Annual
Information
Form
MAGNA INTERNATIONAL INC.

March 28, 2019

Annual Information FormTABLE OF CONTENTS
Corporate Structure
4
About Magna
6
Our Industry
8
Our Business & Strategy
15
Risk Factors
21
Description of the Business
32
Innovation and Research & Development
34
Capital Structure, Financings & Credit Ratings
38
Directors & Executive Officers
41
Legal Proceedings
41
Other Information
42
Schedules
45
Appendix – Sustainability Report 2018
7MAR201921412304

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IMPORTANT INFORMATION ABOUT THIS DOCUMENT
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 all other corporate Executive
Vice-Presidents.
• we use the term Operating Group management to refer to ourmanagement within each of the product capabilities described inthis AIF in ‘‘Section 6 – Description of the Business –Products & Services’’.
• all amounts are presented in U.S. dollars, unless we have statedotherwise.
• 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’ operating divisions andsubsidiaries, unless otherwise stated.
• manufacturing operations, product development, engineeringand sales (‘‘PDE&S’’) centres and employee figures include
certain equity-accounted operations.
• references to our ‘‘Circular’’ refer to our Management Information
Circular/Proxy Statement dated March 28, 2019 for our 2019
Annual Meeting of Shareholders to be held on May 9, 2019(the ‘‘Meeting’’).
• information is current as of March 22, 2019, unless otherwise
stated.

FORWARD-LOOKING STATEMENTS
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 forother 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 forwardlooking statements.
Forward-looking statements in this AIF include, but are not limited to, statements relating to:• implementation of our business strategy, including: strategic
initiatives relating to vehicle lightweighting; powertrainelectrification, active aerodynamics, autonomous driving systems
and smart mobility solutions; the evolution of our productportfolio; and our customer, geographic and innovation/R&D
strategies;• implementation of our segment-specific strategic initiatives;• implementation of our financial strategy, including future returns ofcapital to our shareholders through dividends and share
repurchases; and• estimates of future environmental clean-up and remediation costs

Our forward-looking statements are based on information currently available to us, and are based on assumptions and analyses made by us
in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as otherfactors 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 performance oroutcomes. 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:

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Annual Information Form

Risks Related to the Automotive Industry

Warranty/Recall Risks• economic cyclicality;• regional production volume declines;• intense competition;• potential restrictions on free trade;• trade disputes/tariffs;• costs to repair or replace defective products;• warranty costs that exceed our warranty provision;• costs related to a significant recall;

Customer and Supplier Related Risks• concentration of sales with six customers;• inability to significantly grow our business with Asian customers;• shifts in market shares among vehicles or vehicle segments;• shifts in consumer take rates for products we sell;• dependence on outsourcing;• quarterly sales fluctuations;• potential loss of a material purchase order;• a deterioration of the financial condition of our supply base;
Manufacturing/Operational Risks• product launch risks;• operational underperformance;• restructuring costs;• impairment charges;• labour disruptions;• supply disruptions;• climate change risks;• skilled labour attraction/retention;
IT Security Risk
• IT/Cybersecurity breach;
Pricing Risks• pricing risks between time of quote and start of production;• price concessions;• commodity costs;• declines in scrap steel prices;

Acquisition Risks• competition for strategic acquisition targets;• inherent merger and acquisition risks;• acquisition integration risk;
Other Business Risks• risks related to conducting business through joint ventures;• our ability to consistently develop innovative products orprocesses;• our strategic collaboration with Lyft, Inc.;• our private equity investment in Lyft and other technology
companies;• changing business risk profile;• risks of conducting business in foreign markets;• fluctuations in relative currency values;• an increase in our pension funding obligations;• tax risks;• reduced financial flexibility due to rapidly deteriorating economic
conditions;• 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• 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’’.

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1. CORPORATE STRUCTURE
ISSUER
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 (MG) and the New York Stock Exchange (MGA). For a list of our principal subsidiaries and investments in affiliatedcompanies, please refer to Schedule A.

2. ABOUT MAGNAOVERVIEW
Magna is a mobility technology company that is helping pave the way to the future with innovative products and processes. We have morethan 174,000 entrepreneurial-minded employees and 348 manufacturing operations and 91 PDE&S centres in 28 countries, as follows.

Canada57
10

Mexico8747

WesternEurope50
10Africa330South America

36
1

USA

EasternEurope

0
1

72
20

Asia

13
2

Manufacturing/Assembly

Product Development/Engineering/Sales

11MAR201919312305
Our operations and Operating Group management are aligned under the following product-oriented operating segments:• Body Exteriors & Structures• Power & Vision• Seating Systems• Complete Vehicles

Each of these reporting segments and the underlying product capabilities within each segment are discussed in greater detail in ‘‘Section 6 –Description of the Business – Products & Services’’.

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Annual Information FormOUR CORPORATE CULTUREAt Magna’s foundation is a decentralized, entrepreneurial, fair enterprise culture, the key elements of which are as follows.
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.
• Our Operating Group management, which is aligned globally by product area, is responsible for overseeing our Divisions within a
product area or product areas, including approval of Division business plans and preparation of Group business plans for presentation
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 consistently approaching technology trends that impact their business and our customers.
• Our Executive Management team, led by our CEO, allocates capital, coordinates our mergers and acquisitions and strategic alliances
strategy, ensures customer and employee satisfaction and manages succession planning. Executive Management also interfaces with
the investment community and is responsible for our long-term strategic planning and future growth, as well as monitoring theperformance of Division management of our product areas.
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. We recently adopted a Global Labour Standards Policy, which further articulates our FairEnterprise Culture and provides a framework for our commitment to fundamental human rights and international labour relations. See‘‘Appendix – Sustainability Report 2018 – 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.
World Class Manufacturing & Our Operational Principles
As part of our efforts to implement World Class Manufacturing in our facilities globally, each facility is required to adhere to a set ofOperational Principles that define a set of common goals and recommend 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 andWaste Elimination; Operational Availability; Communication; and Recognition and Rewards. The Magna Operational Principles are linked to
our MAFACT assessment program (detailed in ‘‘Section 6 – Description of the Business – Manufacturing & Engineering’’) to allow ouroperations 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 tooperational performance of an applicable business unit, as measured by profitability. Our approach to executive compensation is describedin 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 legal and ethical manner. We have demonstrated thiscommitment in a number of ways, including our support of social and charitable causes, our actions to reduce the environmental impact of
our operations, our activities to promote a safe and healthful work environment for our employees, our global supply chain management andour comprehensive ethics and legal compliance program. For more details on our sustainability initiatives, see ‘‘Appendix – Sustainability
Report 2018’’.

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3. OUR INDUSTRY
GENERAL
The global automotive industry is a complex and increasingly high-tech industry. Magna is a Tier 1 supplier of automotive parts. 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 and political factors. While the global industry
had been in the growth phase of a cycle, which began in 2010, production volumes declined in some regions of the world in the second halfof 2018 and are forecasted to be relatively level in 2019. Some of the macroeconomic and political factors which currently appear to be
having a negative effect on the industry, along with their potential impact on Magna, include, but are not limited to, deteriorating commitment
to multilateral trade in some of our key markets; changing economic conditions; and a rising number of nationalist / populist governments.
See ‘‘Section 4 – Our Business & Strategy – Macroeconomic and Political Trends’’ for details of how these trends affect Magna and theautomotive industry.

AUTOMOTIVE PRODUCTION MARKETS
OEMs have historically built their vehicles primarily in the regions where those vehicles are sold and, as a result, many OEMs haveestablished manufacturing facilities throughout the world. Since OEMs typically use lean manufacturing and supply chain management
techniques in their operations, many Tier 1 Supplier facilities are located relatively close to OEM facilities to reduce the cost and risks
associated with longer supply chains. See ‘‘Section 6 – Description of the Business – Manufacturing & Engineering’’ for details of Magna’s
global manufacturing footprint.
China, Europe, North America, Japan, India and South Korea represent the largest automotive production markets globally, accounting for
approximately 89% of vehicles produced globally. China’s approximate 29% share of global production led all markets in 2018. The local
demand for vehicles in China, India and other markets outside of North America and Western Europe has increased significantly in recent
years. This increasing local demand has helped boost the local automotive industry in these countries and has attracted investments in
manufacturing from North American, European and Asian-based automobile manufacturers, through stand-alone investments and/or joint
ventures with local partners. There has also been increasing migration of component system and vehicle design, development andengineering to certain of these markets, particularly China.

CUSTOMERS
OEMs produced over 95 million light vehicles in 2018. The top 15 OEMs in 2018, based on light vehicle production, were:
1. Volkswagen Group
2. Renault-Nissan-Mitsubishi Alliance3. Toyota Motor Corporation
4. Hyundai Motor Group
5. General Motors Company
6. Ford Motor Company
7. Honda Motor Company
8. Fiat Chrysler Automotive

9. Groupe PSA
10. Daimler AG
11. BMW AG
12. Zhejiang Geely Holding Group
13. SAIC-GM-Wuling Automobile*
14. Suzuki Motor Corporation
15. Mazda Motor Corporation

Source: Autoforecast Solutions*

A joint venture between 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 several Chinese OEMs,
including SAIC and Geely, as listed above. For a list of our top customers on a consolidated basis and within each reporting segment, see‘‘Section 6 – Description of the Business – Products & Services’’.

COMPETITION
The global Tier 1 automotive supply industry is highly competitive, is capital intensive and has high barriers to entry for some product areas.
Competition comes primarily from automobile manufacturers and from other automotive suppliers, including ones in which one or more
automobile manufacturers may have direct or indirect investments.

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Annual Information FormThe basis on which automobile manufacturers select automotive suppliers is determined by a number of factors, which may include: price;
quality; proprietary technologies; ability to supply products from multiple manufacturing sites in support of global production programs;
scope of in-house tooling, manufacturing and engineering capabilities; existing agreements; historical performance; timeliness of delivery;
the supplier’s overall relationship with the automobile manufacturer, including service, quality and responsiveness to the customer; financial
strength; and other factors. Competition has also intensified as automobile manufacturers continue to increase the number and range ofvehicles built from high-volume global platforms.
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. However, with the growing importance of electronics in the automotive value chain, anumber of electronics and semiconductor companies have entered or expanded their presence in the automotive industry. Additionally,
disruptive technology innovators are changing the competitive landscape of the automotive industry through the development of high-value
product and service offerings. To take advantage of growing opportunities relating to vehicle electrification, vehicle autonomy and smart
mobility, OEMs and certain suppliers are increasingly entering into strategic partnerships, joint ventures or collaborations with technology
and software companies. In 2018 we entered into a number of such arrangements, which can be found in ‘‘Section 4 – Our Business &Strategy – Our Business Strategy.’’
Based on 2017 global automotive parts sales to OEMs, the top 10 Tier 1 Suppliers globally are:Supplier

Key Automotive Products**

Supplier

Key Automotive Products**

1. Robert Bosch GmbHPowertrain solutions, chassis
systems control, electrical
drives, starter motors andgenerators, car multimedia,
electronics, aftermarket
products, steering, connectedmobility solutions

6. Aisin Seiki Co.*Powertrain, chassis andvehicle safety systems, body,information andcommunications technology(ICT) and electronics

2. Denso Corporation*

Thermal systems, powertrainsystems, electrification
systems, mobility systems,
electronic systems

7. Hyundai Mobis*

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

3. Magna International Inc.

Body and chassis, exteriors,roof systems, powertrain,electronics, mirrors andlighting, mechatronics, seating
systems, vehicle engineeringand manufacturing

8. Lear Corporation

Seating, electrical distribution
systems, electronic modules,
related sub-systems,
components and software

4. Continental AG

Chassis and safety, interior,
powertrain, tires, rubber/plastic
products/systems

9. Valeo S.A.

Comfort and driving assistancesystems, powertrain systems,
thermal systems, visibility
systems, aftermarket products
and services

5. ZF Friedrichshafen AG

Braking, occupant safety,
driveline, steering, electronics,
chassis10. Faurecia S.A.*

Seating, interiors, electrification
systems

Source: Automotive News (supplement) (June 25, 2018)*

OEM subsidiary or OEM investee** Key Automotive product descriptions are based on information from each Tier 1 Supplier’s website.

A number of Tier 1 Suppliers can produce some or many of the same types of components, assemblies, modules and systems that wecurrently produce. Some of our competitors may have greater technical or other resources than we do and some of them may be stronger inmarkets 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 the Business – Products & Services’’.
Magna’s Competitive Advantage
We believe that we possess a breadth of systems and vehicle integration capabilities and full vehicle competence, which is unmatched byour competitors. In particular, our ability to take a ‘‘holistic’’ view of the vehicle, our broad product capabilities, including our electronics
integration capabilities, as well as our extensive vehicle assembly and systems expertise, combined with our strong balance sheet,corporate culture, and other factors, provide us with an important competitive advantage.
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4. OUR BUSINESS & STRATEGY
BUSINESS DRIVERS
Our business and operating results are dependent on the levels of North American, European and Chinese car and light truck production by
our customers. OEM vehicle production levels are generally aligned with vehicle sales levels. While we supply systems and components toevery major OEM, we do not supply systems and components for every vehicle, nor is the value of our content consistent from one vehicle tothe 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, content andlegislative/regulatory trends are listed below.

8Growth Driver

Factors Potentially Impacting Growth Driver

Vehicle Production Volumes• General economic and political conditions• Vehicles sales levels, which are affected by:• General economic conditions• Consumer confidence levels / housing, job and stock market trends• Vehicle pricing and purchase incentives• Interest rates and/or availability of credit• Purchase/lease finance rates and availability• Fuel prices• Relative currency values• Infrastructure considerations• Free trade agreements and trade disputes• Relative currency values• Commodities prices• Labour relations considerations• Regulatory considerations• Geographic location

Customer and Program Mix• OEM outsourcing strategy, as well as their supplier preferences and relationships• 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• Exclusivity of our products due to certain intellectual property rights

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 capital allocation decisions• Technological, visual, haptic and other features/attributes of our products compared tocompeting products• Pricing of our products relative to competing products• Our ability to achieve customers’ efficiency-related price reduction targets over the life of
the program• Perception/reputation for product quality, as well as timeliness of delivery• Our product engineering capabilities• Our ability to finance pre-production engineering costs• Whether we have complete vehicle assembly responsibility• 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

Legislative/regulatory trends
promoting sustainability andsafety• Regulatory vigour in mandating higher fuel efficiency, lower carbon emissions or enhanced
safety features

Annual Information Form

MACROECONOMIC AND POLITICAL TRENDS
The global automotive industry is cyclical and is affected by a broad range of macroeconomic and political factors. While the global industry
had been in the growth phase of a cycle, which began in 2010, production volumes declined in some regions of the world in the second halfof 2018 and are forecasted to be relatively level in 2019. Some of the macroeconomic and political factors which currently appear to be
having a negative effect on the industry, along with their potential impact on Magna, are discussed below.
Macroeconomic and Political Trends

Description

Potential Impact on Magna

Changing economic conditions• Rising interest rates• Strengthening U.S. dollar relative toother currencies makes U.S.-madeproducts more expensive,
manufacturing outside theU.S. cheaper• Financial market volatility• Housing market uncertainty• Declining consumer confidence levels• Overall growth in global vehicle
production volumes is slowing• Some vehicles and some markets areexperiencing declining growth• Increasing pricing pressure from
OEMs and increasing financial stresson supply base
• Potential impact on Sales growth andon profits

Rising number of nationalist / populist
governments• Deteriorating global commitment tomultilateral trade institutions andnorms• Growing pressure on OEMs to localize
production of vehicles in markets inwhich they are sold• Uncertainty over future of Britain, Italy
and Poland in the E.U.

• Planning and investment uncertainty• Localization of OEM production may
result in new opportunities for Magnain markets where we have available
capacity• Localization could also result in
duplication of capacity across markets

Deteriorating global commitment tomultilateral trade• Uncertainty regarding trade between
U.S. and certain of its trading partners,
including China and the E.U.
• Tariffs on manufacturing inputs, suchas steel and aluminum, increase
production costs• Higher manufacturing input costs
results in either higher prices for
consumers or lower profits forbusinesses• OEMs adjusting production strategies
to minimize tariff risk
• Disruption of global supply chains• Higher production costs due to tariffs,
but no automatic ability to pass someor all of the cost to the OEM• Impact on profits• Changes to OEM manufacturing
strategy may require changes to
Magna manufacturing strategy

Imposition of tariffs on some goods, suchas steel and aluminum, as well as
vehicles made in certain markets

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INDUSTRY TRENDS
The automotive industry continues to be shaped by a number of significant long-term trends, particularly those relating to reduction of the
carbon footprint of vehicles and enhancement of driver and passenger safety through advanced electronic features. Key trends and theirpotential impact on Magna include those discussed below.
Automotive Industry Trends

Description

Potential Impact on Magna

Continuing focus on reducing
fuel consumption and CO2
emissions from internal
combustion engines• Environmental and regulatory considerations
resulting in push for more efficient, cleaner
and smaller-displacement engines• Continuing opportunities to support OEM
customers’ efforts through lightweighting,more efficient powertrains / drivetrains, active
aerodynamics

Accelerating demand forelectric, hybrid vehicles andinvestment in vehicle
electrification• Environmental and regulatory considerations
driving increased emphasis on electrified
powertrains• Declining diesel sales in Europe withincreasing interest in electrified solutions• Growing proportion of SUVs and CUVs may
facilitate increased electrification• Largest early opportunities expected to be
in China• Significant development and engineeringcosts for OEMs may drive increased
outsourcing to suppliers and increased
collaboration among OEMs

• Opportunities to grow Magna content andsales, particularly in drivetrain products• Strong level of investment required tomaintain competitiveness• Pricing pressure on, and migration of value
away from, traditional products in order forOEMs to accommodate cost of battery
systems and electrified products• Increased competition, including from newmarket entrants providing electrified
solutions• Potential long-term displacement of somemechanical products where there arealternative electrified solutions

Continued growth in demandfor vehicle safety features andproducts• Driven by stringent safety regulations,
growing demand for luxury segment vehicles
and the growing focus on vehicle autonomy• Active safety systems lead growth indemand• Opportunity to grow Magna content andSales, particularly in ADAS products• Continued investment required as importantbuilding blocks for Magna’s autonomousvehicle activities

Increased investment andexpenditure on autonomous
driving• Driven by multiple factors, including safety
considerations, traffic congestion and rise of‘‘mobility-as-a-service’’ (‘‘MaaS’’) providers• Significant development and engineeringcosts for OEMs may drive increased
outsourcing to suppliers and increased
collaboration among OEMs, or between
OEMs and new MaaS providers• High R&D costs to develop autonomousfeatures wanted by OEMs places pressure
on profits• Uncertainty regarding ability tocommercialize new technologies• Significant competition from established andnew market entrants

Growth of new OEMs,
particularly in China• Driven largely by China’s accelerated focus
on vehicle electrification• Large number of new OEMs could result inconsolidation• New business opportunities, including
powertrain and electronics products, and fullvehicle engineering and assembly• Potential loss of business with traditionalOEMs, to the extent new OEMs adversely
impact traditional OEMs
• Potential for new partnerships andcollaborations

Disruption by new industry
entrants offering MaaS

• Growth of ride hailing and ride sharing
services in urban areas• Substitute for individually-owned vehicles,
particularly in dense urban centres• May result in lower production volumes ofvehicles from traditional OEMs

• New business opportunities with new typeof customers, including for full-vehicle
engineering and assembly• Potential loss of business with traditionalOEMs, to the extent MaaS adversely
impacts OEMs

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Annual Information FormAutomotive Industry Trends

Description

Potential Impact on Magna

OEM cooperative alliances• Joint platform development and cost sharing• Joint purchasing• Increase in sales, where Magna has strong
relationship with lead OEM• Decrease in sales, where Magna has
weaker relationship with lead OEM‘‘Made in China 2025’’• Chinese government plans to increaseengineering, development andmanufacturing of high-value, high-tech
products in China• Increased localization of engineering,development and manufacturing• Uncertainty regarding whether Chinese
domestic companies will be preferred overforeign-owned companies operating in
China

Emergence of ‘‘new’’ low-cost
automotive manufacturingmarkets• ‘‘New’’ low-cost manufacturing markets(e.g. Morocco and Vietnam), which areclose to larger established manufacturingmarkets (France/Spain and China,
respectively)• New assembly and engineering
opportunities at lower cost
• Various risks of doing business in foreign
markets

OUR BUSINESS STRATEGY
Our corporate strategy is driven by our assessment as to the most effective way to achieve long-term growth within the context of thevarious macroeconomic factors and industry trends shaping the automotive industry and the future of mobility. Key elements of our overall
strategy include: product portfolio; customer strategy; geographic footprint; innovation/R&D approach; capital allocation; and talentmanagement, each of which is discussed in more detail below.
Product Portfolio
Our product strategy is centred on our best understanding of future mobility. This represents our Board and Management’s common view
regarding the automotive systems and services which will continue to be relevant and valued by OEM customers over the next 20 years. We
intend to grow in product areas that are currently generating strong returns on capital and expected to continue to do so over the long-term;
and in which we currently maintain, or can achieve, a top-three market position. In addition, we continue to focus on acquisitions that fit our
product strategy. We follow a disciplined and prudent approach in which we consider acquisition opportunities that allow us to acquireinnovative technologies and strengthen our position in priority product areas or facilitate entry into new product areas, provided that any
such acquisition meets our investment return criteria and falls within our risk tolerance.
In developing our product strategy, consideration has been given to various factors that are shaping how consumers view the car and therole of the car in their lives. While there are many trends influencing the evolution of the vehicle, we believe the three primary trends driving
long term, structural changes in the industry are the demand for: fuel efficiency and CO2 emissions reduction solutions; vehicle autonomy
features; and smart mobility services.
The development of innovative technologies and solutions which are responsive to the three trends above requires dedication of significant
R&D resources and capital investment. We believe that the relatively stable profitability and cash generation from our ‘‘traditional’’businesses, each of which operates in product areas of strategic importance to the ‘‘Car of the Future’’, provide us with the ability to fund the
R&D and capital investment required to realize the opportunities described above. Additionally, we believe that our comprehensive
knowledge and understanding of the entire vehicle and the interaction of various complex vehicle systems provide us with uniqueadvantages in executing our long term strategy.

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Our product strategy as it relates to fuel efficiency and CO2 emissions reduction solutions; vehicle autonomy features; and smart mobility
services is detailed below.

Fuel-efficiency and CO2 emissions reduction solutions
Optimizing Vehicle Weight, Powertrain Efficiency and Aerodynamics

12MAR201912165290

Since, in the short-term, gas-powered, internal combustion engines will remain the dominant powertrain in vehicles, we
continue to support our OEM customers through solutions enabling lighter vehicles, improved/optimized powertrain
efficiency and enhanced aerodynamics, including:• Lightweight Products & Materials: The breadth of Magna’s engineering capabilities across all major sections of the vehicle, together
with our full vehicle capabilities, allow us to address OEMs’ lightweighting needs ‘‘holistically’’. Moreover, our financial strength allows us
to fund continuous innovation related to advanced materials, multi-material joining processes, manufacturing processes and lightweight
products. Since products made from high-strength steel, aluminum, thermoplastics and advanced composites may command higher
prices and could generate higher margins than products made from more conventional materials, our focus on such materials enables us
to achieve some of this higher content per vehicle.
• Efficient Transmissions: Efficient transmissions are needed for both internal combustion and electric powertrains. Through ourpowertrain business, we offer customers a range of efficient dual-clutch transmissions which can be applied in internal combustion
engine-based vehicles, as well as hybrid powertrain architectures. Dual-clutch transmissions offer the driving comfort of a traditional
planetary automatic transmission with improved efficiency through the elimination of the torque converter and high pressure oil pump.
• Active Aerodynamics: Magna offers a growing range of active aerodynamics innovations that redirect airflow to reduce air drag on
vehicles, resulting in reduced fuel consumption and CO2 emissions. Examples include active grille shutters, active air dams, active front
deflectors, active liftgate spoilers and active tailgate and underbody panels.
• Powertrain Electrification: Despite forecasts relating to the continued prevalence of internal combustion engines, there has been clear
growth in demand for hybrid powertrains to achieve reduced fuel consumption and CO2 goals, and fully electric powertrains to eliminate
vehicle-level fossil fuel use and achieve zero tailpipe emissions.
We are agnostic on hybrid and electric vehicle penetration rates and instead are focused on offering a range of solutions that address thefull range of potential customer powertrain needs through scalable powertrain electrification solutions. We are leveraging our powertrain
expertise to offer customers a variety of electrified solutions for a range of vehicles from 48V mild hybrids to full electric vehicles. Productofferings include a scalable range of hybrid dual-clutch transmissions and a highly integrated hybrid forward drive / all wheel drive platform(consisting of e-motor, gearbox, e-Axles, inverter and control software).
• Purely Electrical Vehicle: We have entered into a Chinese joint venture with BJEV, a subsidiary of the BAIC Group, to bring a pure EV tomarket and we also have a memorandum of understanding and intend on entering into a second joint venture with BJEV to build EVs in
our first complete vehicle assembly facility outside of Europe.
• Energy-efficient Lighting: A joint venture with Rohinni LLC, an LED light manufacturer, to produce ultra-thin micro LED lighting
solutions that are brighter, lighter and more energy-efficient than alternative technologies, including OLED.

Vehicle Autonomy Features
Development of Scalable Solutions for Autonomous Driving Systems
Magna is developing the building blocks needed for different levels of autonomous solutions:

12MAR201912165729• Full Suite of Sensing technologies:
Camera: We are a market leader in camera-based ADAS. Our camera-based solutions consist of front and rear facing cameras, withimage processing abilities to create a 360 degree surround view. Features enabled by these camera-based systems include automatic
emergency braking, traffic sign and traffic light recognition, forward collision warning, lane keeping/lane departure assistance, adaptive
cruise control, high beam assistance, pre-collision control and others.
Radar: Working with a technology start-up, we have developed a scalable radar platform, consisting of mid- and long-range radars fora variety of automotive applications. Among other things, this radar platform provides higher resolution at longer ranges, as well as
improved object detection and classification compared to current radars.
LiDAR: We have worked with a strategic technology partner to integrate their cost effective solid state LiDAR for highly automateddriving applications. This LiDAR solution provides high-definition, three-dimensional, real-time images regardless of light and weather
and enables object detection, classification and tracking at longer distances.
• Scalable ADAS Domain Controller: We have developed a scalable controller platform to support a range of automated driving
functionality from automated parking applications (Level 0-2*) to automated driving (Level 3-4*).
*

SAE International (J3016) Autonomy Levels Classification

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Annual Information Form• Collaboration with Lyft: We are collaborating with Lyft to jointly fund, develop and manufacture self-driving systems designed to speed
up the development of various levels of autonomy within vehicles. Our joint team, which has grown to over 300 engineers, has
successfully completed a continuous 10-week public autonomous ride-sharing program by Lyft employees.
• Partnership with Waymo: We are working with Waymo, a self-driving startup that will focus on setting up a factory dedicated to the
production of Level 4 autonomous vehicles, where Magna will integrate Waymo’s self-driving system into a fleet of different vehicles.

ADAS Features by Magna

19MAR201922275621*

The above diagram shows ADAS features that Magna currently offers.

Smart Mobility Services
Smart Mobility Solutions Based on Full Breadth of Magna Capabilities
Smart mobility solutions involve the convergence of fuel consumption/CO2 and vehicle autonomy trends – over the
medium to long-term, smart mobility concepts are expected to be lightweight, electric or other zero emission, fully
12MAR201912165595 autonomous vehicles. We possess the capabilities that support smart mobility, including through:• Magna’s Powertrain and Complete Vehicles Operating Groups, which have significant expertise in alternative energy storage andpropulsion systems;• our ability to offer customers one of the most versatile test environments for highly automated vehicles in Graz, Austria, including theentire test ‘‘chain’’ from virtual simulation to test rigs to trial runs on public roads; and• a concept for a scalable, urban vehicle, autonomous shuttle platform (MAX4).
The MAX4 concept vehicle and other potential smart mobility solutions take advantage of our complete systems knowledge and can draw in
Magna’s expertise across its entire product range, including:
Body Exteriors & Structures:• new chassis architectures that require leading-edge technology in multiple materials; and• sensor integration into the vehicle body required as a result of increased autonomy.
Power & Vision Systems:• highly integrated e-drive systems and full suite of sensors (camera, radar, LiDAR, ultrasonic), as well as domain controllers required inelectric, autonomous smart mobility vehicles.
Seating Systems:• reconfigurable seating solutions that are designed to reimagine the vehicle cabins and facilitate electric vehicle packaging in smart
mobility autonomous vehicles.
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Complete Vehicles:• non-OEM branded (‘‘white-label’’) mobility service providers which will need full vehicle engineering and assembly.
Some of our recent innovations, initiatives and progress addressing powertrain electrification, vehicle autonomy and smart mobility can befound in ‘‘Section 7 – Innovation and Research & Development – Innovations; and Innovation Awards’’.
Customer Strategy
Although Sales to the three U.S.-based and three German-based OEMs represent 77% of our Total Sales, we continue to pursue
diversification to increase our business with Japanese, Korean and Chinese OEMs, as well as credible new market entrants and
MaaS providers.
We monitor the financial health of our customers and potential customers and, in the case of new market entrants, assess their long-term
viability to reduce the risk that any investments we make in support of that customer become unrecoverable if the customer fails.
Geographic Footprint
Due to the need to manufacture within a relatively short distance from OEM customers’ assembly facilities, our geographic footprint isaligned with the manufacturing footprints of our main customers. Since our six largest customers are North-American and German OEMs,
North America and Europe are our largest geographic markets. Additionally, these six customers have significant production capacity in
China, primarily through joint ventures with Chinese OEMs. Accordingly, we have a significant and growing presence in China.
We intend to continue growing in each of our three core markets, while allocating capital for prudent growth in other geographic markets
such as Morocco, Vietnam, Thailand and other ASEAN countries, provided that the business opportunities in such new markets meet ourinternal investment hurdles and key risks can be appropriately managed/mitigated. In markets such as Argentina, Brazil, Russia and South
Korea, we are focused on careful management of our installed capital, rather than growth.
Innovation / R&D
We believe that product and process innovation are at the heart of our success to date, and will be the critical factors in our future success.
Our approach to innovation incorporates multiple elements and addresses multiple time horizons applicable to product and vehicle
development.
In particular, all of our R&D projects follow an ‘‘innovation development process’’ or ‘‘IDP’’ – a multi-stage process with a focus oftransforming ideas into innovations that can eventually be commercialized and scaled. The initial phase of our innovation process is the‘concept stage’ whereby our specialized product teams identify and analyze the impact of societal, demographic, technological, regulatory
and other trends on future product needs. This analysis and aggregation of trends and customer needs then develops into concepts withpotential for development. After this stage, the process moves into the ‘pre-production stage’ whereby we scrutinize how these ideas fit with
our product strategy, specifically fuel efficiency and CO2 emissions reduction solutions; vehicle autonomy features and smart mobility
services; and we also hone in on product, process and cost optimization. After rigorous analysis, consideration and review, certain
innovations will progress to the ‘production stage’ whereby it would eventually lead to a product launch. For a fuller discussion of ourresearch and development process and product, process and materials innovations, refer to ‘‘Section 7 – Innovation and Research &Development’’.
Capital Structure
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 support our needs;• a strong investment grade credit rating of BBB+ or better, and an Adjusted Debt to Adjusted EBITDA ratio of ǉ 2.0x based on themethodology of Moody’s Investors Service;• ensuring the cash on our balance sheet remains at a level reasonably required to run our operations and invest in our business throughorganic growth, innovation spending, and acquisitions that fit our product strategy;• steadily 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 prudent acquisitions; and• delivering strong Return on Invested Capital.

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Annual Information FormIn light of the above strategy, we have returned significant amounts of capital to our shareholders in recent years in the form of dividends andshare repurchases and have also made significant levels of investment in our business. As a result, we had an Adjusted Debt ratio of
1.34 times Adjusted EBITDA(1) by the end of 2018 and aim to maintain such ratio in the range of 1.0 – 1.5 times Adjusted EBITDA, which is inline with our above noted target.
(1) Adjusted Debt is calculated by taking our long and short term debt and adding adjustments relating to operating leases and pension obligations. Adjusted EBITDA is calculated
by taking our Earnings before Interest, Taxes, Depreciation and Amortization and adding adjustments relating to operating leases, pension obligations and unusual items. In eachcase, such adjustments reflect a methodology for calculating such ratios used by Moody’s.

TalentOur talent management strategy is based on our current business objectives and strategy and our understanding of the transformation
taking place in the automotive industry. Given that an effective workforce will increasingly be required to be lean and digitally adept, we arefocussed on building such a workforce through attraction and recruitment, professional development, succession planning, promoting
diversity and inclusion and preservation of our fair enterprise culture:
Attraction

Professional Development• We invested in understanding our key talentsegments to determine how to market andbrand ourselves to attract top talent• Professional development is a top priority inall of our major operating regions and we
strive to create a dynamic and challenging
environment• Our recruitment strategy emphasizes the useof technology• We strengthened the capabilities of ourrecruiters• We developed programs and strategic
relationships with students and early career
professionals, including:• technical apprenticeships through ourWork Integrated Learning Program; and• summer student placements, internships
and co-op opportunities• We are updating our professional
development programs across all functions
and leadership levels to improve the skills of
our current employees, including byemphasizing the importance of digitalization• Promoting a diverse and inclusive workplacealso remains a top priority in our professional
development programs

Succession Planning• We have moved away from event driven
reviews and instead are focused on:• continual discussions to address current
talent pools and future talent concerns• continuously challenging and evaluating
our key and high potential talent
employees• preparing our key and high potential talent
employees for the transition to future roles• Our technical development programs andinnovation projects attract top technical talent• We provide professional development
resources to assist employees with careerplanning and have supportive leaders whocoach and mentor employees

5. RISK FACTORS
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 business strategy, are subject to a number ofrisks 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:RISKS RELATED TO THE AUTOMOTIVE INDUSTRY• Economic Cyclicality: The global automotive industry is cyclical, with the potential for regional differences in timing of expansion andcontraction of economic cycles. A worsening of economic or political conditions in North America, Europe or Asia, may result in lower
consumer confidence, which typically translates into lower vehicle sales and production levels. A significant decline in vehicle production
volumes from current levels could have a material adverse effect on our profitability and financial condition.
• Regional Volumes Declines: North America, Europe and China are key automotive producing regions for us, and our operating 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 these geographic regions could have a material adverse effect on our operations, sales and 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 areas. Additionally, a number of establishedelectronics and semiconductor companies have entered or expanded their presence in the automotive industry, while 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 sales of our electronics products or

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services at or above the rate of growth of electronics content, could have a material adverse effect on our operations, profitability andability to fully implement our business strategy.
• Trade Agreements: The global growth of the automotive industry has been aided by the free movement of goods, services, people andcapital through bilateral and regional trade agreements, particularly in North America and Europe. In Europe, uncertainty remains
regarding the ultimate resolution of Brexit – the United Kingdom’s decision to withdraw from the European Union – and the nature of any
trade agreements or arrangements that may result should Brexit proceed. Introduction of measures which impede free trade could have amaterial adverse effect on our operations and profitability.
• Trade Disputes/Tariffs: Current 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 makeefficient long-term investment decisions, create volatility in relative foreign exchange rates, and contribute to stock market volatility. Tariffs
on steel and aluminum introduced by the United States against Canada and Mexico in 2018, together with retaliatory tariffs by Canada
and Mexico, remain in place despite an agreement in principle regarding the new United States-Mexico-Canada Agreement (‘‘USMCA’’).
An ongoing trade dispute between the United States and China has led to the imposition by the United States of tariffs on a broad rangeof Chinese-origin imports into the U.S., and retaliatory tariffs by China on certain U.S.-origin imports into China, including automobiles.
The continuation of these or other tariffs and/or escalation of trade disputes which interfere with automotive supply chains could have an
adverse effect on our operations and profitability.

CUSTOMER AND SUPPLIER RELATED RISKS• Customer Concentration: Although we supply parts to all of the leading OEMs, a significant majority of our sales are to six customers:
General Motors, Ford, Fiat Chrysler, BMW, Daimler and Volkswagen. In light of the amount of business we currently have with these six
customers, our opportunities for incremental growth with them in North America, Europe and China may be limited. While we continue todiversify our business, there is no assurance we will be successful. Shifts in market share away from our top customers could have amaterial adverse effect on our profitability.
• Growth with Asian OEMS: The amount of business we have with Japanese, Korean and Chinese-based OEMs generally lags with tha
tof 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.
• 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 ofsuch products include: manual and dual-clutch transmissions; all-wheel drive systems; power liftgates; active aerodynamics systems;
advanced driver assistance systems; and complete vehicles with certain option packages or option choices. Where shifts in consumer
preferences result in higher ‘‘take rates’’ for products that we do not sell, such as planetary or continuously variable transmissions, or for
products we sell at a lower price and margin, such as cloth seats instead of leather seats, our profitability may be adversely affected.
• Dependence on Outsourcing: We depend on outsourcing by OEMs. A reduction in outsourcing by OEMs or the loss of any material
production or assembly programs combined with the failure to secure alternative programs with sufficient volumes and margins, could
have a material adverse effect on our profitability.
• 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 apurchase 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.
• Supply Base Condition: We rely on a number of suppliers to supply us with a wide range of components required in connection with ourbusiness. The financial health of automotive suppliers is impacted by a number of factors, including economic conditions and production
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: increased credit risk for us; disruptions in the supply of critical components to
us or our customers; and/or temporary shut-downs of one of our production lines or the production lines of one of our customers; all ofwhich could have a material adverse effect on our profitability.

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Annual Information Form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 of design changes by our customers relative to start of production; production readiness of our and our suppliers’
manufacturing facilities; robustness of manufacturing processes; launch volumes; quality and production readiness of tooling andequipment; employees; and initial product quality. Our failure to successfully launch material new or takeover business could have amaterial adverse effect on our profitability and reputation.
• Operational Underperformance: From time to time, we may have some operating divisions which are not performing at expectedlevels of profitability. The complexity of automotive manufacturing operations often makes it difficult to achieve a quick turnaround ofunderperforming divisions. Significant underperformance of one or more operating divisions could havea 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 somecountries than others and could have a material adverse effect on our profitability.
• Impairments: From time to time, we record significant impairment charges related to goodwill and/or long-lived assets. The earlytermination, loss, renegotiation of the terms of, or delay in the implementation of, any significant production contract could be indicatorsof impairment, as may the technological obsolescence of any of our products or production assets. In conducting our impairment
analysis, we 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 andprofitability.
• Supply Disruptions: Events attributable to us or our suppliers which prevent us from supplying products to our customers could result ina range of adverse consequences, including penalties or business interruption claims by our customers, loss of business and reputational
damage. The inability to promptly resume the supply of products could have a material adverse effect on our operations and profitability.
• Climate Change Risks: Extreme weather events such as floods and windstorms and other natural disasters such as earthquakes
caused by climate could cause catastrophic destruction to some of our or our sub-suppliers’ facilities, which could in turn disrupt our
production and/or prevent us from supplying products to our customers. While we conduct risk assessments of our facilities and have
implemented mitigation strategies to address, where practical, physical risks related to extreme weather events or natural disasters, thefrequency and severity of any such event can vary by region and cannot be predicted. A catastrophic destruction of our or our
sub-supplier facilities could have a material adverse effect on our operations and profitability.
• Skilled Labour Attraction/Retention: Our business depends on our ability to attract, develop and retain experienced and highly skilled
personnel. Such personnel are in high demand in some of the areas in which we compete, and competition for employees with certain
types of skills may be intense. For example, due to the rapid changes in the automotive industry, particularly in response to electrification,
autonomous driving and MaaS trends, we have a growing need for personnel with software and other technical skills, and we may facesubstantial competition for such personnel, including from traditional software industry companies. The inability to attract and retain
highly-skilled personnel could have an adverse effect on our operations and our ability to fully implement our business strategy.

IT SECURITY• 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 cyberattacks. A significant breach of our IT systems could: result in theft of funds; cause disruptions in our manufacturing operations; lead tothe loss, destruction or inappropriate use of sensitive data; or result in theft of our, our customers’ 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 toclaims against us that could have a material adverse effect on our profitability.

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 between the time of award and start of production. The inability to quote effectively, or theoccurrence of a material change in input cost or other quote assumptions between program award and production, could have an
adverse effect on our profitability.
Magna International Inc.

17• Customer Pricing Pressure: 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; incremental annual price concession demands;
pressure to absorb costs related to product design, engineering and tooling; 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 nature of 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 toexert 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. Our inability to fully offset
price concessions and/or absorb design, engineering and tooling costs, could have a material adverse effect on our profitability.
• Commodity Price Volatility: Prices for certain key raw materials and commodities used in our parts, including steel and resin, can bevolatile. To the extent we are unable to offset commodity price increases by: passing such increases to our customers, by engineering
products with reduced commodity content, implementing hedging strategies, or otherwise, such additional commodity costs could havean adverse effect on our profitability.
• Scrap Steel Price Volatility: Some of our manufacturing facilities generate a significant amount of scrap steel in their manufacturing
processes, but recover some of the value through the sale of such scrap steel. Scrap steel prices can also be volatile and don’tnecessarily move in the same direction as steel prices. Declines in scrap steel 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.
The obligation to repair or replace defective products could have a material adverse effect on our operations and profitability.
• Warranty Provisions: Warranty provisions for our powertrain systems and complete vehicle programs are established on the basis of
the terms in the applicable award agreements and our or our customers’ warranty experience with the applicable type of product.
Warranty provisions for our other products are based on our best estimate of the amounts necessary to settle existing or probable claims
related to product defects. Actual warranty experience which results in costs that exceed our warranty provisions, could have an adverse
effect on our profitability.
• Recall Costs: Our customers are required by law to recall vehicles where there is an unreasonable safety risk or non-compliance withlegislative safety standards. In the event of a recall related to products we have supplied, we may be held responsible for a range of costs
including the customer’s administrative costs of the recall, dealerships’ charges for removal of the defective product and reinstallation of
the replacement product, as well as the cost of manufacturing and delivering such replacement product. A significant recall could have amaterial adverse effect on our operations, profitability and reputation.

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 business strategy. However, as a result of intense competition in these strategic areas, we may not be able to acquire thetargets 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 orother risks. Although we seek to conduct appropriate levels of due diligence on our acquisition targets, 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 process. Additionally, we may identify risks and liabilities that we are not able to sufficiently mitigate through appropriate
contractual 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 thoseacquisitions which we do complete 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 one or more partners. Joint venture operations carry a range of risks, including those relating to: failureof our joint venture partner(s) to satisfy contractual obligations; potential conflicts between us and our joint venture partner(s); strategic
objectives of joint venture partner(s) that may differ from our own; potential delays in decision-making; a more limited ability to implement
some or all of our policies, practices and controls, or 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
and reputation.

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Annual Information Form• 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 rapid technological change and significant disruption. Our ability to anticipate changes intechnology 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. If we are unsuccessful or are less successful than our competitors inconsistently developing innovative products and/or processes, we may be placed at a competitive disadvantage and may not be able torecover some or all of our investments or costs, which could have a material adverse effect on our profitability and financial condition andability to fully implement our business strategy.
• Lyft Collaboration: We are collaborating with Lyft to jointly fund, develop and manufacture self-driving systems that may be
manufactured and installed onto vehicles by Magna. Development funding payments by Magna will be expensed in the year in which they
are incurred, and may be material. Magna’s potential opportunities from the collaboration include the sale of complete self-driving
systems (hardware and software) to Lyft or others, licensing of technology to others and use of data. Lyft is not obligated to use any jointly
developed self-driving systems in their vehicle fleet, has the right to purchase and use competing third-party systems, and may separately
license any jointly developed self-driving technology or data to others. We cannot provide assurance that commercially viable technology
or products will result from the collaboration with Lyft or that we will achieve all of the strategic objectives intended from the collaboration.
• Private Equity Investments in Technology Companies: In addition to our development activities, we have invested approximately$323 million in Lyft and other technology companies. Such investments are an important element of our long-term strategy and we may
make further private equity investments in such companies. Investing in such companies involves a high degree of risk, including thepotential loss of some or all of our investment value. In addition, where there is no public market for the shares of our investments instart-ups, we may be unable to monetize our equity investments in the future. The materialization of such 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 powertrain and electronics. As our business evolves, we may face new or heightened risks, including: challenges in quoting
for profitable returns on products with leading-edge technologies for which we may not have significant quoting experience; increased
warranty and recall risks on new products and leading-edge technologies; increased product liability risks on safety-related products or
systems; 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 effect on
our operations, profitability or financial condition.
• Risks of Doing Business in Foreign Markets: The establishment of manufacturing operations in new markets carries a number ofrisks, including those relating to: political, civil and economic instability and uncertainty; corruption risks; high inflation and our ability torecover inflation-related cost increases; trade, customs and tax risks; 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 business internationally. Expansion of our business in non-traditional markets is an important element of ourlong-term strategy and, as a result, our exposure to the risks described above may be greater in the future. The likelihood of suchoccurrences and their potential effect on us vary from country to country and are unpredictable, however, the occurrence of any suchrisks 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
Canadian dollar, the euro, the British pound 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
or euro, 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 we haveceased 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.
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• 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. 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 us
by one or more agencies could increase our cost of borrowing or impact our ability to negotiate loans, which could have an adverse effecton 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 may berequired to devote significant management time and resources to the matters and may 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 ourconsolidated financial statements and/or our MD&A, we do not believe that any of the proceedings or claims to which we are currently aparty will have a 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 and otherlaws which impose additional costs on automotive manufacturers or consumers, could have an adverse effect on our 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.

20

Annual Information Form

6. DESCRIPTION OF THE BUSINESSGEOGRAPHIC MARKETS & CUSTOMERS
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 2018 and 2017:
Magna
Sales
RankingOEM
Ranking(1)

1
2
3
4
5
6

5
6
8
11
10
1

Customer

2018

2017

General Motors
Ford
FCA
BMW
Daimler
Volkswagen
Other
TOTAL

15%
14%
14%
12%
11%
11%
23%
100%

18%
16%
14%
11%
12%
10%
19%
100%

(1) Based on 2018 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. For instance, as part of our purchase contracts, we are generally
required to supply service parts for up to 15 years after the end of production, provided that we are the contracted supplier when the vehicle
model ceases production. However, automobile manufacturers could cease sourcing their production requirements from us for a number ofreasons, including if we refuse to accept demands for price reductions or other concessions.

MANUFACTURING & ENGINEERINGWorld Class Manufacturing
Our goal is to be recognized as a leader in ‘‘World Class Manufacturing’’. Our global operating units strive toward this goal which aims toachieve ‘‘best in class’’ performance in all areas of manufacturing. In order to drive continuous improvement, we monitor our progress inachieving World Class Manufacturing by using an assessment process that is similar to the method used by our customers in their own
plants and to evaluate their suppliers. Our assessment process, known as the Magna Factory Concept or MAFACT, is supplemented withelements we view as critical to achieving World Class Manufacturing in accordance with our Operational Principles. Best practices, ‘‘lessons
learned’’ and key initiatives are shared among our global operating units, including through routinely scheduled internal World Class
Manufacturing meetings that bring together our senior corporate and Operating Group leadership.

Magna International Inc.

21

Smart Factory Technology
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; and perform predictive maintenance on equipment. Specifically, a number of our global
facilities have implemented a combination of new technological applications, software and processes in order to benefit from more efficientand effective factory solutions, which is known as our ‘Smart Factory’ approach. A few examples are set out below.

Advanced Robots

Virtual Reality Centre

Wearable Tech

• Located in Graz, Austria, the VR Centre is helping bring• Our Corporate R&D has developed a core Advanced
new technology to real product development
Robotics System for high volume production using• Before a new production line is installed, the newstate-of-the-art 2D/3D vision systems
building, infrastructure and technology are planned• Camera systems allow next-generation robots to identify
virtually
components, pick them up and understand where they
• Existing plants have also been digitized with the help
must be placedof drones that scan the facility• The “pick, inspect and place” feature is just one potential• Engineers also use Virtual Reality (VR) goggles inapplication of the core technology
complete vehicle development, including vehicle• The system has been launched in one Magna facility andstyling and ergonomics
is ready for deployment in other facilities• One of our Mechatronics facilities is conducting a
multi-year pilot project in partnership with Samsungthat provides employees – including operators, quality
inspectors and maintenance staff – with wearable
technology• Allows for production and efficiency improvements,
including reduction of downtime, and increased
response time
• Improves training through virtual reality headsets thatallow operators to practice movements in a classroom
environment• Improves quality, as bottlenecks and issues are easierto track, and data and analytics help assembly lines
get needed support

26MAR201918015187

Facilities
As at December 31, 2018, we had the following manufacturing and PDE&S facilities:
4%

3%

22%

22%

21%
40%

Manufacturing
Facilities

PDE&S

35%

53%

North America,140
Asia, 7222

Annual Information Form

Europe,123
Rest of World,13North America, 20
Asia, 20

Europe, 48
Restof World, 3
7MAR201919334503

Our manufacturing and PDE&S facilities occupied approximately 83 million and 3.5 million square feet, respectively. These facilities werebroken down between third party leases (including from Granite Real Estate Investment Trust (‘‘Granite REIT’’), a Canadian-based, publiclytraded real estate investment trust), and those owned by us as follows:
12%
0.4m
36%

7%
0.3m

30m

Manufacturing
Facilities

36m

PDE&S
Facilities

44%

3.5m (sq ft)

83m (sq ft)

2.8m
17m
81%
20%
Owned

Leased from
GraniteLeased from other
3rd Parties

11MAR201919311988

We are operating many of our manufacturing facilities on a multi-shift basis. Our facility leases typically have terms of at least five years with
one or more options to renew. Among other terms, our leases typically require 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 lease premises over theterm 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. We arealso responsible for removing all hazardous and toxic substances as required by applicable laws and, in any event, prior to the termination of
our occupation of the leased properties. Magna routinely conducts Phase 1 Environmental Assessments, and if necessary Phase 2 Site
Investigations, at manufacturing, assembly and warehousing locations prior to occupancy to identify any actual and potential pre-existing
environmental concerns at leased or owned sites. Magna would typically be responsible to address new environmental impacts or
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 the landlord with respect to environmental matters and those indemnities expire after a specified period
following the termination of the leases.

Key Commodities
Our key purchased commodities include: stampings, electronics, molded parts, steel, resin, die casting, forging, coverstock, and wire
harnesses. We purchase the majority of our commodities from regional suppliers where we do business. Factors such as price, quality,transportation costs, warehousing costs, duties, tariffs, availability of supply and timeliness of delivery have an impact on the decision tosource from certain suppliers. We also purchase some key commodities offshore when shortages occur or when we choose to source one
supplier for a global program. Prices for certain key commodities used in our parts production, particularly steel and resin, continue tobe 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 scrap steel, which we typically sell at prices that fluctuatewith published market indexes. Most of our resin purchases fluctuate directly with market indexes, although we do participate in somecustomer resale programs on a small portion of our resin purchases. In some cases, our customers direct us to buy certain othercommodities from specified suppliers at specified prices. To date, we have not experienced any significant difficulty in obtaining supplies ofparts, components or key commodities for our manufacturing operations. However, in recent periods, certain electronic parts, including
semiconductors, have become more difficult to source as a result of the high demand for such parts and lack of capacity and production
capability by suppliers. We expect that availability of such electronic parts will normalize over the next few years. Consistent with leanmanufacturing principles, we do not carry inventories of key commodities or finished products significantly in excess of those reasonably
required to meet production and shipping schedules.

Magna International Inc.

23

PRODUCTS & SERVICES
Top Programs

Mechatronics

Tata

Jaguar E-Pace

Daimler

Mercedes-Benz
G-Class

GeneralMotorsChrysler Pacifica,
Dodge Grand Caravan
Chevrolet Equinox,
GMC Terrain

FCA

Jeep Grand Cherokee
Buick Enclave,
Chevrolet Traverse,
GMC Acadia
Ford Escape, Ford
Kuga, Lincoln MKC

FCA

Ram Pick-up

Ford

Ford Transit,
Ford Tansit Custom

FCA

Jeep Cherokee

FCA

Jeep Wrangler

Ford

Ford F-Series Super
Duty

Tata

Jaguar I-Pace

•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

Roof Systems

•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

•
•

•
•

•
•

•

•
•
•
•
•
•
•
•
•
•
•

•
•
•
•
•
•
•
•
•

•
•
•
•
•
•
•
•
•
•
•

•
•
•
•
•
•
•
•
•
•
•

Seating
Systems

Complete
VehiclesManufacturing

Mirrors & Lighting

BMW 5-Series

Ford

Electronics

BMW

GeneralMotorsPowertrain

Full-Size SUVs &Pick-up Trucks

Exteriors

GeneralMotors

FCA••

VehicleBody & Chassis

CustomerPower & Vision

Vehicle Engineering &Body Exteriors& Structures

Seating

Our top fifteen programs/platforms based on 2018 production and vehicle assembly sales were:

•
•
•
•
•
•
•
•
•
•
•
•
•
•

26MAR201918014905

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.

24

Annual Information Form

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.

167*

24*

Manufacturing
Facilities

PDE&S Centres

22 74,425 $17.5B
Countries

Employees

2018 Sales* Figure includes certain manufacturing facilities and PDE&S centres shared with other reporting segments.

Top Segment Programs
Customer

Vehicle1. General Motors
2. General Motors
3. FCA
4. FCA
5. FordFull-Size SUVs & Pick-up Trucks
Chevrolet Equinox, GMC Terrain
Jeep Cherokee
Ram Pick-up Trucks
Ford F-Series Super Duty 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.
Product Capabilities

BODY AND CHASSISPRODUCTS• body systems• chassis systems• engineering and testing

KEY PROCESSESTOP CUSTOMERSKEY COMPETITORS

Forming technologies:• hydroforming• cold stamping, including
high-strength steel &aluminum• hot stamping• roll forming• aluminum casting• advanced welding & joining• stretch bending of aluminum
extrusions• General Motors• Ford• FCA• Daimler• Volkswagen• BMW• Groupe PSA• Honda• Renault-Nissan-Mitsubishi• Mahindra• Tata Motors• Hyundai Motor Company• PACCAR• Benteler International AG• Gestamp Automoción S.L.
• Metalsa, S.A. de C.V.
• Martinrea International Inc.
• Tower International, Inc.
• F-Tech Inc.
• Flex-N-Gate Corporation• F&P America Mfg., Inc.
• thyssenkrupp• Ogihara America
Corporation• Thai Summit Group• Iroquois Industries Inc.

Finishing technologies:• e-coating• heat treating• high temperature wax
coating• machining

Magna International Inc.

25

EXTERIORSPRODUCTSKEY PROCESSESTOP CUSTOMERS• fascia & trim
• front end modules• modular access systems• active aerodynamics• lightweight composites• sealing systems• engineered glass• running board & roof racks• fuel systems

Molding technologies:• injection molding, such as
two shot, structural, insert,
injection compression forthermoplastics & reaction
injection molding• extrusion processes, suchas co-extrusion, thermoset
and thermoplastic extrusion• compression-molding forthermosets• expanded polypropylene
foam• metal rollforming• glass encapsulation• tooling• FCA• Volkswagen• Ford• General Motors• BMW• Daimler• Renault-Nissan-Mitsubishi• Groupe PSA• Toyota• HondaKEY COMPETITORS• Flex-N-Gate Corporation• Plastic Omnium S.A.
• Samvardhana Motherson
Peguform• HBPO GmbH• SRG Global Inc.
• ABC Group• Röchling Group

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

ROOF SYSTEMSPRODUCTS• sliding folding & modular
roofs• retractable hard tops andsoft tops

26

KEY PROCESSESTOP CUSTOMERS• ‘‘cut and sew’’ of complete
fabric covers• backlight gluing• manual and automatedcomplete roof assembly• Daimler• BMW• Volkswagen• FCA• Groupe PSA• General Motors• Renault-Nissan-Mitsubishi

Annual Information Form

KEY COMPETITORS• Webasto Group• Valmet Automotive Inc.
• Inteva Products, LLC• Inalfa Roof Systems
Group B.V.

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

117*

47*

Manufacturing
Facilities

PDE&S Centres

20 56,550 $12.3B
Countries

Employees

2018 Sales* Figure includes certain manufacturing facilities and PDE&S centres shared with other reporting segments.

Top Segment Programs
Customer

1. General Motors

VehicleFull-Size SUVs & Pick-up Trucks

2. Daimler

Mercedes-Benz GLC, GLC Coupe

3. FCA

Chrysler Pacifica, Dodge Grand Caravan

4. FCA

Ram Pick-up Trucks

5. FordFord F-Series F150

Segment Trends and Strategic Focus
In our Power and Vision segment, we seek to realize opportunities presented by trends toward electrification and autonomous driving. We
believe that our powertrain business is well-positioned to benefit from the shift toward electrification and we continue to invest in bothtransmissions and driveline products to further grow in areas such as 48V and high-voltage electric drive systems, including throughproducts such as hybrid transmissions, hybrid transfer cases, electric rear drive axles and highly-integrated primary and secondary e-drive
systems. Our Vision Systems business is currently the leading supplier of camera-based driver assistance systems and we continue toinvest in advanced driver assistance technologies to expand the autonomous driving systems expertise we can offer customers. These
investments include both in-house research and development, as well as venture capital investments in and partnerships with technology
partners, that have resulted in: a high-definition digital radar offering first-to-market functionality and features, sourcing on the first
production program award for solid state LiDAR and development of scalable platforms for domain controllers. In 2018, we demonstrated
our full systems integration and Level 4 autonomous driving capability through the MAX4 demonstration vehicle. And, during 2018, we alsoannounced our collaboration with Lyft to jointly fund, develop and manufacture self-driving systems designed to speed up the developmentof autonomous vehicles.

Magna International Inc.

27

Product Capabilities

POWERTRAINPRODUCTSKEY PROCESSESTOP CUSTOMERS• transmission systems (dualclutch, hybrid dual clutch,
manual transmissions)• driveline systems(AWD/4WD products,
hybrid & battery electric
driveline products)• metal-forming solutions(transmission components,
diecast driveline products)• engineering services• transmission and driveline
assembly• high pressure die castingwith full foundry• flow-forming• stamping and spinning• steel & aluminum die
forming• grob, roller die & cam diespline forming• precision-heavy stamping• shaft spline rolling• aluminum die casting andprecision machining• 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 and metal
inert gas (MIG)/tungsten
inert gas (TIG)• manual and automatedassembly• end-of-line testing, leaktesting and balancing• General Motors• Volkswagen• FCA• Daimler• Ford• Renault-Nissan-Mitsubishi• BMW• Great Wall Motor Company
Limited• Tata Motors• Hyundai Motor Company

PRODUCTSKEY PROCESSESTOP CUSTOMERS• advanced driver assistancesystems/ADAS features• ADAS scalable products(EYERIS camera systems,
ultrasonic sensors, ICONRADAR, LiDAR)• electronic controllers• surface mount placementsof electronic components
on printed circuit boards• manual and automatedassembly of electronic
modules

KEY COMPETITORS• Aisin Seiki Co., Ltd.
• ZF Group• JATCO Ltd.
• Nidec Corporation• GKN plc
• BorgWarner Inc.
• Rheinmetall AG• Johnson Electric• American Axle &Manufacturing, Inc.
• Robert Bosch GmbH• Linamar Corporation• Valeo S.A.
• Continental AG• Schaeffler Group

ELECTRONICS

28

Annual Information Form

• Ford• General Motors• FCA• Mazda• Volkswagen• HondaKEY COMPETITORS• Continental AG• Aptiv PLC• Veoneer, Inc.
• Robert Bosch GmbH
• Valeo S.A.
• ZF Group• Denso Corporation

MIRRORS & LIGHTINGPRODUCTSKEY PROCESSES• interior mirrors• exterior mirrors• actuators• door handles• headlamps• tail lamps• small lighting• electronic controllers• overhead consoles• electronics integration• injection molding• painting• manual and automatedassembly

TOP CUSTOMERS
Mirrors• Daimler• Ford• General Motors• Volkswagen
• BMW
• FCA
Lighting• General Motors• FCA• Ford• BMW• Daimler• Volkswagen• HondaKEY COMPETITORS
Mirrors• SMR Automotive• Gentex Corporation• Ficosa International S.A.
Lighting• Valeo S.A.
• Magneti Marelli S.p.A.
• Hella KGaA Hueck & Co.

MECHATRONICSPRODUCTS• latching systems• door systems• power closure systems• electronic controllers• hinges and wire forming(rods)KEY PROCESSES• light stamping• injection molding• manual and automatedassembly

TOP CUSTOMERS• FCA• General Motors• Renault-Nissan-Mitsubishi• Daimler• Volkswagen• Ford• BMW

KEY COMPETITORS• Brose Fahrzeugteile
GmbH & Co. KG• Inteva Products, LLC• Kiekert AG

Magna International Inc.

29

SEATING SYSTEMSOur Seating Systems segment comprises our global seating systems operations.

60

8*

Manufacturing
Facilities

PDE&S Centres

16 28,475
Countries$5.5B

Employees

2018 Sales* Figure includes certain PDE&S centres shared with other reporting segments.

Top Segment Programs
Customer

Vehicle1. FCA

Chrysler Pacifica, Dodge Grand Caravan

2. FordFord Escape, Ford Kuga, Lincoln MKC

3. FCA

Jeep Grand Cherokee

4. FordFord Transit, Ford Transit Custom

5. General Motors

GMC Acadia, Chevrolet Traverse, Buick Enclave

Segment Trends and Strategic Focus
Our Seating Systems group continues to grow organically 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 andreconfigurable seating, specifically to supply reconfigurable seating solutions for applications such as car sharing and autonomous
ride sharing.
Product Capabilities

SEATING SYSTEMSPRODUCTSKEY PROCESSES• complete seating systems• seat structures,
mechanism & hardware
solutions• foam & trim products• traditional ‘‘cut and sew’’technology• manual and automatedassembly• patented Multi-Material
Mold-In-Place technology• patented EZ-Entry and seatstowing mechanisms
systems

30

Annual Information FormTOP CUSTOMERS• Ford• Fiat/Chrysler• General Motors• Volkswagen• BMW

KEY COMPETITORS• Adient plc• Lear Corporation• Faurecia S.A.

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

7*

27*

9

12,650$6.0B

Manufacturing
Facilities

PDE&S Centres

Countries

Employees

2018 Sales* Figure includes certain manufacturing facilities and PDE&S centres shared with other reporting segments.

Top Segment Programs
Customer

Vehicle1. BMW

BMW 5-Series

2. Tata Motors

Jaguar E-Pace

3. Daimler

Mercedes-Benz G-Class

4. Tata Motors

Jaguar I-Pace

Segment Trends and Strategic Focus
Our Complete Vehicles business continues to provide OEM-level expertise to traditional customers seeking a trusted vehicle assembly
outsource partner, as well as new market entrants seeking expertise for their traditional, electrified, autonomous and/or smart 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, continue to grow. MaaS providers represent an
important source of new opportunities since they typically do not have the vehicle development, engineering, integration and assembly
capabilities of traditional OEMs and thus require outsource partners to commercialize their concepts. In this segment, we also focus onleveraging 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, and we support
our customers with one of the most versatile test environments for highly automated vehicles.
Product Capabilities

VEHICLE ENGINEERING & MANUFACTURING
PRODUCTS• complete vehicle
manufacturing• engineering services• fuel systems

KEY PROCESSES• body-in-white• paint• assembly

TOP CUSTOMERS• BMW• Daimler• Tata Motors• VinFast• Brilliance China• Renault-Nissan-Mitsubishi

KEY COMPETITORS
Contract Manufacturing• VDL Nedcar B.V.
• Valmet Automotive
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 our 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, as well
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’’.

Magna International Inc.

31

7. INNOVATION AND RESEARCH & DEVELOPMENT
FOCUS ON INNOVATION AND TECHNOLOGY
We have historically emphasized technology development and product and process innovation as a key element of our business strategy.
See ‘‘Section 4 – Our Business & Strategy – Our Business Strategy’’ for further details. We intend to continue to invest significant resources
to develop and commercialize innovative technologies, which will provide additional value to our customers. In addition, we aim to advancesome of our sustainability goals through innovations in electrification.
We expect that our involvement with automobile manufacturers and smart 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.

OUR RESEARCH AND DEVELOPMENT PROCESSOur 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
Vice-President and Chief Technology Officer, analyze the key mega-trends 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 OEM customers to understand their product strategies and better align our own product strategy and technology development withcustomer needs.
All of our R&D projects follow an IDP process – a multi-stage process aimed at turning ideas into innovations that can ultimately becommercialized 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 and other trends which may create
demand for and thus drive development of new automotive and mobility technologies; review of academic research; collecting andscreening 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 mobility,
autonomy and electrification; commercialization potential; and risks and challenges to further development. Selected innovations thenprogress through subsequent stages towards product or process realization, validation and eventually, 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 also 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 also partner withstart-ups and early stage companies, potential inventors, entrepreneurs, universities, technical institutions and the venture capitalcommunity to help bring innovative ideas to market. We also look for the best ideas from other industries and apply them to mobility, aprocess we call ‘‘auto-qualifying’’. As part of our continuing efforts to develop innovative solutions to the technology challenges of smart
mobility and the automotive industry, in the last 12-15 months, we have investigated over 1100 potential innovations, which has led to
22 active projects. Such projects include a new joint venture with Rohinni to produce lighting possibilities that go beyond conventional LEDs
and a collaboration with Uhnder in engineering and development of the ICON RADAR, which is able to detect and communicate to thevehicle a topography of static and moving objects. We currently have equity investments in 18 technology partnerships we believe provide
important product or technology development opportunities for our future business.

INTELLECTUAL PROPERTY
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 expiryof any one patent or license would materially affect our business.

32

Annual Information FormINNOVATIONS
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 business strategy. Our current strategic focus is aimed at responding to key industry trends, as
discussed in ‘‘Section 4 – Our Business & Strategy – Our Business Strategy’’. Some examples of recent innovations are as follows:

Reconfigurable Seating

Comfort+ Door Latch

12MAR201912165595
12MAR201912165729 Reconfigurable seating is one of our latest seating

Magna has recently developed the Comfort+ door latch, which isinnovations. Magna is developing reconfigurable seating solutions designed to reduce the effort required to open and close the car door
and technologies by drawing on digital and market consumer and to result in a smooth, consistent feel. Specifically, the Comfort+
research in China, Europe and the U.S. on consumer day-to-day turns sliding friction into rolling friction within the mechanics of theexperiences with vehicle seats. This newly unveiled Magna concept door latch with reduced efforts to open and close the vehicle door
seat system is part of our vision for a flexible vehicle interior that expected to allow automakers to increase sealing around the door,
makes seating a changing environment based on actual usage and thus helping to create a quieter cabin.
moves from a passive seat structure with passengers facing forward
Solid State LiDAR
to a more dynamic structure. This innovation, which includes specificconfigurations for extra cargo space, long road trips and mobile
12MAR201912165729 Recognizing that LiDAR is one of the critical enablers tomeetings, can be reconfigured with the touch of a smartphone and achieve the desired levels of performance and overall safety inresponds to changing demands for vehicle occupancy experiences developing autonomous technologies, Magna continues its
being ushered in by the growth of autonomy and smart mobility.
collaboration with Israeli start-up, Innoviz Technologies, to integrate

etelligentDrive System/e2 Concept Vehicle

12MAR201912165290 With the electrification of the automobile gaining momentum,
Magna has developed a 48-volt transfer case and an array of other48-volt products, which are designed to help automakers meet global
CO2 and fuel-economy regulations. This etelligentDrive eDS 48-volt
High Performance System is among the first mild-hybrid transfer
cases available to automakers. It is also a four-wheel drive system thatprovides CO2 savings and improved fuel efficiency.

automotive-grade, solid-state LiDAR into its autonomous driving
platform (the MAX4). This solid-state high-resolution LiDAR
technology generates an accurate and dense 3D point cloud of thevehicle’s surroundings in real time, even in challenging settings suchas direct sunlight, varying weather conditions and environments inwhich other vehicles are also using LiDAR. Magna and Innoviz havebeen awarded business by the BMW Group to supply solid-state
LiDAR for its upcoming autonomous vehicle production platforms.
The supply award demonstrates Magna’s ability to support
customers by providing various building blocks of an overallautonomous platform.

In addition, Magna has premiered its e2 prototype vehicle in an effort
to meet the different electrification needs of different automakers withscalable and easy-to-integrate powertrain configurations. The e2,
MAX4 Autonomous Driving Platform
which represents the entire range of electrification in one vehicle,
Our MAX4 autonomous driving platform is a fully integrated,
12MAR201912165729
includes both a hybridized dual-clutch gearbox and an electric
rearaxle with torque vectoring that can be activated across different customizable and scalable autonomous driving sensing and compute
power ranges. This allows a demonstration and comparison of ten platform that can enable up to Level 4 autonomous driving capabilities
different powertrain configurations within a single vehicle architecture. in both urban and highway environments. Level 4 automation
Drivers can experience, for example, a mild hybrid for optimal fuel includes vehicles that can perform all safety-critical functions for the
consumption, an electrified four-wheel-drive system for increased duration of a trip in a specified operational design domain with notraction and safety, and an e-axle with integrated torque vectoring for input from a driver, except for destination or navigation input. The
the improved driving dynamics – all within the e2 prototype vehicle. MAX4 combines cameras, RADAR, LiDAR and ultrasonic sensors
with a compute platform that is designed for easy integration with any
3D Surround View System
automakers’ existing and future platforms – including hybrid and
12MAR201912165729 We have announced a partnership with Renesas Electronics electric vehicles. Additionally, Magna’s compute platform, scalable for
Corporation, a supplier of automotive semiconductor solutions, to high-volume production, is flexible, upgradeable and fully functional
accelerate the mass adoption of a new, cost-efficient 3D surround with a fraction of power requirements compared to alternative
view system designed for entry and mid-range vehicles. The solutions. The MAX4 also retains an automaker’s existing design and3D surround view system is a vehicle camera system that provides a styling freedom by not taking up cargo space in the rear of the vehicle
360-degree panoramic view to assist drivers when parking or or personal space in the main compartment.
performing low speed operations. By enabling 3D surround viewsafety capabilities, the new system can assist automakers to deliversafer and more advanced vehicles to a larger number ofcar consumers.

The MAX4 is being used in the development of the Magna
Autonomous Valet, an app-based, on-demand system that will allow
a user to exit the vehicle and initiate autonomous parking. The user
will be able to then request an autonomous pick-up, either at theoriginal drop-off location or a pre-determined location, all while
monitoring the vehicle’s progress via the app.

Magna International Inc.

33

INNOVATION AWARDS
In addition to the innovations described above, a number of our product and process innovations have received accolades and awards inrecent years, including the following:Multiple Awards for our Thermoplastic Liftgate
We received three industry awards for our completely recyclable
thermoplastic liftgate, developed in collaboration with FCA, for the2019 Jeep Cherokee. Specifically, we placed first in the bodyexterior category at both the European and North American Societyof Plastics Engineers automotive innovation awards and received
the Unsurpassed Innovation Award at the Composites andAdvanced Materials Expo. The liftgate module is the firsthigh-volume application of an all thermoplastic liftgate produced in
one location. It is also the first industry use of infrared welding behinda visible exterior surface, which improves structural and dimensional
performance as well as processing time.

Society of Plastics Engineers (SPE) Innovation Awards
Our carbon fibre subframe, the result of an ongoing joint R&D projectwith Ford, received a first-place innovation award in the chassis
category from the Society of Plastics Engineers. The prototype
subframe achieves an 82% part reduction by replacing 45 steel
parts with two molded parts and six steel parts, as well as a 34%
mass savings compared to a subframe made of stamped steel. We
also received a first-place innovation award in the enabling
technology category for our torsional welding joining process.
Torsional welding joins plastic brackets to thermoplastic fascia witha high-speed twisting motion that creates enough friction-basedheat to meld them together. Working with a technology partner, we
became the first to use torsional welding for automotive fascia.
We also received a Materials Innovation Award from the Society of
Plastic Engineers for our class-A body panel made from reclaimed
carbon fiber, which weighs 30-40% less than an aluminum version,increasing sustainability, recyclability and lightweighting.

GM Supplier of the Year Awards
We received two GM Supplier of the Year Awards for innovations inlighting and driveline performance at the automaker’s 26th annual
Supplier of the Year awards ceremony. One example of the lighting
we supply GM is the D-Optic LED Headlamp, an industry-first thatuses multiple high-power LEDs and can be custom-developed to avehicle’s specific styling. This technology debuted on the 2018
Chevrolet Traverse and provides a unique design while also
improving forward visibility. In the driveline area, Magna supplies GM
with products such as the single-speed Actimax transfer case,two-speed Ultimax transfer case, electronic limited slip differential
and Actimax beveloid transfer case. These products provide avariety of benefits to GM vehicles, including improved handling andperformance, dynamic four-wheel and all-wheel drive, andoptimized fuel efficiency.
We previously received the General Motors Supplier of the Year
Innovation Award in 2017 for our use of laser cutting and welding on
the front fascias which appear on the 2017 Chevrolet Camaro ZL1.
The innovative process used provides greater flexibility when making
lower-volume parts and enables weight savings by using
thinner-walled components.

Autonomous Vehicle Technology (AVT) 2019 ACES Awards
We received an ACES award in the Mobility Services category from
Autonomous Vehicle Technology (AVT) magazine for our investment
and collaboration with Lyft to fund, develop and manufactureself-driving systems. We were also named as a winner in the
Sensors category for our ICON RADAR high-resolution automotive
radar technology, which incorporates advanced technology used by
the U.S. military to provide precise detection, extensive range andhigh resiliency.

AutomotiveINNOVATIONS Award
In the last couple of years, we have twice won The Center ofAutomotive Management (CAM) and PricewaterhouseCoopers (PwC)
Germany AutomotiveINNOVATIONS Award as the Most Innovative
Automotive Supplier. Our latest award was in the chassis, car body andexterior category for its new process of welding steel and aluminum
together to make a multi-material vehicle structure with less mass andweight than an all-steel version.

8. CAPITAL STRUCTURE, FINANCINGS & CREDIT RATINGS
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 22, 2019, the Record Date for our Meeting, a total of 323,082,913 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. The attributes of our Common Shares and our Preference Shares are set out in our charterdocuments.

34

Annual Information Form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;• to 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• to 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 andin 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.

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 the classconcerned. Any approval required to be given must be given by two-thirds of the votes cast by those present or voting at a meeting of theholders 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.
$0.40$0.365

$0.35
$0.30
$0.25

$0.275$0.33$0.33 $0.33 $0.33

Q4

Q1$0.275 $0.275$0.275$0.25 $0.25 $0.25

$0.20
$0.15
$0.10
$0.05
$0.00
Q1

Q2

Q3

2016

Q4

Q1

Q2

Q3

2017

Q2

Q3

Q4

2018 6MAR201914453865

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. The declaration and payment 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 otherfactors 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.

Magna International Inc.

35

Financings and Securities/Corporate Transactions
Issuance of Senior Unsecured Notes
On August 24, 2017, we filed a short form base shelf prospectus (‘‘2017 Shelf Prospectus’’) with the Ontario Securities Commission (‘‘OSC’’)and a corresponding shelf registration statement with the United States Securities and Exchange Commission (‘‘SEC’’) on Form F-10 (‘‘2017
Registration Statement’’) to provide for the offering in Ontario and the United States of up to an aggregate of $2 billion of senior unsecured
notes from time to time over a 25 month period.
On September 25, 2017 we issued c600,000,000 in 1.500% senior unsecured notes due September 25, 2027 pursuant to the 2017 Shelf
Prospectus and 2017 Registration Statement.
We previously issued the following senior unsecured notes pursuant to previous shelf prospectuses and registration statements, and in thecase of the CAD$425,000,000 senior unsecured notes, by way of private placement to accredited investors in each of the provincesof Canada:
Issuance Date

June 16, 2014
September 23, 2015
November 24, 2015
December 7, 2015

Amount Issued$750,000,000$650,000,000
c550,000,000
CAD$425,000,000

Interest Rate

3.625%
4.150%
1.900%
3.100%

Maturity Date

June 15, 2024
October 1, 2025
November 24, 2023
December 15, 2022

The prospectus supplements which describe each of the notes above have been filed on SEDAR (www.sedar.com).
Global Credit Facility
We maintain a $2.75 billion syndicated revolving credit facility that expires on June 22, 2023. The facility includes a $200 million Asian
tranche, a $100 million Mexican tranche and a tranche for Canada, U.S. and Europe, which is fully transferable between jurisdictions andcan be drawn in U.S. dollars, Canadian dollars or euros.
On October 12, 2018, we entered into a $300 million, 364-day syndicated revolving credit facility, which can be drawn in U.S. dollars or
Canadian dollars.
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 (the ‘‘ECP Notes’’), subject to an aggregate maximum of c500 million or its equivalent in alternative
currencies. Under the USCP Program, we may, from time to time, issue commercial paper notes (the ‘‘US Notes’’), subject to an aggregate
maximum of $1 billion or its equivalent in alternative currencies. As at December 31, 2018, we have issued c140 million and $902 million
under the ECP Program and USCP Program, respectively.
Normal Course Issuer Bid
On November 12, 2018, the Toronto Stock Exchange (‘‘TSX’’) accepted our Notice of Intention (the ‘‘Notice’’) to Make a Normal Course
Issuer Bid relating to the purchase of up to 33,200,000 Magna Common Shares (the ‘‘2019 Bid’’), representing approximately 10% of our‘‘public float’’ of Common Shares. The primary purposes of the 2019 Bid are purchases for cancellation, as well as purchases to fund ourstock-based compensation awards or programs and/or our obligations to our deferred profit sharing plans. The 2019 Bid commenced on
November 15, 2018 and will terminate no later than November 14, 2019.
Purchases of Common Shares under the 2019 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
entered into a pre-defined automatic securities purchase plan with a designated broker to facilitate the purchase of Magna Common Shares
during blackout periods.

36

Annual Information FormWe have purchased the following Common Shares pursuant to the 2019 Bid as at March 22, 2019, and under our previous normal course
issuer bid which commenced on November 15, 2017 and terminated on November 14, 2018 (‘‘2018 Bid’’):Shares purchased and cancelled
Shares purchased and retained for stock-based compensation awards or programs and/or
deferred profit sharing plans
Total

2019 Bid2018 Bid

10,547,821

29,641,909(1)93,702
10,641,523

0
29,641,909

Notes:(1) 1,867,100 Common Shares were purchased pursuant to two specified share repurchase programs with two arm’s length, third-party sellers at a discount to prevailing market
prices pursuant to issuer bid exemption orders issued to us by the OSC on November 21, 2017.

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

Credit Rating Agency

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

IssuerRatingA (low)
A3
A

Senior Debt
RatingA (low)
A3
A

Short-Term
Debt Rating

R-1 (low)
P-2
A-2

Outlook/
Trend

StableStableStableNotes:(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 somecases, unless challenges 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 a greater 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 anissuer 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 ‘‘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 four broad weighted categories which
are further broken down into 13 weighted sub-factors each of which maps to a specific letter rating in the range above. The indicated rating category for each sub-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 a composite
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 genericrating 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 Standard & Poor’s to have a strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes incircumstances and economic 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 the potential 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. A‘‘Stable’’ outlook rating means the rating is not likely to 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, since suchratings 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. We have made payments in the ordinary course to the rating agencies listed above in connection with theassignment of ratings on our securities. In addition, we made payments to Moody’s and S&P in connection with the confirmation of ourratings in respect of the issuance of our Senior Notes and continued issuance of our ECP Program and USCP Program.

Magna International Inc.

37

9. DIRECTORS & EXECUTIVE OFFICERSDIRECTORSOur Board currently consists of the following members:Name & Municipality of Residence

Scott B. Bonham(1)California, U.S.A.
Peter G. Bowie
Ontario, Canada
Mary S. Chan
New Jersey, U.S.A.
Dr. Kurt J. Lauk
Baden-Württemberg, Germany
Robert F. MacLellan
Ontario, Canada
Cynthia A. Niekamp
Michigan, U.S.A.
William A. Ruh
New South Wales, Australia
Dr. Indira V. Samarasekera
British Columbia, Canada
Donald J. Walker
Ontario, Canada
Lawrence D. Worrall
Ontario, Canada
William L. Young(2)(3)
Massachusetts, U.S.A.

Director Since

Principal Occupation

May 10, 2012

Corporate Director and Co-Founder, Intentional Capital

May 10, 2012

Corporate Director

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

May 4, 2011

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

Chairman, Northleaf Capital Partners

May 8, 2014

Corporate Director

May 11, 2017

Chief Executive Officer, Digital, Lendlease GroupMay 8, 2014

Senior Advisor, Bennett Jones LLP and Corporate Director

November 7, 2005

Chief Executive Officer of Magna

November 7, 2005

Corporate Director

May 4, 2011

Corporate Director

Notes:(1) Effective January 1, 2018, Mr. Bonham entered into a consulting arrangement with a subsidiary of Magna under which he will provide venture capital and technology advisory
services to Magna.
(2) Chairman of the Board.
(3) Mr. Young was a director of Pharmetics (2011) Inc., a private company, until he resigned in connection with the sale of Pharmetics in September 2017. Approximately fivemonths after the sale, in February 2018, Pharmetics filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act (Canada) and was subsequently
declared bankrupt as of March 16, 2018.

All of our directors were elected to their present terms of office by our shareholders at our Annual Meeting of Shareholders held on May 10,
2018. The term of office for each director expires at the conclusion of the next annual meeting of our shareholders. Mr. Worrall is retiring fromthe Board at the end of his current term and thus is not standing for re-election at our next annual meeting. A new candidate, Ms. Lisa S.
Westlake, is a nominee for the first time. For more information about Ms. Westlake’s qualifications and experience, see the ‘‘Election of
Directors’’ section of our Circular, which is incorporated by reference into this AIF. No executive committee of the Board has been
constituted.
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. Bonham was a Venture Partner of GGV Capital from 2011 to June 2015, a venture capital firm he co-founded in 2000;• Ms. Niekamp was Senior Vice-President, Automotive Coatings, PPG Industries, Inc. from July 2010 to March 2016;• Mr. Ruh was Chief Executive Officer, Senior Vice-President and Chief Digital Officer, GE Digital from September 2015 to
December 2018 and Vice-President and Global Technology Director, GE from February 2011 to August 2015; and• Ms. Samarasekera was President & Vice-Chancellor of the University of Alberta from July 2005 to July 2015.
All of our directors, with the exception of Mr. Walker, our CEO, and Mr. Bonham, a non-independent, non-executive director, have been
determined by our Board to be ‘‘independent directors’’ within the meaning of such term under applicable law.

Board Committees
A copy of our Audit Committee Charter, as well as the charters of our other Board Committees and of our Board, is available on our website(www.magna.com) and has been filed on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov/edgar) and is 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 Annual Information Form.
38

Annual Information Form

Membership of these Committees as of the date of this AIF are as follows:

Name(1)

Peter G. Bowie
Mary S. Chan
Dr. Kurt J. Lauk
Robert F. MacLellan
Cynthia A. Niekamp
William A. Ruh
Dr. Indira V. Samarasekera
Lawrence D. Worrall(2)William L. Young

Audit Committee

Corporate Governance,
Compensation &Nominating Committee

Technology Committee●●

5MAR201919272438
●
●
●
●

●

5MAR201919272438
5MAR201919272438● Committee Member

5MAR201919272438 Committee Chair

Notes:(1) As a consultant to the Company, Mr. Bonham does not serve on any Board Committees.
(2) Mr. Worrall is retiring from the Board at the end of his current term and thus is not standing for re-election at our next annual meeting of the shareholders.

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

Magna International Inc.

39

EXECUTIVE OFFICERS
Our executive officers currently consist of the following persons:Name & Municipality of Residence

Principal Occupation

Donald J. Walker
Ontario, Canada
Vincent J. Galifi
Ontario, Canada
Riccardo C. Trecroce
Ontario, Canada
Guenther F. Apfalter
Upper Austria, Austria
Seetarama S. Kotagiri
Michigan, U.S.A.
Aaron D. McCarthy
Ontario, Canada
Francis C. Seguin
Ontario, Canada
Tommy J. Skudutis
Ontario, Canada
James J. Tobin, Sr.
Michigan, U.S.A.

Chief Executive Officer (since November 2010; previously Co-CEO sinceApril 2005)
Executive Vice-President (since September 1996) and Chief Financial Officer(since December 1997)
Executive Vice-President and Chief Legal Officer (since May 2018)
President, Magna Europe (since February 2011) and President, Magna Steyr(since May 2018)
Executive Vice-President and Chief Technology Officer (since January 2014)
and President, Magna Power and Vision (since May 2018)
Executive Vice-President and Chief Human Resources Officer (since
January 2019)
Executive Vice-President, Corporate Projects and Strategy Development(since February 2016)
Executive Vice-President (since May 2018) and Chief Operating Officer (since
May 2007)
Chief Marketing Officer (since May 2010) and President, Magna Asia (since
February 2012)

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 orpositions with us and/or have had the following principal occupations during the last five years:• Prior to joining Magna, Mr. McCarthy was a Vice-President at a global energy company from August 2013 to December 2015.
Mr. McCarthy joined Magna in January 2016 as Vice-President, Human Resources, the Americas and India and remained in this role
until December 2018;• Mr. Seguin was President of Magna Closures from January 2010 to January 2016; and• Mr. Trecroce was Vice-President and General Counsel, North America from May 2009 to May 2014 and Vice-President and GeneralCounsel, Americas and Asia from May 2014 to May 2018.

Beneficial Ownership of Securities
All our directors and executive officers (as a group 19 persons) owned beneficially or exercised control or direction over 3,173,934 Common
Shares representing approximately 1.0% of the class, as at March 22, 2019. Our issued and outstanding Common Shares are held
as follows:
1%
6%

93%

Public, 299,256,238
Directors/Executive Officers, 3,173,934
North American and European DPSPs, 20,652,741
28MAR201914240306

40Annual Information Form

10. LEGAL PROCEEDINGS
Antitrust Investigation
In September 2014, the Conselho Administrativo de Defesa Economica, Brazil’s Federal competition authority, attended at one of theCompany’s operating divisions in Brazil to obtain information in connection with an ongoing antitrust investigation relating to suppliers ofautomotive door latches and related products. Proceedings of this nature can often continue for several years. At this time, management isunable to predict the duration or outcome of the Brazilian investigation.
The Company’s policy is to comply with all applicable laws, including antitrust and competition laws. The Company has completed its
previously announced global review focused on antitrust risk and does not currently anticipate any material liabilities in connection withthe review.
In the event of an antitrust violation, Magna could be subject to fines, penalties, restitution settlements and civil, administrative or criminal
legal proceedings and other consequences, including reputational damage.

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 bringenvironmental 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 costs, including product liability and recall costs. 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. We continue
to experience increased customer pressure to assume greater warranty responsibility. Currently, under most customer agreements, we only
account for existing or probable claims. Under certain complete vehicle engineering and assembly contracts, and with respect to certain
powertrain systems programs, we record an estimate of future warranty-related costs based on the terms of the specific customer
agreements and the specific customer’s, or our own, warranty experience.

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 statements as at and for the two-year period ended
December 31, 2018 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 Canton, Massachusetts.

Interests of Experts
Our independent auditor for the 2018 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.
Magna International Inc.

41

SCHEDULESSCHEDULE A
SUBSIDIARIES AND INVESTMENTS IN AFFILIATED COMPANIES
Subsidiaries
A list of our principal subsidiaries and each of their jurisdictions of incorporation as of December 31, 2018 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 AG
Magna Steyr AG & Co. KG
Magna Powertrain GmbH & Co KG
Magna Steyr Fahrzeugtechnik AG & Co. KG
Magna Powertrain GmbH
Getrag PT GmbH
New Magna Investments N.V.
Magna Automotive Holding (Germany) 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 Powertrain Inc.
Magna Seating Inc.
Magna Exteriors Inc.
Magna Powertrain de Mexico, S.A. de C.V.

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
Germany
Belgium
Germany
Alberta
Delaware
Michigan
Delaware
Delaware
Delaware
Delaware
Delaware
MichiganHong Kong
Ontario
Ontario
Ontario
MexicoNotes:(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.

Investments in Affiliated Companies
Our principal investments in affiliated companies are the following:
Joint Venture

Litens Automotive Partnership
Getrag Ford Transmission GmbH
Getrag (Jiangxi) Transmission Co., Ltd
Dongfeng Getrag Transmission Co. Ltd
Hubei HAPM MAGNA Seating
Systems Co., Ltd.
42

Annual Information Form

Magna Equity
Ownership %76.7%(non-controlling
50% voting interest)
50.0%
66.7%
50.0%
49.9%

Partner(s)Current and retired members of seniorLitens management
Ford Motor Co.
Jiangling Motor Company Group
Dongfeng Motor Group Company
Hubei Aviation Precision
Machinery Co., Ltd.

Reporting Segment

Power & Vision
Power & Vision
Power & Vision
Power & Vision
Seating Systems

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 7 of our consolidated financial statements as at and for the two-year
period ended December 31, 2018, and Note 6 of our consolidated financial statements as at and for the two-year period ended
December 31, 2017.

ACQUISITIONS
Year

2018
2017
2016

Acquisition

OLSA S.p.A.
None
BÖCO Boddecker & Co. GmbH & Co. KG
Telemotive AG
Getrag Group of Companies

DIVESTITURES
Year

2018
2017
2016

Divestiture

None
Minority interest in Shin Young Co., Ltd. joint venture
None

Magna International Inc.

43

SCHEDULE C
MARKET FOR SECURITIESOur Common Shares are listed and posted for trading on the TSX under the trading symbol ‘‘MG’’, and on the New York Stock Exchange
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, 2018 were as follows:

MonthJanuary
February
March
April
May
June
July
AugustSeptember
OctoberNovember
December44

TSX High(C$)

TSX Low(C$)

TSX
VolumeNYSE High($)

NYSE Low($)

NYSE
Volume

74.75
73.48
74.86
77.41
85.61
87.13
81.27
79.24
73.66
74.40
68.81
68.16

69.95
63.63
67.10
69.78
75.41
76.29
73.38
68.12
67.63
59.93
63.17
58.74

20,944,758
22,232,013
23,486,437
19,891,451
18,754,178
21,494,921
20,751,957
26,777,092
21,033,554
31,628,452
25,655,614
21,875,104

59.99
57.73
58.00
61.56
67.47
66.81
61.65
60.79
56.94
57.85
52.50
51.73

56.30
50.78
51.76
53.91
58.46
58.03
55.90
52.25
51.34
45.73
47.32
42.88

27,602,222
26,743,195
29,520,636
25,856,295
24,145,087
22,560,795
24,701,134
32,765,496
24,104,664
41,670,922
28,330,785
24,172,029

Annual Information FormAPPENDIXSUSTAINABILITYREPORT2018

20MAR201813022275
Magna International Inc.

45

Sustainability influences the way we run our business, operate our facilities and contribute to communities around the world. We strive to
conduct business in ways that respect the rights of stakeholders, including shareholders, employees, customers and the communities inwhich we operate. At its essence, we are committed to being a responsible corporate citizen and have backed our commitment withconcrete actions in five core areas.

Environmental
Responsibility& Stewardship

Fairness andConcernfor Employees

Corporate
Ethics andCompliance

Supply Chain
Responsibility

Contributing to
the Communities inWhich we Operate

5MAR201919272577

ENVIRONMENTAL RESPONSIBILITY & STEWARDSHIP250+
FACILITIES ISO 14001
CERTIFIED37
FACILITIES ISO 50001
CERTIFIED

Our Commitment to Health, Safety and the Environment
We strive to be an industry leader in health, safety and environmental practices in all ouroperations 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, our Health, Safety and Environmental Policy (‘‘HSE Policy’’)commits us 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;• implementing effective recycling in manufacturing operations, in each case, through theuse of locally set continuous improvement targets;• utilizing innovative design and engineering to reduce the environmental impact of our products during vehicle operation and at endof 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• reporting to the Board at least annually.
The full text of our HSE Policy is located on our website (www.magna.com).

Environmental Compliance
We are 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 has a strong global environmental program that includes
routine assessment of environmental compliance. This environmental program consists of third party and internal audits and inspections of
our facilities for compliance with local regulations, internal corporate environmental requirements and industry best practices as detailed in
the diagram below:

46

Annual Information Form

AuditInspection

19MAR201922275411
Risk Assessment & Action Plan

• Each action item identified in an audit or inspection is assigned a risk score, and the risk scores of all action items are combined toestablish an overall environmental performance rating for the Division• The Division is provided with a report containing recommendations which are prioritized based on the level of risk identified in the risk
assessment• The Division is required to develop a corrective action plan to reduce/eliminate the identified risk

19MAR201922275411
Management Oversight, Performance Tracking & Reporting• Magna’s Environmental Department provides ongoing assistance to Division personnel in resolving action plan items and also reviews
and approves action items that have been submitted for closure from Divisions• Audit/Inspection findings are also communicated to our Operating Groups to enhance oversight and Group management commitment
to resolving action items• A performance review takes place with Operating Group global and regional personnel on a quarterly basis• An escalation process is in place to deal with action items that are not being resolved on a timely basis, with additional environmental
risk awareness training provided to the relevant Division
Magna’s Environmental Department presents updates on environmental compliance to the Corporate Governance, Compensation and
Nominating Committee (‘‘CGCNC’’) of Magna’s Board, which is comprised solely of independent directors.
General environmental awareness training is provided to employees by our Environmental Department at the corporate level and certain
management representatives at the facilities, which is included as part of ISO 14001 certification compliance. In addition, our corporate
Environmental Department holds regional conferences on a regular basis for representatives of our manufacturing facilities in order to:• reinforce our commitment to environmental responsibility;• communicate changes in local and regional regulations; and• share best practices with respect to environmental protection, compliance and sustainability initiatives.
We are also subject to environmental laws that require prevention of environmental contamination and, where contamination has occurred,
to investigate and remediate to acceptable levels. To date, the aggregate costs incurred in complying with environmental laws andregulations, including the costs of clean-up and remediation, have not had a material adverse effect on us. We have set aside approximately$14.3 million for 13 sites with active environmental remediation projects. No additions to this amount were required in 2018. During 2018,
we spent approximately $1 million on environmental clean-up and remediation costs and currently estimate similar expenditures for 2019.

Responding to Climate Change Opportunities and Risks
Climate change – the alteration of long-term weather patterns and increasing frequency of extreme weather events – presents both
opportunities and challenges for OEMs and suppliers in the automotive industry. We seek to realize the opportunities throughsustainability-focused innovation, while addressing the risks in several ways, such as minimizing the impact of our operations, CO2 reduction
through lean logistics, and climate risk mitigation for our property portfolio.
Sustainability-Focused Innovation
We develop technologies that help our OEM customers bring to market vehicles which meet or exceed consumer expectations regarding
fuel consumption and greenhouse gas (GHG) emissions. Our contribution in this regard is through:• use of advanced and lightweight materials;• components and systems with reduced mass through use of advanced/lightweight materials, innovative multi-material joining
processes, increased use of electronics and reduced number of parts;• solutions to help optimize internal combustion engines; and• innovative powertrain products, such as hybrid and fully electric drivetrains, as well as electrified accessory systems.
Examples of our activities to develop sustainable products are discussed in ‘‘Section 4 – Our Business & Strategy – Our Business Strategy’’and ‘‘Section 7 – Innovation and Research & Development – Innovations; and Innovation Awards’’.

Magna International Inc.

47

Minimizing the Impact of Our Operations
We strive to improve the efficiency of our manufacturing operations, including through the energy, water and waste reduction efforts
discussed below under ‘‘Energy, Water and Waste Reduction’’. Our operations are not major GHG emitters and generally do not exceed
local GHG reporting thresholds. Accordingly, we do not currently anticipate that current or future regulatory targets for GHG reduction or
future GHG emission caps would have a material impact on our overall operations.
Reducing CO2 through Lean Logistics Management
Magna has implemented a lean approach that incorporates sustainability considerations in materials management and logistics. Thesesustainable lean logistics initiatives aim to achieve synergies and efficiencies that reduce both costs and our environmental impact, including
by reducing CO2 emissions, energy use, water consumption and waste.
We conduct analyses at our facilities and those of certain sub-suppliers to determine complete processing times from the initial supplierstage to the final customer delivery stage. Weekly deliveries, internal warehouse procedures, interim transporting, external warehousing andmonthly deliveries to customers are areas of particular focus. These analyses allow us to simplify our logistics processes and determine
ways to reduce our CO2 emissions.
Property Risk Mitigation
Extreme weather events such as floods and windstorms and other natural disasters such as earthquakes may cause catastrophic
destruction to our or our sub-suppliers’ facilities, which could in turn disrupt our production and/or prevent us from supplying products toour customers. Given the diversity of climates to which we are exposed in our operations across 28 countries globally, we maintain a global
property risk control program that includes risk assessment and mitigation strategies to address, where practical, physical risks related toapplicable extreme weather events. The program, which includes risk engineering with support from a third party property risk engineering
consulting firm, includes the following and other elements to enhance the resiliency of our facilities and minimize the risk of disruption to ouroperations from extreme weather events: pre-screening of facility site selection; acquisition risk assessments; facility construction design
review and recommendations; and training and education. In addition, the program extends the risk assessment by identifying andevaluating potential exposures to our direct supply chain (including natural hazards) which could disrupt business operations. Where suchsupply 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.
Reporting
We participate in the Carbon Disclosure Project, a not-for-profit project designed to provide investors with information relating to corporate
GHG emissions, water use and perceived corporate risk due to climate change. In addition, Magna provides sustainability reporting directly
to our customers. These assessments are supplier requirements and typically follow common reporting templates approved by automotive
industry associations in North America (Automotive Industry Action Group) and Europe (CSR Europe/Drive Sustainability).

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 waste handling and emissions. Some of ourfacilities have in the past and may in the future 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.

Energy Efficiency, Water and Waste Reduction
We aim to achieve efficiencies in and minimize waste from our manufacturing operations by focusing on increasing energy efficiency, as well
as reducing water consumption and waste generation.
Energy Efficiency
Our efforts to reduce energy consumption and operate facilities on a more energy efficient basis forms part of our formal MAFACT program –the primary operational assessment audit tool used to support our World Class Manufacturing initiative.
The MAFACT program establishes minimum standards for achieving operational efficiencies, and allows Divisions to benchmark theiractivities against other Divisions in Magna. In order to achieve a baseline MAFACT Energy efficiency ranking, the Division must establish
structured energy teams which include the Division general manager or assistant general manager and key functional personnel within the
Division, and also demonstrate that such teams meet at least monthly. In order to achieve a higher ranking, Divisions must demonstrateprogressive actions including evidence that the Division has implemented at least two energy reduction initiatives.
The activities of the Division energy teams are also supported at the corporate level, including through: training courses designed to promotestrategies for reduced energy use; regular communication through newsletters; an internal energy savings collaboration site which allows

48

Annual Information FormDivisions to view implemented projects, associated costs and savings and implementation recommendations; and energy ‘‘champions’’
who identify and promote energy reduction initiatives.
Some of the incremental changes made by our Divisions to their facilities and processes to reduce our energy consumption and improveenergy efficiency include:• specific 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 and prevent heat over-delivery;• computer-controlled utility and HVAC systems to allow for improved performance and energy reduction;• monitoring of electrical panel efficiency;• door upgrades 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;• 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 many jurisdictions in which we operate.
We received an Energy into Action Innovation Award in the Best Industrial Customer (1 MW+) category at the 2018 Energy into Action
Conference in Ontario. This award was presented to us for achieving over 3.6 million kWh in electricity savings through projects that
improved our lighting, compressed air systems, chillers and other equipment.
Water Consumption
We collect global water use data to: understand the volume of water used in our business; identify facilities with high water use;benchmarking of water use at comparable facilities; and identification of water reduction opportunities. Some of our Divisions haveundertaken initiatives to reduce water usage, such as use of recycled water in the manufacturing process. In water stressed regions, such as
Mexico, some of our facilities are also implementing water reduction and re-use activities, including the use of treated wastewater for
irrigation of green areas on site.
Waste Reduction and Recycling
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. One example of our waste
reduction efforts is our ‘‘packaging and packing’’ initiative. This initiative aims toreplace disposable packaging with reusable packaging for our parts, as well as
redesign product packaging to more efficiently use space when transporting
products to our customers, thus reducing the number of trips needed. Anotherexample is our ‘‘Get Rid of Waste’’ program (‘‘G.R.O.W.’’), which allows employees
to submit waste reduction suggestions at prominently placed computer kiosks. The
program is aimed at saving money and eliminating wasted time, effort, inventory
and cost.

G.R.O.W.
“Get Rid of Waste” Program
An electronic employee-driven waste reduction
suggestion box. Submissions are quickly
reviewed and employees can track theirsuggestions in real time.

19MAR201922481138

Magna International Inc.

49

FAIRNESS AND CONCERN FOR EMPLOYEESOur Commitment to Our Employees
We are committed to an operating philosophy based on fairness and concern for people. Thisphilosophy is part of our ‘‘Fair Enterprise’’ culture in which employees and management share theresponsibility to help ensure our success. Our Employee’s Charter, a foundational document in ourbusiness, sets out this philosophy through the following principles:• Job Security – Being competitive by making a better product for a better price is the best way
to enhance job security. We are committed to working together with our employees to help
5MAR201919273023
protect their job security, including through job counselling, training and employee assistanceprograms to our employees;• A Safe and Healthful Workplace – We strive to provide our employees with a working
environment that is safe and healthful;• Fair Treatment – We offer equal opportunities based on an individual’s qualifications andperformance, free from discrimination or favouritism;• Competitive Wages and Benefits – We provide our employees with information which enables
them to compare their total compensation, including wages and benefits, with those earned
by employees of direct competitors and local companies with which an employee’s Division
5MAR201919272871
competes for labour. If total compensation is not competitive, it will be adjusted;• Employee Equity and Profit Participation – We believe that our employees should share in our financial success. Accordingly, 10% of
our qualifying annual pre-tax profits before profit sharing are shared among participating employees in the form of cash and Magnaequity, helping to create an ‘‘owner’s mindset’’ among employees and aligning them with shareholders;• Communication and Information – Through regular monthly meetings between management and employees, continuous
improvement meetings and through various publications and videos, we keep our employees informed on company and industry
developments. We also conduct employee opinion surveys to help ensure employee involvement and feedback; and• Magna Hotline – Should any of our employees have a problem, or feel the foregoing principles are not being met, we encourage themto contact our confidential and anonymous employee hotline to register their complaints (‘‘Magna Hotline’’). We are committed toinvestigating and resolving all concerns or complaints received through the Magna Hotline and must report the outcome of all
HR-related submissions to our Global Human Resources Department. As part of the Magna Hotline, we also maintain a confidential
and anonymous whistle-blower hotline for employees and other stakeholders that is overseen by our Audit Committee. See‘‘Appendix – Sustainability Report 2018 – Corporate Ethics and Compliance’’ for further details.
We recently adopted a Global Labour Standards Policy, which codifies our existing practices consistent with our Fair Enterprise culture andprovides a framework for our commitment to fundamental human rights and international labour relations. In particular, the Global Labour
Standards Policy sets out key commitments with regard to:• maintaining respectful work environments where our employees feel safe and welcome, with opportunities for personal andprofessional growth;• refusing to tolerate harassment of any kind, including physical, sexual, psychological or verbal abuse;• treating and compensating employees without discrimination based on race, nationality or social origin, colour, sex, religion, gender
identity, disability, sexual orientation, or any other ground protected by applicable law in the way we treat, promote, or compensate
employees;• condemning child labour;• rejecting forced or compulsory labour;• maintaining safe and healthy workplaces;• providing employees with appropriate rest and leisure time; and• respecting the right of employees to associate freely and to bargain collectively where permitted by local laws and regulations.

Leadership Development and Succession Program
A key element to the success of our business remains our ability to attract, retain and develop skilled personnel to match the pace of ourglobal growth. We have implemented and continue to enhance our Leadership Development and Succession program to help identify, train
and develop future leaders with the skills and expertise needed to manage a complex, global business. See ‘‘Section 4 – Our Business &Strategy – Our Business Strategy – Talent’’ for a more detailed discussion of our talent management priorities.

50

Annual Information FormRespecting Employee Rights
We are committed to providing working conditions and standards that promote dignified and respectful treatment of all of our employees,
globally, which are set out in our Global Labour Standards Policy and our Code of Conduct and Ethics (‘‘Code’’).
Our Global Labour Standards Policy also articulate that we respect the rights of workers to associate freely and have freedom of choice todecide whether or not they wish to be represented by labour unions or workers’ councils in accordance with applicable laws. Employees at:four of our Canadian Divisions are covered by national collective agreements between Magna and Unifor; seven of our Divisions in the
United States are represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America(UAW); a number of our Divisions in Mexico and the United Kingdom are currently covered by collective bargaining agreements with various
unions in these jurisdictions; and a number of our Divisions in continental Europe are covered by national industry-wide agreements relating
to compensation and employment conditions and are also members of in-house employees’ associations, works councils and/or
trade unions.

Fairness Committees and Employee AdvocatesIn furtherance of our commitment to fairness, as demonstrated in our Employee’s Charter, we have established Fairness Committees inmost of our North American and European manufacturing facilities and in many of our manufacturing facilities in India and China. These
Fairness Committees enable employees at such facilities to have many of their concerns resolved by a committee comprised of bothmanagement and 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 concerns that arise in the workplace are addressed quickly and in accordance with our
Employee’s Charter, Global Labour Standards Policy and Operational Principles.

Diversity and Inclusion
At Magna, our employees are critical stakeholders in our business. We strive to attract a variety of different people to provide us with diverse
perspectives and capabilities. Diversity is important to us and we continually strive to create an inclusive work environment at Magna. We
believe the principle of fair treatment in our Employee’s Charter – one which we reinforce through employee meetings, training andcommunications – has been a key element in fostering diversity at Magna. Any employee who believes that we are not living up to any of theprinciples of the Employee’s Charter, including the principle of fair treatment, can raise their concern through the Magna Hotline, Fairness
Committees or Employee Advocates, as well as our ‘Open Door Process’, which encourages employees to speak with anyone at Magna
who can be of assistance, without fear of retaliation.
We abide by all applicable labour and employment laws, including those prohibiting discrimination and harassment and those providing forreasonable accommodation of differences. We are committed to providing equal employment and career advancement opportunities foreveryone, without discrimination based on sex, race, ethnic background, religion, disability or any other personal characteristic protectedby law.
Gender Diversity
We promote and embed gender and cultural diversity through our talent attraction and management processes. Additionally, by working
with diversity and inclusion thought leaders, associations and non-profit organizations dedicated to mentoring and advancing careerdevelopment and inclusiveness for women, we continue to build our capabilities in this area. We have built strategic partnerships with the
Women’s Executive Network, Catalyst, Inc., Inforum and several academic and governmental organizations dedicated to raising the profile
of women in the automotive industry. In recent years, we have also sponsored several diverse student teams globally to support thedevelopment of the next generation of talent in Science, Technology, Engineering and Mathematics (STEM), including programs that engage
and encourage young women to enter STEM as a career.
Currently, 5% of our senior corporate and Operating Group leaders are female. Recognizing that this level of gender representation is not
sufficient, we established a Diversity & Inclusion Council with senior functional and business leaders globally, sponsored by our CEO. The
Council, which meets on a quarterly basis to provide guidance to the business and focus on key diversity objectives, has adopted a council
Charter that outlines a commitment to advance diversity and inclusion across Magna.

Occupational Health and Safety
Health and Safety Standards and Compliance
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, covering health, safety, industrial-hygiene, industrial ergonomics and emergency preparedness policies
and action plans. Audits are designed to address documentation requirements, while inspections assess physical hazards. Audits andinspections are conducted on-site and followed with a report requiring the facility to develop an action plan to address deficiencies or bestpractices which is reviewed by senior Operating Group management quarterly.

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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 conducted every three years. The key elements of the program are detailed below:
Audit

Inspection

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Risk Assessment & Action Plan

• Each action item identified in an audit or inspection is assigned a risk score, and the risk scores of all action items are combined toestablish an overall health and safety performance rating for the Division• The Division is provided with a report containing recommendations which are prioritized based on the level of risk identified in the risk
assessment• The Division is required to develop a corrective action plan to reduce/eliminate the identified risk

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Management Oversight, Performance Tracking & Reporting• Magna’s Health and Safety Department provides ongoing assistance to Division personnel in resolving action plan items and also
reviews and approves action items that have been submitted for closure from Divisions• Audit/Inspection findings are also communicated to our Operating Groups in order to enhance oversight and Group management
commitment to resolving action items• A performance review takes place with Operating Group global and regional personnel on a quarterly basis• An escalation process is in place to deal with action items that are not being resolved on a timely basis, with additional health and safety
risk awareness training provided to the relevant Division
Magna’s Health and Safety Department presents updates on health and safety compliance to the CGCNC.
Our Health and Safety Department holds regular conferences with representatives of our manufacturing facilities to reinforce ourcommitment to providing a safe and healthful work environment and share best practices with respect to occupational health and safety. To
the extent an employee believes we have not fulfilled our promise to provide a safe and healthful working environment, he or she has
numerous avenues to elevate the concern, including the Magna Hotline.
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.

CORPORATE ETHICS AND COMPLIANCE
Our Commitment to Ethics and Legal Compliance
Code
We are committed to conducting business in a legal and ethical manner globally. Our Chief Executive Officer, Executive Management, andour Operating Group management, have communicated and consistently reinforced our clear and unequivocal compliance expectations
through all levels of our organization. Our Code, which applies equally to all of our directors, executive officers and employees, articulates
our compliance-oriented values and our expectations generally. It also establishes our standards of conduct in a number of specific areas,
including:• employment practices and employee rights;• respect for human rights;• compliance with law, generally;• conducting business with integrity, fairness and respect;• fair dealing, including prohibition on giving or receiving bribes;• accurate financial reporting;• standards of conduct for senior financial officers;
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Annual Information Form• prohibition on insider trading and derivative monetization transactions;• timely public disclosure of material information;• compliance with antitrust and competition laws;• environmental responsibility;• occupational health and safety;• management of conflicts of interest;• protection of employees’ confidential information; and• compliance with our corporate policies.
The Code is disclosed on the corporate governance section of our website (www.magna.com) and posted on our employee intranet in
25 different languages. The Code is reviewed regularly and proposed amendments must be approved by our Board. We have also
supplemented the requirements of the Code through the adoption of policies covering: bribery and improper payments; tooling practices;
gifts and entertainment; anti-retaliation; careful communication; conflicts of interest and antitrust and competition.
Ethics and Legal Compliance Program
In order to help our employees understand the values, standards and principles underlying our Code, we have implemented an ethics andlegal compliance program (‘‘ELC Program’’), which is overseen by the Audit Committee, and includes both live and online training. We havealso developed specialized compliance training modules which target specific functional audiences and high-risk regions. In addition toproviding training on legal compliance and ethics topics generally, these specialized programs are designed to be interactive andincorporate real-life scenarios and exercises, which we believe amplifies our compliance expectations and resonates more powerfully withparticipants.
Our ELC Program aims to assist employees in understanding the values, standards and principles underlying the Code, as well as theapplication of such values, standards and principles to real-life situations. The global implementation of the program is supervised by the
Magna Compliance Council, a body that includes key corporate officers representing our finance, legal, human resources, operations,internal audit, sales and marketing and ethics & compliance functions. The Compliance Council is tasked with, among other things,
providing overall direction for our compliance program, approving key initiatives and ensuring that the required elements of our complianceprogram are being carried out globally by our cross-functional Operating Group Compliance Committees. These Operating Group
Compliance Committees are supported by cross-functional regional Compliance Committees.
Magna Hotline
As part of the Magna Hotline, we maintain a confidential and anonymous whistle-blower hotline which is overseen by our Audit Committee.
The hotline is available for employees and other stakeholders such as customers and suppliers to make submissions by phone or online at
any time in over 25 languages. Submissions are received and tracked by an independent third party service provider. Reports to the Hotline
are reviewed by our Internal Audit Department and, when appropriate, an investigation is conducted. Non-HR-related submissions to the
Hotline are investigated by Magna’s Internal Audit Department, Corporate Security Department, In-House Legal Department or externalcounsel (where applicable). Our Investigations Oversight Committee, a sub-committee of the Compliance Council, reviews suchinvestigations on a quarterly basis to ensure consistency of discipline. The Audit Committee receives quarterly presentations regarding
Hotline activity and details of fraud, financial reporting and other non-HR-related submissions are discussed by the Vice-President, Internal
Audit with the Audit Committee.
The process for investigating and resolving HR-related submissions received through the Magna Hotline is discussed in greater detail in‘‘Appendix – Sustainability Report 2018 – Fairness and Concern for Employees’’.

Data and Cybersecurity/Privacy
Enterprise Cybersecurity
Our enterprise cybersecurity strategy has been designed by our Information Security, Risk and Compliance Department (‘‘ISRC’’) which
ultimately reports to our Chief Financial Officer. The strategy was designed using guiding principles from our Code and enterprise risk
considerations and aligns with industry standards including the National Institute of Standards and Technology, relevant ISO standards, andapplicable customer requirements. Our Audit Committee has risk oversight responsibility for our enterprise IT/information security systems
and cybersecurity program and receives periodic reports regarding the program at quarterly meetings.
We execute our cybersecurity initiatives, driven by three key considerations: Prevent – being better able to fend off external attacks including
ransomware and malware; Detect – having 24  7 monitoring of all information traffic for anomalies; Respond and recover – our Security
Operations Center has appropriate incident response plans/processes and the necessary resources and expertise to respond to detected
threats and work with IT operations to recover as quickly as possible. We are committed to ensuring that we fulfill the cybersecurity
requirements of our customers. In addition, we ensure that we comply with all emerging governmental rules and regulations regarding
cybersecurity or privacy regulations (such as GDPR as detailed below), which directly affect cybersecurity requirements. Our selection

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process for third party (e.g. Cloud-based) services includes a due diligence approach that ensures that such services are evaluated andaligned with our overall approach to cybersecurity.
We regularly evaluate and adjust our information security management system implementation strategy based on risk assessments,
continuous monitoring and periodic independent cybersecurity maturity evaluations. This enables the ISRC to identify and prioritize
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 and training and awareness programs designed to ensurethat 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. ISRC
has an understanding of the critical IT systems across the entire IT platform which facilitates identification of our risk exposures and theimplementation of appropriate security controls. We have processes in place to ensure that our IT systems receive appropriate upgrades,
including patching and other required remediation, in a timely manner.
Product-Embedded and Solution Software Cybersecurity
In addition to the above centralized initiatives, our decentralized operating model assigns cybersecurity accountability to our Divisions andOperating Groups with respect to manufacturing facility IT systems and risk/security issues inherent in production operations and products.
However, the ISRC provides our Divisions and Operating Groups with a toolkit to help them assess their cybersecurity risk and maturity.
From this assessment, our Divisions and Operating Groups are then able to determine the solutions and cybersecurity software that may berequired.
Privacy
Magna is committed to preserving the privacy of our stakeholders in accordance with applicable law. Our Code articulates our approach tothe privacy of our employees and protection of their personal information. We only collect, use and disclose personal information for
legitimate business or employment purposes or if 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.
In addition to our general privacy and confidentiality commitments, our European Data Privacy Policy (the ‘‘EU Privacy Policy’’) contributes toensuring compliance with the newly adopted EU General Data Protection Regulation (‘‘GDPR’’). The EU Privacy Policy sets out dataprotection principles, responsibilities of data controllers and processors, circumstances under which personal data can be transferred,
rights of data subjects and actions that must be taken in case of data breach. Furthermore, a training program has been implemented toaddress data privacy awareness to all EU employees and those employees outside of the EU who are handling personal data of EU
residents. Finally, those employees across our organization responsible for handing privacy requests by EU data subjects or for addressing
data breaches have been provided with the tailored training and resources to carry out such responsibilities. The EU Privacy Policy isaccompanied by a variety of formal and comprehensive procedures, developed and overseen by our Compliance Council.

SUPPLY CHAIN RESPONSIBILITY
Our Expectations of Our Suppliers
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
other things:• 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.

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 the terminationby Magna of the supply relationship.
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Supply Chain Management
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: common global key performance indicators (KPIs); specific roles and responsibilities; processes and standards;
global training; and risk management.
The global KPIs we use are focused on purchasing savings, supplier ratings, supplier quality measurements and supplier diversity. All four ofthese KPIs are standardized globally. We also maintain a strong financial and commercial risk management process focused on supplierquality and financial risk. We use cross-functional sourcing teams to help ensure compliance 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 a four-module global training program on an ongoing basis to over 1000 internalpurchasing 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.
Supplier Reviews
From a risk management standpoint, we aim to review all new production suppliers in order to assess their overall quality and financial
health. During any assessment, we also consider the presence and effectiveness of any internal policies and programs that suppliers have inplace to address issues concerning the environment, health and safety, human rights, social responsibility, business ethics and compliance.
Furthermore, we use our Supplier Scorecard to provide ongoing monitoring and assessment of suppliers that we have contracted with.
Among other criteria, our Supplier Scorecard tracks whether suppliers have certain industry-recognized environmental and health andsafety certifications, such as ISO 14001 and ISO 18001. No suppliers were terminated in 2018 as a result of a violation of working conditions
or human rights.
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.
Supplier Diversity
To support the supplier diversity efforts which form part of our supply chain management program, we participate as a corporate member ofseveral industry-recognized suppler diversity organizations, including the Michigan Minority Supplier Development Council (MMSDC), Great
Lakes Women’s Business Council (GL-WBC) and the Canadian Aboriginal and Minority Supplier Council (CAMSC). We are also involved
with a number of supplier diversity advocacy events, conferences, and procurement fairs, including several organized by our OEM
customers, such as GM Supplier Connections and FCA MatchMaker. We are proud to have received awards for our supplier diversity efforts
from two of our customers, GM and Toyota in past years.
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) (formerly the Conflict Free Sourcing Initiative),
support continuing cross-industry efforts to identify and validate conflict-free smelters and refiners.

CONTRIBUTING TO COMMUNITIES IN WHICH WE OPERATE
Our Commitment to Our Communities and Society
Magna recognizes that sustainability goes beyond our processes and products and we believe it is important to give back to thecommunities in which we are based.

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Corporate Giving
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. In 2018, our Corporate, Operating Groups and Divisions made over 800 charitable donations and sponsorships
around the world.
Most of our donations and sponsorships are focused on:• Employee and Community Health and Wellness;• Technical and Vocational Training/Education;• Refugee Aid;
• Culture; and• Youth Sports.
In addition, Magna’s Employee Disaster Relief Fund provides financial assistance to eligible employees and their families in the event they are
victims of a disaster. In 2018, the program helped 35 employees in China, Czech Republic, Italy, Mexico, Poland, Serbia and theUnited States.
Magna In Action
We encourage and support our employees who devote their time, energy and passion to making a positive contribution to their workplaceand communities through direct giving, special events, fundraising and volunteer work.
In order to further support and enhance employee fundraising efforts, we maintain a Magna Matching Program, which matches donations
by Magna employees to qualified, non-profit initiatives, up to specified amounts. Since the beginning of the program in 2017, Magna hasmatched the funds raised by Magna employees in more than 100 projects globally, including Magna employees’ participation with World
Vision’s Global 6K for Water to help set up new clean water sources in Africa, India and Haiti. Each year, more than 2,000 of our employees
from 13 different countries support this one-day, worldwide event that unites thousands of people who run and walk to help bring cleanwater to those in need. In 2017 and 2018, our employees raised more than $375,000 as part of the Global 6K for Water event, which wasmatched under the Magna Matching Program for a total of $750,000.
We are also a leading sponsor and supporter of For Inspiration and Recognition of Science and Technology (‘‘FIRST’’), an international youth
organization which supports students with an interest in engineering and technology fields. FIRST organizes mentor-based programs that
help participants build science, engineering and technology skills while also fostering self-confidence, communication skills and leadership.
For more than a decade, Magna has volunteered with, provided mentorship to and led various FIRST teams and programs, including its
robotics competition, that have engaged thousands of students globally.

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Annual Information Formmagna.com

MAGNA INTERNATIONAL INC.
337 Magna Drive
Aurora, Ontario
Canada L4G 7K1(905) 726 2462

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