Executive Vice President and Chief Financial Officer at BorgWarner
Thank you, Fred, and good morning, everyone. Let's turn to slide nine. As we look at our year-over-year revenue walk for Q3, we begin with pro forma 2020 revenue of just under $3.6 billion, which includes a little over $1 billion of revenue from Delphi Technologies. Next, you can see that foreign currencies increased revenue by about 2%. Then our organic revenue decline year-over-year was approximately 7% or almost 9%, excluding growth in our aftermarket segment. That compares to a 22% decrease in weighted average market production, which suggests that our outgrowth in the quarter was more than 13%. Now with that said, the significant volatility in production schedules and the varying levels of supply disruptions among our customers are continuing to make it difficult to draw conclusions from the quarterly outgrowth figures.
Nonetheless, we were pleased that we delivered strong relative revenue performance in all three major markets despite the overall decline in revenue. Regionally, in Europe, we outperformed, driven by new business in small gasoline turbochargers and fuel injection products. In China, we also outperformed the market, driven by the resilience in the former Delphi businesses. And in North America, we outperformed the market, primarily due to new business as well as vehicle and customer mix. The sum of all these was just over $3.4 billion of revenue in Q3. Now let's look at our earnings and cash flow performance on slide 10. Our third quarter adjusted operating income was $311 million compared to pro forma operating income of $396 million last year. This yielded an adjusted operating margin of 9.1%.
On a comparable basis, excluding the impact of foreign exchange and the impact of AKASOL, adjusted operating income decreased $79 million on $261 million of lower sales. That translates to a decremental margin of approximately 30%. This higher than typical decremental margin was primarily driven by $24 million of higher commodity costs, net of customer recoveries. Excluding these higher commodity costs, our year-over-year decremental margin was approximately 19%, which we view as a sign that we're effectively managing our operating cost performance in spite of the supply chain disruptions. Moving on to cash flow. We consumed $10 million of free cash flow during the third quarter. This was worse than our expectations going into the quarter due to lower-than-expected operating income as well as higher-than-planned inventories.
Fundamentally, when production declines this rapidly and expectedly, it's difficult to get inventory out of the system in the near term. We expect inventory to improve in the coming quarters once we see less volatility in production orders, which will give us the ability to rightsize our supply chain demands accordingly. Now let's talk about our full year financial outlook on slide 11. We now expect our end markets to be down 2.5% to flat for the year. Next, we expect to drive market outgrowth for the full year of approximately 1,000 basis points. This contemplates the strong performance to date with a sequential step down in the fourth quarter as we expect to return to more normalized year-over-year outgrowth in Q4. Based on these assumptions, we expect our 2021 organic revenue to increase approximately 8.5% to 11% relative to 2020 pro forma revenue.
Then adding an expected $425 million benefit from stronger foreign currencies and an expected $70 million related to the acquisition of AKASOL, we're projecting total 2021 revenue to be in the range of $14.4 billion to $14.7 billion. This wide revenue guidance range reflects the continued production uncertainty we have in the fourth quarter. From a margin perspective, we expect our full year adjusted operating margin to be in the range of 9.6% to 10.0% compared to a pro forma 2020 margin of 8.3%. This contemplates the business delivering full year incrementals in the low 20% range before the impact of Delphi-related cost synergies and purchase price accounting. From a cost synergy perspective, our margin guidance continues to include $100 million to $105 million of incremental benefit in 2021, the same as our prior guidance.
Based on this revenue and margin outlook, we're now expecting full year adjusted EPS of $3.65 to $3.95 per diluted share. And finally, we expect that we'll deliver free cash flow in the range of $600 million to $700 million for the full year. The reduction versus our prior guidance is a little larger than our projected decline in operating income as we expect inventory to remain higher than usual through the fourth quarter. Then once we head into 2022, we expect to start to see reductions in inventory towards more normalized levels. That's our 2021 outlook. Let's turn to slide 12. Given the uncertain outlook for the remainder of 2021, we felt it appropriate to provide you with some of our initial thoughts on some key financial drivers and strategic priorities heading into 2022. Starting with our top line. As of right now, we do expect to see supply chain challenges, particularly with respect to semiconductors, continue well into 2022.
Ultimately, where full year 2022 industry production shakes out will depend on the scope and duration of these challenges. But at this point, we would still expect a modest level of growth in industry production next year. Next, we expect to deliver outgrowth in 2022. However, we're currently assessing the extent to which the much stronger-than-expected outgrowth in 2021 will result in any headwind to our outgrowth next year. From a cost perspective, we expect incremental Delphi-related cost synergies in the $40 million to $45 million range, and we also expect incremental restructuring savings of $40 million to $50 million. These combined savings are expected to largely offset our estimated increase in R&D spending of approximately $100 million. We're planning for this significant increase in R&D spending in order to support the new business wins we've achieved to date and to pursue additional EV opportunities consistent with our CHARGING FORWARD organic growth objectives.
And finally, we're building our plans based on the assumption that we'll see sustained levels of commodity inflation continuing into 2022, which means we expect that to create a year-over-year headwind during the first and second quarters. That's the near term. But while we're managing the near term, we're also focused on securing our long-term future. So consistent with our CHARGING FORWARD initiative, we have three key strategic priorities heading into next year. First, we plan to continue to pursue and secure additional electric vehicle awards for both components and systems. Second, we intend to execute additional M&A to accelerate our positioning in electric vehicles. And finally, we expect to complete the disposition of approximately $1 billion in combustion revenue. Ultimately, it's the pillars of near-term execution, securing future profitable growth and disciplined inorganic investments that will drive the success of our strategy and thus drive value creation for our shareholders.
With that, I'd like to turn the call back over to Fred.