Bank of America
35th Annual
Investment Conference
Sept. 22, 2005
Charles “Chip” McClure
Chairman, CEO and President
Rakesh Sachdev
Senior Vice President, Corporate Strategy
Brian Casey
Vice President and Treasurer
Cautionary Statement Concerning
Forward-Looking Statement
This presentation contains “forward-looking statements” as defined in the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are based
on currently available competitive, financial and economic data and management’s
views and assumptions regarding future events. Such forward-looking statements are
inherently uncertain, and 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 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; reliance on major OEM customers; labor relations of the company,
its customers and suppliers; the financial condition of the company’s suppliers and
customers, including potential bankruptcies; successful integration of acquired or
merged businesses; achievement of the expected annual savings and synergies from
past and future business combinations; 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
access capital markets; the 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; as well as other risks and uncertainties,
including but not limited to those detailed herein and from time to time in
ArvinMeritor’s Securities and Exchange Commission filings.
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Agenda
Company profile
Light Vehicle Systems
Reshaping the business
Commercial Vehicle Systems
Capitalizing on strengths
Emissions
Diesel emissions opportunities
Summary
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Company Profile
Global Diversification
FY 2004
4
Company Profile
Note: LVS sales were 55% and CVS sales were 45% for the first nine months of 2005
Business Segment Diversification
FY 2004
5
Company Profile
Market and Product Focus
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Light Vehicle Systems
Roof systems and modules
Door systems
and modules
Suspension
components
(coil
springs,
stabilizer
and torsion
bars)
Steel wheels
Emissions systems
Suspension
modules
Exhaust
systems
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Restructuring Program
Reshaping the LVS Business
Step 1: Reducing Capacity
Closing and consolidating
11 ArvinMeritor locations
Nine in LVS business
$135 million total program cost
$50-60 million annual savings for
ArvinMeritor expected by 2007
$50-60 Million Annual Benefit
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Reshaping the LVS Business
Step 2: Sourcing Globally
Expecting new sources to
generate savings in
immediate future
VP of LVS Purchasing
relocated to China
Building local staff to
achieve aggressive goals
Moving Rapidly to Reduce Supply Costs
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Reshaping the LVS Business
Committed to Improving Profitability
Roof systems and modules
Door systems
and modules
Suspension
components
(coil
springs,
stabilizer
and torsion
bars)
Steel wheels
Emissions systems
Suspension
modules
Exhaust
systems
Step 3: Evaluating Product Portfolio
Reducing capacity/sourcing globally
not enough for some products
Divestitures of non-core products
under consideration
Market valuations have
become pacing factor
Continue steps to capture
value throughout
evaluation process
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Reshaping the LVS Business
Step 4: Growing Non-North America Big 3 Business
Relatively low N.A. Big 3 exposure
20 percent of total
ArvinMeritor business
Continue efforts to diversify
Established Korean
emissions joint venture
Awarded European
multi-panel sunroof contract
Began door module production
for Hyundai N.A.
Continuing to Diversify Customer Base
FY 2004
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ABS, air
system and
stability
controls
Emissions
systems
Complete
Braking
systems
(wheel ends
and brakes)
Drivelines
Automated
transmissions
Front and
rear axles
Commercial Vehicle Systems
Trailer and
suspension
systems
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Capitalizing on Strengths
Commercial Vehicle Markets are Strong Globally
Significant volume increases in North America, Europe,
South America and China (2005 vs. 2004)
+30%
+12%
+16%
+11%
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Capitalizing on Strengths
Well-Positioned to Capture Growth
Firmly entrenched in global markets
European Volvo joint venture
First Auto Works (FAW) joint venture in China
Dynamic product portfolio in “hot” growth areas
Safety/Undercarriage
Aftermarket
Emissions
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Capitalizing on Strengths
2007 N.A. Truck Market Cyclicality
Being Well-Managed
Only impacts 10 percent of
total ArvinMeritor business
N.A. downturn not expected
to be as severe
(30-35% vs. 50%)
Global markets expected to
remain strong in 2007
Emissions and Aftermarket
provide meaningful offset to
potential N.A. market decline
FY 2004
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Capitalizing on Strengths
Opportunities Are Being Realized
Commercial Vehicle Aftermarket
Opportunity for global expansion
Partially offsets N.A. market decline
Commercial Vehicle Emissions
Delivering solutions to meet global emissions
requirements
Marketing new products
Capturing new business
Developing advanced technology for future solutions
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Diesel Emissions Opportunities
NOx (g/bHp
-
hr)
2010
(PM = 0.01, NOx = 0.2)
1988
1991
1994
1998
2002
0
1
4
3
2
5
6
0.1
0.2
0.3
0.4
0.5
0.6
0
1
4
3
2
5
6
0.1
0.2
0.3
0.4
0.5
0.6
NOx (g/bHp
-
hr)
2010
1988
1991
1994
1998
2002
2010
2014
0
0.05
0.2
0.1
0.002
0.004
0.006
0.008
0.01
0.15
2010
2014
(PM = 0.001, NOx = 0.05)
Sources: EPA and DieselNet
U.S. Diesel Emissions Standards
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Diesel Emissions Opportunities
EPA ’98
EPA ’04
Euro IV
Euro III
Euro II
Euro I
Japan ‘05
Projected
Euro
III=
2010
Euro IV= 2006
Euro IV=
2010
Euro III= 2006
Euro IV= 2009
Euro III= 2007
Euro IV=2010
Euro IV=
20??
EPA ‘04= 2007
Euro V= 2008
Euro VI=2011
Global Emissions Standards are Driving
Significant Growth Opportunities for ArvinMeritor
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Diesel Emissions Solutions
U.S. may adopt SCR solution
Improves fuel efficiency
Low sulfur diesel capacity
constraint
Lean NOx Traps
Combined PM and NOx Traps
SCRT (SCR+DPF)
Lean NOx Trap with Plasma
Fuel Reformer
2007
U.S.
Solution
2006
Europe
Solution
EGR
Exhaust Gas Recirculation (EGR)
Reduces NOx
DPF
Diesel Particulate Filter (DPF)
Reduces PM
Vocational application uses
actively regenerated filter
SCR
Urea
Control
Selective Catalytic Reduction (SCR)
Reduces NOx
Reduces PM
Beyond
2007
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Commercial Vehicle Diesel Emissions
Global Addressable Market
$660/truck
$2,700/truck
Euro 4 / Japan
EPA 2007
Euro 5
EPA 2010
- EU: mostly SCR
US: EGR+DPF
Technology TBD
Current Tech. Prevails
(EGR + DPF)
New Tech. Required
(SCR & Active DPF)
Technology Defined
Global Market $2+ billion in 2007
ARM Addressable Market
Addressable Market Grows to $2-3 Billion in 2010
Global Solutions
ArvinMeritor Solutions
$2,000/truck
$300-360 /truck
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Summary
Reshaping the Light Vehicle Systems business
Capitalizing on global strengths of
Commercial Vehicle Systems
Well-positioned to capture growing diesel
emissions opportunities
Light Vehicle Aftermarket divestiture progressing
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www.arvinmeritor.com
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