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Global Equity ResearchGlobal Equity Research

Automotive Industry Automotive Industry CoverageCoverage

Michael Bruynesteyn Michael Bruynesteyn (Senior)(Senior)(212)778(212)778--13231323

[email protected]

John Tomlinson John Tomlinson (Associate)(Associate)(212) 778(212) 778--44714471

[email protected]

Takuo Katayama (Associate)Takuo Katayama (Associate)212212--778778--84138413

[email protected] u n e 3 , 2 0 0 2

Global Equity ResearchGlobal Equity Research-- AutomotiveAutomotiveMichael Bruynesteyn (212) [email protected]

22

Key ThemesKey Themes• Structural/demographic changes bode well for demand

– 16.5 million forecast for ’02 US light vehicle sales– Boomers moving into peak buying years, likely to buy/lease high-end vehicles– Pricing lowest in 20 years, may be influencing scrappage rates

• Big Three’s unprecedented market share loss in U.S translates to continued pressure on capacity utilization, incentives and margins

– Capacity rationalization restricted by limited production flexibility

• Mix shifting to trucks, helping domestics’ profits until transplants/imports catch up– Definition of “truck” is broadening to include crossovers like P/T Cruiser, RX300– Transplants & imports increasing truck penetration quickly, likely to pressure profits

• Eventual interest rate increases likely to depress valuations

• Valuations generally ahead of mid-cycle forecasts due to high 1H02 production

• Industry Risks: extended recession, regulation, new transplant capacityThesis Risks: 17m+ SAAR in ’02, extended low rate environment, Big 3 share recovery

à CONCLUSION: CAUTION RECOMMENDED, NO OVERWEIGHTING


33

Boomers Entering Peak Buying Years

0

20

40

60

80

100

120

140

160

180

200

<25 25-34 35-44 45-54 55-64 65+

`98 V

ehic

les

Sal

es/

(000s)

Hou

sehol

ds

0

5

10

15

20

25

Hou

sehol

ds

by

age

of h

ouse

hol

der

(mil)

Buying propensity by age group (left) Households by age of householder (right)

Boomer Bulge

Boomers About to Buy More Expensive Vehicles

$14,000

$16,000

$18,000

$20,000

$22,000

$24,000

$26,000

$28,000

$30,000

<25

25-3

4

35-4

4

45-5

4

55-6

4

65

+

New

Veh

icle

Pri

ces

by

Age

Bra

cket

5

10

15

20

25

Hou

sehol

ds

by

age

of h

ouse

hol

der

(mil)

Average Transaction Price (left) Households by age of householders (right)

Boomer Bulge

Source: CNW , Prudential Securities Inc. estimates

Rising Leasing Penetration Has Reduced Volatility And Improved Mix

0%

5%

10%

15%

20%

25%

30%

35%

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

E20

02E20

03E

Leas

ing

Shar

e of

Lig

ht V

ehic

le M

arke

t Passenger CarsLight Trucks

Structural Changes Support Extended Sales Cycle & Richer MixStructural Changes Support Extended Sales Cycle & Richer Mix

Source: Bureau of Economic Analysis

Caveat: Low end purchasers reverting to used high end vehicles

CPI For New Vehicles Leveled Out In 1997

40

60

80

100

120

140

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

CPI

For

New

Veh

icle

s

Source: CNW and Prudential Securities, Inc. estimates Source: CNW


44

10.0

11.0

12.0

13.0

14.0

15.0

16.0

17.0

18.0

19.0

20.0

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

*19

9719

9819

9920

0020

0120

02E

2003

E

US

Annual

Sal

es V

olum

e (m

illio

ns)

10%

15%

20%

25%

30%

35%

40%

45%

US

Mar

ket

Sh

are

(Dom

esti

c B

ran

ds)

US Light Vehicle Sales GM%

Ford% Chrysler%

Big 3 Market Share Declines Show No Sign Of ReversalBig 3 Market Share Declines Show No Sign Of ReversalTransplants/Imports have better quality, strengthening brands and opportunities to grow into new segments

Source: Autodata


55

Typical Downturn Pattern For Incentives & Utilization Not Seen ITypical Downturn Pattern For Incentives & Utilization Not Seen In 01/02n 01/02

30%

40%

50%

60%

70%

80%

90%

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

E

2003

E

Cap

acit

y U

tiliz

atio

n -

Lt.

Veh

icle

/ N

A B

ig 3

Mkt

. Shr

.

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Incen

tives as % of R

evenu

e

Capacity Utilization - Autos andlight trucks

Big 3 Market Share

Incentives (right axis)

Prior Two Recessions in the US resulted in

all-time high incentives and all-time

low capacity utilization.

Source: Autodata and Federal Reserve


66

New Transplant Capacity Offsets Domestics’ ReductionNew Transplant Capacity Offsets Domestics’ ReductionUnits In (000's)

2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007

Est. Est. Capacity Est. Capacity Est. Capacity Est. Capacity Est. Capacity Est. CapacityCapacity Capacity Change Capacity Change Capacity Change Capacity Change Capacity Change Capacity Change

General MotorsTotal North American GM Light Vehicle 6,105 6,205 1.6% 6,205 0.0% 5,600 -9.8% 5,465 -2.4% 5,640 3.2% 5,195 -7.9%

Ford Motor CompanyTotal North American Ford Light Vehicle 4,941 4,866 -1.5% 4,781 -1.7% 4,300 -10.1% 4,025 -6.4% 3,890 -3.4% 3,915 0.6%

DaimlerChryslerTotal NA DaimlerChrysler Light Vehicle 3,513 3,380 -3.8% 3,360 -0.6% 3,430 2.1% 3,387 -1.3% 3,350 -1.1% 3,395 1.3%

BMW of North AmericaTotal Bmw 150 160 6.7% 155 -3.1% 155 0.0% 155 0.0% 155 0.0% 155 0.0%

Honda of America/Honda of CanadaTotal Honda 1,070 1,175 9.8% 1,255 6.8% 1,285 2.4% 1,400 8.9% 1,450 3.6% 1,450 0.0%

Renault/NissanTotal Nissan 750 815 8.7% 940 15.3% 1,070 13.8% 1,065 -0.5% 1,065 0.0% 1,065 0.0%

Fuji HeavyTotal Fuji Heavy 120 120 0.0% 120 0.0% 120 0.0% 135 12.5% 135 0.0% 135 0.0%

HyundaiTotal Hyundai 85 150 76.5% 180 20.0%

SuzukiTotal CAMI 110 80 -27.3% 65 -18.8% 0 -100% 0 0 0

Toyota Motor Mfg.Total Toyota 905 945 4.4% 1,075 13.8% 1,125 4.7% 1,230 9.3% 1,275 3.7% 1,325 3.9%

New United Motor Mfg. Inc. (NUMMI)TOTAL NUMMI 365 365 0.0% 365 0.0% 365 0.0% 365 0.0% 365 0.0% 365 0.0%

Total Toyota, Including NUMMI 1,270 1,310 3.1% 1,440 9.9% 1,490 3.5% 1,595 7.0% 1,640 2.8% 1,690 3.0%

Volkswagen de MexicoTotal Volkswagen 420 420 0.0% 420 0.0% 420 0.0% 545 29.8% 610 11.9% 610 0.0%

Total All North American Light Vehicle Production Capacity

Total NA Light Vehicle (000's) 19,719 19,841 0.6% 20,181 1.7% 19,360 -4.1% 19,452 0.5% 19,725 1.4% 19,480 -1.2%

Source: 2002 CSM Worldwide- North American Light Vehicle Forecast and Prudential Financial estimates.

Calendar Year

0.3m unit net reduction 01-05

1.7m unit reduction


77

Industry Truck Mix Continues to Rise…Industry Truck Mix Continues to Rise…Transplants and Imports Close Gap on Big ThreeTransplants and Imports Close Gap on Big Three

0%

10%

20%

30%

40%

50%

60%

70%

80 CY 81 CY 82 CY 83 CY 84 CY 85 CY 86 CY 87 CY 88 CY 89 CY 90 CY 91 CY 92 CY 93 CY 94 CY 95 CY 96 CY 97 CY 98 CY 99 CY 00 CY 01 CY

Truc

k M

ix %

Big Three Truck Mix % US Industry Truck Mix % Transplant/Import Truck Mix

Source: Autodata


88

Automakers and Autoparts Indices Respond To Fed Funds Rate

50.000

150.000

250.000

350.000

450.00030

-Dec

-198

3

28-D

ec-1

984

27-D

ec-1

985

26-D

ec-1

986

25-D

ec-1

987

23-D

ec-1

988

22-D

ec-1

989

21-D

ec-1

990

20-D

ec-1

991

18-D

ec-1

992

17-D

ec-1

993

16-D

ec-1

994

15-D

ec-1

995

13-D

ec-1

996

12-D

ec-1

997

11-D

ec-1

998

10-D

ec-1

999

08-D

ec-2

000

07-D

ec-2

001

Inde

x V

alue

s *

0.00

2.00

4.00

6.00

8.00

10.00

12.00

Fede

ral F

unds

Rat

e

Autoparts Index Automakers Index Fed Funds Rate

* Index Values based on Total Return of Investment with Dividends Reinvested on Pay Date.

1. Fed lowers rates …….2. Auto/Parts stocks rally

1. Fed raises rates …….2. Auto/Parts stocks plunge.

Source: Prudential Securities, Inc estimates


99

0.0

10.0

20.0

30.0

40.0

50.0

60.0

04/19

89

10/19

89

04/19

90

10/19

90

04/19

91

10/19

91

04/19

92

10/19

92

04/19

93

10/19

93

04/19

94

10/19

94

04/19

95

10/19

95

04/19

96

10/19

96

04/19

97

10/19

97

04/19

98

10/19

98

04/19

99

10/19

99

04/20

00

10/20

00

04/20

01

10/20

01

04/20

02

Fw

d P

/E M

ult

iple

Automaker Fwd Multiple Auto Parts Suppliers Fwd Multiple

MID-CYCLE PERIOD (1994-1998)

AUTOMAKERSAvg.: 8.5 times

AUTO PARTS SUPPLIERS

Avg.: 10.0 times

US Automakers’ and Parts Suppliers’ Forward P/E RatiosUS Automakers’ and Parts Suppliers’ Forward P/E Ratios

Source: Factset Systems


1010

Stocks: F, GM, DCXStocks: F, GM, DCX

•• Group:Group:– Lifted by falling interest rates thru end ‘01. Eventual uptick in rates in ’02 should hit valuations.– Muted upside as market share driven revenue pressure cannot be fully offset by cost cutting

•• DaimlerChrysler (DCX):DaimlerChrysler (DCX):– Chrysler breakeven likely in ’02, but ‘02 & ‘03 product rollout very light so further upside limited– Mercedes-Benz and Commercial Vehicles 2002 performance improvement also a challenge

•• General Motors (GM):General Motors (GM):– ’02 product slate strong; market share should remain flat. Mix weakening. Better flex than F and Chrysler.– Pension and healthcare issues (10% return expectation optimistic, healthcare costs growing faster than 6%)– Hughes deal: limited value to be unlocked. Fiat absorption possible before 1/04.

•• Ford (F):Ford (F):– Negative ‘02 mix, launches delayed, loss of 1.1 points of market share in U.S. during 2001, expecting 200 bp in

‘02. Luxury brands down despite Jag and Land Rover gains– Trimming assets like foundries, transmissions, Kwik-Fit. $1 billion divestitures planned for ’02.– Large restructuring Jan. 02. Several years to implement improvements, held back by weak flex, choppy cadence– Costs of new models exceeding those they replaced (Explorer, Expedition, F150, Windstar) w/o pricing recovery

Prudential Securities Automaker CoveragePrudential Securities Automaker Coverage

Sell

Hold

Hold

Market Perform


1111

Stocks: JCI, DCN, DPH, LEA, GNTX, SUP, VCStocks: JCI, DCN, DPH, LEA, GNTX, SUP, VC

•• Group:Group:– Rallied in 1H02 on strong OEM production– Longer term investments: look for good cash flow, growth through penetration and outsourcing despite falling

domestic OEM production, and pricing power in face of pressure from OEMs•• Dana (DCN):Dana (DCN):

– 2002 and 2003 FCF yield low given high debt/capital. Key ops depressed. Over-diversification hurts focus– No end in sight to restructuring (charges 5 years in a row).

•• Delphi (DPH):Delphi (DPH):– Cost cuts visible, portfolio transformation slow (related restructuring costs to continue), still 65% GM exposed.

Strong management•• Gentex (GNTX)Gentex (GNTX)

– Trading near top-end of its range. Big mid-2001 program wins delivering growth, 2002 boost likely from exterior mirrors, announcement in June/July

•• Johnson Controls (JCI)Johnson Controls (JCI)– Strong ROIC, solid cash flow, declining debt, lowest exposure to Big 3 among major suppliers– 2002 backlog light but later years strong

•• Lear (LEA):Lear (LEA):– ROIC > cost of capital, good order backlog, strong cash flow, declining debt, solid management – Free cash flow yield impressive given improvements in balance sheet

•• Superior (SUP)Superior (SUP)– Increasing share in expected flat to falling aluminum wheels market. Growth muted. Strong cash flow & ROIC

•• Visteon (VC)Visteon (VC)– Waiting for cost reductions to take hold. Management has not yet delivered on cost savings promises

Prudential Securities Auto Supplier CoveragePrudential Securities Auto Supplier Coverage

Market Perform

Hold

Hold

Hold

Hold

Hold

Sell

Hold


1212

Automaker Comps SheetAutomaker Comps SheetMarket Est US

% Chg. Price % To 52 Week Cap ($Bil) 02 Mkt `01E P/E Rel. `02E P/E Rel.Ticker Rating YTD 6/5/02 Target Target High Low 6/5/02 Share 1999 2000 2001 2002E 2003E 2000 2001 2002E 2003E to S&P 500 to S&P 500

General Motors GM Hold 22.3% $59.5 $55 (7)% $68.2 $39.2 $36.5 27.7% $8.62 $8.58 $3.57 $5.19 $6.25 6.9 16.6 11.5 9.5 68% 56%Ford Motor F Sell 7.6% $16.9 $12 (29)% $26.2 $13.9 $31.7 19.7% $3.10 $3.26 -$0.43 -$0.20 $0.77 5.2 N/A N/A 21.9 N/A N/ADaimlerChrysler * DCX Hold 13.0% $47.1 $40 (15)% $50.9 $25.6 $51.4 13.0% $6.19 $3.24 $0.65 $1.85 $3.12 14.5 72.9 25.4 15.1 299% 125%

6.15€ 3.45€ 0.73€ 2.11€ 3.54€

Group 14.3% $120 60.4% 8.9 44.8 18.4 15.5 184% 91%S&P 500 .SPX (8.0)% 1,055.8 1,287 945 $50.82 $55.12 $43.30 $52.00 $58.00 19.2 24.4 20.3 18.2

Nasdaq Composite COMP-O (19.9)% 1,562.6 2,265 1,387

Dow Jones Indu. .INDU (0.7)% 9,946.8 11,197 8,062

Group Relative to S&P 500 22.4% 85%

Dividend EPS EPS P/E 2Q PRU 2001 2002E 2003E 2001 2002E 2003E 2001 2002E 2003E $/Year Yield 2002E 2003E 2001 2002E 2003E 2002E 2003E 2003E EPS 2Q EPS

General Motors 0.33 0.39 0.38 5.3 5.2 4.9 6.0% 7.1% 7.6% $2.00 3.4% 5.4% 3.6% 71.6% 72.4% 69.9% $5.30 $6.61 9.0 $2.14 $2.20

Ford Motor 0.23 0.22 0.22 2.8 5.8 3.9 2.6% -2.3% 7.6% $0.40 2.4% -12.8% -5.1% 78.6% 75.7% 75.1% $0.20 $0.92 18.5 $0.25 $0.26

DaimlerChrysler** 0.35 0.38 0.36 6.1 5.7 4.6 -1.2% 3.7% 5.7% $0.94 2.0% -2.2% 0.6% 34.2% 38.4% 36.9% $2.25 $3.00 15.7 $0.69 $0.63

Group 0.3 0.3 0.3 4.7 5.6 4.4 2.5% 2.8% 7.0% 1.11$ 2.6% -3.2% -0.3% 61.4% 62.2% 60.7% 14.4

S&P 500 16.69 1.6% $52.00 $58.00 18.2

Group Relative to S&P 500 — — — — — 1.0% 79%

Source: Company reports, Prudential Securities estimates, prices as of

Earnings Per Share P/E

Firm Valueto Sales

Free Cash Flow Yield

First Call Mean Data(Adjusted)

Market Perform

Debt/Cap

*Note: DaimlerChrysler is not included in the S&P 500. **Note: DaimlerChrysler dividend is converted to USD at the current exchange rate.

6/5/02 9:24 AM

Firm Valueto EBITDA

Rtn on CapitalEmployed


1313

Auto Parts Comps SheetAuto Parts Comps Sheet

Market

% Chg. Price % To Cap ($Bil) `01E P/E `02E P/ETicker Rating YTD 6/4/02 Target Target High Low 6/4/02 1999 2000 2001 2002E 2003E 2001 2002E 2003E Rel. to S&P 500

GM F DCXDana Corp. DCN Hold 48.1% $20.6 $14 (32)% $26.90 $10.25 $3.3 8% 18% 11% $4.08 $2.47 $0.08 $0.89 $1.38 244.7 23.2 14.9 1003% 114%Delphi Automotive DPH Hold 12.4% $15.4 $13 (15)% $17.50 $9.50 $9.3 65% 0% 0% $1.95 $1.94 $0.40 $0.82 $1.23 38.5 18.6 12.5 158% 92%Gentex Corp. GNTX Hold 12.6% $30.1 $31 3% $34.23 $20.00 $2.4 40% <10% 20% $0.86 $0.93 $0.86 $1.01 $1.22 35.0 29.9 24.6 144% 147%Johnson Controls JCI Hold 7.1% $86.5 $90 4% $93.20 $54.90 $8.0 14% 11% 14% $4.15 $5.09 $5.79 $6.10 $6.51 14.9 14.2 13.3 61% 70%Lear Corp. LEA Hold 16.6% $44.5 $51 15% $53.84 $22.60 $3.2 28% 32% 13% $3.78 $4.20 $2.45 $4.20 $4.80 18.1 10.6 9.3 74% 52%Superior SUP Sell 11.8% $45.0 $39 (13)% $53.80 $28.00 $1.3 47% 44% $2.62 $3.04 $2.10 $2.58 $2.93 21.4 17.4 15.4 88% 86%Visteon Corp. VC Hold 5.9% $15.9 $13 (18)% $21.72 $10.45 $2.1 0% 84% $2.16 $2.79 $0.02 $0.13 $0.58 1,038.8 (n/a) 27.4 4260% (n/a)

Group 16.4% $29.67 201.6 19.0 16.8 827% 93%

S&P 500 .SPX (8.0)% 1,056 1,286.6 945.1 50.82 55.12 43.3 52 58 19.2 24.4 20.3

Nasdaq Composite COMP-O (19.9)% 1,563 2,265 1,387

Dow Jones Indu. .INDU (0.7)% 9,947 11,197 8,062

Group Relative to S&P 500 24.4%

Free Cash Flow Adjusted First Call Mean Data Dividend Yield EPS EPS P/E EPS PRU June

2001 2002E 2003E 2001 2002E 2003E 2001 2002E 2003E $/Year Yield 2002E 2003E 2001 2002E 2003E 2002E 2003E 2003E JuneQ02 02 EPS

Dana Corp. 0.55 0.53 0.49 9.7 7.4 6.3 2.5% 5.9% 6.7% $0.04 0.2% 1.5% 7.2% 64.4% 71.9% 67.7% $0.93 $1.66 12.4 0.34 $0.32

Delphi Automotive 0.57 0.55 0.52 8.1 6.9 5.7 5.5% 7.9% 9.6% $0.28 1.8% 6.5% 9.1% 75.6% 74.8% 72.8% $0.84 $1.25 12.3 0.36 $0.35

Gentex Corp. 6.99 5.82 4.75 22.3 18.1 14.9 14.8% 14.7% 15.2% NA --- 2.1% 2.8% 0.0% 0.0% 0.0% $1.02 $1.21 24.9 0.25 $0.25

Johnson Controls 0.53 0.51 0.46 6.1 6.4 5.7 22.4% 21.1% 19.7% $1.32 1.5% 4.7% 5.6% 37.9% 38.1% 37.5% $6.19 $6.83 12.7 1.79 $1.72

Lear Corp. 0.41 0.38 0.35 5.7 5.4 4.9 12.2% 13.0% 12.2% NA --- 8.0% 11.3% 63.8% 57.4% 50.3% $4.16 $5.04 8.8 1.14 $1.13

Superior Industries 1.76 1.47 1.22 9.9 7.9 5.8 12.4% 14.0% 15.7% $0.50 1.1% 4.9% 5.4% 0.0% 0.0% 0.0% $2.64 $3.44 13.1 0.70 $0.73

Visteon Corp. 0.26 0.28 0.25 5.9 6.1 4.6 8.9% 0.8% 0.9% $0.24 1.5% 2.8% 6.6% 57.7% 58.7% 58.8% $0.43 $0.96 16.6 0.50 $0.46

Group 1.6 1.4 1.1 9.7 8.3 7.0 11.3% 11.1% 11.4% $0.48 1.2% 4.4% 6.9% 14.4

S&P 500 16.69 1.6% $52.00 $58.00 18.2

Group Relative to S&P 500 79%

Source: Company reports, Prudential Securities estimates, prices as of

Market Perform

Firm Valueto Sales

Firm Valueto EBITDA

P/EEarnings Per Share 52 Week

6/4/02 8:10 AM

Rtn on CapitalEmployed

Revenue

ExposureTo Big 3

Debt/Cap


1414

GM Has The Most Stable Cadence In 2001GM Has The Most Stable Cadence In 2001--20042004——Ford weak in 2002Ford weak in 2002

——Chrysler has a serious problem for 2002/2003Chrysler has a serious problem for 2002/2003

0%

5%

10%

15%

20%

25%

30%

35%

40%

Ford GM DCXC

adence*

Of

New

Vehic

le P

rogra

ms

* Volume for new models and major changeovers divided by annual

15%-20% Theoretical Ideal Range All Dodge Ram & Jeep Liberty

99 00 01 02 03 04 05 06 99 00 01 02 03 04 05 06 99 00 01 02 03 04 05 06

Source: CSM Worldwide


1515

North American Planned Vehicle Launches for Big 3North American Planned Vehicle Launches for Big 3CY 2000 CY 2001 CY 2002E CY 2003E CY 2004E CY 2005E

C (PT44): PT Cruiser & (MEX) C: (KJ) Jeep Liberty C: (SR/PR) Dodge Viper C: (CS) Chrysler Pacifica C: (NLH) Concorde C (EB74): Chrysler PT Cruiser

C (RS): T & C, Caravan, Voyager C: (DR/DE) Ram Pickup C: (HB) Durango C (W251): Mercedes Grand Sports Tourer C (KJ): Jeep Youth SUV

C (JR41/JR27) Stratus, Sebring & Conv. C(T1N): Freightliner Sprinter C: (T1N): Dodge Ram Van C: (NLH) 300N (replaces M) C: (PS24): Mitsubishi Eclipse

C: (PS45): Mitsubishi Montero Sport C (ND): Dodge Dakota C: (JT41,2): Mitsubishi Lancer

C (LX49): Dodge Sport Wagon

C: (PS41) Mitsubishi Galant

992,036 589,643 2,802 269,210 475,912 243,300 F (U207): Explorer Sport Trac F (U222/228): Expedition & Navigator F (J56A): Mazda 6 F (GT40): Ford GT40 F (CD338): Ford Taurus

F (P225): SuperCrew F (U152): Ford Explorer F (U231): Lincoln Aviator F (P221): F SuperCrew F (D258): Ford 500 F (F236): Lincoln LS

F (C1): Focus F (U152) Mercury Mountaineer F (V229): Windstar F: (S197) Mustang F: (P336) Ford Ranger

F (U204): Ford Escape F (BE91/B146): Ikon F (V229): Mercury Mariner F (D219): Ford Crosstrainer F (U251): Ford Explorer

F DEW 98: Thunderbird (M205) F (P221): F-Series F(CD338): Ford Compact Sedan

F (P225): Lincoln Blackwood F (U251): Mercury Mountaineer

F (P336): Ford Explorer Sport Trac

950,440 444,880 274,830 793,731 411,006 992,785 GM (X160/220/310):Aurora GM (T360): Trailblazer, Envoy, Bravada GM (GMT370): Chevrolet Trailblazer XL GM (GMX215): Cadillac XLR GM (GMX245): Chevrolet Corvette GM (GMX001): Chevrolet Cavalier

GM: (GMT880) Chev. Silverado/GMC Sierra GM (GMT805) Avalanche GM (GMT370): GMC Envoy XL GM (GMX357): Saturn Ion GM (GMT001): Cavalier Tall Wagon

GM (X310):Bonneville GM (257) Buick Rendezvous GM (GMT820): Hummer H2 SUV GM (GMT370): Isuzu Ascender GM (GMX381): Pontiac Grand Am GM (Epsilon): Saturn Sportback

GM (257) Pontiac Aztek GM (GMT825C): Cadillac Escalade GM (GMT610): Chevrolet Express GM (GMT305): GMC Equinox GM (GMX272): Cadillac DTS

GM (GMT806): Cadillac Escalade EXT GM (GMT610): GMC Savana GM (GMT830): Cadillac Escalade ESV GM (GMT345): Hummer H3 GM (GMT201): Buick Luxury Van

GM (UCR116): Isuzu Axiom GM (GMX320): Cadillac CTS GM (GMX367): Pontiac Grand Prix GM (GMT360): Buick Compact SUV GM (GMT201):Chevrolet Venture

GM (GMT315): Saturn VUE GM (GMT265): Cadillac SRX GM (GMT368): Chevrolet SSR GM (GMT201):Pontiac Montana

T: (328N) Pontiac Vibe GM (GMT355): Chevrolet Colorado GM (GMX635): Buick Regal/Century GM (GMT211): Chevrolet ImpalaGM (GMX380): Chevrolet Malibu GM (GMX295): Cadillac STS GM (SIGMA): Cadillac CRS

GM (GMT191): Chevrolet Traverse GM (GMT266): Saab SAV

276,463 523,585 586,942 935,269 693,530 893,501 H: (CS) Civic H: (BM) Acura MDX H: (UA) Honda Accord Sedan/Coupe H: (EX) Element H: (UM) Odyssey H: (UM2) Honda SUT

H: (CS) Acura EL H: (HP) Honda Pilot H: (GQ) Acura TL H: (BM/MD) Honda SUV

H: (CO) Acura CL H: (BM/MD) Acura MDX

H: (CS2) Civic

H: (CS2) Acura EL

420,861 44,957 514,324 156,302 243,298 579,439 T: (900T) Avalon T: (800T) Sequoia T: (330N) Corolla T: (300N2) Camry Solara T: (770N) Avalon T: (483N) Highlander

T: (300N) Camry Sedan T: (329N) Matrix T: (500N) Sienna T: (635N) Tacoma

T: (BM/MD) Highlander SUV T: (483N) Lexus RX300 T: (050X) Echo

T: (800T2) Tundra

120,252 510,915 386,772 393,839 102,763 323,898 Nissan: (MS) Sentra Nissan: (FF-L) Altima Renault: (X65) Clio (Mex) Renault: Megane (Mex) Nissan: (ZW) Infiniti Full-Size SUV Nissan: Sub B-car

Nissan: (WQW) Exterra Nissan: (J64) Renault Scenic Renault: (X65) Tsuru II (Mex0 Nissan: (FF-L) Maxima Nissan: (ZW) Full-Size Pickup Renault: Twingo (Mex)

Nissan: (FF-L) Quest Nissan: Frontier (inc. Mex) Renault: Scenic (Mex)

Nissan: (ZW) Full-Size SUV Nissan Sentra

247,379 201,481 80,720 225,518 198,460 209,150

Source: CSM Worldwide


1616

Assembly Plant Production Flexibility (North America)

0%

2%

4%

6%

8%

10%

12%

14%

16%

2000 2002

DCX Ford GM Honda Toyota

Flexibility is based on Dec. 2000/2001 Prudential Securities study of 24 months of production at all 88 North American assembly plants for GM, F, DCX, HMC, and TM.

Transplants clearly in the lead!


1717

Pru Auto Team Research HighlightsPru Auto Team Research Highlights

• 33% 2001 return following our recommendations vs 22% for average auto analyst (Fortune magazine)– Calc’d by Zack’s, ignoring beneficial impact of sell rating on DCX– Key rating changes on DCX, GNTX, F, SUP, LEA

• First to upgrade stocks following 9/11. – Discovered error in industry sales reporting that overstated sales

drop-off in late September.– Focused on Parts Suppliers, as they tend to recovery first

• Flexible manufacturing report highlighted importance of flex to industry, and pointed out GM strength vs F and DCX.

• Capital efficiency conference and research report


1818

Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. However, such information has not been verified by us, and we do not make any representations as to its accuracy or completeness. Any statements nonfactual in nature constitute only current opinions, which are subject to change. Prudential Securities Incorporated (or one of its affiliates or subsidiaries) or their officers, directors, analysts, employees, agents, independent contractors, or consultants may have positions in securities or commodities referred to herein, and may, as principal or agent, buy and sell such securities or commodities. An employee, analyst, officer, agent, independent contractor, a director, or a consultant of Prudential Securities Incorporated, its affiliates, or its subsidiaries may serve as a director for companies mentioned in this report. Neither the information nor any opinion expressed shall constitute an offer to sell or a solicitation of an offer to buy any securities or commodities mentioned herein. There may be instances when fundamental, technical, and quantitative opinions may not be in concert. This firm (or one of its affiliates or subsidiaries) may from time to time perform investment banking or other services for, or solicit investment banking or other business from, any company mentioned in this report.There are risks inherent in international investments, which may make such investments unsuitable for certain clients. These include, for example, economic, political, currency exchange rate fluctuations, and limited availability of information on international securities. Prudential Securities Incorporated (or one of its affiliates or subsidiaries) or its officers, directors, analysts, employees, agents, independent contractors, or consultants may have positions in securities or commodities referred to herein and may, as principal or agent, buy and sell such securities or commodities.Prudential Securities Incorporated and/or its affiliates or its subsidiaries have managed or comanaged a public offering of securities for GM.Prudential Securities Incorporated makes a primary over-the-counter market in the shares of GNTX.

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