To Our Shareowners

2001 marked the completion of our first full year as a new company.

We have much to be proud of, but still have more work to do.

As shareowners of this company, you can be assured ArvinMeritor

is focused on the future and positively positioned to move forward.

Our successful merger integration process put us ahead of the economic

downturn. As a result, we are ready to respond to the growing challenges

currently facing the automotive industry, including declining sales, and

excess capacity and inventory. We remain diligent in our efforts to grow

the business while taking costs out, striving toward our ultimate goal to

be the supplier of choice for the motor vehicle industry. Our long-term

goals have not changed:

• Grow sales 10 percent annually over the business cycle.

We intend to achieve this primarily through organic growth;

• Grow earnings per share 15 percent to 18 percent annually by

focusing on margin expansion. This growth will be driven by cost

reductions and efficiencies;

• Emphasize cash generation;

• Maintain investment grade credit rating; and

• Reduce debt-to-capital ratio to 45 percent.

Our customers, and our promise to deliver the highest levels of product

quality and service, remain at the center of our work. Despite these difficult

economic times, we must never lose sight of our commitment to deliver

innovative solutions that move the world.

Financial HighlightsIn millions, except per share amounts

Pro Forma(1)

Year Ended September 30, 2001 2000 1999 Sales

Light Vehicle Systems $ 3,588 $ 3,668 $ 3,474Commercial Vehicle Systems 2,199 2,926 2,941Light Vehicle Aftermarket 859 950 906Other 159 178 170

Total Sales $ 6,805 $ 7,722 $ 7,491Operating income(2) $ 279 $ 515 $ 533As a percent of sales 4.1% 6.7% 7.1%Net income(3) $ 91 $ 254 $ 279Pre-tax interest coverage(3) 2.0x 3.9x 4.9xDiluted earnings per share(3) $ 1.38 $ 3.56 $ 3.66Diluted common shares outstanding 66.1 71.4 76.3Cash provided by operations $ 605 $ 344 $ 415Total debt to capitalization ratio(4) 67% 67% 58%

(1) Pro forma financial information presented as if the merger had occurred at the beginning of each fiscal year and reflects (a) the amortization of

goodwill from the merger and the elimination of historical Arvin goodwill amortization expense; (b) the adjustment to interest expense for

borrowings to fund the Arvin cash consideration and other financing costs; (c) the income tax effects of (a) and (b) above; and (d) the adjustment

of shares outstanding representing the exchange of one share of Meritor common stock for 0.75 shares of ArvinMeritor common stock and one

share of Arvin common stock for one share of ArvinMeritor common stock, based on the average shares outstanding for each year.

(2) Operating income excludes restructuring costs and other charges of $84 million, $30 million and $35 million in fiscal years 2001, 2000 and

1999, respectively, and gain on sale of businesses and other of $89 million and $31 million in fiscal years 2000 and 1999, respectively.

Operating income also excludes merger-related expenses of $70 million in fiscal year 2000.

(3) Net income, earnings per share and pre-tax interest coverage exclude the special items discussed in (2) above and non-operating one-time

expenses of $3 million and $1 million in fiscal 2000 and 1999, respectively.

(4) As of September 30, 1999 this ratio is based on combined results of Arvin and Meritor.

$5.6

6.2% $401

$6.3

$7.5$7.7

$6.8

7.1%

7.1% 6.7%

4.1%

$383$415

$344

$605

2000 20011999199819972000 20011999199819972000 2001199919981997

$348 $444 $533 $515 $279

� Special items

% Operating income before special items

as a percent of sales

Sales$ in billions

Operating Income$ in millions

Operating Cash Flow$ in millions

Note: Sales, operating income and operating cash flow for the fiscal years ended September 30, 1997 - 2000 are presented on a pro forma basis.

Financial Results For Fiscal Year 2001The company reported fiscal year 2001 sales of $6.8 billion and net income beforespecial items of $91 million, or $1.38 per share. Sales declined 12 percent, andnet income before special items decreased 64 percent, as compared to last year’sresults. Operating income before special items was $279 million, down 46 percentfrom last year, reflecting an operating margin of 4.1 percent, compared to lastyear’s 6.7 percent.

For the year, Light Vehicle Systems (LVS) sales were $3.6 billion. Excluding the$128-million negative impact of currency translation and the loss of $31 million ofseat sales, LVS sales would have been up two percent as compared to last year.Fiscal year 2001 operating margin for LVS declined to 5.9 percent, from 6.3 percentlast year, attributable to pricing pressures and declining markets in North America.

Commercial Vehicle Systems (CVS) sales were $2.2 billion in fiscal year 2001, adecrease of 25 percent from a year ago, and operating margin was 1.5 percent,down from 7.9 percent for fiscal year 2000. The operating margin decline for the year is attributable to volume reductions outpacing the company’s lowering of its fixed costs.

For the year, Light Vehicle Aftermarket (LVA) sales were $859 million, compared to$950 million in fiscal year 2000, and operating margin increased to 5.1 percentfrom 4.5 percent in the prior year. The margin increase is the result of improvedpricing and the impact of ongoing cost reductions.

The company generated $605 million in operating cash flow for fiscal year 2001,including the $211-million sale of accounts receivable, reflecting the company’scontinuing emphasis on cash generation. Due to the strong operating cash flowand the impact of the accounts receivable securitization program, the company was able to reduce debt and preferred capital securities by $320 million.

Sustain and Strengthen the BusinessAs a direct result of current economic conditions and industry pressures, we areaggressively pursuing several process improvements and organizational changesthat are designed to improve our returns. Our goals are to cut costs, improvequality and reduce cycle time in order to sustain and strengthen our business.Specifically, we will:

• Concentrate on core competencies, divest non-core businesses and outsource non-core processes;

• Identify products with low margins and either improve or discontinue them;

• Improve returns or divest under-performing businesses;

• Conserve cash and capital through joint ventures and alliances;

Working capital (receivables,

payables and inventory) as a

percent of sales improved

dramatically as a result of

our focus on cash generation.

*Excluding sale of receivables.

1

2000 2001

$7.7

4.2%*

$6.8

6.9%

Inventory turnover was the key

contributor to the improvement in

working capital.

Note: References to results for

fiscal year ended September 30,

2000, are on a pro forma basis.

2000 2001

11.4x

13.0x

Working Capital as a Percent of Sales$ in billions

Inventory Turnover

• Align inventories with weakening market demands; and

• Implement continuous improvement initiatives that will improve quality,shorten cycle times and drive out waste.

In addition to these tough measures, we will reduce capital spending by approximately 15 percent from fiscal year 2001 capital spending of $206 million, adjust our salaried workforce downward and eliminate unnecessary costs. These steps will strengthen our financial performance and ensure that we emerge from the downturn a stronger company.

Our ProductsAs consolidations and global outsourcing continue to shape our marketplace,we remain competitively positioned to support these trends and grow our marketshare. The merger created an even stronger product portfolio for ArvinMeritor,integrating several competencies for next-generation automotive systems andmodules. These systems are designed, manufactured, assembled and delivered to our customers wherever and whenever they are needed by way of our globaljust-in-time logistics network.

We view systems integration as our greatest growth opportunity. Through value-added engineering, technology and innovation, we will provide more value to ourcustomers, and, in return, grow our business by increasing our content per vehicle.

Light Vehicle Systems Today, our light vehicle products total more than $100 in content per vehicle in North America and Europe combined. By combining our component technologies into systems – such as aperture, undercarriage and exhaust systems – we haveidentified an eight-percent annual organic growth rate for this segment. This growthis driven by new products, new business wins and increased market penetration.

While we currently hold the market leadership position in exhaust systems, werecognize the need to prepare for the market impact of alternative fuels and newpowertrain solutions. We are tracking this transition and working on exciting newtechnologies to take advantage of this trend, while maintaining our commitment toproviding cleaner, lighter and smarter exhaust and emission solutions to ourcustomers. By understanding and optimizing airflow management principles,ArvinMeritor’s air induction and exhaust system development process will improveengine performance, as well as reduce OEM development time by eliminatingdesign and engineering redundancies. A recent tribute to this work was General Motor’s selection of our new integrated air management solution – Air2Air™– for the all new Chevy SSR sport utility vehicle.

Another great example of ArvinMeritor’s system integration is in the recentlyannounced modular, independent rear suspension concept unveiled at the IAAInternational Motor Show in Frankfurt, Germany. By integrating several ride control

2

2000 2001

$344

$605

We achieved a positive cash flow

from operations despite a

significant drop in net income.

Cash Flow from Operations$ in millions

The positive interaction of

ArvinMeritor’s unequalled

processes, market-leading

products and our talented, highly

motivated people creates a

powerful synergy that positions us

well for today, as well as takes

advantage of future opportunities.

and suspension components into a flexible alternative for our customers, we canreduce product cycle time, lower assembly costs and enhance the total suspensionperformance for the end user.

Commercial Vehicle SystemsWhile vehicle markets for our heavy-duty product lines were down significantly,our commitment to product enhancements was not. Today, our commercial vehicle products total more than $2,000 in content per truck and trailer produced in North America and Europe combined. We intend to grow this numberby continuing to incorporate more products into the drivetrain, suspension andstopping systems package.

Beyond the much lower vehicle production volumes, the industry faces severalissues, including enhanced safety requirements, new emissions regulations and theneed to lower operating costs. Because ArvinMeritor integrates its products into theDriveTrain Plus™ system (available only in North America), we can address theseconcerns and deliver several benefits to the truck and trailer OEM, as well as theend-user customer.

In 2001, we launched several new products targeted at reducingoperator maintenance costs, including the Meritor® Amboid DriveAxle and Meritor® Tire Inflation System by P.S.I. We also beganproduction on the newest automated manual transmission,ZF Meritor’s FreedomLine™ – which is designed to be a lighter,more cost-effective solution than that of the competition. Its electronically controlled shifting senses payload and automatically knowswhen to shift gears. This engineering advancement also optimizes fuel economy – a benefit that has never been more important, as we watch fuel prices fluctuate and severely affect truck fleet and owner-operator profits.

One of our greatest opportunities for growth in the commercial vehicle market willcome with the pending U.S. and European heavy-duty diesel emissions regulations.Between now and 2005 for Europe, and by 2007 for the United States, a dramaticreduction in environmentally harmful diesel emissions must be realized. In order toreduce diesel particulate and emissions from exhaust gas, our customers will needto redesign their engines and apply aftertreatment technologies. By utilizing ourproven emissions-control experience and newly developed product solutions, weexpect to achieve significant penetration in this expanding market within the nextfive years and beyond.

Our commercial vehicle aftermarket business continued its push to promote theMeritor and Euclid® aftermarket parts brands within their respective distributionchannels, focusing on delivering the right product at the right time. Supporting thateffort was the introduction of XpresswayPlus.com, our first Web-based online partsordering system. Today, we have more than 630 customers who will benefit fromthe real-time information exchange between ArvinMeritor and our OEMs, dealersand warehouse distributors.

3

People

Process

Products

Light Vehicle Aftermarket While the markets remained weak for aftermarket parts, we were successful inadjusting our operations to put more focus on servicing customers, while reducingcosts. Our marketing and industry-leading distribution capabilities are ready tosupport our family of well-known brands, including the introduction of several newproducts targeting the performance market. In exhaust and ride control, we expectto capitalize on the growing number of used vehicles in the critical six- to ten-year-old segment that requires more frequent service and repair. In filters, theincreasing number of vehicles in operation that drive more miles each year willgenerate a strong market. We are well-positioned in each of these markets, withloyal customer leaders in the “Do-It-Yourself,” “Do-It-for-Me” and Original Equipment Service markets.

Our ProcessesThe foundation to our ongoing success is our commitment to continuous improvementand quality. Both of these areas received significant attention this year.

One of our most significant merger accomplishments has been the institution ofArvinMeritor Performance System (AMPS). AMPS is a combination of leanmanufacturing principles and best practices designed to empower teams ofemployees to drive out waste, eliminate non-value-added tasks and improveproduction and administrative processes. This internally focused initiative – whencombined with our dedication to quality – moves us closer to designing productsthat exceed our customer expectations.

The ArvinMeritor “S3” program, which stands for Six Sigma, Shainin and Solutions, was also launched this year. S-Cubed thinking is helping us to create a problem-solving culture that is not only focused on customer needs, but also on delivering products on time, at lower costs. To date, the application of S-Cubedprograms have resulted in approximately $100,000 in savings per project.

Our PeopleIt’s been a busy year, and our people have achieved a great deal. Our mergerintegration was successful. By combining human, technical and financial bestpractices we saved the company $40 million in pre-tax integration synergies.In addition, our other cost reduction initiatives generated $40 million in pre-taxsavings, and we expect recurring income tax savings of $10 million per year.Our engineering teams made significant advancements in designing new systemsand technologies, filing more than 145 original patent applications in 2001. And,our operations made great progress to ensure that the highest levels of sustainablemanufacturing quality were achieved.

It’s not an exaggeration when we say that our success is derived from our people.It’s through their hard work, commitment and passion to serve the customer thatprogress is made and innovations are born.

We are the 12th largest global

automotive supplier based on

2000 sales.

Source: Automotive News,

June 18, 2001

ArvinMeritor has 33,000 employees

and more than 150 manufacturing

facilities in 27 countries.

12thLargestSupplier

4

Larry Yost

Chairman and

Chief Executive Officer

This year alone, we were recognized by our customers, peers and professionalassociations, as well as by the communities in which we work, with more than 90 awards and accolades. To name a few:

• Ford Motor Company’s Gold World Excellence Award to Light Vehicle Aftermarket for its determination and sustained focus on achieving the very highest of standards with its Purolator® filter brand;

• General Motors Corporation Supplier of the Year Award to Light Vehicle Systems for superior performance in quality, service, technology and price with its wheel product line;

• Motor & Equipment Manufacturers Association’s Aftermarket Web Challenge™

Award to Commercial Vehicle Aftermarket for its new market-leading B2B Web site XpresswayPlus.com; and

• PACE 2001 – Honorable Mention to Exhaust Systems for its revolutionary use of titanium for a complete exhaust system for the Corvette Z06.

Facing the FutureWe have a strong and experienced management team, and we are taking thenecessary actions to weather this downturn and prepare for the eventualturnaround. In the last year, we built a financially sound, viable new company that is fast on its feet. It took long hours, tough decisions and a commitment from all toemerge from the merger bigger and better than we were as separate companies.Today, we face the future with confidence and certain knowledge that ArvinMeritoris a growth story. We will continue to strengthen our technology and engineeringinfrastructure to ensure we remain a leader in this industry, always deliveringexemplary value to our customers, shareowners and employees.

We’re in it for the long haul. Stick with us. We’re in for a great ride!

Sincerely,

Larry YostChairman andChief Executive Officer

December 11, 2001

5

ArvinMeritor At-A-Glance

Business Segments Brand Names Highlights 2001 Results

Light Vehicle AftermarketExhaust Filters Ride Control

Commercial Vehicle SystemsDrivetrain SystemsStopping SystemsSpecialty ProductsSuspension Systems and Trailer Products

Light Vehicle SystemsExhaust SystemsAperture Systems Undercarriage Systems

6

Captured major supply contract with Volvo Buses

for axle modules

Meritor ®Tire Inflation System by P.S.I. selected standard

equipment on Great Dane classic refrigerated trailers

Awarded first exhaust system contract with European

commercial vehicle manufacturer

Aggressively aligned manufacturing and distribution

capacity with future aftermarket demand

Achieved three consecutive quarters of

margin improvement

Awarded Vendor of the Year by CARQUEST and TruStar

Purolator wins Ford Gold Excellence Award

Net Sales(Segment by %)

Operating Income(Segment by %)

Net Sales(Segment by %)

Operating Income(Segment by %)

Net Sales(Segment by %)

Operating Income(Segment by %)

ArvinMeritor

MSSC*

Arvin Sango*

Zeuna Stärker*

Meritor

Gabriel Commercial

Vehicle

ROR

Euclid

ZF Meritor*

Meritor WABCO*

Purolator

Gabriel

Arvin

Ansa Sport

EuroCat

MetalCat

Arvin Tesh

Arvin Rosi

Arvin Timax

Arvin Ansa

Expanded wheel manufacturing facility in Mexico to

respond to growing Americas market

Introduced new modular, independent

rear suspension

Signed an exclusive technology development agreement

with MIT to commercialize new emissions aftertreatment

and other system solutions

Moved into recreational market, with first contracts to

supply exhaust products to Harley-Davidson and Arctic Cat

� LVS 76%

� CVS 32% � CVS 11%

� LVA 13% � LVA 16%

� LVS 53%

*Joint Venture Brand Name

Note: Business units that are not focused on automotive products are classified as “Other.” Net sales

*Joint Venture Brand Name

Top Customers Markets Served Market Outlook and Trends

Light vehicle volumes are predicted to

decline in North America and Europe in

the next year. The company expects the

continued integration of automotive

components into major systems and

modules, consolidation and outsourcing

to offer future growth opportunities.

• Warehouse distributors

• Installers

• Retail outlets

Global manufacturers of:

• Passenger cars and vans

• Sport utility vehicles

• Light trucks

7

North American Class 8 commercial vehicle

volumes will remain soft in 2002.

European OEMs will increasingly outsource

components in order to achieve cost and

efficiency advantages. Approaching U.S. and

European diesel emission regulations will

generate new markets for aftertreatment

emission products.

The fastest growing segment of vehicles

in operation are 6- to 10-years old.

The Motor & Equipment Manufacturers

Association (MEMA) estimates an

“untapped market” of $58.3 billion of

unperformed vehicle maintenance.

These two facts combined translate into

expanding market opportunity for

Light Vehicle Aftermarket.

DaimlerChrysler

General Motors

Ford

Volkswagen

Toyota

Nissan

Freightliner

Volvo

Navistar

PACCAR

Mack

Blue Bird

Evobus

Volkswagen

Oshkosh Truck

Stewart & Stevenson

MCI

IVECO

MAN

Wabash

Trailmobile

Great Dane

Ford/Motorcraft

AutoZone

CARQUEST

Kwik-Fit

Unipart

Pep Boys

Advance

Midas

Meineke

Texaco

Pennzoil Quaker State

Segment Sales(by region)

Segment Sales(by product)

Segment Sales(by region)

Segment Sales(by product)

Segment Sales(by region)

Segment Sales(by product)

Global manufacturers of:

• Heavy-duty trucks and trailers

• Medium-duty trucks

• Coaches and buses

• Specialty vehicles

� North America 57%

� Europe 35%

� South America 4%

� Asia/Pacific and other 4%

� Exhaust 48%

� Apertures 32%

� Undercarriage 20%

� North America 67%

� Europe 25%

� South America 4%

� Asia/Pacific and other 4%

� Drivetrain Systems 41%

� Stopping Systems 23%

� Specialty Products 19%

� Suspension Systems and Trailer Products 17%

� North America 74%

� Europe 24%

� Asia/Pacific and other 2%

� Exhaust 36%

� Filters 35%

� Ride Control 29%

and operating income for the “Other” classification were $159 million and $(10) million, respectively.

8

Larry D. YostChairman of the Board Chief Executive Officer ArvinMeritor Inc.

Joseph B. Anderson, Jr.Chairman of the Board and Chief Executive Officer Chivas Industries LLC

Steven C. BeeringPresident Emeritus Purdue University

Rhonda L. BrooksPresidentExterior Systems Business Owens Corning, Inc.

Joseph P. FlanneryChairman of the Board President and Chief Executive Officer Uniroyal Holding, Inc.

William D. George, Jr.Former President and Chief Executive Officer S.C. Johnson Wax

Richard W. HanselmanChairman of the Board Health Net, Inc.

Charles H. HarffFormer Senior Vice President,General Counsel andSecretary Rockwell International Corporation

Victoria B. JacksonPresident Victoria Bellé, Inc.

James E. MarleyFormer Chairman of the Board AMP Inc.

James E. PerrellaChairman of the Board Ingersoll-Rand Company

Harold A. PolingFormer Chief Executive Officer

and Chairman of the Board Ford Motor Company

Martin D. WalkerFormer Chairman of the Board

and Chief Executive OfficerM.A. Hanna Company

ArvinMeritor Board of Directors

Executive Officers

Larry D. YostChairman of the BoardChief Executive Officer

Vernon G. Baker, IISenior Vice President General Counsel

Diane S. BullockVice PresidentController

Linda M. CumminsSenior Vice PresidentCommunications

William K. DanielSenior Vice PresidentPresident, Light Vehicle

Aftermarket

Juan L. De La RivaSenior Vice President Corporate Development & Strategy,

Engineering and Procurement

Thomas A. GosnellSenior Vice PresidentPresident, Commercial

Vehicle Systems

Perry L. LipeSenior Vice President Chief Information Officer

Terrence E. O’RourkeSenior Vice PresidentPresident, Light Vehicle Systems

S. Carl SoderstromSenior Vice President Chief Financial Officer

Craig M. StinsonSenior Vice PresidentPresident, Exhaust Systems

Frank A. VoltolinaVice PresidentTreasurer

Ernest T. WhitusSenior Vice PresidentHuman Resources

Bonnie WilkinsonVice PresidentSecretary

Corporate Information

ArvinMeritor Headquarters2135 West Maple RoadTroy, MI 48084-7186Phone: 248-435-1000 Fax: 248-435-1393www.arvinmeritor.com

Corporate Public RelationsMembers of the media should contact:Public Relations 248-435-7907

Shareowner ServicesCommunications about share ownership, book-entryaccounts, dividend payments, transfer requirements,changes of address, lost stock certificates, account status and sale of shares should be directed to:EquiServe Trust Company, N.A.P.O. Box 43069Providence, RI 02940-3069800-519-3111www.equiserve.com

For Internet access to account information call 877-843-9327 toll free to receive a password by mail.

E-mail: equiserve@equiserve.comTelecommunications Devices for the Deaf (TDDs) may be accessed by calling 201-222-4955.

Investor RelationsSecurities analysts and professional investors should contact:Investor Relations ArvinMeritor, Inc.2135 West Maple RoadTroy, MI 48084-7186 www.arvinmeritor.com/investor/investor.aspPhone: 866-INFO-ARM (866-463-6276)Fax: 248-435-1189E-mail: investor.relations@arvinmeritor.com

For copies of annual reports, Forms 10-K and 10-Q and other ArvinMeritor publications,please contact Investor Relations at the above address.

Dividend Reinvestment and Additional Investments inArvinMeritor Common StockEquiServe Trust Company, N.A., provides the DirectSERVICE Investment Program for ArvinMeritor shareowners, under which current shareowners may elect to reinvest dividends and/or make optional cash investments in additional shares of ArvinMeritor common stock.The program also allows cash investments in ArvinMeritor common stock by first-time investors,with a $500 minimum initial investment.Shareowners may also sell their shares through the DirectSERVICE Investment Program.

For a brochure and details of the program,please direct inquiries to:DirectSERVICE Investment ProgramEquiServe Trust Company, N.A.P.O. Box 2598Jersey City, NJ 07303-2598Registered shareowners: 800-414-6280Other interested investors: 800-483-2277

Independent AuditorsDeloitte & Touche LLP600 Renaissance CenterDetroit, MI 48243-1704313-396-3000

Transfer Agent and RegistrarEquiServe Trust Company, N.A.P.O. Box 43069Providence, RI 02940-3069 800-519-3111

New York Stock ExchangeCommon Stock (Symbol: ARM)

Annual MeetingThe companyÕs annual meeting of shareowners will be held at the ArvinMeritor headquarters at 9:00 a.m. (EST)Wednesday, February 20, 2002. A notice of meeting and proxy material will be mailed to shareowners on or about January 4, 2002.

North America EuropeRank Share Rank Share

Light Vehicle Systems OEExhaust Systems 1 31% 1 20%Door Systems 2 18% 2 27%Roof Systems 2 28% 2 29%Gas-Charged Lift Supports 2 27% - -Vacuum Actuators 1 91% 2 23%Access Control - - 2 28%Suspension 1 34% - -Wheels 2 23% - -Shocks and Struts 1 16% 2 21%

Commercial Vehicle Systems OETrailer Axles 1 70% 2 30%Truck Axles 1 53% 1 26%Brakes and ABS 1 77% 1 40%Drivelines 2 27% - -Transmission and Clutch 2 16% - -Ride Control 1 62% - -

Light Vehicle AftermarketExhaust Systems 2 35% 2 20%Filters 1 30% - -Ride Control 2 46% 3 12%

Commercial Vehicle AftermarketTrailer Axles 1 80% - -Truck Axles 1 44% - -Brakes and ABS 1 40% - -Drivelines 2 20% - -Ride Control 2 40% - -

Our Market and Brand Strength

Aperture

Undercarriage

SP-0217