Aptiv PLC

Previous wording

The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to help you understand the business operations and financial condition of the Company for the three months ended March 31, 2025. This discussion should be read in conjunction with Item 1. Financial Statements. Our MD&A is presented in eight sections:

Current wording

The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to help you understand the business operations and financial condition of the Company for the three and six months ended June 30, 2025. This discussion should be read in conjunction with Item 1. Financial Statements. Our MD&A is presented in eight sections:

Previous wording

On January 22, 2025, we announced our intention to pursue a separation of our Electrical Distribution Systems business through a transaction expected to be treated as a tax-free spin-off to its shareholders (the “Separation”). The Company plans to complete the Separation by March 31, 2026, subject to customary closing conditions. During the three months ended March 31, 2025, the Company incurred costs of $19 million related to the Separation. These costs, which are included in selling, general and administrative expense within the consolidated statements of operations, are primarily related to third party professional fees associated with planning the Separation. The Company expects to continue to incur additional expenses related to the Separation through the date of completion.

Current wording

On January 22, 2025, we announced our intention to pursue a separation of our Electrical Distribution Systems business through a transaction expected to be treated as a tax-free spin-off to its shareholders (the “Separation”). The Company plans to complete the Separation by March 31, 2026, subject to customary closing conditions. During the three and six months ended June 30, 2025, the Company incurred costs of $28 million and $47 million, respectively, related to the Separation. These costs, which are included in selling, general and administrative expense within the consolidated statements of operations, are primarily related to third party professional fees associated with planning the Separation. The Company expects to continue to incur additional expenses related to the Separation through the date of completion.

Previous wording

In connection with the Separation, in the first quarter of 2025 Aptiv realigned its business into three reportable operating segments: Electrical Distribution Systems, Engineered Components Group and Advanced Safety and User Experience. Prior period amounts were adjusted retrospectively to reflect the change in reportable operating segments, consistent with the current year presentation, throughout the consolidated financial statements and the accompanying notes to the consolidated financial statements.

Current wording

In connection with the Separation, in the first quarter of 2025 Aptiv realigned its business into three reportable operating segments: Electrical Distribution Systems, Engineered Components Group and Advanced Safety and User Experience. Prior period amounts have been adjusted retrospectively to reflect the change in reportable operating segments, consistent with the current year presentation, throughout the consolidated financial statements and the accompanying notes to the consolidated financial statements.

Previous wording

Our total net sales during the three months ended March 31, 2025 were $4.8 billion, a decrease of 2% compared to the same period of 2024. Our volumes decreased 1% for the three months ended March 31, 2025, which reflects volume declines in Europe and North America, compared to increased global automotive production of 1% (down 2% on an Aptiv weighted market basis, which represents global vehicle production weighted to the geographic regions in which the Company generates its revenue, “AWM”).

Current wording

Our total net sales during the three and six months ended June 30, 2025 were $5.2 billion and $10.0 billion, an increase of 3% and 1% compared to the same periods of 2024, respectively. Our volumes increased 2% for the three months ended June 30, 2025, which primarily reflects volume growth in Asia Pacific and North America, partially offset by volume declines in Europe, compared to increased global automotive production of 2% (flat on an Aptiv weighted market basis, which represents global vehicle production weighted to the geographic regions in which the Company generates its revenue, “AWM”). Our volumes increased 1% for the six months ended June 30, 2025, which primarily reflects volume growth in Asia Pacific, partially offset by volume declines in Europe, compared to increased global automotive production of 3% (down 1% on an AWM basis).

Previous wording

Economic volatility or weakness in North America, Europe, China or, to a lesser extent, South America could result in a significant reduction in automotive sales and production by our customers, which would have an adverse effect on our business, results of operations and financial condition. Global inflationary pressures have, at times, both reduced consumer demand for automotive vehicles and increased the price of inputs to our products, which has adversely impacted our sales and profitability, which may continue in 2025. There is also potential that geopolitical factors could adversely impact the U.S. and other economies, and specifically the automotive sector. In particular, changes to international trade agreements, such as the United States-Mexico-Canada Agreement (the “USMCA”), increases in trade tariffs, import quotas and other trade restrictions or actions, including retaliatory responses to such actions, or other political pressures have and could continue to affect our operations and the operations of our OEM customers, resulting in reduced automotive production in certain regions or shifts in the mix of production to higher cost regions. Increases in interest rates could also negatively impact automotive production as a result of increased consumer borrowing costs or reduced credit availability. Additionally, economic weakness may result in shifts in the mix of future automotive sales (from vehicles with more content such as luxury vehicles, trucks and sport utility vehicles toward smaller passenger cars). While our diversified customer and geographic revenue base, along with our flexible cost structure, have well positioned us to withstand the impact of industry downturns and benefit from industry upturns, shifts in the mix of global automotive production to higher cost regions or to vehicles with less content could adversely impact our profitability.

Current wording

Economic volatility or weakness in North America, Europe, China or, to a lesser extent, South America could result in a significant reduction in automotive sales and production by our customers, which would have an adverse effect on our business, results of operations and financial condition. Global inflationary pressures have, at times, both reduced consumer demand for automotive vehicles and increased the price of inputs to our products, which has adversely impacted our sales and profitability, and this trend has continued in 2025. There is also potential that geopolitical factors could adversely impact the U.S. and other economies, and specifically the automotive sector. In particular, changes to international trade agreements, such as the United States-Mexico-Canada Agreement (the “USMCA”), increases in trade tariffs, import quotas and other trade restrictions or actions, including retaliatory responses to such actions, or other political pressures have affected and could continue to affect our operations and the operations of our OEM customers, resulting in reduced automotive production in certain regions or shifts in the mix of production to higher cost regions. Increases in interest rates could also negatively impact automotive production as a result of increased consumer borrowing costs or reduced credit availability. Additionally, economic weakness may result in shifts in the mix of future automotive sales (from vehicles with more content such as luxury vehicles, trucks and sport utility vehicles toward smaller passenger cars). While our diversified customer and geographic revenue base, along with our flexible cost structure, have well positioned us to withstand the impact of industry downturns and benefit from industry upturns, shifts in the mix of global automotive production to higher cost regions or to vehicles with less content could adversely impact our profitability.

Previous wording

Global supply chain disruptions. Global supply chain disruptions have in the past and could in the future lead to interruptions in our production, which could impact our ability to fully meet the vehicle production demands of OEMs at times due to events which are outside our control. For example, as a result of the rapidly evolving trade policies and tariff actions, the uncertainty in the automotive industry continues to increase, which could adversely affect our business and financial results. We will continue to actively monitor our global supply chain and will seek to aggressively mitigate and minimize the impact of any future disruptions on our business.

Current wording

Global supply chain disruptions. Global supply chain disruptions have in the past and could in the future lead to interruptions in our production, which could impact our ability to fully meet the vehicle production demands of OEMs at times due to events which are outside our control. For example, as a result of the rapidly evolving trade policies and tariff actions, the uncertainty in the automotive industry has increased, which could adversely affect our business and financial results. We will continue to actively monitor our global supply chain and will seek to aggressively mitigate and minimize the impact of any future disruptions on our business.

Previous wording

In addition, we are carrying critical inventory items and key components, and we continue to procure productive, raw material and non-critical inventory components in order to satisfy our customers’ vehicle production schedules. However, as a result of our customers’ recent production volatility and cancellations, among other things, our balance of productive, raw and component material inventories has increased substantially from customary levels as of March 31, 2025 and December 31, 2024. We will continue to actively monitor and manage inventory levels across all inventory types in order to maximize both supply continuity and the efficient use of working capital.

Current wording

In addition, we are carrying critical inventory items and key components, and we continue to procure productive, raw material and non-critical inventory components in order to satisfy our customers’ vehicle production schedules. However, as a result of our customers’ recent production volatility and cancellations, among other things, our balance of productive, raw and component material inventories has increased substantially from customary levels as of June 30, 2025 and December 31, 2024. These changes to the production environment were primarily driven by the global supply chain disruptions that impacted the automotive industry at times during previous years. We will continue to actively monitor and manage inventory levels across all inventory types in order to maximize both supply continuity and the efficient use of working capital. Normally we do not carry inventories of such raw materials in excess of those reasonably required to meet our production and shipping schedules.

Previous wording

Commercializing the high-tech evolution of the automotive industry. The automotive industry is increasingly evolving towards the implementation of software-dependent components and solutions. In particular, the industry is focused on the development of advanced driver assistance technologies, with the goal of developing and introducing a commercially-viable, fully automated driving experience. We expect automated driving technologies will provide strong societal benefit as well as the opportunity for long-term growth for our product offerings in this space. We are focused on enabling and delivering end-to-end smart mobility solutions, enabling our customers’ transition to more electrified, software-defined vehicles, accelerating the commercialization of active safety and autonomous driving technologies and providing enhanced user experience and connected services.

Current wording

Commercializing the high-tech evolution of the automotive industry. The automotive industry is increasingly evolving towards the implementation of software-defined components and solutions. In particular, the industry is focused on the development of advanced driver assistance technologies, with the goal of developing and introducing a commercially-viable, fully automated driving experience. We expect automated driving technologies will provide strong societal benefit as well as the opportunity for long-term growth for our product offerings in this space. We are focused on enabling and delivering end-to-end smart mobility solutions, enabling our customers’ transition to more electrified, software-defined vehicles, accelerating the commercialization of active safety and autonomous driving technologies and providing enhanced user experience and connected services.

Previous wording

In March 2020, we completed a transaction with Hyundai Motor Group (“Hyundai”) to form Motional, AD LLC (“Motional”), a joint venture focused on the design, development and commercialization of autonomous driving technologies. Although we believe our strategic partnerships have us well-aligned with industry technology mega-trends in these evolving areas, the timeline necessary to produce commercially viable autonomous vehicles has been extended and is still subject to significant uncertainty, which resulted in additional funding requirements for Motional. In April 2024, Aptiv and Hyundai entered into an agreement to restructure Aptiv’s ownership interest in Motional and for Hyundai to provide additional funding to Motional, which also eliminated any requirements for additional future funding from Aptiv. These transactions, which were completed in May 2024, resulted in the reduction of our common equity interest in Motional from 50% as of December 31, 2023 to approximately 15%. The total gain recorded as a result of these transactions was approximately $641 million (approximately $2.50 per diluted share) during the year ended December 31, 2024, within net gain on equity method transactions in the consolidated statements of operations. Refer to Note 21. Investments in Affiliates to the consolidated financial statements contained herein for further information on these transactions.

Current wording

In April 2024, Aptiv and Hyundai entered into an agreement to restructure Aptiv’s ownership interest in Motional and for Hyundai to provide additional funding to Motional, which also eliminated any requirements for additional future funding from Aptiv. These transactions, which were completed in May 2024, resulted in the reduction of our common equity interest in Motional from 50% as of December 31, 2023 to approximately 15%. In May 2025, Hyundai provided additional funding to Motional, further reducing Aptiv’s common equity interest in Motional from 15% as of March 31, 2025 to approximately 13%. Refer to Note 21. Investments in Affiliates to the consolidated financial statements contained herein for further information on these transactions.

Previous wording

Key growth markets. There have been periods of increased market volatility and moderation in the level of economic growth in China, which resulted in periods of lower automotive production growth rates in China than those previously experienced. Automotive production in China experienced growth of 4% in 2024, which follows growth of 10% in 2023. Despite the market volatility and moderation in the level of economic growth in China, rising income levels in China and other key growth markets are expected to result in stronger growth rates in these markets over the long-term. Our strong global presence, and presence in these markets, has positioned us to experience above-market growth rates over the long-term. We continue to expand our established presence in key growth markets, positioning us to benefit from the expected long-term growth opportunities in these regions. We are capitalizing on our long-standing relationships with the global OEMs and further enhancing our positions with the key growth market OEMs to continue expanding our worldwide leadership. We continue to build upon our extensive geographic reach to capitalize on fast-growing automotive markets. We believe that our presence in best cost countries positions us to realize incremental margin improvements as the global balance of automotive production shifts towards the key growth markets.

Current wording

Key growth markets. We believe our strong global presence has positioned us to generate strong growth rates over the long-term. We continue to expand our established presence in key growth markets, positioning us to benefit from the expected long-term growth opportunities in these regions. We are capitalizing on our long-standing relationships with the global OEMs and further enhancing our positions with the key growth market OEMs to continue expanding our worldwide leadership. We continue to build upon our extensive geographic reach to capitalize on fast-growing automotive markets. We believe that our presence in best cost countries positions us to realize incremental margin improvements as the global balance of automotive production shifts towards the key growth markets.

Previous wording

We have a strong local presence in China, including a major manufacturing base and well-established customer relationships. Each of our business segments have operations and sales in China. Our business in China remains sensitive to economic and market conditions that impact automotive sales volumes in China and may be affected if the pace of growth slows as the Chinese market matures or if there are reductions in vehicle demand in China. Our business in China may also be impacted by the expanding market share of domestic Chinese OEMs in the China market, which has led to declines in revenue and market share of non-Chinese OEMs, resulting in certain traditional OEMs taking steps to reduce or restructure their operations in China. However, we continue to believe this market will benefit from long-term demand for new vehicles and stringent governmental regulation driving increased vehicle content, including accelerated demand for electrified vehicles.

Current wording

Our business in China remains sensitive to economic and market conditions that impact automotive sales volumes in China and may be affected if the pace of growth slows as the Chinese market matures or if there are reductions in vehicle demand in China. Our business in China may also be impacted by the expanding market share of domestic Chinese OEMs in the China market, which has led to declines in revenue and market share of non-Chinese OEMs, resulting in certain traditional OEMs taking steps to reduce or restructure their operations in China. However, we continue to believe this market will benefit from long-term demand for new vehicles and stringent governmental regulation driving increased vehicle content, including accelerated demand for electrified vehicles.

Previous wording

Existing free trade laws and regulations, such as the USMCA, provide certain beneficial duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and other requirements. Changes in laws or policies governing the terms of trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we manufacture products, such as China and Mexico, could have a material adverse effect on our business and financial results. For example, in February 2025, the U.S. government imposed a 10% tariff on imports from China and added an additional 10% on March 4, 2025. On March 4, 2025, the U.S. government also imposed 25% tariffs on imports from Mexico and Canada. From March 7, 2025, imports from Mexico and Canada that are compliant with the USMCA became exempt from this tariff. On April 3, 2025, the U.S. government began a phased implementation of a 25% tariff on automobiles and automobile parts. In addition, the U.S. government imposed a new universal baseline tariff of 10% on U.S. imports for all countries except Mexico and Canada effective April 5, 2025, plus additional country-specific tariffs at varying rates, effective April 9, 2025. The additional country-specific tariffs were subsequently suspended for most countries on April 9, 2025, for 90 days. The country-specific tariffs for imports from China were not suspended and were further increased on April 10, 2025, which, in combination with previous tariffs, resulted in a 145% tariff on imports from China.

Current wording

Existing free trade laws and regulations, such as the USMCA, provide certain beneficial duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and other requirements. Changes in laws or policies governing the terms of trade, and in particular increased trade restrictions, tariffs, taxes or non-tariff barriers on imports from countries where we manufacture products, such as China and Mexico, could have a material adverse effect on our business and financial results. For example, beginning on April 2, 2025, the U.S. government announced tariffs of at least 10% across imported goods from all countries, with rates even higher for goods from certain countries with a high trade deficit with the U.S. Subsequent to this announcement, a number of other countries announced tariffs on U.S. goods and have negotiated or continue to negotiate trade agreements with the U.S.

Previous wording

While the impacts resulting from these incremental tariffs to the Company were minimal during the three months ended March 31, 2025, the future impact of these tariffs is subject to a number of factors, including the effective date and duration of such tariffs, changes in the amount, scope and nature of the tariffs in the future, retaliatory responses to such actions that the target countries may take and any mitigating actions that may become available. In addition, we are continuing to work with our customers and suppliers to mitigate the impact of these incremental tariffs on our results of operations. Despite recent trade negotiations between the U.S. and other countries, including the Mexican, Canadian and Chinese governments, given the uncertainty regarding the scope and duration of any new tariffs, as well as the potential for additional tariffs or trade barriers by the U.S., Mexico, Canada, China or other countries, we can provide no assurance that any strategies we implement to mitigate the impact of such tariffs or other trade actions will be successful. Management continues to monitor the volatile geopolitical environment to identify, quantify and assess proposed or threatened duties, taxes or other business restrictions which could adversely affect our business and financial results.

Current wording

While the impacts to the Company resulting from these incremental tariffs were not significant during the first half of 2025, the future impact of any announced tariffs is subject to a number of factors, including the effective date and duration of such tariffs, changes in the amount, scope and nature of the tariffs in the future, any retaliatory responses to such actions that the target countries may take and any mitigating actions that may become available. In addition, we are continuing to work with our customers and suppliers to mitigate the impact of these incremental tariffs on our results of operations. Despite recent trade negotiations and the potential for trade agreements between the U.S. and the Mexican, Canadian and Chinese governments, given the uncertainty regarding the scope and duration of any new tariffs and any associated retaliatory measures, as well as the potential for additional tariffs or trade barriers by the U.S., Mexico, Canada, China or other countries, we can provide no assurance that any strategies we implement to mitigate the impact of such tariffs or other trade actions will be successful. Management continues to monitor the volatile geopolitical environment to identify, quantify and assess proposed or threatened duties, taxes or other business restrictions which could adversely affect our business and financial results.

Previous wording

In addition, effective January 1, 2024 and January 1, 2025, the government of Mexico implemented country-wide statutory minimum wage increases of 20% and 12%, respectively. The government of Mexico has also indicated it may implement other labor reforms, such as a bill to shorten the work week from 48 to 40 hours. While management has implemented measures to mitigate the impact of these labor reforms on our cost structure, we cannot predict the ultimate future impact on our business.

Current wording

In addition, effective January 1, 2024 and January 1, 2025, the government of Mexico implemented country-wide statutory minimum wage increases of 20% and 12%, respectively. The government of Mexico has also indicated it may implement other labor reforms, such as an initiative to shorten the work week from 48 to 40 hours. While management has implemented measures to mitigate the impact of these labor reforms on our cost structure, we cannot predict the ultimate future impact on our business.

Previous wording

The outbreak of armed conflicts in the Middle East beginning in October 2023 has also created numerous uncertainties in the global economy and supply chains, including the risk that the conflicts spread throughout the broader region. In addition, as described above, the conflict between Ukraine and Russia has also created numerous economic uncertainties, including the potential for further sanctions against Russia, the impact on the global supply chain for raw materials produced in each country, as well as increased logistics costs and transit times, and the actions of automotive OEMs and suppliers as they relate to production plans in each country and within the region. We are also subject to risks associated with actions taken by governmental authorities to impose changes in laws or regulations that restrict certain business operations, trade or travel in response to a pandemic or widespread outbreak of an illness. The impacts of any of these factors mentioned above, among others, could adversely affect our business, business opportunities, results of operations, financial condition and cash flows.

Current wording

The outbreak of armed conflicts in the Middle East beginning in October 2023 has also created numerous uncertainties, including the risk that the conflicts spread throughout the broader region, and their impact on the global economy and supply chains. In addition, as described above, the conflict between Ukraine and Russia has also created numerous economic uncertainties, including the potential for further sanctions against Russia, the impact on the global supply chain for raw materials produced in each country, as well as increased logistics costs and transit times, and the actions of automotive OEMs and suppliers as they relate to production plans in each country and within the region. We are also subject to risks associated with actions taken by governmental authorities to impose changes in laws or regulations that restrict certain business operations, trade or travel in response to a pandemic or widespread outbreak of an illness. The impacts of any of these factors mentioned above, among others, could adversely affect our business, business opportunities, results of operations, financial condition and cash flows.

Previous wording

Suppliers that can provide fully-engineered solutions, systems and pre-assembled combinations of component parts are positioned to leverage the trend toward system sourcing.

Current wording

OEMs are increasingly looking to their suppliers to simplify vehicle design and assembly processes to reduce costs. As a result, OEMs prefer suppliers that have the capability to manufacture products on a global basis with manufacturing and design flexibility to adapt to regional variations. Suppliers that can provide fully engineered solutions, systems and pre-assembled combinations of component parts, such as our Company, are positioned to leverage the trend toward system sourcing from global suppliers.

Previous wording

Pricing. Cost-cutting initiatives adopted by our customers result in increased downward pressure on pricing. Our customer supply agreements generally require step-downs in component pricing over the periods of production and OEMs have historically possessed significant leverage over their outside suppliers because the automotive component supply industry is fragmented and serves a limited number of automotive OEMs. Our profitability depends in part on our ability to generate sufficient production cost savings in the future to offset price reductions. In addition, during recent years, global economies and our industry were subjected to significant inflationary cost pressures, and these pressures, including potential impacts from the rapidly evolving trade policies and tariff actions, may continue throughout 2025. We continue to work with our customers, both through price recoveries and adjustments as well as future pricing adjustments as contracts renew, to mitigate the impact of these inflationary pressures on our results of operations.

Current wording

Pricing. Cost-cutting initiatives adopted by our customers result in increased downward pressure on pricing. Our customer supply agreements generally require step-downs in component pricing over the periods of production and OEMs have historically possessed significant leverage over their outside suppliers because the automotive component supply industry is fragmented and serves a limited number of automotive OEMs. Our profitability depends in part on our ability to generate sufficient production cost savings in the future to offset price reductions. In addition, during recent years, global economies and our industry were subjected to significant inflationary cost pressures, and we continue to face additional potential impacts from the rapidly evolving trade policies and tariff actions. We continue to work with our customers, both through price recoveries and adjustments as well as future pricing adjustments as contracts renew, to mitigate the impact of these inflationary pressures on our results of operations.

Previous wording

We are focused on maintaining a low fixed cost structure that provides us flexibility to remain profitable at all points of the traditional vehicle industry production cycle. As a result, approximately 97% of our hourly workforce is located in best cost countries. Furthermore, we have substantial operational flexibility by leveraging a large workforce of contingent workers, which represented approximately 30% of the hourly workforce as of March 31, 2025. However, we will continue to adjust our cost structure and optimize our manufacturing footprint in response to changes in the global and regional automotive markets and in order to increase investment in advanced technologies and engineering, as evidenced by our ongoing restructuring programs focused on reducing our global overhead costs and on the continued rotation of our manufacturing footprint to best cost locations in Europe. As we continue to operate in a cyclical industry that is impacted by movements in the global and regional economies, we continually evaluate opportunities to further refine our cost structure.

Current wording

We are focused on maintaining a low fixed cost structure that provides us flexibility to remain profitable at all points of the traditional vehicle industry production cycle. As a result, approximately 97% of our hourly workforce is located in best cost countries. Furthermore, we have substantial operational flexibility by leveraging a large workforce of contingent workers, which represented approximately 30% of the hourly workforce as of June 30, 2025. However, we will continue to adjust our cost structure and optimize our manufacturing footprint in response to changes in the global and regional automotive markets and in order to increase investment in advanced technologies and engineering, as evidenced by our ongoing restructuring programs focused on reducing our global overhead costs and on the continued rotation of our manufacturing footprint to best cost locations in Europe and aligning our manufacturing capacity with the current levels of automotive production in each region. As we continue to operate in a cyclical industry that is impacted by movements in the global and regional economies, we continually evaluate opportunities to further refine our cost structure.

Previous wording

We have a strong balance sheet with gross debt of approximately $8.0 billion and substantial available liquidity of approximately $3.4 billion as of March 31, 2025, consisting of cash and cash equivalents and available financing under our Revolving Credit Facility and committed European accounts receivable factoring facility, and no significant U.S. defined benefit or workforce postretirement health care benefits and employer-paid postretirement basic life insurance benefits (“OPEB”) liabilities. We intend to maintain strong financial discipline by targeting industry-leading earnings growth, cash flow generation and return on invested capital and to maintain sufficient liquidity to sustain our financial flexibility throughout the industry cycle.

Current wording

We have a strong balance sheet with gross debt of approximately $7.9 billion and substantial available liquidity of approximately $4.0 billion as of June 30, 2025, consisting of cash and cash equivalents and available financing under our Revolving Credit Facility and committed European accounts receivable factoring facility, and no significant U.S. defined benefit or workforce postretirement health care benefits and employer-paid postretirement basic life insurance benefits (“OPEB”) liabilities. We intend to maintain strong financial discipline by targeting industry-leading earnings growth, cash flow generation and return on invested capital and to maintain sufficient liquidity to sustain our financial flexibility throughout the industry cycle.

Previous wording

OEM product recalls. The number of vehicles recalled globally by OEMs has increased above historical levels. These recalls can either be initiated by the OEMs or influenced by regulatory agencies. Although there are differing rules and regulations across countries governing recalls for safety issues, the overall transition towards global vehicle platforms may also contribute to increased recalls outside of the U.S., as automotive components are increasingly standardized across regions. Given the sensitivity to safety issues in the automotive industry, including increased focus from regulators and consumers, we anticipate the number of automotive recalls may remain above historical levels in the near future. Although we engage in extensive product quality programs and processes, it is possible that we may be adversely affected in the future if the pace of these recalls continues.

Current wording

OEM product recalls. The number of vehicles recalled globally by OEMs has increased above historical levels. These recalls can either be initiated by the OEMs or influenced by regulatory agencies. Although there are differing rules and regulations across countries governing recalls for safety issues, as automotive components are increasingly standardized across regions, the level of recalls outside of the U.S. may also increase. Given the sensitivity to safety issues in the automotive industry, including increased focus from regulators and consumers, we anticipate the number of automotive recalls may remain above historical levels in the near future. Although we engage in extensive product quality programs and processes, it is possible that we may be adversely affected in the future if the pace of these recalls continues.

Previous wording

The automotive technology and component supply industry is traditionally subject to inflationary pressures with respect to raw materials and labor which may place operational and profitability burdens on the entire supply chain. For instance, the industry has recently been subjected to increased pricing pressures, specifically in relation to copper and petroleum-based resin products, which have experienced significant volatility in price. We have also been impacted globally by increased overall inflation as a result of a variety of global trends. Due to various factors, the industry has recently been impacted by increased operating and logistics challenges from certain global supply chain disruptions. For example, the rapidly evolving trade policies and tariff actions could result in increased pricing pressures on our global supply chain, which could adversely affect our business and financial results. In addition, during recent years, global economies were subjected to increased pricing pressure on semiconductors due to the worldwide semiconductor shortage. Although the severity of semiconductor related disruptions abated during the second half of 2023, we expect semiconductor supply cost and commodity cost volatility to have a continual impact on future earnings and/or operating cash flows. Management continues to seek to mitigate both inflationary pressures and our material-related cost exposures using a number of approaches, including combining purchase requirements with customers and/or other suppliers, using alternate suppliers or product designs, negotiating cost reductions and/or commodity cost contract escalation clauses into our vehicle manufacturer supply contracts and hedging. We have also negotiated, and will continue to negotiate, price increases with our customers in response to the aforementioned increased overall inflation and global supply chain disruptions.

Current wording

The automotive technology and component supply industry is traditionally subject to inflationary pressures with respect to raw materials and labor which may place operational and profitability burdens on the entire supply chain. For instance, the industry has recently been subjected to increased pricing pressures, specifically in relation to copper and petroleum-based resin products, which have experienced significant volatility in price. We have also been impacted globally by increased overall inflation as a result of a variety of global trends. For example, the rapidly evolving trade policies and tariff actions could result in increased pricing pressures on our global supply chain, which could adversely affect our business and financial results. In addition, we expect semiconductor supply cost and commodity cost volatility to have a continual impact on future earnings and/or operating cash flows. Management continues to seek to mitigate both inflationary pressures and our material-related cost exposures using a number of approaches, including combining purchase requirements with customers and/or other suppliers, using alternate suppliers or product designs, negotiating cost reductions and/or commodity cost contract escalation clauses into our vehicle manufacturer supply contracts and hedging. We have also negotiated, and will continue to negotiate, price increases with our customers in response to the aforementioned increased overall inflation and global supply chain disruptions.

Previous wording

Three Months Ended March 31, 2025 versus Three Months Ended March 31, 2024

Current wording

Three and Six Months Ended June 30, 2025 versus Three and Six Months Ended June 30, 2024

Previous wording

The results of operations for the three months ended March 31, 2025 and 2024 were as follows:

Current wording

The results of operations for the three and six months ended June 30, 2025 and 2024 were as follows:

Previous wording

Total net sales for the three months ended March 31, 2025 decreased 2% compared to the three months ended March 31, 2024. Our volumes decreased 1% for the period, which primarily reflects volume declines in Europe and North America, compared to increased global automotive production of 1% (down 2% on an AWM basis). The declines in volumes reflect contractual price reductions, net of price recoveries, of $13 million. In addition, our net sales reflect unfavorable foreign currency impacts, primarily related to the Euro, South Korean Won and Chinese Yuan Renminbi .

Current wording

Total net sales for the six months ended June 30, 2025 increased 1% compared to the six months ended June 30, 2024. Our volumes increased 1% for the period, which primarily reflects volume growth in Asia Pacific, partially offset by volume declines in Europe, compared to increased global automotive production of 3% (down 1% on an AWM basis). Our net sales also reflect the impact of contractual price reductions, net of price recoveries, of $30 million, and unfavorable foreign currency impacts, primarily related to the Chinese Yuan Renminbi and South Korean Won, partially offset by the Euro.

Previous wording

Cost of sales decreased $118 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, as summarized below. The Company’s material cost of sales was approximately 50% of net sales for both the three months ended March 31, 2025 and 2024.

Current wording

Cost of sales increased $128 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, as summarized below. The Company’s material cost of sales was approximately 50% of net sales for both the three months ended June 30, 2025 and 2024.

Previous wording

•$30 million of increased commodity pass-through costs;

Current wording

•$23 million of increased commodity pass-through costs.

Previous wording

The decrease in cost of sales reflects impacts of improved operational performance, currency exchange and decreased volumes. Cost of sales was also impacted by the following items in Other above:

Current wording

The increase in cost of sales reflects the impacts of improved operational performance, offset by increased volumes and currency exchange. Cost of sales was also impacted by the following items in Other above:

Previous wording

•Approximately $20 million of increased depreciation, primarily as a result of a higher fixed asset base, which includes long-lived asset impairment charges of $5 million; and

Current wording

•Approximately $20 million of increased depreciation, which includes increased long-lived asset impairment charges of $5 million; and

Previous wording

Selling, general and administrative expense (“SG&A”) primarily includes administrative expenses, information technology costs, incentive compensation related costs, acquisition and project portfolio costs and selling and marketing expenses. SG&A increased as a percentage of net sales for the three months ended March 31, 2025 compared to 2024, which includes $19 million of separation costs.

Current wording

Selling, general and administrative expense (“SG&A”) primarily includes administrative expenses, information technology costs, incentive compensation related costs, separation, acquisition and project portfolio costs and selling and marketing expenses. SG&A remained consistent as a percentage of net sales for the three and six months ended June 30, 2025 compared to 2024. SG&A includes $28 million and $47 million of separation costs during the three and six months ended June 30, 2025, respectively.

Previous wording

Amortization expense reflects the non-cash charge related to definite-lived intangible assets. Amortization during the three months ended March 31, 2025 and 2024 reflects the continued amortization of our definite-lived intangible assets, which resulted primarily from our acquisitions, over their estimated useful lives.

Current wording

Amortization expense reflects the non-cash charge related to definite-lived intangible assets. Amortization during the three and six months ended June 30, 2025 and 2024 reflects the continued amortization of our definite-lived intangible assets, which resulted primarily from our acquisitions, over their estimated useful lives.

Previous wording

2025 also included the recognition of approximately $3 million for a program initiated in the fourth quarter of 2024 focused on global salaried workforce optimization, primarily in the European region, and we expect to recognize additional charges of approximately $30 million related to this program through the remainder of 2025, with cash payments expected to be largely completed within the next twelve months. We expect to make cash payments of approximately $85 million over the next twelve months pursuant to currently implemented restructuring programs.

Current wording

The Company recorded employee-related and other restructuring charges totaling approximately $52 million and $89 million during the three and six months ended June 30, 2025, respectively, which included the recognition of approximately $12 million and $15 million, respectively, for a program initiated in the fourth quarter of 2024 focused on global salaried workforce optimization, primarily in the European region. The charges recorded during the three and six months ended June 30, 2025 also included the recognition of approximately $9 million and $22 million, respectively, within the Electrical Distribution Systems segment for programs to downsize and close European manufacturing sites. We expect to make cash payments of approximately $110 million over the next twelve months pursuant to currently implemented restructuring programs.

Previous wording

The Company recorded employee-related and other restructuring charges totaling approximately $39 million during the three months ended March 31, 2024, of which $24 million was recognized for a program initiated in the fourth quarter of 2023 focused on global salaried workforce optimization, primarily in the European region.

Current wording

During the three and six months ended June 30, 2024, Aptiv recorded employee-related and other restructuring charges totaling approximately $70 million and $109 million, respectively, which included the recognition of approximately $30 million and $54 million, respectively, for a program initiated in the fourth quarter of 2023 focused on global salaried workforce optimization, primarily in the European region. The charges recorded during the three and six months ended June 30, 2024 also reflected programs to align manufacturing capacity with the current levels of automotive production in North America and Asia Pacific.

Previous wording

We expect to continue to incur additional restructuring expense in 2025 and beyond, primarily related to programs focused on reducing global overhead costs, the continued rotation of our manufacturing footprint to best cost locations in Europe and aligning manufacturing capacity with the levels of automotive production, which includes approximately $65 million (of which approximately $30 million relates to the Engineering Components Group segment, approximately $20 million relates to the Electrical Distribution Systems segment and approximately $15 million relates to the Advanced Safety and User Experience segment) for programs approved as of March 31, 2025. Additionally, as we continue to operate in a cyclical industry that is impacted by movements in the global and regional economies, we continually evaluate opportunities to further adjust our cost structure and optimize our manufacturing footprint. The Company plans to implement additional restructuring activities in the future, if necessary, in order to align manufacturing capacity and other costs with prevailing regional automotive production levels and locations, to improve the efficiency and utilization of other locations and in order to increase investment in advanced technologies and engineering. Such future restructuring actions are dependent on market conditions, customer actions and other factors.

Current wording

We expect to continue to incur additional restructuring expense in 2025 and beyond, primarily related to programs focused on reducing global overhead costs, the continued rotation of our manufacturing footprint to best cost locations in Europe and aligning manufacturing capacity with the levels of automotive production, which includes approximately $25 million (of which approximately $10 million relates to the Electrical Distribution Systems segment, approximately $10 million relates to the Engineering Components Group segment and approximately $5 million relates to the Advanced Safety and User Experience segment) for programs approved as of June 30, 2025. Additionally, as we continue to operate in a cyclical industry that is impacted by movements in the global and regional economies, we continually evaluate opportunities to further adjust our cost structure and optimize our manufacturing footprint. The Company plans to implement additional restructuring activities in the future, if necessary, in order to align manufacturing capacity and other costs with prevailing regional automotive production levels and locations, to improve the efficiency and utilization of other locations and in order to increase investment in advanced technologies and engineering. Such future restructuring actions are dependent on market conditions, customer actions and other factors.

Previous wording

The increase in interest expense during the three months ended March 31, 2025 compared to 2024 primarily reflects the issuance of €750 million in aggregate principal amount of 4.25% Euro-denominated senior unsecured notes due 2036 (the “2024 Euro-denominated Senior Notes”) in June 2024, the issuance of $1,650 million in aggregate principal amount of senior unsecured notes (the “2024 Senior Notes) in September 2024 and the issuance of $500 million in aggregate principal amount of junior subordinated notes (the “2024 Junior Notes”) in September 2024, partially offset by the redemption of the $700 million in aggregate principal amount of 2.396% senior unsecured notes due 2025 (the “2.396% Senior Notes”) in September 2024 and the redemption of the €700 million in aggregate principal amount of 1.50% Euro-denominated senior unsecured notes due 2025 in December 2024. Refer to Note 8. Debt to the consolidated financial statements contained herein for additional information.

Current wording

The increase in interest expense during the three and six months ended June 30, 2025 compared to 2024 primarily reflects the issuance of €750 million in aggregate principal amount of 4.25% Euro-denominated senior unsecured notes due 2036 (the “2024 Euro-denominated Senior Notes”) in June 2024, the issuance of $1,650 million in aggregate principal amount of senior unsecured notes (the “2024 Senior Notes) in September 2024 and the issuance of $500 million in aggregate principal amount of junior subordinated notes (the “2024 Junior Notes”) in September 2024, partially offset by the redemption of the $700 million in aggregate principal amount of 2.396% senior unsecured notes due 2025 (the “2.396% Senior Notes”) in September 2024 and the redemption of the €700 million in aggregate principal amount of 1.50% Euro-denominated senior unsecured notes due 2025 in December 2024. Refer to Note 8. Debt to the consolidated financial statements contained herein for additional information.

Previous wording

Other income, net for the three months ended March 31, 2025 includes interest income of $11 million, partially offset by a loss on extinguishment of debt of $3 million primarily in conjunction with the repayment of the Term Loan A, as discussed in Note 8. Debt to the consolidated financial statements contained herein.

Current wording

Other income, net for the three months ended June 30, 2025 includes interest income of $13 million. Other income, net for the six months ended June 30, 2025 includes interest income of $24 million, partially offset by a loss on extinguishment of debt of $3 million primarily in conjunction with the repayment of the Term Loan A, as discussed in Note 8. Debt to the consolidated financial statements contained herein.

Previous wording

Other income, net for the three months ended March 31, 2024 includes interest income of $20 million.

Current wording

Other income, net for the three and six months ended June 30, 2024 includes interest income of $16 million and $36 million, respectively.

Previous wording

The Company’s effective tax rate for the three months ended March 31, 2025 includes net discrete tax expense of approximately $281 million, primarily related to changes in valuation allowances, as described below, partially offset by changes in reserves. The Company’s effective tax rate for the three months ended March 31, 2024 includes net discrete tax expense of approximately $7 million, primarily related to changes in the tax benefits of vested share-based compensation and changes in accruals for unremitted earnings.

Current wording

The Company’s effective tax rate for the three and six months ended June 30, 2025 includes net discrete tax benefits of approximately $40 million and net discrete tax expense of approximately $241 million, respectively, primarily related to a change in valuation allowance on the Swiss tax incentive, as described below, partially offset by changes in other valuation allowances and changes in reserves. The Company’s effective tax rate for the three and six months ended June 30, 2024 includes net discrete tax benefits of approximately $27 million and $20 million, respectively, primarily related to a business reorganization that occurred in the second quarter of 2024. Also included as a discrete item in the effective tax rate for the three months ended June 30, 2024 is the beneficial impact of approximately 8 points resulting from the Motional funding and ownership restructuring transactions, as described further in Note 21. Investment in Affiliates. There was no tax expense associated with these gains as Aptiv’s interest in Motional is exempt from capital gains tax in the jurisdiction in which it is owned.

Previous wording

On December 15, 2022, the European Union (the “E.U.”) Member States formally adopted the Framework, which generally provides for a minimum effective tax rate of 15%, as established by the OECD. Many countries have enacted legislation consistent with the Framework effective at the beginning of 2024. The OECD continues to release additional guidance on these rules. The Company has proactively responded to these tax policy changes and will continue to closely monitor developments. Our effective tax rate for the three months ended March 31, 2025 includes an unfavorable impact from the enacted Framework.

Current wording

On December 15, 2022, the E.U. Member States formally adopted the Framework, which generally provides for a minimum effective tax rate of 15%, as established by the OECD. Many countries have enacted legislation consistent with the Framework effective at the beginning of 2024. The OECD continues to release additional guidance on these rules. The Company has proactively responded to these tax policy changes and will continue to closely monitor developments. Our effective tax rate for the six months ended June 30, 2025 includes an unfavorable impact from the enacted Framework.

Previous wording

On January 15, 2025, the OECD released Administrative Guidance (the “Guidance) on Article 9.1 of the Global Anti-Base Erosion Model Rules (the “Model Rules”) which amends the Pillar Two Framework. Jurisdictions that have adopted the Framework may implement and administer their domestic laws consistent with the Model Rules and Guidance. The Guidance eliminates the tax basis in certain deferred tax assets including tax credit carryforwards for purposes of the global minimum tax established under the Framework. As a result, the Company no longer expects to obtain significant benefits from the tax incentive granted to its Swiss subsidiary in 2023. Accordingly, the Company recognized an increase to valuation allowances of $294 million to reduce the related deferred tax asset during the three months ended March 31, 2025. No other deferred tax assets are impacted by the Guidance.

Current wording

On January 15, 2025, the OECD released Administrative Guidance (the “Guidance) on Article 9.1 of the Global Anti-Base Erosion Model Rules (the “Model Rules”) which amends the Pillar Two Framework. Jurisdictions that have adopted the Framework may implement and administer their domestic laws consistent with the Model Rules and Guidance. The Guidance eliminates the tax basis in certain deferred tax assets including tax credit carryforwards for purposes of the global minimum tax established under the Framework. As a result, the Company no longer expects to obtain significant benefits from the tax incentive granted to its Swiss subsidiary in 2023. Accordingly, the Company recognized an increase to valuation allowances of $294 million to reduce the related deferred tax asset during the six months ended June 30, 2025. No other deferred tax assets are impacted by the Guidance.

Previous wording

Equity loss, net of tax reflects the Company’s interest in the results of ongoing operations of entities accounted for as equity method investments. The decrease in equity losses recognized by Aptiv during the three months ended March 31, 2025 compared to 2024 is primarily attributable to the decrease in Aptiv’s common equity interest in Motional from 50% to approximately 15% as a result of the Motional funding and ownership restructuring transactions that were completed in May 2024. Refer to Note 21. Investments in Affiliates to the consolidated financial statements contained herein for additional information.

Current wording

Equity loss, net of tax reflects the Company’s interest in the results of ongoing operations of entities accounted for as equity method investments. The decrease in equity losses recognized by Aptiv during the three and six months ended June 30, 2025 compared to 2024 is primarily attributable to the decrease in Aptiv’s common equity interest in Motional from 50% to approximately 13% as a result of the Motional funding and ownership restructuring transactions that were completed in May 2024 and May 2025. Refer to Note 21. Investments in Affiliates to the consolidated financial statements contained herein for additional information.