1. SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED SMMT, the ‘S’ symbol and the ‘Driving the motor industry’ brandline are trademarks of SMMT Ltd UK automotive supply chain – challenges & opportunities Konstanze Scharring, SMMT Westminster Energy, Environment & Transport Forum 01 November 2011

2. SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 2 UK automotive industry Sector is an important contributor to private sector investment & export led growth UK automotive turnover - £49bn in 2010 – 6.7% of total UK. Sector employees 150,000 directly, 720,000 in total. 7 volume car producers. 8 commercial vehicle producers. 19 of world’s largest 20 component manufacturers in UK. Produces 1.5mn vehicles and 2mn engines Invested £1.5bn in R&D in 2010 78% of vehicles produced are exported Accounts for over 10% of total UK exports – valued at more than £25bn Automotive is largest exporter of goods

3. Matthias Holweg with Yung Tran Philip Davies Stephan Schramm THE UK SOURCING ROADMAP CREATING AND SUSTAINING SUPPLY CHAIN CAPABILITIES IN THE UK AUTOMOTIVE INDUSTRY

4. 201020112012201320152014 Alternative powertrain parts entering full-scale production Alternative powertrain parts entering full-scale production Support LCV demand UK Sourcing Roadmap Interior & exterior Body & powertrain Electrics & electronics Identify Top-10 suppliers Identify Top-10 suppliers Survey point #1: A.OEMs’ UK sourcing: £7.4bn B.GVA in UK supply chain: £4.8bn Survey point #1: A.OEMs’ UK sourcing: £7.4bn B.GVA in UK supply chain: £4.8bn Survey point #2: A.Increase in OEMs’ UK sourcing? B.Increase in GVA in UK supply chain? Survey point #2: A.Increase in OEMs’ UK sourcing? B.Increase in GVA in UK supply chain? Short-term opportunities through matched needs Critical support Medium- to long-tem potential for LCV parts Support R&D at UK suppliers Target international suppliers A. Shop-floor competitiveness B. Total supply chain cost modelling C. Finance to sustain and grow business * * * Interface area with Technology Group

5. Interior trim: 7.4 m units Prospective UK sourcing: what OEMs would like to source in the UK Heavy metal: forgings, castings, large pressings: 1 m units Wheels: 5.8 m units Electric powertrain parts: Charging technology, reducers, invertors: 100,000 units Large electric motors: 100,000 units Batteries: 56,000 units Struts: 5.3 m units Glass: 7 m units Bearings: 7 m units Large ext. mouldings (mirrors, bumpers): 0.5 m units Fuel cells: 100,000 units Hybrid Conversion: 200 units Hybrid Fuel Systems: 5,000 units Range extender engines: 100,000 units Power Springs 500,000 Castings 20,000 Crankshafts 20,000 Flywheels 10,000 Steering systems 500,000 Aluminium pressing & assembly 100,000 General tubular assemblies 250,000 Pressed Metal Structures 2,000 Suspension Springs 1,000,000 Appliance trims 30,000 Architectural trims 5,000 Comfort headrests 25,000 Door trim 100,000 Headliners 200,000 Instrument panels 100,000 Bumper parts 1,000,000 Glass 500,000

6. SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 6 April 2011 event: 200 People participated 30 Buyers from 20 companies included BMW, Ford, GM, Honda, JLR, Nissan Around 90 Suppliers Over 200 1-2-1 meetings Next: 3 regional events 31 Oct Melton Mowbray 8 Nov Chester 15 Nov Bridgend SMMT ‘Meet the Buyer’ events

7. SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITEDPAGE 7 Government policies to support investment & growth Key industry asks for Autumn Statement Industry seeks a supportive business environment that allows automotive sector to drive innovation, secure high quality employment and deliver sustainable economic growth Need for unlocking private sector investment in R&D, capital equipment, plants and machinery, and skills –Reform R&D tax relief for large companies to make it internationally competitive –Reverse reduction in capital allowances to support cyclical, high investment industries like automotive –End uncompetitive business rates and opaque valuation methodology for automotive sites in the UK –Encourage flexible investment in skills across the workforce Ensure quantitative easing and credit easing actually supports the automotive supply chain