source: stephen girsky imf world auto council

Source:

Stephen Girsky

IMF World Auto Council

June 2004

Morgan Stanley Research

Source:

The State of the Industry

• Global demand growth continues to be modest, with the exception of selected emerging markets.

• Excess capacity likely to continue, putting pressure on prices.

• OEM strategies to counter deflation have been to cut costs and get the consumer to “buy up”.

• Company updates• Questions


Source:

Global Demand Growing at Slow Pace

55,000

56,000

57,000

58,000

59,000

60,000

61,000

62,000

2000 2001 2002 2003 2004E

Un

its

in

00

0Global Light Vehicle Demand

1.4% CAGR

LMC-JD Power & Morgan Stanley Research

Source:

Morgan Stanley Global Sales Forecast FY04E

United States

16.7 16.7 Flat

Western Europe

14.2 14.4 + 1%

Japan 5.8 5.9 + 2%

China 2.0 2.5 + 25%

2003A 2004E % ∆Units in MM

Morgan Stanley Research Estimates

Source:

Excess Capacity Estimated at 25-30%

45

50

55

60

65

70

75

80

2003

Assemby

Capacity

Global Utilization at 72%

Autofacts

Source:

Global Excess Capacity is Significant

• Honda contemplating importing small cars into U.S. from Brazil

• VW contemplating importing cars to Europe from Brazil• Honda to import cars to Europe from China• Ford/Toyota importing vehicles to Europe from Turkey


Source:

OEMs Spending for Growth

60

80

100

120

140

160

180

200

Nissan Hyundai-Kia

Mitsubishi Renault Honda Toyota Fiat

13 of 14 OEMs had FY03 CapEx > D&A

BMW

Mazda

PSAFord VW

DCX

GM

Company data & Morgan Stanley Research

Source:

Zero Sum Game

• Slow growth and excess capacity suggest deflation/revenue pressures are likely to continue.

• Not everybody can be a winner.• Winners will be low cost producers who deliver good

product that consumers are willing to pay for.


Source:

Capacity Situation Could Get Worse

NA Net Capacity Additions Over 1mm units

Ford (122)Nissan 250Toyota 180 Total 308

GM 125 Ford (48) DCX 80Honda 180Nissan 200Toyota 30 Total 567

Ford (211) GM (98) DCX 80Hyundai 235 Total 6

Toyota 150

2003 2004 2005 2006

Company data & Morgan Stanley ResearchUnits in 000

Source:

Every 1 Pt. of Share Translates into $1.0bn in Profits

1.03mm Units of Added Capacity is 6.2% of NA Capacity,or $5-$6bn in Pretax Profits

Detroit Three $3,143

N.A. Pretax Profit FY03 in MM


Source:

Europe Estimated Capacity Additions

General Motors (200) (150) - - (350)

BMW 20 180 80 - 280

DaimlerChrysler 100 - - - 100

PSA Group 130 60 - 300 490

Nissan 100 - - - 100

Toyota 40 150 40 - 230

Hyundai - - - 200 200

Total Europe 190 240 120 500 1050

2003A 2004E 2005E 2006E ‘03-’06E


Source:

China Estimated Capacity Additions

BMW 30 - - - 30

China Motor (Mitsubishi) 25 95 30 30 180

Citroen - - - 150 150

Fiat - 50 50 - 100

Ford 50 - 50 50 150

GM 100 (50) 150 50 250

Honda 60 120 - - 180

Hyundai 50 50 100 50 250

Kia - 50 200 200 450

Mazda 30 40 - - 70

Nissan/Renault 70 - 30 70 170

Toyota 50 30 70 50 200

VW 100 100 200 360 760

Other 270 150 190 - 610

Total China 835 635 1,090 1,010 3,570

2003A 2004E 2005E 2006E ‘04-’06E


Source:

Revenue Pressures Worst Since 1970’s

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Ma

r-6

8

Ma

r-7

0

Ma

r-7

2

Ma

r-7

4

Ma

r-7

6

Ma

r-7

8

Ma

r-8

0

Ma

r-8

2

Ma

r-8

4

Ma

r-8

6

Ma

r-8

8

Ma

r-9

0

Ma

r-9

2

Ma

r-9

4

Ma

r-9

6

Ma

r-9

8

Ma

r-0

0

Ma

r-0

2

Ma

r-0

4

6

8

10

12

14

16

18

New Car CPI Avg Lt Dom Sls

New Car CPI vs. Light Domestic Sales

CPI & Morgan Stanley Research

Source:

Deflationary Pricing Since 2002

-2.3%

-1.8%

-1.3%

-0.8%

-0.3%

Feb-02 May-02 Aug-02 Nov-02 Feb-03 May-03 Aug-03 Nov-03 Feb-04

Y/Y Change in Monthly New Car CPI

CPI & Morgan Stanley Research

Source:

Price Reductions Pressure Manufacturers

• Every 1% Decline in Prices is Worth– $1.2bn at GM– $800mm at Ford– $500mm at Chrysler


Source:

Deflation Not Just a N.A. Phenomenon

• GM offers €1,085 discount to prospective customers who order the new Astra before it reaches the market. Jan-04

• VW counters by offering €1,000 of extra trade-in values to prospective customers who switch from competitor cars to new Golf. Jan-04

• VW offers free air conditioning (implied discount of €1,000) on all new Golfs through September. Feb-04

• Ford offers $6,000 in additional equipment on Focus (including air conditioning and alloy wheels). This implies a 20% discount to MSRP. Mar-04.


Source:

Countering Deflation

• Lower costs– Materials – 65-70% of the cost of a car

• More efficient use of components• Global sourcing

– Overhead – 15%-25%• Investment efficiency• Supplier Parks

– Labor -10%-20%• Richen mix


Source:

Overcoming Deflation; Getting Consumers to Buy Up.

Aug-01 6.41% 57.68 $22,591 ($456) 91.26% $24,754 Sep-01 5.42% 57.20 $23,049 ($458) 92.07% $25,034

Oct-01 2.71% 53.74 $24,443 ($484) 93.86% $26,042

Nov-01 2.89% 51.02 $24,934 ($520) 92.01% $27,099

Dec-01 3.31% 48.57 $24,812 ($547) 90.73% $27,347

Aug-02 2.17% 59.44 $26,455 ($470) 96.83% $27,321

Sep-02 2.29% 58.40 $26,331 ($477) 96.94% $27,162

Oct-03 3.92% 63.52 $26,067 ($455) 93.57% $27,858 Nov-03 3.93% 62.86 $26,306 ($464) 93.72% $28,069

Dec-03 3.56% 61.26 $27,105 ($485) 94.29% $28,746

Jan-04 3.20% 59.91 $27,240 ($493) 93.79% $29,043

Feb-04 3.00% 59.59 $26,296 ($476) 94.33% $27,877

Mar-04 3.51% 59.49 $25,873 ($474) 93.28% $27,737

APR Maturity Financed Amt Payment LTV Implied Cost of Vehicle

FRB & Morgan Stanley Research

Source:

Global Labor Costs vs. Unit Growth

USAGermanyFranceSwedenUKJapanKoreaTaiwanEstoniaTurkeyMexicoPolandMalaysiaRomaniaThailandChinaPhilippinesIndiaIndonesia

1009887806256322716131111

876433

1.5

Labor Cost Indexed to the U.S.

1.9%-1.1%-0.1%7.3%3.1%0.8%5.8%

11.3%NA

30.5%-4.7%7.8%6.6%

10.9%19.5%26.8%19.8%9.6%6.3%

FY01-FY04EProduction Unit CAGR

Autoliv, LMC-JD Power & Morgan Stanley Research

Source:

Global Footprint Migrating To Lower Cost Regions

• Nissan adds 250k in Mississippi FY03• Nissan adds 150k in Mississippi FY04• DCX adds 80k in Alabama FY04• Honda adds 150k in Alabama FY04• Nissan adds 50k in Georgia FY04• Hyundai adds 300k in Alabama FY05• Toyota adds 150k in Texas FY06• Toyota adds 30k in Tijuana, Mexico FY06

N.A. Capacity Additions Mostly in Southern Belt

European Capacity Additions in Eastern Europe/Turkey

• Toyota adds capacity in Czech/Turkey• VW adds capacity 75k in Slovakia• Hyundai adds 200k in Slovakia FY06• PSA adds 300k in Slovakia FY06

Source: Company data & Morgan Stanley Research

Source:

Risks to chasing low cost labor

• Export Strategy Increases Exposure to Currency Fluctuations

• Logistics• Material Supply• Political


Source:

Currency Movements Add Risk to Export Strategy

¥100

¥105

¥110

¥115

¥120

¥125

¥130

¥135

Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04

Japanese ¥ vs. US$

Factset & Morgan Stanley Research

Source:

YTD04 Imp % Dom % Import Domestic Wtd Avg Based on Every 1 ¥

OEM* of Total of Total ¥ Content ¥ Content ¥ Content $20,000 Move =

Toyota 37% 63% 100% 24% 52% $10,494 $89

Honda 22% 78% 100% 3% 24% $4,811 $41

Nissan 25% 75% 100% 20% 40% $7,963 $68

Foreign OEMs Exposed to Currency Movements

¥ to US$ Price Sensitivity YTD-04

Company data & Morgan Stanley ResearchIncludes Acura, Infiniti, Lexus

Source:

Japanese Local Production Continues to Increase

30.0%

40.0%

50.0%

60.0%

70.0%9

0 C

Y

91

CY

92

CY

93

CY

94

CY

95

CY

96

CY

97

CY

98

CY

99

CY

00

CY

01

CY

02

CY

03

CY

04

CY

TD

Japanese Transplant Sales as % of Total Sales in U.S.

Autodata & Morgan Stanley Research

Source:

Watch Out for China

Three Reasons Why China Is Important:– China is the 4th largest auto market, and the

fastest growing– High Profitability– Export potential


Source:

China Growing Portion of Company Profits

Company Metric China Ops

% (9mos 03) Total Pretax Income

34%

% 3Q03 Total Net Income 17%

% FY03 Total Net Income 15%

China Profits Matter


Source:

Prospects of China Excess Capacity High

• Capacity additions are being announced almost every month, as manufacturers race to establish future market share positions.

• While capacity does not currently appear to be in excess, we estimate that demand will need to grow by roughly 25%-30% per annum to absorb the currently-announced capacity additions over the next three years.

• Recent pricing actions in China a cause for concern.


Source:

Company updates

• Stock performance• Profits• Quality• Market Share• Return on Investment


Source:

Why stock price is important

• Industry is a significant user of capital; Cost of capital is a competitive advantage.– Every 1% pt on a five year car loan is worth $700-

$750 per vehicle.

• More efficient users of capital typically have a cost of capital advantage.


Source:

Current Bond Yields

GMAC 6.92%

FMCC 6.99%

DCX 6.30%

Toyota Motor Credit

4.35%


Source:

Global OEM Market Values

-5,000

15,000

35,000

55,000

75,000

95,000

115,000

135,000

To

yo

ta

DC

X

Nis

sa

n

Ho

nd

a

Fo

rd

BM

W

GM

Re

na

ult

VW

PS

A

Hy

un

da

i

Fia

t

Ta

ta

Kia

Ch

ina

Mo

tors

Bri

llia

nc

e

Global OEM Market Cap in US$

Factset & Morgan Stanley Research

Source:

Global Share Winners

-1.1%

-0.8%-0.8%

-0.6%

-0.4%

0.3%0.4%0.4%

0.6%

1.4%

-0.5%

-1.25%

-0.75%

-0.25%

0.25%

0.75%

1.25% H

yu

nd

ai

To

yo

ta

Ho

nd

a

Re

n-N

iss

an

BM

W

PS

A

VW

Fia

t

GM

DC

X

Fo

rd

Global Share Winners FY01-FY04E

LMC-JD Power & Morgan Stanley ResearchBased on production units

Source:

Global Profitability Winners

11.1%

9.0% 8.7%8.1%

7.4%

6.3%

3.6%3.1% 2.9% 2.9%

0.5% 0.4%-1.1%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Nis

sa

n

Hy

un

da

i

To

yo

ta

BM

W

Ho

nd

a

Kia

PS

A G

rou

p

DC

X

Re

na

ult

VW

GM

Fo

rd

FIA

T

Global Operating Margin LTM as of 1Q04


Source:

Global Automotive Operating Income

-1,500

500

2,500

4,500

6,500

8,500

10,500

12,500

To

yo

ta

Nis

sa

n

Ho

nd

a

BM

W

DC

X

VW

Hy

un

da

i

PS

A G

rou

p

Re

na

ult

GM

Kia

Fo

rd

FIA

T

Automotive Operating Income LTM as of 1Q04 ($ in MM)


Source:

Global Financial Position

-10250

-5250

-250

4750

9750

Ho

nd

a

To

yo

ta

Fo

rd

BM

W

Hy

un

da

i

DC

X

Nis

sa

n

PS

A

Re

na

ult

VW

FIA

T

GM

Industrial Net Debt/(Cash) ($ in MM)


Source:

Off-Balance Sheet Liabilities

GM ($1,116) ($57,544) ($58,660)Ford ($3,447) ($28,797) ($32,244)DCX (€6,400) (€13,400) (€19,800)VW (€11,431) NMF (€11,431) BMW (€3,490) NMF (€3,490)PSA (€1,402) NMF (€1,402)Fiat* (€1,005) NMF (€1,005)Renault (€880) NMF (€880)

Pension Liability Healthcare Liability

Company data & Morgan Stanley Research ( in MM)Fiat FY02 data, 20-F for FY03 not available

Total Liability

Source:

J.D. Power IQS Results 2004

40 60 80 100 120

LexusCadillacJaguarHondaBuick

MercuryHyundai

InfinitiToyota

Mercedes-BenzBMWAudi

OldsmobileVolvoAcura

ChevroletIndustry Average

Problems per 100 Vehicles: Out-performance

JD Power & Morgan Stanley Research

Source:

J.D. Power IQS Results 2004

115 125 135 145 155 165 175

Industry AverageChrysler

DodgeLincolnPontiacSubaru

GMCFord

MitsubishiSaabJeepMini

Land RoverSuzukiSaturn

KiaNissanMazdaScion

PorscheVolkswagen

Hummer

Problems per 100 Vehicles: Under-performance

JD Power & Morgan Stanley Research

Source:

Actual vs. Perceived Quality

-80

-60

-40

-20

0

20

40

Mer

cury

Infi

nit

iB

uic

kL

inco

lnC

hry

sler

Lex

us

Po

rsch

eO

ldsm

ob

iS

aab

Acu

raS

ub

aru

To

yota

Cad

illa

cN

issa

nJe

epS

uzu

kiH

on

da

Fo

rdM

azd

aC

hev

role

tJa

gu

arP

on

tiac

Sat

urn

Do

dg

eIs

uzu

BM

WA

ud

iH

yun

dai

Mit

sub

ish

iM

erce

des

Vo

lvo

VW

Kia

Ran

ge

Actual Quality > Perceived Quality =Share Opportunity

Actual Quality < Perceived Quality =Share Risk

Actual – Perceived Quality Gap

CNW & Morgan Stanley Research

Source:

Source: Company data, Morgan Stanley Research

Toyota Asset Turns vs. Margin

2003

2002

2001

1999

2000

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

1.00 1.05 1.10 1.15 1.20 1.25

Asset turns

Op

era

tin

g M

arg

in

Stock Performance:

1 Yr: + 42.8%

3 Yr: - 4.0%

5 Yr: + 13.7%

Toyota Asset Turns vs. Operating Margin


Source:


Nissan Asset Turns vs. Margin

20032002

2001

1999

2000

19980.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0.88 0.90 0.92 0.94 0.96

Asset Turns

Op

era

tin

g M

arg

in

Stock Performance:

1 Yr: + 26.2%

3 Yr: + 38.7%

5 Yr: + 123.1%

Nissan Asset Turns vs. Operating Margin


Source:


Honda Asset Turns vs. Margin

1999

2001

2000

19982002

2003

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

9.5%

10.0%

1.74 1.76 1.78 1.80 1.82 1.84 1.86 1.88

Asset Turns

Op

era

tin

g M

arg

in

Stock Performance:

1 Yr: + 19.0%

3 Yr: - 11.3%

5 Yr: - 10.0%

Honda Asset Turns vs. Operating Margin


Source:


GM Asset Turns vs. Operating Margin

1998

1999

2000

2002

20032001

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

1.0 1.1 1.1 1.2 1.2 1.3 1.3 1.4 1.4 1.5

Asset Turns

Op

era

tin

g M

arg

in

Stock Performance:

1 Yr: + 21.6%

3 Yr: - 19.7%

5 Yr: - 38.0%

GM Asset Turns vs. Operating Margin


Source:


Ford Asset Turns vs. Margins

1998

2000 1999

2001

2002

2003

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1.10 1.15 1.20 1.25 1.30 1.35 1.40 1.45 1.50 1.55 1.60

Asset Turns

Op

era

tin

g M

arg

in

Stock Performance:

1 Yr: + 42.1%

3 Yr: - 48.2%

5 Yr: - 60.3%

Ford Asset Turns vs. Operating Margin


Source:


DCX Asset Turns vs. Margin

1998

2000

1999

1997

1996

1995

2001

2002 2003

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

0.75 0.95 1.15 1.35 1.55 1.75 1.95 2.15

Asset Turns

Op

era

tin

g M

arg

in

Stock Performance:

1 Yr: + 35.0%

3 Yr: - 14.3%

5 Yr: - 56.1%

DCX Asset Turns vs. Operating Margin


Source:


Volkswagen Asset Turns vs. Margin

2003

2002

2001

1999

2000

1998

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

1.30 1.50 1.70 1.90 2.10 2.30 2.50

Asset Turns

Op

era

tin

g M

arg

in

Stock Performance:

1 Yr: + 15.2%

3 Yr: - 38.4%

5 Yr: - 45.9%

Note: Transitioned to IAS in 2001

Volkswagen Asset Turns vs. Operating Margin


Source:


BMW Asset Turns vs. Margin

2003

20022001

1995 1996

1997

1999

2000

1998

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

1.00 1.20 1.40 1.60 1.80 2.00

Asset Turns

Op

era

tin

g M

arg

in

Stock Performance:

1 Yr: + 19.5%

3 Yr: - 13.6%

5 Yr: + 35.5%

Note: Transitioned to IAS in 2001

BMW Asset Turns vs. Operating Margin


Source:

Summary; Prepare For Change

• Global deflation likely to continue• Consumers will continue to but cars although

where they buy them will change.• Technology will change how cars operate and

how they are put together.• Flexibility is key success factor


Source:

Stock Price, Price Target, & Rating History

GM, $45.62, Equal-Weight, Price Target N/A


Source:

Disclaimers

Global Stock Ratings Distribution(as of May 31, 2004)Data include common stock and ADRs currently assigned ratings. For disclosure purposes (in accordance with NASD and NYSE requirements), we note that Overweight, our most positive stock rating, most closely corresponds to a buy recommendation; Equal-weight and Underweight most closely correspond to neutral and sell recommendations, respectively. However, Overweight, Equal-weight, and Underweight are not the equivalent of buy, neutral, and sell but represent recommended relative weightings (see definitions below). An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings) and other considerations. Investment Banking Clients are companies from whom Morgan Stanley or an affiliate received investment banking compensation in the last 12 months.

ANALYST STOCK RATINGSOverweight (O). The stock’s total return is expected to exceed the average total return of the analyst’s industry (or industry team’s) coverage universe, on a risk-adjusted basis, over the next 12-18 months.Equal-weight (E). The stock’s total return is expected to be in line with the average total return of the analyst’s industry (or industry team’s) coverage universe, on a risk-adjusted basis, over the next 12-18 months.Underweight (U). The stock’s total return is expected to be below the average total return of the analyst’s industry (or industry team’s) coverage universe, on a risk-adjusted basis, over the next 12-18 months.More volatile (V). We estimate that this stock has more than a 25% chance of a price move (up or down) of more than 25% in a month, based on a quantitative assessment of historical data, or in the analyst’s view, it is likely to become materially more volatile over the next 1-12 months compared with the past three years. Stocks with less than one year of trading history are automatically rated as more volatile (unless otherwise noted). We note that securities that we do not currently consider "more volatile" can still perform in that manner.Unless otherwise specified, the time frame for price targets included in this report is 12 to 18 months. Ratings prior to March 18, 2002: SB=Strong Buy; OP=Outperform; N=Neutral; UP=Underperform. For definitions, please go to www.morganstanley.com/companycharts.

ANALYST INDUSTRY VIEWSAttractive (A). The analyst expects the performance of his or her industry coverage universe to be attractive vs. the relevant broad market benchmark over the next 12-18 months.In-Line (I). The analyst expects the performance of his or her industry coverage universe to be in line with the relevant broad market benchmark over the next 12-18 months.Cautious (C). The analyst views the performance of his or her industry coverage universe with caution vs. the relevant broad market benchmark over the next 12-18 months.Stock price charts and rating histories for companies discussed in this report are also available at www.morganstanley.com/companycharts. You may also request this information by writing to Morgan Stanley at 1585 Broadway, 14th Floor (Attention: Research Disclosures), New York, NY, 10036 USA.

Coverage Universe Investment Banking Clients (IBC)

Stock Rating Category Count % of Total Count

% of Total IBC

% of Rating Category

Overweight 631 36% 266 41% 42% Equal-weight 787 44% 282 43% 36% Underweight 353 20% 102 16% 28% Total 1,771 650


Source:

Important Disclosures

Analyst CertificationThe following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report: Stephen Girsky.

Important US Regulatory Disclosures on Subject CompaniesImportant US Regulatory Disclosures on Subject Companies

The information and opinions in this report were prepared by Morgan Stanley & Co. International Limited and its affiliates (collectively, "Morgan Stanley").As of April 30, 2004, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in this report: DaimlerChrysler AG, Ford, General Motors.Within the last 12 months, Morgan Stanley managed or co-managed a public offering of securities of DaimlerChrysler AG, Ford, General Motors.Within the last 12 months, Morgan Stanley has received compensation for investment banking services from DaimlerChrysler AG, Ford, General Motors.In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from DaimlerChrysler AG, Ford, General Motors.Within the last 12 months, Morgan Stanley has received compensation for products and services other than investment banking services from DaimlerChrysler AG, Ford, General Motors.Within the last 12 months, Morgan Stanley has either provided or currently is providing investment banking services to the following companies covered in this report DaimlerChrysler AG, Ford, General Motors.Within the last 12 months, Morgan Stanley has either provided or currently is providing non-investment banking, securities related services to and/or in the past has entered into an agreement to provide services or currently has a client related relationship with the following companies covered in this report DaimlerChrysler AG, Ford, General Motors.The research analysts, strategists, or research associates principally responsible for the preparation of this research report have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues.

Morgan Stanley & Co. Incorporated makes a market in the securities of Ford, General Motors.


Source:

Other Disclosures

Other Important DisclosuresFor a discussion, if applicable, of the valuation methods used to determine the price targets included in this summary and the risks related to achieving these targets, please refer to the latest relevant published research on these stocks. Research is available through your sales representative or on Client Link at www.morganstanley.com and other electronic systems.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The securities discussed in this report may not be suitable for all investors. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives.

This report is not an offer to buy or sell any security or to participate in any trading strategy. In addition to any holdings disclosed in the section entitled "Important US Regulatory Disclosures on Subject Companies", Morgan Stanley and/or its employees not involved in the preparation of this report may have investments in securities or derivatives of securities of companies mentioned in this report, and may trade them in ways different from those discussed in this report. Derivatives may be issued by Morgan Stanley or associated persons.

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© 2004 Morgan Stanley


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source: stephen girsky imf world auto council

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