ALV 10-K & 10-Q changes, risk factors and insider trading

Our business, financial condition, operating resultsresults, cash flows, and cashfinancial flowscondition may be impacted by a number of factors. A discussion of the risks associated with these material risk factors is included below.

The cyclical nature of automotive sales and production can adversely affect our business.business, operating results, and financial condition. Our business is directly related to LVP in the global market and by our customers, and automotive sales and LVP are the most important drivers for our sales

Automotive sales and production are highly cyclical and can be affected by general or regional economic or industry conditions, the level of consumer demand, recalls and other safety issues, labor relations issues, technological changes, fuel prices and availability, vehicle safety regulations and other regulatory requirements, governmental initiatives, trade agreements, political volatility (especially in energy producing countries and growth markets), changes in interest rate levels and credit availability, and other factors. Some regions around the world may at various times be more particularly impacted by these factors than other regions. Economic declines that result in a significant reduction in automotive sales and production by our customers have in the past had, and may in the future have, a material adverse effect on our business, resultsoperating of operations,results, and financial condition. Our sales are also affected by the inventory levels of our customers, which we cannot predict. Customers may choose to increase or reduce inventory levels at any time, and new inventory levels may not align with historical trends. These fluctuations can add variability to customer call-offs, our production schedulesschedules, and order intake, potentially impacting our revenues and financial condition. Uncertainty regarding inventory levels may be further impacted by consumer financing programs initiated or terminated by our customers or governments, as such changes can influence the timing of sales. Changes in automotive sales and LVP and/or customers’ inventory levels will have an impact on our financial targets, earnings guidance, and estimates. In addition, we base our growth projections in part on business awards, or order intake, made by our customers. However, actual production orders from our customers may not approximate the awarded business or our estimated order intake. Any significant reduction in automotive sales and/or LVP by our customers, whether due to general economic conditions or any other factors relevant to sales or LVP, could have a material adverse effect on our business, resultsoperating of operations,results, and financial condition.

Growth rates in safety content per vehicle,CPV, which can be impacted by changes in consumer trends, political decisions, crash test ratings and safety regulations could affect our results in the future

TheWe Company estimatesestimate that the average global content of passive safety systems per light vehicle in 20242025 was unchangedclose aroundto $260.$270. Vehicles produced in different markets may have various passive safety content values. For example, in high-income markets, light vehicles have an average passive safety content valuesvalue of aroundapproximately $340$350 per vehicle, whereas in growth marketsmarkets, such as China and IndiaIndia, the average passive safety content per vehiclevalue is approximately $200$210 and $120,$140 per vehicle, respectively. Due to the concentration of the majority of the growth in global LVP over time in growth markets, our operating results may be impacted if the passive safety content per vehicleCPV remains low and if the penetration of automotive safety systems does not increase in these regions. As passive safety content per vehicleCPV is also an indicator of our sales development, should these trends continue, the average value of passive safety systems per vehicle could decline.

The market for passive safety systems is highly competitive.competitive, Weand competewe withface competition from a number of other companies that produce and sell similar products. Among other factors, our products compete on the basis of price, quality, manufacturing and distribution capability, design and performance, technological innovation, delivery, and service. Some of our competitors are subsidiaries (or divisions, units or similar) of larger companies that are larger and havewith greater financial and other resources than us. Some of our competitors may also have a “preferred status” as a result of special relationships or ownership interests with certain customers. Our ability to compete successfully depends, in large part, on our success in continuing to innovate and manufacture products that have commercial success with our customer and end-consumers, differentiating our products from those of our competitors, continuing to deliver quality products in the time frames required by our customers, and maintaining best-cost production. We continue to invest in technology and innovationinnovation, which we believe will beare critical to our long-term growth. Our ability to maintain and improve existing products, while successfully developing and introducing distinctive new and enhanced products that anticipate changing customer and consumer preferences and capitalize upon emerging technologies will be a significant factor in our ability to remain competitive. We may not be able to effectively implement new technology-driven products and services or be successful in marketing such products and services. In addition, our implementation of certain new technologies, such as those related to artificial intelligence, automation and algorithms, may have unintended consequences due to any limitations or failure to use them effectively. If we are unsuccessful or are less successful than our competitors in predicting the course of market development, developing innovative products, processes, and/or use of materials or adapting to new technologies or evolving regulatory, industry or customer requirements, we may be placed at a competitive disadvantage. For example, our customers are increasingly focused on developing electric vehicles. If we fail to be awarded business on electric vehicle models, or these electric vehicles are not successful commercially, it will harm our future business prospects. Our competitive environment continues to change, including increased competition from entrants outside the traditional automotive industry, creating uncertainty about the future competitive landscape. Given the competitive nature of our business, the number of awards we are awarded relative to our peers may decrease over time and our past order intake is not an indicator of future levels or order intake. Additionally, OEMs rigorously evaluate our performanceproducts and productsperformance against those of our competitors on the basis of product quality, reliabilityreliability, cost-effectiveness, and cost-effectiveness.the overall competitive landscape. If one or more of ourany OEM customerscustomer determinedetermines that theyusing coulda achievecompetitor's overallproduct would yield better financial results by incorporating a competitor’s new or existingwould product,help maintain supply chain resilience, it may result in loss in business and could affect our ability to be competitive and may decrease our current market share. The inability to compete successfully could have a material adverse effect on our business, resultsoperating of operations,results, and financial condition.

A number of our customer contracts generally require us to supply a customer’s annual requirements for a particular vehicle model and assembly facilities, rather than forto manufacturingmanufacture a specific quantity of products. Such contracts range from one year to the life of the model, which is generally four to seven years. These contracts are often subject to renegotiation, sometimes as frequently as annually, which may affect product pricing, and generally may be terminated by our customers at any time. Therefore, the discontinuation of, the loss of business with respect to, or a lack of commercial success of a particular vehicle model or brand for which we are a significant supplier could reduce our sales and harm our business prospects,business, operating results, cash flows, orand financial condition.

We are workingcontinue to expand our product offerings beyond light passenger vehicles to include other mobility safety solutions. If we are not successful in expanding our product offeringsofferings, or if it takes longer or costs are more than expected, it could harm our business

TheWe Company is workingcontinue to expand itsour product offerings to focus on mobility safety solutions. Because mobility safety product offerings are currentlystill in the development stages, it is difficult for us to anticipate the level of sales they may generate. The expansion of our product offering will require us to invest time and resources to develop innovative products, such as wearables and two-wheeler passive safety products, that keep pace with continuing changes in industry standards and to reach new customers who have rapidly changing preferences. Our product offerings might not receive customer acceptance if customer preferences shift to other products, and our future success depends in part on our ability to anticipate and respond to these changes. If we are not successful in expanding our product offerings or if it takes longer or costs are more than expected, it could negatively impact our operating results, financial results,condition, competitive position, and future business prospects.

We face risks related to product liability claims, warranty claims, and recalls in the event that any of our products actually or allegedly are defective, fail to perform as expected, or the use of our products results, or is alleged to result, in bodily injury and/or property damage. We may not be able to anticipate all of the possible performance or reliability problems that could arise with our products after they are released to the market. Additionally, increasing regulation and reporting requirements regarding potentially defective products, particularly in the U.S., may increase the possibility that we become involved in additional product liability or recall investigations or claims. See – “Our business may be adversely affected by changes in automotive safety regulations or concerns that drive further regulation of the automobile safety market”. Although we currently carry product liability and product recall insurance in excess of our self-insured amounts, no assurance can be made that such insurance will provide adequate coverage against potential claims, such insurance is available or will continue to be available in the appropriate markets, or that we will be able to obtain such insurance on acceptable terms in the future. The cost of such insurance has risen in recent years and our self-insured amounts have risen as well. Although we have invested and will continue to invest in our engineering, design, and quality infrastructure, we cannot give any assurance that our products will not suffer from defects or other deficiencies or that we will not experience material warranty claims or product recalls. In the future, we could experience material warranty or product liability losses and incur significant costs to process and defend these claims. A successful claim brought against us in excess of available insurance coverage, if any, or a requirement to participate in any product recall, could have a material adverse effect on our operating results, cash flows, or financial condition. Future recalls could result in costs not covered by insurance in excess of our self-insurance,self-insurance furtheramounts, additional government inquiries, litigation, reputational harm, and coulddiversion divertof management’s attention away from other matters.attention. The main variables affecting therecall costs of a recall areinclude: the number of vehicles ultimately determined to be affected by the issue,affected, the cost per vehicle associated with athe recall, the determination of proportionate responsibility among the customer, the Company,us, and any relevant sub-suppliers, and actual insurance recoveries. EveryEach vehicle manufacturer has its own practices regarding product recalls and other product liability actions relating to its suppliers, and the performance and remedial requirements vary between jurisdictions. Due to recall activity in the automotive industry over the past decade, some vehicle manufacturesmanufacturers have become even moreincreasingly sensitive to product recall risks. Government regulators have also become more focused on potential recall risks and recall rates, as demonstrated by the USU.S. National Highway Traffic Safety AdministrationAdministration's (“NHTSA”) investigation of the ARC inflators. If NHTSA proceeds with any recalls of ARC inflators, such a recall could have a material impact on our resultsbusiness, ofoperating operations.results, and financial condition. As suppliers become more integrally involved in the vehicle design process and assume more of the vehicle assembly functions, vehicle manufacturers are increasingly looking to their suppliers for contribution when faced with recalls and product liability claims. Product recalls in our industry, even when they do not involve our products, can harm the reputations of our customers, competitors, and us, particularly if those recalls cause consumers to question the safety or reliability of products similar to those we produce.ours. In addition, with global platforms and procedures, vehicle manufacturers are increasingly evaluating our quality performance on a global basis; any one or more quality, warranty or other recall issue(s) (including issues affecting few units and/or having a small financial impact) may cause a vehicle manufacturer to implement measures whichthat may have a severe impact on our operations, such as a global, temporary or prolonged suspension of new orders. In addition, as our products more frequently use global designs and are based on or utilize the same or similar parts, components or solutions, there is a risk that the number of vehicles affected globally by a failure or defect will increase significantly with a corresponding increase in our costs. A warranty, recall or product liability claim brought against us in excess of our available insurance may have a material adverse effect on our business. Vehicle manufacturers are also increasingly requiring their outside suppliers to guarantee or warrant their products and bear the costs of repair and replacement costs of such products under new vehicle warranties. A vehicle manufacturer may attempt to hold us responsible for some or the entire repair or replacement costs of defective products under new vehicle warranties when the product supplied did not perform as represented. Accordingly, the future costs of warranty claims by our customers may be material. However, the final amounts determined to be due related to these matters could differ materially from our recorded warranty estimatesestimates, and our business prospects,business, operating results, cash flowsflows, orand financial condition may be materially impacted as a result. In addition, as we adopt new technology,technologies, we face an inherent risk of exposure to the claims of others that we have allegedly violated their intellectual property rights. We cannot assure you that we will not experience any material warranty, product liability or intellectual property claim losses in the futurefuture, or that we will not incur significant costs to defend against such claims. See “–Risks Related to Intellectual Property–If our patents are declared invalid or our technology infringes on the proprietary rights of others, our ability to compete may be impaired”.

The automotive industry continues to experience aggressive pricing pressure from customers. This trend is partly attributable to the major automobile manufacturers’ strong purchasing power. As with other automotive component manufacturers, we are often expected to quote fixed prices or are forced to accept prices with annual price reduction commitments for long-term sales arrangements or discounted reimbursements for engineering work. Price reductions have impacted our sales and profit margins and are expected to continue to do so in the future. While we havein recentlythe past received inflation related pricing concessions from most of our customers, there is no guarantee that this will occur in the future. Our future profitability will depend upon, among other things, our ability to continuously reduce our cost per unit and maintain our cost structure, enabling us to remain cost-competitive. Our profitability is also influenced by our success in designing and marketing technological improvements in automotive safety systems, which helps us offset price reductions by our customers. If we are unable to offset continued price reductions through improved operating efficiencies and reduced expenditures, these price reductions may have a material adverse effect on our business prospects,business, operating results, cash flowsflows, orand financial condition.

We, as with other component manufactures in the automotive industry, ship our products to customer vehicle assembly facilities throughout the world on a “just-in-time” basis for our customers to maintain low inventory levels. Our suppliers (external suppliers as well as our own production sites) use a similar method in providing raw materials to us. However, this “just-in-time” method makes the logistics supply chain in our industry very complex and vulnerable to disruption. Disruptions in our supply chain may result for many reasons, including closures of one of our own or one of our suppliers’ facilities or critical manufacturing lines due to strikes or other labor disputes, mechanical failures, electrical outages, fires, explosions, critical pollution levels, critical health and safety and other working conditions issues (including epidemics and pandemics), natural disasters, war, geopolitical and economic instability, political upheaval, as well as logistical complications due to labor disruptions, weather or natural disasters, acts of terrorism or violence (such as the disruptions in shipping in the Red Sea),violence, mechanical failures, cybersecurity events, and legislation or regulation regarding the transport of hazardous goods. Inflation and pricing pressures have also negatively impacted companies in our supply chain. Additionally, we may experience disruptions if there are newly imposed trade restrictions or delays in customs processing, including if we are unable to obtain government authorization to export or import certain materials, including materials that may be viewed as dangerous such as the propellant used for our inflators. See "–Risks Related to Internal Operations–Tariffs, sanctions, and geopolitical conflicts may disrupt our multi-tier automotive supply chain, constrain access to critical components, and adversely affect our production capabilities and financial performance." As we continue to expand in growth markets, the risk of such disruptions is heightened. The unavailability of even a single small subcomponent necessary to manufacture one of our products, for whatever reason, could force us to cease production of that product, possibly for a prolonged period. Similarly, a potential quality issue could force us to halt deliveries while we validate the products. Even when products are ready to be shipped, or have been shipped, delays may arise before they reach our customer. Also, similar difficulties for other suppliers may force our customers to halt production, which may in turn impact our sales shipments to such customers. When we fail to timelydeliver deliver,timely, we may have to absorb our own costs for identifying and resolving the ultimate problem as well as expeditiously producing and shipping replacement components or products. Generally, we must also carry the costs associated with “catching up,” such as overtime and premium freight. If we are the cause of a customer being forced to halt production, the customer may seek to recoup all of its losses and expenses from us. These losses and expenses could be very significant and may include consequential losses such as lost profits. Where a customer halts production because of another supplier failing to deliver on time, we may not be fully compensated, if at all. Thus, any such supply chain disruptions could severely impact our operations and/or those of our customers and force us to halt production for prolonged periods of time which could expose us to material claims for compensation and have a material adverse effect on our business prospects,business, operating results, orand financial condition.

Our business uses a broad range of raw materials and components in the manufacture of our products, nearly all of which are generally available from a number of qualified suppliers. Our industry may be affected from time to time by limited supplies or price fluctuations of certain key components and materials. Strong worldwide demand for certain raw materials has had a significant impact on prices and short-term availability in recent years. Such price increases have materially increased, and could continue to materially increaseincrease, our operating costs and materially and adversely affect our profit margin,margins, as direct material costs amounted to approximately 55%54% of our net sales in 2024,2025, of which approximately half is therepresents raw material cost portion. Inflation is currently high world-wide and may continue for some time, which could lead to fluctuations in interest rates.costs. Commercial negotiations with our customers and suppliers may not always offset all of the adverse impact of higher raw material, energy, labor, logistics, and commodity costs, including those resulting from tariffs and trade restrictions (including retaliatory tariffs). due to the change in administration in the U.S. CommercialThese negotiations withmay our customers and suppliers mayalso not be successful in the future. Even where we are able to pass price increases alongon to our customer,customers, there may be (i) a lapse of timedelay before we are able tocan do soso, suchrequiring thatus we mustto absorb the cost increase,increase in the interim, and (ii) a negative impact on our relationships with such customers and supplierssuppliers, which may limit our successability into securingsecure future awards from customers and securingor obtain acceptable supplies from suppliers. In addition, no assurancesassurance can be given that the magnitude andor duration of such cost increasescurrent or any future cost increases couldwill not have a larger adverse impact on our profitability andor consolidated financial position than currently anticipated. Furthermore, if raw material costs for raw materials go down,decrease, the price for our products may decreasealso decrease, as wellsuch asprices theare price isoften indexed to the cost of raw materials.material costs. Additionally, various government regulators require companies that manufacture products containing certain minerals and their derivatives that are known as “conflict minerals”, originating from the Democratic Republic of Congo or adjoining countries to perform due diligence and report the source of such materials. There are significant resources associated with complying with these requirements, including diligence efforts to determine the sources of conflict minerals used in our products and potential changes to our processes or supplies as a consequence of such diligence efforts. As there may be only a limited number of suppliers able to offer certified “conflict free” conflict minerals, there can be no assurance that we will be able to obtain necessary conflict free minerals from such suppliers in sufficient quantities or at competitive prices. We may face reputational challenges if we determine that certain of our products contain minerals not determined to be conflict free or if we are unable to sufficiently verify the origins for all minerals used in our products through the procedures we may implement. Furthermore, our customers are also increasingly requiring us to track sustainable sources of certain raw materials, which also requires additional diligence efforts and there can be no assurance that we will be able to obtain these materials in a cost-efficient and sustainable manner. Accordingly, these rules and customer requirements may adversely affect our business prospects,business, operating results, cash flows, orand financial condition.

Our business could be materially and adversely affected if we lostlose any of our largest customerscustomers, lose business from any of our largest customers, or if theyany weresuch customers are unable to pay their invoices

We are dependent on a few large customers with strong purchasing power. This is the result of customer consolidation in the last few decades. In 2024,2025, our top five customers represented around 44% of our consolidated sales, and our largest customer contract accounted for around 4%2% of our consolidated sales. Although business with any given customer is typically split into several contracts (either on the basis of one contract per vehicle model or on a broader platform basis), the loss of business from any of our major customers (whether by lower overall demand for vehicles, cancellation of existing contracts or the failure to award us new business) could have a material adverse effect on our business, resultsoperating results, and financial condition. Additionally, supply chain disruptions experienced by our customers could result in, among others, decreased demand and production or aggressive renegotiation of operations,supplier contracts, all of which could have a material adverse effect on our business, operating results, and financial condition. Similarly, further consolidation of our customers in the future could make us more reliant upon a smaller group of customers for a significant portion of our consolidated sales and negatively impact our bargaining power when contracting with such customers. Customers may put us on a “new business hold,” which would limit our ability to quote or be awarded all or part of their future vehicle contracts if quality or other issues arise in the vehicles for which we were a supplier. This could have a significant negative impact on our order intake. Such new business holds range in length and scope and are generally accompanied by a certain set of remedial conditions that must be met before we are eligible to bid for new business. Meeting any such conditions within the prescribed timeframe may require additional Company resources. A failure to satisfy any such conditions may have a material adverse impact on our operating results and financial resultscondition in the long term. There is a risk that one or more of our major customers may be unable to pay our invoices as they become due or that a customer will simply refuse to make such payments given its financial difficulties. If a major customer enters into bankruptcy proceedings or similar proceedings whereby contractual commitments are subject to stay of execution and the possibility of legal or other modification, or if a major customer otherwise successfully procures protection against us legally enforcing its obligations, it is likely, absent special relief such as having a “preferred status”, that we will be forced to record a substantial loss. Additional information concerning our major customers is included in Note 20,21, Segment Information, ofto the Consolidated Financial Statements in this Annual Report.

Our inability to effectively manage the timing, qualityquality, and costs of new program launches could adversely affect our business, operating results, cash flows, and financial performancecondition

To compete effectively in the automotive supply industry, we must be able to launch new products tothat meet our customers’ timing, performance, and quality standards. At times, we face an uneven number of launcheslaunches, and some launches, for various reasons, may have shortened launch lead times. We cannot provide assurance that we will be able to install and certify the equipment needed to produce products for new programs in time for the start of production, or that the transitioning of our manufacturing facilities and resources to full production for such new programs will not impact production rates or other operational efficiency measures at our facilities. In addition, we cannot provide assurance that our customers will execute on schedule the launch of their new product programs, for which we might supply products. Additionally, asAs a Tier 1 supplier, we must effectively coordinate the activities of numerous suppliers in order to launch programs successfully. Given the complexity of new program launches, especiallyparticularly those involving new and innovative technologies, we may experience difficulties managing product quality, timeliness and associated costs. In addition, new program launches require a significant ramp upramp-up of costs; however, the sales related to these new programs generally aredepend dependent uponon the timing and success of the introduction of new vehiclesvehicle introductions by the Company’sour customers. Our inability to effectively manage the timing, quality and costs of these new program launches could adversely affect our business prospects,business, operating results, cash flows, orand financial condition.

Changes in our product mix may impact our operating results and financial performancecondition

We sell products that have varying profit margins. Our financial performance can be impacted depending on the mix of products we sell during a given period. Our earnings guidance, estimates, and financial targets assume a certain product sales mix as well as a geographic sales mix as many of the growth markets have a lower content per vehicle.CPV. If actual results vary significantly from this projected product and geographic mix of sales, our operating results and financial condition could be negatively impacted.

We are, from time to time, involved in litigation, regulatory proceedings, and commercial or contractual disputes that may be significant. These matters may include, without limitation, disputes with our suppliers and customers, intellectual property claims, shareholder litigation, government investigations, class action lawsuits, personal injury claims, product liability claims, environmental issues, antitrust, customs and VAT disputes, and employmentemployment, and tax issues. In such matters, government agencies or private parties may seek to recover from us very large, indeterminate amounts in penalties or monetary damages (including, in some cases, treble or punitive damages) or seek to limit our operations in some way. The possibility exists that claims may be asserted against us and their magnitude may remain unknown for long periods of time. For example, we are currently in the early stages of a dispute with the Mexican tax authorities in relation to various issues dealing with certain manufacturing activities that occur in Mexico. An adverse result in this or other similar disputes could have a materially negative impact on our operating results and financial condition. These types of lawsuits could require a significant amount of management’s time and attention and a substantial legal liability or adverse regulatory outcome and the substantial expenses to defend the litigation or regulatory proceedings may have a material adverse effect on our customer relationships, business prospects, reputation, operating results, cash flows, and financial condition. No assurances can be given that such proceedings and claims will not have a material adverse impact on our profitability and consolidated financial position or that our established reserves or our available insurance will mitigate such impact.

TheWe Company washave previously been the subject of an investigation by the European Commission (“EC”) regarding possible anti-competitive behavior among certain suppliers to the automotive vehicle industry that was resolved in 2019. TheWe Company isare subject to a civil antitrust lawsuitslawsuit in the UK and Germany filed by certaina customerscustomer with respect to allegations over a decade ago and may be subject to such civil antitrust lawsuits in the future in countries that permit such civil claims, including lawsuits or other actions by our customers. The trial associated with the lawsuit in the UK recently concluded and a ruling in the proceeding is expected imminently. These types of lawsuits require significant management time and attention and could result in significant expenses. Any unfavorable outcomes of such lawsuits could have a material adverse impact on our customer relationships, business prospects, reputation, operating results, cash flows, orand financial condition, and our insurance may not mitigate such impact. See Note 18,19, Contingent Liabilities, to the Consolidated Financial Statements in this Annual Report.

Work stoppages, slow-downs or other labor issues at our customers’ facilities or at our facilities could adversely affect our operationsbusiness, operating results, and financial condition

Because the automotive industry relies heavily on “just-in-time” delivery of components during the assembly and manufacture of vehicles, a work stoppage or slow-down at one or more of the Company’sour facilities could have a material adverse effect on our business. Similarly, if any of our customers were to experience a work stoppage or slow-down, that customer may halt or limit the purchase of our products. Similarly, a work stoppage or slow-down at another supplier could interrupt production at one of our customers’ facilities which would have the same effect. Furthermore, geopolitical instability or conflicts could displace workers or trigger the migration of workers, causing labor shortages in critical areas, which could further disrupt operations. Labor shortages could also increase wages as multiple companies and facilities compete for a shrinking pool of workers. While labor contract negotiations at our facilities historically have rarely resulted in work stoppages, no assurances can be given that we will be able to negotiate acceptable contracts with these unions or that our failure to do so will not result in work stoppages. A work stoppage or other labor disruption at one or more of our facilities or our customers’ facilities could cause us to shut down production facilities supplying these products, which could have a material adverse effect on our business, resultsoperating of operations,results, and financial condition.

Our ability to operate our business and implement our strategies effectively depends, in part, on the efforts of our executive officers and other key employees. In addition, ourOur future success will depend on, among other factors, our ability to attract, develop, and retain other qualified personnel, particularly engineers and other employees with software and technical expertise. The loss of the services of any of our executive officers or other key employees or the failure to attract, develop, or retain other qualified personnel could have a material adverse effect on our business.business, operating results, and financial condition.

Our restructuring, efficiency, and strategic initiatives and capacity alignments include efforts to adjust our manufacturing capacity, direct and indirect labor workforce, and cost structure to meet current and projected operational and market requirements,requirements. includingThese efforts include plant closures, transfer oftransferring sourcing to best costbest-cost countries, consolidation ofconsolidating our supplier base, and standardization ofstandardizing products to reduce our overhead costs and consolidate our operational centers. The successful implementation of our restructuring activities and capacity alignments will involveinvolves sourcing, logistics, technology, and employment arrangements. Because these restructuring, efficiency, and strategic initiatives and capacity alignments can be complex, there may be difficulties or delays in the implementation ofmay anyoccur, suchor the initiatives and capacity alignments or they may not be immediately effective, resulting in an adverse material impact on our performance. In addition, there is a risk that inflation, high-turnoverhigh turnover rates, and increased competition may reduce the efficiencies nowcurrently available in best-cost countries to levels that no longer allow for cost-beneficial restructuring opportunities. Therefore, there can be no assurances that any future restructurings or capacity alignments will be completed as planned or will achieve the desired results. See Note 12,13, Restructuring, to the Consolidated Financial Statements in this Annual Report.

Our ability to generate cash from our operations is highly dependent on automotive sales and LVP, the global economy, and the economies of our important markets. If LVP were to remain on low levels for an extended period of time, we would experience a significantly negative cash flow. Similarly, if cash losses forresulting from customer defaults were to rise sharply, we would experience a negative cash flow. Such negative cash flow could result in our having insufficient funds to continue our operations unless we can procure external financing, which may not be possible. Our access to debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts could be affected by credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors. Our ability to obtain unsecured funding at a reasonable cost is dependent on our credit ratings or our perceived creditworthiness. Our current credit rating could be lowered as a result of us experiencing significant negative cash flows, increasing our indebtedness and leverage, or a dire financial outlook, which may affect our ability to procure financing. We may also for the same, or other reasons, find it difficult to secure new long-term credit facilities, at reasonable terms, when our principal credit facility expires in 2029. Further, even our existing unutilized credit facilities may not be available to us as agreed, or only at additional cost, if participating banks are unable to raise the necessary funds, where, for instance, financial markets are not functioning as expected or one or more banks in our principal credit facility syndicate were to default. As a result, we cannot assure you that we will continue to have sufficient liquidity to meet our operating needs. In the event that we do not have sufficient external financing, we may be required to seek additional capital, sell assets, reduce or cut back our operating activities or otherwise alter our business strategy. Information concerning our credit facilities and other financings is included in Item 7 in this Annual Report in the section headed “Treasury Activities” and in Note 14,15, Debt and Credit Agreements, to the Consolidated Financial Statements in this Annual Report.

Our indebtedness may harm our financial condition and operating results of operations

We periodically review the carrying value of our assets, goodwill and other intangible assets for impairment indicators. If one or more of our customers’ facilities cease production or decrease their production volumes, the assets we carry related to our facilities serving such customers may decrease in value because we may no longer be able to utilize or realize them as intended. Where such decreases are significant, such impairments may have a material adverse impact on our financial results. We monitor the various factors that impact the valuation of our goodwill and other intangible assets, including expected future cash flow levels, global economic conditions, market price for our stock, and trends with our customers. Impairment of goodwill and other identifiable intangible assets may result from, among other things, deterioration in our performance and especially the cash flow performance of these goodwill assets, adverse market conditions and adverse changes in applicable laws or regulations. If there are changes in these circumstances or the other variables associated with the estimates, judgments and assumptions relating to the valuation of goodwill, when assessing the valuation of our goodwill items, we may determine that it is appropriate to write down a portion of our goodwill or intangible assets and record related non-cash impairment charges. In the event that we determine that we are required to write-down a portion of our goodwill items and other intangible assets and thereby record related non-cash impairment charges, our operating results and financial condition and operating results would be adversely affected.

We rely extensively on information technology (“IT”) networks and systems, and those of our third-party service providers, and our global data centers and services provided over the internet to process, transmit and store electronic information, and to manage or support a variety of business processes or activities across our facilities worldwide. In addition, a greater number of our employees are working remotely which may increase cybersecurity vulnerabilities and risk to our IT networks and systems. The secure operation of our IT networks and systemssystems, and those of our third-party service providers, and the proper processing and maintenance of this information are critical to our business operations. We have been, and likely will continue to be, subject to cyber-attacks. Although we seek to deploy comprehensive security measures to prevent, detect, address and mitigate these threats, there has been an increased level of activity, and an associated level of sophistication, in cyber-attacks against large multinational companies. Threat actors, including nation state attackers, could also use artificial intelligence for malicious purposes, increasing the frequencyfrequency, velocity, and complexity of their attacks. The ever-evolving threats mean we and our third-party service providers and vendors must continually evaluate and adapt our respective systems and processes and overall security environment, as well as those of any companies we acquire. There is no guarantee that these measures will be fully implemented, complied with, or effective in safeguarding against all data security breaches,incidents, system compromises or misuses of data. Our security measures may be breachedcompromised due to human or technological error, employee malfeasance, system malfunctions or attacks from uncoordinated individuals or from organized threat actors groups using sophisticated and targeted measures known as advanced persistent threats, directed at theus, Company, itsour products, itsour customers, itsour third-party service providers, and/or other entities with whom we do business. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Disruptions and attacks on our IT systems or the systems of third parties storing our datadata, or employee malfeasance or human or technological errorerror, could result in the unauthorized access, misappropriation, loss, destruction or corruption of our critical data and confidential or proprietary information, personal information of our employees, the leakage of our or our customers’ confidential information, and/or the improper use of our systems and networks, production downtimes and both internal and external supply shortages, which could have a material adverse effect on our resultsoperating ofresults. operations.Such Itdisruptions or attacks may also result in the theft of intellectual property or other misappropriation of assets, or otherwise compromise our confidential or proprietary information and materially disrupt our operations. The potential consequences of a material cybersecurity incident include reputational damage, damaged customer relationships, loss of revenue, lower order intake in the future, theft of intellectual property, litigation with third parties, diminution in the value of our investment in research, development and engineering, diversion of the attention of management away from the operation of our business and increased cybersecurity protection and remediation costs, legal claims and liability, regulatory scrutiny, sanctions, fines or penalties (which may not be covered by our insurance policies), negative publicity, release of sensitive and/or confidential information, or increases in operating expenses, or lost revenues which in turn could adversely affect our competitiveness and resultsoperating of operations.results. To the extent that any disruption or security breachincident results in aan unauthorized access, misappropriation, loss, destruction or corruption of our customer’s information, it could affect our relationships with our customers, create significant expense for us to investigate and remediate any damage, lead to claims against the Companyus and ultimately harm our business, strategy, result of operations, or financial condition. In addition, we may be required to incur significant costs to protect against damage caused by these disruptions or security breachesincidents in the future. In the event that our systemssystems, or those of our third-party service providers, are breachedcompromised or attacked, we may also suffer an outage, failure, or unavailability of data or information technology systems, and interruptions to our business operations while such breachincident or attackedattack is being remedied; this may impact data or systems operated by us or by our third-party service providers. In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with new and constantly changing requirements applicable to our business, compliance with those requirements could result in additional costs. Furthermore, our technology systems and those of our third-party service providers are vulnerable to damage or interruption from natural disasters, power loss and telecommunication failures. We continuously seek to maintain a robust program of information security and controls, however, any future significant compromise or breach of our data security, whether external or internal, or misuse of customer, associate, supplier or Company data, could result in significant costs, lost sales, fines, lawsuits, and damage to our reputation.

We rely on third parties to provide or maintain some of our IT systems, data centers and related services and do not exercise direct control over these systems. Despite the implementation of security measures at third party locations, these IT systems, data centers and cloud services are also vulnerable to security breachesincidents or other disruptions. Additionally, we and certain of our third-party vendors,service providers collect and store personal information in connection with human resources operations and other aspects of our business. While we obtain assurances that any third parties to whom we provide data will protect this information and, where we deem appropriate, monitor the protections they employ, there remains a risk that the confidentiality and security of data held by us or by third parties may be compromised, exposing us to liability for such breach.liability.

Increased publicPublic awareness and concern regarding global climate change may result in more regional and/or national requirements to reduce or mitigate the effects of greenhouse gas emissions. In addition, our shareholders and customers alsomay, to varying levels, expect us to reduce our greenhouse gas emissions. There continues to be a lack of consistent climate legislation, which creates economicCurrent and regulatory uncertainty. Anyany future regulations aimed at mitigating climate change may negatively impact the prices of raw materials and energy, as well as the demand for certain of our customer’s products which could in turn impact demand for our products and impactadversely affect our operating results ofand operations.financial condition. The costs of compliance and any changes to ourcomply operations mandated bywith new or amended laws, may be significant. We may also face unexpected delays in obtaining permitslaws and approvals required by such laws in connection with our manufacturing facilities, which would hinder our operation of these facilities. Furthermore, any violations of these lawslaws, which may result in substantial fines and penalties, remediation costs, third party damages, or a suspension or cessation of our operations.operations, Wemay alsobe face physical and transition risks from climate change.significant. The manifestations of climate change, such as extreme weather conditions or more frequent extreme weather events, including wildfires, flooding, water stress and extreme heat, could also disrupt our operations, damage our facilities, disrupt our supply chain, including our customers or suppliers, impact the availability and cost of materials needed for manufacturing or increase insurance and other operating costs. As a result, severe weather or a natural disaster that results in a prolonged disruption to our operations, or the operations of our customers or suppliers, could have a material adverse effect on our business, operating results, cash flows orand financial condition.

Our goals, targetstargets, and ambitions related to sustainability and emissions reduction, and our public statements and disclosures regarding them, may, from time to time, result in additional considerations or expectations and expose us to numerous risks

We have developed, and will continue to develop and set, goals, targets, ambitions and other objectives related to sustainability matters, including our net-zero emission targets both for ourselves and our supply chain. Some of these are based on our internal scenario analysis, which may not prove to be accurate and carries inherent uncertainties. Statements related to these goals, targets, ambitions and objectives reflect our current plans and do not constitute a guarantee that they will be achieved. Our efforts to research, establish, accomplish, and accurately report on these goals, targets, and objectives expose us to numerous operational, reputational, financial, legal, and other risks. Additionally, greenhousethere gascan emissions,be particularno emissionsassurance that comewe will be able to secure pricing from individualsour customers that reflects any increased costs of developing and entitiesmanufacturing upsustainable products. If we are unable to recover these costs, our business, operating results, cash flows, and downfinancial the value chain (otherwise known as Scope 3 emissions), are very difficult to estimate and our estimatescondition may be materiallyadversely different than actual emissions. Additionally, accepted methodologies or regulatory requirements for estimating emissions, particularly Scope 3 emissions, continue to evolve. The manner in which we estimate and disclose Scope 3 emissions may differ from other companies and may be different than future regulatory requirements, and currently, we do not include downstream Scope 3 emissions in our targets and ambitions. If future governmental regulations require us to modify the basis of our Scope 3 emissions disclosure, our historically disclosed Scope 3 emissions may change materially. Our ability to achieve any stated goal, target, ambition or objective, including with respect to emissions reduction, is subject to numerous factors and conditions, some of which are outside of our control.affected.

Our business may face increased scrutinyinterest from investors and other stakeholders related to our sustainability activities,initiatives, including the goals, targets, and objectives that we announce, and our methodologies and timelines for pursuing them. If our sustainability practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our reputation, our ability to attract or retain employees, and our attractiveness as an investment or business partner could be negatively affected. Similarly, our failureFailure or perceived failure to pursue or fulfill oursuch sustainability-focused goals, targets, ambitions and objectives, to comply with ethical, environmental, or other standards, regulations, or expectations, or to satisfy various reporting standards with respect to these matters, within the timelines we announce, or at all,initiatives could adversely affect our business or reputation, as well as expose us to government enforcement actions and private litigation.

We currently conduct operations in various countries and jurisdictions, including locating certain of our manufacturing and distribution facilities internationally, which subjects us to the legal, political, regulatory and social requirements and economic conditions in these jurisdictions. Some of these countries are considered growth markets and emerging markets. International sales and operations, especially in growth markets, subject us to certain risks inherent in doing business abroad, including: exposure to local economic conditions; unexpected changes in laws, regulations, trade, or monetary or fiscal policy, including interest rates, foreign currency exchange rates, and changes in inflation rates; foreign tax consequences; inability to collect, or delays in collecting, value-added taxes and/or other receivables associated with remittances and other payments by subsidiaries; exposure to local political turmoil and challenging labor conditions; changes in general economic and political conditions in countries where we operate, particularly in emerging markets; expropriation and nationalization; enforcing legal agreements or collecting receivables through foreign legal systems; wage inflation; currency controls, including lack of liquidity in foreign currency due to governmental restrictions, trade protection policies and currency controls, which may create difficulty in repatriating profits or making other remittances; compliance with the requirements of an increasing body of applicable anti-bribery laws; reduced intellectual property protection in various markets; investment restrictions or requirements; and the imposition of producttariffs tariffsand duties, and the burden of complying with a wide variety of international and U.S. export control and economic sanctions laws. TheWe Company isare subject to taxation in the U.S. and numerous foreign jurisdictions. The Organization for Economic Co-operation and Development (“OECD”) continues its base erosion and profit shifting (“BEPS”) project begun in 2015 with new proposals for a global minimum tax, further development of a coordinated set of rules for taxation and the allocation of taxing rights between jurisdictions. These proposals, if adopted by countries in which we operate, could result in changes to tax policies, including transfer pricing policies, which could ultimately impact our tax liabilities.

Changes in tax laws or policies by the U.S. or foreign jurisdictions could result in a higher effective tax rate on our worldwide earnings, and any such change could have a material adverse effect on our business prospects,, operating results, cash flows, operating results and financial condition.

Our international operations also depend upon favorable trade relations between the countries where we manufacture and sell products and those foreign countries in which our customers and suppliers have operations. The current U.S. presidential administration has created uncertainty about the future relationshiprelationships between the U.S. and certain of its trading partners, including with respect to the trade policies and agreements, treaties, government regulationsregulations, and the tariffs that could apply to trade between the U.S. and other nations. For example, in 2025 the U.S. administration hasimposed indicatedtariffs thataffecting it intendsimports to imposethe tariffsU.S. from nearly every country by executive action adopted and modified without predictable timelines, creating increased operational and financial exposure for companies dependent on importscross-border fromtrade. Mexico,Other Canada,countries, andincluding the European Union. In February 2025, additional tariffs have been applied to imports from China and ChinaChina, responded with retaliatory tariffs onor, like the importEuropean ofUnion, Americanannounced goods.it Changesis inconsidering nationalretaliatory policy, other governmental action related to tariffs or international trade agreements, changes in social, political regulatory, and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where the Company currently manufactures and sells products, and any resulting negative sentiments towards the Company as a result of such changes could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on our cash flows, operating results and financial condition.tariffs.

Increasing our manufacturing footprint in the growth markets and our business relationships with automotive manufacturers in these markets are particularly important elements of our strategy. As a result, our exposure to the risks described above may be greater in the future, and our exposure to risks associated with developing countries, such as the risk of political upheaval and reliability of local infrastructure, may increase. It could also impact importing certain foreign-produced vehicles into the U.S. Changes in national policy or continued uncertainty could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on our business, operating results, cash flows, operating results and financial condition. Additionally, such trade restrictions or material increases in tariffs could impact our targets, earnings guidance, and estimates. The ultimate impact of any tariffs, including any related responses, are uncertain and will depend on various factors, including if any tariffs are ultimately implemented, the timing of implementation, and the amount, scope, and nature of the tariffs. Any or all of these actions could adversely affect our business, financial condition and cash flows. Increasing our manufacturing footprint in the growth markets and our business relationships with automotive manufacturers in these markets are particularly important elements of our strategy. As a result, our exposure to the risks described above may be greater in the future, and our exposure to risks associated with developing countries, such as the risk of political upheaval and reliability of local infrastructure, may increase. It could also impact importing certain foreign-produced vehicles into the U.S. Changes in national policy or continued uncertainty could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on our cash flows, operating results and financial condition.

Significant changes in the United States Mexico Canada Agreement ("USMCA") could adversely affect our financial performance

The U.S., Mexico and Canada entered into the USMCA, a successor to the North American Free Trade Agreement (NAFTA),Agreement, effective as of July 1, 2020. The USMCA changed the automotive rules of origin that dictate what percentage of an automobile must be built from parts that originated from countries in the NAFTAUSMCA region.territory. The rules require that at least 75% of parts be made in North America and that 40-45% of an automobile must be made by workers earning at least $16 an hour. Reflective of the automotive industry, our vehicle parts manufacturing facilities in the U.S., Mexico and Canada are highly dependent on duty-free trade amongst the U.S., Mexico, and Canada. The criticality of USMCA willeligibility undergoof products involved in such trade has increased significantly as a result of the exemption such eligibility currently affords from additional tariffs imposed against Canada and Mexico by executive orders in 2025. The USMCA is undergoing a joint review in 2026. If the USMCA is earlier terminated, or otherwise substantially amended, it could have a material adverse impact on our financial performance. The imposition of customs duties on imports into the U.S., MexicoMexico, or Canada could negatively impact our financial performance.

Due to our global operations, we are subject to many laws governing international relations (including, but not limited to, the Foreign Corrupt Practices Act, and other anti-bribery regulations in foreign jurisdictions where we do business), which prohibit improper payments to government officials and restrict where and how we can do business, what information or products we can supply to certain countries and what information we can provide to authorities in governmental authorities. We also export components and products that are subject to certain trade-related U.S. laws,trade regulations, including the U.S. Export Administration ActRegulations and various economic sanctions programs administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control. Although we have procedures and policies in place that should mitigate the risk of violating these laws, there is no guarantee that they will be sufficiently effective. If and when we acquire new businesses, we may not be able to ensure that the pre-existing controls and procedures meant to prevent violations of these laws were effective, and violations may occur if we are unable to timely implement corrective and effective controls and procedures when integrating newly acquired businesses. Any allegations of noncompliance with these laws could harm our reputation, divert management attention and result in significant expenses, and could therefore materially harm our business prospects,business, operating resultsresults, and financial condition.

We operate in the automotive supply market throughout Asia including the highly competitive markets in China, South Korea, and India. In each of these markets we face competition from both international and smaller domestic manufacturers. Due to the significance of the Asian markets for our profit and growth, we are exposed to risks in China, South Korea, and India. We anticipate that additional competitors, both international and domestic, may seek to enter the Chinese, South Korean, and/or Indian markets resulting in increased competition. Increased competition may result in lower sales volumes, price reductions, reduced margins and our inability to gain or hold market share. There have been periods of increased market volatility and moderation in the levels of economic growth in China, which resulted in periods of lower automotive production growth rates in China than those previously experienced. Our business in Asia is sensitive to economic and market conditions that drive automotive sales volumes in China, South Korea, and India and may be impacted if there are reductions in vehicle demand in those markets. There are also trade and political tensions between China and other countries in the western world. If we are unable to maintain our position in the Asian markets, the pace of growth slows, or vehicle sales in these markets decrease, our business prospects,business, operating resultsresults, and financial condition could be materially adversely affected.

As a result of our global presence, a significant portion of our revenues and expenses are denominated in currencies other than the U.S. dollar. We are therefore subject to foreign currency risks and foreign exchange exposure. Such risks and exposures include: transaction exposure, which arises because the cost of a product originates in one currency and the product is sold in another currency; revaluation effects, which arise from valuation of assets denominated in other currencies than the reporting currency of each unit; translation exposure in the income statement, which arises when the income statements of non-U.S. subsidiaries are translated into U.S. dollars; translation exposure in the balance sheet, which arises when the balance sheets of non-U.S. subsidiaries are translated into U.S. dollars; and changes in the reported U.S. dollar amounts of cash flows. We cannot predict exchange rate volatility or the extent of its impact on our future financial results. We typically denominate foreign transactions in foreign currencies to achieve a natural hedge. However, a natural hedge cannot be achieved for all our currency flows; therefore, a net transaction exposure remains within the group. The net exposure can be significant and creates a transaction exposure risk for theus. Company.We The Company doesdo not hedge translation exposure. However, we do engage in foreign exchange rate hedging from time to time related to foreign currency transactions. For additional information, see Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk - Currency risks.

Changes in legislative, regulatory, or industry requirements or in competitive technologies may render certain of our products obsolete or less attractive to our customers. We currently license certain proprietary technology to third parties and, if such technology becomes obsolete or less attractive, those licensees could terminate our license agreements, which could adversely affect our resultsoperating of operations.results. Our ability to anticipate changes in technology and regulatory standards and to successfully develop and introduce new and enhanced products on a timely basis will be a significant factor in our ability to remain competitive. We cannot provide assurance that we will be able to achieve the technological advances that may be necessary for us to remain competitive or that certain of our products will not become obsolete. We are also subject to the risks generally associated with new product introductions and applications, including lack of market acceptance, delays in product development and failure of products to operate properly. As part of our business strategy, we may from time to time seek to acquire businesses or assets that provide us with additional intellectual property. We may experience problems integrating acquired technologies into our existing technologies and products, and such acquired intellectual property may be subject to known or contingent liabilities such as infringement claims.

We are subject to various federal, state, local and foreign laws and regulations, including those related to the requirements of environmental, occupational health and safety, financial, and other matters.requirements. We cannot predict the substance or impact of pending or future legislation or regulations, or the application thereof. The introduction of new laws or regulations orregulations, changes in existing laws or regulations, or thechanges interpretationsin thereof,their interpretations, could increase the costs of doing business for usus, our customers, or our customers or supplierssuppliers, or restrict our actions and adversely affect our business prospects,business, operating results, cash flowsflows, orand financial condition. Our operations are subject to environmental and safety laws and regulations governing, among other things, emissions to air, discharges to waters and the generation, handling, storage, transportation, treatment and disposal of waste and other materials. The operation ofOperating automotive parts manufacturing facilities entails risks in these areas, and we cannot assure that we will not incur material costs or liabilities as a result. Additionally, environmental laws, regulations, and permits and the enforcement thereof change frequently and have tended to become increasingly stringent over time, which may necessitate substantial capital expenditures or operating costs or may require changes of production processes. Although we have no known pending material environmental issues, there is no assurance that we will not be adversely impacted by any environmental costs, liabilities, or claims in the futurefuture, eitherwhether under presentexisting laws and regulations or those that may be adopted or imposed in the future. Our costs, liabilities, and obligations relating to environmental matters may have a material adverse effect on our business, operating results, cash flows, orand financial condition. Our facilities in the U.S. are subject to regulation by the Occupational Safety and Health Administration (“OSHA”), which regulatesoversees the protection of theworker health and safety of workers.safety. In addition, the OSHA hazard communication standard requires thatus weto maintain information about hazardous materials used or produced in our operations and that weto provide this information to employees, state and local governmental authorities and residents. We are also subject to occupational safety regulations in other countries. Our failure to comply with government occupational safety regulations, including OSHA requirements, or general industry standards relating to employee health and safety, keep adequate recordsrecordkeeping, or monitormonitoring occupational exposure to regulated substances could expose us to liability, enforcement,enforcement andactions, fines and penalties, and could have a material adverse effect on our business, operating results, cash flows, orand financial condition. Although we employ safety procedures in the design and operation of our facilities, there is a risk that an accident or injury to one of our employees could occur in one of our facilities. Any accident or injury to our employees could result in litigation, manufacturing delays and harm to our reputation, which could negatively affect our business, operating results, and financial condition.

Government vehicle safety regulations are a key driver in our business. Historically, these regulations have imposed ever moreincreasingly stringent safety regulationsrequirements for vehicles. SafetySuch regulations have a positive impact on driver awareness and acceptance of automotive safety products and technology. These moreMore stringent safety regulations often require vehicles to haveinclude more safety content per vehicleCPV and more advanced safety products, which has thus been a driver of growth in our business. However, these regulations are subject to change based on a number of factors that are not withinoutside our control, including new scientific or medical data, adverse publicity regarding the industry recalls and safety risks ofassociated with airbags or seatbelts (for instance,example, risks to children and small adults), domestic and foreign political developments or considerations, and litigation relating to our products and our competitors’ products. Changes in government regulations in response to these and other considerationsfactors could have a severe impact on our business. Although we believe that over time safety will continue to be a regulatory priority,priority over time, if government priorities shift and we are unable to adapt to changing regulations, our business may suffer material adverse effects. TheOur regulatory obligation of complying with safety regulationsobligations could increase as federal and local regulators impose more stringent compliance and reporting requirements in response to product recalls and safety issues in our industry. We are subject to existing stringent requirements under the National Traffic and Motor Vehicle Safety Act of 1966 (the “Vehicle Safety Act”), including a duty to report,report safety defects with our products, subject to strict timing requirements, safety defects with our products.requirements. The Vehicle Safety Act imposes potentially significant civil penalties for violationsviolations, including the failure to comply with such reporting actions.obligations. We are also subject to the existing U.S. Transportation Recall Enhancement, Accountability and Documentation (“TREAD”) Act, which requires equipment manufacturers, such as Autoliv, to comply with “Early Warning” reporting requirements by reportingproviding NHTSA with certain informationinformation, to NHTSA such as:including information related to defects or reports of injury related to our products. The TREAD Act imposes criminal liability for violating such requirementsviolations if a defect subsequently causes death or bodily injury. In addition, the Vehicle Safety Act authorizes NHTSA to require a manufacturer to recall and repair vehicles that contain safety defects or fail to comply with U.S. federal motor vehicle safety standards. Sales into foreign countries may be subject to similar regulations. Due to the record recall of airbag inflators of one of our competitors, NHTSA has become more active in requesting information from suppliers and vehicle manufactures regarding potential product defects.

Changes in, or changes in the application of, U.S. or foreign tax laws, regulations or accounting principles with respect to matters such as tax base, tax rates, transfer pricing, dividends and restrictions on certain forms of tax relief or limitations on favorable tax treatment could affect the calculation of our income taxes and other tax liabilities, our effective tax rate, and the carrying value of our deferred tax assets. Our annual tax rate is based on our income and the tax laws in the jurisdictions in which we operate. Because of our global operations we face uncertainties and judgments in the application of complex tax regulations in a multitude of jurisdictions. Significant judgment and estimation are required in determining our effective tax rate and in evaluating our tax positions, in many cases where the ultimate tax determination is uncertain. Although we believe that our tax estimates are reasonable, the final determination of our tax liability may be different from what is reflected in our historical income tax provisions and accruals. We are regularly examined by tax authorities around the world and in a number of jurisdictions, we are currently under examination, which inherently creates uncertainty. Although we periodically assess the likelihood of adverse outcomes, negative or unexpected results from one or more of such reviews and audits, including any related interest or penalties imposed by governmental authorities, could increase our effective tax rate and adversely impact our operating results, cash flowsflows, orand financial condition. For example, we are currently in the early stages of a dispute with the Mexican tax authorities in relation to various issues dealing with certain manufacturing activities that occur in Mexico. An adverse result in this or other similar disputes could have a materially negative impact on our financial results. The effective tax rates used for interim reporting are based on our projected full-year geographic earnings mix and take into account projected tax costs on intercompany dividends from lower tier subsidiaries. Changes in currency exchange rates, earnings mix among taxing jurisdictions, or the ability of our subsidiaries to pay dividends could impact our reported effective tax rates, or cause fluctuations in the tax rate from quarter to quarter. Certain anti-trust judgments or settlements may not be tax deductible, which could have a material negative impact to our annual tax rate. A number of other factors may also increase our effective tax rate, which could have an adverse impact on our profitability and operating results. Due to our numerous foreign operations, our tax rate may be impacted by our global mix of earnings if our pre-tax income is lower than anticipated in countries with lower statutory tax rates and/or is higher than anticipated in countries with higher statutory tax rates. Based on U.S. regulatory rules,GAAP, we do not record current or deferred tax liabilities on permanent investments in our foreign subsidiaries. See Note 5, Income Taxes, to the Consolidated Financial Statements in this Annual Report.

Cost inflation moderated but remains somewhat elevated, especially for labor ContinuedGrowth growthimpacted aboveby LVPLVP, despiteshifting unfavorableOEM LVPlandscape mixand developmentsafety content per vehicle Order intake impacted by developmentsshifts in technology, geopoliticscustomer landscape and customer landscape.geopolitics.

20242025 saw global LVP declineincrease by around 1.2%3.9% (according to S&P Global January 20252026). Our sales to customers are based on production schedule order quantities and delivery dates that are communicated to us by our customers, which we refer to as “call-off” plans. WeDespite industry challenges such as chip shortages related to the Nexperia situation and the tariffs imposed in the beginning of 2025, which caused uncertainties regarding costs in the industry, we saw an improvement in call-off volatility in 2024, especially in the second half year.2025. This improvement supported our improvement in operating efficiency and productivity, including a significant reduction in direct workforce. However, customer call-off volatility increased in the fourth quarter and remained higher than pre-pandemic levels, and low customer demand visibility and changes to customer call-offs with short notice still had a negative impact on our production efficiency and profitability. Geopolitical uncertainties could continue to create a challenging operating environment. We also see a likelihood that there could be new or increased tariffs or other related trade restrictions imposed in 2025 that may impact our operations. We continue to closely monitor the situation and are prepared to remain agile in responding to any such developments.

Cost pressures from labor, in our own operations and related to our suppliers' labor costs, had a negative impact on our profitability in 2024.2025. Most of the inflationary cost pressure was offset by customer price and other compensations. Changes in raw material costs had a limited impact on our profitability in 2024.2025. The Company expects only limited raw material price changesimpact also in 2025.2026. We also expect continued cost pressure from inflation relating mainly to labor, including increased labor costs for our suppliers, especially in Europe and the Americas. The Company continues to execute on productivity and cost reduction activities to offset these cost pressures, and we continue to seek inflation compensation from our customers. The Companycontinued believesuncertainty price adjustments will gradually offsetregarding the cost inflation, with limited positive effects inof the first quartertariffs and gradualtrade improvementrestrictions asmay thelead yearto progresses.a more adverse inflation environment.

GROWTH IMPACTED BY LIGHT VEHICLE PRODUCTIONPRODUCTION, SHIFTING OEM LANDSCAPE AND SAFETY CONTENT PER VEHICLE

The most important driver for Autoliv’s sales is the LVP. In 2024,2025, global LVP declinedgrew by 1.2%.3.9%.

The increase in LVP in China of 4.2%10% was significantly more than what was expected in the beginning of the year, driven mainly by a multitude of successful launches of new models by domestic Chinese OEMs,OEMs especiallyand BYD.in particular by increased exports, mainly to Asian markets. The LVP decline of 4.7%1.0% in Europe was impacted by affordability issues and technology uncertainties. The LVP decline of 0.5% in North America was impacted by the EV market development, U.S. tariffs and growing consumer uncertainty, Japan increased by 1.8%, mainly impacted by domestic demand and US exports, supplemented by Japanese OEM production repatriation. LVP wasin mainlyIndia increased by 7.4%, driven by vehiclereduced inventorysales corrections.tax Japanon declinedcars byand 8.8%multiple impacted bynew model homologation issues.launches.

The different LVP growth rates for different regions in 20242025 was dilutive to global safety content per vehicle (CPV), as LVP in several high CPV regions declined while LVP increased in some lower CPV regions. The highest CPV region is North America, and its share of global LVP declined by 0.2pp0.5pp to 16.2%.15.5%. The second highest CPV region is Europe, and its share of global LVP declined by 0.7pp,1.0pp, to 19.6%.18.7%. TheIndia, a major region with the lowest major CPV region is India,CPV, which saw its share of LVP increase from 6.1%6.5% to 6.5%.6.7%. CPV in China is below the global average, and China’s share of global LVP increased from 32.0%33.7% to 33.7%.35.7%. Japan’s share decreased to 8.9%8.7% from 9.7%.8.9%. Additional dilution to global CPV came from the difference in growth within China, where lower CPV models and segments grew strongly while higher CPV models and segments growth was limited or negative. LVP growth for Domestic Chinese OEMs with typically lower CPV was 18%16% compared to global OEMs with typically higher CPV saw LVP decline by 9.5%.1.3%. Combined with the regional growth differences, we estimate this shift in LVP mix contributed negatively to our sales growth by between 2 to 3 pp. The Company estimates that its global market share decreasedwas fromunchanged around 45% in 2023 toat around 44% in 2024.2025 The main reasons for this change are the difference in regional LVP growth outlined above and that component sales, which is growing fast, especiallycompared to BYD, is not part of market share calculation.2024.

Due to more stringent crash test rating requirements,requirements by institutes such as Euro NCAP, increased government regulations and increasing consumer demand for more safety in emerging markets, the Company sees vehicle manufacturers installing more airbags and more advanced seatbelt systems in vehicles. This generally takes place when new models are introduced. The safety standards of vehicles are increasing in China, India, and other growth markets, partially due to new government regulations and crash test rating programs. This is supporting higher installation rates of airbags and more advanced seatbelts, impacting CPV positively. Commercial customer recoveries compensating for increased labor costs and tariffs also added to CPV in 2024,2025, partly offset by negative effects from continued productivity related pricing pressure from vehicle manufacturers. CPV increased in Japan,India, South America, South Korea, Europe and India,North America, was unchanged in NorthJapan Americaand whileChina itand decreased in ChinaOther due to the changes in LVP mix outlined above.Asia. The changes in regional and model mix diluted global CPV by 2 to 3pp leading to a global CPV that was unchanged compared to 2023.2024. TogetherThis withcontributed the positive pricing and the execution of the Company's strong order book, this supportedto an organic growth (Non-U.S. GAAPNon-GAAP measure) of around 1.6pp3.4% abovecompared to global LVP growth inof globalaround LVP.3.9%. The average global safety CPV (airbags, pedestrian safety, seatbelts, and steering wheels) amounted to around $260$268 in 2024.2025.

The past several years’ high order intake share has resultedsupported ina the Company'sstrong sales development outperformingover the underlying LVP significantly.time. In the past 5 years, the Company's organic sales development outpaced global LVP betweenon average by around 2 and 94.3 percentage points every year.points. During 2024,2025, growth was positively affected through recent launches of several new models, including SubaruHonda Forester,Passport, Ford Expedition, Hyundai SantaPalisade, Fe,Onvo NissanL90, Kicks,Mercedes DaciaCLA, Duster,Citroen ToyotaC3 Landcruiser, Zeekr 7zAircross and ToyotaOpel 4Runner.Frontera.

The Company estimates that the sales tofor Electric Vehicles (not including PHEVs) amounted to around $1.4$1.7 billion in 2024.2025.

ORDER INTAKE ADDINGIMPACTED TOBY ANSHIFTS ALREADYIN STRONGTECHNOLOGY, CUSTOMER BASELANDSCAPE AND GEOPOLITICS

The Company's order intake in 2024,2025, with high win rates for new platforms with both new and traditional OEMs as well as for both EV and ICE platforms, added tosupports the Company's already strong base, which includes supplying products to more than 1,3001,400 vehicle models and around 100 car brands. The order intake in 20242025 supports the Company's ability to defend its around 45%44% sales market share in the near and medium term. For several years, the automotive industry facehas somefaced key trends that impactsimpact the industry, notably changes in technologies as well as geographic growth differencesdifferences, with the emergence of new automakers arebeing particularly visible in China. Autoliv havehas therefore increasingly focused resources on developing new products and tostrengthening strengthen ourits position with new automakers to capture the growth opportunities that comescome with these changes. This includes long termlong-term development agreements with several new automakers in China in recent yearsyears, as well as increased investments in capacity and capabilities in India. The order intake from new automakers, mainly in China and North America,China, accounted for nearlyaround 1/3 of our total order intake in 2024.2025. We won multiple awards supportingtied new market- andto industry trends likesuch foldableas steeringautonomous wheelsdriving. These include solutions that protect occupants in reclined seating positions, addressing critical safety risks in next‑generation interiors. We strengthened our Mobility Safety Solutions business by winning new orders for self-drivingour vehiclesadvanced includingPyro newSafety typesSwitch, supporting the growing segment of driver1,000‑volt electric vehicles. We continued to expand our safety offering in India with advanced systems such as seat‑cushion airbags thatand deploysfront‑center fromairbags. theWe dashboardlicensed orour ceilingHuman TheBody 2024Model ordersolution intaketo includedour highfirst win rates with new automakers.customer. In China, the Company estimates that around 60%50% of order intake in 20242025 was with domestic Chinese OEMs, which supports our expectation that domestic OEMSOEMs in China will continue to increase itstheir share of the Company's sales in China in 2025.2026. New order intake is defined as the sales value of awards for future business,business received within that year. The lifetime value is calculated using detailed assumptions of price and volumes over the years of production and the exchange rates prevailing at the time of receiving the order.

In 2024,2025, OEMs sourcing of new business was at thea lowestlow level since 2018 for the industry, as OEMs are reconsidering certain future product offerings due to geopoliticaltechnological and technologicalgeopolitical uncertainties.uncertainties, including uncertainties regarding costs for tariffs. The Company's order intake share for 20242025 continued on a high level. Even so, the low level of OEM sourcing activity in 20242025 resulted in a loweran order intake in 20242025 forthat was on the Company.same low level as in 2024. The estimated life-time sales for all orders booked in 20242025 is around $7.4$7.7 billion, compared to around $11.8$7.4 billion in 2023.2024. As sourcing of several large platforms were pushed into 2025,2026, we expect a rebound of OEM sourcing activity and Autoliv order intake in 2025.2026.

STRATEGIC INITIATIVES AND STRUCTURAL IMPROVEMENTSINITIATIVES

2024The 2025 light vehicle market was impacted by a technological and geopolitical uncertaintiesuncertainties, with continued highelevated customer call-off volatility and inflationary pressure on costs for labor. In response, Autoliv management continued to implement strict cost control measures, as well as initiatingexecute significant structural cost reduction measures. In June 2023, the Company communicated a cost reduction framework whichthat included the intent to reduce ourits indirect headcount by up to 2,000, and to improve direct labor productivity equivalent to a reduction of up to a 6,000 direct workforce reduction.positions. Based on the intended indirect workforce reductions, the Company estimates that thetotal annual cost reductions will amount to around $135$130 million in total annual savings when fully implemented, with aroundapproximately $50 million in savings recorded in 2024, which is expected to increaseincreasing to around $100 million in 2025 and the remaining amount expected in 2026 and 2027. At the end of 2025, around 1,600 of the planned indirect reductions had been completed.

The provision, net of reversals, for restructuring activities in 20242025 amounted to $8 million compared to $18 million compared to $(210) million in 2023.2024. As of December 31, 2024,2025, the Company had $151$82 million reserved in its balance sheet related to restructuring compared to $213$151 million last year. For more information, see Note 12,13, Restructuring, to the Consolidated Financial Statements included herein.

In addition to the structural improvements outlined above, the Company continues to implement the strategic initiatives to improve the efficiency of its value chain from end to end, not least through the Autoliv Production System and increased digitalization and automation. With several hundred projects in implementation or undergoing development, theThe Company has a high pace in the planning and implementation of the strategic initiatives and structural improvements.initiatives. These initiatives are key drivers to the Company's targets and building the foundation to continue to create shareholder value.

Pricing pressure is an inherent part of the automotive supplier business. Price reductions are generally higher on newer products with strong volume growth compared to older products, where both the possibilities to re-design the product to reduce costs and market growth are less. Price reductions can also depend on the business cycle and raw material price development. For the five-year period 2017-2021, the Company estimates the average reduction of product prices on existing programs to have been in the range of around 2-4% annually. In 2022, the pricing environment changed to some extent due to high raw material price and cost increases, which led to renegotiations with customers regarding commercial terms. These discussions resulted in a net positive price development, gradually implemented throughout the year. This was also the case in 2023, and for 2024 as well, albeit at a lower level.level as inflation moderated. In 2025, inflation moderated further, as did customer compensations for excess inflation. Customer recoveries for increased tariff costs impacted net sales positively in 2025.

The Company's productivity improvement targettarget, measured as labor minutes per unit, is to achieve at least 8% savings per year. This is an increase from previous target of 5% savings per year. The increase reflects mainly increased opportunities related to advances in digitalization and automation, including machine learning and AI. To meet this target, Autoliv has developed a set of strategies to reduce costs in manufacturing:

Autoliv One Product One Process (1P1P) strategy focuses on product and process standardization and reducing cost and complexity. The 1P1P strategy, combined with initiatives to reduce costs for components from external suppliers, ensures that the Company continuously optimizeoptimizes its supply base footprint, consolidateconsolidates purchase volumes to fewer suppliers, improveimproves productivity in the Company's supply chain, standardizestandardizes components and redesign its products.

Strategic Initiatives, including Automation, Digitalization, Machine Learning and AI, Supply Chain Management Effectiveness and RD&E Effectiveness.

The Company's historichistorical experience is that theits continuous improvement strategies have enabled productivity improvementimprovements at or above its historic target of 5%. However, the Company hadhas not achieved its 5% productivity target since the COVID-19 pandemic in 2020, due to the related decline in LVP in 2020 and the high volatility in customer call-offs in 2021, 2022 and 20232023, driven by the industry wide supply chain instability, especially for semiconductors. In 2024, however, the Company achieved its 5% productivity target, as gradual improvement in customer call -offcall-off volatility enabled an improved operational efficiency. In 2025, the Company achieved its new target of 8% labor minutes per unit productivity.

The Company foresees opportunities for further productivity on organic sales growth and increased call-off stability when global supply chains havecontinue stabilizedto atstabilize further to pre-pandemic levels, but also from increasing use of automation in its assembly for lean manufacturing processes. Additionally, automated cells typically perform the manufacturing process with reduced variability. This results in greater control and consistency of product quality.

The number of vehicle recalls in the automotive industry continues onto be at a relatively high level. The Company expects overall recall numbers to remain high for years to come and, although the Company strives for the highest quality in its processes, it cannot be ruled out that the Company may also be adversely impacted by a future recall.

The customer landscape is gradually changing, with a multitude of new OEMs emerging in recent years. This is especially prominent within electric vehicles and in China. In China, domestic OEMs have gained significant market shares and as a group now has larger market share than global OEMs have in China. Autoliv's sales to domestic OEMs in China has grown rapidly. In 2022, this group accounted for 22% of Autoliv's sales in China, and in 20242025 their share of Autoliv sales in China was 37%.44%. The fastest growing OEM in China in recent years ishas BYD.been BYD, although its growth slowed significantly in 2025. BYD has a uniquely high degree of vertical integration, with a large proportion of in-house sourcing of products and systems. This includes passive safety systems, which is supplied by its subsidiary FinDreams Technology. Autoliv supplies components, especially inflators, to FinDreams Technology. In 2024, the institutional alliance between Renault, Nissan, and Mitsubishi ended.

It is the Company’s policy to maintain a financial leverage commensurate with a “strong investment grade credit rating”. The long-term target is to have a leverage ratio (see section Non-U.S. GAAPNon-GAAP Performance Measures) ofnot around 1.0x and to be within the range of 0.5x toabove 1.5x. At December 31, 2024,2025, the current leverage ratio iswas 1.2x.1.1x. The Company monitors its capital structure and the financial markets closely and intends to maintain a high level of financial flexibility while being shareholder friendly.

As part of the adjustment of the capital structure, the Company has historically has repurchased shares of its common stock. During 20242025 and 2023,2024, the Company repurchased and retired 5.13.1 million and 3.75.1 million shares, respectively,respectively. underOn June 4, 2025, the Company announced that its Board of Directors approved a new stock repurchase program approved by the Board of Directors in November 2021. This stock repurchase programthat authorizes the Company to repurchase up to $1.5$2.5 billion orof up to 17 millioncommon shares (whichever comes first) between January 2022 and theoperates endfrom ofJuly 2024.1, In November 2024, the Board of Directors approved the extension of this stock repurchase program2025 through theDecember end31, of 2025.2029.

In 2024, the Company also retired an additional 2 million shares previously held in Treasury stock. AfterAs theof retirements,December 31, 2025, the Company continues to hold around 2.72.6 million shares of common stock in treasury.

In addition to the assumptions noted below,below and our business and market update provided herein, the Company's guidance for 20252026 is mainly based on ourits customer call-offs,call-offs and the achievement of ourits targeted cost compensation effectsadjustments andwith its customers, including no material changes to tariffs or trade restrictions.restrictions, as compared to what is in effect as of January 23, 2026, as well as no significant changes in the macro-economic environment, changes to customer call-off volatility or significant supply chain disruptions.

The forward-looking non-U.S. GAAPnon-GAAP financial measures above are provided on a non-U.S. GAAPnon-GAAP basis. Autoliv has not provided a U.S. GAAP reconciliation of these measures because items that impact these measures, such as costs related to capacity alignments and antitrust matters, cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable efforts and Autoliv is unable to determine the probable significance of the unavailable information.

See Item 3. Legal Proceedings and Note 1819, Contingent LiabilitiesLiabilities, to the Consolidated Financial Statements in this Annual Report.

Consolidated net sales in 20242025 decreasedincreased by 0.8%4.1% compared to 2023.2024. Excluding negativepositive currency translation effects of 1.2%,0.7%, the organic sales increased (Non-U.S. GAAPNon-GAAP measure, see reconciliation table below) by 0.4%3.4% compared to the global LVP decreaseincrease of 1.2%3.9% (according to S&P Global, Jan 20252026). The 1.6pp outperformance was mainly driven by new product launches, and to a lesser extent higher prices, partly offset by negative customer and model mix.

Sales for Airbags, Steering Wheels and Other grew organically (Non-U.S. GAAPNon-GAAP measure, see reconciliation table above) by 0.7%3.4% in 2024.2025. The largest contributor to the increase was steeringside wheels,airbags and inflatable curtains, followed by steering wheels, center airbags, side airbags, inflatable curtains and inflators, partly offset by decreases for passenger airbags, knee airbags and driver airbags.

Sales for Seatbelt Products and Other declinedgrew organically (Non-U.S. GAAPNon-GAAP measure, see reconciliation table above) by 0.2%3.5% in the period.2025. Sales decreasedgrowth organicallywas inmainly Chinadriven by Americas and Europe, while it increased in Asia excluding China followed by Europe and the Americas.China.

Autoliv’s global sales increased organically (Non-U.S. GAAPNon-GAAP measure, see reconciliation table above) by 0.4%3.4% in 20242025 compared to 2023,2024, which was around 1.60.5 percentage points better thanbelow global LVP growth (according to S&P Global, January 20252026). The 0.5pp underperformance was positively impacted by product launches and tariff compensations. This was more than offset by negative effects from the regional and model LVP mix development, which we estimate contributed to about 2.5pp underperformance. This was particularly accentuated in China.

Our organic sales growth (Non-U.S. GAAPNon-GAAP measure) outperformed LVP growth by 113.4pp percentagein pointsAmericas, by 3.3pp in Asia excluding China supportedand by strong outgrowth2.4pp in India,Europe, Japanwhile andwe South Korea. We outperformedunderperformed by 6.1 percentage points in Europe due mainly to product launches and to a smaller extent higher prices, while it was in line with LVP growth in Americas. Our sales growth underperformed LVP growth by 7.4 percentage points6.1pp in China. LVP growth in China in 2025 was tilteddriven toby domestic OEMs with typically lower safety content. Domestic OEM LVP in China grew by 18% while LVP declined by 9.5% for global OEMs indeclined Chinaby in1.3% 2024.while it increased by 16% for domestic OEMs. Autoliv's sales to domestic OEMs increased by 24%23% in 2024.2025 while it decreased by 7.3% to global OEMs in China. We expect continued strong sales growth in China in 2026, driven by our performance with domestic OEMs.

20242025 Organic Growth (Non-U.S. GAAPNon-GAAP measure)

1) AssumingNon-GAAP dilutionMeasure. and2) netNet of treasury shares.

In 2024,2025, gross profit increased by $106$147 million and the gross margin increased by 1.2pp0.6pp compared to 2023.2024. The drivers behind the gross profit improvement waswere mostly due to that better customer call-off accuracy supported anmainly improved operational efficiency with around $82 million in lower costs for labor, logistics, premium freight and waste and scrap. TheWe grossalso profit increase was also, to a lesser extent, supported byhad positive effects from the organic sales growth and lower material costs.costs Thepartly mainoffset offsetting factor to the improvement wereby negative effects offrom lowerrecall sales.and warranty costs, un-recovered tariffs and higher depreciation.

Operating income increased in 20242025 by $290$109 million, mainly due to lower capacity alignment accruals as outlined below, and the increase inhigher gross profit, as outlined above.above and the improvement in Other income (expense), partly offset by higher costs for S,G&A and R,D&E, as outlined below.

Selling, General and Administrative (S,G&A) expenses increased in 20242025 by $30$40 million.million, The main reason for the cost increase was higher costs for personnel,mainly due to high$20 million in increased personnel costs driven by wage inflation.inflation, $13 million in higher IT costs mainly due to higher license costs, $6 million in negative FX translation effects. S,G&A costs in relation to sales increased from 4.8%5.1% to 5.1%.5.3%, a level that is considered to be slightly above normal.

Research, Development & Engineering (R,D&E) expenses, net decreasedincreased in 20242025 by $27$15 million, Highermainly due to $18 million in lower engineering income explaineddue almostto thetiming entireeffects improvement.and $7 million in higher personnel costs due to wage inflation partly offset by $5 million from positive FX translation effects. R,D&E, net, in relation to sales decreasedwas fromunchanged 4.1% toat 3.8%. The Company consider a level of around 4% to be representative for its business scope.

Other income (expense), net was an expense of $19$2 million in 20242025 compared to an expense of $207$19 million in 2023.2024. Almost all of the $188$17 million in lower expense was due to lower capacityrestructuring alignment accrualscosts in 20242025 compared to 2023. The high level of capacity alignment accrual in 2023 relate to a structural efficiency program aiming at reducing indirect headcount by up to 2,000. No significant further accruals are expected for this program.2024.

Costs for Financial and non-operating items, net, costs increasedimproved by $27$3 million in 20242025 compared to previous year, mainly due to $14$5 million in increasedlower interest expense aspartly theoffset resultby of higher debt and higher interest rates, and $13$3 million in increasedlower expensesinterest for Other non-operating items.income.

Net income in 20242025 increased by $159$88 million compared to 2023.2024. Earnings per share, diluted increased by $2.32$1.52 compared to a year earlier, where the main drivers were $2.83$0.90 from higher operating income and $0.45$0.41 from lower number of outstanding shares, diluted, partly$0.17 offsetfrom tax and by $0.76$0.03 from higher taxes and $0.21 from higherlower financial and non-operating items, net. The weighted average number of shares outstanding assuming dilution in 2025 was 76.9 million compared to 80.4 million in 2024.

The Company analyzes its sales trends and performance as changes in “organic sales growth” or “organic sales decline”, because the Company currently generates approximately three quarters of net sales in currencies other than the reporting currency (i.e. U.S. dollars) and currency rates have proven to be rather volatile. Organic sales present the increase or decrease in the overall U.S. dollar net sales on a comparable basis, allowing separate discussions of the impact of acquisitions/divestitures and exchange rates.

The Company, from time to time enters into “debt-related derivatives” (DRDs) as a part of its debt management and as part of efficiently managing the Company’s overall cost of funds. Creditors and credit rating agencies use net debt adjusted for DRDs in their analyses of the Company’s debt, therefore we provide this non-U.S. GAAPNon-GAAP measure. DRDs are fair value adjustments to the carrying value of the underlying debt. Also included in the DRDs is the unamortized fair value adjustment related to a discontinued fair value hedge that will be amortized over the remaining life of the debt. By adjusting for DRDs, the total financial liability of net debt is disclosed without grossing debt up with currency or interest fair values.

As of MarchJune 31,30, 2026, there have been no material changes to the risk factors that were previously disclosed in Item 1A in the Company’s Form 10-K for the year ended December 31, 2025 filed with the SEC on February 19, 2026.

Some of the following discussions refer to non-U.S. GAAP financial measures: see reconciliations for “Organic sales,” “Free operating cash flow,” “Cash conversion,” “Net debt,” “Leverage ratio,” “Adjusted net income,” “Adjusted operating income,” “Adjusted operating margin,” “Adjusted other non-operating items,net,items, net,” “Adjusted earnings per share, diluted,” “Adjusted return on capital employed,” and “Adjusted return on total equity” provided below. Management believes that these non-U.S. GAAP financial measures provide supplemental information to investors regarding the performance of the Company’s business and assist investors in analyzing trends in the Company's business. Additional descriptions regarding management’s use of these financial measures are included below. Investors should consider these non-U.S. GAAP financial measures in addition to, rather than as substitutes for, financial reporting measures prepared in accordance with U.S. GAAP. These historical non-U.S. GAAP financial measures have been identified as applicable in each section of this report with a tabular presentation reconciling them to the most directly comparable U.S. GAAP financial measures. It should be noted that these measures, as defined, may not be comparable to similarly titled measures used by other companies.

The business environment isremains uncertain but our current best estimate for the remainder of the year is ato re-iteration ofreiterate our full year 2026 guidance of about unchanged organic sales growth (Non-GAAP measure) and an, adjusted operating margin (Non-GAAP measure) of around 10.5-11%.10.5-11% and operating cash flow of around 1.2 billion. This is based on the assumption that LVP will decline by around 1%.2.5%.

Our balance sheet is healthy, with debt leverage (Non-GAAP measure, see reconciliation table below) of 1.3x, well below our target limit of 1.5x. Based on our guidancefull foryear sales and adjusted operating margin,guidance, we continue to expect strong cash flow for the year, which supports our ambitionsambition to provide attractive shareholder returns, including toshare repurchase sharesrepurchases of $300-500 million in 2026.

Financial highlights in the three months period ended MarchJune 31,30, 2026

0.8%1.0% organic sales growth (Non-GAAPnon-GAAP measure, see reconciliation table below) 8.6%6.8% operating margin, 8.9%9.6% adjusted.adj. operating margin (Non-GAAPnon-GAAP measure, see reconciliation table below)

Key business developments in the three months period ended MarchJune 31,30, 2026

Net sales increased organically (Non-GAAPnon-GAAP measure, see reconciliation table below) by 0.8%,1.0%, which was 4.2pp1.3pp higher than the global LVP decrease of 3.4%0.3% (S&P Global,Global AprilJuly 2026) mainly driven mainly by strong progressperformance in Asia. Regional and customer LVP mix is estimated to have impacted sales positivelynegatively by about 1.5pp, while tariff compensations added around 0.5pp.0.6pp. Our organic sales growth (Non-GAAPnon-GAAP measure) outperformed LVP significantly in China (15pp)and andin Asia excl. ChinaChina, (6.8pp)underperformed and performed in lineslightly in EMEA and underperformedmore markedly in Americas (4.5pp).Americas. Our strong performance in Asia excl. China was mainly due to India, where we outperformed by 28pp,20pp, driven by continued strong market growth in safety content per vehicle, while our China performance was mainlydue drivento bymore furtherthan improved40pp presenceoutperformance with Chinese OEMs.

ProfitabilityUnderlying wasprofitability remained strong. Supported by successful execution of cost reductions and positive foreign currency effects, gross profit increased by 10%. Operating income decreased bysubstantially 6.7%due andto adjustedpreviously communicated restructuring activities in Türkiye. Adjusted operating income (Non-GAAPnon-GAAP measure, see reconciliation table below) decreasedincreased by 3.9%,7.3%, impacted bydespite adverse effects from foreign currency translationexchange effectsrates and temporaryraw lowermaterial R,D&Eprices, reimbursementsmainly asdue to well asexecuted thatdirect Q1material 2025cost was positively impacted by one-time effects.savings. Operating margin was 8.6%6.8% and adjusted operating margin (Non-GAAPnon-GAAP measure, see reconciliation table below) was 8.9%.9.6%. ROCE was 22.2%17.9% and adjusted ROCE (Non-GAAPnon-GAAP measure, see reconciliation table below) was 22.9%.24.9%.

OperatingCash flow was the best for a second quarter so far with operating cash flow wasimproving negativefrom $76$277 million to $434 million, mainly duedriven toby anstrong increaseunderlying inprofitability and a normalization of working capital due to strong sales in March, temporary effects expected to reverse later in the year and the high level of accounts payable at the end of 2025.capital. Free operating cash flow (Non-GAAPnon-GAAP measure, see reconciliation table below) therebymore decreasedthan doubled to negative $159$340 million. The leverage ratio (Non-GAAPnon-GAAP measure, see reconciliation table below) was unchanged comparedimproved to a year ago at 1.3x, below our target limit of 1.5x.1.2x. In the quarter, a dividend of $0.87 per share was paid.paid and 1.65 million shares were repurchased and retired.

Call-off volatilityaccuracy improved somewhat compared to boththe Q4second 2025quarter and Q1of 2025, althoughbut itdeclined stillslightly versus the first quarter of 2026, mainly driven by light vehicle market developments in China. Call-off volatility remains higher than pre-pandemic levels. Low customer demand visibility and changes toin customer call-offs with short notice continued to have some negative impact on our production efficiency and profitability. We expect call-off volatility for the full year 2026 on average to be slightly improved compared to 2025 but still remain higher than pre-pandemic levels. However, the continued significant uncertainty in the geopolitical environment and future changes in tariffs and trade restrictions may lead to more negative call-off volatility.

Raw material price changes had only a small negative impact on our profitability in the firstsecond quarter, with a gross impact of around $5$21 million. For the full year 2026, our current assessment is for around $90$110 million gross impact from higher raw material prices. We expect to be able to mitigate a majority of this headwind, mainly through internal cost reductions, material mix improvements and commercial negotiations with customers and suppliers. Given the continued uncertainty in the geopolitical environment, the effects of tariffs and trade restrictions may lead to a more adverse inflation environment. We continue to execute on productivity and cost reduction initiatives to offset these cost pressures.

The effects of the new tariffs imposed in 2025 negatively impacted our profitability negatively in the firstsecond quarter of 2026. Although weWe achieved customer compensationscompensation for more than 70%80% of the tariff costs, resulting in a net negative impact after compensation of around $7 million, which was in line with the net effectamount in Q2 2025. Including the dilution effect, the impact on operating margin was around 40bps35bps negative,negative. includingThe recovery of tariffs related to the dilutionU.S. effect.Supreme Court's ruling regarding the International Emergency Economic Powers Act had a net positive effect of around $3 million. While it is our ambition and expectation to continue passing tariff costs on to our customers, there is significant uncertainty as future recovery levels may vary. For the full year 2026, we estimate the tariff-related dilution on operating margin towill be similar to the around 20 bps that it was20bps for full year 2025.

Ongoing geopolitical developments, including the hostilities in and around the Persian Gulf, introducehave additionaladded uncertainty into the global economic environment. These conditions may affect supply chains, commodity prices, customer demand, and broader market stability. As a result, our current financial guidance reflects the best information available today but may be subject to change should these geopolitical dynamics materially impact our operations or the markets in which we operate.

We continue to closely monitor both geopolitical developments and the tariff policy environment in order to beremain agile and to adjust our commercial and operational responses to any such developments.

7) Net debt adjusted for pension liabilities in relation to EBITDA. See tabular presentation reconciling this non-U.S. GAAPnon-GAAP measure to U.S. GAAP below.

three months period ended MarchJune 31,30, 2026 COMPARED WITH three months period ended MarchJune 31,30, 2025

3) Non-U.S. GAAPNon-GAAP measure.

Sales for Airbags, Steering Wheels and Other grew organically (Non-U.S. GAAPnon-GAAP measure, see reconciliation table above) by 0.7%3.0% in the quarter. The largest contributors to the increase were center airbags, driverside airbags and sidecenter airbags, followed by driver airbags, inflatable curtains and knee airbags, partly offset by declines for passengersteering airbagswheels and inflatablepassenger curtains.airbags.

Sales for Seatbelt Products and Other grewdeclined organically (Non-U.S. GAAPnon-GAAP measure, see reconciliation table above) by 1.1%3.0% in the quarter. Sales increaseddecreased organically (non-GAAP measure) in Americas, China and EMEA while it increased in Asia excluding China, EMEA and China while sales declined in Americas.China.

Our global organic sales (Non-U.S. GAAPnon-GAAP measure, see reconciliation table above) increased by 0.8%1.0% compared to the global LVP decrease of 3.4%0.3% (according to S&P Global, AprilJuly 2026). The relative performanceoutperformance was positively impacted by product launches but alsonegatively impacted by positive effects from the regional and model LVP mix development,development which we estimate contributed to about 1.5pp outperformance and by tariff compensations of (around 0.5pp.60bps). Our organic sales growth (Non-U.S. GAAPnon-GAAP measure) outperformed LVP growth by 15pp7.3pp in China and by 6.8pp5.9pp in Asia excluding China. We performed in line withunderperformed LVP in EMEA by 1.0pp and underperformed by 4.5pp4.9pp in Americas, impacted mainly by lower top line effect from tariffs, negative mix due to a high LVP growth in lowlower content South America and a lower content on some replacement models.

LVP in China declined substantiallyby 4.0%, with globalGlobal OEMs LVP declining by 8.5%19% and Chinese OEMs decliningLVP growing by 11%.3.1%. OurAutoliv's sales to domestic OEMs increased organically (non-GAAP measure) by around 30%44% while our sales to global OEMs decreased by around 10%.24%. Chinese OEMs accounted for 55% of our sales in China in the quarter, compared to around 40% a year ago. We expect continued strong sales growth in China in 2026, driven mainly by our performance with domestic OEMs. Our strong sales growth in Asia excluding China was mainly due to 38%36% organic sales growth (Non-U.S.non-GAAP GAAP measure, see reconciliation table abovemeasure) in India, reflecting LVP growth but mainly the trend of increased safety content in vehicles in India.

FirstSecond quarter of 2026 organic growth1)

1) Non-U.S. GAAPNon-GAAP measure.

Change firstsecond quarter of 2026 versus firstsecond quarter of 2025

1) Source: S&P Global, AprilJuly 2026.

1) Non-U.S. GAAPNon-GAAP measure, excluding effects from capacity alignments and antitrust related matters.

FirstSecond quarter of 2026 financial development

Gross profit increased by $48$8 million and gross margin increaseddecreased by 0.6pp0.3pp compared to the prior year. The drivers behind the gross profit improvement were mainly positive foreign currency effects,translation improvedeffects operational efficiency withand lower costs for labor as well as positive effects from higher sales.materials. This was partly offset by increased$13 tariffmillion costs,in net.costs for a supplier compensation reversal and $9 million in asset impairment related to the restructuring activities in Türkiye.

S,G&A costs increaseddecreased by $16$7 million compared to the prior year, mainly due to $10$8 million from revised estimated credit loss reserve and $1 million in lower personnel costs, partly offset by $3 million in negative foreign currency translation effects and $5 million in higher costslegal for personnel driven by wage inflation and a non-recurring cost of $4 million.costs. S,G&A costs in relation to sales increaseddecreased from 5.6%5.4% to 5.8%.4.9%.

R,D&E, net, costs increased by $25$15 million compared to the prior year, mainly due to $11$5 million in lower engineering income related to timing effects, $5$4 million in higher personnel costs due to wage inflation and $4$3 million in negative FXforeign currency translation effects. R,D&E, net, in relation to sales increased from 3.7%3.9% to 4.3%.4.4%.

Other income (expense), net, was negative $9$56 million, compared to positivenegative $15$1 million in the same period last year. The positive $15$56 million in 2025the relatedsecond quarter of 2026 consists mainly toof recycledaround accumulated$66 currencymillion translationin differencescapacity alignments related to the divestment of our idledrestructuring operationsactivities in RussiaTürkiye whilepartly theoffset negativeby $9around $10 million in 2026government related mainly to restructuring costsincome in EMEA.India.

Operating income decreased by $17$55 million compared to the prior year, mainly due to thehigher highercapacity alignment costs forrelated to restructuring activities in Türkiye and higher R,D&E, net, Other income (expense) and S,G&A,costs, partly offset by higher gross profit and lower S,G&A costs as outlined above.

Adjusted operating income (Non-U.S. GAAPnon-GAAP measure, see reconciliation table below) decreasedincreased by $10$18 million compared to the prior year, due to the higher costsgross forprofit R,D&E,and net,lower S,G&A and Other income (expense), partly offset by higher gross profitcosts as outlined above.

Financial and non-operating items, net, was a negative $35$38 million compared to a negative $22$27 million a year earlier. The cost increase comeswas fromdriven by $12 million in higher costs for non-operating items mainly related to costs associated with restructuring costsactivities in Americas.Türkiye.

Income before taxes decreased by $30$67 million compared to the prior year, mainly due to the lower operating income and higher costs for financial and non-operating items, net.net, as outlined above.

Tax rate was 29.9%34.5% compared to 28.0%24.1% the prior year. Discrete tax items, net, had an unfavorable impact of 2.3pp5.4pp in the firstsecond quarter of 2026, while discrete tax items, net were not materialnet, in the correspondingsecond quarter lastof year.2025 had a favorable impact of 4.3pp. Discrete tax items recorded in the second quarter of 2026 primarily related to negative tax impacts from costs recorded for the capacity alignment for Autoliv’s manufacturing operations in Türkiye.

Earnings per share, diluted decreased by $0.26$0.81 compared to the prior year. The main drivers were $0.16$0.55 from lower operating income, $0.12$0.21 from higher taxes and $0.11 from financial and non-operating items, $0.05 from taxes partly offset by $0.07$0.05 from lower number of outstanding shares, diluted.