OVERVIEW

ArvinMeritor, Inc. is a global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company serves light vehicle, commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets. Headquartered in Troy, Michigan, the company employs approximately 18,100 people at 82 manufacturing facilities in 22 countries. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM.

In 2008, we announced our intention to separate our Light Vehicle Systems (LVS) and Commercial Vehicle Systems (CVS) businesses. We subsequently attempted to complete the separation through a spin-off of the LVS business via a tax-free distribution to ArvinMeritor stockholders. The unprecedented challenges in the credit markets, deterioration in the automotive markets and other factors prompted us to investigate other alternatives for the separation, including a potential sale of all or portions of the business. On January 8, 2009, we announced that we will reorganize the LVS business into separate product lines consisting of Body Systems, Chassis and Wheels. We intend to pursue a sale of the Body Systems business separately when market conditions support such actions. We are exploring immediate strategic alternatives for a timely and orderly disposition of the Chassis business. We expect to retain the Wheels business for the foreseeable future. We believe the separation of LVS and CVS represents a major step in our corporate transformation and will improve corporate clarity and management focus. There are risks to the timing and certainty of completing any transaction, including the terms upon which any sale agreement with respect to any portion of the business may be entered into and the amount of any exit costs. During the first quarter of fiscal year 2009, we incurred approximately $6 million of costs associated with separation related activities, which are included in the selling, general and administrative expenses in the consolidated statement of operations included in the Consolidated Financial Statements under Item 1. Financial Statements.

In the first quarter of fiscal year 2009, management determined that an impairment review of goodwill and certain long-lived assets was required due to recent declines in overall economic conditions including tightening credit markets, stock market declines and significant reductions in current and forecasted production volumes for light and commercial vehicles. As a result, we recognized pre-tax, non-cash asset impairment charges of $279 million, primarily related to our LVS segment. In addition to these asset impairment charges, we established valuation allowances against deferred tax assets in certain tax jurisdictions, primarily the United States, resulting in a non-cash charge of $665 million in the first quarter of fiscal year 2009.

We believe that the substantial uncertainty and significant deterioration in the worldwide credit markets, the global economic downturn and the current climate in the U.S. and other economies has impacted the demand for the company's products. Many of our customers experienced sharp declines in production in November and December 2008. The decreases in production and sales volumes of our customers had a significant impact on our revenues and profitability during the first quarter of fiscal year 2009. Our LVS business was adversely affected by decreased volumes in all of our major markets with most of the declines occurring in North America and Europe. In addition, lower material recovery and increases in costs associated with the planned LVS separation reduced earnings for the LVS business during the first quarter of fiscal year 2009. Our CVS business was primarily impacted by significantly lower volumes in our Asia-Pacific operations and trailer product lines. CVS sales also reflect the initial impact of declines in our European truck business, which are expected to experience larger declines in the second quarter of fiscal year 2009. However, sales in our specialty and aftermarket product lines increased compared to the prior year despite the challenging economic environment.

Highlights of our consolidated results from continuing operations for the three months ended December 31, 2008, are as follows:

• Sales were $1,370 million, down 18 percent compared to the same period last year. Excluding the impact of foreign currency exchange rates, which decreased sales by $116 million, sales decreased by 11 percent year over year.
• Segment EBITDA margin for our reportable segments was negative 19.9 percent, down from positive 4.4 percent a year ago.
• Operating margins were negative 24.7 percent, down from positive 1.7 percent a year ago.
• Diluted loss per share from continuing operations was $13.71, compared to $0.01 in fiscal year 2008.
• Segment EBITDA and operating margins include non-cash asset impairment charges of $273 million discussed above. Diluted loss per share also includes $665 million of non-cash impairment charges to establish valuation allowances against certain deferred tax assets.

Cash used for operating activities for the three months ended December 31, 2008 was $338 million, compared to cash used of $271 million in the same period of last fiscal year. The deterioration in cash flow is primarily attributable to lower earnings and $53 million of payments related to previously announced settlements of claims with certain unions and a customer. These decreases were partially offset by lower working capital levels compared to the prior year. The decrease in working capital is primarily due to the

impact of the lower volumes. The first fiscal quarter is typically our poorest cash flow quarter because of normal seasonal trends, including calendar year shutdowns in the industries in which we participate.

MARKET OUTLOOK

We are operating with the expectations that global markets will remain weak for
an extended period of time. Although we are unable to predict industry volumes
for fiscal year 2009 due to the current market uncertainty, the following is a
summary of industry production volumes we are assuming for purposes of managing
our business, compared to fiscal year 2008 production volumes.

                                                Fiscal Year      Unit    Percent
                                               2009     2008    Change     Change
Commercial Vehicles (in thousands)
North America, Heavy-Duty Trucks                 140      191      (51 )    (27) %
Europe, Heavy and Medium Duty Trucks             305      562     (257 )    (46) %
South America, Heavy and Medium Duty Trucks      115      158      (43 )    (27) %

Light Vehicles (in millions)
North America                                    9.2     13.6     (4.4 )    (32) %
Europe                                          16.5     22.2     (5.7 )    (26) %
South America                                    3.5      4.0     (0.5 )    (12) %

COMPANY OUTLOOK

Our business continues to address a number of challenging industry-wide issues including the following:

• Severely reduced production volumes in the light and commercial vehicle industry;
• Weakened financial strength of most of the original equipment (OE) manufacturers and some suppliers;
• Excess capacity;
• Changes in product mix in North America;
• Higher energy and transportation costs;
• OE pricing pressures;
• Fluctuating costs for steel and other raw materials;
• Pension and retiree medical health care costs; and
• Currency exchange rate volatility.

We have begun implementing a number of immediate restructuring and cost reduction initiatives aimed at mitigating current market conditions. These actions include:

• Workforce reductions of more than 1,500 employees, including full-time, contract and temporary workers;
• Extended shutdowns and reduced work weeks at all plants;
• A 10 percent salary reduction for all U.S. executive-level employees and a 5 percent reduction in salary for all other U.S. salaried employees;
• Elimination of the matching contribution for the U.S. 401-K;
• Suspension of fiscal year 2009 merit increases for all employees; and
• Reduction of Board of Directors annual compensation by 10 percent.

In fiscal year 2009, we expect to achieve an estimated $170 million in annualized savings related to these significant actions of which $115 million is expected to be in our CVS business and $55 million is expected to be in our LVS business. The majority of these actions have already been completed; while the remainder are in process. We expect to incur approximately $35 million of cash expenditures in fiscal year 2009 in connection with these actions for severance and related benefits. In addition, we are implementing proactive cost reduction actions to keep a strong focus on cash flow by maintaining tight controls on global inventory, pursuing

working capital improvements, reducing capital spending and significantly reducing discretionary spending. We also continue to implement and execute our profit improvement and cost reduction initiative called "Performance Plus", which was launched in fiscal year 2007.

The substantial uncertainty and significant deterioration in the worldwide credit markets, the global economic downturn and the current climate in the U.S. and other economies has impacted demand for the company's products. As a result, commercial and light vehicle production has declined significantly in most markets. We believe the impact of these lower volumes will continue to impact our profitability for the remainder of fiscal year 2009. We are unable to predict production levels in these markets for 2009 and are managing our business under the assumption that production levels, as set forth in the volume chart above, may continue to be at severely depressed levels. We believe that our strategic direction, aggressive cost reductions, diversified customer base and global footprint should help us to weather these challenges.

Our cash and liquidity needs have been impacted by various factors, including the level, variability and timing of our customer's worldwide vehicle production and other factors outside of our control. Cash flow in the first quarter of fiscal year 2009 was negatively affected by decreased earnings due to lower sales and will continue to be impacted during the remainder of fiscal year 2009 due to expected production declines and the current volatility in the financial markets, which could affect certain of our customers. We have seen our usage of the revolving credit facility throughout the quarter increase to meet working capital and other operational needs and expect this to continue through the first half of fiscal year 2009. In view of the reduction in production levels and the world-wide economic environment, we are focused on maintaining the liquidity necessary to operate our business. At December 31, 2008, we had $158 million in cash and cash equivalents and an undrawn, available amount of $523 million under our revolving credit facility. We believe that our current financing arrangements should provide us with sufficient financial flexibility to fund our on-going operations, debt service requirements, restructuring activities, and planned investments through the next twelve months. However, if the current uncertainty in the financial markets results in a prolonged period of economic downturn and delays a recovery of production volumes beyond the time horizon assumed in our forecasting process, or results in production volumes significantly below our planning assumptions, our current financing arrangements may not be sufficient to fund our operations. In addition, if the credit environment or other factors causes the banks that are parties to our credit facility to not meet their funding commitments, it could adversely affect our access to liquidity needed for our business. Any disruption could require us to take additional measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged, which could be difficult given the current environment and the recent lowering of our credit rating. See "Part II. Item 1A. Risk Factors." In addition, the amount available to us under the revolving credit facility is subject to our senior secured debt-to-EBITDA, as defined in the agreement, being no greater than (i) 2.50 to 1 on the last day of any fiscal quarter through and including the fiscal quarter ending March 31, 2009 and (ii) 2.00 to 1 on the last day of any fiscal quarter thereafter. Our ability to access the entire availability under the revolver facility will likely become constrained at future quarter ends as a result of this leverage covenant and the impact of lower volume on our profitability as measured by EBITDA. While we expect to be in compliance with this covenant based on current planning assumptions, many of the above factors could affect our future compliance. See "Liquidity - Revolving Credit Facility".

The price of steel increased significantly during fiscal year 2008 causing substantial variability in the cost of our products. Steel prices have stabilized during the first quarter of fiscal year 2009 and are expected to gradually decline through the remainder of the fiscal year. Variability in steel costs, transportation costs and overall volatility of the commodity markets, could unfavorably impact our financial results in the future. In addition, these factors, together with continued volatility in credit markets, OEM production cuts resulting from an extended economic slowdown and intense competition in global markets have created pressure on our profit margins. We continuously work to address these competitive challenges by reducing costs, improving productivity and restructuring operations. In addition, in certain circumstances, we have been successful in negotiating improved pricing with our customers. To the extent these price increases are contractually limited to a short period of time or are not sustainable, we intend to pursue alternative means to offset any future price decreases by reducing costs and improving productivity, or, to the extent such measures are insufficient, by renegotiating certain pricing.

Significant factors that could affect our results and liquidity in fiscal year 2009 include:

• Volatility in financial markets around the world;
• Our ability to continue to access our bank revolving credit facilities, accounts receivable securitization and factoring arrangements and capital markets;
• Timing and extent of recovery of the production and sales volumes in commercial and light vehicle markets around the world;
• Our ability to successfully separate our light vehicles Body Systems and Chassis businesses from our commercial vehicles business;
• Higher than planned price reductions to our customers;
• Additional restructuring actions and the timing and recognition of restructuring charges;
• The financial strength of our suppliers and customers, including potential bankruptcies;
• Any unplanned extended shutdowns or production interruptions;
• Our ability to implement planned productivity and cost reduction initiatives;
• The impact of any acquisitions or divestitures;
• Significant awards or losses of existing contracts;
• The impact of currency fluctuations on sales and operating income;
• Higher than planned warranty expenses, including the outcome of known or potential recall campaigns;
• A significant further deterioration or slow down in economic activity in the key markets we operate;
• Further lower volume of orders from key customers;
• Ability to implement enterprise resource planning systems at our locations successfully;
• Our continued ability to recover steel price increases from our customers; and
• The impact of any new accounting rules.

NON-GAAP MEASURES

In addition to the results reported in accordance with accounting principles generally accepted in the United States (GAAP), we have provided information regarding "segment EBITDA". Segment EBITDA is defined as income (loss) from continuing operations before interest, income taxes, depreciation and amortization and loss on sale of receivables. We use segment EBITDA as the primary basis to evaluate the performance of each of our reportable segments. For a reconciliation of segment EBITDA to loss from continuing operations see "Results of Operations" below.

Management believes segment EBITDA is a meaningful measure of performance as it is commonly utilized by management and investors to analyze operating performance and entity valuation. Management, the investment community and banking institutions routinely use segment EBITDA, together with other measures, to measure operating performance in our industry. Further, management uses segment EBITDA for planning and forecasting future periods.

Segment EBITDA should not be considered a substitute for the reported results prepared in accordance with GAAP and should not be considered as an alternative to net income as an indicator of our operating performance or to cash flows as a measure of liquidity. Segment EBITDA, as determined and presented by the company, may not be comparable to related or similarly titled measures reported by other companies.

Results of Operations

The following is a summary of our financial results (in millions, except per
share amounts):

                                                  Three Months Ended
                                                     December 31,
                                                   2008         2007
Sales:
Commercial Vehicle Systems                      $       956    $ 1,080
Light Vehicle Systems                                   414        583
SALES                                                 1,370      1,663
SEGMENT EBITDA:
Commercial Vehicle Systems                      $        36    $    71
Light Vehicle Systems                                  (308 )        2
SEGMENT EBITDA (1)                                     (272 )       73
Unallocated legacy and corporate costs (2)              (16 )       (1 )
Loss on sale of receivables                              (4 )       (4 )
Depreciation and amortization                           (32 )      (32 )
Interest expense, net                                   (22 )      (27 )
Provision for income taxes                             (645 )      (10 )
LOSS FROM CONTINUING OPERATIONS                        (991 )       (1 )
LOSS FROM DISCONTINUED OPERATIONS, net of tax             -        (11 )
NET LOSS                                        $      (991 )  $   (12 )

DILUTED LOSS PER SHARE
Continuing operations                           $    (13.71 )  $ (0.01 )
Discontinued operations                                   -      (0.16 )
Diluted loss per share                          $    (13.71 )  $ (0.17 )

DILUTED AVERAGE COMMON SHARES OUTSTANDING              72.3       71.9

(1)Segment EBITDA results reflect $273 million of non-cash impairment charges recognized in the first quarter of fiscal year 2009.

(2) Unallocated legacy and corporate costs represent items that are not directly related to our business segments. These costs include pension and retiree medical costs associated with recently sold businesses, legacy costs for environmental and product liability and certain corporate costs not specifically allocable to any of our segments. Unallocated legacy and corporate costs for the first three months of fiscal year 2009 include $6 million of costs associated with the separation of the LVS business, $3 million of restructuring costs at certain corporate locations, $6 million of impairment charges related to certain tax credits and $1 million of costs associated with legacy pension and retiree medical.

Three Months Ended December 31, 2008 Compared to Three Months Ended December 31, 2007

Sales

The following table reflects total company and geographic business segment sales
for the three months ended December 31, 2008 and 2007. The reconciliation is
intended to reflect the trend in business segment sales and to illustrate the
impact that changes in foreign currency exchange rates, volumes and other
factors had on sales (in millions).

                                                           Dollar Change Due To
                  December 31,      Dollar      %                           Volume
                 2008      2007     Change    Change     Currency          / Other
CVS:
North America   $   517   $   461    $   56       12 %   $      (3 )         $   59
Europe              277       409      (132 )    (32 )%        (56 )            (76 )
South America        95        89         6        7 %         (16 )             22
Asia-Pacific         67       121       (54 )    (45 )%        (11 )            (43 )
                    956     1,080      (124 )    (11 )%        (86 )            (38 )
LVS:
North America   $   145   $   203    $  (58 )    (29 )%  $      (8 )         $  (50 )
Europe              174       255       (81 )    (32 )%        (22 )            (59 )
South America        71        89       (18 )    (20 )%         (3 )            (15 )
Asia-Pacific         24        36       (12 )    (33 )%          3              (15 )
                    414       583      (169 )    (29 )%        (30 )           (139 )
TOTAL SALES     $ 1,370   $ 1,663    $ (293 )    (18 )%  $    (116 )         $ (177 )

The following table reflects estimated automotive and commercial vehicle production volumes for the first quarter ended December 31, 2008 and 2007 based on available sources.

                                           Quarter ended December 31,          Unit      Percent
                                            2008                2007          Change       Change
Commercial Vehicles (in thousands)
North America, Heavy-Duty Trucks                  40.5                42.6        (2.1 )     (5) %
North America, Trailers                           31.1                51.2       (20.1 )    (39) %
Europe, Heavy and Medium Duty Trucks              95.4               135.6       (40.2 )    (30) %
Europe, Trailers                                  27.6                46.0       (18.4 )    (40) %
South America, Heavy and Medium Duty
Trucks                                            34.5                38.0        (3.5 )     (9) %

Light Vehicles (in millions)
North America                                      2.8                 3.7        (0.9 )    (24) %
Europe                                             4.2                 5.6        (1.4 )    (25) %
South America                                      0.8                 1.0        (0.2 )    (20) %

Commercial Vehicle Systems (CVS) sales were $956 million in the first three months of fiscal year 2009, down 11 percent from the same period in fiscal year 2008. The effect of foreign currency translation decreased sales by $86 million. Excluding the effects of foreign currency, the decrease in sales is primarily due to lower heavy and medium-duty truck volumes in the European and Asia-Pacific markets, along with lower global trailer volumes. Heavy and medium-duty truck volumes in all markets are expected to experience a further decline in our second fiscal quarter. The above decreases were partially offset by improved North American sales primarily due to higher sales in our specialty and aftermarket product lines. The acquisitions of Mascot and Trucktechnic businesses during fiscal year 2008 increased sales by $15 million in the first three months of fiscal year 2009.

Light Vehicle Systems (LVS) sales were $414 million in the first quarter of fiscal year 2009, compared to $583 million in first quarter of fiscal year 2008. The effect of foreign currency translation decreased sales by $30 million. Excluding the impact of foreign currency translation, sales decreased by $139 million or 24% compared to the prior year. As previously mentioned, we believe that the substantial uncertainty and significant deterioration in the worldwide credit markets, the global economic downturn and the current climate in the U.S. and other economies has impacted the demand for light vehicles in the foreseeable future. As a result, light vehicle production in most regions has declined significantly compared to the prior year. Pass-through sales, primarily in North America, decreased by $23 million in the first quarter of fiscal year 2009 compared to the same period in the prior year. Pass-through sales are products sold to our customers where we acquire certain components and assemble them into the final product. These pass-through sales carry minimal margins, as we have little engineering or manufacturing responsibility. We expect production volumes in all regions of the world to be significantly lower during the remainder of fiscal year 2009 compared to fiscal year 2008.

Segment EBITDA and EBITDA Margins

The following table reflects segment EBITDA and EBITDA margins for the three
months ended December 31, 2008 and 2007 (dollars in millions).

                          Segment EBITDA               Segment EBITDA Margins
                   December 31,                        December 31,
                   2008      2007     $ Change         2008      2007     Change
CVS              $      36   $  71   $      (35 )          3.8 %   6.6 %    (2.8) pts
LVS                   (308 )     2         (310 )       (74.4) %   0.3 %   (74.7) pts
Segment EBITDA   $    (272 ) $  73   $     (345 )       (19.9) %   4.4 %   (24.3) pts

Restructuring costs included in our business segment results during the three months ended December 31, 2008 and 2007 are as follows (in millions):

                                             CVS                    LVS                  Total
                                        December 31,            December 31,          December 31,
                                      2008         2007       2008       2007       2008       2007
Performance Plus Actions            $      -     $      -    $     2    $    11    $     2    $    11
First Quarter 2009 Actions
(reduction in force)                       8            -         13          -         21          -
Total                                      8            -         15         11         23         11
Adjustments and reversals                  -            -          -         (1 )        -         (1 )
Total restructuring costs (1)       $      8     $      -    $    15    $    10    $    23    $    10

(1) Total segment restructuring costs do not include those recorded in unallocated corporate costs. These costs were $3 million in the first quarter of fiscal year 2009, primarily related to employee termination benefits. There were no unallocated corporate restructuring costs during the first quarter of fiscal year 2008.

Significant items impacting year over year segment EBITDA include the following:

                                                             CVS     LVS     TOTAL
. . .