Annual Information Form
March 30, 2023
Magna International Inc.

Contents
Annual Information Form
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A-1

Forward-Looking Statements
Corporate Structure
About Magna
Our Industry
Our Business & Strategy
Risk Factors
Description of the Business
Innovation and Research & Development
Capital Structure, Financings & Credit Ratings
Directors & Executive Officers
Legal Proceedings
Other Information
Schedules
Appendix 1 – Sustainability Report FY 2022

Im por t a n t I n for ma ti on A b out t h i s D o c u m e n t
This Annual Information Form (“AIF”) provides information about Magna International Inc. (“Magna”), including its industry, corporate
structure, strategy, risk factors relating to its business and operations, products and services, sustainability activities, and other information
related to its business activities.
Readers should note that in this AIF:◾

we use the terms “you” and “your” to refer to the shareholder,
while “we”, “us”, “our”, “company” and “Magna” refer to Magna
International Inc. and, where applicable, its subsidiaries;◾ we use the term “Executive Management” to refer to our Chief
Executive Officer, together with our Presidents and our othercorporate Executive Vice-Presidents;◾ we use the term “Operating Group management” to refer to ourmanagement within each of the product-based business units
correspondingtothecapabilities
described
in“Section 6 – Description of the Business – Products & Services”
in this AIF;
◾ dollar amounts in this AIF are stated in U.S. dollars, unlessotherwise indicated;◾ a reference to “fiscal year” is a reference to the fiscal or financial
year from January 1 to December 31 of the year stated;◾

sales figures disclosed have been prepared in accordance with
United States Generally Accepted Accounting Principles(U.S. GAAP);◾

where we have referred to specific customers or competitors, thereference includes the customers’ or competitors’ operating
divisions and subsidiaries, unless otherwise stated;◾

facility and employee figures include certain equity-accounted
operations, unless otherwise indicated;◾

references to our “Circular” refer to our Management Information
Circular/Proxy Statement dated March 30, 2023 for our
virtual-only 2023 Annual Meeting of Shareholders to be held on
May 11, 2023 (the “Meeting”); and◾

information is current as of March 24, 2023, unless otherwise
indicated.

Fo rwa rd- Lo ok i n g S t a temen t s
We disclose “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) to provide information
about management’s current expectations and plans. Such forward-looking statements may not be appropriate for other purposes.
Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, objectives or
economic performance, or the assumptions underlying any of the foregoing, and other statements that are not recitations of historical fact.
We use words such as “may”, “would”, “could”, “should”, “will”, “likely”, “expect”, “anticipate”, “believe”, “intend”, “plan”, “aim”, “forecast”,“outlook”, “project”, “estimate”, “target” and similar expressions suggesting future outcomes or events to identify forward-looking statements.
Forward-looking statements in this AIF include, but are not limited to, statements relating to:◾

implementation of our business strategy, including: increasing
capital deployment toward high-growth/megatrend areas alignedwith the “Car of the Future”; driving operational excellence; andunlocking new business models and markets;◾ implementation of our segment-specific strategic initiatives;◾

our approach to capital structure, including; maintenance of astrong balance sheet; preservation of strong investment grade
ratings; delivering strong Return on Invested Capital; investing for
growth; and future returns of capital to our shareholders throughdividends and share repurchases;◾ implementation of our sustainability strategy and initiatives andachievement of sustainability targets/commitments; and◾ estimates of future environmental clean-up and remediation costs.

Forward-looking statements are based on information currently available to us, and are based on assumptions and analyses made by us inlight of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors
we believe are appropriate in the circumstances.
While we believe we have a reasonable basis for making such forward-looking statements, they are not a guarantee of future performanceor outcomes. Whether actual results and developments conform to our expectations and predictions is subject to a number of risks,
assumptions and uncertainties, many of which are beyond our control, and the effects of which can be difficult to predict, including, without
limitation:

2

Annual Information Form

Macroeconomic, Geopolitical and Other Risks◾
◾
◾
◾

impact of the Russian Invasion of Ukraine;
inflationary pressures;interest rate levels;
risks related to COVID-19;

Risks Related to the Automotive Industry◾
◾
◾
◾

economic cyclicality;
regional production volume declines;
deteriorating vehicle affordability;
potential consumer hesitancy with respect to Electric Vehicles(“EVs”);◾ intense competition;◾ potential restrictions on free trade;◾ trade disputes/tariffs;
Strategic Risks◾
◾

alignment of our product mix with the “Car of the Future”;
our ability to consistently develop and commercialize innovative
products or processes;◾ our investments in mobility and technology companies;◾ our changing business risk profile as a result of increased
investment in electrification and autonomous/assisted driving,
including: higher research and development engineering costs,
and challenges in quoting for profitable returns on products forwhich we may not have significant quoting experience;

◾
◾
◾
◾

impairment charges;
labour disruptions;skilled labour attraction/retention;
leadership expertise and succession;

IT Security/Cybersecurity Risks◾
◾

IT/cybersecurity breach;product cybersecurity breach;

Pricing Risks
pricing risks following time of quote or award of new business;
price concessions;commodity price volatility;
declines in scrap steel/aluminum prices;

◾
◾
◾
◾

Warranty/Recall Risks◾

costs related to repair or replacement of defective products,
including due to a recall;◾ warranty or recall costs that exceed warranty provision or
insurance coverage limits;◾ product liability claims;
Climate Change Risks◾
◾

transition risks and physical risks;
strategic and other risks related to the transition to electromobility;

Acquisition Risks
Customer-Related Risks◾
◾
◾

concentration of sales with six customers;
inability to significantly grow our business with Asian customers;
emergence of potentially disruptive EV OEMs, including risks
related to limited revenues/operating history of new OEM entrants;◾ evolving counterparty risk profile;◾ dependence on outsourcing;◾ OEM consolidation and cooperation;◾ shifts in market shares among vehicles or vehicle segments;◾ shifts in consumer “take rates” for products we sell;◾ quarterly sales fluctuations;◾ potential loss of any material purchase orders;◾ potential OEM production-related disruptions;
Supply Chain Risks◾

semiconductor chip supply disruptions and price increases, andthe impact on customer production volumes and on the efficiencyof our operations;◾ supply disruptions and applicable costs related to supply
disruption mitigation initiatives;◾ regional energy shortages/disruptions and pricing;◾ a deterioration of the financial condition of our supply base;
Manufacturing/Operational Risks◾
◾
◾

product and new facility launch risks;
operational underperformance;
restructuring costs;◾
◾
◾

competition for strategic acquisition targets;
inherent merger and acquisition risks;acquisition integration risk;

Other Business Risks
◾
◾
◾
◾
◾
◾
◾
◾

risks related to conducting business through joint ventures;
intellectual property risks;
risks of conducting business in foreign markets;
fluctuations in relative currency values;
an increase in our pension funding obligations;tax risks;
reduced financial flexibility as a result of an economic shock;inability to achieve future investment returns that equal or exceed
past returns;◾ changes in credit ratings assigned to us;◾ the unpredictability of, and fluctuation in, the trading price of our
Common Shares;◾ a reduction or suspension of our dividend;
Legal, Regulatory and Other Risks◾
◾
◾

antitrust risk;
legal claims and/or regulatory actions against us;changes in laws and regulations, including those related to vehicle
emissions, taxation, or made as a result of the COVID‐19
pandemic;◾ potential restrictions on free trade;◾ trade disputes/tariffs; and◾ environmental compliance costs.

In evaluating forward-looking statements or forward-looking information, we caution readers not to place undue reliance on any forwardlooking statement, and readers should specifically consider the various factors which could cause actual events or results to differ materiallyfrom those indicated by such forward-looking statements, including the risks, assumptions and uncertainties above that are discussed ingreater detail in this AIF under “Section 5 – Risk Factors”.

Magna International Inc.

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1. Corporate Structure
Is su er
Magna was originally incorporated under the laws of the Province of Ontario, Canada on November 16, 1961. Our charter documents
currently consist of amended and restated articles of incorporation dated December 31, 2017, which were issued pursuant to the BusinessCorporations Act (Ontario).
Our registered and head office is located at 337 Magna Drive, Aurora, Ontario, Canada L4G 7K1. Our Common Shares trade on the Toronto Stock
Exchange (“TSX”) under the trading symbol (MG) and the New York Stock Exchange (“NYSE”) under the trading symbol (MGA). For a list of our principal
subsidiaries and investments, please refer to Schedule A.

2. About Magna
Over view
Magna is more than one of the world’s largest Tier 1 suppliers in the automotive space. We are a mobility technology company with morethan 168,000 entrepreneurial-minded employees(1), 343 manufacturing and assembly operations and 88 product development, engineeringand sales (“PDE&S”) centres in 29 countries(2), as follows:41
2

Eastern Europe

55
12

Mexico7040Western Europe

49
10

CanadaUSA
Africa310South America

85
20

2
1

Asia

10
3

Manufacturing / Assembly

Product Development / Engineering / Sales

We have complete vehicle engineering and contract manufacturing expertise, as well as product capabilities which include body, chassis,
exterior, seating, powertrain, active driver assistance, electronics, mechatronics, mirrors, lighting and roof systems. Magna also has
electronic and software capabilities across many of these areas. In addition, we are leveraging our capabilities and platform technologies inareas such as battery management, software stack and sensors to enter growing adjacent mobility markets such as micromobility.
Our business is managed under four operating segments which have been determined on the basis of technological opportunities, productsimilarities, as well as market and operating factors, as follows:◾
◾

Body Exteriors & Structures
Power & Vision◾
◾

Seating Systems
Complete Vehicles

Our internal financial reporting is aligned with the way our business is managed. Accordingly, we present key internal operating performancemeasures for the reporting segments described above to our chief operating decision maker to use in the assessment of operating
performance, allocation of resources, and to help plan our long-term strategic direction andfuture global growth.
(1)

Number of employees includes over 158,000 employees at our wholly-owned or controlled entities and over 10,000 employees at certain operations accounted for under theequity method.

(2)

Manufacturing operations and PDES centres include certain operations accounted for under the equity method.

4

Annual Information FormOu r Corporate C u l tu r e
At Magna’s foundation is an entrepreneurial, decentralized, fair enterprise culture, the key elements of which are as follows:
Entrepreneurialism and Decentralization
We follow a corporate policy of functional and operational decentralization, which we believe increases flexibility, customer responsivenessand productivity.
◾

Our manufacturing and assembly operations are conducted through “Divisions”, each of which is an autonomous business unit
operating within pre-determined guidelines. Each Division is a separate profit centre under the authority of a general manager who has
the discretion to determine rates of pay, hours of work and sources of supply, within the framework of our Employee’s Charter, our
Global Labour Standards Policy and our Operational Principles (each as described below), as well as our corporate policies.

◾

Divisions are aligned globally by product area in Operating Groups. Operating Group management is responsible for overseeing theDivisions within its product area(s), including approval of Divisional business plans and preparation of Group business plans forpresentation to Executive Management. Our Operating Groups are aligned under four reporting segments overseen by members of
Executive Management to ensure that the Operating Groups are: taking advantage of cross-Group synergies; sharing research anddevelopment and best practices; and consistently approaching technology trends that impact their business and our customers.

◾

Our Executive Management team, led by our CEO, interfaces with the investment community and is responsible for our long-term
strategic planning and future growth, as well as monitoring the performance of Operating Group management. In addition, our Executive
Management: allocates capital; oversees mergers, acquisitions and strategic alliances; manages global marketing and customer
strategies; develops employee policies and programs; manages leadership training, development and succession planning; oversees
our sustainability/ESG strategy and provides support for global sustainability/ESG initiatives; and develops common finance, internal
controls, compliance, IT, quality, environmental, health & safety, ergonomics and other policies, programs or global standards.

Employee’s Charter & Global Labour Standards Policy
We are committed to operating our business in a way that is based on fairness and concern for our employees. Our Employee’s Charter setsout key principles outlining this commitment. Our Global Labour Standards Policy further articulates our Fair Enterprise Culture and provides
a framework for our commitment to fundamental human rights and international labour relations. See “Appendix 1 – Sustainability
Report – Section 4.2 Fairness and Concern for Employees” for a description of our human resource principles, including our Employee’s
Charter, as well as the details of our Global Labour Standards Policy and the key commitments that it sets out.
Operational Excellence and World Class Manufacturing
As part of our strategic priority of achieving Operational Excellence, including our efforts to implement next generation World Class
Manufacturing in our facilities globally, each facility is required to adhere to a set of Operational Principles that define a set of common goals
and recommended tools/business practices in the following areas: Employee Focus; Safe and Healthful Work Environment; Pride in
Craftsmanship and Total Quality; Integrity and Respect; Operational Effectiveness; Scrap and Waste Elimination; Operational Availability;
Communication; and Recognition and Rewards. The Magna Operational Principles are linked to our MAFACT assessment system (detailedin “Section 6 – Description of the Business – Manufacturing & Engineering” and “Factory of the Future (FoF) Initiatives” in this AIF) to allow
our operations to continually measure their progress in achieving World Class Manufacturing.
Incentive-Based Management Compensation
We maintain an incentive-based compensation system for management, which directly links short-term incentive compensation to theoperational performance of an applicable business unit, as measured by profitability. In the case of our Divisions and Operating Groups, theshort-term incentive formula is based on Divisional or Operating Group EBIT, after taking into account a funds employed charge. For our
Executive Management, the short-term incentive formula is directly linked to Magna’s pre-tax profit. Members of our Operating Groupmanagement and Executive Management also receive equity-based incentives tied to metrics such as ROIC, stock price performance, andrelative total shareholder return. Our approach to executive compensation is described in further detail in the sections of our Circular titled“Compensation and Performance Report” and “Compensation Discussion & Analysis”.
Sustainability
We are committed to being a responsible corporate citizen that conducts business in a manner that balances profits, people and planet.
Magna accepts the reality of climate change and the importance of addressing sustainability in our operations. To this end, we are committed
to achieving carbon neutrality with respect to Scope 1 and Scope 2 emissions by 2025 for our European operations, and by 2030 globally.
For a full discussion of our sustainability strategy, initiatives and achievements to date, see “Appendix 1 – Sustainability Report”.

Magna International Inc.

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3. Our Industry
Ge nera l
The global automotive industry is a complex, high-tech manufacturing industry. The industry is rapidly evolving in response to societal,
mobility-related and economic trends, including the transition to a lower carbon economy, which is accelerating the shift from internal
combustion to electric propulsion. These trends are detailed in “Section 4 – Our Business & Strategy – Industry Trends”. Tier 1 automotive
suppliers (“Tier 1 Suppliers”) design, engineer and manufacture components, assemblies, systems, subsystems and modules for original
equipment manufacturers (“OEMs” or “automobile manufacturers”) of vehicles and light trucks. Tier 1 Suppliers source subcomponents
from Tier 2 and other sub-suppliers, which are integrated into the products sold by the Tier 1 Suppliers directly to OEMs.
The global automotive industry is cyclical and is sensitive to a broad range of macroeconomic, political and other trends as discussed in“Section 4 – Our Business & Strategy” in this AIF. Throughout 2022, the automotive industry experienced a number of macroeconomic
challenges, including:◾

elevated levels of inflation, with higher commodity, energy, labour, freight and other production input pricing expected to persist
throughout 2023 and 2024;◾ supply chain disruptions, including the global shortage of semiconductor chips that has materially affected global automotive production
volumes since 2020 and is expected to continue impacting volumes and semiconductor chip pricing in 2023; and◾ a deterioration in vehicle affordability due to a combination of factors, including: higher prices for Electric Vehicles (“EVs”); costs related
to advanced electronic systems; increasing vehicle finance costs due to rising interest rates; inflationary cost increases; and limited
vehicle supply.
See “Section 4 – Our Business & Strategy – Macroeconomic, Political and Other Trends” and “Industry Trends” for details of how thesetrends affect Magna and the automotive industry. See also “Industry Trends” in our Management’s Discussion & Analysis of Results ofOperations and Financial Position for the year ended December 31, 2022 (“MD&A”).

Au tomotive P r od u cti on M a r ke t s
OEMs have historically built their vehicles in the regions where those vehicles are primarily sold and, as a result, many OEMs have establishedmanufacturing facilities in multiple countries. Since OEMs typically use lean manufacturing and supply chain management techniques intheir operations, many Tier 1 Supplier facilities are generally located relatively close to OEM facilities to reduce the cost and risks associatedwith longer supply chains. See “Section 6 – Description of the Business – Manufacturing & Engineering” of this AIF for details of Magna’s
global manufacturing footprint.
China, Europe, North America, Japan, India and South Korea represent the largest automotive production markets in the world, accounting
for approximately 88% of vehicles produced globally. China’s approximate 32% share of global production led all markets in 2022, followedby the United States and Japan, with 12% and 9% shares, respectively. The local demand for vehicles in China, India and certain markets
outside of North America and Western Europe has increased over time. This increasing local demand has helped boost the local automotive
industry in these countries and attracted investments in manufacturing from North American, European and Asian-based automobile
manufacturers, through stand-alone investments and/or joint ventures with local partners. In the case of China, the increasing migration ofcomponent system and vehicle design, development and engineering, especially for battery electric vehicles (“BEVs”), is expected to further
benefit the automotive industry in that market.

Cu stomers
OEMs produced over 82 million light vehicles in 2022, a 6% increase over 2021 production, but still below pre‐pandemic levels. The top 15
OEMs, representing 81% or approximately 66 million vehicles based on 2022 light vehicle production, were:
1. Toyota Motor Corporation
2. Volkswagen Group
3. Hyundai Motor Group
4. Renault-Nissan-Mitsubishi Alliance
5. Stellantis N.V.
6. General Motors Company
7. Ford Motor Company
8. Honda Motor Company

9. Suzuki Motor Corporation
10. Mercedes-Benz AG
11. BMW AG
12. Zhejiang Geely Holding Group
13. BYD Auto
14. Chang’an Automobile (Group) Co., Ltd.
15. SAIC-GM-Wuling Automobile*

Source: S&P Global Mobility*

A joint venture among SAIC Motor, General Motors, and Liuzhou Wuling Motors Co Ltd.

The considerable growth of the Chinese automotive market over the past decade has led to the significant growth of a number of Chinese
OEMs, including Geely, BYD Auto, Chang’an and SAIC, as listed above. In addition, the growing trend toward vehicle electrification has led
to the emergence of potentially-disruptive EV OEMs, particularly in China. See “Section 5 – Risk Factors – Emergence of Potentially
Disruptive EV OEMs; Evolving Counterparty Risk Profile” in this AIF.
For a list of our top customers on a consolidated basis and within each reporting segment, see “Section 6 – Description of theBusiness – Products & Services” in this AIF.
6

Annual Information FormCo mpetition
In spite of high barriers to entry in many product areas, as well as the highly capital intensive nature of the global Tier 1 automotive supply
industry, competition is fierce and intensifying from many different sources. For most of our Operating Groups, competition comes primarily
from automobile manufacturers and from other “traditional” Tier 1 Suppliers, including ones in which one or more automobile manufacturers
may have direct or indirect investments. However, with the growing importance of electrification and electronics in the automotive value
chain, a number of electronics and semiconductor companies have entered or expanded their presence in the automotive industry,
becoming direct competitors to Tier 1 Suppliers, including us. Additionally, disruptive technology innovators are changing the competitive
landscape of the automotive industry through the development of high-value product and service offerings, particularly in areas related tovehicle electrification, vehicle autonomy, new mobility and connectivity. As a result of these trends, some suppliers seek to enhance theircompetitive positioning by entering into strategic partnerships, joint ventures or collaborations with technology and software companies.
Lastly, competition has also intensified as automobile manufacturers have reduced the number of their Tier 1 Suppliers in connection with
their strategy to increase the number and range of vehicles built from high-volume global platforms.
The basis on which automobile manufacturers select automotive suppliers for particular programs is determined by a number of factors,
which may include: price; overall relationship, including historical performance with respect to innovation, quality and timeliness of delivery;
manufacturing footprint; proprietary technologies; financial strength; ability to test and validate new technologies for application in theautomotive industry; scope of in-house engineering and tooling capabilities; carbon footprint and alignment with the customer’ssustainability/ESG goals and targets; existing agreements; and other factors.
The number of competitors that are asked by automobile manufacturers to bid on any individual product has been reduced in many cases.
We expect further reductions as a result of the increasing preference of automobile manufacturers to deal with fewer suppliers and reward
those suppliers with earlier and deeper involvement.
Based on 2021 global automotive parts sales to OEMs, the top 10 Tier 1 Suppliers globally were:Supplier

Key Automotive Products(1)Key Automotive Products(1)Supplier(2)

1. Robert BoschPowertrain solutions, chassis
systems control, electrical
drives, car multimedia,
electronics, aftermarket
products, steering, connectedmobility solutions

6. Hyundai Mobis

In-vehicle infotainment (IVI)
systems, braking, steering,lamps, safety, suspension,autonomous driving,
electrification systems,
advanced driver assistancesystems

2. Denso Corporation(2)Thermal systems, powertrainsystems, electrification
systems, mobility electronics,
sensor system &semiconductors

7. Forvia Group(3)Seating, interiors, clean
mobility (exhaust systems),
lighting, hydrogen mobility,
smart cockpit electronics &software integration

3. ZF Friedrichshafen AG

Electrified powertrain, chassis,
driveline, braking systems,
steering wheel, autonomoustransport systems, electronics& advanced driver assistancesystems, active & passive
safety systems

8. Continental Corporation

Autonomous mobility andsafety, vehicle networking andinformation, powertrain, tires,rubber, electric mobility,
connected mobility

4. Magna International Inc.

Body and chassis, exteriors,
powertrain, active driverassistance, electronics, mirrors
and lighting, mechatronics,
seating systems, vehicle
engineering andmanufacturing, roof systems

9. BASF

Engineering plastics,
electronic materials, catalysts,
battery materials, automotive
OEM and refinish coatings,
surface treatment

5. Aisin Corporation(2)Powertrain, chassis andvehicle safety systems, body,
vehicle navigation systems

10. Lear Corporation

Seating, electrical distribution
and connection systems,
battery disconnect systems,
electronic systems, softwareand connected services,
electronic control modules,
electrification products,
connectivity products

Notes:(1) Source: Automotive News (supplement) (June 27, 2022). Key automotive product descriptions are based on information from each Tier 1 Supplier’s website.
(2) OEM subsidiary or OEM investee.
(3) Group formed in 2022 through the combination of Faurecia SE and HELLA GmbH & Co. KGaA.

Magna International Inc.

7

While no single Tier 1 Supplier currently supplies a full range of products which compete with ours, a number of Tier 1 Suppliers can produce
some or many of the same types of components, assemblies, modules and systems that we currently produce. Some of our competitors
may have greater technical or other resources than we do and some of them may be stronger in markets in which we operate. A list of our
key competitors within each product capability in our reporting segments can be found in “Section 6 – Description of theBusiness – Products & Services” in this AIF. See also the risk factors related to “Intense Competition” and “Technology and Innovation” in“Section 5 – Risk Factors” in this AIF.
Magna’s Foundational Strengths
We believe that we possess a number of foundational strengths that give us a competitive advantage as a Tier 1 Supplier, including our:8◾

decentralized operating model, entrepreneurial culture and “ownership” mentality;◾

manufacturing expertise;◾

complete vehicle and broad systems engineering expertise◾

strong balance sheet and emphasis on disciplined, profitable growth;◾

depth of talent;◾

global scale;◾

focus on innovation and our “start‐up” mindset, as well as a strategic portfolio of product groups that enable us to provide innovative,complete vehicle solutions to our customers, while:◾

generating cash to fund investments in high-growth areas; and◾

enabling access to new business models and/or new customers.

Annual Information Form

4. Our Business & Strategy
Bu sin ess Dr i ver s
Our business and operating results are primarily dependent on the levels of North American, European and Chinese car and light truck
production by our customers. Ordinarily, OEM vehicle production levels are aligned with vehicle sales levels and thus affected by changes
in such levels. While we supply systems and components to every major OEM, we do not supply systems and components for every
vehicle, nor is the value of our content consistent from one vehicle to the next. As a result, customer and program mix relative to market
trends, as well as the value of our content on specific vehicle production programs, are important drivers of our performance. Key factors
impacting production volumes, product/customer mix and content, as well as legislative/regulatory trends are listed below.
Growth Driver

Factors Potentially Impacting Growth Driver

Vehicle Production Volumes◾

Customer and Program Mix◾

Vehicle sales levels, which are affected by:◾ General macroeconomic and political conditions◾ Consumer confidence levels, which may be affected by consumer perceptions andgeneral trends related to the job, housing and stock markets, as well as elevated levels of
inflation, and other macroeconomic and political factors, such as the Russian invasion of
Ukraine and banking sector volatility◾ Interest rates and/or availability of credit◾ Declines in vehicle affordability◾ Fuel and energy prices◾ Relative currency values◾ Regulatory restrictions on the use of vehicles in certain megacities◾ COVID-19, including due to mandatory lockdowns/stay-at-home orders which restrict
consumers’ ability to purchase vehicles◾ Potential consumer hesitancy to purchase EVs or to purchase new ICE vehicles during thetransition to EVs◾ Supply chains and infrastructure, including current supply chain disruptions due to the global
shortage of semiconductor chips◾ Energy supply disruptions or shortages that could result in unplanned production shutdownsof some of our, our sub-suppliers’ and customers’ manufacturing facilities◾ Free trade arrangements, trade disputes and tariffs◾ Availability and relative cost of skilled labour◾ Labour disruptions◾ OEM production disruptions, including as result of collective bargaining negotiations◾ Commodities prices◾ Relative currency values◾ Regulatory considerations, including environmental, emissions and safety standards◾ a resurgence of COVID-19, combined with new mandatory lockdowns/stay-at-home orders
which:◾ restrict production;◾ cause elevated employee absenteeism; and◾ lead to supply chain disruptions
OEM outsourcing strategy, as well as their supplier preferences and relationships
OEM decisions to allocate production inputs that are in limited supply, such as
semiconductor chips, to certain programs and not others◾ Our systems level approach and diversified portfolio which provides flexibility in responding
to OEM requirements◾ Business relations between us and each of our OEM customers◾ Our ability to supply products from multiple production locations for global vehicle platforms◾ Our capital allocation decisions◾ Competitiveness of our products, including in megatrend-aligned product areas◾ Exclusivity of our products due to certain intellectual property rights◾ OEM consolidation and cooperation◾ Our ability to grow sales to emergent EV OEMs that achieve significant commercial success◾

Magna Content on Specific
Programs or Platforms◾

OEM outsourcing strategy and supplier preferences
Our ability to supply products from multiple production locations for global vehicle platforms◾ Our systems level approach and diversified portfolio which provides flexibility in responding
to OEM requirements◾ Our capital allocation decisions◾

Magna International Inc.

9

Growth Driver

Factors Potentially Impacting Growth Driver◾ Technological, visual, haptic and other features/attributes of our products compared tocompeting products or the overall cost of such products to the end consumer◾ Pricing of our products relative to competing products◾ Perception/reputation for product quality, as well as timeliness of delivery◾ Our product engineering capabilities◾ Our ability to finance pre-production engineering costs◾ The scope of our authority relative to the OEM, regarding sourcing of sub-components or

products which are incorporated into the systems which we supply◾ Consumer “take rates” for products we sell
◾ Collaboration among our Operating Groups◾ Our ability to meet OEM customers’ sustainability/ESG criteria embedded in their sourcing

decisions for requirements for specific programs
Legislative/regulatory trends
promoting sustainability and safety◾

Regulatory vigour in mandating higher fuel efficiency, lower carbon emissions and/or
enhanced safety features◾ Rise in the number of jurisdictions, including the European Union, committing to, or
accelerating existing commitments to, phase-out of the sale or registration of new ICE
engines over the medium- to long term, which could accelerate OEM development of
non-ICE vehicles

Ma croecon omi c, Pol i ti ca l a n d O t h e r Tr e n d s
The global automotive industry is cyclical and, as noted above, vehicle production and/or sales may be affected by a broad range ofmacroeconomic, political and other factors. Some such factors which are currently affecting the industry are discussed below.
Macroeconomic, Political & Other Trends

Description

Potential Impact on Magna

Inflationary Price Increases◾

Global markets currently experiencing
elevated inflation◾ Inflationary pressures expected topersist throughout 2023 and 2024◾

Elevated Interest Rates

◾

◾

10

Annual Information Form

Increasing global inflation rates havespurred a cycle of monetary policy
tightening, including through central
bank increases to key short-term
lending rates◾ Availability and cost of credit are bothfactors affecting consumer confidence,
which is a critical driver of vehicle sales
and thus automotive production

Higher (and potentially unrecoverablefrom customers) operating costs,
including for: commodities; energy;
labour; freight; and other production
inputs◾ Longer-term increases in cost structure
as a result of current increases in wage
levels◾ Sub-supplier pricing pressures which
may not be recoverable throughcontinuous improvement, customer
price increases or otherwise
Lower sales as a result of a decrease in
consumer demand for vehicles, and in
turn, lower production◾ Higher borrowing costs for us, at a time
when our debt level is increasing tofinance the acquisition of Veoneer’s
active safety systems business, as wellas higher capital expenditure needs inconnection with program awards

Macroeconomic, Political & Other Trends

Description

Potential Impact on Magna

Supply Chain Disruptions◾

Supply chain disruptions, including the
global shortage of semiconductor chipsthat has materially affected global
automotive production volumes since2020 and is expected to continue
impacting automotive production
volumes and chip pricing in 2023
◾ OEMs’ actions in response to the chipshortage have included: unplanned
shutdowns of production lines and/or
plants; reductions in vehicle productionplans; and changes to product mix◾ Supply chain disruptions caused byextreme weather events growing infrequency◾

◾

◾

Russian Invasion of Ukraine

Decrease in global production volumes
as a result of automotive OEMs
departing Russian market◾ Actions imposed on Russia by U.S.,
Canada, U.K., the European Union
member states and other countries,
including:◾ Imposition of sanctions targetingcertain Russian leadership and otherindividuals◾ Restrictions on certain sectors of theRussian economy◾ Expulsion of some Russian banksfrom the SWIFT global banking
systemLower sales
Operational inefficiencies due to volatile
OEM vehicle production schedules,
including as a result of trapped labour,
overtime costs and/or expedited freight◾ Higher inventory levels◾ Increased costs, including premium
freight costs and other unrecoverable
costs◾ Prolonged disruptions of criticalmaterials or components◾ Pricing pressures from sub-suppliers
negatively impacted by production
inefficiencies, premium freight costs
and/or other costs and surcharges◾ Challenges in retaining employees due
to production volatility◾ Financial stress on supply base◾

Lower sales for Magna manufacturing
operations as a result of the substantial
idling of our Russian operations during
the first quarter of 2022
◾ Potential exacerbation of current risks,
including:◾ Increased inflationary pressures,
including in energy (particularly
natural gas and oil), commodities andtransportation/logistics;◾ disruption of vehicle production andsupply chains;◾ Further slowdown of economic
growth and consumer confidence;◾ Disruptions in the supply of certain
gases required in semiconductor chip
manufacturing; and◾ Increased cybersecurity threats
originating in Russia or from cybercriminals sympathetic to Russia

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Macroeconomic, Political & Other Trends

Description

Potential Impact on Magna

Impact of COVID-19 pandemic◾

A resurgence of COVID-19 combined withnew lockdowns could lead to:

Emergence and spread of new, more
highly-transmissible variants of the virus
which could create a risk of disruptions
to the automotive industry, including therisk of mandatory lockdowns/stay-athome orders or other restrictions, as
was the case in parts of China during2022 as a result of China’s “Zero Covid”
Policy◾ Potential deterioration of economic
conditions, resulting in lower consumer
confidence which typically translates
into lower vehicle sales and productionlevelsEconomic/political uncertainty◾

Accelerating focus on impact of climatechange◾

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Potential reductions of our customers’
production including as a result ofintermittent shutdowns of any of ourcustomers’, suppliers’ or our own
facilities◾ Potential for lower vehicle sales as aresult of restrictions on consumers’ability to purchase vehicles, and thus
lower production volumes◾ Elevated levels of absenteeism or
potential shortages of employees tostaff our facilities, or the facilities of ourcustomers or suppliers◾ Prolonged disruptions of criticalmaterials or components◾ Potential for premium freight costs orincreased costs arising from othersupplier mitigation activities for
products shipped from impacted areas◾ Potential for higher inventory levels in
the event of customer and/or supplier
shutdowns◾ Financial stress on supply base
◾ Potential medium-to longer termsocietal changes that expand work-fromhome practices and reduce consumer
reliance on vehicles; and/or increased
reluctance to use modes of public
transport and/or shared mobility

Deterioration of consumer confidence,
including as a result of:◾ Impact of elevated levels of inflation◾ Impact of elevated long-term interest
rates◾ Direct/indirect impacts of geopoliticalevents, such as Russia’s invasion of
Ukraine◾ Banking sector volatility◾

Acceleration of government regulation
banning ICE engines◾ Governmental authorities, customers,
equity investors, lenders, rating
agencies, employees and otherstakeholders increasing scrutiny ofcompanies’ impact on and resilience toclimate change◾ Focus on energy reduction andtransition to renewable / carbon neutralenergy sources◾ Increasing expectations regarding
disclosures of ESG metrics◾ Growth in investment demand forcompanies demonstrating sustainablestrategy and operations◾ Heightened focus and concern on riskof supply chain disruptions fromclimate-related events◾

Potential for lower vehicle sales, andthus lower production volumes◾ Planning and investment uncertainty◾ Increasing risk of pricing pressure from
OEMs and increasing financial stress on
supply base
◾ Potential impact on our sales andprofits
Opportunities from product strategyaligned with sustainable goals◾ Potential energy reduction opportunities
could reduce operating costs◾ Carbon neutrality strategies /commitments could require increased
capital spending and/or involve higher
operating costs, including higher costs
to purchase renewable energy and/or
carbon offsets◾ Potential for increased / decreased
demand for Magna’s Common Shares,
based on market views as tosustainability of the company◾ Climate-related events can disrupt
automotive supply chains,transportation routes and electricity
grids

Macroeconomic, Political & Other Trends

Description

Potential Impact on Magna

Localization of production◾

◾

Pressure on OEMs to localize
production of vehicles in markets inwhich they are sold
◾ Potential to reduce costs and mitigate
risks associated with longer supply
chainsPlanning and investment uncertainty
Potential incentives for expansion into
local markets◾ May result in new opportunities for
Magna in markets where we haveavailable capacity or are wellestablished◾ Could also result in duplication of
capacity across markets◾

Ind u str y Tre n d s
The automotive industry is being defined by a number of global megatrends that have shaped our long-term strategy, including:
Megatrend

EconomyImpact on Automotive

Globalization

Industry built through globalization appears to be undergoing regionalization.

Environmental Impact

Concern for environment/climate change driving vehicle electrification.

Natural Resources & Energy

Access to critical battery minerals and availability of sufficient renewableenergy may define success of drive to vehicle electrification.

Demographic Change & Individualism

Product design will be influenced by aging population and growing
individualization.

Digital Transformation

Connectivity and digitization impact both product and process. New vehiclearchitectures that connect the subsystems along with software functionality
creates additional value to products. Process is also impacted due toincreased digitization, driven by increased requirements for productivity andquality.

Health & Well-Being

Active Driver Assistance Systems (“ADAS”) and autonomy take rates will be
driven both by consumer preferences as well as regulatory requirements tied
to increased safety.

Urbanization

Continued growth in urban population will lead to changes in mobility as aresult of increased density and congestion with an increase in EV adoption
and new transport modalities.

New Mobility

Emerging new mobility eco-system offers a range of potential opportunities
for new products and services.

Society

Mobility

These global megatrends and other factors are driving a number of industry trends, which are discussed below together with their potential
impact on Magna.
Automotive Industry Trends

Description

Potential Impact on Magna

Continuing focus on reducing
vehicle’s energy consumption
and CO2 emissions◾

◾

Sustainability considerations and regulatory
action, resulting in push for more efficient,cleaner and smaller-displacement engines◾ Increasing trend toward electrified vehicles
drives demand for solutions to help extend
driving range from single battery charge

Continuing opportunities to support OEM
customers’ efforts through lightweighting,more efficient drivetrains, electrification andactive aerodynamics◾ Magna’s diversified portfolio supports bothtransition to EV, as well as traditional vehiclearchitectures — positioning Magna toproactively manage the speed of thetransition to EVs

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Automotive Industry Trends

Description

Potential Impact on Magna

Accelerating demand forelectric, hybrid vehicles andinvestment in vehicle
electrification◾

Sustainability considerations and regulatory
actions, including mandatory phase-outs of thesale or registration of new ICE vehicles in the
future, driving increased emphasis onelectrified powertrains◾ Increased interest in electrified solutions,especially in Europe and China◾ Growing proportion of SUVs and CUVs may
facilitate increased electrification◾ Significant development and engineering costs
for OEMs may drive increased outsourcing to
suppliers and increased collaboration among
OEMs◾

Continued growth in demandfor driver assistance/active
safety systems, with longerterm potential for growth inautonomous driving
capabilities◾

Growth in demand for driver assistancefeatures/active safety systems◾ Driven by tightening safety regulations andcontinued growth in demand for luxury
segment vehicles◾

Disruption by new industry
entrants offering “mobility as aservice” (“MaaS”)

◾

◾

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Growth of ride hailing and ride sharing services
in urban areas◾ Potential substitute for personal mobility
vehicles, particularly in congested urban
centres◾ May result in lower production volumes ofvehicles from traditional OEMs

Opportunities to grow Magna content andsales in areas such as drivetrain products
and battery enclosures◾ Strong level of investment required to growor maintain market share could impact shortterm financial performance◾ Pricing pressure on, and migration of value
away from, traditional products in order forOEMs to accommodate cost of battery
systems and electrified products◾ Quoting risk and technology risks, as wellas lack of warranty experience withelectrified products◾ Increased competition, including from newmarket entrants providing electrified
solutions◾ Potential risk of OEMs in-sourcing a greater
proportion of EV components and systems
production◾ Potential long-term displacement of somemechanical products where there arealternative electrified solutions
Opportunity to grow Magna content andsales, particularly in ADAS products◾ Continued expenditures for growth in ADAS
required to develop Magna’s autonomous
driving capabilities could impact short-term
financial performance◾ Quoting risk and technology risks, as wellas lack of warranty experience with ADAS
products◾ Potential challenges in attracting andretaining highly skilled engineering andsoftware personnel
Alternative revenue streams or new
business opportunities for full-vehicle
engineering and manufacturing, as well as
additional service offerings◾ Potential loss of business with traditionalOEMs, to the extent MaaS adversely
impacts OEMs
◾ Potential risks relating to conducting
business with new Maas entrants that may
have limited operating history, as well as
financial, capital or other resources◾ Uncertainty with respect to volume of new
Maas product offerings creates risks relating
to recovery of engineering/capital
investments

Automotive Industry Trends

Description

Potential Impact on Magna

Emergence of Potentially
Disruptive EV OEMs◾

◾

Accelerating demand forconnected vehicles◾

Pervasiveness of digitalization in consumer’s
daily lives is driving growing demand to include
connectivity features in vehicles◾ Personalization of end user functionality invehicle experience increasingly attractive toconsumers◾ Growth in vehicle architectures that connect
subsystems and include software functionality◾

Significant R&D spending◾

Large-scale OEM and Tier 1 Supplierinvestments to comply with tightening
emissions regulations◾ Significant spending by OEMs, new market
entrants and Tier 1 Suppliers on vehicle
autonomy systems and new mobility solutions◾ Significant development and engineering costs
for OEMs may drive increased collaboration
among OEMs◾

Continuing elevated productwarranty expectations andproduct recall levels◾

◾

Accelerating trend towards vehicle
electrification has led to the emergence ofEV-focused OEMs, including in China

Over the last decade, OEMs have become
more inclined to recall vehicles with potentially
faulty products◾ Increased frequency and severity of recalls,
together with other factors, have impacted
coverage and pricing for recall insurance

Potential for cooperative relationships andnew business opportunities with new EV
entrants◾ Potential risks relating to conducting
business with emergent OEMs that may
have limited: operating history, as well as
financial, capital or other resources◾ Uncertainty regarding consumer
acceptance of EVs, particularly those madeby new OEMs
◾ Uncertainty regarding which emergent
OEMs will succeed in the long-term creates
potential customer and/or partnership risk
◾ Failure to grow with those emergent OEMs
that achieve commercial success could
impact our long-term strategy
Opportunities to grow Magna high-value
content, particularly given our systems
capabilities◾ Potential for establishment of new businessmodels, including software as a service◾ Potential challenges in attracting andretaining highly skilled engineers andsoftware personnel◾ Potential product cybersecurity risks related
to vehicles connected to external networks,
which could impact consumer adoption ofconnectivity related products/systems
Pricing pressure on, and migration of value
away from, traditional products in order forOEMs to accommodate cost ofelectrification, as well as active safety /autonomous features◾ OEM inability to achieve planned sales
volumes for electrified vehicles could impact
suppliers’ ability to recover pre-production
costs◾ Technical challenges to commercialize newtechnologies in ADAS
◾ Intense competition from established andnew market entrants◾ Risks related to establishing andmaintaining intellectual property rights,
including potential challenges to intellectual
property ownership
Increased OEM pricing pressure, includingpressure to assume incremental warranty
costs◾ Increasing product recall claims and related
product replacement cost risk, even whereroot cause not agreed with OEM◾ Higher self-insured retentions and, reduced
coverage limits on recall insurance, as wellas increased reluctance by certain subsuppliers to absorb full cost of warranty/
recall relating to failure of their components,
create greater net exposure

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Automotive Industry Trends

Description

Potential Impact on Magna

OEM cooperative alliances /consolidation◾

Joint platform development and cost sharing◾ Joint purchasing◾

Long-term growth of Chinese
OEMs and suppliers◾

Aided by China’s accelerated focus on vehicle
electrification◾ Chinese OEMs may have low cost base which
could provide advantage for expansion into
global markets◾ Large number of Chinese OEMs and excess
production capacity could result inconsolidation◾

Chinese policies aimed at
growing high-value domestic
development/production◾

Chinese government plans to increaseengineering, development and manufacturingof high-value, high-tech products in China◾

Emergence of new “best-cost”
automotive markets◾

New “best-cost” automotive markets (e.g.
Morocco and Vietnam), which are close tolarger established manufacturing markets(France/Spain and China, respectively)◾

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Increased OEM pricing pressure
Increase in sales, where Magna has strong
relationship with lead OEM◾ Decrease in sales, where Magna has
weaker relationship with lead OEM◾

New business opportunities, including
drivetrain, electronics and ADAS products,
and full vehicle engineering and assembly◾ Potential loss of business with traditionalOEMs, to the extent new OEMs adversely
impact traditional OEMs
◾ Vertical integration risk as a result ofChinese OEMs having a financial /ownership interest in certain suppliers◾ Potential for new partnerships andcollaborations
Increased localization of engineering,development and manufacturing◾ Uncertainty regarding whether Chinese
domestic companies will be preferred overforeign-owned companies operating in
China◾ Potential for increased export control
restrictions in the U.S. and Western Europe
relating to strategically important and/or
technologically advanced products andtechnology
Potential new “best-cost” market forengineering talent◾ Increased level of investment in newmarkets required◾ Various risks of doing business in foreign
markets

Ou r Corporate S tr a teg y
We have distilled the impacts of the global megatrends into four long-term strategic factors which we see defining the “Car of the
Future” – electrification, autonomy, new mobility and connectivity. We believe we are well-positioned to capitalize on opportunities in eacharea:
We possess an enhanced e-Powertrain portfolio with a range of products that addresses the roadmap for the transition
to EVs. We continue to win new EV business.

We possess full ADAS capability and complete ADAS system expertise. We take a systems level approach in developing
ADAS building blocks for OEM customers with a focus up to level 2+/3 ADAS capabilities.

We have expanded our collaboration ecosystem and continue to look at opportunities to leverage new business models.
The breadth of our capabilities make us a key enabler of OEM customers and new entrants in the New Mobility space.

We possess software-enabled functionality in our electronic control unit-related products. This functionality could help
optimize performance and efficiency in connected products, such as our connected powertrains.

We have developed our corporate strategy to realize the opportunities from these trends. Key elements of such strategy include:
1 . I n c re a sin g c a p i t a l d e p l o y m e nt t o w a rd hi g h - g ro wth a re a s a lig n e d with th e “Ca r o f th e Fu ture”
We are proactively managing our portfolio and evolving our product mix based on alignment with the Car of the Future. We seek to grow ourbusiness and capabilities in areas which are positively impacted by the global megatrends discussed earlier. Examples of such areas include
powertrain electrification, ADAS and battery enclosures, as well as our contract vehicle manufacturing operations. As illustrated below, we
believe that a substantial proportion of our product areas are not adversely impacted by the global megatrends, including our body, chassis,
lighting, active aerodynamics, dual clutch transmissions, mirrors, mechatronics and seating products.

Impact of Megatrends

Magna Sales over time

Positive
Impact••••eDrives
Battery Enclosures
ADAS
Contract Vehicle Manufacturing

Aligned

•
•
•
•
•
•
•

Lighting
Active Aerodynamics
Body & Chassis
Dual Clutch Transmissions
Mirrors
Mechatronics
Seating

Negative
Impact•••Manual Transmissions
4WD/AWD
Fuel Tanks

TODAY

FUTURE

Lastly, there are elements of our product portfolio which are negatively impacted by the global megatrends and are expected to be lessdirectly relevant to the Car of the Future. Examples of such products include manual transmissions, mechanical AWD/4WD systems and fueltank systems. Despite their declining long-term strategic importance, our assets and expertise associated with these products remain
relevant to, and can be redeployed for, growing product areas aligned with the Car of the Future.
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2 . Dr iv in g O p e ra t i o na l E xc e l l e nc e
We are committed to manufacturing excellence. We continue to elevate our approach to manufacturing by implementing “factory of the
future” initiatives including: enhanced use of big data and analytics; advanced robotics; additive manufacturing; and augmented reality. The
ultimate goal is to achieve greater profitability through further enhanced quality, production efficiency, reduction of floor space and improved
return on investments. Critical elements of our approach to operational excellence include our World Class Manufacturing initiatives and
MAFACT operating system, which are discussed in “Section 6 – Description of the Business – Manufacturing & Engineering” in this AIF.
Additionally, our Sustainability strategy dovetails with our efforts around operational excellence, due to the focus on energy optimization andminimization of both water withdrawals, as well as waste streams to landfill. Details of our approach to Sustainability, including energy, water
and waste reduction targets, can be found in our Sustainability Report, which is Appendix 1 to this AIF.
3 . Un lo c k in g N e w B us i ne s s M o d e l s a nd M a r ke ts
The new mobility landscape, which is generally urban, electrified, autonomous and connected, is creating new business models andmarkets. We believe that our systems and complete vehicle knowledge, including elements of our portfolio such as EV and ADAS platforms,
provide us with an advantage in pursuing such opportunities. In addition, our ability to use capital efficiently, launch programs reliably andhelp speed products to market, makes Magna a key enabler of new entrants. Additionally, we are using our capabilities and platform
technologies to enter the micromobility market. For example, in 2022 we invested in the Yulu electrified two-wheeler shared mobility
business in India and related battery-swapping business and have a number of activities underway involving Magna-developed and thirdparty developed delivery robots.

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5 . R i s k Fa c t o r s
The industry in which we compete and the business we conduct are subject to a number of risks and uncertainties. Our short andmedium-term operational success, as well as our ability to create long-term value through our corporate strategy, are subject to a numberof risks and uncertainties. These risks and uncertainties, together with a number of assumptions, underlie the forward-looking statements
made in this AIF. In order to fully understand these risks, uncertainties and assumptions, you should carefully consider the following risk
factors in addition to other information included in this AIF:

Macroeconomic, Geopolitical and Other Risks◾

Impact of Russian Invasion of Ukraine: Our operations in Russia were substantially idled in the first quarter of 2022 and remain
substantially idled. In the second quarter of 2022, we impaired the value of the balance sheet investments for our operations in Russia,
including deferred cumulative translation losses, by recording a $376 million impairment charge. However, we remain subject to anumber of other risks relating to the conflict which are described elsewhere in these Risk Factors, including: increased inflationarypressures, including in energy (particularly natural gas and oil), commodities and transportation/logistics; disruptions to vehicle production
and/or supply chains; a further slowdown in global economic growth and consumer confidence; disruptions to the supply of certain
gases required in semiconductor chip manufacturing; and increased cybersecurity threats originating in Russia, or from cyber criminals
sympathetic to Russia. A material occurrence of one or more of the foregoing risks could have a material adverse effect on our businessand results of operations.

◾

Inflationary Pressures: We continue to experience elevated inflation in all markets in which we operate, with higher commodity, energy, labour, freight and other production input pricing expected to persist throughout 2023 and 2024. While many of these input priceincreases will moderate over time, the increases in wage levels we are currently experiencing are likely to have a longer-term effect on our
cost structure. Additionally, we may continue to experience price increases or surcharges from sub-suppliers in connection with the
inflationary pressures they face. The inability to offset inflationary price increases through price increases to or cost recoveries from ourcustomers, modifications to our products, continuous improvement actions or otherwise, could have a material adverse effect on our
profitability.

◾

Interest Rates: Increasing global inflation rates have spurred a cycle of monetary policy tightening, including through central bankincreases to key short-term lending rates. The availability and cost of credit are both factors affecting consumer confidence, which is a
critical driver of vehicle sales and thus automotive production. A material, sustained decrease in consumer demand for vehicles could
result in further reductions to vehicle production from levels assumed in our business plan, which could have a material adverse effect on
our profitability and financial condition. Higher interest rates will have an adverse effect on our borrowing costs at a time when our debt
level is increasing as we finance the acquisition of Veoneer’s active safety systems business, as well as higher capital expenditure needs
in connection with new program awards. A prolonged period of higher interest and/or sustained interest rate increases could have an
adverse effect on our profitability.

◾

COVID-19: While we believe that the worst of the pandemic is behind us, the continued development and spread of highly-transmissible
COVID-19 variants continues to create a risk of disruptions to the automotive industry. Although unlikely in our key production markets,
such risks could include mandatory lockdowns/stay-at-home orders or other restrictions, which could restrict consumers’ ability topurchase vehicles; restrict production; cause elevated employee absenteeism; result in us incurring significant unrecoverable costs; andlead to supply chain disruptions. Over the medium-to long term, the pandemic may result in societal changes that impact the automotive
industry, positively or negatively, including as a result of: expanded work-from-home practices that reduce consumers’ reliance on
vehicles; and/or increased reluctance by people to utilize modes of public transit and/or shared mobility. Any resurgence of COVID-19
that causes prolonged production shutdowns and/or restrictions on consumers’ ability to purchase vehicles, or long-term changes in
consumers’ vehicle purchasing behaviour, could have a material adverse effect on our operations, sales and profitability.

Risks Related to the Automotive Industry◾

Economic Cyclicality: Ordinarily, the global automotive industry is cyclical, with potential for regional differences in the timing of
expansion and contraction of economic cycles. In normal industry cycles, lower consumer confidence typically translates to lower vehicle
sales and production volumes. Examples of factors which often reduce consumer confidence include: worsening economic, political,
and other conditions; military conflict; increasing inflation (particularly fuel and energy prices); and rising interest rates. A significant decline
in vehicle production volumes from levels assumed in our business plan could have a material adverse effect on our profitability andfinancial condition.

◾

Regional Production Volume Declines: North America, Europe and China are key automotive producing regions for us, and ouroperating results are primarily dependent on car and light truck production by our customers in these regions. A significant or sustained
decline in vehicle production volumes in any or all these geographic regions could have a material adverse effect on our operations, sales,and profitability.

◾

Deteriorating Vehicle Affordability: Vehicle affordability to consumers is becoming more challenged due to a combination of factors,
including: higher prices for EVs; costs related to advanced electronic systems; increasing vehicle finance costs due to rising interest rates;
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inflationary cost increases, and limited vehicle supply. A material, sustained decrease in consumer demand for vehicles due to deteriorating
vehicle affordability could result in further reductions to vehicle production from levels assumed in our business plan, which could have amaterial adverse effect on our profitability and financial condition.
◾

Potential Consumer Hesitancy: The automotive industry is transitioning from vehicles powered by internal combustion engines toEVs. EV penetration rates differ regionally based on factors such as government regulation, availability of government subsidies, charging
infrastructure and consumers’ levels of disposable income. Consumers may be hesitant to purchase EVs due to: the higher costcompared to ICE vehicles; reduction or elimination of government subsidies; uncertainty regarding battery technologies and/or charging
infrastructure; the proliferation of new, EV-focused OEMs and/or new EV models with little or no operating and warranty history; and otherfactors. At the same time, consumers may be hesitant to purchase new ICE vehicles, during the transition toward EVs. Any widespread
consumer hesitancy which results in consumers deferring purchases of both new EVs and ICE vehicles during the transition to EVs could
materially affect vehicle production volumes which could have a material adverse effect on our profitability.

◾

Intense Competition: The automotive supply industry is highly competitive and becoming more so. Some of our competitors havehigher or more rapidly growing market share than we do in certain product or geographic markets. Additionally, a number of establishedelectronics, semiconductor chip and contract manufacturing companies have entered or expanded their presence in the automotive
industry. At the same time, disruptive technology innovators have been introducing novel product and service solutions which traditional
automotive suppliers may not be able to match. Failure to successfully compete with existing or new competitors, including failure to
grow our electronics and/or EV content at or above the rate of growth of vehicle production, could affect our ability to fully implement our
corporate strategy.

Strategic Risks◾

Alignment With “Car of the Future”: The success of our corporate strategy is correlated in part to our ability to evolve our product mix
based on alignment with trends defining the “Car of the Future.” Accordingly, we seek to grow our business and capabilities in areas
which are positively impacted by megatrends related to vehicle electrification, autonomy, new mobility, and connectivity. Examples ofsuch product areas include powertrain electrification, ADAS and battery enclosures. Some elements of our product portfolio are negatively
impacted by the foregoing megatrends, including manual transmissions, mechanical all-wheel drive/four-wheel drive systems and fueltank systems. The failure to grow our megatrend-aligned product areas at or above the industry rates of growth for such products could
have a material adverse effect on our profitability and financial condition.

◾

Technology and Innovation: While we continue to invest in technology and innovation which we believe will be critical to our long-term
growth, the automotive industry is experiencing significant electrical, electronic, and software-driven change and disruption. Our ability toanticipate changes in technology and to successfully develop and introduce new and enhanced products and/or manufacturing
processes on a timely basis will be a significant factor in our ability to remain competitive. Additionally, our success is dependent on ourability to attract, train, develop and retain employees with the required technical and software skills. If we are unsuccessful or are lesssuccessful than our competitors in consistently developing innovative products and/or processes, we may be placed at a competitive
disadvantage in bidding for new business and may not be able to recover some or all of our engineering, research and development
costs, which could have a material adverse effect on our profitability and financial condition and ability to fully implement our corporate
strategy.

◾

Investments in Mobility and Technology Companies: In addition to our development activities, we have invested in various mobility
and technology companies, as well as funds that invest in such companies. Such investments are an important element of our long-term
strategy, and we may make further investments in such companies. However, investing in such companies involves a high degree of risk,
including the potential loss of some or all of our investment value. There is currently no public market for the shares or units of some ofthese investments and, as a result, we may be unable to monetize such investments in the future. In some cases, we have shares orshare purchase warrants with technology-driven suppliers or OEMs with which we have commercial relations and the value of our sharesin such companies may be closely related to the commercial success of such programs. Investments in companies or funds which are
currently or subsequently become publicly traded are “marked-to-market” quarterly, which may result in us recording unrealized gains orlosses in any given quarter. The realization of any of the foregoing investment-related risks could have an adverse effect on our profitability
and financial condition.

◾

Evolving Business Risk Profile: The risk profile of our business continues to evolve with the increasing importance to us of productareas such as electrified powertrains, ADAS and electronics, as well as new mobility business models. With this continuing evolution, we
may face new or heightened risks, including: forecasting and planning risks related to penetration rates of EVs, as well as take-rates for
ADAS or features offered to consumers as optional items; reduction in demand for certain products which are unique to internal
combustion engine vehicles; challenges in quoting for profitable returns on products with leading-edge technologies and/or new service
models for which we may not have significant quoting experience; rigorous testing and validation requirements from OEM customers forcomplex new products; increased warranty and recall risks on new products and leading-edge technologies; increased product liability
risks; heightened risk of technological obsolescence of some of our products, processes and/or assets; and difficulties in attracting or
retaining employees with critical skills in high-demand areas. Realization of one or more such risks could have a material adverse effecton our operations, profitability, or financial condition.

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Customer-Related Risks◾

Customer Concentration: Although we supply parts to all the leading OEMs, a significant majority of our sales are to six customers:
General Motors, BMW, Stellantis, Mercedes-Benz, Ford and Volkswagen. In light of the amount of business we currently have with thesesix customers, our opportunities for incremental growth with them may be limited. Shifts in market share away from our top customers
could have a material adverse effect on our profitability to the extent we are unable to offset such lost sales with sufficient sales growthwith alternative OEMs.

◾

Growth with Asian OEMs: The amount of business we have with Japanese, Korean and Chinese-based OEMs generally lags with thatof our six largest customers, due in part to the existing relationships between such Asian OEMs and their preferred suppliers. Our inability
to significantly grow our business with Asian-based OEMs could have an adverse effect on our profitability.

◾

Emergence of Potentially Disruptive EV OEMs: A number of potentially disruptive EV-focused OEMs, including Fisker, Lucid, Nio,
Rivian and Vinfast, have emerged in recent years, but it remains too early to predict which EV-focused OEMs will succeed. Vehicle
electrification is an important component of our strategy, including through product areas such as electric drive systems and battery
enclosures, as well as services such as complete vehicle engineering and contract vehicle manufacturing. While we are developing
business relationships with some of the newer EV-focused OEMs, we do not have relations with all, nor are such relationships as wellestablished as those with our traditional customers. The failure to sufficiently grow our sales to such OEMs which achieve significant
commercial success could adversely impact our long-term strategy. At the same time, the failure of newer EV-focused OEMs to which we
supply systems or vehicles to achieve their sales projections could adversely impact the success of our customer diversification andelectrified product strategies, as well as create counterparty risks described below.

◾

Evolving Counterparty Risk Profile: Conducting business with newer EV-focused OEMs continues to alter the risk profile of ourbusiness and poses incremental risks and challenges compared to our traditional customers, including as a result of: their relatively short
operating histories; limited financial, liquidity/capital or other resources; less mature product development and validation processes;
uncertain market acceptance of their products/services; and untested business models. These factors may elevate our counterparty risk
in dealing with such OEMs, particularly with respect to recovery of: pre-production expenses; tooling, engineering and production
receivables; amortized cost recoveries; inventory obsolescence; as well as committed capital and/or capacity. Our exposure to loss on
current assets related to such OEM customers as at December 31, 2022 was approximately $225 million. In some cases, we may holda minority equity position in such companies which involves a high degree of risk, including those discussed above under “Investments
in Mobility and Technology Companies”. The inability of newer EV-focused OEMs to achieve commercial success, or the bankruptcy or
insolvency of any such OEM with which we conduct business, could result in us incurring material cash and impairment charges, which
could have a material adverse effect on our financial condition.

◾

Dependence on Outsourcing: We depend on outsourcing by OEMs, including the outsourcing of complete vehicle assembly to ourcontract vehicle manufacturing business. The extent of such outsourcing is dependent on a number of factors, including: the cost,quality, and timeliness of outsourced production relative to in-house production by an OEM; the degree of unutilized capacity at an
OEM’s facilities; and collective bargaining agreements and labour relations between OEMs and labour unions. Currently, OEMs in Europe
and China have excess vehicle assembly capacity. Additionally, since EVs have fewer components than vehicles with internal combustion
engines, some OEMs may insource production of certain components or systems to maintain employment levels committed to incollective bargaining agreements and/or in connection with government incentives. A reduction in outsourcing by OEMs, or the loss ofany material production or assembly programs combined with the failure to secure alternative programs with sufficient volumes andmargins, could have a material adverse effect on our profitability.

◾

Customer Consolidation and Cooperation: There have been a number of examples of OEM consolidation in recent years. Additionally,
competing OEMs have cooperated and collaborated in different ways to save costs, including through joint purchasing activities, platform
sharing, powertrain sharing, joint R&D and regional joint ventures. While OEM consolidation and cooperation may present opportunities,
they also present a risk that we could lose future business or experience even greater pricing pressure on certain production programs,
either of which could have an adverse effect on our profitability.

◾

Market Shifts: While we supply parts for a wide variety of vehicles produced globally, we do not supply parts for all vehicles produced,
nor is the number or value of parts evenly distributed among the vehicles for which we do supply parts. Shifts in market shares away fromvehicles on which we have significant content, as well as vehicle segments in which our sales may be more heavily concentrated, could
have a material adverse effect on our profitability.

◾

Consumer Take Rate Shifts: Shifts in consumer preferences may impact “take rates” for certain types of products we sell. Examples
of such products include: all-wheel drive systems; power liftgates; active aerodynamics systems; ADAS; and complete vehicles withcertain option packages or option choices. Where shifts in consumer preferences result in higher “take rates” for products that we do notsell or for products we sell at a lower margin, our profitability may be adversely affected.

◾

Quarterly Sales Fluctuations: Our business is generally not seasonal, but our sales and profits are closely related to our automotive
customers’ vehicle production schedules. Our largest customers typically shut down vehicle production for brief periods which fall during
our third and fourth fiscal quarters. These scheduled shutdowns of our customers’ production facilities could cause our sales andprofitability to fluctuate when comparing fiscal quarters within any given year.

◾

Customer Purchase Orders: Contracts from our customers consist of blanket purchase orders which generally provide for the supply
of a customer’s annual requirements rather than a specific quantity of products, and can be terminated by a customer at any time. If a
Magna International Inc.

21

purchase order is terminated, we may have various pre-production, tooling, engineering and other costs which we may not recover fromour customer and which could have an adverse effect on our profitability.
◾

Potential OEM Production-Related Disruptions: Any significant OEM production disruptions, including as a result of labour unrest
related to collective bargaining agreement negotiations occurring at GM, Ford and Stellantis in 2023, would lead to disruptions to our
production, which could have a material adverse effect on our sales, and profitability.

Supply Chain Risks◾

Semiconductor Chip Supply Disruptions and Price Increases: A global shortage of semiconductor chips for use in automotive
applications has had a material adverse effect on global automotive production volumes since 2020 and is expected to continue impacting
volumes and chip pricing in 2023. In response to semiconductor chip shortages, OEMs continue to take actions such as: unplanned
shutdowns of production lines and/or plants; reductions in their vehicle production plans; and changes to their product mix. Such OEM
responses can result in a number of direct and indirect consequences for Tier 1 suppliers like Magna, including: lower sales; significant
production inefficiencies resulting from our production lines being stopped/restarted unexpectedly when OEMs’ allocate scarce chips tospecific production programs; higher inventory levels; premium freight costs to expedite shipments; other unrecoverable costs andcharges, including from sub-suppliers which have been adversely affected by higher chip prices and/or production inefficiencies; andincreased challenges in retaining employees through production disruptions. It remains unclear when supply and demand for automotive
semiconductor chips will fully rebalance. A worsening or prolongation of the semiconductor chip shortage could have a material adverse
effect on our operations, sales, and profitability.

◾

Supply Chain Disruptions: In addition to the global shortage of semiconductor chips for automotive applications, OEMs and Tier 1
automotive suppliers may also experience supply disruptions or constraints on other critical manufacturing inputs, such as steel and/or
aluminum. Supply chain disruptions which prevent us from timely supplying products to our customers could result in a range of potential
adverse consequences, including: unrecoverable price increases; elevated, unrecoverable costs such as those for premium freight or
re-sourcing of supply; penalties or business interruption claims by our customers; loss of future business; and reputational damage. The
impacts of prolonged supply chain disruptions or constraints could have a material adverse effect on our operations and profitability.

◾

Regional Energy Supply and Pricing: Regional energy supplies have experienced disruptions due to the impact of Russia’s invasionof Ukraine, supply/demand imbalances, regulatory restrictions on energy usage, severe weather events and challenges related to thetransition to renewable energy generation. Prices for energy inputs critical to manufacturing, such as natural gas and electricity, spiked inparts of Europe in 2022 and, although they have eased from their 2022 peaks, are expected to remain significantly higher than pre-2022
levels throughout 2023. Unforeseen supply or demand shocks, prolonged energy disruptions and/or significant energy price increases
could have a material adverse effect on our operations and profitability.

◾

Supply Base Condition: We rely on a number of suppliers to supply us with a wide range of components required in connection withour business. The financial health of automotive suppliers is impacted by a number of factors, including economic conditions andproduction volumes. A significant worsening of economic conditions or reduction in production volumes could deteriorate the financial
condition of our supply base, which could lead to, among other things: disruptions in the supply of critical components to us or ourcustomers; and/or temporary shut-downs of one of our production lines or the production lines of one of our customers; all of which
could have a material adverse effect on our profitability.

Manufacturing/Operational Risks◾

Product Launch: The launch of production is a complex process, the success of which depends on a wide range of factors, including:the timing and frequency of design changes by our customers relative to start of production; product maturity and complexity; production
readiness of our own, as well as our customers’ and suppliers’ manufacturing facilities; robustness of manufacturing and validation
processes; launch volumes; quality and production readiness of tooling and equipment; sufficiency of skilled employees; and initial
product quality. Failure by us to successfully launch a new product or complete vehicle could result in commercial or litigation claims
against us which could have a material adverse effect on our profitability and reputation. Additionally, a significant product or program
launch failure could adversely affect our reputation and/or ability to execute our strategy.

◾

Operational Underperformance: From time to time, we may have operating divisions which are not performing at expected levels of
profitability. The size and complexity of automotive manufacturing operations often makes it difficult to achieve a quick turnaround ofunderperforming divisions. Significant underperformance in our operating divisions could have a material adverse effect on our profitability
and operations.

◾

Restructuring Costs: We may sell some product lines and/or downsize, close, or sell some of our operating divisions. By taking suchactions, we may incur restructuring, downsizing and/or other significant non-recurring costs. These costs may be higher in some countries
than others and could have a material adverse effect on our profitability.

◾

Impairments: We have recorded significant impairment charges related to equity interests in joint ventures, goodwill and long-lived
assets in the past and may do so again in the future. The early termination, loss, renegotiation of the terms of, or delay in theimplementation of, any significant production contract could be indicators of impairment, as may the technological obsolescence of anyof our products or production assets or volumes that are lower than previously expected. In conducting our impairment analysis, we

22

Annual Information Formmake forward-looking assumptions regarding: the impact of turnaround plans on underperforming operations; new business
opportunities; program price and cost assumptions on current and future business; the timing and success of new program launches;and forecast production volumes. To the extent such forward-looking assumptions are not met, any resulting impairment loss could havea material adverse effect on our profitability.
◾

Labour Disruptions: Some of our manufacturing facilities are unionized, as are many manufacturing facilities of our customers andsuppliers. While unionized facilities are subject to the risk of labour disruptions from time to time, we cannot predict whether or when any
labour disruption may arise, or how long such a disruption could last. A significant labour disruption could lead to a lengthy shutdown of
our or our customers’ and/or our suppliers’ production lines, which could have a material adverse effect on our operations and profitability.

◾

Skilled Labour Attraction/Retention: Our business is based on successfully attracting, training, developing and retaining employees
at all levels of the company from “shop-floor” to Executive Management. The markets for highly skilled workers, as well as talented
professionals and leaders in our industry are extremely competitive, particularly in the major global automotive and technology centres inwhich many of our operations are located. The inability to meet our needs for skilled workers and talented professionals and leaders,
whether through recruitment or internal training and development activities could impact our ability to profitably conduct business and/or
effectively implement our strategy.

◾

Leadership Expertise and Succession: Effective succession planning programs and practices are a critical element of our overall
talent management strategy. We experienced a significant number of planned retirements in the last few years, and may experiencesimilar waves in future years. As a result of such retirements, we have multiple senior leaders recently appointed to roles at a time ofsignificant macroeconomic, geopolitical, industry and other disruptions discussed elsewhere in these Risk Factors. While we believe that
our leadership development and succession program has been effective in facilitating leadership transitions to date, our ability to profitably
conduct business and/or successfully implement our strategy could be impacted by the failure to: identify, train, develop and support
high-performing leaders; ensure effective knowledge transfers from transitioning leaders to successors; and/or otherwise promoteorganizational robustness and resilience through leadership transitions in critical roles.

Pricing Risks◾

Quote/Pricing Assumptions: The time between award of new production business and start of production typically ranges between
two and four years. Since product pricing is typically determined at the time of award, we are subject to significant pricing risk due tochanges in input costs and quote assumptions from the time of award through the start of production. This risk is elevated in a rising
inflation environment, as is currently the case globally, including with respect to wages, energy, and commodities. The inability to quote
effectively, or the occurrence of a material change in input cost or other quote assumptions between program award and production,
could have a material adverse effect on our profitability.

◾

Customer Pricing Pressure/Contractual Arrangements: We face ongoing pricing pressure from OEMs, including through: quoting
pre-requirements; long-term supply agreements with mutually agreed price reductions over the life of the agreement; non-contractual
annual price concession demands; pressure to absorb costs related to product design, engineering and tooling, and/or amortize suchcosts through the piece price for the product; pressure to assume incremental warranty costs; and OEM refusal to fully offset inflationary
price increases. OEMs possess significant leverage over their suppliers due to their purchasing power and the highly competitive natureof the automotive supply industry. As a result of the broad portfolio of parts we supply to our six largest OEM customers, such customers
may be able to exert greater leverage over us as compared to our competitors. We attempt to offset price concessions and costs in a
number of ways, including through negotiations with our customers, improved operating efficiencies and cost reduction efforts. Ourinability to fully offset price concessions, absorb design, engineering, and tooling costs, and/or fully recover such costs over the life of
production, could have a material adverse effect on our profitability. Moreover, while we attempt to negotiate contractual terms with our
suppliers that align with the contractual terms between us and our OEM customers, we may not always be successful in doing so. Anysuch gaps between our customer and supplier contract terms could, in certain circumstances, have an adverse effect on our profitability.

◾

Commodity Price Volatility: Prices for certain key raw materials and commodities used in our parts, including steel, aluminum, andresin, can be volatile. In some cases, our risk is mitigated because we purchase steel or aluminum under customer resale programs.
Where such commodity purchases are not made under customer resale programs, we seek to offset commodity price increases by:passing such increases to our customers, engineering products with reduced commodity content, implementing hedging strategies, orotherwise. To the extent we are unable to offset commodity price increases, such additional commodity costs could have an adverse
effect on our profitability.

◾

Scrap Steel/Aluminum Price Volatility: Some of our manufacturing facilities generate a significant amount of engineered scrap steel
and/or aluminum in their manufacturing processes, but recover some of the value through the sale of such scrap. Scrap steel and scrap
aluminum prices can also be volatile and do not necessarily move in the same direction as steel or aluminum prices. Declines in scrap
steel/aluminum prices from time to time could have an adverse effect on our profitability.

Warranty/Recall Risks◾

Repair/Replacement Costs: We are responsible for repair and replacement costs of defective products we supply to our customers.
Certain of our products, such as transmissions and battery enclosures, typically have a higher unit and labour service cost in the event of
Magna International Inc.

23

replacement. Other products, such as cameras and side door latches, are supplied in multiples of two or four for a single vehicle, which
could result in significant cost in the event all need to be replaced. OEMs and/or government regulators can initiate recalls of safety or
regulated products, which could place us at risk for the costs of the administrative costs of the recall, in addition to the repair/replacement
costs of defective products, even in situations where we dispute the need for a recall or the responsibility for any alleged defect. The
obligation to repair or replace defective products could have a material adverse effect on our operations and profitability. To the extent
such obligation arises as a result of a product recall, we may face reputational damage, and the combination of administrative andrepair/replacement costs could have a material adverse effect on our profitability.
◾

Warranty Provisions: In certain circumstances, we are at risk for warranty, product liability and recall costs. We are currently experiencing
increased customer pressure to assume greater warranty responsibility. Certain customers seek to impose partial responsibility forwarranty costs where the underlying root cause of a product or system failure cannot be determined. Warranty provisions for our
products are based on our best estimate of the amounts necessary to settle existing or probable claims related to product defects. In
addition, warranty provisions for our powertrain systems, electronics and complete vehicle programs are also established based on ouror our customers’ warranty experience with the applicable type of product and, in some cases, the terms in the applicable customer
agreements. Actual warranty experience which results in costs that exceed our warranty provisions, could have a material adverse effecton our profitability.

◾

Product Liability: We cannot guarantee that the design, engineering, testing, validation, and manufacturing measures we employ toensure high-quality products will be completely effective, particularly as electronic content and product complexity increases and/or as
we enter newer product areas such as ADAS. If our products fail to perform as expected or as required by governmental regulations,
and/or to the extent any such failure results in, or is alleged to result in, bodily injury and/or property damage or other losses, ourcustomers or government regulators may initiate a product recall of such products and/or third party product liability claims may bebrought against us. The defense of product liability claims, particularly class action claims in North America, may be costly and judgements
against us could impair our reputation and have a material adverse effect on our profitability.

Climate Change Risks◾

Transition Risks and Physical Risks: Our Sustainability Report, which is appended to our current Annual Information Form / Annual
Report on Form 40-F, contains a detailed discussion of transitional and physical climate change risks, along with our efforts to mitigate
them. Readers are encouraged to review such climate risk disclosures.

◾

Strategic and Other Risks: A number of the risk factors discussed above contain detailed discussion of strategic and other risks
related to the evolution of the automotive industry and our business within the context of the transition to electromobility, including:
Alignment with “Car of the Future”; Technology and Innovation; Evolving Business Risk Profile; Emergence of Potentially Disruptive EV
OEMs; and Evolving Counterparty Risk Profile. Readers are encouraged to review this entire Risk Factors section in its entirety.

IT Security/Cybersecurity Risks◾

IT/Cybersecurity Breach: Although we have established and continue to enhance security controls intended to protect our IT systems
and infrastructure, there is no guarantee that such security measures will be effective in preventing unauthorized physical access or
cyber-attacks. A significant breach of our IT systems could: result in theft of funds; cause disruptions in our manufacturing operations;lead to the loss, destruction, or inappropriate use of sensitive data, including employees’ personal data; or result in theft of our, ourcustomers’ or our suppliers’ intellectual property or confidential information. The occurrence of any of the foregoing could adversely
affect our operations and/or reputation and could lead to claims against us that could have a material adverse effect on our profitability.

◾

Product Cybersecurity: The risk of vehicle cyber-attacks have risen with the proliferation of technology designed to connect vehicles toexternal networks. Although vehicle and systems-level cybersecurity controls and protections are typically managed and/or specified by
our OEM customers, we cannot provide assurance that such controls and protections will be effective in preventing cyber intrusion
through one of our products. Furthermore, an OEM customer may still seek to hold us financially responsible, even where the OEM
specified the cybersecurity controls and protections. Any such cyber intrusion could cause reputational damage and lead to claims
against us that have an adverse effect on our profitability.

Acquisition Risks◾

Acquisition of Strategic Targets: We intend to continue to pursue acquisitions in those product areas which we have identified as key
to our long-term corporate strategy. However, as a result of intense competition in these strategic areas, we may not be able to acquire
the targets which we need to achieve our strategic objectives.

◾

Inherent Merger and Acquisition Risks: Acquisitions are subject to a range of inherent risks, including the assumption of incremental
regulatory/compliance, pricing, supply chain, commodities, labour relations, litigation, environmental, pensions, warranty, recall, IT, tax,
or other risks. While due diligence on an acquisition target is intended to mitigate such risks, these efforts may not always prove to be
sufficient in identifying all risks and liabilities related to the acquisition, including as a result of: limited access to information; time constraints
for conducting due diligence; inability to access target company facilities and/or personnel; or other limitations in the due diligence

24

Annual Information Formprocess. Additionally, we may identify risks and liabilities that we are not able to sufficiently mitigate through appropriate contractualindemnities or other protections. The realization of any such risks could have a material adverse effect on our profitability.
◾

Acquisition Integration and Synergies: We may not be able to successfully integrate or achieve anticipated synergies from ouracquisitions and/or such acquisitions may be dilutive in the short to medium term. Either of these outcomes could have a material
adverse effect on our profitability.

Other Business Risks◾

Joint Ventures: We conduct certain of our operations through joint ventures under contractual arrangements under which we share
management responsibilities with our joint venture partners. Joint venture operations carry a range of risks, including those relating to:
failure of our joint venture partner(s) to satisfy contractual obligations; potential conflicts between us and our joint venture partner(s);strategic objectives of joint venture partners that may differ from our own; potential delays in decision-making; a limited ability to implement
some or all of our policies, practices and controls, or to control legal and regulatory compliance, within the joint venture(s); and other risks
inherent to non-wholly-owned operations. The likelihood of such occurrences and their potential effect on us vary depending on the joint
venture arrangement, however, the occurrence of any such risks could have an adverse effect on our operations, profitability, andreputation.

◾

Intellectual Property: We own intellectual property that is important to our business and product portfolio. Our intellectual property is
an important factor in protecting our innovation activities and maintaining our competitive advantage. From time to time, our intellectual
property rights may be challenged, including through the assertion of intellectual property infringement claims which could result in us:
being prevented from selling certain products; having to license the infringed product/technology; and/or incurring monetary damages.
The foregoing consequences could have an adverse effect on our sales, profitability and ability to fully implement our corporate strategy.

◾

Risks of Doing Business in Foreign Markets: Conducting business in markets outside our traditional markets of North America andEurope carries a number of potential risks, including those relating to: political, civil and economic instability and uncertainty; military
conflict; corruption risks; high inflation and our ability to recover inflation-related cost increases; trade, customs and tax risks; potential
sanctions and export control risk; expropriation risks; currency exchange rates; currency controls; limitations on the repatriation of funds;
insufficient infrastructure; competition to attract and retain qualified employees; and other risks associated with conducting businessinternationally. Expansion of our business in China is an element of our long-term strategy and, as a result, our exposure to the risks
described above may be greater in the future. The likelihood of such occurrences and their potential effect on us vary from country tocountry and are unpredictable, however, the occurrence of any such risks could have an adverse effect on our operations, profitability,and financial condition.

◾

Relative Foreign Exchange Rates: Our profitability is affected by movements of our U.S. dollar reporting currency against the Canadiandollar, the euro, the Chinese renminbi, and other currencies in which we generate revenues and incur expenses. Significant long-term
fluctuations in relative currency values, in particular a significant change in the relative values of the U.S. dollar, Canadian dollar, euro or
Chinese renminbi, could have an adverse effect on our profitability and financial condition and any sustained change in such relative
currency values could adversely impact our competitiveness in certain geographic regions.

◾

Pension Risks: Some of our current and former employees in Canada, the United States and Germany participate in defined benefit
pension plans. Although such plans in North America have been closed to new participants, existing participants in Canada continue toaccrue benefits. Our defined benefit pension plans in Germany are not funded and plans in Canada and the United States may not be fully
funded. Our pension funding obligations in North America could increase significantly due to a reduction in plan funding status caused bya variety of factors, including: weak performance of capital markets; declining interest rates; failure to achieve sufficient investment
returns; investment risks inherent in the investment portfolios of the plans; and other factors. A significant increase in our pension funding
obligations could have an adverse effect on our profitability and financial condition.

◾

Tax Risks: At any given time, we may face tax exposures arising out of changes in tax or transfer pricing laws, tax reassessments orotherwise. To the extent we cannot implement measures to offset these exposures, they may have an adverse effect on our profitability.
We have incurred losses in some countries which we may not be able to fully or partially offset against income we have earned in thosecountries. In some cases, we may not be able to utilize these losses at all if we cannot generate profits in those countries and/or if wehave ceased conducting business in those countries altogether. Our inability to utilize tax losses could adversely affect our profitability.

◾

Financial Flexibility: The occurrence of an economic shock not contemplated in our business plan, a rapid deterioration of conditions
or a prolonged recession could result in the depletion of our cash resources, which could have a material adverse effect on our operations
and financial condition.

◾

Returns on Capital Investments: In recent years, we have invested significant amounts of money in our business through capital
expenditures to support new facilities, expansion of existing facilities, purchases of production equipment and acquisitions. We expect
higher capital expenditures in 2023 to support program awards and our continued growth, including in megatrend areas. Returns
achieved on such investments in the past are not necessarily indicative of the returns we may achieve on future investments and ourinability to achieve returns on future investments which equal or exceed returns on past investments could have a material adverse effecton our level of profitability.

◾

Credit Ratings Changes: There is no assurance that any credit rating currently assigned to us will remain in effect for any period of timeor that any rating will not be revised or withdrawn entirely by a rating agency in the future. A downgrade in the credit ratings assigned to
Magna International Inc.

25

us by one or more agencies could increase our cost of borrowing or impact our ability to negotiate loans, which could have an adverse
effect on our profitability, financial condition, and the trading price of our Common Shares.
◾

Stock Price Fluctuation: Trading prices of our Common Shares cannot be predicted and may fluctuate significantly due to a variety offactors, many of which are outside our control.

◾

Dividends: Our Board may in certain circumstances determine that it is in the best interests of the company to reduce or suspend ourdividend. In such event, the trading price of our Common Shares may be materially affected.

Legal, Regulatory and Other Risks◾

Antitrust Proceedings: The automotive industry has in recent years been the subject of increased government enforcement of antitrustand competition laws. Where wrongful conduct is found, the relevant antitrust authority can, depending on the jurisdiction, initiate
administrative or criminal legal proceedings and impose administrative or criminal fines, penalties or restitution payments. OEMs, cardealers and consumers may also be able to claim against antitrust violators through civil lawsuits. The company’s policy is to comply withall applicable laws, including antitrust and competition laws, and has implemented a robust compliance training program to mitigate
against the risk of an antitrust violation. However, in the event of an antitrust violation, Magna could suffer reputational damage and be
subject to criminal or administrative fines or penalties, restitution settlements, or civil damages that could have a material adverse effecton Magna’s profitability.

◾

Legal and Regulatory Proceedings: From time to time, we may become involved in regulatory proceedings, or become liable for legal,
contractual, and other claims by various parties, including customers, suppliers, former employees, class action plaintiffs and others.
Depending on the nature or duration of any potential proceedings or claims, we may incur substantial costs and expenses, be required
to devote significant management time and resources to the matters and suffer reputational damage as a result of regulatory proceedings.
On an ongoing basis, we attempt to assess the likelihood of any adverse judgements or outcomes to these proceedings or claims,
although it is difficult to predict final outcomes with any degree of certainty. Except as disclosed from time to time in our consolidated
financial statements and/or our MD&A, we do not believe that any of the proceedings or claims to which we are currently a party will havea material adverse effect on our profitability; however, we cannot provide any assurance to this effect.

◾

Changes in Laws: A significant change in the current regulatory environment in our principal markets, including changes in tax laws,
laws related to the COVID-19 pandemic, laws related to vehicle emissions, and other laws which impose additional costs on automotive
manufacturers or consumers, could have an adverse effect on our profitability. More than 135 jurisdictions have agreed to implement a
new global minimum tax regime (“Pillar Two”) based on model rules published by the Organization for Economic Co-operation andDevelopment. The proposed Pillar Two rules are intended to ensure that large multinational enterprises pay a minimum tax of 15% on theincome arising in each jurisdiction in which they operate. Although the impact on Magna will depend on how each jurisdiction implements
the model rules, as well as profitability and local tax liabilities of Magna’s operations in those jurisdictions, this change in law may have an
adverse effect on our profitability.

◾

Trade Agreements: Historical global growth of the automotive industry has been aided by the free movement of goods, services,people, and capital through bilateral and regional trade agreements, particularly in North America and Europe. Introduction of measures
which impede free trade could have a material adverse effect on our operations and profitability.

◾

Trade Disputes/Tariffs: International trade disputes could, among other things, reduce demand for and production of vehicles, disrupt
global supply chains, distort commodity pricing, impair the ability of automotive suppliers and vehicle manufacturers to make efficient
long-term investment decisions, create volatility in relative foreign exchange rates, and contribute to stock market volatility. The impositionof sanctions, tariffs and/or escalation of trade disputes which interfere with automotive supply chains could have an adverse effect on ouroperations and profitability.

◾

Environmental Compliance: While we regularly attempt to estimate environmental clean-up liabilities, such an exercise is complex. In
addition, environmental laws and regulations are complex, change frequently and have tended to become more stringent and expensive
over time. In certain circumstances, we could be named as a Potentially Responsible Party (“PRP”) with respect to a contaminated site.
Costs associated with being a PRP could be material depending on site conditions and the number of participating PRPs. As a result, we
may incur material costs or liabilities significantly in excess of amounts we have reserved, which could have an adverse effect on ouroperations, profitability, financial condition or reputation.

26

Annual Information Form

6. Description of the BusinessGe ograp h ic M a r kets & C u sto m e r s
Major Customers
While we supply products and services to a large number of customers worldwide, sales to our six largest customers represented thefollowing proportions of our consolidated sales in 2022 and 2021:
Magna
Sales
RankingOEM
Ranking(1)Proportion of
Magna Sales
Customer

2022

2021

1

6

General Motors

16%

13%

2

11

BMW

14%

16%

3

5

Stellantis

13%

13%

4

10

Mercedes-Benz(formerly Daimler)

13%

14%

5

7

Ford

13%

12%

6

2

Volkswagen

10%

10%

Other

21%

22%

TOTAL

100%

100%

Note:
(1) Based on 2022 global light vehicle production.

Customer Management Offices
We have a globally structured sales, engineering and marketing team spread across multiple global locations where our customers maintainengineering, commercial and/or manufacturing facilities. The various internal operating divisions and subsidiaries of the automobile
manufacturers normally initiate many of their own purchasing decisions. As a result, an automobile manufacturer may effectively constitutemultiple customers.

Purchase Orders
Our sales are generated through customer requests to quote on particular products, as well as the tools and dies required to produce parts.
Purchase orders for our products are typically for one or more models, and typically extend over the life of each model, which is generally
four to seven years. However, purchase orders issued by our automobile manufacturer customers typically do not require them to purchase
any minimum number of our products. Releases under such purchase orders, which authorize us to supply specific quantities of products,
are issued for planning, raw material and production purposes, which is typically over a one to four month period in advance of anticipateddelivery dates. The actual number of products that we supply under purchase orders in any given year is dependent upon the number ofvehicles produced by the automobile manufacturers of the specific models in which those products are incorporated.
It has been our experience that once we receive purchase orders for products for a particular vehicle model or program, we will usuallycontinue to supply those products until the end of that model or program, although most of our customers’ purchase orders allow them toterminate the purchase order for convenience. In addition, as part of our purchase contracts, we are generally required to supply service
parts for up to 15 years after the end of production of any model, provided that we are the contracted supplier at the time production
ceases. Automobile manufacturers could cease sourcing their production requirements from us for a number of reasons, including if werefuse to accept demands for price reductions or other concessions and if the vehicle is not meeting their sales targets. Should the latteroccur, we are still required to provide service parts for up to 15 years, although we may be able to negotiate that this be supplied as a
one-time up front purchase.

Ma n u fa ctur i n g & E n g i n eer i ng
World Class Manufacturing
As part of our strategy of maintaining Operational Excellence, our goal is to be recognized as a leader in next generation “World Class
Manufacturing”. Our global operating units strive toward this goal which aims to achieve “best in class” performance in all areas ofmanufacturing. In order to drive continuous improvement, we monitor our progress by using an assessment process known as the Magna
Factory Concept or “MAFACT”, which includes elements we view as critical to achieving World Class Manufacturing in accordance with ourOperational Principles. Best practices, “lessons learned” and key initiatives are shared among our global operating units.
Magna International Inc.

27

Factory of the Future (FOF) Initiatives
We continue to look at ways to integrate leading edge manufacturing trends into our operations, including Artificial Intelligence (AI) capabilities
designed to, among other things: increase information available to human operators to enhance decision making; automate certain
processes to increase efficiency and safety; optimize material and process flows, and perform predictive maintenance on equipment.
Specifically, a number of our global facilities have implemented a combination of new technological applications, software and processes inorder to benefit from more efficient and effective factory solutions, which is known as our “Factory of the Future (FoF)” approach. In 2022,
we launched 66 FoF projects globally. A few examples of our FoF activities are set out below.

Advanced Robots & DigitalTwin• Our Corporate R&D team has developed a core
Advanced Robotics System for high volume
production using state-of-the-art 2D/3D visionsystems and advanced robotics trajectory
planning with AI supporting simplified, rapid
implementation• The system has been launched in ten Magnafacilities with over 20 systems in high volume
production. As part of our planned “scaled
implementation” approach, the system is ready forlarger scale deployment in other facilities across all
Magna Operating Groups for cost optimization• The advanced robotics platform allows continuous
upgrades in performance as well as introduction oflower cost hardware components

Fenceless Robot System• Our Corporate R&D team is working with several
robotics companies, startups, research labs anduniversities to develop enabling technologies thatcan be scaled across Magna. Together with one of
our Powertrain Divisions, we co-developed andimplemented the first fenceless robot system forhigh volume production at Magna.
• The fenceless robot system can handle almost
double the payload at 10 times the speed of othercollaborative robotic systems in the market forboxes, baskets and trays.
• Elimination of fencing and guarding of robot cells
takes up less floor space and allows freedom of
movement and access for human workers• The insight gained from the fenceless robot system
is allowing Magna to co-develop, test and validate
the next generation of fenceless robotics for highvolume automotive production in a safe,
collaborative and efficient way.

Predictive Maintenance

Augmented/Virtual Reality Centre• Our Exteriors facilities have actively implemented
predictive maintenance of injection moulding
machines. Data from a machine controller, as wellas additional sensors, is collected and processedin real time.
• The data is then made available by way of adashboard and automatic alerts allowing emerging
maintenance issues to be pinpointed andaddressed before they develop into larger issues.
• These activities allow for production and efficiency
improvements, including reduced equipment
downtime, as well as avoidance of unexpected
equipment failures.
• This flexible hardware and software platform is
expected to expand to include additional
equipment and processes throughout Magna• Located in Graz, Austria, the VR Centre is helping
bring new technology to real product development• Before a new production line is installed, the newbuilding, infrastructure and technology are planned
virtually• Existing plants have also been digitized with thehelp of drones that scan the facility• Engineers also use Virtual Reality (VR) goggles incomplete vehicle development, including vehicle
styling and ergonomics

Data Analytics & Digital
Infrastructure• Magna IT, Operating Groups, Divisions andCorporate R&D teams are implementing standards
and data connectivity across the enterprise• Standardized digital infrastructure enables faster,
more intelligent analytics solutions, ultimately
aiding decision making• Standardized digital infrastructure also enables
lower cost, faster implementation of shop floor
solutions responsive to Industry 4.0 – which
defines the rapid change to technology, industries
and society due to increasing interconnectivity
and smart automation

28

Annual Information Form

Facilities
As at December 31, 2022, we had the following manufacturing and PDE&S facilities in each designated geographic region:
12
(4%)

4
(4%)

85
(25%)

22
(25)%

20
(23%)

Manufacturing
Facilities

135
(39%)

PDE&S

111
(32%)

North America
Asia

42
(48%)

EuropeRest of World

North America
Asia

EuropeRest of WorldOur manufacturing and PDE&S facilities occupied approximately 81 million and 3.4 million square feet, respectively. These facilities
were broken down between third party leases, and those owned by us as set out below. At this time, the largest percentage ofproperties leased (by square footage) from any single landlord is approximately 14%.

0.4m

(12%)
Manufacturing
Facilities
81.2m (sq ft)

PDE&S
Facilities

35.4m
(44%)

3.4m (sq ft)

45.8m
(56%)

3.0m
(88%)

Owned

Leased from 3rd Parties

Our facility leases typically have terms of at least five years with one or more options to renew. Among other terms, our leases typicallyrequire us to return the facilities to the condition in which we received them at start of the lease (reasonable wear and tear excepted). From
time to time, the cost of doing so may be significant due to such factors as the length of the lease period, the nature of the manufacturing
operations, the extent of modifications made to the leased properties over the term of the lease and other factors.
We are also subject to environmental laws and regulations both as tenant and owner of our properties. Our leases with third party landlords
generally provide that we must maintain the leased properties in accordance with all applicable laws, including environmental laws. Magnaroutinely conducts Phase 1 Environmental Assessments, and if necessary Phase 2 Site Investigations, at manufacturing, assembly andwarehousing locations prior to occupancy to identify any actual and potential pre-existing environmental concerns at leased or owned sites.
Magna is responsible for addressing environmental impacts arising during our tenancy, including exacerbations of existing impacts as
defined by lease terms or regulatory requirements. Our leases with third party landlords generally also contain indemnities in favour of thelandlord with respect to environmental matters and those indemnities expire after a specified period following the termination of the leases.

Key Components and Raw Materials
Our key purchased components include: stampings, electronics, semiconductor chips, molded parts, die casting, forging, coverstock, andwire harnesses. Our key purchased raw materials are steel, resin and aluminum. While we endeavour to purchase the majority of thesecomponents and raw materials from regional suppliers where we do business, factors such as price, quality, transportation costs,
warehousing costs, duties, tariffs, availability of supply, timeliness of delivery, and customer requirements have an impact on the decision tosource from certain suppliers. In some cases, we are directed by our OEM customers to source components or commodities from specific
Magna International Inc.

29

suppliers, as is largely the case for leather we purchase for use in automotive seats we produce. We also purchase some key components
and raw materials offshore when shortages occur or when we choose to source one supplier for a global program. Prices for our raw
materials used in our production of parts, like steel, resin and aluminum, continue to be volatile.
Approximately two-thirds of our steel is acquired through resale programs operated by automobile manufacturers and the balance isgenerally acquired through annual or six month contracts. Under customer steel resale programs we are not exposed to steel price volatility,
thus helping to manage our production costs. Certain of our operations generate steel and aluminum scrap, which we typically sell at pricesthat fluctuate with published market indices. Most of our resin purchases fluctuate directly with market indices, although we do participate
in some customer resale programs on approximately one quarter of our resin purchases. The majority of our aluminum purchases fluctuatewith market indices. In some cases, our customers direct us to buy certain other raw materials from specified suppliers, at specified prices.
Consistent with lean manufacturing principles, we do not typically carry inventories of key raw materials or finished products significantly inexcess of those reasonably required to meet production and shipping schedules. The automotive industry globally continues to experiencea shortage of semiconductors, which is negatively impacting vehicle production and is resulting in a number of consequences for us,
including: operational inefficiencies due to production lines being stopped/restarted unexpectedly The risks related to the semiconductor
chip shortage and potential future shortages/supply constraints of key commodities are discussed in greater detail under “Section 4 – OurBusiness & Strategy – Macroeconomic, Political and Other Trends” and “Section 5 – Risk Factors”.

P rodu cts & S er vi ces
Top Programs
Our top fifteen programs/platforms based on 2022 production and vehicle assembly sales were:
Capabilities
Seating Complete
Systems Vehicles

◾

◾

◾

◾

Stellantis

Jeep Grand Cherokee

◾

◾

◾

BMW

BMW 5-Series◾

GeneralMotors

GMC Acadia, Buick Enclave,
Cadillac XT6, Chevrolet Blazer,
Chevrolet Traverse

◾

◾

◾

◾

◾

◾

◾

◾

Stellantis

Ram Pick-up

◾

◾

◾

◾

◾

◾

◾

◾

BMW

BMW X3

◾

◾

◾

Ford

Ford Transit, Ford Transit Custom

◾

◾

◾

MercedesBenz

Mercedes-Benz GLE/GLE Coupe,
Mercedes-Benz GLS
Ford Escape, Ford Kuga, Lincoln
Corsair

◾

◾

◾

◾

◾

◾

◾

◾
◾

Ford

◾

◾

◾

◾

◾

◾

◾

◾

◾

◾

BMW X5◾

◾

◾

◾

Chevrolet Equinox & GMC Terrain

◾

◾

◾

◾

Stellantis

Chrysler Grand Caravan & Chrysler
Pacifica◾

◾

Stellantis

Jeep Wrangler

◾

◾

Tata

Jaguar I-Pace

◾

◾

◾

◾

◾

◾

◾

◾

◾

◾

◾

GeneralMotors

BMW

◾

◾

◾

◾

◾

◾

Seating◾

Mechatronics◾

Lighting

Powertrain

Full-Size SUVs &Pick-up Trucks
Mercedes-Benz
G-Class

VehicleMirrors

Exteriors

GeneralMotors
MercedesBenz

CustomerElectronics

Body & Chassis

Power & Vision

Vehicle Engineering &Manufacturing

Body
Exteriors &Structures

◾
◾
◾

◾

◾
◾

◾

◾

◾

◾

◾

◾

◾

◾

◾
◾

Note: Capabilities represented may not be on each vehicle or each trim level of each vehicle. Additionally, our capabilities in each product area range from components to fullsystems, only some of which may be represented on any particular program. Our Roof Systems capabilities are not present on the programs/platforms listed.

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Annual Information Form

Product Portfolio
We continue to evolve our product portfolio consistent with the strategy described under Section 4 “Our Business & Strategy – Corporate
Strategy” in this AIF. The development of innovative technologies and solutions which are responsive to the global megatrends defining the“Car of the Future” requires R&D spending, as well as capital investments and the acquisition of engineering talent with the necessary
software and other expertise. We believe that in typical years, the relatively stable profitability and cash generation from our “traditional”
businesses provide us with the ability to fund the R&D and capital investment required to realize opportunities related to product areas suchas electrification, ADAS and others aligned with the Car of the Future.
Some of our recent innovations can be found in “Section 7 – Innovation and Research & Development – Innovations and Innovation Awards”.

Product Segments
A description of our product and service capabilities, processes, top customers and key competitors by reporting segment follow.
Manufacturing facility and PDE&S Centres counts below include joint venture facilities.

Body Exteriors & Structures
Our Body Exteriors & Structures segment includes our body and chassis systems, exterior systems and roof systems operations.

157*

Manufacturing Facilities
*

*

23

PDE&S Centres

23 67,975 $16.0B
Countries

Employees2022 Sales

Figure includes certain manufacturing facilities and PDE&S centres shared with other reporting segments.

Top Segment Programs
Customer

Vehicle1. General Motors

Full-Size SUVs & Pick-up Trucks

2. Stellantis

Jeep Grand Cherokee

3. General Motors

GMC Acadia, Buick Enclave, Chevrolet
Traverse & Blazer, Cadillac XT6

4. BMW

BMW X3

5. Stellantis

Ram Pick-up Trucks

Segment Trends and Strategic Focus
Within our Body Exteriors & Structures segment, we aim to support our customers’ efforts to deliver vehicles which consume less fuel andproduce lower CO2 emissions, particularly through reduced vehicle weight, aerodynamic enhancements and use of multi-materials. We
currently offer our customers a broad range of lightweight product solutions, such as thermoplastic liftgates, as well as reduced-weight
products formed through advanced manufacturing processes, such as hot stamping, high-pressure aluminum casting and multi-material
joinery.

Magna International Inc.

31

Product Capabilities

Body and Chassis
Products◾

body systems
chassis systems◾ battery enclosures◾ engineering and testing◾

Key Processes
Forming technologies:hydroforming◾ cold stamping, including
high-strength steel &aluminum◾ hot stamping◾ roll forming◾ high pressure aluminum
casting◾ advanced welding & joining◾ sealing and adhesive
bonding◾ stretch bending of aluminum
extrusions◾

Finishing technologies:
e-coating◾ high temperature wax
coating◾ heat treatment◾ machining◾ powder coating◾ conversion coating foraluminum castings◾

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Annual Information Form

Top Customers

Key Competitors

◾

◾

◾

◾

BMW
Ford
◾ General Motors◾ Mercedes-Benz◾ Stellantis◾ Volkswagen

Benteler International AG
Flex-N-Gate Corporation◾ F-Tech Inc.
◾ Georg Fischer Ltd.
◾ Gestamp Automoción S.L.
◾ Martinrea International Inc.
◾ Minth Group Ltd.
◾ Metalsa, S.A. de C.V.
◾ Nemak, S.A.B. de C.V.
◾ Tower International, Inc.

Exteriors◾

fascia & trim
front end modules◾ integration panels◾ liftgate modules◾ active aerodynamics◾ engineered glass◾ running boards◾ truck bed access products◾ breakthrough lighting◾ side doors◾ greenhouse products(quarter windows;
encapsulated glass)◾

Molding technologies:
injection molding, such as
two shot, structural, insert,
injection compression forthermoplastics & reaction
injection molding◾ extrusion processes, such as
co-extrusion, thermoset andthermoplastic extrusion◾ compression-molding forthermosets◾ expanded polypropylene
foam◾ metal rollforming◾ glass encapsulation◾ tooling◾

Key Competitors

Top Customers

Key Processes

Products

◾

◾

◾

◾

BMW
Ford
◾ General Motors◾ Renault-Nissan-Mitsubishi◾ Stellantis◾ Volkswagen

ABC Group
Flex-N-Gate Corporation◾ Plastic Omnium S.A.
◾ Röchling Group◾ Samvardhana Motherson
Peguform◾ SRG Global Inc.

Finishing processes:◾ painting◾ hardcoating◾ chrome plating◾ hot stamp foils◾ metal finishing◾ hydrographics◾ laser etching/engraving◾ in-mold film
Assembly processes:◾ adhesive bonding◾ infrared, ultrasonic, vibration,
torsional and resistance
implant welding◾ laser cutting and welding◾ manual and automatedassembly & sequencing

Magna International Inc.

33

Power & Vision
Our Power and Vision segment comprises our global powertrain systems, electronics systems and mechatronics, mirrors & lighting
operations.

106*

Manufacturing Facilities
*

*

47

PDE&S Centres

25 51,250 $11.9B
Countries

Employees2022 Sales

Figure includes certain manufacturing facilities and PDE&S centres shared with other reporting segments.

Top Segment Programs
Customer

Vehicle1. General Motors

Full-Size SUVs & Pick-up Trucks

2. Stellantis

Ram Pick-Up Trucks

3. BMW

BMW X1

4. General Motors

GMC Acadia, Buick Enclave, Chevrolet Traverse& Blazer, Cadillac XT6

5. Mercedes-Benz

Mercedes-Benz GLC/GLC Coupe

Segment Trends and Strategic Focus
In our Power and Vision segment, we seek to realize opportunities presented by trends toward electrification, advanced driver assistancesystems and autonomous driving. We believe that our powertrain business is well-positioned to benefit from the shift toward electrificationby leveraging the investments we have made in high-voltage technologies, including highly integrated primary and secondary electric drive
systems, as well as individual components such as electric traction motors and inverters through our joint venture with LG Electronics Inc.
While investing in electrified technologies we continue to optimize operations in our market-leading traditional products such as 4WD/AWD
systems and transmissions. Our Vision Systems business is currently a leading supplier of camera-based driver assistance systems and wecontinue to invest in advanced driver assistance technologies to expand the assisted driving systems expertise we can offer customers.
These investments include both in-house research and development, as well as venture capital investments in and strategic relationships
with mobility and technology companies.

34

Annual Information Form

Product Capabilities

Powertrain
Key Processes

Products◾

electric drive systems andcomponents (eMotors*;
inverters*, onboard
chargers*, gearboxes,
e-clutch for hybrid and BEVs◾

transmission systems(dedicated hybrid drives, dual
clutch/hybrid dual clutch andmanual transmissions)◾ driveline systems (AWD/4WD
products, including transfer
cases and rear drive
modules)◾ metal-forming products(transmission, ICE, anddriveline components)* through our joint venturewith LG Electronics Inc.

◾

powertrain systems
assembly and final testing◾ flow-forming,◾ stamping and spinning◾ grob, roller & cam die spline
forming◾ precision heavy stamping◾ profilator processing◾ in-die fine cutting◾ soft and hard processing ofgears and shafts◾ CNC machining & broaching◾ rotary swaging◾ heat treating◾ welding, including laser,
electron beam (EB),capacitor discharge (CD),inertia, resistance & metal
inert gas (MIG)/tungsten inert
gas (TIG)◾ assembly & final test ofeMotors*, inverters*, andon-board chargers*

Top Customers

Key Competitors

◾

◾

◾

◾

BMW
Ford
◾ General Motors◾ Mercedes-Benz◾ Renault-Nissan-Mitsubishi◾ Stellantis◾ Volkswagen

Aisin Group
BorgWarner Inc.
◾ GKN plc
◾ JATCO Ltd.
◾ Jing-Jin ElectricTechnologies Co., Ltd.
◾ Linamar Corporation◾ Nidec Corporation◾ Robert Bosch GmbH
◾ Valeo S.A.
◾ ZF Group* through our joint venturewith LG Electronics Inc.

Magna International Inc.

35

Electronics
Products◾

ADAS technology andfeatures, including cameras◾ ADAS sensors◾ electronic control units

Key Processes◾

surface mount placements ofelectronic components on
printed circuit boards◾ manual and automatedassembly of electronic
modules

Top Customers

Key Competitors

◾

◾

◾

◾

Ford
General Motors◾ Honda◾ Mazda◾ Mercedes-Benz◾ Stellantis◾ Volkswagen

Aptiv PLC
Continental AG◾ Robert Bosch GmbH
◾ Valeo S.A.
◾ Veoneer, Inc.
◾ ZF Group

Mirrors
Products

Key Processes

Key Competitors

Top Customers

◾

◾

◾

◾

◾

◾

◾

◾

interior mirrors
exterior mirrors◾ camera and drivermonitoring systems andelectronics◾ actuators◾ door handles◾ overhead consoles

electronics integration
injection molding◾ painting◾ manual and automatedassembly

BMW
Ford◾ General Motors◾ Mercedes-Benz◾ Stellantis◾ Volkswagen

Ficosa International S.A.
Gentex Corporation◾ SMR Automotive

Lighting
Products◾

forward lighting◾ rear lighting◾ auxiliary lighting

Key Processes◾

electronics integration◾ injection molding◾ manual and automatedassembly

Top Customers◾

BMW◾ General Motors◾ Renault-Nissan-Mitsubishi◾ Stellantis◾ Volkswagen

Key Competitors◾

Hella KGaA Hueck & Co.
(now part of Forvia Group)◾ Koito Manufacturing Co.
◾ Marelli Automotive Lighting◾ Valeo S.A.

Mechatronics
Products

Key Processes

◾

◾

◾

◾

◾

◾

latching systems
door modules◾ window systems◾ power closure systems◾ hinges and wire forming

light stamping
injection molding◾ manual and automatedassembly

Key Competitors

Top Customers
BMW
Daimler◾ Ford◾ General Motors◾ Renault-Nissan-Mitsubishi◾ Stellantis◾

Brose Fahrzeugteile GmbH& Co. KG
◾ Inteva Products, LLC◾ Kiekert AG

Roof Systems
Key Processes

Products◾

modular roofs
hard tops and soft tops
◾ textile folding roofs◾

36

Annual Information Form◾

“cut and sew” of complete
fabric covers◾ backlight gluing◾ manual and automatedcomplete retractable roof
assembly

Top Customers

Key Competitors

◾

◾

◾

◾

BMW
Mercedes-Benz◾ Renault-Nissan-Mitsubishi◾ Stellantis◾ Toyota

Valmet Automotive Inc.
Webasto GroupSeating Systems
Our Seating Systems segment comprises our global seating systems operations.

74

9*

Manufacturing Facilities

PDE&S Centres*

20 31,975 $5.3B
Countries

Employees2022 Sales

Figure includes certain PDE&S centres shared with other reporting segments.

Top Segment Programs
Customer

Vehicle1. Stellantis

Jeep Grand Cherokee

2. FordFord Escape, Ford Kuga, Lincoln Corsair

3. Stellantis

Chrysler Grand Caravan & Chrysler Pacifica

4. BMW

BMW X5

5. FordFord Expedition, Lincoln Navigator

Segment Trends and Strategic Focus
Our Seating Systems group continues to grow by winning new business based on its reputation for delivering innovative seating solutions.
Longer term, our Seating Systems group aims to capitalize on its strength in seat mechanisms, vertical integration and reconfigurable
seating, specifically to supply reconfigurable seating solutions for applications such as car sharing and autonomous ride sharing; as well asseat products that are responsive to growing EV requirements, including lighter weight seats, and lower seat box height.
Product Capabilities

Seating Systems
Products◾

complete seating systems◾ seat structures,
mechanism & hardware
solutions◾ foam & trim products

Key Processes◾

traditional “cut and sew”
technology◾ manual and automatedassembly◾ patented next gen EZ-Entry
and seat stowing
mechanisms systems◾ freeform trim technology◾ reconfigurable seating

Top Customers◾

BMW◾ Ford◾ Geely◾ General Motors◾ Stellantis◾ Volkswagen

Key Competitors◾

Adient plc◾ Faurecia S.A. (now part ofForvia Group)◾ Lear Corporation

Magna International Inc.

37

Complete Vehicles
Our Complete Vehicles segment comprises our global complete vehicle engineering and manufacturing operations.

9*

25*

Manufacturing Facilities

PDE&S Centres*

11 14,225 $5.2B
Countries

Employees2022 Sales

Figure includes certain manufacturing facilities and PDE&S centres shared with other reporting segments.

Segment Programs
Customer

Vehicle1. Mercedes-Benz

Mercedes-Benz G-Class

2. BMW

BMW 5-Series

3. Tata Motors

Jaguar I-Pace

5. BMW

BMW Z4

6. Tata Motors

Jaguar E-Pace

Segment Trends and Strategic Focus
Our Complete Vehicles business continues to provide OEM-level expertise to traditional customers seeking a trusted vehicle complete
vehicle outsource partner, as well as new market entrants seeking expertise for their traditional, electrified, autonomous and/or new mobility /MaaS concepts. Traditional OEMs currently represent the substantial majority of our Complete Vehicles group business customers. However,engineering sales with non-traditional customers, including Chinese OEMs and new OEM entrants, continue to grow. MaaS providers
represent an important source of new opportunities since they typically do not have the vehicle development, engineering, integration andassembly capabilities of traditional OEMs and thus require outsource partners to commercialize their concepts. In this segment, we also
focus on leveraging our expertise in alternative energy storage and propulsion systems by further strengthening and capitalizing on our
know-how in different propulsion systems. In addition, we continue to focus on integration and testing of autonomous driving systems, andwe support our customers with one of the most versatile test environments for highly automated vehicles.
Product Capabilities

Vehicle Engineering & Manufacturing
Key Processes

Products◾

complete vehicle
manufacturing◾ engineering services◾

body-in-white◾ paint◾ assembly

Top Customers◾

BMW◾ Fisker◾ Mercedes-Benz◾ Tata Motors

Key Competitors
Traditional and New OEMs
Contract Manufacturers
NEVS AB◾ Valmet Automotive◾ VDL Nedcar B.V.
◾

Engineering Services
Bertrandt Group◾ EDAG Engineering GmbH
◾ IAV GmbH◾

Tooling & Engineering
As part of our production programs, we design, engineer and manufacture tooling for our own use, as well as for sale to our customers.
However, a predominant amount of the tooling used in our production programs is purchased by us from third parties and sold to ourcustomers on a pass-through basis. In addition, we manufacture tooling for our customers on a standalone basis, which is tooling soldseparately and not part of a production arrangement. We also provide engineering services independent of our production programs, aswell as for programs for which we have production sales.

Acquisitions and Divestitures
For further details of our acquisitions and divestitures in the last three fiscal years, refer to “Schedule B – Acquisitions and Divestitures”.

38

Annual Information Form

7 . I n n ova t i o n a n d R e s e a r c h & D e ve l o p m e n t
Fo cus on I n n ova ti on a n d Tec h n o l o g y
We have historically emphasized technology development and product and process innovation as a key element of our corporate strategy.
See “Section 4 – Our Business & Strategy – Our Corporate Strategy” for further details. We continue to invest significant resources todevelop and commercialize innovative technologies, which will provide additional value to our customers. In addition, we aim to advance oursustainability goals through innovations in electrification, driver assistance, lightweighting, adjacent mobiity markets such as micromobility,
materials, fuel efficiency, and energy efficiency for both end-use products and our manufacturing processes.
We expect that our involvement with automobile manufacturers and new mobility partners in the development of innovative product andprocess technologies will increase as such manufacturers and partners further involve suppliers like us in the overall vehicle concept anddevelopment process.

Ou r Researc h a n d Devel op m e n t Pr o c e s s
Our R&D activities take place at our Division/Operating Group level and at the corporate level. Our Divisional/Operating Groups work withour customers to identify product and technology gaps. Magna’s Corporate R&D team, under the global direction of our Executive VicePresident and Chief Technology Officer, analyzes the key megatrends that are expected to drive future mobility and automotive development.
As part of these efforts, our Corporate R&D team engages with the advanced engineering and product development teams of our current
and potential OEM customers to understand their product strategies and better align our own product strategy and technology developmentwith customer needs.
All of our R&D projects follow an Innovation Development Process (IDP) process – a multi-stage process aimed at turning ideas into
innovations that can ultimately be commercialized and scaled. The initial phase of the process is designed to foster the generation of ideas
and includes, among other things: identification, understanding of and analysis of societal, digital, demographic, regulatory, industry andother trends which may create demand for and thus drive development of new automotive and mobility technologies; review of academic
research; collecting and screening ideas submitted through innovation programs; and automotive customer input.
Concepts that progress past this initial stage are further evaluated, including with respect to: fit with our strategy regarding electrification,
autonomy, new mobility, vehicle connectivity and advanced manufacturing; commercialization potential; and risks and challenges to further
development. Selected innovations then progress through subsequent stages towards product or process realization, validation andeventually, product launch.
Our R&D initiatives are supported by and involve close collaboration with our Corporate R&D group. Our Division/Operating Group R&D
teams work together with our Corporate R&D group on technology development, and where necessary specific working groups are
established to discuss and develop technological solutions.
As a result of our innovation activities, we have developed a number of product, process and materials innovations, some of which aredescribed in this Section 7 under “Innovations and Innovation Awards”.
As a key part of our own innovation efforts and to gain further access to innovative thinking outside of our company, we partner withstart-ups and early stage companies, inventors, entrepreneurs, universities, technical institutions and the venture capital community to help
bring innovative ideas to market. We also look for the best ideas from other industries and apply them to mobility – a process we call
“auto-qualifying”. As part of our continuing efforts to develop innovative solutions to the technology challenges of new mobility and theautomotive industry, in the last year we have considered thousands of potential innovations, which has led to several active projects. Suchprojects include: development of Driver Monitoring Systems and ADAS features; efficiency and performance technologies related to electric
drives and power electronics; and advanced robotics, inspection systems, Digital Twin/simulation and data analytics technologies supporting
our World Class Manufacturing.

Int ellectua l P r op er ty
We own and use numerous patents, trademarks, and other intellectual property in connection with our operations. In addition, certain of our
Operating Groups license their technology to third parties on a limited basis. We also license and use, to a minor extent, patents owned byothers. From time to time, claims of intellectual property infringement are made by us or against us. At present, we believe that the outcomeof any pending claim, whether positive or negative, will not have a material adverse effect upon us. While in the aggregate our intellectual
property and licenses are considered important in the operation of our business, we do not consider them of such importance that the
expiry of any one patent or license would materially affect our business. See “Section 5 – Risk Factors – “Intellectual Property” in this AIF fora discussion of risks related to our intellectual property.

Magna International Inc.

39

Inn ovation s & In n ova ti on Awar d s
We believe that innovation has been the foundation of Magna’s success and an important factor in our competitiveness, a key
operational priority and a critical element of our corporate strategy. Our current strategic focus is aimed at responding to key industry
trends, as discussed in “Section 4 – Our Business & Strategy – Our Corporate Strategy”. Some examples of recent innovations are as
follows:

Innovations
48 VOLT HYBRID TRANSMISSION SYSTEM
Our 48 volt hybrid dual-clutch transmission system has made its debut on Stellantis’ Jeep
Renegade, Jeep Compass e-Hybrid, Fiat 500 X and Fiat Tipo. Hybrid technologies are an
important step on the path to lower emissions, and our hybrid transmission achieves stringent CO2
requirements while offering improved driving dynamics due to electric torque vectoring and traction
support. The 48V 7-speed dual-clutch transmission system for hybrids provides a maximum torqueof 320 Nm and torque-split technology to optimize the efficiencies of the internal combustion engine(ICE) and the e-motor. The e-motor is capable of providing propulsion to the vehicle even when the
ICE is switched off. This new transmission features independent on-demand cooling for the clutch
and e-motor with a single oil circuit for cooling and lubrication, resulting in significant CO2 reductions
in worldwide harmonized light-duty vehicles Test Cycles (WLTC) and real-world driving conditions.

48 VOLT HYBRID INVERSE TRANSMISSION
Magna’s new 7-speed, mild hybrid dual-clutch transmission is featured exclusively on BMW
Group’s compact class, which underpins all its front-transverse vehicles, starting with the BMW 2
Active Tourer. With its specific torque-split concept for hybridization, Magna’s 7HDT400 48V
transmission enables optimal efficiency of an ICE and electric motor. It provides a maximum of 400
Nm of torque as well as offering scalable functionality benefits. It also offers high modularity withthe: base transmission; fully integrated e-machine; on-demand cooling of the clutch and e-motor;
a single oil circuit for cooling and lubrication, and a significant reduction in CO2 at WLTC and inreal-world driving operations. Our hybrid transmission significantly reduces CO2 emissions of an
ICE and continues our accelerated transformation toward electric mobility.

CLEARVIEW™ VISION SYSTEM
Magna’s ClearViewTM vision innovation is a unique system that combines camera and mirror
technology, potentially reducing blind-spots and enhancing visibility around the vehicle. The
complete vision system with first-to-market features, has been introduced on Ram 2500 and 3500
Heavy Duty trucks. The ClearView™ system includes an interior rear-view video mirror, exterior
mirrors with integrated cameras and a center high-mounted stop lamp camera. An additional trailer
camera is available as an option to provide an unobstructed view while towing. All camera data isprocessed through Magna’s software in a central electronic control unit. The interior mirror includes
Magna’s PACE award-winning Infinity™ glass. Drivers can switch between an optical rear view anda video display that shows up to three camera views at the same time – the first of its kind on themarket.

REAR THERMOPLASTIC SWING DOORS
Magna’s industry-first thermoplastic rear swing doors will debut on the all-electric Volkswagen ID.
Buzz. The doors contain recycled materials that are 20 to 30 percent lighter than conventional
steel solutions, helping to reduce vehicle weight, optimize range and make them easier to open.
By using thermoplastics, the real spoiler has been integrated into the swing doors, resulting in
reduced costs, a cleaner appearance and improved vehicle aerodynamics. In addition, the use ofthermoplastic resin materials allows for greater design flexibility and detailing, undercut surfaces
and tighter radii.

BREAKTHROUGH LIGHTING
Our breakthrough lighting solution featured on our thermoplastic liftgate known as “Litgate”,
combines our expertise in exteriors and lighting. In addition to enhancing visibility, the lighting
offers new avenues for vehicle personalization as exterior lighting increasingly becomes a stylingdifferentiator. The innovation, which expected to be ready for production in 2023, includes:
breakthrough hidden-until-lit light effects; communicative, functional and decorative lighting;molded-in styling features and intricate textured surfaces; and an extensive color palette available,
programmable to customer specifications. The technology can be applied to thermoplastic material
surfaces including polycarbonate and thermoplastic polyolefins.

40

Annual Information FormMORPHING SURFACES TECHNOLOGY
Debuted at the Consumer Electronics Show in January 2023, Magna’s Morphing Surfaces
technology builds on our expertise in producing millions of active aerodynamic systems. The
innovation represents a paradigm shift beyond today’s active shutters, panels and grilles throughthe use of active ‘bendable’ surfaces that can be designed to visually blend into a vehicle’s bodywhile opening or closing to optimize cooling, venting or aerodynamics when required. Magnamorphing surfaces create more possibilities for vehicle designers to balance aesthetics and aero
performance in reducing vehicle drag, particularly for EVs. Depending on the vehicle, a typicalapplication could achieve up to a 10% reduction in drag resulting in up to a 5% range extension
in EVs without foregoing the sleek, clean designs prized by modern automotive designers
and customers.

BATTERY ENCLOSURES
Magna’s battery enclosures can be found on the all‐electric Ford F‐150 Lightning and GMC
Hummer EV, and will feature on the new 2024 Chevrolet Silverado EV. The productillustrates our ability to expand structural product opportunities as electrification grows.
The enclosures, which all EVs require, house high‐voltage batteries, electrical components,
sensors and connectors, contributing to the structural and safety aspects of a vehicle’s
frame and protecting critical components from potential impact, heat and water intrusion.
In addition, the use of lightweight aluminum helps minimize added mass from the vehicle’s
battery.

SMARTACCESS™ POWER DOOR SYSTEMThe SmartAccess™ power door system, which is set to launch on the opposing rear doors of the
Ferrari Purosangue, is a complete power door system, which includes our power door drive unit,
SmartLatchTM with cinch actuator, and a first-to-market Haptronik™ motion control. Haptronik is
an innovative motion control software that enhances the tactile feel of door movement, enabling
effortless opening and closing. It can detect when the vehicle is parked on a curb or a hill andautomatically adapts the gravitational force so that opening and closing remains smooth in these
conditions. It also includes anti-slam and wind catch features. SmartAccess was a finalist for the2022 Automotive News Pace Awards, and the system can be configured for a wide range ofvehicle embodiments – to serve the rapidly growing cargo and rideshare markets as well.

INTEGRATED DRIVER AND OCCUPANT MONITORING SYSTEM
Our industry-first solution for driver and occupant monitoring are expected to debut on several
models from a German OEM in 2024. The system, which reduces packaging complexities, fully
integrates Magna’s high-resolution camera, infrared emitters and electronic control unit into theinterior mirror of the vehicle. Advanced software actively monitors the driver’s head, eye andbody movement and sends customizable audible or visual alerts if signs of distracted behaviour,
drowsiness and/or fatigue are detected. The system is also scalable to include features such as
child presence detection, seat belt detection and identification of specific passengers to enable
user preference memory settings.

ETELLIGENT FORCETM
Magna’s EtelligentForce, is a battery electric 4WD powertrain system for pickup trucks and lightcommercial vehicles. The product features Magna’s Mid+ eDrive technology at the front of thevehicle and its eBeam™ electric axle drive system in the rear. The system is designed to deliver
the environmental benefits of an electric powertrain, while maintaining full vehicle capabilities andwithout compromising payload or towing capacities of pickup trucks and light commercial vehicles.
The system is designed for high‐payload vehicles, capable of towing up to 14,500 pounds – on
par with its ICE counterparts in this truck segment. It can provide a total peak power of up to
430 kW ‐ 250kW from the rear eBeam™ and 180kW from the front eDrive. The solution also
eliminates the need for architectural changes to the vehicle and is totally customizable for
automakers to prioritize key performance attributes. Magna’s eBeam™ replaces traditional beam
axles, accommodating existing suspension and brake systems, and avoiding the need for
expensive redesign of existing truck platforms. These benefits help automakers simplify thetransition toward electrification of these vehicle segments. In addition, with fewer moving parts
than a traditional ICE powertrain, the EtelligentForce requires less maintenance – a direct benefit totruck owners over the life of the vehicle.

Magna International Inc.

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ETELLIGENT COMMANDTM
EtelligentCommand is a PHEV/HEV system featuring a Dedicated Hybrid Drive DHD Plus at the front
and an eDrive Mid+ with torque vectoring at the rear, combined with advanced software and controls.
Various driving modes are available on command to enhance performance and drivability and provide
greater power handling and control. The Dedicated Hybrid Drive DHD Duo is a two e‐motor single ormulti speed system suitable for HEV application delivering greater performance, drivability and comfort
even when driving in congested traffic. Additional efficiency increases are available through an optional
voltage booster and innovative e‐coupling technology for ICE disconnection.

ETELLIGENT REACHTM
Magna’s all‐electric connected powertrain, the EtelligentReach, is a complete system comprised of
two electric motors, inverters and gearboxes, and leverages advanced software to maximize vehicle
range and driving dynamics. eDrive technology advancements and the holistic vehicle development
approach of the EtelligentReach achieve a range increase of up to 145 km/90 miles or 30%
compared to certain production BEV vehicles in this segment, which reduces range anxiety, and isa key differentiator in the growing electrification space. Magna’s approach optimizes the interactionof individual eDrive components and the entire vehicle with a software package that manages
multiple vehicle functions. On one of our new entrant customer’s vehicles, for example,
EtelligentReach utilizes a functional, modular control unit that integrates various powertrain andchassis functions. This includes a vehicle dynamics controller with a disconnect system which
increases efficiency while reducing CO2 emissions, and a longitudinal torque vectoring function that
can improve the safety margin by up to 10% by controlling each axle individually in all roadconditions, as well as significantly reduce steering effort during dynamic cornering. Drivers canselect from several distinctive driving modes ‐ further enhancing the driving experience.
Additional efficiency gains are achieved using silicon carbide within the inverter.

Innovation Awards
A number of our product and process innovations have received accolades and awards in recent years. In 2022, Magna was:◾

A double winner of GM’s Overdrive Awards for Launch Excellence and Accelerating Innovation, for the development and delivery of a
jump-seat for BrightDrop’s electric delivery vehicles and battery pack module plates.
◾ A 2022 Consumer Electronics Show (CES) Innovations Award winner for our ICON 4D Digital Radar, which scans the environment
around the vehicle in four dimensions with higher resolution and contrast than analog radar. Our third award in two years after being adouble honouree in 2021.
Magna was also selected as 2002 Automotive News Pace Award winner for its Auto Adjusting Balance
Blocks (AABB) process, a smart die solution offering real-time die adjustments to counter thermal expansion
during stamping runs. Magna has won five Pace Awards over the last eight years.
2022 WINNER

Three other Magna product and process innovations were named as finalists for the 2022 Pace Awards, which together with the AABB
process, represent the most finalists of any company for the award year. These finalist innovations were:◾

ICON 4D Digital Radar (discussed above);
SmartAccess™ Power Door with Haptronik™ Motion Control, a complete powered door system; and◾ Augmented Reality (AR) Quality Inspection System, which works through a user-operated tablet and a full-scale CAD overlay on thephysical part to recognize defects. The tablet guides operators through a standardized step-by-step sequence to verify the quality ofparts. The easily scalable system has been introduced in 65 Magna Divisions in 6 months, and reduces inspection cycle time byapproximately 40%.
◾

pilot
2022 INNOVATION TO WATCH

42

In addition, Magna was awarded a 2022 Automotive News PACEpilot Innovation to Watch – an award
which acknowledges post-pilot, pre-commercial innovations in the automotive and future mobility
space – for its Aural 5R Alloy. The innovation is the only aluminum die-cast alloy for structural applications
created from 100% recycled materials, and offers a better performing alloy for structural applications at alower cost and lower carbon footprint.

Annual Information Form

8 . C a p i t a l S t r u c t u r e , Fi n a n c i n g s & C r e d i t Ra t i n g s
Capital Structure Approach
Our approach to capital structure remains unchanged from recent years. We aim to maintain the company’s financial flexibility in order toremain in a position to pursue opportunities and withstand an industry downturn. To do so, we are focused on:◾

maintaining sufficient liquidity, including committed lines of credit, to run our operations and continue investing in our business throughorganic growth, innovation spending, and acquisitions that fit our product strategy;◾ preserving a strong investment grade credit rating of BBB+ or better, and an Adjusted Debt to Adjusted EBITDA ratio that meets orexceeds the Moody’s Investors Service criteria for a strong investment grade credit rating;◾ growing dividends over time as earnings grow; and◾ returning excess cash to shareholders in the form of share repurchases.
Other core elements of our approach to capital structure and strategy include:◾ lowering our capital spending as a percentage of sales, thereby increasing free cash flow generation;◾ utilizing share repurchases to deploy excess cash not needed for organic growth and acquisitions; and◾ delivering strong Return on Invested Capital.
In light of the above strategy, we have made significant levels of investment in our business in recent years and have also returned significant
amounts of capital to our shareholders in the form of dividends and share repurchases. We had an Adjusted Debt(1) ratio of 1.56 times
Adjusted EBITDA(1) at the end of 2022 and our capital structure strategy remains with a long-term target range of 1.0 – 1.5 times Adjusted
EBITDA. In order to fund the acquisiton of the Veoneer Active Safety business, which is expected to close mid-year 2023, and to support
investment in megatrend areas, we anticipate that our Adjusted Debt ratio will exceed our target range in the near term. However, we arecommitted to getting into our target range within approximately the next 24 months.

Authorized Share Capital
Our authorized share capital consists of an unlimited number of Common Shares and 99,760,000 Preference Shares, issuable in series, allwith no par value. As of March 24, 2023, the Record Date for our Meeting, a total of 286,117,975 Common Shares were issued andoutstanding. No Preference Shares have been issued or are outstanding.
The following is a brief description of the significant attributes of our authorized share capital and is qualified in its entirety by reference to thedetailed provisions in our charter documents, that set out the attributes of our Common Shares and our Preference Shares.

Common Shares
The holders of our Common Shares are entitled to:◾

one vote for each Common Share held at all meetings of our shareholders, other than meetings of the holders of another class orseries of shares;◾ receive any dividends that may be declared by our Board, subject to the preferential rights attaching to any shares ranking in priority to
our Common Shares; and◾ receive, after the payment of our liabilities and subject to the rights of the holders of any shares ranking in priority to our Common
Shares, all our property and assets available for distribution in the event of our liquidation, dissolution or winding-up, whether voluntary
or involuntary, or any other distribution of assets among our shareholders for the purpose of winding-up our affairs.
For further details of the market for our securities, refer to “Schedule C – Market for Securities”.

Preference Shares
Our Board may, without the approval of any of our shareholders, fix the number of shares in, and determine the attributes of, an individual
series of Preference Shares and issue shares of such series from time to time. The shares of each such series will be entitled to a preference
over our Common Shares, but will rank equally with the Preference Shares of every other series with respect to the payment of dividends
and in the distribution of all our property and assets available for distribution in the event of our liquidation, dissolution or winding-up,
whether voluntary or involuntary, or any other distribution of assets among our shareholders for the purpose of winding-up our affairs. No
Preference Shares have been issued or are outstanding and we do not currently anticipate issuing any such shares. In the event we do issue
Preference Shares in the future, we would expect to issue them solely for legitimate financing purposes and not to block a change of control
transaction.
(1)

Adjusted Debt is calculated by taking our long- and short-term debt and operating lease liabilities and adding pension obligations andcertain other Moody’s adjustments. Adjusted EBITDA is calculated by taking our trailing 12-month Earnings before Interest, Taxes,
Depreciation and Amortization, as well as operating lease expense and interest income, and adding adjustments relating to pension
obligations and unusual items. In each case, such adjustments reflect a methodology for calculating such ratios used by Moody’s.
Magna International Inc.

43

Amendments to Share Provisions and Other Matters
The provisions attaching to our Preference Shares, to a series of our Preference Shares and to our Common Shares may not be deleted orvaried without the approval of the holders of the class or series concerned. In addition, no shares of a class ranking prior to or on a parity
with our Preference Shares, or our Common Shares, may be created without the approval of the holders of the class or each series of theclass concerned. Any approval required to be given must be given by two-thirds of the votes cast by those present or voting at a meetingof the holders of the class or series concerned duly called for that purpose in addition to any other consent or approval required by law.

Dividends
The following table sets forth the cash dividends paid and payable on our Common Shares in respect of each quarter for the last three years.

0.50
0.45
0.40

$0.40

$0.40

$0.40

Q1

Q2

Q3

$0.43

$0.43

$0.43

$0.43

Q4

Q1

Q2

Q3

$0.45

$0.45

$0.45

$0.45

$0.46

Q4

Q1

Q2

Q3

Q4

0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
2020

2021

2022

We intend to continue paying a quarterly dividend from our cash flow from operations, with the aim of regularly increasing the dividend
consistent with our practice since 2010. Magna’s quarterly dividend has increased for thirteen consecutive years. The declaration andpayment of dividends, including the dividend rate, is reviewed quarterly by our Board and is subject to the Board’s discretion taking into
account our cash flow, capital requirements, our financial condition and other factors they consider relevant. See “Section 5 – Risk Factors”.

Dividend Reinvestment Plan (DRIP)
Since 1994, we have maintained a dividend reinvestment plan in which registered shareholders have the option to purchase additional
Common Shares by investing the cash dividends paid on their shares.

Financings and Securities/Corporate Transactions
Senior Unsecured Notes
We currently have the following senior unsecured notes outstanding:Issuance Date

Amount Issued

Interest Rate

Maturity Date

June 16, 2014

$750,000,000

3.625%

June 15, 2024

September 23, 2015

$650,000,000

4.150%

October 1, 2025

November 24, 2015

€550,000,000

1.900%

November 24, 2023

September 25, 2017

€600,000,000

1.500%

September 25, 2027

June 15, 2020

$750,000,000

2.450%

June 15, 2030

March 10, 2023

C$350,000,000

4.95%

January 31, 2031

March 17, 2023

€550,000,000

4.375%March 17, 2032

March 21, 2023

$300,000,000

5.980%March 21, 2026

March 21, 2023

$500,000,000

5.500%March 21, 2033

The prospectus supplements (or in the case of the 4.95% Canadian dollar-denominated notes, the offering memorandum) which describe
each of the notes above have been filed and are available on SEDAR (www.sedar.com).
On February 28, 2022, we completed an early redemption of our outstanding Canadian dollar-denominated 3.100% senior unsecured
notes due 2022. The Redemption Price for such Notes was approximately CAD $430 million in the aggregate, including accrued and unpaid
interest on such notes, up to but excluding, the Redemption Date.
44

Annual Information Form

Credit Facilities
On May 18, 2022, we amended our $2.75 billion syndicated revolving credit facility (the “Global Credit Facility”), including a decrease to thesize of the facility to $2.7 billion and an extension of the maturity date from June 24, 2026 to June 24, 2027. The facility includes a$150 million Asian tranche, a $150 million Mexican tranche and a tranche for Canada, U.S. and Europe, which is fully transferable between
jurisdictions and can be drawn in U.S. dollars, Canadian dollars or euros. As at December 31, 2022, we had approximately $1 million
outstanding under this facility.
We also maintain an $800 million, 364-day syndicated revolving credit facility that expires on June 24, 2023, and can be drawn in U.S.
dollars or Canadian dollars. As at December 31, 2022, we had no amounts outstanding under the 364-day facility.
On March 6, 2023, we entered into a syndicated credit agreement with several financial institutions providing for an unsecured term loan (the“Term Loan”) with a 3-year tranche of US$800 million and 5-year tranche of US$600 million. The purpose of the Term Loan is to finance inpart our proposed acquisition of the Veoneer Active Safety business from SSW Partners.
Commercial Paper Programs
We maintain a euro-commercial paper program (the “ECP Program”) and a U.S. commercial paper program (the “USCP Program”), eachbackstopped by our Global Credit Facility. Under the ECP Program, one of our indirect wholly-owned subsidiaries may, from time to time,issue euro-commercial paper notes, subject to an aggregate maximum of €500 million or its equivalent in alternative currencies. Under the
USCP Program, we may, from time to time, issue commercial paper notes, subject to an aggregate maximum of $2 billion or its equivalent
in alternative currencies (increased from $1 billion in March 2023). As at December 31, 2022, we had no outstanding issues under the ECP
Program or the USCP Program.
Normal Course Issuer Bid
On November 8, 2022, the TSX accepted our Notice of Intention (the “Notice”) to Make a Normal Course Issuer Bid relating to the purchaseof up to 28,445,000 Magna Common Shares (the “2023 Bid”), representing approximately 10% of our “public float” of Common Shares.
The primary purposes of the 2023 Bid are purchases for cancellation, as well as purchases to fund our stock-based compensation awards
or programs and/or our obligations to our deferred profit sharing plans. The 2023 Bid commenced on November 15, 2022 and willterminate no later than November 14, 2023.
Purchases of Common Shares under the 2023 Bid as of the date of this AIF have been made on the TSX or the NYSE at the prevailingmarket price at the time of purchase and in accordance with the rules and policies of the TSX or in compliance with Rule 10b-18 under the
U.S. Securities Exchange Act of 1934, respectively, or through other published markets, or by such other means permitted by the TSX.
We have purchased the following Common Shares pursuant to the 2023 Bid as at March 24, 2023, and under our previous normal course
issuer bid which commenced on November 15, 2021 and terminated on November 14, 2022 (“2022 Bid”):
2023 Bid

Shares purchased and cancelled02022 Bid

14,939,400

Shares purchased and retained for stock-based compensation awards or programs and/or deferredprofit sharing plans

180,087

289,279

Total

180,087

15,228,679

Ratings
As of the date of this AIF, we have been assigned the ratings in the table below:
IssuerRatingCredit Rating Agency

Dominion Bond Rating Service (DBRS)(1)
Moody’s Investor Services (Moody’s)Standard & Poor’s (S&P)(3)(2)

Senior Debt
RatingShort-Term
Debt Rating

Outlook/Trend

A (low)

A (low)

R-1 (low)

Stable

A3

A3

P-2

Stable

A−

A−

A-2

StableNotes:(1) DBRS’s issuer and senior debt ratings are based on its long-term rating scale that ranges from “AAA” to “D” which represents the range from an issuer with the highest credit
quality to one that has filed under bankruptcy, insolvency or winding up legislation or failed to satisfy an obligation after exhausting grace periods. A rating in the “A” rating
category is in the third highest category of the relevant scale of eight major categories and is considered by DBRS to be of good credit quality, with substantial capacity for
payment of financial obligations. “High” and “low” grades are used to indicate the relative standing of credit within a particular rating category. The absence of one of these
designations indicates a rating which is in the middle of the category, excluding the AAA and D categories for which the “high”, “middle” or “low” designations are not used. The
DBRS rating trends provide guidance in respect of DBRS’ opinion regarding the outlook for the rating in question, with rating trends falling into one of three categories – “Positive”,“Stable” or “Negative”. The rating trend indicates the direction in which DBRS considers the rating is headed should present tendencies continue, or in some cases, unlesschallenges are addressed. A “Positive” or “Negative” does not necessarily indicate a rating change is imminent, but rather the trend represents an indication that there is agreater likelihood that the rating could change in the future versus if a “Stable” trend was assigned.
DBRS’s short-term debt rating is based on its commercial paper and short-term debt rating scale that ranges from “R-1 (high)” to “D” which represents the range from an issuer
with the highest credit quality to one that has filed under bankruptcy, insolvency or winding up legislation or failed to satisfy an obligation after exhausting grace periods. A rating

Magna International Inc.

45

in the “R-1 (low)” category represents the third highest category of the relevant scale of ten major categories and is considered by DBRS to be of good credit quality, with
substantial capacity for payment of financial obligations.
(2) Moody’s senior unsecured issuer rating is an opinion as to our future relative creditworthiness. The credit rating is based on a rating scale that, for global automotive suppliers,
ranges from “Aaa” to “C”, which represents the range from those obligations with minimal credit risk to those obligations that are in default with little prospect of recovery. Issuer’s
in the “A” rating category are in the third highest category of the relevant scale of nine major categories and are considered by Moody’s to be subject to low credit risk. The
determination of the overall rating assigned to a global automotive supplier is based on an assessment of an issuer’s performance in five broad weighted categories, some ofwhich are further broken down into a number of weighted sub-factors each of which maps to a specific letter rating in the range above. The indicated rating category for eachsub-factor (i.e., Aaa, Aa, etc.) is then converted into a numeric value, which is then multiplied by the weight for that sub-factor with the results then totaled to produce acomposite weighted-factor score, that is itself then mapped back to an alphanumeric rating based on the ratings range from Aaa to C. Moody’s appends the numerical modifiers
1, 2, or 3 to each generic rating classification from Aa through Caa. The modifiers 1, 2 and 3 indicate that the obligation ranks in the higher end, mid-range or lower end of its
generic rating category, respectively. The Moody’s rating outlook is an opinion regarding the likely direction of an issuer’s rating over the medium term, and fall into one of four
categories: Positive, Negative, Stable or Developing.
(3) S&P’s issuer credit rating is a current opinion of our overall financial capacity (i.e. credit worthiness) to pay our financial obligations in full and on time. This credit rating is basedon a rating scale that ranges from “AAA” to “D”, which represents the range from extremely strong capacity to meet financial obligations to a failure to pay one or more financial
obligations when it came due. An issuer with a long-term issuer rating in the “A” rating category is in the third highest category of the relevant scale of ten major categories andis considered by S&P to have a strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances andeconomic conditions than issuers in higher-rated categories. The ratings from “AA” to “CCC” may be modified by the addition of a plus (+) or minus (−) sign to show relative
standing within the major rating categories. The lack of one of these designations indicates a rating that is in the middle of the category. The S&P rating outlook assesses thepotential direction of a credit rating over the intermediate term (typically six months to two years), but is not necessarily a precursor to a rating change.

Credit ratings are intended to provide investors with an independent measure of the credit quality of debt and securities. The credit ratings
assigned to us or our senior debt by the rating agencies are not recommendations to purchase, hold or sell our debt or securities, sincesuch ratings do not address market price or suitability for a particular investor. There is no assurance that any rating will remain in effect for
any given period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future, if in its judgement,
circumstances warrant. See “Section 5 – Risk Factors – “Credit Ratings Changes” in this AIF. We have made payments in the ordinary
course to the rating agencies listed above in connection with the assignment of ratings on our securities. In addition, we made payments to
Moody’s and S&P in connection with the confirmation of our ratings in respect of the issuance of our Senior Notes and continued issuances
under our ECP Program and USCP Program.

9 . D i r e c t o r s & E xe c u t i ve O ff i c e r s
D i rectors
Our Board currently consists of the following members:Name & Municipality of ResidencePeter G. Bowie(1)Ontario, Canada
Mary S. Chan
New Jersey, U.S.A.
Hon. V. Peter Harder
Ontario, Canada
Jan R. Hauser
Massachusetts, U.S.A.
Seetarama (Swamy) Kotagiri
Michigan, U.S.A.
Dr. Kurt J. Lauk(2)Baden-Württemberg, Germany
Robert F. MacLellan(3)Ontario, Canada
Mary Lou Maher
Ontario, Canada
William A. Ruh
New South Wales, Australia
Dr. Indira V. Samarasekera
British Columbia, Canada
Dr. Thomas Weber
Baden-Württemberg, Germany
Lisa S. Westlake
Florida, U.S.A.

Director Since

Principal Occupation

May 10, 2012

Corporate Director

August 10, 2017Managing Partner of VectoIQ LLP and Corporate Director

January 10, 2020

Senator and Corporate Director

August 1, 2022

Corporate Director

January 1, 2021

Chief Executive Officer of Magna

May 4, 2011

Co-Founder & President, Globe CP GmbHMay 10, 2018

Chairman, Northleaf Capital Partners and Corporate Director

May 6, 2021

Corporate Director

May 11, 2017

Chief Executive Officer, Digital of Lendlease GroupMay 8, 2014

Senior Advisor, Bennett Jones LLP and Corporate Director

January 1, 2022

Corporate Director

May 9, 2019

Corporate Director

Notes:(1) Mr. Bowie was a director of Xebec Adsorption, Inc. (“Xebec”) when it sought protection under the Companies’ Creditors Arrangement Act (“CCAA”) on September 29, 2022.
Xebec’s shares were suspended from trading by the Toronto Stock Exchange on the same date and subsequently delisted on November 14, 2022.
(2) Retiring at the end of the current term on May 11, 2023.
(3) Chairman of the Board.

46

Annual Information FormAll of our directors were elected to their present terms of office by our shareholders at our Annual and Special Meeting of Shareholders heldon May 3, 2022, except Jan R. Hauser, who was appointed to the Board on August 1, 2022. The term of office for each director expires atthe conclusion of the next annual meeting of our shareholders. Two individuals, Jay K. Kunkel and Matthew Tsien, are being nominated forelection to our Board at the Meeting, and if elected, will serve as independent directors.
All of the directors have held the principal occupations identified above (or another position with the same employer) for not less than
five years, except as follows:◾

Mr. Harder served as the Representative of the Government of Canada in the Senate from March 2016 to January 2020;
Ms. Hauser was a Vice President of General Electric from April 2013 to March 2019, as well as GE’s Controller and Chief Accounting
Officer from April 2013 to November 2018;◾ Ms. Maher was concurrently the Canadian Managing Partner, Quality and Risk, KPMG Canada and Global Head of Inclusion andDiversity, KPMG International from October 2017 to February 2021;◾ Mr. Ruh was Chief Executive Officer, Senior Vice-President and Chief Digital Officer, GE Digital from September 2015 to
December 2018; and◾ Ms. Westlake was Chief Human Resources Officer of IHS Markit Ltd. from April 2017 to August 2018.
◾

With the exception of Mr. Kotagiri, our CEO, all other directors have been determined by our Board to be “independent directors” within themeaning of such term under applicable law.

Board Committees
Effective August 1, 2022, our Corporate Governance, Compensation and Nominating Committee (“CGCNC”) was split into two newcommittees: (1) Governance, Nominating and Sustainability Committee (“GNSC”); and (2) Talent Oversight and Compensation Committee(“TOCC”), in order to enable more focused oversight.
A copy of our Board Charter, Audit Committee Charter, as well as the charters of our other Board Committees are available on our website(www.magna.com), have been filed on SEDAR (www.sedar.com) and EDGAR (www.sec.gov/edgar) and are incorporated by reference into
this AIF. Additional information about our Audit Committee is contained under “Corporate Governance – Report of the Audit Committee” in
our Circular for our Meeting, which is incorporated by reference into this AIF.
Membership of these Committees as of the date of this AIF are as follows:

Audit
Committee

Name

Governance,
Nominating &Sustainability
Committee

TalentOversight &Compensation
Committee

Technology
Committee◾

Peter G. Bowie◾

Mary S. Chan◾
◾

Hon. V. Peter Harder◾

Jan R. Hauser◾

Dr. Kurt J. Lauk(1)Robert F. MacLellan

◾

◾

(2)

◾

Mary Lou Maher◾
◾

William A. Ruh◾

Dr. Indira V. Samarasekera◾

Dr. Thomas Weber◾
◾

Lisa S. Westlake◾ Committee Member◾

Committee Chair

Notes:(1) Mr. Lauk will retire from his committee assignments in connection with his retirement from the Board at the end of his current term on May 11, 2023.
(2) Chairman of the Board

Additional details regarding our Committee structure can be found in the “Corporate Governance” section of our Circular.

Magna International Inc.

47

Executive Officers
Our executive officers currently consist of the following persons:Name & Municipality of Residence

Principal Occupation

Seetarama (Swamy) Kotagiri
Michigan, U.S.A.

Chief Executive Officer (since January 2021)

Patrick W.D. McCann
Ontario, Canada

Executive Vice-President and Chief Financial Officer (since January 2022)

Vincent J. Galifi
Ontario, Canada

President (since January 2022)

Guenther F. Apfalter
Upper Austria, Austria

President, Magna Europe (since February 2011) and Magna Asia (since
July 2020) and President, Magna Steyr (since March 2022)

John H. Farrell
Ontario, Canada

President (Cosma, Exteriors and Seating) (since January 2023)

Tom J. Rucker
Ontario, Canada

President (MPT, MML, Electronics and Complete Vehicles) (since January
2023)

Bruce R. Cluney
Ontario, Canada

Executive Vice-President and Chief Legal Officer (since July 2020)

Matteo Del Sorbo
Ontario, Canada

Executive Vice-President, Magna New Mobility (since January 2022)

Uwe Geissinger
Hesse, Germany

Executive Vice-President, Operational Efficiency (since February 2021)

Anton Mayer
Lower Austria, Austria

Executive Vice-President and Chief Technology Officer (since January 2022)

Aaron D. McCarthy
Ontario, Canada

Executive Vice-President and Chief Human Resources Officer (since
January 2019)

Boris ShulkinMichigan, U.S.A.

Executive Vice-President (since February 2021) and Chief Digital & Information
Officer (since April 2022)

Eric J. Wilds
Michigan, U.S.A.

Executive Vice-President and Chief Sales & Marketing Officer (since
January 2020)

To the extent that our executive officers have not held the offices identified above for the last five years, they have held the following offices
or positions with us and/or have had the following principal occupations during the last five years:◾

Prior to becoming our CEO, Mr. Kotagiri was President, Magna International from January 2020 to December 2020 and Executive
Vice-President and Chief Technology Officer from January 2014 to January 2020. He also served as President, Power and Vision fromMay 2018 to December 2020 and as President, Magna Electronics from February 2016 to May 2018;◾ Mr. McCann was Senior Vice-President, Finance from May 2019 to December 2021, and Vice-President, Cosma Group from January
2016 to April 2019;◾ Mr. Galifi was Executive Vice-President from September 1996 to December 2021, and Chief Financial Officer from December 1997 to
December 2021;◾ Mr. Farrell was President of Cosma International from January 2013 to December 2022;◾ Mr. Rucker was President of Magna Powertrain from October 2019 to December 2022, Senior Vice President, Program Managementand Launch Excellence of Magna Powertrain from April 2018 to September 2019 and Vice President, Operations – Metal Forming
Solutions, a subgroup of Magna Powertrain from January 2012 to March 2018;◾ Mr. Cluney was Executive Vice-President and General Counsel, Power and Vision from July 2018 to July 2020 and Vice-President,
Secretary and General Counsel of Magna Closures / Magna Mirrors (now known as Mechatronics / Magna Mirrors / Magna Lighting)from January 2010 to July 2018;◾ Mr. Del Sorbo was Vice-President, Business Development from January 2020 to January 2022 and Vice-President, Business
Development – Exteriors, Seating, Mirrors, Closures and Cosma Groups from January 2017 to January 2020;◾ Mr. Geissinger was President, Magna Electronics and Senior Vice-President Operations, Power & Vision Group from April 2019 toFebruary 2021, and Senior Vice-President, Fluid Pressure & Controls Group from January 2017 to March 2019;◾ Mr. Mayer was Executive Vice President, Research and Development from October 2021 to December 2021, Executive VicePresident, Systems and Portfolio Strategy from February 2021 to September 2022 and Senior Vice-President, Global Engineering at
Magna Powertrain from November 2017 to February 2021;◾ Mr. McCarthy joined Magna in January 2016 as Vice-President, Human Resources, the Americas and India and remained in this role
until December 2018;48

Annual Information Form◾

Mr. Shulkin was Senior Vice-President, Technology and Development from July 2020 to February 2021, Vice-President, Research andDevelopment from May 2011 to July 2020, and Executive Vice President, Technology & Investments from February 2021 to March2022; and◾ Mr. Wilds was Executive Vice President, Business Development & Strategy, Magna Power and Vision from January 2018 toJanuary 2020.

Beneficial Ownership of Securities
As at March 24, 2023, we had 286,117,975 Common Shares issued and outstanding. All our directors and executive officers (as a group
24 persons) owned beneficially or exercised control or direction over 1,407,402 Common Shares representing approximately 0.5% of theclass, as at March 24, 2023. Our issued and outstanding Common Shares are held as follows:
0.5%
6.0%

93.5%

Public, 267,463,739

North American and European DPSPs, 17,246,834

Directors/Executive Officers, 1,407,402

10. Legal Proceedings
Regulatory Proceedings
From time to time, the Company may become involved in regulatory proceedings. Magna’s policy is to comply with all applicable laws,
including antitrust and competition laws. Based on a previously completed global review of legacy antitrust risks which led to a September
2020 settlement with the European Commission and a June 2022 settlement with Brazil’s federal competition authority involving in bothcases the supply of closure systems, Magna does not currently anticipate any material liabilities. However, we could be subject to restitution
settlements, civil proceedings, reputational damage and other consequences, including as a result of the matters specifically referred toabove.

Other
In the ordinary course of business activities, we may become contingently liable for litigation and claims with customers, suppliers, former
employees and other parties. In addition, we may be, or could become, liable to incur environmental remediation costs to bring environmental
contamination levels back within acceptable legal limits. On an ongoing basis, we assess the potential of any adverse judgments or
outcomes to these matters, as well as any associated probable costs and losses.
A determination of the provision required, if any, for these contingencies is made after analysis of each individual issue. The required
provision may change in the future due to new developments in each matter or changes in approach, such as a change in settlement
strategy in dealing with these matters.

Warranty, Product Liability and Recall Costs
In certain circumstances, we are at risk for warranty, product liability and recall costs, and are currently experiencing increased customer
pressure to assume greater warranty responsibility. Certain customers seek to impose, partial responsibility for the warranty costs where theunderlying root cause of product or system failure cannot be determined. Due to the nature of the costs, we make our best estimate of the
expected future costs, however, the ultimate amount of such costs could be materially different. For most types of products, we only
account for existing or probable claims on product defect issues when amounts related to such issues are probable and reasonably
estimable. However, for certain complete vehicle assembly, powertrain systems, and electronics contracts, we record an estimate of future
warranty-related costs based on the terms of the specific customer agreements and/or our warranty experience.
Product liability and recall provisions are established based on our best estimate of the amounts necessary to settle existing claims, which
typically take into account: the number of units that may be returned; the cost of the product being replaced; labour to remove and replace
the defective part; and the customer’s administrative costs relating to the recall. In making this estimate, judgement is also required as to theultimate negotiated sharing of the cost between us, the customer and, in some cases a supplier. Where applicable, insurance recoveries
related to such provisions are also recorded.
Magna International Inc.

49

11. Other Information
Additional Information
Our Circular contains the following additional information:◾

our directors’ and named executive officers’ remuneration and indebtedness;
our voting securities and their principal holders; and◾ securities authorized for issuance under our equity-based compensation plans.
◾

Additional financial information about us is provided in our consolidated financial statement as at and for the year ended December 31, 2022
and in our MD&A. These documents and additional information about us may be found on SEDAR, at www.sedar.com, on EDGAR at
www.sec.gov/edgar and on our website, at www.magna.com.

Interests of Management & Others in Material Transactions
Reference is made to “Interests of Management and Other Insiders in Certain Transactions” in our Circular for our Meeting, which isincorporated by reference into this AIF.

Transfer Agent & Registrar
The transfer agent and registrar for our Common Shares is Computershare Trust Company of Canada, at its principal offices in Toronto,
Ontario. The co-transfer agent and co-registrar for our Common Shares in the United States is Computershare Trust Company, N.A., at its
offices in Louisville, Kentucky.

Interests of Experts
Our independent auditor for the 2022 fiscal year is Deloitte LLP. Deloitte LLP is independent within the meaning of the Rules of Professional
Conduct of the Chartered Professional Accountants of Ontario, and the applicable rules and regulations adopted by the SEC and the PublicCompany Accounting Oversight Board (United States) (PCAOB). Additional information regarding the fees paid to our independent auditors
is contained under “Business of the Meeting – Reappointment of Deloitte as Magna’s Independent Auditors” in our Circular, which isincorporated by reference into this AIF.

50

Annual Information FormS c hedu lesSchedule A
Principal Subsidiaries and Investments
Subsidiaries
A list of our principal subsidiaries and each of their jurisdictions of incorporation as of December 31, 2022 is set out below. Our legal
structure (including that of our subsidiaries) is not necessarily indicative of our operational structure.
Subsidiary(1)(2)

VotingSecurities

Jurisdiction ofIncorporation

1305290 Ontario Inc.
Magna International Investments S.A.
Magna International Automotive Holding GmbH
Magna Automotive Europe GmbH
Magna Automotive Holding GmbH
Magna Metalforming GmbH
Magna Steyr GmbH & Co. KG
Magna Powertrain GmbH & Co KG
Magna Steyr Fahrzeugtechnik AG & Co. KG
Engineering Center Steyr GmbH
Magna Powertrain GmbH
Magna Automotive Holding (Germany) GmbH
Magna PT Holding GmbH175 Holdings ULC
Magna US Holding, Inc.
Cosma International of America, Inc.
Intier Automotive of America, Inc.
Intier Automotive of America Holdings, Inc.
Magna Seating of America, Inc.
Magna Exteriors Holdings, Inc.
Magna Exteriors of America, Inc.
Magna Mirrors of America, Inc.
Magna International (Hong Kong) Limited
Magna Exteriors Inc.
Magna Powertrain de Mexico, S.A. de C.V.
Magna Seating Inc.
Magna Internacional de Mexico, S.A. de C.V.
Magna Powertrain Inc.

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

Ontario
Luxembourg
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Austria
Germany
Germany
Alberta
Delaware
Michigan
Delaware
Delaware
Delaware
Delaware
Delaware
MichiganHong Kong
Ontario
MexicoOntario
MexicoOntario

Notes:(1) The table shows the percentages of the votes attached to all voting securities and of each class of non-voting securities, owned by us or over which control or direction is
exercised by us. Parent/subsidiary relationships are identified by indentations. Percentages represent the total equity interest in a subsidiary, which is not necessarily indicativeof percentage voting control.
(2) Subsidiaries not shown each represent less than 10% of our total consolidated revenues and total consolidated assets (although not all subsidiaries shown necessarily each
represent more than 10% of our total consolidated assets and total consolidated sales) and, if considered in aggregate as a single subsidiary, represent less than 20% of our
total consolidated revenues and total consolidated assets.

Magna International Inc.

51

Investments
Our principal equity method investments are the following:
Joint Venture

Litens Automotive Partnership
Hubei HAPM MAGNA Seating
Systems Co., Ltd.
LG Magna e-Powertrain Co.,Ltd.

52

Annual Information Form

Magna Equity
Ownership %76.7%(non-controlling
50% voting interest)
49.9%
49.0%

Partner(s)Current and retired members of seniorLitens management
Hubei Aviation Precision
Machinery Co., Ltd.
LG Electronics Inc.

Reporting Segment

Power & Vision
Seating Systems
Power & Vision

Schedule B
Acquisitions and Divestitures
We have completed a number of acquisitions, divestitures, financings and securities/corporate transactions in the last three fiscal years,
including those listed below. None of these acquisitions constitutes a “significant acquisition” within the meaning of such term in National
Instrument 51-102 – Continuous Disclosure Obligations of the Canadian Securities Administrators. Additional information about theacquisitions and/or divestitures listed below can be found in Note 21 of our consolidated financial statement as at and for the year ended
December 31, 2022, Note 5 of our consolidated financial statement as at and for the year ended December 31, 2021, and Notes 5 & 7 ofour consolidated financial statement as at and for the year ended December 31, 2020.

Acquisitions
Year

Acquisition

2022

◾

Investment in Yulu Mobility, an electrified mobility provider in India and together
with Yulu Mobility, establishment of 51% controlling interest in a new battery
swapping entity ("Magna Yuma") to support electrification of mobility andrequired infrastructure.

2021

◾

Getrag Ford Transmission GmbH’s non-controlling interest in Getrag (Jiangxi)
Transmission Co., Ltd., a Chinese joint venture controlled by Magna, and afacility in Europe◾

65% equity interest and a controlling financial interest in Chongqing Hongli
Zhixin Scientific Technology Development Group LLC◾

Klein Automotive, a metalforming operation in Czechia

2020

Controlling interest in Getrag (Jiangxi) Transmission Co., Ltd joint venture

Divestitures
Year

Divestiture

2022

None

2021

◾

Distribution to Ford Motor Company of certain assets of Getrag Ford
Transmission GmbH, a European joint venture with Ford, in connection withmultiple agreements with Ford to operate certain businesses within the joint
venture under separate ownership◾

Three Body Exteriors & Structures operations in Germany

2020

None

Magna International Inc.

53

Schedule C
Market for Securities
Our Common Shares are listed and posted for trading on the TSX under the trading symbol “MG”, and on the NYSE under the trading
symbol “MGA”.
The high and low sale prices and volume of shares traded for our Common Shares, as reported by the TSX and NYSE, respectively, for themonths during the year ended December 31, 2022 were as follows:
TSX High(C$)

TSX Low(C$)

TSX
VolumeNYSE High($)

NYSE Low($)

NYSE
VolumeJanuary112.62

94.09

16,303,403

90.15

74.26

26,673,058

February

106.2090.90

17,873,751

83.68

70.78

29,556,418

March

93.30

70.16

35,416,948

73.72

54.60

52,610,978

April

83.39

75.97

17,202,327

66.81

59.35

23,406,350

May

83.67

71.92

21,200,091

66.20

55.19

26,619,020

June

84.32

69.10

20,288,121

67.31

53.55

24,285,486

July

82.36

68.39

14,933,904

64.14

52.47

18,862,392

August

83.77

75.38

14,145,468

65.58

57.69

20,220,820

September

78.64

64.49

15,258,822

60.55

47.04

21,814,971

October

76.88

63.55

15,461,307

56.32

45.58

22,283,857

November

84.49

73.38

17,727,947

64.31

53.21

25,359,486

December

84.24

73.64

13,146,893

62.74

53.86

23,241,480

Month

54

Annual Information FormA p pen d ix 1

Sustainability
ReportFY 2022

Magna International Inc.

A-1

Contents
Sustainability Report
A-4
A-5
A-5
A-8
A-13
A-20
A-33

A-2

Summary Sustainability Metrics
Introduction
Sustainability Governance
Climate-Related Opportunities
Climate-Related Risks and Risk Mitigation
Non-Climate Elements of Sustainability
Sustainability Metrics

Annual Information FormENVIRONMENTAL, SOCIAL AND GOVERNANCE

Committed to a Sustainable Future.
Concern for the environment is central to who we are and what we do at Magna. Last year, we
committed to being carbon neutral in our European operations by 2025 and globally by 2030,
placing us among industry leaders. Some of our divisions have already exceeded those ambitious

While energy, water, and natural gas conservation are important to sustainability, they are just partof the equation for us. We think bigger. It’s about protecting our common home and making a better
society overall.
This is why so many Magna employees around the world plant thousands of trees, tend beehives,
sustainability goals.

Where
We AreYear OverYear Progress

Where
We Are Going% of global electricity buy
that is renewable electricity

19%+500 bps

35%
Expected by 2025

Divisions using renewable electricity

61

+32

>120
Expected by 2025

Divisions that are CO2 neutral

26

+17

110
Expected by 2025

Divisions with on-site
solar generation

6

+1

>20
Currently investigating

Magna International Inc.

A-3

S ummar y Su s t a i n a b i l i ty M e t r i c s
TOPIC

SASB CODE

Scope 1 & 2 emissions

Metric Tons (t) CO2e

1,460,959 t

љ 30.9%Gigajoules (GJ)
MegaWatt hours (MWh)20,052,840 GJ
5,570,234 MWhљ 12.9%% of energy consumed supplied
from electrical grid

Percentage (%)

57.8%

ј 280 bps

% of energy consumed that isrenewable energy

Percentage (%)

10.0%

—

Energy intensity

MegaWatt hours (MWh) /Sales (USDm)

147 MWh / USDm

љ 9.3%

Energy intensity reduction

MegaWatt hours (MWh) /Sales (USDm)

Target: ≥3% p.a.
Actual: 1.3% 2022—

Aggregate amount of waste
generated from manufacturing
operations

Metric Tons (t)1,476,282 t—% of waste generated that ishazardous

Percentage (%)

4.3%

—

% of waste generated that wasrecycled

Percentage (%)

87.2%

—

% hazardous waste diverted fromlandfill

Percentage (%)

90.0%

—

—

Waste diversion from landfill target

Percentage (%)≥95% p.a.

——

Annual water withdrawals

Megalitres (ML)6,292 ML

љ 17.4%

Water reduction target

Percentage (%)

1.5% p.a.
15% by 2030 (vs. 2019)—

Annual remediation expenses

Reporting Currency (USD)<$1.0m

No Change

Aggregate remediation balance for
known events

Reporting Currency (USD)$16.3mј 21.6%

Total amount of monetary losses
incurred as a result of legal
proceedings associated with
anti-competitive behaviour
regulations

Reporting Currency (USD)

$1.2m

—

Accident frequency rate

1.0 = 1 injury / illness per
100 employees working
40 hours/week, 50 weeks/year

0.62

љ 40.4%

Accident severity rate

10.0 = 10 lost work days /100 employees working
40 hours/week, 50 weeks/year

12.40

ј 0.4%% of employees who are women(3)Percentage (%)

28%—% Women in Critical Positions

Percentage (%)

18%—% Women on the Board of Magna

Percentage (%)

42%(4)

ј 600 bps

GHG Emissions—
TR-AP-130a.1—

TR-AP-150a.1

Water
Management

Environmental
Management

Competitive
Behaviour—

TR-AP-520a.1

Health and Safety

Gender Diversity——

Aggregate amount of energy
consumed

Notes:(1) 2022 data with respect to Water Withdrawals, Emissions, Energy Management, Waste Management, and Health and Safety is preliminary.
(2) Items indicated by a dash were not tracked in 2019.
(3) Wholly-owned operations only.
(4) As of May 11, 2023, the percentage of women on the Board will be 38%, assuming election of all nominees for Magna’s annual meeting of shareholders.

A-4

CHANGE FROM
2019 BASELINE(2)UNIT OF MEASURE

EnergyManagement

Waste
Management

MAGNA 2022 DATA(1)METRIC

Annual Information Form

Int r od u ctio n
At Magna we are committed to making a difference through our products and processes, as well as care and concern for our people andthe communities in which they live.

Magna’s Climate Change Committment
We recognize the reality of climate change and its impact on the planet. As a result, we are focused on doing the right things today so that
our corporate interests do not come at the expense of the viability of life for the generations that follow. Although combating climate change
requires a collective global response, Magna is determined to play its part in addressing this existential threat to our planet. We took asignificant step in 2021, targeting carbon neutrality (Scope 1 and Scope 2 emissions) in our European operations by 2025 and in our global
operations by 2030. To date, 26 (2022: 20; 2021: 9) of our Divisions globally have achieved carbon neutrality.
We believe our ambitous commitment makes us an industry leader in North America and aligns us with industry leaders in Europe. Moreover,
we are focused on a science-based approach aligned with the objectives of the Paris Climate Agreement and intend to submit our emission
reduction targets for official validation by the Science-based Targets initiative (SBTi) in 2023.
Our progress to date with respect to carbon neutrality is detailed in this Sustainability Report.
Approach to Sustainable Value Creation
Overall, our approach to sustainable value creation involves:◾

designing, engineering, manufacturing and delivering innovative product solutions for our customers, which achieve shared goals of
reduced weight, lower fuel consumption and reduced carbon emissions;◾ optimizing and innovating our manufacturing processes for resource and input efficiency, as well as product quality;◾ enhancing the energy efficiency of our plants to reduce Scope 1 greenhouse gas emissions;◾ implementing our roadmap for the transition to 100% renewable energy by 2030 to reduce our Scope 2 emissions;◾ working on a roadmap for engaging our supply chain regarding Scope 3 emissions;◾ treating our employees fairly and looking out for their health, safety and general well-being;◾ serving as a good community partner, particularly in the communities in which our employees live and work; and◾ enhancing the sustainability of our supply chain with respect to human rights and working conditions through communication,
monitoring, and where necessary, corrective action.

Governance

Strategy

RiskManagement

Metrics andTargets1.
1.1

This Sustainability Report aims to provide our stakeholders with a better understanding of how
we approach the creation of sustainable, long-term value and our management of sustainabilityrelated risks. The report has been structured to align with the Task Force on Climate-related
Financial Disclosures (“TCFD”) framework, as well as the Sustainability Accounting Standards
Board’s (“SASB”) Auto Parts accounting standard, where possible. While this report may notcurrently provide stakeholders with all of the information sought through the TCFD and SASB
frameworks; we continue to evolve and enhance our disclosure as our collection and validationof the applicable data improves. While the TCFD and SASB Auto Parts frameworks primarily
address climate-related factors, this Sustainability Report aims to go beyond such items to give
stakeholders a better understanding of the broad range of initiatives that define our approach tosustainable value creation.

Sust ain a b i l i ty G over n a nc e
Board Oversight

Magna’s Board of Directors is the company’s highest decision-making body, except to the extent certain rights have been reserved forshareholders under applicable law or Magna’s articles of incorporation or by-laws. As such, the Board is responsible for the overall
Magna International Inc.

A-5

stewardship of the company by: supervising the management of the business and affairs of Magna in accordance with the legal requirements
set out in applicable company law (Business Corporations Act (Ontario)), as well as other applicable law; and, jointly with Management,
seeking to create long-term shareholder value. The Board operates under a written Board Charter, in addition to applicable law, our articles
of incorporation and by-laws. The Board Charter, which has been filed on SEDAR, and is available in the Leadership & Governance sectionof Magna’s website (www.magna.com), delineates Board oversight responsibilities including with respect to a number of areas relevant tosustainability such as: corporate culture; corporate governance; strategy; risk; shareholder engagement; and fundamental corporate actions.
The Board takes an integrated and coordinated approach to oversight (including climate-related issues). This includes oversight of theCompany’s corporate culture, as well as its overall approach to corporate governance; capital allocation; major corporate policies; enterpriserisk management, including sustainability risks; and shareholder engagement. Climate-related and other sustainability issues are typicallyconsidered by the Board at least annually through the Board’s strategic planning process. Typically, Magna’s Chief Technology Officer
identifies material “megatrends” impacting the automotive industry, including automotive and mobility trends arising from climate-related
issues. Significant opportunities and risks are then addressed by the CTO at the annual Board strategy meeting, while Operating Group
Presidents address the opportunities and risks applicable to their respective business units at the annual business planning meeting.
Guidance, feedback and other outputs from the strategy meeting are incorporated and integrated into business unit business plans for the
next business planning meeting. Sustainability issues may also arise before the Board in connection with its oversight of fundamental
corporate actions such as review/approval of material acquisitions/divestitures, three-year business plans and capital expenditures.
Additionally, the Board annually monitors our progress in reducing our carbon footprint and reviews/approves the company’s material
public disclosures, including our Annual Information Form / Annual Report on Form 40-F incorporating this Sustainability Report.
1.1.1 GNSC and TOCC Roles
The Board carries out its duties in part through standing committees composed solely of independent directors. One such committee, the
GNSC, supports the Board’s oversight of the company’s approach to sustainability and climate change issues, including by assessing
Magna’s overall approach to reduce its carbon footprint, environmental compliance, as well as Magna’s actions to identify, monitor andmitigate any material risk exposures relating to such areas. The Board’s TOCC also supports the Board’s sustainability oversight activities byassessing Magna’s approach to certain non-climate elements of sustainability, including its approach to advancing diversity in our workplace,and occupational health and safety compliance, as well as Magna’s actions to identify, monitor and mitigate any material risk exposuresrelating to such areas.
Like the Board, the GNSC and TOCC maintain a written charter which outlines its specific roles and responsibilities. The GNSC and TOCC
Charters have been filed on SEDAR and is available in the Leadership & Governance section of Magna’s website (www.magna.com).
Matters under the GNSC’s responsibility include: corporate governance, sustainability, and other matters. The scope of the GNSC’s
oversight role with respect to sustainability includes climate-related issues generally, as well as related elements such as environmental
management and compliance. As Magna defines “sustainability” in a broad and inclusive manner to include areas that go beyond climaterelated issues, the GNSC’s role also extends to matters such as supply chain sustainability. The GNSC periodically reviews Magna’s
policies, practices and public disclosures relating to sustainability topics, and makes recommendations to the Board regarding such items.
During 2022, the GNSC received updates on Magna’s evolving sustainability strategy, its progress in achieving its carbon neutralitycommitments, and its activities in relation to supply chain monitoring. Its predecessor committee, the CGCNC also reviewed, provided input
into and approved the organization’s Sustainability Report and presented its recommendations to the Board regarding the Board’s approvalof the Sustainability Report. Additionally, the CGCNC received reporting relating to the performance of Magna’s environmental complianceand management program. The TOCC’s responsibility include: talent management and succession planning, executive and incentive
compensation, employee health and safety, and other matters. During 2022, the TOCC received updates on Magna’s occupational healthand safety program, leadership development and succession planning, and global compliance program training.
1.1.2 Other Board Committees
In addition to the GNSC and TOCC, the Board maintains two other standing committees – the Audit Committee and the Technology
Committee. While neither of these committees have specific sustainability responsibilities, each may have a role with respect to sustainability
risks and opportunities that arise indirectly out of the committee’s primary role and responsibilities.
Magna’s Audit Committee supports the Board through its oversight of financial and audit-related matters, including financial risks anddisclosures. To the extent that climate-related or other sustainability risks are or could be financially material, the Audit Committee would be
involved through its consideration of the financial statement or other disclosure of the nature and scale of the risk.
The Technology Committee supports the Board’s overisight duties by advising it on technology trends, related opportunities and risks, R&D
and innovation, and technology-focused acquisitions, as well as the alignment between the company’s technology and its strategic priorities.
As such, the scope of the Technology Committee’s role includes products and processes that seek to realize opportunities created byclimate-related challenges.

1.2Management

Climate-related issues are part of the CEO’s responsibility. As Magna’s highest-ranking member of management, the CEO guides anddirects Executive Management and Operating Group Presidents with respect to product portfolio and strategic planning, business planning,
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Annual Information Formcapital expenditures, innovation/R&D, manufacturing productivity and efficiency, as well as other critical areas, including the setting of the
carbon neutrality targets (Scope 1 & Scope 2) announced by Magna in 2021. The CEO is also the highest executive responsible forcustomer management, shareholder engagement/investor relations, as well as talent management. The criticality of climate sustainability to
the future of the automotive industry generally means that climate-related issues are interwoven through all of the foregoing areas of the
CEO’s responsibilities. At the same time, the importance of making demonstrable progress with climate sustainability goals requires CEOlevel engagement and direction to ensure organizational alignment.
To assist our CEO, Magna has designated one of its Operating Group presidents as an executive “champion” for climate-related sustainability
matters (the “Sustainability Champion”). The Sustainability Champion reports directly to Magna’s CEO on sustainability matters and helps
coordinate and align sustainability priorities across the company’s other Operating Groups. Operating Group management is responsiblefor development of product strategies to address megatrends, industry trends, and business opportunities and risks, including those whicharise due to climate-related challenges.
We also have a bottom-up sustainability structure with representatives at each of our three main management levels (Divisional, OperatingGroup and Corporate). Approximately 95% of our manufacturing Divisions have an energy management champion who works with membersof our Global Energy Team to identify and implement high-priority energy management projects. The Global Energy Team functions acrossall of our Divisions and Operating Groups to share energy efficiency/management case studies and best practices. Each Operating Group’s
day-to-day sustainability activities are coordinated through a Group “lead”. Operating Group sustainability leads participate in a sustainability
steering committee headed by the Sustainability Champion, which consists of cross-functional corporate leaders representing operational
improvement, environmental, purchasing, supplier risk management, energy, real estate, R&D, legal/corporate secretarial and finance, withother functions as needed. The Sustainability Steering Committee is led by the Sustainability Director who oversees and tracks the metrics
and KPIs developed by the Committee, such as the energy reduction goals. The Sustainability Director leverages the multidisciplinary
Committee to develop Magna’s long-term sustainability and decarbonization strategy coupled with near-term metrics. In connection with
our evolving sustainability strategy and our commitment to achieving the carbon neutrality targets, our energy reduction progress andinitiatives are reported to our Sustainability Champion, helping to increase the visibility of these initiatives across our Operating Groups
through the Sustainability Champion’s regular interaction with other Operating Group Presidents.
A number of initiatives intended to help us achieve our carbon neutrality targets are well underway, including energy optimization initiatives
at most of our operating Divisions and a phased in transition to renewable electricity globally. For us, carbon offsets are a last resort to offset
Scope 1 emissions that cannot be displaced by other methods, not a primary means of achieving our targets.

CARBON NEUTRALITY PRIORITIES3PRIORITY 3
Purchase of clean carbon offsets as alast resort to address Scope 1
emissions that cannot be displaced

Carbon Offset(Scope 1)

2
Renewable‐e(Scope 2)

1

PRIORITY 2
A regional portfolio approach torenewable energy including: Power
Purchase Agreements (PPAs),
Energy Attribute Certificates (EACs)
and self generation, where feasible

PRIORITY 1
Energy reductions through our
Global Energy Team (GET),
Operating Groups and Divisions

Energy Optimization(Scope 1 & 2)

Our energy optimization activities are described in further detail in Section 2.3 of this Sustainability Report.
Aspects of sustainability beyond climate-change concerns are typically managed through a matrix structure in which corporate-wide
functions support initiatives implemented or managed by Operating Groups and Divisions. Examples of functional areas managed in thismanner include: environmental management and compliance; occupational health and safety; quality and operational improvement; talentmanagement, including diversity and inclusion; cybersecurity; data privacy; as well as supply chain.

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1.3

Enhancements to Our Sustainability Program

In 2022, we made a number of enhancements to our Sustainability program, including introducing:◾ a Corporate-wide Fundamentals of Sustainability Training, which was rolled out in 11 languages and completed by approximately
42,000 employees. The training provides a review of sustainability basics and their relation our business, and helps our organization
continue to cultivate interest, ideas and opportunities for improving our operations and products and our world in general.
◾ our first annual Commitment to Sustainability Awards to recognize how sustainable activities benefit our Divisions, our environment,
and all stakeholders. The awards, which are open to Magna’s Divisions globally, are separated into three categories: (i) productexcellence and innovation; (ii) process improvements that advance lean and sustainability efforts; and (iii) people – programs that
overcome employee and community challenges in the areas of education and training, health and safety, diversity and inclusion, andother areas of social impact. 71 Divisions submitted applications for the inaugural awards, and 191 Divisions have submitted
applications for this year’s awards. Our inaugural winners are detailed on pages A-32 and A-33 of this Sustainability Report.
◾ a new module in our MAFACT system covering Sustainability with five scoring levels that assess a Divison’s performance onsustainability, including: carbon/air emissions, water usage, waste, and support for UN Sustainable Development Goals. Scoring isbased on development of a strong foundation for data collection (level 1) through to achieving carbon neutrality (level 5).

2.
2.1

Climate- R el a ted O p p or t u n i t i e s
Corporate Strategy

The automotive industry is being defined by a number of global megatrends that have shaped our long-term strategy, including:
Megatrend

Impact on Automotive

Globalization

Industry built through globalization appears to be undergoingregionalization.

Environmental Impact

Concern for environment/climate change driving vehicle
electrification.

Natural Resources & Energy

Access to critical battery minerals and availability of sufficient
renewable energy may define success in drive to vehicle
electrification.

Demographic Change & Individualism

Product design will be influenced by aging population and growing
individualization.

Digital Transformation

Connectivity and digitization impact both product and process. New
vehicle architectures that connect the subsystems along with
software functionality creates additional value to products. Process isalso impacted due to increased digitization, driven by increased
requirements for productivity and quality.

Health & Well-Being

ADAS and autonomy take rates will be driven both by consumer
preferences as well as regulatory requirements tied to increased
safety.

Urbanization

Continued growth in urban population will lead to changes in mobility
as a result of increased density and congestion with an increase in
EV adoption and new transport modalities.

New Mobility

Emerging new mobility eco-system offers a range of potential
opportunities for new products and services.

EconomySociety

Mobility

We have distilled the impacts of the global megatrends into four long-term strategic factors which we see defining the “Car of the
Future” – electrification, autonomy, new mobility and connectivity. We believe we are well-positioned to capitalize on opportunities in each
area:

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Annual Information FormWe possess an enhanced e-Powertrain portfolio with a range of products that addresses the roadmap for the transition
to EVs. We continue to win new EV business.

We possess full ADAS capability and complete ADAS system expertise. We take a systems level approach in developing
ADAS building blocks for OEM customers with a focus up to level 2+/3 ADAS capabilities.

We have expanded our collaboration ecosystem and continue to look for opportunities to leverage new business models.
The breadth of our capabilities make us a key enabler of OEM customers and new entrants in the New Mobility space.

We possess software-enabled functionality in our electronic control unit-related products. This functionality could help
optimize performance and efficiency in connected products, such as our connected powertrains.

We have developed our corporate strategy to realize the opportunities from these trends. Key elements of such strategy include:
Increasing capital deployment toward high-growth areas aligned with the “Car of the Future”
We are proactively managing our portfolio and evolving our product mix based on alignment with the Car of the Future. We seek to grow ourbusiness and capabilities in areas which are positively impacted by the megatrends discussed earlier. Examples of such areas include
powertrain electrification, ADAS and battery enclosures, as well as our contract vehicle manufacturing operations. As illustrated below, we
believe that a substantial proportion of our product areas are not adversely impacted by the global megatrends, including our body, chassis,
lighting, active aerodynamics, dual clutch transmissions, mirrors, mechatronics and seating products. The strong returns and cash flowfrom these product areas enable us to fund the R&D and capital investments required to realize the opportunities in high-growth products
which are benefiting directly from the global megatrends.

Impact of Megatrends

Magna Sales over time

Positive
Impact••••eDrives
Battery Enclosures
ADAS
Contract Vehicle Manufacturing

Aligned

•
•
•
•
•
•
•

Lighting
Active Aerodynamics
Body & Chassis
Dual Clutch Transmissions
Mirrors
Mechatronics
Seating

Negative
Impact•••Manual Transmissions
4WD/AWD
Fuel Tanks

TODAY

FUTURE

Lastly, there are elements of our product portfolio which are negatively impacted by the global megatrends and are expected to be lessdirectly relevant to the Car of the Future. Examples of such products include manual transmissions, mechanical AWD/4WD systems and fueltank systems. Despite their declining long-term strategic importance, our assets and expertise associated with these products remain
relevant to, and can be redeployed for, growing product areas aligned with the Car of the Future.
Driving Operational Excellence
We are committed to manufacturing excellence. We continue to elevate our approach to manufacturing by implementing "factory of the
future" initiatives including: enhanced use of big data and analytics; advanced robotics, additive manufacturing and augmented reality. The
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ultimate goal is to achieve greater profitability through further enhanced quality, production efficiency, reduction of floor space and improved
return on investments. Critical elements of our approach to operational excellence include our World Class Manufacturing initiatives and
MAFACT operating system, which are discussed in “Section 6 – Description of the Business – Manufacturing & Engineering” in our AIF.
Additionally, our sustainability strategy dovetails with our efforts around operational excellence, due to the focus on energy optimization andminimization of both water withdrawals, as well as waste streams to landfill.
Unlocking New Business Models and Markets
The new mobility landscape, which is generally urban, electrified, autonomous and connected, is creating new business models andmarkets. We believe that our systems and complete vehicle knowledge, including elements of our portfolio such as EV and ADAS platforms,
provide us with an advantage in pursuing such opportunities. In addition, our ability to use capital efficiently, launch programs reliably andhelp speed products to market, makes Magna a key enabler of new entrants. Additionally, we are using our capabilities and platform
technologies to enter the micromobility market. For example, in 2022 we invested in the Yulu electrified two-wheeler shared mobility
business in India and related battery-swapping business and have a number of activities underway involving Magna-developed and thirdparty developed delivery robots.
Our long-term strategy is well-aligned with climate change-related trends impacting the automotive industry, including vehicle electrification,
operational efficiency to minimize manufacturing inputs and waste outputs, as well as the pursuit of new mobility business models. We
cannot determine for certain how quickly the market for the declining products in our portfolio may deteriorate, but products such as
AWD/4WD systems appear to have continuing relevance for the next decade. However, we believe that our physical assets, human capitaland know-how related to the mechanical solutions can be repurposed as vehicle development plans migrate toward electrified AWD/4WD
solutions. We currently offer multiple alternatives to manual transmissions, including efficient dual-clutch, hybrid dual-clutch and dedicatedhybrid transmissions, as well as complete e-drive systems, and expect to be able to continue growing our market share in the drivetrain
market. Fuel tank systems are not a material part of our business, but also have continuing relevance for a number of years to come. The
physical assets, human capital and know-how related to fuel tank systems could be repurposed for adjacent product areas such as vehiclehydrogen storage tank systems.

Section 2.2

Markets & Products

The transition to a lower-carbon economy has provided, and is expected to continue to provide, opportunities to enter new product andservice markets. Some recent new products developed to take advantage of opportunities from such transition include:48 VOLT HYBRID TRANSMISSION SYSTEM
Our 48 volt hybrid dual-clutch transmission system has made its debut on Stellantis’ Jeep
Renegade, Jeep Compass e-Hybrid, Fiat 500 X and Fiat Tipo. Hybrid technologies are an
important step on the path to lower emissions, and our hybrid transmission achieves stringent CO2
requirements while offering improved driving dynamics due to electric torque vectoring and traction
support. The 48V 7-speed dual-clutch transmission system for hybrids provides a maximum torqueof 320 Nm and torque-split technology to optimize the efficiencies of the internal combustion engine(ICE) and the e-motor. The e-motor is capable of providing propulsion to the vehicle even when the
ICE is switched off. This new transmission features independent on-demand cooling for the clutch
and e-motor with a single oil circuit for cooling and lubrication, resulting in significant CO2 reductions
in worldwide harmonized light-duty vehicles Test Cycles (WLTC) and real-world driving conditions.

48 VOLT HYBRID INVERSE TRANSMISSION
Magna’s new 7-speed, mild hybrid dual-clutch transmission is featured exclusively on BMW
Group’s compact class, which underpins all its front-transverse vehicles, starting with the BMW 2
Active Tourer. With its specific torque-split concept for hybridization, Magna’s 7HDT400 48V
transmission enables optimal efficiency of an ICE and electric motor. It provides a maximum of 400
Nm of torque as well as offering scalable functionality benefits. It also offers high modularity withthe: base transmission; fully integrated e-machine; on-demand cooling of the clutch and e-motor;
a single oil circuit for cooling and lubrication, and a significant reduction in CO2 at WLTC and inreal-world driving operations. Our hybrid transmission significantly reduces CO2 emissions of an
ICE and continues our accelerated transformation toward electric mobility.

BATTERY ENCLOSURES
Magna’s battery enclosures can be found on the all‐electric Ford F‐150 Lightning and GMC
Hummer EV, and will feature on the new 2024 Chevrolet Silverado EV. The productillustrates our ability to expand structural product opportunities as electrification grows.
The enclosures, which all EVs require, house high‐voltage batteries, electrical components,
sensors and connectors, contributing to the structural and safety aspects of a vehicle’s
frame and protecting critical components from potential impact, heat and water intrusion.
In addition, the use of lightweight aluminum helps minimize added mass from the vehicle’s
battery.

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Annual Information FormETELLIGENT COMMANDTM
EtelligentCommand is a PHEV/HEV system featuring a Dedicated Hybrid Drive DHD Plus at the front
and an eDrive Mid+ with torque vectoring at the rear, combined with advanced software and controls.
Various driving modes are available on command to enhance performance and drivability and provide
greater power handling and control. The Dedicated Hybrid Drive DHD Duo is a two e‐motor single ormulti speed system suitable for HEV application delivering greater performance, drivability and comfort
even when driving in congested traffic. Additional efficiency increases are available through an optional
voltage booster and innovative e‐coupling technology for ICE disconnection.

ETELLIGENT FORCETM
Magna’s EtelligentForce, is a battery electric 4WD powertrain system for pickup trucks and lightcommercial vehicles. The product features Magna’s Mid+ eDrive technology at the front of thevehicle and its eBeam™ electric axle drive system in the rear. The system is designed to deliver
the environmental benefits of an electric powertrain, while maintaining full vehicle capabilities andwithout compromising payload or towing capacities of pickup trucks and light commercial vehicles.
The system is designed for high‐payload vehicles, capable of towing up to 14,500 pounds – on
par with its ICE counterparts in this truck segment. It can provide a total peak power of up to
430 kW ‐ 250kW from the rear eBeam™ and 180kW from the front eDrive. The solution also
eliminates the need for architectural changes to the vehicle and is totally customizable for
automakers to prioritize key performance attributes. Magna’s eBeam™ replaces traditional beam
axles, accommodating existing suspension and brake systems, and avoiding the need for
expensive redesign of existing truck platforms. These benefits help automakers simplify thetransition toward electrification of these vehicle segments. In addition, with fewer moving parts
than a traditional ICE powertrain, the EtelligentForce requires less maintenance – a direct benefit totruck owners over the life of the vehicle.

ETELLIGENT REACHTM
Magna’s all‐electric connected powertrain, the EtelligentReach, is a complete system comprised of
two electric motors, inverters and gearboxes, and leverages advanced software to maximize vehicle
range and driving dynamics. eDrive technology advancements and the holistic vehicle development
approach of the EtelligentReach achieve a range increase of up to 145 km/90 miles or 30%
compared to certain production BEV vehicles in this segment, which reduces range anxiety, and isa key differentiator in the growing electrification space. Magna’s approach optimizes the interactionof individual eDrive components and the entire vehicle with a software package that manages
multiple vehicle functions. On one of our new entrant customer’s vehicles, for example,
EtelligentReach utilizes a functional, modular control unit that integrates various powertrain andchassis functions. This includes a vehicle dynamics controller with a disconnect system which
increases efficiency while reducing CO2 emissions, and a longitudinal torque vectoring function that
can improve the safety margin by up to 10% by controlling each axle individually in all roadconditions, as well as significantly reduce steering effort during dynamic cornering. Drivers canselect from several distinctive driving modes ‐ further enhancing the driving experience.
Additional efficiency gains are achieved using silicon carbide within the inverter.

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2.3

Resource Efficiency

2.3.1 Energy
Our aggregate global energy spend in 2022 amounted to approximately $581 million broken down by type as follows:◾ Electricity – approximately $446 million◾ Natural Gas – approximately $112 million◾ Other (Propane; Liquid Petrol; Diesel; District Heat; Steam; Coal Gas) – $23 million
As part of our sustainability and operational efficiency efforts, we are focused on optimizing energy use, which may result in savings in overall
energy costs. However, as we continue to forecast growth in Sales and number of facilities over the medium-term, we anticipate that ouraggregate energy consumption may increase. Accordingly, we are focused on becoming more energy efficient (measured by energy
consumption relative to Sales) so that, at minimum, our rate of increase in energy consumption slows. In connection with our efforts topromote energy efficiency, we developed interim 2022 energy reduction targets for each of our Operating Groups, which aggregated toapproximately 3% of our annual energy purchase based on MWh per USD of sales. We reduced our MWh per USD of sales by 1.3% in 2022
(compared to 2021). For future years our Corporate Sustainability team, working with our Operating Groups, has established new shortand long- term energy reduction targets as follows:

1 Year(Stretch Target)

10% reduction inenergy cost intensity(cost/Production Sales)(Y/E 2023 vs. Y/E 2022)

1 Year

2 Year

5 YearComplete energy
reduction projects
in 2023 that equate toat least a 5% reductionof a Group’s 2022 actual
absolute energy usage

A minimum 10%
reduction in energy
intensity(kWh/Production Sales)(Y/E 2024 vs. Y/E 2022)

A minimum 20%
reduction in energy
intensity(kWh/Production Sales)(Y/E 2027 vs. Y/E 2022)

Approximately 95% of our Divisions have active energy teams pursuing energy efficiency measures in their respective Divisions. These
teams are supported at the corporate level by a Global Energy Team which helps identify and promote energy reduction initiatives, including
through: training courses designed to promote strategies for reduced energy use; regional benchmarking sessions; regular communication
through newsletters; an internal energy savings collaboration site; and best practice sharing.
Some of the incremental changes made by our Divisions to their facilities and processes to reduce our energy consumption and improveenergy efficiency include:◾

Installation of LED lighting and installation of lighting controls into the building management system (BMS);
Equipment start-up/shut-down/idling procedures to achieve energy-savings during production downtimes;◾ Compressed air leak identification and repair initiatives;◾ Use of ceiling fans to blend air temperatures evenly within our operations;◾ Computer-controlled utility and HVAC systems to allow for improved performance and energy reduction;◾ Installation of energy metering and monitoring systems, a requirement for all our manufacturing facilities;◾ Door and dock seal repairs to reduce heat loss;◾ High efficiency chiller and compressor upgrades;◾ Integration of air economizers and heat recovery units into HVAC systems;◾ Software-managed and occupancy-sensor-controlled lighting and energy efficient lighting retrofits;◾ Use of solar panels at certain facilities;◾ Installation of insulation mattresses on equipment and heating units;◾ Recovery of waste heat from certain processes for use in other areas;◾ Installation of variable frequency drives on motors and pumps; and◾ Participation in energy savings and incentives programs offered by utilities providers in some jurisdictions in which we operate.
◾

In 2022, Magna joined the U.S. Environmental Protection Agency’s (EPA) ENERGY STAR program as a partner. Through this partnership,
we will work to improve energy efficiency in our operations and fight climate change through an enhanced energy management program inwhich we will:◾ Continue to measure and track the energy performance of our organization’s facilities, where possible;
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Annual Information Form◾

Continue to develop and expand our energy management programs consistent with the Energy Star Guidelines to achieve energy
savings;◾ Help spread the word about the importance of energy efficiency to our staff and community;◾ Highlight our achievements with recognition offered through ENERGY STAR.
Our efforts to reduce energy consumption and operate facilities on a more energy efficient basis forms part of our formal MAFACT
system – the primary operational assessment audit tool used to support our World Class Manufacturing initiative. The MAFACT systemestablishes World Class standards for achieving operational efficiencies, identifies benchmarks and promotes best practice sharing among
Divisions in Magna. The integration of energy management elements into a core operational assessment tool such as MAFACT is intended
to reinforce the importance of energy management throughout the organization and help realize potential cost savings. In 2022, we
implemented energy projects across all of our Operating Groups which resulted in approximately 18,000 tons of CO2 equivalent in annual
savings. Given the importance of energy optimization in meeting our carbon neutrality targets and to further incentivize our Divisions, wehave established a separate approval category for energy efficiency and sustainability-related capital improvements. We have also developed
a phased-in renewable energy strategy focused on Europe and the U.S. first, followed by the other markets in which we operate. In 2022,
100% of our electricity purchase (84% of our total energy purchase) in Austria was from renewable energy sources and evidenced byrenewable Energy Attribute Certificates (EACs) or from on-site generation from photovoltaic (solar panel) systems. In the near – and mediumterms, adoption of renewable energy may increase our energy costs, but we are working to offset the impact of such increases throughenergy use reductions. While we currently have a few examples of renewable energy self-generation at certain of our facilities, selfgeneration is not a significant opportunity for us primarily since the vast majority of our facilities are leased, as well as other factors such asfootprint constraints for solar panels at certain owned facilities, and/or facilities in locations with relatively clean electrical grids that makeself-generation economically unfeasible.
2.3.2 Water
We have implemented a 1.5% per year water reduction target, with the aim of reducing water use 15% by 2030, in each case referencing
2019 as the baseline year. To date ,we have already met and exceeded this target, having acheived a reduction of over 17% at the end of2022. While we are not a significant water user, achievement of water reductions would be expected to result in cost savings, potentially byoffsetting (in whole or in part) any increase in the rates charged by applicable water utilities. Overall, we do not anticipate that any savings will
be material.
2.3.3

Waste

We have also implemented a zero waste to landfill (“ZWTL”) target. Waste sent to landfill bears both an economic cost borne by us and an
environmental cost borne by society as a whole. Although achievement of our ZWTL target will help reduce or eliminate the economic cost,
we do not anticipate any such savings will be material.

2.4

Resilience

The automotive industry as a whole is investing in innovations aimed at adapting mobility products and service solutions to a lower carbon
economy. The risk mitigation factors below in “Section 3 – Climate-Related Risks and Risk Mitigation” and initiatives to realize opportunities
discussed in this Section of the Sustainability Report, together with factors addressed in “Section 4 – Our Business & Strategy” of our AIF,
are expected to promote our ability to adapt and succeed in a lower carbon economy.

3.

Climate- R el a ted R i s k s an d R i s k M i t i g at i o n

Magna maintains both top-down and bottom-up processes for identifying and assessing sustainability-related risks within the governancestructure described in “Section 1 – Sustainability Governance” of this Sustainability Report. In order to fully understand the risks set out
below, you should also carefully consider the risk factors set out in “Section 5 – Risk Factors” in our AIF.

3.1

Transition Risks and Risk Mitigation

3.1.1 Regulatory Policy Actions
Applicable near-term policy actions related to climate change generally fall into one of the following categories, each of which may have anindirect effect on Magna:◾

Average Fleet Emissions or Fuel Efficiency Regulations: Governments in key auto producing regions have set challenging
average vehicle fleet emissions or fuel efficiency targets which OEMs must meet, including the European Union, China and the U.S., asdetailed below. We regularly monitor changes in regulation relating to emissions and fuel efficiency as part of our strategic planning
processes:
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European Union: E.U. regulations generally require OEMs to have achieved E.U. fleet-wide average emissions of 95g CO2/km from2021 through to 2024, which corresponds to 4.1 litres/100 km of gas or 3.6 litres/100 km of diesel. Vehicle manufacturers with anaverage fleet economy in excess of the target must pay an excess emissions penalty for each vehicle registered within the E.U. The
2021 average emissions level forms the baseline for a further 15% fleet-wide average emissions reduction from 2025 onwards; and37.5% from 2030 onwards. In addition, in March 2023, the E.U. approved its “Fit for 55” legislation to aggressively increase suchtargets to a 55% reduction by 2030 and a 100% reduction by 2035 (as discussed below). Penalties levied on non-compliant OEMs
may be passed on to vehicle-buying consumers, which could impact demand for such vehicles and thus demand for Magna products
supplied for such programs. Additionally, E.U. regulations contain incentives aimed at promoting the development of Zero- and lowemission vehicles (“ZLEVs”). The CO2 emissions targets applying to any particular OEM will be relaxed if its share of ZLEVs registered
within the E.U. in any year exceeds 25% from 2025 to 2029; however, such incentives will be eliminated under the Fit for 55 legislationfrom 2030 onwards.
China: In China, effective July 1, 2021, stringent China VI emissions regulations addressing particulate emissions were implemented,
which could affect consumer demand for vehicles, or powertrain options for vehicles, that do meet the new emissions standard. For
example, in 2019, one of our equity-accounted joint ventures in China experienced a significant drop in demand for one transmission
model supplied to a Chinese OEM. One of the factors underlying the drop in demand was the fact that the transmission would not have
met the China VI standard, had it been in effect at that time.
United States: In the U.S., the current administration issued an executive order with a non-binding target of 50% of all new vehicles
sold in 2030 to be zero-emission vehicles (“ZEVs”), including battery electric, plug-in hybrid electric, or fuel cell EVs. Subsequently, theEPA finalized new vehicle emissions standards for passenger cars and light-duty trucks with model years 2023-2026 which increasein stringency through that period, and would result in a fleetwide average fuel economy of approximately 40 mpg in 2026. Morestringent emissions standards for model years 2027-2030 are expected to be introduced by the EPA in the near term. In addition, theU.S. National Highway Traffic Safety Administration (NHTSA) issued new corporate Average Fuel Economy (CAFE) standards regulating how far our vehicles must travel on a gallon of fuel. The new CAFE standards for passenger cars and light trucks
manufactured in model years 2024-2026, would increase fuel efficiency requirements by 8% annually (compared to 1.5% annually
under previous standards) for model years 2024-2026 and increase the estimated fleetwide average fuel economy by 12 miles per
gallon for model year 2026 vehicles, relative to model year 2021. In 2022, the U.S. also announced stricter standards on smog-forming
emissions from trucks, vans and buses starting in the 2027 model year. The new EPA rules are more than 80% stronger than current
rules and represent the first update to clean air standards for heavy-duty vehicles in over 20 years.
The tightening emissions standards in the European Union, China and the U.S. are intended to promote the transition to ZEVs. OEMs
have been spending significant sums in R&D in order to meet the higher regulatory standards. Although production of ZLEVs/ZEVs is
accelerating due to regulatory requirements, to the extent that ZLEVs/ZEVs do not sell at the levels expected, production volumes mayneed to be reduced. Lower than forecast production poses a risk to our ability to recover pre-production expenses amortized in thepiece-price of our product, as discussed above.
◾

Phase-Out of New ICE Vehicles: In addition to more stringent fleet emissions and fuel efficiency standards, the number of nationaland subnational jurisdictions committing to, or accelerating existing commitments to, phase-out of the sale or registration of new ICE
engines is growing. As part of its Fit for 55 legislation, the E.U. will require 100% reduction in CO2 emissions by 2035 effectively
banning the sale of new gasoline and diesel fueled vehicles in EU member countries by that date, with an interim reduction of 55% by
2030.
The United Kingdom has accelerated its plans to phase out ICE passenger cars and vans, with all vehicles required to have a significant
zero emissions capability (e.g. plug-in and full hybrids) from 2030, and be 100% zero emissions at the tailpipe from 2035.
In North America, Canada has accelerated its mandatory phase out of ICE and diesel powered vehicles through a new regulation that
requires all new sales of light-duty vehicles to be ZEVs by 2035; with interim targets requiring 20% ZEVs from 2026 and rising eachyear until reaching the 100% target in 2035. Companies offering vehicles for sale in Canada will be required to offer a growing
percentage of their fleet as ZEVs starting in 2026 and increasing to 100 per cent by 2035, according to the current drafts.
In the US, the State of California’s, California Air Resources Board (CARB) adopted the Advanced Clean Cars II proposal in 2022. The
proposal bans ICE-powered vehicles by 2035, and has progressive targets for ZLEVs in the intervening years. 15 other US States andthe District of Columbia have existing laws that require state emissions policies to mirror those of California (Connecticut; Colorado;
Delaware; Maine; Maryland; Massachusetts; New Jersey; New Mexico; New York; Oregon; Pennsylvania; Rhode Island; Vermont;
Virginia; and Washington). Massachusetts, New York, Oregon, Washington and Vermont have formally declared the phase-out of new
ICE vehicle sales from 2035.
Given the long lead times for vehicle development such proposals and emerging regulation are expected to increasingly impact OEM
and automotive supplier product planning and development this decade, and have led to several OEM establishing EV targets for
specific brands or their complete vehicle offerings, including our top six customers:◾ BMW: 30% EVs by 2025; 50% by 2030
◾ Ford: 100% EV by 2030 in Europe

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Annual Information Form◾

GM: 100% EV by 2035
Mercedes-Benz: 50% EVs by 2025 (including plug-in EV); 100% EV by 2030
◾ Stellantis: 100% EV by 2030 (by brand - DS by 2024; Lancia by 2026 Alfa Romeo by 2027; Opel by 2028; Fiat & Peugeot by 2030)◾ Volkswagen: 45% EV by 2030 (by brand – Audi 100% EV by 2033; VW 100% EV by 2035; Porsche > 80% EV by 2030).
◾

◾

Vehicle Restrictions in Congested Urban Centres: municipal governments in a number of cities around the world have introduced
restrictions on personal-use vehicles in congested urban centres, in an effort to reduce CO2 emissions and improve urban air quality.
Examples of the types of restrictions include: car-free zones; toll charges; and use restrictions by license plate. Continued expansionof such initiatives could reduce the demand for personal-use vehicles, which could affect our profitability. As a result of measurable air
quality improvements in many cities during COVID-19-related mandatory lockdowns/stay-at-home orders, an expansion of restrictions
on personal-use vehicles in urban centres is likely.

We attempt to mitigate applicable policy risks relating to climate change-related regulation in a number of ways, including:◾

monitoring and evaluating global regulatory developments;
early-stage interaction with our OEM customers to understand their product priorities and regulatory compliance requirements;◾ in-house R&D, including our ongoing analysis of megatrends and the “Car of the Future”, combined with investment strategies inmobility and technology start-ups; and◾ strategic planning processes at both Operating Group and Corporate levels, including Board oversight of strategic plans.
◾

In terms of direct policy actions affecting our operations, we anticipate continued strengthening of environmental regulations related toindustrial emissions and discharge of pollutants to air, water and ground. We currently face strict environmental regulations in the countries
where we operate and have developed a global environmental management program in order to comply with or exceed regulatory standards.
Our environmental management program is regularly updated to address changing environmental laws and regulations. Refer to“Section 4.1 – Environmental Stewardship” in this Sustainability Report for a description of the program.
In considering the potential impact of the above or other climate-related policy actions, readers are encouraged to review the following risk
factors in “Section 5 – Risk Factors” in our AIF:
◾

◾

◾

◾

Regional Volume Declines
Consumer Take Rate Shifts◾ Deteriorating Vehicle Affordability◾ Potential Consumer Hesitancy◾ Alignment with “Car of the Future”◾ Evolving Counterparty Risk Profile

Impairments
Changes in Laws
◾ Market Shifts◾ Customer Purchase Orders◾ Customer Pricing Pressure/Contractual Arrangements◾ Environmental ComplianceOver the medium-to long-term, carbon pricing initiatives may present a risk to our profitability. According to the World Bank, in 2022 there
were 70 carbon pricing initiatives implemented or scheduled for implementation in 47 countries and 36 sub-national jurisdictions, which
would cover emissions representing 23.2% of global GHG emissions. We are pursuing energy reduction measures and developing carbon
neutrality strategies for our manufacturing facilities. However, over the medium- to long-term, carbon pricing initiatives could affect our
profitability to the extent we are unable to implement cost-saving or energy reduction measures within a timeframe and/or at a cost whichenables us to offset or avoid the cost of carbon pricing initiatives.
3.1.2

Customer-Driven Policy Actions

A number of our OEM customers have set carbon-neutrality targets and are challenging Tier 1 Suppliers to support such targets. Somesuch OEM targets and expectations are more aggressive than our own carbon neutrality targets. In some cases, we are being asked toquote the supply of future programs based on 100% renewable energy use for production. Although we expect to meet or exceed ourcustomers’ expectations, the inability to do so within the timeframes expected could result in the loss of some future business.
3.1.3

Climate-Related Litigation

We do not currently believe that climate-change related litigation represents a significant legal risk for us. However, if OEMs are adversely
impacted by climate-change litigation, there is a possibility that Tier 1 Suppliers like Magna could face additional pricing pressure. Readers
are encouraged to review the “Customer Pricing Pressure/Contractual Arrangements” risk factor in “Section 5 – Risk Factors” in our AIF.
3.1.4

Technology

Investments in automotive technologies that support the transition to ZLEVs can be significant, particularly in product areas such as battery
systems for hybrid and EVs. While our product strategy does not currently include battery systems or other components which generate orstore energy for ZLEVs, we have been awarded several battery enclosure programs and currently offer a range of electrified drivetrain
products, hybrid dual-clutch transmissions (“HDTs”), dedicated hybrid transmissions (“DHTs”), as well as complete electric-drive (“e-Drive”)
systems. We have also expanded our product offering into other areas relevant to ZLEVs – for example, in conjunction with a joint venture
partner, we can offer customers a complete EV platform. Our R&D spending for electrification solutions has been significant over the last few
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years and could continue to be in coming years as electrification-related technologies continue to evolve. Additionally, our OEM customers
are making significant investments in the development of ZLEVs, which is impacting their profitability and could lead to increased pricing
pressure on us.
As ZLEVs increase their proportion of the overall vehicle market over the medium – to long-term, we expect our sales of manual transmissions
and traditional DCTs to decline, and sales of HDTs, DHTs and e-Drive systems to increase. The increasing adoption of electrified drivetrain
solutions adversely impacts our AWD and 4WD businesses over the long term, since it is possible to achieve AWD through the use ofelectric motors in hybrid or fully-electrified drivetrains. However, OEM product plans show mechanical AWD and 4WD programs extendingout for approximately the next decade. We seek to offset displacement of mechanical AWD and 4WD systems through increased sales ofelectrified product offerings such as e-Drive systems.
Overall, we believe that the range of products we offer our OEM customers provides us with a competitive advantage and an effective hedge
against the market uncertainties associated with the transition to ZLEVs. As illustrated below, a substantial majority of our products are“agnostic” with respect to the type of vehicle propulsion system used, and therefore remain relevant to ZLEVs:
Included in Magna's portfolio

EV

PowertrainAgnostic

ICE

Power Electronics –EV, HV Hybrid

E-Drivetrain

Interior
Systemsand Seating

Body
Structure

Body Exterior(incl. Lighting
and Mirrors)

Driving
Systems(incl. chassis)

Transmission

Battery Pack

Sensors(ADAS)

Electronics –OtherEngineSystems

ECUs/DCUs

ThermalManagement

Complete
VehicleEngineeringandManufacturing

ExhaustRegulation
Components

In the case of drivetrain products, we view the know-how gained from our mechanical drivetrain expertise as being critical to our ability todeliver innovative electrified solutions that meet our customers’ needs. In addition to continuing to offer a range of mechanical and electrified
drivetrain products, we aim to mitigate technology transition risks through:◾

early-stage interaction with our OEM customers to understand their product priorities and regulatory compliance requirements;
in-house R&D including our ongoing analysis of megatrends and the “Car of the Future”, combined with investment strategies inmobility and technology start-ups; and◾ strategic planning processes at both Operating Group and Corporate levels, including Board oversight of strategic plans.
◾

In considering the potential impact of the above or other climate-related policy actions, readers are encouraged to review the following risk
factors in “Section 5 – Risk Factors” in our AIF:
◾

◾

◾

◾

Intense Competition
Consumer “Take Rate” Shifts◾ Emergence of potentially-disruptive EV OEMs
◾ Deteriorating Vehicle Affordability◾ Potential Customer Hesitancy◾ Alignment with “Car of the Future”◾ Evolving Counterparty Risk Profile◾ Customer Purchase Orders◾ Restructuring Costs
3.1.5

Technology and Innovation
Changes in Laws
◾ Market Shifts◾ Dependence on Outsourcing◾ Impairments◾ Customer Pricing Pressure/Contractual Arrangements◾ Investments in Mobility and Technology Companies◾ Intellectual Property Risks

MarketSome of the risks impacting the market for our products in the transition to a lower carbon economy are described above under“Section 3.1.1 – Regulatory Policy Actions” and “Section 3.1.4 – Technology”. Additionally, there are potential risks to the demand for
personal mobility vehicles, and thus for our products, from technology-driven shared mobility solutions such as ride hailing and ride sharing.
To date, such shared mobility solutions have not had a material impact on the demand for new vehicles and no such adverse effect is
expected in the near- to medium-term. In any event, our own strategy related to new mobility seeks to mitigate risks to our business andrealize opportunities based on the breadth of capabilities we can offer new mobility customers.
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Additionally, in order to enhance our understanding of potential shifts in consumer behavior, we conduct our own analysis of various factorsthat are expected to drive future personal and shared mobility trends, including through:◾

monitoring and analysis of social, digital, demographic, regulatory, industry, geopolitical and other trends which may create demand
for and drive development of new automotive and mobility technologies;◾ review of academic research;◾ collection and screening of ideas submitted through innovation programs; and◾ early-stage interaction with our OEM customers and new mobility market entrants to understand their product priorities.
We do not currently anticipate long-term supply constraints on key commodities required by us in our business, including steel, aluminumor resin. However, production processes for steel and aluminum are carbon intensive, with relatively scarce supply of low-carbon alternatives.
As the entire industry’s carbon-neutrality and net-zero efforts increase, the price of low-carbon steel and aluminum may increase in the nearand medium-terms until the supply of low-carbon product is sufficient to meet growing demand. In the near- and medium-term, theincreasing production of ZLEVs may also strain supplies of the rare earth minerals and other metals required for vehicle battery systems,
which we do not supply, including nickel, cobalt and lithium used in EV batteries, copper for EV charging infrastructure and rare earth metals
for EV motor magnets. However, such supply constraints could help spur the development of alternative battery technologies or low carbon
fuels and/or promote technological breakthroughs that could facilitate market penetration of hydrogen fuel cell or other technologies. We
intend to continue developing and offering solutions such as e-Drive systems which are neutral as to electric power source (battery orhydrogen fuel cell stack) in order to mitigate potential risks related to supply constraints of rare earth minerals or other commodities needed
for current ZLEV power source technologies.
In considering the potential impact of market risks, readers are encouraged to review the following risk factors in “Section 5 – Risk Factors”
in our AIF:
◾

◾

◾

◾

Intense Competition
Consumer “Take Rate” Shifts◾ Deteriorating Vehicle Affordability◾ Potential Customer Hesitancy◾ Alignment with “Car of the Future”◾ Evolving Counterparty Risk Profile◾ Supply Chain Disruptions
3.1.6

Quote/Pricing Assumptions
Commodity Price Volatility◾ Technology and Innovation◾ Market Shifts◾ Dependence on Outsourcing◾ Customer Pricing Pressure/Contractual Arrangements◾ Investments in Mobility and Technology Companies

Reputation

Since light vehicles are contributors to global GHG emissions, Tier 1 suppliers like Magna may face reputational risks from participation in
the automotive industry. Examples of such risk types include potential loss of business from sustainability-focused customers, reduced
investor demand for our shares, and challenges attracting talent. A number of our OEM customers are embedding sustainability criteria intheir sourcing decisions and could reduce purchases from us if they perceive Magna to lag other suppliers with respect to sustainability.
Stakeholders, including investors and employees, as well as prospective employees are increasingly focused on companies’ sustainability
efforts. Investors may sell shares of investee companies perceived to be less sustainable. In addition, millennial and other components of
the workforce want to work in companies they perceive as sustainable, making it difficult for companies to attract such talent if the company
is perceived as lagging in sustainability. However, OEMs and Tier 1 Suppliers have been proactively adapting to climate change andtransitioning to a lower carbon economy, as evidenced by the significant spending on R&D and technological innovation to reduce CO2
emissions, particularly through electrification and powertrain efficiency, as well as the setting of carbon neutrality targets in their own
operations. At the same time, particular OEMs may be viewed as more or less sustainable based on their sustainability strategies andcommitment to transitioning to a lower-carbon economy. Equally, particular vehicle models or even entire vehicle segments may be perceived
to be more or less sustainable. As a supplier of a broad range of systems to all major OEMs, we do not anticipate any consequences to our
reputation by virtue of the fact that we may supply to any particular OEM, vehicle or vehicle segment. In any event, we believe that our R&D
and technological innovation, which is focused on lightweighting, improved fuel economy and lower emissions, together with oursustainability strategy, including our carbon neutrality commitments, serve to mitigate potential reputational risks.

3.2

Physical Risks and Risk Mitigation

3.2.1

Acute

With the increased frequency and severity of extreme weather events associated with Climate change, including floods, windstorms,
wildfires, tornados, tsunamis, hailstorms and other natural weather hazards, we face the risk that such an event could cause significant
damage to one or more of our facilities or those of our customers and/or sub-suppliers. While our primary concern in an acute climate event
affecting one of our facilities would be the safety and well-being of our employees, property damage and business interruption would
represent the primary financial risk.
An acute climate event that significantly damages one of our facilities, could disrupt our production and/or prevent us from supplying
products to our customers. Such an event could lead to us incurring a number of costs, many of which may be unrecoverable, including:
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costs related to the physical repair of any damage to our facility; costs related to premium freight or re-sourcing of supply; penalties orbusiness interruption claims by our customers; loss of future business and reputational damage; and higher insurance costs going forward.
Extreme climate events could also disrupt supply chains for the entire industry over the near-, medium- and long-term. The National Centers
for Environmental Information, a U.S. federal agency, estimates that the number of billion-dollar weather and climate disasters in the UnitedStates each year has risen significantly to an average of 20 in the last two years, from an average of three per year in the1980s. In recent
years, a number of supply disruptions resulting from extreme weather have occurred around the world, including:◾ a rare and extreme storm impacted the U.S. state of Texas that disrupted oil production and thus supplies of resins and materials
required for automotive seating. The storm also forced three major semiconductor facilities clustered in the Austin, Texas area totemporarily shut down, which exacerbated the global semiconductor shortage.
◾ flooding in central China that disrupted supply chains for commodities and forced the closure of several automotive OEM plants.
◾ a typhoon in Malaysia that damaged Southeast Asia’s second-largest port, causing a disruption in the semiconductor supply chain
and causing some U.S.-based automotive OEMs to suspend operations.
◾ the Rhine river, Europe’s most important commercial waterway, experienced both bursting from heavy rainfall and snowmelt, as wellas, low water levels from drought conditions. The conditions halted shipping for extended periods, forced reduced cargo loads, anddisrupted both inbound raw material and outbound product deliveries, which impacted the German automotive industry, in particular.
Such events can cause shortages of critical materials, which in turn drives prices higher. Efforts to mitigate the impact of such events often
result in higher near-term costs until disruption of the affected material has been resolved, due to factors such as premium freight costs for
substitute materials. As the frequency of such events increases, we may be forced to maintain higher inventories of various materials andcomponents required for production, to minimize potential disruptions.
We maintain a global property risk control (PRC) program to support our efforts to mitigate risks to our employees’ safety, physical property
risks and potential for business interruption due to extreme weather events. The program, which includes risk engineering with support froma third party property risk engineering consulting firm, includes the following elements to promote the physical resiliency of our facilities andminimize the risk of disruption to our operations: pre-screening of facility site selection; acquisition risk assessments; periodic facility
inspections; facility construction design review and recommendations; and training and education. Our third party risk engineering consultant
typically engages in over 200 physical on-site assessments annually to evaluate various risks, including those relating to natural hazards.
Using the Swiss Re NatCat database, the advisor has analyzed over 400 unique Magna locations to assess climate related exposures,
including: flood, wind, storm surge, wildfire, tornado. tsunami, hailstorm, lightning, temperature change, precipitation, sea level rise risk andwater security. The results of the analysis form the basis of discussions with our PRC group regarding potential risk control recommendations
to be implemented in our facilities.
In certain circumstances, the program extends the risk assessment to our direct suppliers by identifying and evaluating potential exposures
to our direct supply chain (including natural hazards) which could potentially disrupt business operations. Where such supply chain exposures
are identified, a more detailed assessment may be performed to better understand the supply chain risk, including further on-site
assessment, where practicable.
In considering the potential impact of acute physical risks, readers are encouraged to review the following risk factors in “Section 5 – Risk
Factors” in our AIF:◾
◾

Supply Chain Disruptions
Regional Energy Supply and Pricing◾
◾

Legal and Regulatory Proceedings
Climate Change Risks – Transition and Physical Risks

An extreme weather event that damages any of our manufacturing Divisions and results in injuries or fatalities among employees at such
Division could have a material adverse effect on our reputation and could result in legal claims being brought against us.
Climate change considerations may impact the availability of and premiums for insurance coverage in general, and in particular, for properties
in high-risk locations. Additionally, we may need to self-insure a higher level of risk, which could result in a material adverse effect on
profitability in the event of an extreme weather event which causes damage to one or more of our facilities.
3.2.2

Chronic

As part of our PRC program, we have retained an advisor to map our global footprint against identified earthquake, wind exposed/
hurricane, flood exposed and wildfire zones, as well as areas with low water security, in order to assist us with footprint planning, as well as
our understanding of, and efforts to address, potential risks associated with such types of natural catastrophes. This footprint mapping
exercise provided the following conclusions:◾

Property Risk Concentrations: There are ten geographic regions (in Austria, Canada, Germany, Mexico and the U.S.) in which wehave concentrations of property/asset risk, meaning multiple locations within a 35 km radius, and comprising approximately 42% of
the total insured value (“TIV”) under our property risk program. All of the regions of concentrated property/asset value are considered
to be “Low” seismic hazard zones and are not exposed to tropical cyclones.
◾ Seismic Zones: We have operations in Austria, Germany, Slovenia, Slovak Republic, Morocco, India, Turkey, Japan, Italy, Romania,
China and Mexico comprising approximately 6% of the TIV under our property risk program, which are located in regions of “Moderately
High” or greater seismic hazard. None of our operations are in regions where the seismic hazard is considered “Extreme”.
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Annual Information Form◾

Tropical Cyclone Zones: Operations in certain parts of Mexico, Japan, China, India, Korea and the U.S. comprising approximately 4%of the TIV under our property risk program are located in hurricane risk Zone 1 to Zone 5, as per Munich Re’s Natural Hazards
Assessment Network (NATHAN) categorization. TIV by Tropical Cyclone Zones are as follows:
Munich Re (NATHAN) Tropical Cyclone Zone

Proportion of TIV

Zone 5: > 300 km/h◾

NIL

Zone 4: 252-300 km/h

NIL

Zone 3: 213-251 km/h

0.67%

Zone 2: 185-212 km/h

0.58%

Zone 1: 142-184 km/h

2.68%

Zone 0: 76-141 km/h

23.86%

No hazard

72.21%

Flood Zones: Flood risk is typically categorized as 50-year, 100-year, 200-year and 500-year flood risks. Definitions of these categories
based on Swiss Re’s CatNet Global Flood Zone (GFZ) categorization and the proportion by TIV of our facilities for each category are as
follows:

Category

Proportion of TIV
within 5 km Radius

Flood Probability

50 year1 in 50 (2%) chance of occurring in a year

2.3%

100 year

1 in 100 (1%) chance of occurring in a year

11.4%

200 year

1 in 200 (0.5%) chance of occurring in a year

13.1%

500 year

1 in 500 (0.2%) chance of occurring in a year

2.6%

Climate change is associated with a rise in sea levels, which places properties located within a five kilometre radius of the current coastline
at risk of coastal flooding. A total of 12 of our Divisions are located five kilometres or closer to a coastline and thus may be at higher risk fromthe effects of climate-change related sea rise:
No. of Divisions

Location(s)Body of Water

2

Michigan, U.S.

Lake Michigan

1Ohio, U.S.

Lake Erie

1

Ontario, Canada

Lake Ontario

1

Liverpool, U.K.

River Mersey

1Livorno, Italy

Ligurian Sea

1

Bari, Italy

Adriatic Sea

1

Golcuk Izmit, Turkey

Lake Sapanca

1

Tangier, Morocco

Atlantic Ocean

1

Guangzhou, China

Huangou River

1

Hangzhou, China

East China Sea

1

Taizhou, China

East China Sea

Two of such Divisions (Golcuk Izmit, Turkey and Taizhou, China) representing less than 0.5% of TIV are located within one kilometre of acoastline.
◾

Wildfires: Less than 1% of our Divisions (located in Brazil), representing approximately ≤1% of TIV, are considered as being exposed
to significant wildfire risk. Wildfire risk is reviewed based on proximity to forests and grasslands with consideration of topography andclimate conditions.

◾

Water Security

Water scarcity is a chronic condition in a number of regions of the world, and it is expected to be amplified due to the effects of climatechange. As part of our PRM program we conducted an assessment of water security risk in 2022. Water security suggests the reliability/
security of an acceptable quantity and quality of water, since water is a critical input in many production processes as well as the lifebloodof sprinkler protection systems. A reduction or failure of water supply could cause a significant impact on operations in the affected region.
The methodology for determining water security exposure was based on the "Baseline Water Stress" 4 of the World Resources Institute(WRI) Aqueduct Global Maps 3.0, that measures the ratio of water withdrawals to available renewable surface and groundwater at the
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catchment scale. Water withdrawals include domestic, industrial, irrigation, and livestock consumptive and non-consumptive uses. Available
renewable water supplies include the impact of upstream consumptive water users and large dams on downstream water availability. The
indicator used is calculated by inverting the "Baseline Water Stress" scores and converted to a 0-100 scale to represent "Water Availability"
as a percentage. Low values represent water stressed areas, due to either high water withdrawals or low water supplies.
Our assessment showed that we have 61 locations in regions deemed to have "low" water security, comprising approximately 14% of TIV.
The assessment indicated exposure locations in China, Germany, India, Italy, Mexico, Spain and the United States. However, Mexico
represents the most significant region for us in terms of exposure to water security risk as approximately 50% of the affected locations are
in Mexico, representing approximately 70% of the TIV in low water security regions. While we currently attempt to mitigate the impact ofwater scarcity risks through water reduction and re-use activities, including the use of treated waste water for irrigation of green areas on asite, the water security analysis is used for additional discussions with our risk engineering consultant, including potential additional
recommendations for action plans to mitigate water security risks in the affected regions.
In considering the potential impact of chronic physical risks, readers are encouraged to review the following risk factors in “Section 5 – Risk
Factors” in our AIF:◾

Supply Chain Disruptions◾

Climate Change Risks – Transition and Physical Risks◾

Regional Energy Shortages and Pricing

4 . Non- Clima te E l emen ts of Su s t ai n ab i l i t y
4.1

Environmental Stewardship

260+
FACILITIES ISO 14001
CERTIFIED

Magna strives to be an industry leader in health, safety and environmental practices in all
operations through technological innovation and process efficiencies to minimize the impact of
our operations on the environment and to provide safe and healthful working conditions. In
furtherance of this objective, Magna’s Health, Safety and Environmental Policy (“HSE Policy”)
commits to, among other things:◾

complying with, and exceeding where reasonably possible, all applicable health, safety
and environmental laws, regulations and conforming with our internal standards based on
generally accepted environmental practices and industry codes of practice;◾ regularly evaluating and monitoring past and present business activities impacting on
health, safety and environmental matters;◾ improving the efficient use of natural resources, including energy and water;◾ minimizing waste streams and emissions;
FACILITIES ISO 50001◾ implementing environmental sustainability targets as defined in the Magna Environmental
CERTIFIED
Principles;◾ utilizing innovative design and engineering to reduce the environmental impact of our
products during vehicle operation and at end of life;◾ ensuring that a systematic review program is implemented and monitored at all times for each of our operations, with a goal ofcontinuous improvement in health, safety and environmental matters and zero accidents or environmental incidents; and◾ reporting to the Board at least annually.

25+

The full text of the HSE Policy is located on Magna’s website (www.magna.com).

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4.1.1 Environmental Compliance
Magna is subject to a wide range of environmental laws and regulations relating to emissions, soil and ground water quality, wastewater
discharge, waste management and storage of hazardous substances. Magna maintains a global environmental program which consists ofboth internal and third party audits and inspections of our facilities for compliance with local regulations, internal corporate environmental
requirements and industry best practices as detailed below:
Audits &Inspections

Risk Assessment &Action Plan
Each finding identified in an audit orinspection is assigned a risk score,with the risk scores of all findings
combined to establish an overall
environmental performance rating forthe Division
The Division is provided a reportcontaining recommendations which
are prioritized based on the level ofrisk identified in the risk assessment
The Division is required to develop a
corrective action plan to address theidentified risk

Oversight,
Performance Tracking & Reporting
Magna’s Environmental Department
provides ongoing assistance toDivision personnel in resolving action
plan items, including by reviewing
and approving action plans that havebeen submitted to close-out
identified risks
Audit/Inspection findings are also
communicated to our OperatingGroup management to enhanceoversight and commitment toresolving action items
A performance review takes placequarterly with Operating Groupmanagement
An escalation process is in place todeal with findings that are not being
resolved on a timely basis, withadditional environmental risk
awareness training provided to therelevant Division, where necessary
Magna’s Environmental Department
provides periodic environmental
compliance updates to the GNSC

General environmental awareness training is provided to employees by Division management as well as Magna’s Environmental Department
as part of ISO 14001 certification compliance. In addition, Magna’s Environmental Department holds regular conferences for representativesof our manufacturing facilities in order to:◾ reinforce Magna’s commitment to environmental responsibility;◾ communicate changes in local and regional regulations; and◾ share best practices with respect to environmental protection, compliance and sustainability initiatives.
4.1.2

Hazardous Waste and Industrial Emissions

We operate a number of manufacturing facilities that use environmentally-sensitive processes and hazardous materials. We believe that allof these operations meet, in all material respects, applicable governmental standards for management of hazardous waste and industrial
emissions. Occasionally our operations may receive a notice of violation or similar communication from local regulators during routine
reviews. We have in the past and will continue in the future to address any such notices promptly. Based on our preliminary data,approximately 4% of the aggregate waste generated by Magna in 2022 was hazardous, a reduction from 7% in 2021. We attempt to reduce
the amount of hazardous waste that ends up in secure landfills through: recycling, reuse or energy recovery initiatives. Approximately 90%of the hazardous waste generated by Magna in 2022 was diverted from secure landfills through such initiatives.

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4.2

Fairness and Concern for Employees
4.2.1

Our Commitment to Magna Employees

We are committed to an operating philosophy based on fairness and concern for people. This philosophy is
one in which employees and management share in the responsibility of ensuring our company’s success.
Our Employee’s Charter, a foundational document in our business, sets out this philosophy through thefollowing principles:

MICHIGAN◾

Job Security – Being competitive by making a better product for a better price is the best way toenhance job security. Magna is committed to working together with employees to help protect their job
security. To assist employees Magna will provide job counselling and training, as well as employee andfamily assistance programs.
◾ A Safe & Healthful Workplace – Magna is committed to providing employees with a working
environment which is safe and healthful.
◾ Fair Treatment – Magna offers equal opportunities based on an individual’s qualifications andperformance, free from discrimination or favouritism.
◾ Competitive Wages & Benefits – Magna provides employees with information which enables them tocompare their total compensation, including wages and benefits, with those earned by employees of
their direct competitors and local companies their Division competes with for people. If totalcompensation is found not to be competitive, it will be adjusted.
◾ Employee Equity & Profit Participation – Magna believes that every employee should share in thefinancial success of the company.
◾ Communication & Information – Through regular monthly meetings between management andemployees, continuous improvement meetings and through various publications and videos, we keep
our employees informed about company and industry developments. We also conduct regular
employee opinion surveys to help facilitate employee engagement and to receive valuable feedback
from employees to help drive continuous improvement.
◾ The Hotline – Should an employee have a problem, or feel the above principles are not being met, we
encourage them to contact the Hotline to register their complaint(s). Those using the Hotline do nothave to give their name, but if they choose to do so, it will be held in strict confidence. Hotline
Investigators will respond to those using the Hotline. The Hotline is committed to investigating andresolving all concerns or complaints and must report the outcome to Magna’s Global Human
Resources Department. We also maintain a confidential and anonymous whistle-blower hotline for
employees and other stakeholders that is overseen by our Audit Committee. See Section 4.5 –“Corporate Ethics and Compliance” below for further details.
We also maintain a Global Labour Standards Policy, which codifies our existing practices consistent with our
Fair Enterprise culture. This Policy provides a framework for our commitment to fundamental human rights
and international standards that help support positive employee relations, including:◾

promoting the importance of diversity, inclusion, and respect for one another, regardless of personal
differences;◾ not tolerating harassment of any kind, including physical, sexual, psychological or verbal abuse;◾ ensuring employees do not face discrimination in accordance with the protections afforded byapplicable law, including discrimination based on race, nationality or social origin, colour, sex, religion,
gender identity, disability or sexual orientation;◾ condemning child labour;◾ rejecting forced or compulsory labour;◾ maintaining safe and healthy workplaces; and◾ providing employees with appropriate rest and leisure time.
We publish a Slavery and Human Trafficking Statement setting out the steps Magna has taken to address
the risk of slavery and human trafficking in our operations and supply chain. The statement can be found in
the “Financial Reports & Public Filings” section of our website, at www.magna.com.
Our commitment to our employees continued to garner recognition, including:◾

Forbes: America’s Best Large Employers (2023)
Forbes: Canada’s Best Employers (2023)◾ Built in: Best Places to Work (2023)◾ Forbes: World’s Best Employers (2022) – Our 6th consecutive year receiving this accolade◾ Forbes: Best in State – Michigan (2022)◾ “Open Company” Certification from Glassdoor◾ Great Place to Work® for Millenials – Turkey (2022)◾ Great Place to Work® – Turkey (2022)◾ Mercier China: Healthiest Workplace Awards (2022-2023)◾ Universum: Most Attractive Employer Award – Mexico & Czech Republic (2022)◾

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4.2.2 Collective Rights
We are committed to providing workplace environments that promote the dignified, ethical, and respectful treatment of our employees, as
reflected in the standards contained in our Global Labour Standards Policy and our Code of Conduct and Ethics (“Code”).
Our Global Labour Standards Policy articulates our respect for employees’ right to associate freely and to choose for themselves whether
or not they wish to be represented by a third party in accordance with local laws. We operate both unionized and non-unionized facilities
across multiple regions, as well as having facilities where other forms of representative structures exist, such as works councils, and/or
where industry-wide tariff agreements apply. In our core regions such as the Americas, Europe and Asia, we have a number of locations
formally represented by trade unions, where local collective bargaining agreements are in place. Where such arrangements exist, we strive
to maintain positive and productive business relationships with these organizations, resulting in competitive industry agreements.
Employees in our unrepresented facilities benefit from a system of progressive and people-focused human resources policies, coupled with
consultative concern resolution programs which include our Fairness Committee, Employee Advocates, Employee Opinion Survey, Open
Door Process and our Hotline, all designed to proactively address individual and workplace issues in a constructive and respectful manner.
4.2.3 Magna’s Open-Door Process
Magna maintains a comprehensive Open-Door Process, whereby employees are empowered to bring issues and concerns forward toleadership at all levels of the organization, without fear of retaliation. This process enables management and employees to collaborate on
resolving workplace issues together. This process includes regular use of Employee Opinion Surveys, focus groups, and local continuous
improvement action plans, focused on maintaining a positive workplace environment.
As a part of our Open-Door Process, we maintain Fairness Committees in many of our North American and European manufacturing
facilities, as well as at various manufacturing facilities in India and China. These Fairness Committees enable employees to have many of
their concerns resolved by a peer review committee comprised of both management and fellow employees. Most of our North American
manufacturing facilities also have an Employee Advocate who works with our employees and management to help ensure that any concernsthat arise in the workplace are addressed quickly and in accordance with our Employee’s Charter, Global Labour Standards Policy andOperational Principles.
4.2.4 Leadership Development / Talent Management
We have implemented, and continue to enhance, our Leadership Development System to help identify, train and develop future leaders withthe skills and expertise needed to manage a complex, global business. We have also based our talent management strategy on our current
business objectives and strategy and our understanding of the transformation taking place in the automotive industry. Given that aneffective workforce will increasingly be required to be lean and digitally adept, we are focused on building such a workforce through attraction
and recruitment, professional development, succession planning, promoting diversity and inclusion and preservation of our Fair Enterprise
culture.
4.2.5 Employee Training
In order to support our talent management programs and employee career development, we provide numerous training resources andopportunities for our employees. These include:◾ required training for designated employees with regard to global compliance topics (discussed in Section 4.5 of this Sustainability
Report), including our Code and supplementary policies;◾

required training for designated employees with respect to various topics, including: information security/cybersecurity and dataclassification;◾

training with regard to sustainability objectives and priorities, including gender equality, industry innovation and infrastructure, andgood health and well-being, which has been completed by approximately 33,000 of our employees to date;◾

providing a Leadership Excellence Program (LE), built on best practices in the business and manufacturing environment;◾

online Magna Training Centres (MTCs) for Canada/USA, Mexico, Austria, Germany, Czech Republic, Slovakia, Poland, China andIndia. The MTCs offer programs to develop technical, leadership and business skills to support the learning and development needs of
Magna employees from the shop floor to senior management; and◾

maintaining an online Learning Hub to provide employees with the ability to enhance and future proof their technical and other skills.

Approximately 25% of our total workforce (i.e. all of our white collar employees) receives e-learning training each year, consisting of one
course on the Code (including the topics of bribery, corruption, antitrust, and competition) and a second course on one ethics-related topic
selected for that year. All new employees are required to receive compliance on-boarding training on Code and related topics as part of theiron-boarding process when joining the company. Finally, all new people managers receive advanced ethics training; and all customer-facing
employees receive advanced antitrust training upon hiring.
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4.3

Diversity and Inclusion in our Workplaces

Magna is committed to attracting, retaining and developing under-represented talent across the globe. In order to pursue this commitment,
Magna’s identified strategic pillars for Diversity and Inclusion (“D&I”) success are reviewed by our Executive Management with the Chairs of
our Diversity and Inclusion (DI) Council. Periodic updates are provided to the Board of Directors about how the company is progressing the
D&I strategy.
Our key D&I priorities are to create an inclusive workplace; promote awareness; and to leverage strategic partnerships, as discussed below:
4.3.1 Creating an Inclusive Workplace
Our employees are critical stakeholders in our business. The principle of Fair Treatment, outlined in our Employee’s Charter – one which we
reinforce through employee meetings, training and communications – has been a key element in fostering an inclusive workplace at Magna.
Any employee who feels that we are not living up to the principles of the Charter can seek redress through the Magna Hotline.
We seek to abide by all applicable labour and employment laws, including those prohibiting discrimination and harassment and those
providing for the reasonable accommodation of differences. We are committed to providing equal employment and career advancement
opportunities, without discrimination based on sex, race, ethnic background, religion, disability or any other personal characteristic protectedby law. This is addressed in our Code documentation and training, which all Magna employees must complete.
4.3.2 Promoting Awareness
Our Executive Management continues to reinforce the importance of an inclusive and diverse organization. We continue to roll out facilitatedworkshops to all leadership levels to better equip leaders with tools and resources to drive inclusive behaviour. We also host “listening
sessions” to understand racial barriers and issues faced by diverse employees. We promote and embed diversity through our talentattraction and management processes. We have provided diversity and inclusion training for certain employees and have made various D&I
tools and resources available for all employees. To further advance our D&I progress, we have implemented three employee-led, volunteer
resource communities: Race & Ethnicity (EDGE); LGBQT+ and Allies (PRIDE); and the Women’s eXchange. These communities support theexecution of Magna’s D&I strategy, raise awareness and help foster a more inclusive environment. The employee resource communities
provide, among other things, opportunities for mentoring and career development.
4.3.3 Leveraging Strategic Partnerships
We continue to enhance our capabilities by working with diversity and inclusion thought leaders, associations and non-profit organizations
dedicated to the advancement of women, racial minorities, and employees of diverse backgrounds; promotion of inclusive work cultures; aswell as strategies and actions to address the needs of a diverse workforce. These partnerships help us to benchmark our activities andprogress, as well as provide insight into best practices and emerging topics for our D&I agenda. Recognizing the importance of improving
gender diversity within key technical career streams and to support the development of the next generation of the talent in science,technology, engineering, and mathematics (STEM), we have formed strategic partnerships with a number of organizations that promote
gender diversity in technical career streams. Our current strategic partnerships include: Build a Dream; Centre for Automotive Diversity,
Inclusion & Advancement (CADIA); Catalyst; FIRST Robotics – Girls in STEM; Gartner, Inc.; her Career; Institute of Electrical and Electronic
Engineers (IEEE); Indspire; Inforum; KnowledgeStart; Mckinsey & Company; National Society of Black Engineers (NSBE); Newmarket
African Caribbean Canadian Association (NACCA); Oakland University; Parents of Black Children; Pontiac Chamber of Commerce; Ryerson
DMZ; Society of Automotive Engineers (SAE) International; Society of Hispanic Professional Engineers; and Women in Manufacturing. We
also participate in various automotive advisory groups to ensure the focus on Diversity and Inclusion in the industry remains strong.
4.3.4

Gender Diversity

We are continuing to progress our agenda to increase the number of women in Magna. On a global basis, approximately 28% of theemployees in our wholly-owned operations are women. A total of approximately 4,900 employees in our wholly-owned operations occupy
critical roles with 873 of such employees, or 18%, being women. Both the percentage of women in our wholly-owned operations, and thepercentage of women in critical roles increased slightly from the previous year. Underrepresentation of women in our workforce is mostpronounced in IT, operations, and product engineering career streams, which is a consistent trend throughout the automotive industry. We
recognize that there are improvements to be made and we are pursuing strategies to accelerate the progression of women, in director andmanagerial level roles, and in our most critical operational and technical roles, where there is the greatest level of underrepresentation.
As part of our succession planning program we continue to identify high-potential, diverse talent candidates and implement accelerated
development plans to support their progression to advanced roles. During talent and succession discussions, there is an increased level offocus on the number of women and diverse candidates nominated into each of our succession pools.
In addition, the Board as a whole continues to advocate for improved gender representation and other diversity in leadership and othercritical roles, as well as STEM career streams. In addition to their strong advocacy, the female directors of the Board, currently representing
42% of our Board of Directors, have also sought opportunities to mentor and share their experiences with the company’s high-performing
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Annual Information Formfemale employees. Recognizing the important example set by the Board with respect to its own composition, the Board maintains a Board
Diversity Policy (located in the Board Charter) targeting gender parity by December 31, 2023, subject to a minimum of not less than 30%
female director prior to that time. Consistent with the recommendations of the Canadian Coalition for Good Governance, gender parity will
be achieved if the balance between male and female directors ranges between 40% and 60% over a rolling three-year timeframe. As of
May 11, 2023, the percentage of women on the Board will be 38%, assuming election of all nominees for Magna’s annual meeting ofshareholders. In addition to the Board gender representation discussed above, 46% of nominees for election at Magna’s annual meeting ofshareholders are diverse nominees (based on gender, LGBTQ+ and/or being an underrepresented minority in their home country).

4.4

Occupational Health and Safety

4.4.1

Health and Safety Standards and Compliance

Our health and safety program at our Divisions must include specific areas of risk assessment and evaluation that at a minimum includes:
machinery and equipment safety; incident and accident management; personal protective equipment; emergency preparedness policies
and action plans; fire protection; ergonomics; mental health; industrial hygiene and handling of chemicals; and working at heights andconfined space.
Our commitment to providing a safe and healthful work environment is fulfilled through a regular program of health and safety audits andinspections of our global facilities. These audits and inspections cover the specific minimum topics listed above. Audits are designed toaddress documentation requirements, while inspections assess physical hazards. Audits and inspections are conducted on-site andfollowed with a report requiring the facility to develop an action plan to address deficiencies or best practices. The action plans are reviewed
quarterly by senior Operating Group management.
The compliance program incorporates international and regional standards, including: ISO 45001, Canadian Standards Association (CSA),
American National Standards Institute (ANSI), Conformité Européenne (CE), as well as country-specific standards. Audits and inspections
are conducted by specialists with knowledge of Magna’s standards and country-specific requirements. Legislative changes, accident
trends and changes to industry standards are incorporated into the program as part of the annual review of the program and updates ofaudit requirements are conducted every three years. The key elements of the program are detailed below:

Audits &Inspections

Risk Assessment &Action Plan
Each action item identified in an audit
or inspection is assigned a risk score,with the risk scores of all action items
combined to establish an overall
health and safety performance rating
for the Division
The Division is provided a reportcontaining recommendations which
are prioritized based on the level ofrisk identified in the risk assessment
The Division is required to develop a
corrective action plan to address theidentified risk

Oversight,
Performance Tracking & Reporting
Magna’s Health and Safety
Department provides ongoing
assistance to Division personnel inresolving action plan items and also
reviewing action items that havebeen submitted for closure from
DivisionsAudit/Inspection findings are also
communicated to our OperatingGroup management to enhanceoversight and commitment toresolving action items
A performance review takes placequarterly with Operating Groupmanagement
An escalation process is in place todeal with action items that are notbeing resolved on a timely basis, withadditional health and safety risk
awareness training provided to therelevant Division, where necessary
Magna’s Health and Safety
Department provides periodic healthand safety compliance updates to
the TOCC

Our Health and Safety Department holds regular conferences with representatives of our Divisions to reinforce our commitment to providing
a safe and healthful work environment, as well as to share best practices with respect to occupational health and safety. An employee who
believes we have not fulfilled our promise to provide a safe and healthful working environment can seek redress through the Magna Hotline.

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4.4.2 Ergonomics Program
A key program for supporting employee well-being is our ergonomics program which aims to reduce the risk of musculoskeletal injuries.
Managed by each Division’s ergonomic committee and with the support and guidance of corporate ergonomists, the program regularly
evaluates Division performance against a set of established criteria.

4.5

Corporate Ethics and Compliance4.5.1 Code of Conduct and Ethics
We are committed to conducting business in a legal and ethical manner globally. Our Code, which applies equally to all of our directors,
executive officers and employees, articulates our compliance-oriented values and expectations. The principles of the Code have been andcontinue to be reinforced by our Chief Executive Officer, Executive Management, Operating Group management and the Board.
The Code addresses standards of conduct in a number of specific areas, including:◾

how to report suspected violations of the Code, and prohibiting retaliation against employees who report such violations in good faith;◾ respect for human rights, diversity and inclusion;◾ conducting business with integrity, fairness and respect;◾ giving and receiving gifts and entertainment;◾ complying with all laws and regulations, including anti-corruption/bribery and antitrust/competition laws;◾ lobbying and political contributions;◾ full, accurate and timely public disclosures, including financial reporting;◾ prohibiting insider trading;◾ compliance with environmental, and occupational health and safety laws;◾ protecting personal data;◾ respect for human rights, diversity and inclusion;◾ careful communication, and protecting confidential and personal information;◾ managing conflicts of interest;◾ giving and receiving gifts and entertainment; and◾ compliance with related corporate policies.
The Code, which is disclosed on the “For Employees” section of our website (www.magna.com) and posted on our employee intranet in 26
different languages, is reviewed regularly with all amendments approved by the Board. We have also supplemented the requirements of theCode through the adoption of policies covering specific topics, including: bribery and improper payments, tooling practices, gifts andentertainment, anti-retaliation, careful communication, conflicts of interest, sanctions and trade embargoes, antitrust and competition, data
privacy, and the conduct of internal ethics investigations (all of which are also available on our website (www.magna.com)).
4.5.2

Global Compliance Program
In order to help our employees understand the values, standards and principles underlying ourCode, we have implemented a global compliance program (the “Program”) overseen by the
Audit Committee, which includes training of employees through different modalities (e-learning
live in-person, and virtual instructor-led) on various topics relating to compliance and ethics. We
also provide specialized compliance training modules which target specific functional audiences
and high-risk regions. In addition to providing training on compliance and ethics topics generally,
these specialized modules are designed to be interactive and incorporate real-life scenariosand exercises, which we believe amplify our Program expectations and resonate more
powerfully with participants.
The Program is supervised by the Magna Compliance Council (“Compliance Council”), a bodythat includes key corporate officers representing our finance, legal, human resources,
operations, internal audit, sales and marketing, technology, information, research anddevelopment, and compliance functions. The Compliance Council is tasked with, among otherthings, providing overall direction for our Program, approving key initiatives and ensuring thatthe required elements of our Program are being carried out globally by our cross-functional
Operating Group Compliance Committees.

For the second year in a row, in 2023 Magna was selected as a World’s Most Ethical Companies honoree by Ethisphere, a global leader in
defining and advancing standards of ethical business practice.
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Annual Information Form

~34,000

~100%

~100%

employees completed
annual Code of Conduct
e-learning in 2022

of customer facing
employees completed antitrust
training since 2015of new or recently
promoted people managers
completed advanced ethics
training since 2015

4.5.3 Magna Hotline
The Magna Hotline is a whistle-blower hotline. The Hotline is confidential and reporters can remain anonymous (except where local law
requires disclosure of a reporter’s identity), and is available for employees and other stakeholders such as customers and suppliers to makereports by phone or online at any time in 27+ languages. Reports are received and tracked by an independent third party service provider.
Reports to the Magna Hotline (other than reports of an HR nature) are reviewed by our Internal Audit Department and, when appropriate, aninvestigation is conducted in accordance with our Policy on Internal Ethics Investigations. Investigations are conducted by Magna’s Internal
Audit Department, Corporate Security team, In-House lawyers and/or external counsel (where applicable). We maintain an Investigations
Oversight Committee, a sub-committee of the Compliance Council, which meets quarterly (and on an ad hoc basis, as needed) to review
such investigations to ensure consistency of discipline and promote early awareness and oversight. The Audit Committee receives quarterly
presentations from the Vice-President, Internal Audit regarding Magna Hotline activity and details of compliance, fraud, financial reporting,and other investigations (other than HR-related investigations).

4.6

Data and Cybersecurity/Privacy

4.6.1 Enterprise Cybersecurity
Our enterprise cybersecurity strategy was developed by our Information Security, Risk and Compliance Department (“ISRC”) which ultimately
reports to our EVP and Chief Digital and Information Officer. The strategy has been designed using guiding principles from our Code as wellas enterprise risk considerations and aligns with industry standards including the National Institute of Standards and Technology, relevant
ISO standards, and applicable customer requirements. Our Board has risk oversight responsibility for Magna’s enterprise IT/information
security systems and cybersecurity program and receives reports regarding the program at periodic meetings.
Our cybersecurity initiatives are based on five key considerations:◾

Identify – develop an organizational understanding of cybersecurity risk to systems, people, assets, data, and capabilities;
Protect – develop and implement appropriate safeguards to ensure against cybersecurity risk and continue to deliver critical services;◾ Detect – internal and external 24 × 7 monitoring of all information traffic for cyber-attacks, including ransomware and other malware;◾ Respond – our Security Operations Centre has appropriate incident response plans/processes and the necessary resources andexpertise to respond to detected threats; and◾ Recover – our Security Operations Centre works with IT operations to recover as quickly as possible by rebuilding affected systems
and restoring data back-ups.
◾

We are committed to working with our customers and other stakeholders to ensure that appropriate cybersecurity standards andrequirements are continually monitored and implemented as required. In addition, we ensure that we comply with all governmental rules andregulations regarding cybersecurity or privacy regulations (such as GDPR as defined and detailed below), which directly affect cybersecurity
requirements. Our selection process for third party (e.g. Cloud-based) services includes a due diligence approach that ensures that suchservices are evaluated using industry standard security assurance approaches to assess and address the risks associated with third party
technology services and aligns with our overall approach to cybersecurity.
We regularly evaluate and adjust our information security management strategy based on a variety of considerations including risk
assessments, continuous monitoring and periodic independent cybersecurity maturity evaluations. This enables the ISRC to identify andprioritize responses to residual risk arising from changes to our business or the ever-changing threat landscape. Magna has developed andimplemented centralized enterprise cybersecurity policies, compliance measures, as well as training and awareness programs designed toensure that our cybersecurity strategy is executed to minimize our exposure.
Governance of cybersecurity over our shared global telecommunications and computer infrastructure is centralized under the ISRC. The
ISRC facilitates identification of our risk exposures and mandates the implementation of appropriate security controls. We have processes
in place to ensure that our IT systems receive appropriate upgrades, including patching and other protective measures, in a timely manner.
4.6.2

Product-Embedded and Solution Software Cybersecurity

In addition to the above centralized initiatives, our decentralized operating model assigns cybersecurity accountability to our OperatingGroups with respect to risk/security issues inherent in products. However, the ISRC provides various standards-based approaches to assist
our Operating Groups in assessing their respective product cybersecurity risk and maturity. From this assessment, our Divisions andMagna International Inc.

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Operating Groups are then able to determine appropriate cyber solutions that may be required. Our Technology Committee supports theBoard through the committee’s risk oversight responsibility for Magna’s product-embedded or solution software cybersecurity.
4.6.3 Privacy
Magna is committed to preserving the privacy of our stakeholders in accordance with applicable laws. Our Code articulates our approachto the privacy of our employees and protection of their personal information. We only collect, use and disclose personal information for
legitimate business or employment purposes, as required by law, or with an individual’s consent. In addition, like any other asset, confidential
information which includes trade secrets and proprietary information is a valuable part of our business and we aim to safeguard it.
Magna has established a data privacy organization and program in our divisions in the European Union, as well as Brazil, Thailand andChina. The program includes the issuance of policies and procedures, employee training, gap assessments and the implementation of adata privacy management system.
In addition to our general privacy and confidentiality commitments, our Global Data Privacy Policy (the “Privacy Policy”) has been established.
The Privacy Policy is designed to guide our compliance with, among others, the EU General Data Protection Regulation (“GDPR”), China’s
Personal Information Protection Law, the Brazilian General Data Protection Law and Thailand’s Personal Data Protection Act.
The Privacy Policy sets out general data protection principles, responsibilities of data controllers and processors, circumstances underwhich personal data can be transferred, rights of data subjects and actions that must be taken in case of data breach, as well as addressing
data retention periods. The Privacy Policy is accompanied by a variety of formal and comprehensive procedures, developed and overseen
by our Compliance Council.
A training program has been implemented to address general data privacy awareness for all employees and provide more specific rules for
those employees who are handling personal data as part of their daily work. Finally, those employees across our organization responsible
for handling privacy requests by data subjects or for addressing data breaches have been provided with the tailored training and resources
to carry out such responsibilities.
Furthermore, Magna continues to monitor legislative and regulatory developments in the fast-changing data privacy landscape in otherregions with Magna operations.

4.7

Supply Chain Responsibility

4.7.1 Supplier Code of Conduct
We have introduced a Supplier Code of Conduct and Ethics (“Supplier Code”) which outlines the principles we apply internally at Magnathrough our Code, as well as expectations we have for every company that supplies goods or services to Magna, relating to, among otherthings:◾ ethical business conduct, such as compliance with antitrust/competition, anti-corruption/bribery and export controls laws; conflictminerals reporting; avoidance and reporting of conflicts of interest; and protection of Magna intellectual property and confidential
information;◾ employee rights, including those rights set out in our Employee’s Charter, Global Working Conditions and Global Labour Standards
Policy; and◾ environmental responsibility and compliance.
The Supplier Code forms an integral part of our overall contractual relationship with our suppliers. We expect the standards set out in the
Supplier Code to be met by our suppliers, even in jurisdictions where meeting such standards may not be considered part of the usualbusiness culture and a failure to do so can result in the termination by Magna of the supply relationship. The full text of our Supplier Code isavailable on our website (www.magna.com).
We continue to support and participate in industry efforts to develop common standards relating to business ethics, environmental
standards, working conditions and employee rights. We will continue to engage with our suppliers to raise awareness of the importance ofsustainability in our supply chain.
4.7.2

Global Working Conditions in our Supply Chain

We expect that our supply chain will adhere to our Global Working Conditions and our Supplier Code, which prohibit the use of child,underage, slave or forced labour. Our Global Working Conditions are an integral part of our supplier package that emphasize the importanceof maintaining global working conditions and standards that result in dignified and respectful treatment of all employees within all our global
operating locations, as well as those of our supply chain. A failure by any of our suppliers to comply with its terms can result in thetermination by Magna of the supply relationship.
4.7.3 Supply Chain Management
4.7.3.1

GeneralMagna’s supply chain management group focuses on a number of elements that we believe are integral to world class supply chain
management, such as: standardized supplier quality and delivery performance ratings; specific roles and responsibilities; processes andA-28

Annual Information Formstandards; global training; and risk management. The supplier quality and delivery performance ratings have been established to help
optimize business award decisions. We use cross-functional sourcing teams, in the majority of our sourcing decisions, to help ensurecompliance with our internal standards when we place new business within our supply base. In order to promote awareness of the key
elements of our supply chain risk management program, including the requirements in our Supplier Code, we provide global on-line training
on an ongoing basis to internal purchasing employees.
We continue to increase digitization of our supply chain management, including focusing on spend analytics and online transportation risk
tracking, as well as electronic tagging and tracing of certain assets.
As part of our strategy to improve sustainability performance across our supply chain, we are developing an ESG component for our
program award criteria, as discussed under “Supplier Reviews” below.
4.7.3.2 Enhancing Transparency into and the Sustainability of Our Supply Chain
In order to enhance transparency into our supply chain and work towards a more sustainable supply chain, we have made several
enhancements to our supply chain management program:◾ We have implemented a third party supply chain risk monitoring and mapping tool, which monitors and provides real-time alerts
affecting supply chains, including: operational issues, financial or legal issues, CSR incidents (i.e., environmental incidents, poor
working conditions), industrial accidents, product incidents (i.e., recalls), cyber risks, natural disasters, governance risks (i.e., corporate
wrongdoing), labour unrest, and political unrest;◾ We participate in the CDP Supply Chain Program for Climate Change, engaging key suppliers to report on their energy usage andemissions – a critical step in better understanding our Scope 3 emissions with a view to establishing Science-based Scope 3 emissions
targets;◾ We require our strategic suppliers (representing a majority of our direct material spend) to respond to self-assessment questionnaires
through NQC, a third party supply chain management organization who will be responsible for data collection and analysis via theirSupplierAssurance platform. The self-assessment questionnaires (currently SAQ 5.0) which is a standard automotive industry
sustainability questionnaire developed by global OEMs. The SAQ which Magna completes for requesting OEM customers annually,requires information, including documentation, relating to several topics, including, among other things: sustainability management;
working conditions and human rights; health and safety; business ethics; environmental compliance; supplier management; andresponsible sourcing of raw materials, as well as questions specifically addressed to German Act (as defined below) compliance;◾ We are in the process of implementing a Supplier Roundtable, with the aim of annually engaging key suppliers on topics including
energy reduction, carbon neutrality, supply chain resiliency, and human rights and working conditions;◾ Magna is a founding member of the Responsible Supply Chain Initiative (RSCI), an association of automotive OEMs, Tier 1 Suppliers
and industry associations, which has established an assessment program for due diligence in the automotive supply chain relating tosocial compliance, occupational safety and environmental protection. The RSCI assessment program is based on the Responsible
Business Association Validated Audit Program and customized to the requirements of the automotive industry; and◾ Through the RSCI, member companies such as Magna, have the opportunity to have employees trained as RSCI auditors. Magna iscurrently rolling out such training to ensure our own personnel are trained to support our supply chain due diligence needs.
We continue to monitor and ensure compliance with emerging supply chain regulation, including:◾ the German Supply Chain Due Diligence (Lieferkettensorgfaltspflichtengesetz (LkSG)) (the “German Act”) which came into force
January 1, 2023, and which imposes a duty on companies, including several Magna subsidiaries in Germany, to make reasonable due
diligence efforts to determine if there are violations of human rights or violations of environmental obligations in their own business
operations or in the their supply chain. We maintain a cross-functional working group that includes representatives from our compliance,
legal and purchasing functions and meets regularly to analyze and provide guidance on compliance with the requirements of theGerman Act. The working group currently reports its activities and progress to a Steering Committee comprised of members of Magnasenior leadership led by Magna’s Global Vice President, Procurement. We have also appointed a Human Rights Officer to oversee ourcompliance with the German Act. The first reporting obligation for our subsidiaries under the German Act arises in Spring 2024; and◾ the U.S. Uyghur Forced Labor Prevention Act, which requires companies, starting in June 2022, to rebut the presumption that goods
coming from Xinjiang, China were not made using forced labour, by meeting forced labor due diligence standards set forth in the
Guidance published by U.S. Department of Homeland Security.
In addition, Magna is monitoring developments related to the publication, in February 2022, of a draft E.U. Corporate Sustainability Due
Diligence regulation that, like the German Act, would mandate supply chain due diligence relating to human rights and environmental
matters.
4.7.3.3

Supplier Reviews

We currently review production suppliers in order to assess their overall operational, performance and financial health. We use a scorecard
to provide ongoing monitoring and assessment of suppliers, which tracks (among other things) whether suppliers have certain industryrecognized environmental and health and safety certifications, such as ISO 14001 and ISO 18001. In 2023, we intend to introduce anotherpillar covering ESG to our supplier review scorecard process. We are in the process of finalizing relevant key performance indicators
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(KPIs) that will form part of this additional pillar, but expect that such KPIs will, at a minimum, include a supplier’s CDP and SAQ (discussed
below) scores, as well as relevant risk alerts generated from our third party supplier monitoring tool.
No suppliers were terminated in 2022 as a result of a violation of working conditions or human rights.
4.7.3.4

Phytosanitation Program

We maintain a phytosanitation program aimed at preventing the introduction and spread of plant diseases (i.e., pests and mold) through thecross-border import/export process. Our phytosanitation policy which applies to suppliers and shippers aligns with the International Plant
Protection Convention (IPPC) standard for treatment of wood packaging material (e.g., wooden pallets), and includes the requirements of
ISPM-15 (International Standards for Phytosanitary Measures). Our phytosanitation program includes training sessions for internal employees
and suppliers, as well as reviews aimed at confirming compliance with our policy.
4.7.3.5

Supplier Diversity

To support the supplier diversity efforts which form part of our supply chain management program, we participate as a corporate memberof several industry-recognized suppler diversity organizations, including:◾

the National Minority Supplier
Development Council (NMSDC)◾

National Veteran Business Development
Council (NVBDC)◾

Women’s Business Enterprise National
Council (WBENC)◾

the Canadian Aboriginal and Minority
Supplier Council (CAMSC)◾

the National LGBT Chamber ofCommerce (NGLCC)◾

Disability: IN◾

Women Business Enterprises Canada
Council (WBE Canada)◾

Great Lakes Women’s Business Council(GL-WBC)◾

WEConnect International◾

Michigan Minority Supplier
Development Council (MMSDC)

In addition, we are supporters of the Michigan Hispanic Chamber of Commerce (MHCC), the US Hispanic Chamber of Commerce (USHCC),
the Asian Pacific American Chamber of Commerce (APACC), the Detroit LGBT Chamber of Commerce, the Veteran Owned Business
Roundtable (VOBRT), the Council of Supplier Diversity Professionals (CSDP), and The National Business League. We are also involved witha number of supplier diversity advocacy events, conferences, and procurement fairs, including many organized by our OEM customers,such as GM Supplier Inclusion Board, Stellantis MatchMaker, BMW Supplier Diversity Conference, Toyota Opportunity Exchange andHonda Network Partnership. We are proud to have received, in recent years, several customer awards for our supplier diversity efforts fromGM and also received a diversty award from supplier diversity leader – WBE Canada.
4.7.3.6

Conflict Minerals Reporting

Consistent with the approach taken by our customers, suppliers and other fellow members of the Automotive Industry Action Group withrespect to “conflict minerals”, we are engaged in an annual process of determining whether any products which we make or buy containsuch “conflict minerals”. Our latest conflict minerals report is available on our website www.magna.com and on the SEC’s EDGAR website(www.sec.gov/edgar). We continue to engage with our suppliers to increase awareness, and accuracy, of “conflict minerals” reporting
requirements and, through our membership in the Responsible Minerals Initiative (RMI), support continuing cross-industry efforts to identify
and validate conflict-free smelters and refiners. We also report to requesting OEM customers with respect to Cobalt and Mica.

4.8

Contributing to Communities in Which we Operate

4.8.1 Commitment to Communities and Society
Magna recognizes the importance of giving back to society. We have a long history of supporting many global social and charitable causes,
primarily in the communities around the world in which our employees live and work. While much of our corporate giving is to general

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Annual Information Formphilanthropic causes, we have identified seven United Nations Sustainable Development Goals that most directly relate to our business.
Examples of Magna’s activities and accomplishments with respect to each relevant Development Goal is as follows:

Ensure healthy lives
and promote wellbeing for all at all ages

Ensure inclusive andequitable quality
education andpromote lifelong
learning opportunities
for all◾

Since 2017, more than $1.3M has been raised from employee donations and Magna’s Matching
program through annual participation in the World Vision Global 6K for Water, which aims to bringlife-changing clean water to communities in need. The Suppliers Partnership for the Environment(SP) – an association of global automakers and their suppliers working together to advanceenvironmental sustainability through the automotive supply chain – previously awarded Magna SP’s
Community Impact Award for our support of the Global 6K for Water challenge◾

Magna’s corporate wellness initiatives help support the ongoing physical and mental health of employees
globally◾

Magna has contributed over $25M toward medical infrastructure and over $1M to the Red Cross andother organizations to aid with global disaster relief efforts. Magna’s Employee Disaster Relief Fund
provides financial assistance to eligible employees and their families in the event they are victims of adisaster. In 2022, the program helped 26 employees in Canada, China, Czech Republic, India, Italy,
Mexico, Russia, and the United States. Magna also made a donation to the Red Cross to assist theirefforts in response to the earthquake that devastated parts of Turkey and Syria in February 2023◾

Magna locations around the globe organize food drives and fundraisers to support local foodbanks andto address food security◾

Magna sponsors and actively participates in FIRST Robotics globally to encourage students to consider
careers in science, technology and engineering. FIRST organizes mentor-based programs that help
participants build science, engineering and technology skills while also fostering self-confidence,
communication skills and leadership◾

Magna embraces a culture of learning, including a pilot program that pays for employees to pursue
job-related certificate programs and university degrees◾

Employees can access Magna-sponsored scholarships for their children to pursue university degrees◾

We have partnerships in several countries with universities and technical institutions to develop a talentpipeline and help promote skilled trades development◾

Magna sponsors several regional and international skills competitions through WorldSkills to enhance
technical trades development and growth opportunities for students◾

We support the Canadian Institute for Advanced Research a Canadian-based global researchorganization that brings together teams of top researchers from around the world to address importantand complex questions◾

We support Skills USA and Ontario, organizations that champion and stimulate the development ofworld-class technological and employability skills for youth◾

Magna’s Women’s eXchange Employee Resource Community strives to empower, develop andrecognize its female employees and encourage students to pursue STEM careers◾

We hosted the Women of Inforum@CES 2023 networking event in conjunction with Inforum, a nonprofit
dedicated to accelerating the careers of women and building talent initiatives at companies◾

Magna’s Board has adopted a Board Diversity Policy targeting gender parity by December 31, 2023,
subject to a minimum of not less than 30% female directors prior to that time. As of May 11, 2023, 38%
of our Board members will be women. assuming election of all nominees for Magna’s annual meeting ofshareholders◾

Since 2016, Magna has spent more than $1.8 billion with women-owned businesses/suppliers as part ofits overall supplier diversity program◾

Magna celebrates and honors the many contributions of women around the world, including annuallycelebrating International Women’s Day through live global events for employees to connect with andhonor outstanding women in the company

Achieve genderequality and empower
all women and girls

Magna International Inc.

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Magna:◾

completed hundreds of energy/sustainability projects in recent years, resulting in significant and ongoingenergy, emission, and costs savings throughout its global operations. Some examples of sustainableprojects in our company are:◾

Build resilient
infrastructure, promote
inclusive andsustainableindustrialization andfoster innovation

Magna’s Cosma Shanghai Division in China implemented a waste heat recovery program that reusedflue gas generated in its aluminum casting process to power lithium bromide chilling units, resulting ina reduction of approximately 1,650 tons of CO2 per year
Both MCC Wuhu and Cosma Shanghai were inaugural winners of our Commitment to SustainabilityAwards for these process improvements◾

Reduce inequality
within and among
countries

Magna’s Exteriors MCC Wuhu Division in China used a Regenerative Thermal Oxidizer (RTO) torecover waste heat from an air pollution control unit for use in a paint line, eliminating use of 3,000 tons
per year of steam

Three Magna plants in Austria installed photovoltaic (solar) panel systems which are capable ofproducing approximately 3,000 kW peak of electricity◾

joined the U.S. EPA’s ENERGY STAR program as a partner to work to improve energy efficiency in ouroperations and fight climate change through an enhanced energy management program◾

created a Global Bold Perspective Award to showcase student vehicle designs of the future. The
automotive design competition annually selects a winner from entries from students in North America,
Europe and China◾

Magna’s race and ethnicity-focused (EDGE), LGBQT+ and Allies (PRIDE) Employee, and Women’seXchange Resource Communities, support employee-led learning opportunities to foster open dialogue
and understanding, as well as opportunities for mentoring and career development◾

46% of Board nominees for election at Magna’s annual meeting of shareholders are diverse nominees(based on gender, LGBTQ+ and/or being an underrepresented minority in their home country)◾

Since 2016, Magna has spent more than $3.3 billion with Minority-owned businesses/suppliers as partof its overall supplier diversity program◾

Unconscious bias training is required for all managers and available to any Magna employee◾

Magna partners with various United Way agencies in North America to support a broad number oforganizations that are delivering community-based solutions to address poverty and inequalities◾

Magna has partnered with other industry leaders to support a variety of poverty-reduction efforts in the
Greater Detroit and Greater Toronto Areas, including support for Pope Francis Center and Inn from theCold, organizations that provide vital services to people experiencing homelessness

Magna:

Ensure sustainableconsumption andproduction patterns

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◾

has implemented a zero waste to landfill target. More than 87% of total waste outputs from operations in
2022 were recycled or diverted from landfills, rising to approximately 91% if energy recovery is included◾

has achieved a 19% global electricity buy from renewable electricity sources (8% of our global energy
purchase was renewable)◾

exceeded its long-term (2030) water use reduction target, having achieved an over 17% reduction inwater withdrawals in 2022 against our 2019 baseline◾

has received Performance Standard certification from the Aluminum Stewardship Initiative (ASI) for five of
its Divisions in Europe. ASI is the only voluntary sustainability standard for the aluminum value chain.
ASI’s independent third-party certification focuses on material stewardship, including as it relates to
product design, life cycle assessments, management of process scrap, and recycling of products at
end-of-life◾

recognized its Powertrain Division in Modugno, Italy with a Commitment to Sustainability Award for its
innovative process that converts sludge from grinding machines into reusable materials (oil and steel)through the use of a bacterial solvent◾

is pursuing several packaging and logistics initiatives and aligning with industry partners to limit theoverall use of materials and to increase transportation efficiency across the supply chain, including
publication of (automotive packaging guidelines through a committee of the Suppliers’ Partnership for
the Environment which Magna Co-Chairs

Annual Information Form

Magna:Take urgent action tocombat climatechange and its
impacts5.

◾

is committed to carbon neutrality (Scope 1 and Scope 2) by 2025 in its European operations and by2030 in its global operations◾

has committed to setting near-term Science-based Targets by 2023, further reinforcing its commitment
to achieving addressing carbon reductions in its operations and supply chain◾

has achieved carbon neutrality in 26 of its divisions, including our complete vehicle manufacturing facility
in Graz, Austria – our largest facility◾

is investing in clean carbon offset programs to counterbalance Scope 1 emissions that cannot be
mitigated in its operations, in addition to its primary energy reduction efforts and purchasing of green
energy◾

invested in a geothermal power plant in Turkey in order to offset 6,862 metric tons of CO2 emissions andthe plant will generate about 51 GWh of clean energy and avoid 32,000 tons of CO2 per year◾

recognized its Exteriors Craiova Division in Romania with a Commitment to Sustainability Award forlaunching an environmental stewardship campaign that included the planting of 10,000 oak and ash
trees near its facility◾

is a financial sponsor of the Technical Office of the International Sustainability Standards Board (ISSB)
that is establishing a comprehensive global baseline of climate change-related disclosure standards

Sust ain a b i l i ty M etr i cs

In this Sustainability Report we report according to the SASB framework. SASB establishes and maintains industry-specific standards thatassist companies in disclosing sustainability information to investors. SASB metrics indicated below are identified by the relevant SASB
Auto Parts Sustainability Accounting Standard code. We caution readers that our processes to collect and validate the energy, emissions
and water data shown below are not as mature as those related to financial data, but we are committed to enhancing both the datacollection/validation processes and thus the quality of the data, in the coming years.
Readers are cautioned that COVID-19 significantly impacted our operations during 2020, including temporary suspension of production at
our manufacturing facilities at different times during 2020 and implementation of work-from-home arrangements for employees globally. As
a result, many of the 2020 metrics that follow are not reflective of a typical operational year for Magna and the extent of any improvement insuch metrics from prior years is not necessarily indicative of expected performance in such metrics in future years.

5.1

Energy Management and Emissions

5.1.1 Energy
Energy management data is set out below.
SASB Accounting Metric (TR-AP-130a.1)

Aggregate amount of energy consumed by Magna
Percentage of energy consumed by Magna that was supplied from gridelectricity
Percentage of energy consumed by Magna that is renewable energy2022(1)2021

2020(2)

20,052,840 GJ
5,570,234 MWh

19,681,540 GJ
5,467,094 MWh

18,169,048 GJ
5,045,958 MWh

58%

57%

59%

(3)

10.0%

(3)

7.1%(4)8.2%

Notes:(1) Preliminary data.
(2) Data for 2020 may not be indicative of typical energy consumption levels due to COVID-19-related production shutdowns impacting our facilities in 2020.
(3) The percentage of renewable electricity purchased in 2022 was 17% (14% in 2021).

Energy intensity relative to Sales is as follows:

Energy Intensity (MWh/Sales (USDm))

2022

2021

2020

147 MWh/USDm

149 MWh/USDm

155 MWh/USDm

In connection with our efforts to promote energy efficiency, each of our Operating Groups developed interim 2022 energy intensity reduction
targets. On a consolidated basis, such targets amounted to approximately 3% of our energy intensity (MWh/Sales) per year. In 2022, welowered our energy intensity by 2 MWh/USDm compared to 2021, a 1.3% reduction.
5.1.2 Emissions
Energy consumed can be converted to CO2 emissions based on regional conversion factors. In order to help us and our stakeholders better
assess trends related to the emissions we generate, we track emissions “intensity” on the basis of total sales, employee headcount andMagna International Inc.

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aggregate square footage of our facilities and offices. These intensity metrics assist us in determining whether we are becoming more
efficient by normalizing emissions on a per dollar of sales, per employee and per square footage basis. The raw data for Scope 1 & 2
emissions, together with intensity metrics are set out below. Magna adheres to the GHG Protocol Corporate Accounting and ReportingStandard (“GHG Protocol”) for its Scope 1 and 2 reporting, and we use commonly accepted emission factors such as those available fromthe GHG Protocol, International Energy Association (IEA), United States EPA, including its eGrid database, as well as other local or regionalreferences. Our Scope 1 and 2 emissions data is verified annually by a third party in connection with our annual CDP Climate Changereporting.
2022

2021

2020(2)

1,460,959(1)1,613,922

1,620,090

37,84036,24232,6470.0000386

0.0000445

0.0000496

168,000

158,000

158,000

Employee Intensity (metric tons/employee)

8.70

10.21

10.25

Square Footage (million sq. ft)

84.4

83.5

83.8

0.01730.01930.0193

Scope 1 & 2 emissions (metric tons)
Sales (USD, millions)
Sales Intensity (CO2 metric tons/$ Sales)
Employees

Square Footage Intensity (metric tons/sq. ft.)
Notes:(1) Preliminary data.

(2) Data for 2020 may not be indicative of typical emissions levels due to COVID 19 related production shutdowns impacting our facilities in 2020.

5.2

Water and Waste Management

5.2.1 Water
Description2022(1)2021

2020(2)

Water withdrawals (ML)

6,292

6,922

6,351

Notes:(1) Preliminary data.
(2) Data for 2020 may not be indicative of typical water usage levels due to COVID-19-related production shutdowns impacting our facilities in 2020.

We have implemented a 1.5% per year water reduction target, with the aim of reducing water use 15% by 2030, in each case referencing
2019 as the baseline year in which we withdrew 7,621 ML of water. Our water withdrawals in 2022 represent a greater than 17% reduction
from our 2019 baseline, exceeding our overall 2030 target. Water withdrawal data is verified annually by a third party in connection with ourannual CDP Water Security reporting.
5.2.2

Waste Management

Waste reduction and scrap elimination are important considerations in our manufacturing activities, including as part of our efforts to achieve
World Class Manufacturing objectives in our facilities globally. We have implemented a zero waste to landfill target, with the aim of eliminating
landfill-bound waste by 2022.
Waste data is set out below:
SASB Accounting Metric (TR-AP-150a.1)

Aggregate amount of waste generated from manufacturing by Magna2022(1)2021

2020(2)

1,476,282 t

1,178,619 t

965,677 t

Percentage of waste generated by Magna that is hazardous

4.3%(3)

7.0%(3)

4.9%(3)

Percentage of waste generated by Magna that was recycled

87.2%(4)88.4%(4)91.5%(4)Notes:(1) Preliminary data.
(2) Data for 2020 may not be indicative of typical waste generation levels due to COVID-19-related production shutdowns impacting our facilities in 2020.
(3) Approximately 90% of such hazardous waste was diverted from secure landfills through recycling, reuse, or energy recovery initiatives in 2022 (91% in 2021; 84% in 2020).
(4) For 2022, this figure would be 90.9% if energy recovery was also included as a category of recycled waste (91.2% in 2021; 94.8% in 2020).

5.3

Environmental Remediation

The aggregate costs incurred in complying with environmental laws and regulations, including the costs of clean-up and remediation, have
not had a material adverse effect on Magna to date and are set out below.
Description

2022

2021

2020

Annual remediation expenses<$1.0m<$1.0m<$1.0mAggregate remediation balance for known events$16.3m$14.1m$10.8m

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Annual Information Form

5.4

Product Safety

Magna is at risk for product warranty, product liability and recall costs, and is currently experiencing increased customer pressure to assume
greater warranty responsibility. Certain customers seek to impose partial responsibility for warranty costs where the underlying root causeof a product or system failure cannot be determined. For most types of products, we only account for existing or probable product warranty
claims. However, for certain complete vehicle assembly, powertrain systems and electronics contracts, Magna also records an estimate of
future warranty-related costs based on the terms of the specific customer agreements and/or Magna’s warranty experience. Product liability
and recall provisions are established based on Magna’s best estimate of the amounts necessary to settle existing claims, which typicallytake into account: the number of units that may be returned; the cost of the product being replaced; labour to remove and replace thedefective part; and the customer’s administrative costs relating to the recall. Where applicable, such provisions are booked net of recoveries
from sub-suppliers and along with related insurance recoveries. Due to the uncertain nature of the net costs, actual product liability costs
could be materially different from our best estimates of future costs. In 2022, our warranty expense (net) increased by $19 million compared
to 2021. See Note 12 of our consolidated financial statements for the year ended December 31, 2022, which have been filed on SEDAR and
are on Magna’s website (www.magna.com).

5.5

Fuel Efficiency

Our product strategy, which is discussed in “Section 4 – Our Business & Strategy – Our Corporate Strategy” of this AIF, includes as a coreelement the supply of product solutions which support our customers’ objectives of increased fuel efficiency and reduced vehicle CO2
emissions. We do not currently track total revenue from products designed to increase fuel efficiency and/or reduce emissions.

5.6

Materials Sourcing

The SASB Auto Parts Standard identifies critical materials as defined by the U.S. National Research Council (NRC) of which cobalt,
magnesium, tantalum and tungsten are most relevant to our products. We do not purchase such materials in their raw form, however, they
may be present in components and sub-assemblies that we purchase. Our key purchased raw materials are steel, resin and aluminum, andour key purchased components include: stampings, electronics, chips, molded parts, die casting, forging, coverstock, and wire harnesses.
See the discussion in “Section 6 – Description of the Business – Manufacturing & Engineering – Key Components and Raw Materials” of
our AIF.
We address strategic risks regarding critical materials with more limited supply and key commodities/raw materials in a number of ways,
including: diversification of suppliers; carrying excess inventory, where appropriate; and, designing and engineering our products to minimize
the use of scarce/limited materials, where not constrained by customer specifications. The current shortage of semiconductors is discussed
in greater detail in “Section 4 – Our Business & Strategy – Macroeconomic, Political and Other Trends” and “Section 5 – Risk Factors” of our
AIF.
We are a member of the Aluminum Stewardship Initiative (ASI), and five of our Powertrain Divisions have received certification under ASI’s
Performance Standard, which supports responsible aluminium supply chains by among other things: providing a common standard forassessing ESG performance in the aluminium value chain, and establishing requirements that can be independently audited to provide
objective evidence for meeting the criteria for certification, including product design, life cycle assessments, management of process scrap,
and recycling of products at end-of-life.
With respect to reputational risk related to critical materials, we maintain a conflict minerals program, including an annual process ofdetermining whether any of our products contain conflict minerals, and through our membership in the responsible mineral initiative (RMI)
supporting continuing cross-industry efforts to identify conflict-free smelters and refiners. We also report to requesting OEM customers withrespect to Cobalt and Mica.

5.7

Competitive Behaviour

Magna’s policy is to comply with all applicable laws, including antitrust and competition laws and have implemented a robust compliancetraining program to mitigate against the risk of an antitrust violation. Our Corporate Ethics and Compliance Program is described in
Section 4.5 − “Corporate Ethics and Compliance” of this Sustainability Report.
We previously completed a global review focused on antitrust risk and do not currently anticipate any material liabilities in connection withthe review. See “Section 10 – Legal Proceedings” of this AIF.
SASB Accounting Metric (TR-AP-520a.1)

Total amount of monetary losses incurred as a result of legal proceedings associatedwith anti-competitive behaviour regulations

2022

2021

2020

$1.2m(1)NIL

NIL(1) June 2022 settlement with the Conselho Administrativo de Defesa Economica (CADE), Brazil’s Federal competition authority, in connection with an administrative proceeding
commenced in 2019 into alleged anticompetitive behaviour regarding the supply of automotive door latches and related products.

Magna International Inc.

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5.8

Health & Safety

We are committed to providing a safe and healthful workplace for our employees. This commitment is fulfilled through a regular program of
health and safety audits and inspections of our global facilities. In connection with our health and safety program we track the frequency andseverity of workplace accidents and conduct post-accident reviews to develop action plans to reduce/eliminate similar accidents in the
future.
2022(1)

Description(2)(4)

2020(5)2021

Accident Frequency Rate

0.62

0.59

0.58

Accident Severity Rate(3)(4)

12.40

17.40

15.17

Notes:(1) Preliminary data.
(2) Frequency 1.0 translates to 1 injury or illness per 100 employees working 40 hours/week, 50 weeks/year.
(3) Severity 10.0 translates to 10 lost work days per 100 employees working 40 hours/week, 50 weeks/year. Severity Rate is reported as of March 24, 2023, but could change,
including as a result of employees who continue to accrue lost work days in relation to an accident.
(4) Global production facilities and certain engineering locations.
(5) Data for 2020 may not be indicative of typical accident frequency and severity rates due to COVID-19-related production shutdowns impacting our facilities in 2020.

The occurrence of injuries and fatalities is a matter of significant concern for both management and the Board. The TOCC reviews thecircumstances related to significant injuries and all fatalities of employees or third parties on Magna properties and reports same to theBoard. In 2022, there were no employee fatalities at Magna facilities.

5.9

Diversity

Diversity within our employee population is important to us and we strive to create an inclusive work environment throughout our company.
As part of our efforts to promote an inclusive workplace, we track metrics relating to gender diversity in our workforce.
Description

2022

2021

2020

Percentage of global employees who are women (wholly-owned operations)

28%

27%

26%

Women in critical roles

18%(1)

16%

15%

Women on the Board of Magna

42%(2)

42%

36%

Notes:(1) 873 women in critical roles out of 4900 such roles.
(2) As of May 11, 2023, the percentage of women on the Board will be 38%, assuming election of all nominees for Magna’s annual meeting of shareholders.

5.10

ReportingIn addition to this Sustainability Report, we participate in CDP (formerly Carbon Disclosure Project), a not-for-profit project designed toprovide investors with information relating to corporate GHG emissions, water use, deforestation risk and perceived corporate risk due toclimate change. Our current CDP submission is available on our website at www.magna.com. We also file a conflict minerals report,
available on www.sec.gov/edgar, in accordance with SEC requirements, and publish a slavery and human trafficking statement on our
website, at www.magna.com. Magna also provides sustainability reporting directly to our customers. These assessments are supplierrequirements and typically follow common reporting templates approved by automotive industry associations in North America (Automotive
Industry Action Group) and Europe (CSR Europe/Drive Sustainability).
We also continue to monitor the acceleration of climate/sustainability reporting initiatives by regulators and standard setters, including:◾ the European Union’s European Sustainabilty Reporting Standards (ESRS) and Corporate Sustainability Reporting Directive (CSRD)
which will first apply to certain of Magna’s European subsidiaries in 2025;◾ the International Sustainability Board (ISSB) publication of its first of two voluntary frameworks on climate-related disclosures which is
expected in June 2023; and◾ initiatives by securities law regulators to mandate climate disclosure, including proposals from Canadian securities regulators, andproposed rule changes from the U.S. SEC, which have not yet been released in final form.

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Annual Information Form

Magna International Inc.
337 Magna Drive
Aurora, Ontario
Canada L4G 7K1
Telephone: 905 726 2462