Magna International : 2023 Annual Report to Shareholders

Strategy in Motion: Continued Growth Over Market and Improved Earnings

I am pleased to present Magna's 2023 annual report, highlighting our achievements, challenges, and future opportunities. As I reflect on the past year, it is evident that Magna has continued to thrive and adapt in a rapidly changing automotive industry.

The goal of delivering a sustainable, safer, and more accessible future for all who share the road steers our business decisions as we continue to create value for our stakeholders.

We are building momentum by further innovating, delivering operational excellence, and solving challenges for the industry in key megatrend areas of electrification and active safety. We are optimistic about the future as we continue to invest for growth and navigate one of the most complex industries, establishing leadership in high-tech product categories that will be fundamental to future vehicles.

A hallmark of Magna continues to be a strong financial foundation, including a solid balance sheet and our disciplined capital allocation strategy has remained consistent. In 2023, we remained focused on identifying product gaps and growth opportunities, while we continued to shift our portfolio through both M&A and internal investments. Looking ahead, we expect capital spending as a percent of sales to decline, as planned, and our cash generation profile to significantly improve from 2023 levels.

Go-Forward Strategy

We continue to execute our Go-Forward strategy, which gives us confidence in our outlook for growth and margin expansion. This strategy includes accelerating the deployment of capital towards high-growth areas, driving operational excellence, and unlocking new business models and markets.

Portfolio and Capabilities

Our ecosystem of interconnected products and complete vehicle expertise enables us to deliver unique system solutions and position ourselves at the forefront of the industry's shift towards software-defined vehicles. We believe this integrated systems approach aligns with how OEMs will design, source, and manufacture in the future. Most importantly, this approach gives us a competitive advantage and enables us to generate strong returns and grow in this rapidly evolving landscape.

In addition, our ability to continue to outgrow vehicle production and win significant new business confirms the strength of our portfolio and our capabilities.

We continue to take a selective, measured, and thoughtful approach to the programs in which we invest, to help mitigate volume risk.

Following the acquisition of Veoneer Active Safety, our active safety business is well on its way to becoming an industry leader with a comprehensive portfolio, leading

market positions and a global presence, with more than 2,600 systems and software engineers.

Operational Excellence

We are among the industry leaders in annual product launches and shipped roughly two billion components and systems from our facilities in 2023.

on creating value by participating in new business models within specific market segments. These include autonomous mobile robots (AMR), which can be leveraged in manufacturing and last-mile delivery applications, which is expected to grow to about four times what the market is today.

Optimistic about 2024

To help mitigate short- and mid-term macroeconomic pressures, we implemented various actions, including consolidation, restructuring, and cost containment activities across the company. We also engaged in ongoing commercial negotiations with customers to recover costs, transitioned to various pricing models based on industry benchmarks, and addressed pricing challenges.

These actions have already yielded benefits, helping offset 2023 headwinds and contributed to solid earnings growth. Simultaneously, we are intensifying efforts in core areas of our business and adopting advanced technologies to enhance long-term productivity. These efforts encompass automation, smart manufacturing activities, and enterprise-wide global purchasing initiatives.

New Mobility

With a methodical approach focused on leveraging our core expertise, Magna is poised to take advantage of near- and long-term opportunities beyond the traditional supply and manufacture of vehicles. We are focused

With the plans we are executing, we believe we are poised to continue to outgrow the market, expand margins over time, generate strong returns on our investments and further shift our portfolio toward the Car of the Future.

We are well-positioned for the tremendous opportunities in the coming years as the industry transforms. I am confident that Magna will generate sustainable value in the long run, as we lead in the evolving mobility landscape.

I thank all of our stakeholders for their continued support of our vision and mission.

Sincerely,

Swamy Kotagiri

Chief Executive Officer

The mobility landscape is transforming, driven by new technology and changing consumer preferences. As a dedicated leader, Magna spearheads innovations that resonate across the automotive industry, positioning us for the Car of the Future. This software- and systems-defined vehicle will be equipped with active safety features and connected capabilities, while embracing advancements in electrification. It will be embedded with Magna innovations designed to enhance safety, intelligence, and sustainability.

Our full systems approach and deep product expertise allows us to understand the complete picture and deliver solutions that respond to evolving market opportunities. We continually make advancements in our areas of expertise, from enhancing driver assistance systems to pioneering new eco innovations.

At Magna, every step we take is guided by a broader purpose: to advance mobility for everyone and everything. We are driven by the vision of creating a future where mobility is accessible, sustainable, and inclusive. By aligning our expertise with this purpose, we contribute to shaping a better automotive industry and a more connected world.

All-Encompassing Magna Technologies

Eco Innovation means technologies for the future - from aerodynamics and powertrain to software, manufacturing processes and nearly everything in between.

These innovations solve complex problems and help our customers fulfill their vision. They also have a significant impact on sustainability and efficiency throughout the value chain and product life cycle.

Flexing Our eDrive Muscle

Magna's comprehensive hybrid and electric powertrain portfolio is taking vehicle electrification to the next level of efficiency and range. Our next generation 800V eDrive solution sets new standards in efficiency, power-to-weight ratio, and torque density. The system will minimize our reliance on aluminum and heavy rare earth materials, and lower CO2 emissions during production by about 20%.

Strengthening EV Safety and Structure

We are leveraging our foundational structures expertise and contributing to the overall structural and safety aspects of an EV through our battery enclosures, offering customers a competitive advantage in the development of these complex assemblies featuring a range of state-of-the-art joining and sealing techniques. This is one of Magna's fastest growing businesses.

Expanding Presence in the Value Chain

The LG Magna e-Powertrain joint venture is a key contributor to our expanded presence in the EV value chain. With production of motors, inverters, and on-board chargers at a new facility in Mexico and an additional facility under development in Hungary, we are well positioned to keep pace as global EV production continues to increase.

Building on Market-Leading Camera Expertise

Our Gen5 front camera module system is a one-box system that delivers road safety through long-range and side object detection. With production already underway, the high-resolution camera's microcontroller is scalable for sensor fusion with up to five radars and offers leading active safety solutions.

Sustainability:

Significant Steps Forward

At Magna, we are not only building a strong, sustainable business, but one that makes a positive impact on the planet for current and future generations. We are committed to minimizing the environmental impact of our activities - partnering with our customers and communities, as well as operating efficient manufacturing processes and recycling programs.

2023 Highlights:

• • Announced our most ambitious environmental commitment to date: to achieve net-zero emissions by 2050, an important step in fighting climate change. This latest effort is part of the Science-Based Targets Initiative, the benchmark for decarbonization targets in line with the Paris Climate Agreement.

• • Targeted a 20% reduction in corporate energy intensity in all manufacturing facilities by 2027. We are already halfway towards our 2027 target, having achieved a 10% reduction over the last 12 months.

• • Pledged to transition to 100% renewable electricity use in our European operations by 2025 and globally by 2030.

• • Targeted a 90% reduction in scopes 1, 2 and 3 by 2050, with near-term commitments to reduce approximately 42% in scopes 1 and 2, and 25% in scope 3 by 2030.

• • Dedicated to addressing not only the emissions we produce within our own facilities but also those of our entire supply chain. We are working with our customers and partners, along side more than 10,000 supplier companies, to conserve our natural resources.

MAGNA INTERNATIONAL INC.

Management's Discussion and Analysis of Results of Operations and Financial Position

December 31, 2023

Unless otherwise noted, all amounts in this Management's Discussion and Analysis of Results of Operations and Financial Position ["MD&A"] are in U.S. dollars and all tabular amounts are in millions of U.S. dollars, except per share figures, which are in U.S. dollars. When we use the terms "we", "us", "our" or "Magna", we are referring to Magna International Inc. and its subsidiaries and jointly controlled entities, unless the context otherwise requires.

This MD&A should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 included in our 2023 Annual Report to Shareholders.

This MD&A may contain statements that are forward looking. Refer to the "Forward-Looking Statements" section in this MD&A for a more detailed discussion of our use of forward-looking statements.

This MD&A has been prepared as at February 22, 2024.

HIGHLIGHTS

INDUSTRY PRODUCTION ENVIRONMENT

• • Global light vehicle production increased 8% in 2023, including increases of 9%, 11%, and 8% in North America, Europe, and China, respectively.

• • North American light vehicle production was negatively impacted by the UAW labour strikes at certain customers during the third and fourth quarters of 2023.

SALES & EARNINGS

• • Total sales increased 13% to a record $42.8 billion, primarily reflecting higher global vehicle production, the launch of new programs, and the acquisition of Veoneer Active Safety ["Veoneer AS"], partially offset by the negative impact of lost vehicle production as a result of the UAW labour strikes at certain customers during the third and fourth quarters of 2023.

• • Diluted earnings per share were $4.23 and adjusted diluted earnings per share(1) were $5.49 in 2023. Adjusted diluted earnings per share increased $1.25 compared to 2022 primarily reflecting earnings on higher sales, including higher margins due to the impact of operational excellence and cost initiatives, and productivity and efficiency improvements. These factors were partially offset by higher launch, engineering, and other costs associated with new assembly business, the negative impact of the UAW labour strikes, the net unfavourable impact of commercial items, lower amortization of the initial value of public company securities, higher launch costs associated with new manufacturing business, and the impact of acquisitions, net of divestitures.

CASH & INVESTMENTS

• • Cash generated from operating activities was $3.1 billion, compared to $2.1 billion in 2022, largely reflecting an increase in net income and generation of cash from operating assets and liabilities in 2023 compared to an investment in operating assets and liabilities in 2022.

• • We continued to invest in our business, including:

  • · $2.5 billion for fixed assets;

  • · $562 million in investment and other asset spending; and

  • · $1.5 billion for acquisitions and business combinations, and public and private equity investments, including the acquisition of Veoneer AS.

• • We paid dividends of $522 million in 2023.

• • Our Board of Directors increased our quarterly dividend to $0.475 per share, our 14th consecutive year of dividend increases.

• • We raised $2 billion in debt, comprised of Senior Notes and $400 million in a delayed-draw Term Loan, to fund the acquisition of Veoneer AS, invest in megatrend areas, and refinance €550 million in Senior Notes that came due in 2023.

STRATEGIC UPDATES

• • Active Safety - we further advanced our position in Active Safety, including: · Completing the acquisition of Veoneer AS, broadening our active safety portfolio with complementary products, customers, geographies, engineering and software resources; · Launching our innovative, Gen5 front camera module system on a high-volume program for a European-based global OEM, and winning further front camera module volume on the program for an additional region.

• • Electrification - we continued to strengthen our business in electrification, including through:

  • · Winning two additional integrated e-drive programs for global OEMs, one based in North America and one in Europe;

  • · Launching primary and secondary e-drives on a battery electric vehicle program for a new customer;

  • · Launching a first-to-market modular eDecoupling unit to support multiple battery electric vehicle programs for a German premium OEM;

  • · Winning significant new awards for battery enclosures on multiple OEM programs.

• • Sustainability - we committed to sustainability and environmental stewardship by submitting net-zero emission targets for validation by the Science Based Targets initiative, with a goal to achieve this target by 2050, and meet our near-term Scope 1, 2 and 3 targets by 2030.

OVERVIEW

OUR BUSINESS(2)

Magna is more than one of the world's largest suppliers in the automotive space. We are a mobility technology company built to innovate, with a global, entrepreneurial-minded team of over 179,000(3) employees across 342 manufacturing operations and 104 product development, engineering and sales centres spanning 28 countries. With 65+ years of expertise, our ecosystem of interconnected products combined with our complete vehicle expertise uniquely positions us to advance mobility in an expanded transportation landscape. For further information about Magna (NYSE:MGA; TSX:MG), please visitwww.magna.comor follow us on social.

• (1) Adjusted diluted earnings per share is a Non-GAAP financial measure. Refer to the section "Use of Non-GAAP Measures".

• (2) Manufacturing operations, product development, engineering and sales centres include certain operations accounted for under the equity method.

• (3) Number of employees includes over 166,000 employees at our wholly owned or controlled entities and over 13,000 employees at operations accounted for under the equity method.

2 ANNUAL REPORT 2023

FORWARD-LOOKING STATEMENTS

Certain statements in this MD&A may constitute "forward-looking information" or "forward-looking statements" (collectively, "forward-looking statements"). Any such forward-looking statements are intended to provide information about management's current expectations and plans and may not be appropriate for other purposes. Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, strategic objectives or economic performance, or the assumptions underlying any of the foregoing, and other statements that are not recitations of historical fact. We use words such as "may", "would", "could", "should", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "aim", "forecast", "outlook", "project", "estimate", "target" and similar expressions suggesting future outcomes or events to identify forward-looking statements.

Forward-looking statements in this document include, but are not limited to, statements relating to achievement of our near term emissions reductions target and 2050 net zero target.

Forward-looking statements are based on information currently available to us and are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. While we believe we have a reasonable basis for making any such forward-looking statements, they are not a guarantee of future performance or outcomes. Whether actual results and developments conform to our expectations and predictions is subject to a number of risks, assumptions, and uncertainties, many of which are beyond our control, and the effects of which can be difficult to predict, including the risk factors which are described later in this MD&A.

INDUSTRY TRENDS

Our operating results are primarily dependent on the levels of North American, European, and Chinese car and light truck production by our customers. While we supply systems and components to every major original equipment manufacturer ["OEM"], we do not supply systems and components for every vehicle, nor is the value of our content consistent from one vehicle to the next. As a result, customer and program mix relative to market trends, as well as the value of our content on specific vehicle production programs, are also important drivers of our results.

Ordinarily, OEM production volumes are aligned with vehicle sales levels and thus affected by changes in such levels. Aside from vehicle sales levels, production volumes are typically impacted by a range of factors, including: general economic and political conditions; labour disruptions; free trade arrangements; tariffs; relative currency values; commodities prices; supply chains and infrastructure; availability and relative cost of skilled labour; regulatory considerations, including those related to environmental emissions and safety standards; and other factors.

Overall vehicle sales levels are significantly affected by changes in consumer confidence levels, which may in turn be impacted by consumer perceptions and general trends related to the job, housing, and stock markets, as well as other macroeconomic and political factors. Other factors which typically impact vehicle sales levels and thus production volumes include: vehicle affordability; interest rates and/or availability of credit; fuel and energy prices; relative currency values; regulatory restrictions on use of vehicles in certain megacities; government subsidies to consumers for the purchase of low- and zero-emission vehicles; and other factors.

While the foregoing economic, political, and other factors are part of the general context in which the global automotive industry operates, there were a number of significant industry trends that impacted us during 2023, including:

• • elevated inflation in all markets in which we operate;

• • price increases and surcharges from sub-suppliers impacted by inflationary pressures;

• • targeted labour strikes by UAW members against certain Ford, General Motors and Stellantis facilities in the U.S.;

• • supply chain disruptions, including continued impact from the global shortage of semiconductor chips that has materially affected global automotive production volumes since 2020; and

• • operational inefficiencies as a result of our production lines being stopped/restarted unexpectedly.

We continue to implement a business strategy which is rooted in our best assessment as to the rate and direction of change in the automotive industry, including with respect to trends related to vehicle electrification and advanced driver assistance systems, as well as future mobility business models. Our short and medium-term operational success, as well as our ability to create long-term value through our business strategy, are subject to a number of risks and uncertainties which are discussed later in this MD&A.

USE OF NON-GAAP FINANCIAL MEASURES

In addition to results presented in accordance with accounting principles generally accepted in the United States of America ["U.S. GAAP"], this report includes the use of Adjusted earnings before interest and taxes ["Adjusted EBIT"], Adjusted EBIT as a percentage of sales, Adjusted diluted earnings per share, and Adjusted Return on Invested Capital [collectively, the "Non-GAAP Measures"]. We believe these Non-GAAP financial measures provide additional information that is useful to investors in understanding our underlying performance and trends through the same financial measures employed by our management. Readers should be aware that Non-GAAP Measures have no standardized meaning under U.S. GAAP and accordingly may not be comparable to the calculation of similar measures by other companies. We believe that Adjusted EBIT, Adjusted EBIT as a percentage of sales, Adjusted diluted earnings per share and Adjusted Return on Invested Capital provide useful information to our investors for measuring our operational performance as they exclude certain items that are not reflective of ongoing operating profit and facilitate a comparison with prior periods. The presentation of any Non-GAAP Measures should not be considered in isolation or as a substitute for our related financial results prepared in accordance