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HDMA Pulse Report July 2020Q3 Update

Richard AndersonDirector, Market Research, HDMA

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Notes• Survey conducted with HDMA members July 13 through June 16, 2020

• 45 survey completions• 41 unique corporate entities

• Report contains historical comparison data using the following sources:• HDMA Pulse June 2020 – COVID-19 Part 2 – Listed as 3 weeks ago

• Published June 24, data collected June 15-23, 50 responses

• HDMA Pulse June 2020 – COVID-19 – Listed as 5 weeks ago• Published June 5, data collected June 1-4, 40 responses

• HDMA Pulse May 2020 – COVID-19 Part 2 – Listed as 7 weeks ago• Published May 22, data collected May 18-21, 40 responses

• HDMA Pulse May 2020 – COVID-19 – Listed as 9 weeks ago• Published May 8, data collected May 4-7, 59 responses

• Report includes a straw poll taken July 15, 2020 during the HDMA Pulse Webinar with Mackay and Company

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Findings• Overall activity levels remain down and the outlook for Q3 indicates suppliers don’t

anticipate any meaningful change in the short term.• Liquidity concerns continue to rise for suppliers and their customers, with almost one-

third of suppliers having stopped shipments to aftermarket customers as a result of non-payment.

• Prevalence of inbound shipping delays has fallen steadily while the delay time has increased during the same period; likely the normal process of the supply chain identifying blockages.

• Suppliers expressed increased concern over rising levels of infection and any potential shutdown mandates that may result.

What is your current USA & Canada commercial vehicle business plan compared to same period 2019?

Min 1Q 2Q (median) 3Q 4Q (max) Mode MeanQ3-20 -75% -40% -28% -20% 2% -20% -29%

2020 -50% -40% -30% -20% 10% -20% -28%

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Short Term OutlookWhat is your current USA & Canada Q3-2020 commercial vehicle business plan compared to Q3-2019?

Average: -29%

-75%

-40%

-28%-20%

2%

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%Min 1Q 2Q (median) 3Q 4Q (max)

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2020 OutlookWhat is your current 2020 commercial vehicle business plan compared to 2019?

Average: -28%≈3 weeks ago: -26%≈5 weeks ago: -35%≈7 weeks ago: -31%≈9 weeks ago: -35%-50%

-40%

-30%

-20%

10%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%Min 1Q 2Q (median) 3Q 4Q (max)

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Recovery Planning• When are you expecting your total North American sales to return to the

level you planned at the beginning of the year?

• Q3 2020 – 2%

• Q4 2020 – 5%

• Q1 2021 – 11%

• Q2 2021 – 57%

• Q3 2021 or beyond – 25%

July 15 HDMA Pulse Webinar with MacKay & Company instant responses shown. All industry, not suppliers only.

Responses may not equal 100% due to rounding.

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Operational StatusApproximately what percent of your North America commercial vehicle parts production footprint is currently online?

Approximately what percent of your North America commercial vehicle parts production footprint do you expect to be online for the start of Q4-2020?

35%

80%

100% 100% 100%

40%

89%100% 100% 100%

0%10%20%30%40%50%60%70%80%90%

100%

Min 1Q 2Q (median) 3Q 4Q (max)

Q3-20 Q4-20

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Operational StatusApproximately what percent of your sales force is currently performing normal, in-person sales calls?

87%

4%0%

4% 4%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%-20% 21%-40% 41%-60% 61%-80% 81%-100%

Average of range midpoints: 17.11% (likely lower due to large 0% in lowest range)

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Liquidity StatusFor your North American sales, what percent of your OEM

invoices are past due beyond the usual tolerance?

Average of range midpoints: 2.38%

0%

10%

20%

30%

40%

50%

60%

No additionalpast due

1%-5% 6%-10% 11%-15% 16%-20% 21%-25% Over 25%additionalpast due

56%

30%

7%2% 5%

0% 0%

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Liquidity StatusFor your North American sales, what percent of your independent aftermarket

invoices are past due beyond the usual tolerance?

Average of range midpoints: 3.60%

0%

10%

20%

30%

40%

50%

60%

No additionalpast due

1%-5% 6%-10% 11%-15% 16%-20% 21%-25% Over 25%additionalpast due

35%

44%

12%

2% 5% 2% 0%

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Payment StopsHave you stopped shipment to any customers because of outstanding invoices?

OEM Major Independent Aftermarket

Yes16%

No84%

Yes32%

No68%

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Inbound Shipping DelaysFor your USA & Canada manufacturing operations, what percent of your inbound materials

and semi-finished goods are delayed beyond the usual amount?

Average of range midpoints: 5.71%

0%5%

10%15%20%25%30%35%

No additionaldelays

1%-5% 6%-10% 11%-15% 16%-20% Over 20%inbounddelays

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Inbound Shipping DelaysApproximately how long are inbound materials and semi-finished materials delayed?

Average of range midpoints: 7.24 days

0%

5%

10%

15%

20%

25%

30%

35%

1-2 days 3-5 days About a week About twoweeks

Greater thantwo weeks

Unknown atthis time

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Outbound Shipping DelaysAgain, for your USA & Canada manufacturing operations, what percent of your

outbound finished product is delayed beyond the usual amount?

Average of range midpoints: 4.14%

0%5%

10%15%20%25%30%35%40%45%50%

No additionaldelays

1%-5% 6%-10% 11%-15% 16%-20% Over 20%outbound

delays

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Outbound Shipping DelaysApproximately how long are outbound products delayed?

Average of range midpoints: 5.90 days

0%5%

10%15%20%25%30%35%40%45%50%

1-2 days 3-5 days About a week About twoweeks

Greater thantwo weeks

Unknown atthis time

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Shipping Delays – Change Over TimePercent of Suppliers Experiencing Delays

76%

55%

80%

47%

83%

50%

84%

53%

0%10%20%30%40%50%60%70%80%90%

100%

Inbound Outbound

Current 3 weeks ago 5 weeks ago 9 weeks ago

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Shipping Delays – Change Over Time

Average of range midpoints shown

Average Delays

7.24

5.906.74

7.65

5.77

4.03

9.32

4.15

0.00

2.00

4.00

6.00

8.00

10.00

Inbound Outbound

Current 3 weeks ago 5 weeks ago 9 weeks ago

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Restart ChallengesWhich represents the greatest challenge to restarting normal business operations?

(percent ranked first)

43%

15%

6%

6%

12%

12%

6%Accuracy of production and demandforecastsClosure mandates of own facilities

Inbound/outbound shipper availabilityand costCustomer liquidity

Business cash flow

Labor force readiness and availability

Raw material and semi-finished goodsprocurement

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Restart ChallengesWhich represents the greatest challenge to restarting normal business operations?

Categories in popularity order, ranking distribution shown

0%10%20%30%40%50%60%70%80%90%

100%

Accuracy ofproduction and

demand forecasts

Closure mandatesof own facilities

Inbound/outboundshipper availability

and cost

Customer liquidity Business cash flow Labor forcereadiness and

availability

Raw material andsemi-finished

goods procurement

1 2 3 4 5 6 7

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Supplier RisksPlease rate the level of risk to your overall business caused by COVID-19 infections:

13% 13%

36%38%

0%0%

5%

10%

15%

20%

25%

30%

35%

40%

Minor or none Small Moderate Large Extreme

1 2 3 4 5

Average: 2.98

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Supplier Risks

• “We weathered the first round of Class 8 and Trailer plant closings. If COVID forces this to happen again we fear it may be even more painful.”

• 9 similar comments related to increased infection levels and consequent shutdown mandates

• “Low sales demand and the ability for the economy to stay open”• 5 similar comments related to low economic activity and sales

• “Constantly changing forecasts”• 4 similar comments related to

• “Cash flow and customer liquidity”• 4 similar comments related to liquidity at all points of the industry

What is the greatest risk faced by your business related to COVID-19?

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HDMA Staff ContactsHDMA StaffTimothy KrausPresident & COOOffice: (919) 406-8835Mobile: (919) 724-1735tkraus@hdma.orgLinkedIn

Beth BarkovichExecutive Director, Membership DevelopmentOffice: (919) 406-8831Mobile: (919) 599-8772bbarkovich@hdma.orgLinkedIn

Katelyn LitalienDirector, Marketing & Member Services(919) 406-8848klitalien@hdma.org

MEMA StaffBill LongPresident & CEOblong@mema.org

Ann WilsonSenior Vice President, Government Affairsawilson@mema.org

Catherine BolandVice President, Legislative Affairscboland@mema.org

Leigh Merino – RACExecutive Director, Regulatory Affairslmerino@mema.org

Laurie HolmesSenior Director, Environmental Policylholmes@mema.org

Brian DaughertyCTO, MEMA (for HDMA and OESA)bdaugherty@mema.org

Ashley McLeodManager, Meetings & Member Services(919) 406-8803amcleod@hdma.org

Caterina PontorieroManager, Marketing Communications & Member Engagement(919) 406-8828cpontoriero@hdma.org

Richard AndersonDirector, Market Research(919) 406-8875randerson@hdma.org