Science fiction thinking. Automotive reality.

We don’t just talk about big ideas.

We make them road ready.

For over 60 years, Magna has been making the impossible possible by solving some of the automotive industry’s most complex problems. Our agility, complete systems expertise, global reach and disruptive thinking allow us to bring the best technology to market and lead the industry into the future.

From inspiration to design.
From manufacturing to the open road.
We turn science fiction thinking into automotive reality.

MESSAGE FROM THE

CHIEF EXECUTIVE OFFICER

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Magna CEO Don Walker against futuristic background. Magna CEO Don Walker against futuristic background.
Delivering today and defining tomorrow. In a time of unprecedented change, Magna continues to help shape the future of the automotive industry. We're developing and delivering technologies that were not feasible just a few years ago.

Don Walker

Chief Executive Officer

We create innovative technology, have a product portfolio that aligns with trends, are world class in manufacturing and have some of the best and most motivated people in the industry. From a financial perspective, we continue growing our sales, earnings per share and cash flow. All of these factors position us to continue creating shareholder value over the long term and to grow at a rate that outpaces global vehicle production.

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EXECUTING OUR VISION

At Magna, we see opportunity in change. Right now, new companies are disrupting the status quo, environmental and safety regulations are tightening, and consumers are demanding smarter, more connected vehicles. Magna is positioned for organic growth in this environment because we think like a tech company. We bring the right products to the right markets with high efficiency. We set goals and then we deliver.

Throughout 2017, we delivered results relative to several strategic goals and growth areas. Those included the following:

  • Deliver products to meet increasing demand for Advanced Driver Assistance Systems (ADAS). Our innovative new MAX4 Autonomous Drive Platform demonstrated our range of ADAS capabilities, and we continued to win business, including a new solid-state LiDAR production contract.
  • Take advantage of the trend toward electrification and position our powertrain business for long-term growth. Magna continued to develop scalable powertrain solutions that will work with most new vehicles and powertrain architectures to 2030 and beyond. In conjunction with a new joint venture partner, HASCO, we won a contract to produce Magna’s first-ever high-volume eDrive system for Volkswagen in China.
  • Develop products and processes that help our customers meet legislative demands. We provide automakers with the broadest design and manufacturing solutions to address fuel efficiency and lightweighting, including some of the most advanced die cast and aerodynamic parts in the world.
  • Build our complete vehicle business with new and existing customers. We began production of the Jaguar E-PACE compact SUV and the BMW 5-Series and plug-in hybrid. We are also preparing to launch the Jaguar I-PACE battery electric vehicle and the all-new Mercedes-Benz G-Class.
  • Expand our geographic reach. We have grown our footprint to 335 manufacturing facilities around the world, including expansion in key regions such as China.
  • Solidify our standing as an employer of choice. In 2017, we saw an increase of 73% in qualified applicants and 156% in the number of students and graduates interested in working for Magna. We were also named one of Fortune’s Most Admired Companies and recognized on Forbes’ Best Employers list.

Our formula for remaining a significant force in the global auto industry is simple. We leverage our decades of experience to create an understanding of how all the pieces – from technology to megatrends to regulatory shifts – come together. This positions us to deliver the right products and technologies to the market.

Magna has a spirit of collaboration that extends beyond our product capabilities to our partners and customers. We take the best ideas from other industries and apply them to mobility, a process we call “auto-qualifying.” We know where to go and how to get there, and our reputation for leadership and collaboration will only grow stronger as we solve new challenges.

We are focused on aligning with partners and customers in the new-mobility ecosystem. Our new partnership with Lyft, a leading rideshare service provider, is a good example. We will co-develop self-driving systems that can be deployed on their network as well as throughout the entire automotive industry. This partnership will help solidify our position in this market and give us access to the data generated by the more than eight billion kilometres travelled per year on the Lyft network.

"Our formula for remaining a significant force in the global auto industry is simple. We leverage our decades of experience to create an understanding of how all the pieces – from technology to megatrends to regulatory shifts – come together. This positions us to deliver the right products and technologies to the market."

Don Walker
Chief Executive Officer
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ALIGNING OUR STRUCTURE

To best capitalize on opportunities in the industry, we have realigned our management structure. Beginning with the first quarter of 2018, we will be reporting sales, Adjusted EBIT and other items based on four global, product-oriented operating segments:
  • Body Exteriors & Structures
  • Power & Vision
  • Seating Systems
  • Complete Vehicles
These changes will also provide investors with increased transparency and will open up even more opportunities for our groups to collaborate.

THE ROAD AHEAD

I am proud of everyone at Magna for successfully delivering on our strategic goals, and I know our talented team will continue delivering on them going forward. As we move into 2018, we are excited about:
  • Our continued growth trajectory in markets like China.
  • Developing and delivering modular, scalable solutions that work for all automakers and any future mobility providers.
  • Continuing our long history of growing faster than the rate of global vehicle production.
  • Bringing product solutions to our customers that improve safety, functionality and performance.
  • Developing new products, processes and use of materials that are better for the environment.
2017 was an exceptional year and we are positioned to deliver even more to stakeholders in 2018. Thank you — to our investors, partners, customers and especially our employees — for helping us further strengthen our core business and create new opportunities in this incredible industry.

Sincerely,
Signature
Don Walker
Chief Executive Officer
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COMMENT FROM THE

CHIEF FINANCIAL OFFICER

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Magna CFO Vince Galifi against futuristic background. Magna CFO Vince Galifi against futuristic background.
Magna is in a unique position as the auto industry continues to transform and suppliers play an even larger role in the new-mobility ecosystem. Our competitive advantage is the collective capabilities of our team, born out of our deep systems knowledge and leading technologies across our portfolio.

Vince Galifi

Chief Financial Officer

Our businesses are run by entrepreneurially minded managers, allowing us to be agile and to take advantage of opportunities at any stage of an industry cycle. A strong balance sheet continues to be a priority, providing us with the flexibility to pursue strategic opportunities while simultaneously returning capital to shareholders.

In 2017, we delivered another robust year of financial performance, including records in sales, diluted earnings per share, cash from operating activities, income from operations before income taxes, net income attributable to Magna, and Adjusted EBIT1. We made significant investments to position us for the future, including $1.86 billion in fixed assets. We also returned $1.27 billion to shareholders in the form of share repurchases and $400 million in dividends.

Lastly, we recently increased our quarterly cash dividend by 20%. This represents our ninth consecutive annual dividend increase reflecting the confidence that both Management and our Board have in Magna’s future.

Going forward, we expect to achieve continued strong performance by capitalizing on market trends, driving both top- and bottom-line results and accelerating free cash flow generation, which together should create further value for shareholders.



Sincerely,
Signature
Vince Galifi
Chief Financial Officer

1 Adjusted EBIT is a non-GAAP financial measure. Definitions and reconciliations to the most directly comparable financial measure calculated in accordance with U.S. GAAP, can be found in the Company’s Annual Report for the Year Ended December 31, 2017, in the Management’s Discussion and Analysis of Results of Operations and Financial Position section. The Magna International Inc. 2017 Annual Report has been posted on the Company’s website through the investor relations link at www.magna.com

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CAPITALIZING ON MARKET TRENDS

At a time of unprecedented change in our industry, Magna’s market-leading positions, technologies and solid financial foundation uniquely position us to capitalize on key trends, including lightweighting, electrification, autonomy and new mobility. The recent alignment of our management structure will more closely align with how vehicles are being developed and further promote cross-group synergies. The corresponding realignment of our reporting segments will provide increased transparency to investors into our product areas, resulting in more clarity to the drivers of our business.

DRIVING BOTH TOP- AND BOTTOM-LINE RESULTS2

Magna is expecting further top-line and, more importantly, bottom-line growth. Through 2020, we forecast that Magna’s consolidated sales will continue to grow faster than global vehicle production. We anticipate growth for each of our new reporting segments. From a geographic perspective, we see faster growth in Europe and Asia compared to North America through 2020, which should continue to contribute to a more diversified geographic mix of our sales and profits.

Magna remains diligent in striking a balance between investing for the future and continuing to drive strong profitability. To this end, we continue to work on improving efficiencies and reducing costs in our operations through World-Class Manufacturing and other initiatives. In addition, strong sales growth in joint venture investments that we do not consolidate is expected to drive faster equity income growth, further improving our bottom-line results.

"Going forward, we expect to achieve continued strong performance by capitalizing on market trends, driving both top- and bottom-line results and accelerating free cash flow generation, which together should create further value for shareholders."

Vince Galifi
Chief Financial Officer
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ACCELERATING FREE CASH FLOW2,3 GENERATION

The result of these efforts should continue to drive improving returns on capital and free cash flow conversion. We expect free cash flow to accelerate to over $6 billion in the 2018 to 2020 time frame, representing more than 25% of Magna’s market capitalization at the start of this year, allowing us to make further investments in our business and return capital to shareholders.

2 Readers should specifically consider the various factors which could cause actual events or results to differ materially from those indicated by forward-looking statements in this Annual Review, including the risks, assumptions and uncertainties that are discussed in greater detail in our 2017 Annual Information Form under “Forward-Looking Statements” and ‘‘Section 5 – Risk Factors’’. The 2017 Annual Information Form has been posted on the Company’s website through the investor relations link at www.magna.com.

3 Free cash flow represents Cash from Operating Activities plus proceeds from normal course dispositions of fixed and other assets minus fixed asset additions and investments in other assets. Free cash flow is a forward-looking, non-GAAP financial measure that has no standardized meaning under U.S. GAAP. We do not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP. To do so would be potentially misleading and not practical given the difficulty of projecting items that are not reflective of on-going operations in any future period. The magnitude of these items, however, may be significant.

DELIVERING SHAREHOLDER VALUE

Magna’s capital allocation principles have served us well and remain unchanged. We strive to:
  • Maintain a strong balance sheet, with ample liquidity and high investment grade credit ratings;
  • Invest for growth through organic opportunities, innovation spending and acquisitions that fit our product strategy; and
  • Return capital to shareholders, in the form of dividends and share repurchases.

We believe this prudent and balanced approach to capital allocation will allow us to deliver further shareholder value in the years to come.

Key Figures at-a-Glance

Sales

U.S. $ MILLIONS

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Diluted EPS

U.S. $

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CASH FLOW FROM
OPERATING ACTIVITIES

U.S. $ MILLIONS

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RETURN ON EQUITY1

1Return on Equity is a non-GAAP financial measure. Definitions and reconciliations to the most directly comparable financial measure calculated in accordance with U.S. GAAP, can be found in the Company’s Annual Report for the Year Ended December 31, 2017, in the Management’s Discussion and Analysis of Results of Operations and Financial Position section. The Magna International Inc. 2017 Annual Report has been posted on the Company’s website through the investor relations link at www.magna.com

RETURN ON INVESTED CAPITAL1

1Return on Invested Capital is a non-GAAP financial measure. Definitions and reconciliations to the most directly comparable financial measure calculated in accordance with U.S. GAAP, can be found in the Company’s Annual Report for the Year Ended December 31, 2017, in the Management’s Discussion and Analysis of Results of Operations and Financial Position section. The Magna International Inc. 2017 Annual Report has been posted on the Company’s website through the investor relations link at www.magna.com

DIVIDENDS PAID PER SHARE1

U.S. $

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1A two-for-one stock split was approved February 24, 2015. Dividends are shown on a post-stock split basis.

The Magna Advantage

Staying ahead of a rapidly changing industry doesn’t just require an understanding of where it’s going. It takes an understanding of where it’s been. And with six decades of proven success and expertise across the entire vehicle, Magna can identify the most significant emerging trends and then act on them. We create technologies that solve big problems for our customers and the world around us.

It’s our robust set of core capabilities, culture of innovation and world-class manufacturing operations that enable us to help transform the entire industry.

OUR DIVERSE CAPABILITIES

UNLOCK OPPORTUNITIES.

DividerLine With complete vehicle expertise and a collaborative mindset, we see every system from multiple perspectives. This allows us to innovate across product areas, and design, engineer and manufacture industry-leading solutions. Here are just a few examples.
A wireframe image of Magna’s MILA concept sportscar.

IF YOU CAN IMAGINE IT, WE CAN BUILD IT.

COMMENT FROM THE

CHIEF TECHNOLOGY OFFICER

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Magna’s CTO Swamy Kotagiri against a futuristic background. Magna’s CTO Swamy Kotagiri against a futuristic background.
Transforming an industry. Suppliers and automakers are pushing the pace of technology like never before. In the last five years, more than 1,700 disruptive companies* have brought forward new technologies that could apply to the automotive industry.

Swamy Kotagiri

Chief Technology Officer

Millions of students are learning about robotics, user experience design, machine learning, computer science and dozens of other fields that will impact mobility. It’s truly incredible. And it makes you realize that with all this talent and expertise, answers are everywhere. It’s up to us to define the right questions.

With brilliant and disruptive thinking everywhere, the question isn’t about when driverless cars are coming or when all vehicles will be fully electric. The question is about who is ready for these transformative shifts.

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As a mobility technology company and leading supplier in the automotive industry, we continue to deliver on what’s needed today while creating innovations that society doesn’t even know they need yet. And more important, we are solving problems that haven’t yet surfaced. We know how to auto-qualify technology from other industries, and we are constantly improving our own processes and products, keeping us ahead of the curve.

We cultivate innovation – in our company, in our industry, and beyond. We turn disruptive thinking into disruptive technology. Then we bring it to market.

Signature
Swamy Kotagiri
Chief Technology Officer

*Forbes, May 2017

"As a mobility technology company and leading supplier in the automotive industry, we continue to deliver on what’s needed today while creating innovations that society doesn’t even know they need yet."

Swamy Kotagiri
Chief Technology Officer
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COLLECTIVE EXPERTISE SETS US APART

Magna is the only automotive supplier in the world with capabilities across the whole vehicle – from electronics, body and seating to powertrain and complete vehicle manufacturing.

Our deep systems knowledge allows us to quickly develop technologies to meet current market demands, and gives us a unique insight into where the industry is headed. A few examples include the following:

  • Leveraging the product, process and material expertise of our body systems and closures product areas to reimagine an entirely new lightweight door that’s applicable to 70% of the market.
  • Developing seats that can be reconfigured without compromising package space around centre seats or consoles. The seat back on our latest innovation reverses to provide forward- or rearward-facing seating positions, which enhances interior flexibility and customization.
  • Developing fascias, grilles and exterior body panels with seamless integration and styling for various ADAS sensors.

AGILITY KEEPS US AHEAD

We stand apart from the competition because of our long-standing ability to shift business priorities before the market demands.

This ability to quickly address global trends, customer needs and consumer demands starts with a strong entrepreneurially minded culture. Our core philosophy helps us aggressively develop production-ready solutions today and deploy new technology when the market is ready.

  • Our new MAX4 Autonomous Drive Platform can be integrated into any vehicle without compromising interior or exterior design. MAX4 bundles cameras, RADAR, LiDAR and ultrasonic sensors, and can be used with any automaker’s existing and future vehicles, including hybrids and electric vehicles.
  • The latest innovation in ADAS is our high-definition iCON RADAR™, which is a crucial step toward fully autonomous driving. This technology continuously scans the environment in four dimensions, with a range of more than 348 metres.
  • Our ever-expanding portfolio of powertrain products prepares us to match the market’s progression from internal combustion engines to plug-in hybrids to battery electric vehicles. Magna’s electrified powertrain capabilities include key components for modern eDrive systems, including e-motor, gearbox, inverter and control software that can easily be integrated into vehicles. Electrified auxiliaries like thermal management modules, electric water pumps and electric oil pumps complete the portfolio.
  • The growing number of Magna’s active aerodynamic systems includes the recently launched Active Front Deflector, which debuts on the 2019 Ram pickup truck. It deploys automatically to redirect air around the vehicle, providing emissions and fuel economy improvements. Across the Ram truck fleet, the active aero system is expected to save an estimated 37 million litres of fuel annually.

THE FUTURE OF MOBILITY BEGINS WITH MAGNA

Innovation can come from anywhere, which is why we partner with universities, tech accelerators and startups. It’s why we constantly examine the market for new ideas and opportunities. In 2017 alone, we
  • Investigated over 1,000 startups
  • Launched a program with RocketSpace, a tech accelerator that brings together startups and the most promising technology in their sectors
  • Announced a multidisciplinary Technology Advisory Council to help us identify and capitalize on key trends in the industry. The council features automotive executives, the inventor of the iPod, experts in emerging markets, global leaders in machine learning and more
  • Held multiple innovation challenges with our employees and startups around the world
  • Auto-qualified:
    • Medical technology like biometric and heart-rate sensors to create systems that monitor driver health and alertness
    • Aerospace-grade aluminum for use in body panels
    • Military-grade RADAR for our iCON RADAR system

Magna emphasizes scalability, modularity and platform concepts so that we can quickly bring products to the largest market possible. We’re not waiting for what’s next. We’re leveraging our strengths – a legacy of innovation, unparalleled breadth of capabilities and complete systems knowledge – to create the cross-product building blocks that are the foundation of future mobility. And beyond.


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Electrification and Lightweighting

PICTURED: Magna’s e1 demo car combines one highly integrated eDrive on the front axle with a twin eDrive system on the rear axle for the highest driving performance.

The environmental impact of mobility and the resultant changes in legislation around the world are largely driving the move to hybrid and battery electric vehicles and the optimization of vehicle aerodynamics and weight.

In the coming years, there could be up to 48 variations of powertrain architectures available. Magna’s diverse product suite – including e-motors, hybrid DCTs, inverters, software, e-pumps, gears and shafts – means that we can supply systems for the majority of these architectures.

From 48 volt and extended-range drives to plug-in hybrids and battery electric vehicles, Magna is a premier partner for automakers, all of whom are looking to include hybrid functionality and meet emissions standards. And our high-volume production capabilities and advanced engineering and development services mean we can rapidly innovate and bring propulsion systems to market.

We also believe we have the broadest offering of lightweight design and manufacturing solutions to help our customers reduce vehicle weight. Our knowledge of lightweight materials is bolstered by our expertise in material joining, which is an industry challenge we are uniquely prepared for.

With our innovative material and manufacturing processes, expertise in integrated electronics and a leadership position in powertrain technology, we’re propelling the industry forward. Literally.

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Autonomy

PICTURED: MAX4 – our Level 4 Autonomous Drive Platform can be seamlessly integrated into any vehicle.

Self-driving vehicles won’t just change the automotive industry – they’ll have a significant impact on people’s lives. The future promises accessible transportation for people with disabilities, advances in safety, radically altered urban infrastructure and more.

But first we have to get there.

To do that, we will need to master and integrate dozens of technologies: image and signal processing, sensor fusion, cyber security and countless others. We’ve got a strong head start.

Magna has been developing vision technologies – an important building block for autonomy – for over a decade. We were early entrants into the market, offering automakers innovative products like lane-keeping assist, adaptive cruise control and advanced vision systems. We anticipated the increased demand for cameras in active safety technology well before automakers required them. This let us reallocate our resources to address the shift and establish an early leadership position.

We are still the number one supplier of vision-based ADAS solutions, and this expertise sets us up to continue developing the technology that will be a key factor in self-driving vehicles.

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New Mobility

There are countless ways people and goods will move in the future: self-driving vehicles, e-bikes, smart transit, ridesharing, drones and more. That’s new mobility. And then there are the trends that will impact the new-mobility landscape, like macro-economic shifts toward a sharing economy, artificial intelligence and the proliferation of megacities.

To Magna, all of these trends represent potential opportunities.

This landscape is complex and interconnected. Even trends that seem straightforward affect other parts, sometimes in indirect ways. For example, changes in autonomy and the spread of mobility services are likely to lead to increased vehicle utilization. As vehicles become more sophisticated and are driven more, new requirements will emerge surrounding durability, connectivity and software. There are dozens of trends like this, and each offers unique challenges and opportunities.

Magna’s expertise in self-driving technology, flexible body architectures, flexible seating and cargo systems, as well as modular powertrain designs, help position us to capitalize on these trends.

It’s an exciting time to be in the mobility business.

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A Visionary Culture,
Driven by Innovation

The automotive industry is changing, but it isn’t changing by itself. It takes a company made up of dedicated, entrepreneurially minded people. A company like Magna. And with more than 168,000 talented employees in 28 countries, we’re helping transform the industry.

For every goal we set, it’s our employees who help make it happen. Together, we uphold our reputation for quality and managing complex product launches. We identify new opportunities for collaboration. And we build innovative products that impact millions of consumers around the world. Together, we turn science fiction thinking into automotive reality.

MAGNA IN ACTION

It goes beyond business: Magna and our employees work to improve the communities in which we operate. Employees help drive our sustainability initiatives and fuel our Corporate Social Responsibility efforts. They mentor aspiring engineers in the FIRST Robotics competition. They participate in countless charity events, including the World Vision Walk for Water and the Ride to Conquer Cancer. They organize events to raise money for local food banks, shelters and coat drives. And our employees are quick to answer the call for help in global disaster relief efforts.

TOP TALENT

In the past year, we’ve expanded our focus on talent attraction. It’s working. In 2017, we saw a 73% increase in qualified applicants, and a 156% increase in students and graduates looking to join our company. We’ve also been recognized as a top employer by Glassdoor, 51 Jobs, Zhaopin and Forbes.

We partner with universities like Cambridge, MIT, Stanford and Waterloo because these partnerships help us grow and attract the industry’s brightest minds. And as our industry evolves, we will continue to attract and retain world-class talent in more areas than ever, such as machine learning, computer science, the skilled trades, software development and cyber security.

We are an organization of driven people, driving change.


Charter Poster

EMPLOYEE’S CHARTER

The Employee’s Charter provides a blueprint for fairness in the workplace. Through six simple, common-sense principles, it speaks to the most essential and universal employee needs across cultures and borders around the world.

Young Magna employee Ulrike Resetarits standing in a Magna facility.

“I enjoy working at Magna because there are many training opportunities, good compensation, teamwork, a good working atmosphere and career opportunities for women.”

Ulrike Resetarits
Team Leader
Years of service: 14

We are an organization of
driven people, driving change.

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