Country Dodge Charger Dodge Challenger Dodge Grand Caravan Ford Crown Victoria Ford Edge Ford Flex GMC Terrain Honda Civic Coupe Honda Civic Sedan Lexus RX 350 Lincoln MKT Lincoln MKX Lincoln Town Car Mercury Grand Marquis Toyota Corolla Toyota Matrix Toyota RAV4 VW Routan