# MESSAGE TO OUR STAKEHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-cyclical-auto-parts/NYSE_APTV_2018/NYSE_APTV_2018.mmd` · pages 2-8_

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MESSAGE TO OUR STAKEHOLDERS

The concept of smart mobility is being expanded and redefined almost daily, and in 2018 Aptiv also continued to evolve, building on our long track record of industry leadership, innovation and execution, and expanding on the work we did in 2017 to redefine the company. Today, Aptiv holds a leading position as a technology company innovating at the intersection of disruptive trends in the automotive industry with a portfolio of technologies that make vehicles safer, greener and more connected, and enables the future of mobility.

Thanks to the tireless efforts of our 160,000 people, we made significant progress executing on the strategic initiatives that will enhance our competitive position and create value in 2019 and beyond.
In 2018, we booked a record $22 billion of new customer business. We increased the long-term competitiveness of our business model by continuing to reduce our overhead costs by $50 million, and reinvested those savings to help fund our investments for growth, including more than a 10 percent increase in software and systems engineers. We integrated our nuTonomy and Ottomatika acquisitions into Aptiv Autonomous Mobility, launched a new Automated Driving Technical Center in Las Vegas, and logged more than one million autonomous miles globally. We also enhanced the strength of our Engineered Components Group with the acquisitions of Winchester Interconnect and KUM, further establishing Aptiv as a market leader in connectivity solutions.
"THE FUTURE OF MOBILITY IS RAPIDLY CHANGING, AND AT APTIV, WE ARE POSITIONED TO WIN."

Looking ahead, I've never been more confident in our capabilities and excited about our future prospects. Aptiv is well positioned to continue capitalizing on the key global megatrends driving Automotive 2.0. Today's vehicle data, signal and power distribution systems rely on decades-old technology that is at the breaking point as consumers demand more safe, green and connected vehicles. Our vision is to be the preferred partner for our customers, leveraging our unique position as the only provider of both the brain and the nervous system of the vehicle. As a result, we are able to conceive, specify and deliver hardware and software solutions to problems that many of our competitors do not even know exist.

The future of mobility is rapidly changing, and at Aptiv, we are positioned to win.

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# "LOOKING AHEAD, I'VE NEVER BEEN MORE CONFIDENT IN OUR CAPABILITIES AND EXCITED ABOUT OUR FUTURE PROSPECTS."

## ADDRESSING MOBILITY'S TOUGHEST CHALLENGES

In 2018, we continued to build our position as a value-add platform solutions provider, leveraging our capabilities across our Advanced Safety & User Experience and Signal & Power Solutions segments. Our Advanced Safety & User Experience segment has seen significant acceleration in bookings and revenue growth led by increased consumer demand for our technologies. Aptiv's expertise in perception systems, sensor fusion, satellite architecture and software, enable development of systems to support all levels of autonomy. These capabilities contributed to a record $4 billion in new active safety bookings in 2018, securing our leading market share position for years to come.

Our Signal & Power Solutions segment saw continued momentum in bookings and revenue growth led by our expertise in high-speed data and high-power electrical distribution systems, advanced connection systems, and vehicle charging solutions. By 2022, experts predict that nearly 13 million vehicles produced annually will include a high-voltage electrified powertrain. Based on $2 billion of new business bookings in 2018, we estimate our high-voltage product line will reach more than $1 billion in revenue in that same timeframe, representing a 40 percent compounded growth rate.

Our Mobility & Services group is continuing to develop next-generation automated driving software, Smart Vehicle Architecture \( ^{™} \)  and connected services, which are gaining commercial momentum. We have fully operationalized our automated driving technology and are deploying it with consumers through the Lyft ride-hailing network in Las Vegas.

Today, our commercial service remains the only program available to the public, and has given more than 30,000 paid rides to consumers on the streets of Las Vegas with a near perfect 4.95 star rating out of 5, underscoring the quality of the ride experience. The experience is a real-life application of scalable, automated driving technology that has significant impact on improving safety, emissions and urban congestion challenges. In addition to Las Vegas, we also have cars on the road in Boston, Pittsburgh and Singapore. Aptiv's portfolio and expertise come together to deliver the affordable and safe architecture required for advanced mobility. We understand what it takes to create a sustainable architecture because of our deep-automotive engineering heritage and innovative technology, allowing us to make Smart Vehicle Architecture a reality today.

Aptiv's mobility services platform and connected central compute platforms with edge computing capability unlock advanced data analytics and new business opportunities. Our secure gateways not only provide all the computing power necessary to enable high-speed data networking, but they also meet the most stringent functional safety and cybersecurity standards in the industry. At Aptiv, safety and security are always a top priority.

## PERFORMING IN ALL MARKET ENVIRONMENTS

We operate in a cyclical industry, and as we look ahead to the next few years, we are well prepared for the expected continued softening of vehicle production around the world. Although lower unit production will create a more challenging market environment for the industry, Aptiv has built a portfolio of businesses that will once again outgrow vehicle production. We also have an industry-leading cost structure that provides us the flexibility to respond to changing market conditions through increased operational efficiencies.

As a global company, we are exposed to macro and geopolitical factors that impact our industry. However, we have aligned our strategic footprint to where our customers are located, creating an integrated supply chain that minimizes our exposure to trade disputes or other macro issues. Our footprint also allows us to leverage our global base of talent as we work to develop and commercialize the solutions that will drive the future of mobility.

The rapidly changing consumer preference for mobility solutions, led by the safe, green and connected megatrends, is generating meaningful secular growth in our business as demand for high-voltage electrification increases, and the adoption of advanced safety and connectivity solutions accelerates. This will allow us to maintain our strong revenue

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growth, even with lower automotive unit production as our content per vehicle continues to grow. We are confident that our portfolio of safe, green and connected technologies, and our unique position developing both the brain and the nervous system of the vehicle provides us with a competitive moat which will allow us to continue to gain market share.

The long-term fundamentals of our business are strong and our financial strategy remains consistent – we aim to deliver above-market revenue growth, expand margins, and accelerate earnings and cash flow growth, all while continuing to invest in further strengthening our competitive position. As a result, we are well positioned to deliver on our commitments to our customers, shareholders, employees, and our suppliers now, and into the future.

## VALUE-ENHANCING CAPITAL DEPLOYMENT

Aptiv has a strong track record of value-enhancing and balanced-capital deployment. We executed on this strategy again in 2018, starting with capital investments to support strong bookings growth in fast-growing product lines such as active safety, infotainment and high-voltage electrification. During the year, we invested \(1.2 billion in accretive bolt-on acquisitions, Winchester and KUM, which expanded the geographic and end-market diversification of our Signal & Power Solutions segment.

Our acquisition of Winchester provides us with a portfolio of precision-engineered interconnect solutions for a broad range of harsh environment applications – all outside the automotive industry – enabling us to accelerate our ongoing end-market diversification. Working together with Winchester's talented management team, we are positioning Aptiv to meaningfully increase our non-automotive revenues over time as part of our effort to expand into adjacent markets and develop a more balanced platform that is less exposed to the cyclicality of the automotive market.

KUM, a leading provider of specialized connectors and cable management solutions for the automotive industry, is a great fit for our business and has a strategic facility footprint that will support our growth and competitive advantage in the Asia-Pacific region.

We have an exceptional track record with bolt-on acquisitions, achieving accretive growth and earnings, and expect more of the same in 2019.

Returning excess cash to shareholders is an important component of our disciplined approach to capital allocation. In 2018, we returned over $730 million to shareholders through share repurchases and dividends, and we have returned more than $6 billion to our shareholders since our initial public offering in November 2011.

## EXECUTION-ORIENTED CULTURE DRIVING
CONTINUED RESULTS

As we look back on another successful year, we recognize the immense effort of Aptiv's talented and dedicated employees. We are committed to ensuring we have the right people in an organization that is structured in the right way to enable their success. We know it's our people who play the key role in executing our vision and strategy. They are the ones who drive our high-performance and results-oriented culture, which is the backbone of our ability to maintain our competitive edge in the market, deliver on our strategy and succeed – in good times and bad. As a technology company with 18,600 scientists and engineers, and a 100-year legacy of success, our people are changing the future of mobility.

## FOCUS ON SUSTAINABILITY AND RESPONSIBILITY

Building a strong, sustainable business that makes the world a more safe, green and connected place is at the very foundation of who we are at Aptiv. As we work to address some of mobility's biggest challenges, we are creating technologies and solutions that are dramatically increasing safety, and ones that will significantly reduce vehicle-related injuries and fatalities. We are also enabling the development and adoption of increased vehicle electrification with high-voltage solutions that reduce  \( CO_{2} \)  emissions and increase fuel economy, making the world greener. Finally, we are seeing a paradigm shift in how vehicles integrate with the connected world, which is enabling seamless connectivity between the vehicle, its passengers and the environments in which they operate.

Our commitment to corporate responsibility extends beyond our products and solutions, and with many initiatives across our company to enable the future of our environment and communities, Aptiv and its employees are working to make a difference.

Looking ahead to 2019, customers can continue to count on us as their partner of choice in providing safe, green and connected solutions that are enabling the future of mobility. Notably, our strong 2018 operating and financial performance demonstrates that our operating model, technology portfolio and business strategy support our ability to deliver long-term shareholder value over a range of environments.

Thank you for your continued trust and support.

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Kevin P. Clark

President and Chief Executive Officer

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## APTIV AT
A GLANCE