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This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Ducker Worldwide LLC.
Ducker Worldwide | 1250 Maplelawn Drive | Troy , MI 48084 | www.ducker.com | info@ducker.com Confidential © Ducker Worldwide
DUCKER WORLDWIDECRITICAL THINKING FOR CRITICAL DECISIONS.
AUTOMOTIVE LIGHTWEIGHTING INSIGHTSPrepared for SAA Lightweighting Summit | September 25 2017The Federal Reserve Bank of Chicago, Detroit Branch
CRITICAL THINKING FOR CRITICAL DECISIONS
TRANSACTION ADVISORY GROWTH CONSULTINGMARKET RESEARCH
Ducker gathers unique market, customer and competitive insights
when others cannot. Leveraging industry expertise and research
capabilities, Ducker develops sound strategies to win in existing and new
markets
Ducker’s transaction advisors assist clients with searching and
researching acquisition targets, and provide best-in-class diligence to de-risk M&A transactions. It's a
natural extension of our consulting and research services
With a dynamic fact-based and advanced business analytics, Ducker works with management to develop
actionable strategies and detailed go-to-market plans that represent best-
fit solutions
Confidential © Ducker Worldwide 2
Confidential © Ducker Worldwide
GLOBAL INSIGHTS THAT OUTSMART THE COMPETITION
AmericasTroy, Michigan (Global Headquarters)
EuropeParis, FranceBerlin, GermanyLondon, United Kingdom
Asia-PacificBangalore, IndiaShanghai, China
Ducker Worldwide employs a seasoned team of 150 full-time consultants, located throughout North America, Europe, and Asia- Pacific.
Our team covers all major languages required to do business in Europe, Asia, India, Africa, and the Middle East. This ensures the best cultural fit and most accurate exchange of information needed to turn insights into effective decisions.
In addition to Ducker’s general markets served, Ducker Europe brings their considerable expertise to the emerging energy and environmental industries.
Ducker also offers operational consulting in India and critical data analytics for complex markets across the region.
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Confidential © Ducker Worldwide
AUTOMOTIVE & TRANSPORTATIONManufacturers, tier suppliers and associations in the global transportation sector count on Ducker to deliver trusted insight
BUILDING & CONSTRUCTIONFrom basic materials to advanced building performance systems, Ducker understands every aspect of the construction industry
HEAVY EQUIPMENTFrom mining, road construction and work at height applications, Ducker’s global access into the equipment industry provides seamless methods to identify and capture opportunity
INDUSTRIALAs reshoring of manufacturing continues and growth of automation reaches a new level, Ducker is there to help clients optimize their product/market strategies around the world
MATERIALS & CHEMICALSDucker partners with clients in the materials and chemicals industry to build sustainable strategies and drive success, even as commodities and prices remain in constant motion
HEALTHCAREOur team helps companies navigate the changing face of healthcare, with solutions that support innovation and foster the growth of manufacturers and providers of medical equipment and provider business models
SOLUTIONS FOR GROWTH IN COMPLEX MARKETS,IN TECHNICAL ENVIRONMENTS
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Confidential © Ducker Worldwide
1996 2006 2015 2016
ALTG Aluminum
Content
Castings/Alloys
Development
Casting & Forging Research
Steel Stamping
Tool & Die
Rod & Bar
Analysis
RIM for Auto
Application
SMDI Steel Content
ALTG Aluminum Content
SMDI Steel Content
SMDI Steel
Content
Aluminum Sheet Recycling
SMDI Steel
Content
Steel Roll-Forming
Auto Extrusions Research
Auto Castings Research
AEC Research
Program
AEC Research Program
Composite & Plastics Analysis
360 Degrees of Auto
Lightweighting
Materials
2014
EU Aluminum Content Study
100+ Bespoke Supplier Studies
2016 EU Aluminum Content Study
European Aluminum Association
2017
2017 NA Aluminum
Content Study
NA Aluminum Association
2016 18 + Bespoke Supplier Studies
NA, EU, APAC
S. Africa
SINCE 1996 A TRUSTED SOURCE FOR UNBIASED LIGHTWEIGHT MATERIAL MARKET INTELLIGENCE
2015 30+ Bespoke Supplier Studies
NA, EU, APAC, S. Africa
5
Confidential © Ducker Worldwide
LIGHT WEIGHTING MATERIALS
Confidential © Ducker Worldwide
GLOBAL REGULATIONS DRIVE DEMAND FOR LIGHTWEIGHTING
7
Confidential © Ducker Worldwide
Midterm Evaluation (MTE)Three Step Process
REGULATORY BACKGROUND
On January 12, 2017, Administrator Gina McCarthy signed her determination to maintain the current GHG emissions standards for model year (MY) 2022-2025 vehicles.
Could be Revised!
On March 15, 2017 Administrator Scott Pruitt and Department of Transportation Secretary Elaine Chao announced that EPA intends to reconsider the final determination, issued on January 12, 2017
September 6, 2017: Oral Arguments
October 5, 2017: Written Comments Due
April 1, 2018: FINAL DETERMINATION
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Confidential © Ducker Worldwide
THE ROAD TO COMPLIANCE IS A BALANCING ACT
7%I s N e e d e d
Compliance - Gap
Global Goals
Customer Needs
Performance
Cost Targets
Plant Issues/Union
Powertrain
Materials (Body structures/chassis)
Design/Aerodynamic
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Confidential © Ducker Worldwide
REGULATORY WEIGHT SAVINGS GOALS:
REDUCE 270 POUNDS!
Over 70% of the passenger cars will require mass reduction between 263 pounds per vehicle and 350 pounds per vehicle
Nearly 30% of the light trucks will require mass savings of approximately 840 pounds
Source: Ducker Analysis, Draft TAR Chapter 13
Annual weight reduction targets goes from ~20 lb’s per year for 2015 to 2020 to ~34 lb’s per year for 2021 to 2025 or 7% reduction from 2015
175
263
350
700
0
100
200
300
400
500
600
700
800
20% 60% 12% 8%
PASSENGER CAR WEIGHT SAVINGS BY 2030 IN POUND PER VEHICLE
210
315
420
629
839
0
100
200
300
400
500
600
700
800
900
16% 23% 19% 13% 29%
LIGHT TRUCK WEIGHT SAVINGS BY 2030 IN POUND PER VEHICLE
3779
3835
3735
3565
3400
3450
3500
3550
3600
3650
3700
3750
3800
3850
3900
2012 2015 2020 2025/28
TAR IMPLIED MASS REDUCTION
-100 lbs.
-170 lbs.
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Confidential © Ducker Worldwide
CLOSING THE COMPLIANCE GAP IS A
MULTISTEP PROCESS
Source: Ducker Analysis
Level 1 - Material Substitution
One to One Part/Material Substitution: Closures, Bumpers, Knuckles, Control Arms etc.
Level 2 - Holistic Weight Saving Designs
Parts Consolidation, Multi-Form & Multi Material: sub-frames, front end modules, shock towers, door
rings etc.
Level 3 –
Glazing/glass, coatings, interiors, etc.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Bumpers
HVAC
Braking
Electronical & Electronics
All Others
Wheels & Tires
Glass, Paint, Trim
Interior
Fuel & Exhaust
Transmission & Driveline
Engine
Chassis Suspension & Steering
Body & Closure 25%
13%
15%
12%
6%
5%
5%
5%
4%
4%
4%
1%
1%
Body parts, closures, bumpers, chassis and
suspension parts are the prime candidates for
further weight reduction
Where is the Weight: Light Vehicle Mass Distribution
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Confidential © Ducker Worldwide
THERE ARE OPTIONS!
12V
DC
A
lum
inu
mC
arb
on
Fi
be
r
• New applications of body and structural aluminum for a growing number of applications: replacing stamped & welded mild steel
• Mg castings for seat frames as well as closure inners performs well when paired with aluminum outers
• Carbon fiber as structural patch-work to enable further light-weighting is beneficial
Mag
ne
siu
m
It is unlikely there are breakthrough lightweight materials awaiting discovery – refinement of what is available today
Confidential © Ducker Worldwide
COMPETING MATERIALS HAVE A PLACE IN THE MIXED MATERIAL FUTURE
Materials cost comparison 2015 ($/Kg) Weight saving comparison
2015 (weight for equal stiffness as steel)
Source: Ducker Analysis
13
The right material mix has to be evaluated for the right application and goals for the right budget!
Confidential © Ducker Worldwide
MULTI-MATERIAL VEHICLES DEMONSTRATE THAT ONE SIZE DOES NOT FIT ALL
2018 A8 Body is 58% Aluminum
Audi Q7 SUV
BMW 7 SeriesCadillac CT6
Aluminum VDC>170 lbs.
in Color
Multimaterial/Multiproduct body structures are the key to significant weight savings going forward
Aluminum, High Strength Steels, CFRP & Mg
High Strength Steels, Aluminum and CFRP
Aluminum, Conventional Steels & High Strength Steels
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Confidential © Ducker Worldwide
EVOLUTIONS IN JOINING TECHNOLGOY ENABLES MATERIAL REVOLUTIONS
15
The 2018 Audi A8 utilizes 13 joining methods
Confidential © Ducker Worldwide
COMPLEXITIES IN THE MATERIAL MIX
FOR THE FUTURE
Source: 1Q2017Ducker Analysis
40% 38%32%
15% 15%
15%
10% 13%16%
8% 8%8%
27% 26% 27%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2020 2025/28
AUTOMOTIVE MATERIAL MIX PER VEHICLE
All Others
CFRP
Magnesium
Iron Casting
Aluminum
All Other Steel
Steel Sheet
Mg 0%CFRP 0%
Mg 0%CFRP 0%
Mg 1%CFRP 1%
3835 LBS 3735 LBS 3565 LBS
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To achieve a reduction of 270 PPV from 2015, significant content increases required in AHSS, Aluminum, Magnesium and CFRP
Confidential © Ducker Worldwide
55 Years of Uninterrupted Growth
84120 139
165
212
258
306340
397
466
520
565
0
100
200
300
400
500
600
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2028
Net
Po
un
ds
per
Veh
icle
North American Light Vehicle Aluminum ContentNet Pounds per Vehicle @ 7% MR Scenario by 2028
Source: Ducker Analysis 1Q2017
ALUMINUM MARCHES INTO THE NEXT DECADE WITH UNPRECEDENTED GROWTH
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Aluminum penetration set to grow dramatically within closures, bumpers and structural castings: Aluminum remains the fastest growing automotive material…
Sheet(Hood)
Extrusion(CMS)
Casting(Subframe)
Confidential © Ducker Worldwide
MORE AHSS WILL BE NEEDED
& GEN 3 STEELS ARE ON THE WAY
164 188 203 220 233 248 259 274 293 298 312 330 347 3674147
5155 58
6273
7783 94
99104
109116
205235
254275
291310
332351
375392
411434
456483
0
100
200
300
400
500
600
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Po
un
ds
pe
r V
eh
icle
AHSS UHSS
Source: AISI/SMDI, Ducker Analysis
Under Review
18
AHSS penetration surpassed Ducker’s prior estimates. Steel remains the single largest share of automotive materials
(UHSS) Press Hardened Steels
• High Tensile Strengths
• Deformation Resistance
• Med to High Part Complexity (improving however)
Generation 3 Steels
• High Tensile Strengths
• Engineered Deformation Resistance
• High Parts Complexity (advanced geometries)
Replace Conventional
HSS for Weight Savings & Ductility
Replace Select PH Steels for Strength &
Ductility
Lower Finished Parts Pricing
Confidential © Ducker Worldwide
SUPPLIER IMPACT CASE STUDY
Confidential © Ducker Worldwide20
AHSS
SMC >1.2 SG
Continuous Cast Al Sheet
Al Extruded Body Parts
Al Low Pressure PM
Al Extruded Bumper Beams
SMC <1.2 SG
CFR Epoxy <1.6
Aluminum Vacuum Die Casting
UHSS/Gen 3 Sheet
Aluminum Sheet
Millions Of Dollars
Revenue Growth over 2020 levels for Premium Auto Materials
2025 10% E
2025 15% E
2025 20% E
2020
High
Low
SELECTING THE RIGHT MATERIALS TO FULFILL GROWTH MANDATE
2025 Scenario 2
2025 Scenario 1
2025 Base
2020
Attractiven
essAluminum Sheet
UHSS Sheet
Material A
Material B
Material D
Material E
Material F
Material G
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Confidential © Ducker Worldwide21
Steel Aluminum Composite
Alloy/Grade HSS, AHSS, UHSS (PH) 6060, 6061, 6063, 6082, 7003 GMT, LFT-D, PC-PBT
Tensile Strength 550MPa (up to 1700 MPa)6xxx 300MPa7xxx 350MPa (up to 550 MPa)
275MPa
Energy Absorption Normal Best Good
Weight 1X (base) 0.5X to 0.7X 0.7X
Cost (finished CMS)
Adoption
ProsLower costRepairable (non PH Steel)
LightweightingAnti-corrosionHigh energy absorption
LightweightingAnti-corrosionHigh design flexibility (molding)
ConsCorrosionWeight
Higher costNot repairable
Not repairableLow availability (Hanwha JV with AZDEL)
CASE STUDY – CRASH MANAGEMENT SYSTEMS
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Confidential © Ducker Worldwide
Regulation/Test Standard Description
FMVSS Test Procedure for Regulation Part 581 Bumper Standard (NHTSA)
• Prohibit damage to the vehicle surfaces and limit damage to passenger vehicle bumpers on vehicles under low speed (2.4 MPH)
o Lamp and reflective deviceo Hood, trunk, doorso Fuel and cooling systemo Exhaust systemo Propulsion, suspension, steering, and
braking system• Limit the impact force levels for pendulum
impacts to reduce the frequency of override and under ride
Low-Speed Crash Test Protocol (IIHS)
• Assess how well the bumper system can protect the vehicle from damage in an impact at 5 MPH speed
• Appraise bumper damage and estimate repair cost after impact
• Major components including reinforcement bars, energy absorbers for the front and rear bumper assemblies
• Minor cosmetic damages are permitted
UNDERSTANDING THE MATERIALS ROLE IN THE APPLICATION
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Confidential © Ducker Worldwide
Cold Stamped
Hot Stamped
Roll Formed
Mild/HSS
AHSS
UHSS
Aluminum, 34%
Steel, 66%
6xxx
7xxx
Extruded
0%
25%
50%
75%
100%
Primary Process Grade LV Bumper Material Grade Primary Process
2016
2020
CMS Market Structure in NA(% of total market volume)
23.8 23.8 35.8 12.0 12.0
Cold Stamped
Hot Stamped
Roll Formed
Mild/HSS
AHSS
UHSS
Aluminum, 51%
Steel, 49%
6xxx
7xxx
Extruded
0%
25%
50%
75%
100%
Primary Process Grade LV Bumper Material Grade Primary Process
CAGR (6.2%) (6.2%) 1.3% 12.6% 12.6%
37.7
AluminumSteel
Units in million
Units in million
MATERIAL STRATEGY EVOLUTION IS PART AND APPLICATION SPECIFIC
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Confidential © Ducker Worldwide
Vertical Integration Complimentary
Processes
CMS Cast Billet Extrusion FabricationSub-
Assembly Tier I
IntegratorSteel
StampingSteel Roll Forming
Alloys
Supplier A 6xxx
Supplier B 6xxx, 7xxx
Supplier C 6xxx, 7xxx
Supplier D 6xxx
Supplier E 6xxx
Supplier F 6xxx
Supplier G 6xxx, 7xxx
Supplier H 6xxx, 7xxx
Supplier I 6xxx
Supplier J 6xxx
VERTICAL INTEGRATION BRINGS OPPORTUNITIES
Example of supplier capability vertical integration (CMS)
Tier 1
Tier 1
Tier 1
Tier 1&2
Tier 1&2
Tier 2
Tier 2
Tier 2
Mar
gin
Customer Intimacy
CMS Supplier Positioning
Low High
High
Low
Size: CMS Revenue
Tier 1&2: Tier 1 with extrusion capability 24
Confidential © Ducker Worldwide
VALUE-ADD STEPS PROVIDE MARGINE EXPANSION AND CUSTOMER INTIMACY
Xx%
Xx%
XX%
100%
Material Conversion Costs Value-Added Services Total Price
Value Chain Positioning
Tier 2
Tier 1
25
Confidential © Ducker Worldwide
THANK YOU.This concludes our presentation. Today’s presentation was prepared by Ducker Worldwide LLC. Opinions and estimates constitute judgment as of the date of this material and are subject to change without notice. Any interpretations derived from this document are the sole responsibility of the client. Reproduction without the explicit consent of Ducker Worldwide LLC is strictly prohibited.
For more information regarding our Market Research, Transaction Advisory, or Growth Consulting expertise or to learn how Ducker Worldwide can help you, please contact one of our team members at 248-644-0086 or visit our website at www.ducker.com.
DETROIT | PARIS | BERLIN | SHANGHAI | BANGALORE | LONDONwww.ducker.com | info@ducker.com
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