2009 04 Automotive Market Outlook Frost & Sullivan

Automotive & Transportation

Crisis hits Carmakers: Impact of Economic Slowdown and

Future Automotive Market Outlook

Vivek Vaidya – Director, Asia Pacific Automotive & Transportation Practice

Andriy Ivchenko – Team Leader Russia & CEE, Automotive & Transportation Practice

Vigneshwaran Chandran – Team Leader, Business Strategy and Innovation Group,

Europe

28th April 2009

2

AgendaImpact of Economic Slowdown &

Futu

re A

uto

motive M

ar k

et

Outlook

Question & Answer (Q&A) Session

Overview of Global Automotive Sales – History, Forecast and Breakdown by Segments

4

Government Credit Financing

Conditional Bailout

Consumer Incentives to Stimulate Car Sales

Nationalization

Global Response of Governments to Automotive Industry: Support required to stimulate consumer spending on purchase of cars

Automotive Industry Outlook: Government Bailout Packages (World), 2008

Loans / Credit Assurances / Investment

Tax rebates / Scrapping Bonus / Cash Subsidies

0

5

10

15

20

Italy Argentina Germany China Brazil UK Spain Russia France USA

Packages (US$ Billion)

US$ 22.4

$ 9.2

$ 3.7$ 5.3

$ 3.3$ 2.3$ 2.0

$ 5.9

Greater focus on

providing consumer

incentives to

stimulate demand

$ 1.6

Weak health of Carmakers

requiring financing support

$ 2.0

Source: Frost & Sullivan

Note: All figures as per 24th March 2009

1 US$ = €0.75

Western European Automotive Sales Outlook7

• Russia and Turkey are the only considerable growth markets in 2010 with positive growth trends, although

they are also expected to witness weakness in 2009

• Russia is expected to become the largest market in Europe on par with Germany by 2010

• All key 5 western European markets are expected to witness negative growth with 2010 expected to be the

year of recovery with improving economic conditions

0.5

1.5

2.5

3.5

2007 2008 2009 2010

Germany France UK Italy

Spain Russia West EU*

Million U

nits

0.0

6.0

12.0

18.0

2007 2008 2009 2010

Eastern Europe* Western Europe

-19.5%

-11.8%-2.1%

-3.4% -2.3% 4.8%

European Auto Sales, 2008

*Eastern Europe excludes Russia volumes

Developed Markets in Red; Russia and CEE are expected to clock positive growth in 2010; West EU down until mid ‘10

Million Units

*Austria, Belgium, Denmark, Finland, Greece, Ireland, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland


Asia Automotive Sales Outlook (China, India, Indonesia, Malaysia & Thailand)

11

8.0%7.4%

7.3%

7.2%

6.5%

6.3%4.7%4.7%4.5%

4.1%3.9%

35.4%

SHANGHAI-GM

SAIC-SGM-WULING

FAW VW

SHANGHAI VW

FAW

CHANGAN

GUANGZHOU HONDA

FAW TOYOTA

DONGFENG NISSAN

CHERY

Beijing Hyundai

Others

• The Chinese market is still highly fragmented with no

OEM having more than 8% of the total market

• Many large OEMs except brands such as Toyota and

Nissan, are expected to see a sales downturn in 2009

• OEMs such as Changan Mazda, FAW Toyota etc are

cutting production and others such as FAW and Chery

have delayed their market expansion plans into the US

• New models launches such as Besturn B50 from FAW,

Florid from Great Wall and Fiesta from Ford have been

delayed until market recovery

• The low medium segment is the largest segment in

China and is expected to grow at a moderate 5%

CAGR between 2007 and 2010

• SUV demand has been high in China in the past few

years and is expected to grow from less than 6%

market share in 2007 to more than 8% in 2010

7.0% 6.8%

10.3% 12.8%

35.7% 33.8%

13.2% 13.1%

6.1% 6.9%

18.4% 18.0%

3.0% 2.7%1.6%

4.5%4.8%

0%

25%

50%

75%

100%

Sports, Van & Others

Pickup / Truck

SUV

MPV

Super Luxury

High Luxury

Low Luxury

Large

High Medium

Low Medium

Small

Basic

2008 2010

1.4%

Increasing competition between Chinese and Global OEMs –Chinese brands expected to account for more than 32% of passenger car sales by

2012


Automotive Industry Outlook: Light Vehicle Sales

– by Segment (China), 2008


– by VMs (China), 2008

Source: Frost & Sullivan Vehicle Segment %

Russia & Turkey Automotive Sales Outlook21

• The Russian market which grew explosively at 24% and

30% in 2006 and 2007 respectively, is expected to

slowdown drastically due to the global economic crisis

• The market is expected to fall an estimated 36% in 2009

on the back of a slowdown in imported cars and a huge

lack of credit financing

• Vehicle imports which constitutes more than 40% of

sales, are expected to almost halve in 2009

• OEMs such as Hyundai and Renault have delayed

opening of production or assembly facilities

Government Measures:

• The Russian government has earmarked a total of

200 Billion Rubles as bailout package for Auto

market

• Increase import duties on foreign-made cars, to

increase local production and stimulate growth

• As with other major global bailout packages, end-

consumer incentives form a very marginal part (1%)

of government expenditure for the Auto industry

Outlook:

• Increasing pressure on used car imports with

revision of used vehicle age to 5 years from 7 years,

to stimulate demand in the new car market

• Although high import duties on foreign and used cars

may impact short-term sales, it is expected to

support the long term production growth in Russia

• Huge potential for low-cost (affordable cars) with

three fourths of cars sold being under US$20,000

• Governmental measures to subsidize auto loans for

Russians are expected to generate additional

200,000 units in sales in 2009

Low credit availability for VMs, suppliers and retail buyers hasseverely affected Russian car sales; Recovery not until Q4`09

1

2

3

4

2007 2008 2009 2010

Units (Million)

10.1%

-36.1%

7.0%


Automotive Industry Outlook: Light Vehicle Sales (Russia), 2007 – 2010

Conclusions & Future Outlook25

Road to Recovery: Frost & Sullivan expects a V-shaped sales downturn and recovery – Global Car Sales expected to reach 2006 levels

only by 2012

Automotive Industry Outlook: Light Vehicle Sales – Recession and Recovery (World), 2006 - 2012

50

55

60

65

2006 2007 2008 2009 2010 2011 2012

Q4 ’07 US Enters Recession

Q3 ’08 EU

Enters Recession

Q3’09 Emerging markets, India, China

stage recovery

• 17 New EV model launches

• 2.6m micro-hybrid sales globally

• 0.6m full hybrids

• Global EV volume to exceed 200,000



Q3’10 EU & Russian market, start recovery

Unit Sales (Million)

Q4 ’08 BRIC Markets Slow

Down

62 Million

Recession expected to impact sales for at least two full years


Q4’09 / Q1’10 US recovers

3

0

10

20

30

40

50

60

1950

1955

1960

1965

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

30

26 25

28.9

1973 1974 1975 1976

31.2 30.828.6

27.5 26.7

30

1978 1979 1980 1981 1982 1983

36.335.1 35.5

34.2

1990 1991 1992 1993

Source: American Automobile Manufacturers Association, DRI-WEFA, and Global Insight;Frost & Sullivan Analysis

41.340.1

41.4

2000 2001 2002

1 2

34

Recessions in the Automotive Industry usually last for 2 years; 2010 is expected to be the turnaround year

1 1973 – 75 2 1980 – 82 3 1990 – 93 4 2001 – 03

Global Automotive Passenger Cars Production History 1950 – 2008

-1973 Oil Crisis driven by OPEC embargo on oil exports to west, leads to global economic slowdown

-1973 oil crisis and 1979 energy crisis leads to high inflation and economic stagnation (stagflation)

-The 1987 stock market crash, followed by the 1990 Gulf war and a resulting rise in Oil prices affected global industrial production

-Dot-com bubble bursts driving the economy down-September 11 attacks on the US further causes an economic contraction

Collapse of the housing market in the

US, leads to bank collapses in the US

and Europe. Credit availability is

sharply curtailed and consumer

confidence falls to a low.

Units (Million)

4

Government Credit Financing

Conditional Bailout

Consumer Incentives to Stimulate Car Sales

Nationalization

Global Response of Governments to Automotive Industry: Support required to stimulate consumer spending on purchase of cars

Automotive Industry Outlook: Government Bailout Packages (World), 2008

Loans / Credit Assurances / Investment

Tax rebates / Scrapping Bonus / Cash Subsidies

0

5

10

15

20

Italy Argentina Germany China Brazil UK Spain Russia France USA

Packages (US$ B

illion)

US$ 22.4

$ 9.2

$ 3.7$ 5.3

$ 3.3$ 2.3$ 2.0

$ 5.9

Greater focus on

providing consumer

incentives to

stimulate demand

$ 1.6

Weak health of Carmakers

requiring financing support

$ 2.0


Note: All figures as per 24th March 2009

1 US$ = €0.75

5

The global automotive market is expected to contract at a CAGR of close to -5% between 2007 and 2010

0.0

5.0

10.0

15.0

20.0

NorthAmerica

WesternEurope

EasternEurope

Russia SouthAmerica

Asia Japan Middle East& Africa

2007 2010

Units (Million)

2007

63.7 millionCAGR : –4.6%

2010

Malaysia Indonesia

0.49m0.54m

0.43m0.53m

55.2 million

2007 2010

2.4m3.0m

Brazil

1.5m2.0m

India

7.9m6.3m

China

Automotive Industry Outlook: Sales Volumes of Light Vehicles (World), 2007 – 2010

With import barriers and collapsing vehicle credit financing, sales is expected to plummet a whopping 36% in 2009 and stabilize in 2010. Imports expected to halve in 2009 to 0.55m

Note: All figures are rounded; the base year is 2008. Source: Frost & SullivanNote: CAGR calculated for 2007 to 2010

6

Small, affordable and clean cars are mega trend in the auto industry in the next 5 years

Basic Small Low Medium

High Medium Large Low Luxury

High Luxury Super Luxury MPV

SUV Pickup / Truck Sports, Van & Others

Global Sales Volumes of Light Vehicles – by Vehicle Segment, 2008

*(India, China, Thailand, Malaysia,

Indonesia, Korea)

Europe (including Russia)

41%

18.9m

10% Vans

USA

13.2m

42%

• Basic and small cars have a

strong sales trend in Europe

and Asia at present making

one fourth of the market size

• USA to witness a strong

growth of Small cars and

super-minis in 2009 and 10

• Pickup sales expected to reach

close to 1m units, while SUVs

are expected to sell 1.3m

units in Asia by 2010

• Asia and Europe are big

markets for commercial Vans,

while Japan has Vans in the

passenger segment too

Asia*

13.5m

49%

13% Vans

Japan

5.0m

30%

16.1%

9% Vans

7

• Russia and Turkey are the only considerable growth markets in 2010 with positive growth trends, although

they are also expected to witness weakness in 2009

• Russia is expected to become the largest market in Europe on par with Germany by 2010

• All key 5 western European markets are expected to witness negative growth with 2010 expected to be the

year of recovery with improving economic conditions

0.5

1.5

2.5

3.5

2007 2008 2009 2010

Germany France UK Italy

Spain Russia West EU*

Million U

nits

0.0

6.0

12.0

18.0

2007 2008 2009 2010

Eastern Europe* Western Europe

-19.5%

-11.8%-2.1%

-3.4% -2.3% 4.8%


*Eastern Europe excludes Russia volumes

Developed Markets in Red; Russia and CEE are expected to clock positive growth in 2010; West EU down until mid ‘10

Million U

nits

*Austria, Belgium, Denmark, Finland, Greece, Ireland, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland


8

17.0%

11.7%

11.5%8.4%

8.4%

5.5%

4.4%

4.4%

5.7%

1.7%8.8%

12.5%

Volkswagen Group

PSA Group

Renault-Nissan Group

Ford Group

General Motors Group

Fiat Group

Toyota Group

Daimler Group

BMW Group

Hyundai Group

Suzuki Group

Others

Small segment cars expected to witness growth in Eastern Europe, especially post 2010 with the launch of low-cost cars designed for CEE and Russia

• Volkswagen leads sales in Europe with a strong 2008 in

a rapidly falling market

• PSA had a weak sales in the second half of 2008 and

end with total annual sales down by more than 15%, in

sync with the market

• Renault, which has a strong focus on emerging markets

including Russia and Eastern Europe saw a fall in sales

of more than 5% in 2008

Note: 1. *Ford Group includes volumes of Jaguar and Land Rover account 0.7% market share2. Figures exclude Russia



– by VMs (Europe), 2008

Automotive Industry Outlook: European

Powertrain Mix (Europe), 2015

• Micro Hybridisation to continue on a large scale in

Europe

• EVs infrastructure – public paid recharging stations

to cater to both EVs and plug-in Hybrids.

• Downsizing and Turbocharging – Drive towards

compliance with ACEA CO2 norms in Europe; SCR

systems - EURO 6 application in passenger vehicles

likely.

Gasoline Diesel

Hybrids Alternative Fuels

Electric Vehicles

18%

32%41%

7%

2%

9

• The Chinese market is expected to continue sales

growth, although at a slower rate – 8% CAGR from 6.3

million units in 2007 to 7.9 million units by 2010

• While Sales in China has seen an explosive CAGR of

over 20% between 2002 and 2007, it is expected to

cool down and moderate to 3.6% in 2009

• RMB appreciation, rise in raw material prices, low

demand in export markets (Middle east & South

America) and low credit availability have affected

China's auto export market


• The National Development and Reform Commission

launched a rescue package for sustaining more than

12% growth of the automotive industry, by:

1. RMB 5bn towards boosting local consumption

through vehicle purchase tax cuts and incentives to

scrap old models in favour of new ones

2. RMB 10bn Government funding supporting

development of fuel efficient vehicles and new-energy

vehicles

• Reduction in Consumption tax from 3% to 1% for

small cars with engine size less than 1 litre (Sept 08)

Outlook:

• Chinese OEMs such as Chery are delaying their

market entry into developed markets such as US, due

to the global slowdown

• Chinese OEMs are trying to penetrate tier 2 and tier 3

cities in China for growth of vehicle sales

• Exports to emerging markets such as Russia, Ukraine

and Vietnam are a popular growth routes too

China will continue to grow in 2009, although at a very low-rate than anticipated

4

6

8

2007 2008 2009 2010

Units (Million)

12.1%3.6%

8.2%



(China), 2007 – 2010

10

8.0%7.4%

7.3%

7.2%

6.5%

6.3%4.7%4.7%4.5%

4.1%3.9%

35.4%

SHANGHAI-GM

SAIC-SGM-WULING

FAW VW

SHANGHAI VW

FAW

CHANGAN

GUANGZHOU HONDA

FAW TOYOTA

DONGFENG NISSAN

CHERY

Beijing Hyundai

Others

• The Chinese market is still highly fragmented with no

OEM having more than 8% of the total market

• Many large OEMs except brands such as Toyota and

Nissan, are expected to see a sales downturn in 2009

• OEMs such as Changan Mazda, FAW Toyota etc are

cutting production and others such as FAW and Chery

have delayed their market expansion plans into the US

• New models launches such as Besturn B50 from FAW,

Florid from Great Wall and Fiesta from Ford have been

delayed until market recovery

• The low medium segment is the largest segment in

China and is expected to grow at a moderate 5%

CAGR between 2007 and 2010

• SUV demand has been high in China in the past few

years and is expected to grow from less than 6%

market share in 2007 to more than 8% in 2010

7.0% 6.8%

10.3% 12.8%

35.7% 33.8%

13.2% 13.1%

6.1% 6.9%

18.4% 18.0%

3.0% 2.7%1.6%

4.5%4.8%

0%

25%

50%

75%

100%


Pickup / Truck

SUV

MPV

Super Luxury

High Luxury

Low Luxury

Large

High Medium

Low Medium

Small

Basic

2008 2010

1.4%

Increasing competition between Chinese and Global OEMs –Chinese brands expected to account for more than 32% of passenger car sales by 2012


Automotive Industry Outlook: Light Vehicle

Sales – by Segment (China), 2008


– by VMs (China), 2008


11

• The growing population of middle class with increasing

affordability to buy basic mobility is expected to spur

growth of Indian market

• The automotive market is expected to continue to grow

in India, with sales growth increasing rapidly, touching

the two million mark in 2010

• Growth in the low-cost car segment is expected to be

moderate until 2010, with Tata’s planned production of

the Nano to amount to only 40,000 units in 2009


• The government’s fiscal package to stimulate passenger

cars (PC) sales include a 4% excise duty cut for all

vehicle types

• PSU banks to provide a line of credit to NBFCs, to

encourage lending to consumers for buying commercial

vehicles (CV)

• Consumer incentives for CV purchases in the form of

accelerated depreciation at 50% for purchases between

January 1 and March 31

Outlook:

• Government stimulus for PC segment has resulted in

YOY sales growth in Feb 09, although CV sales continued

to slip in January & February 2009

• An increasing demand for personal mobility and the

narrowing price gap between two-wheelers and low-cost

cars (Ex., Tata Nano) will drive growth

• Hyundai, Suzuki and Tata are aiming to make India a

low-cost production hub

• Exports expected to exceed one-fourth of total vehicle

production between 2012 and 2015

Booming exports to constitute one-fourth of total production (3.5million) by 2015

1.0

1.5

2.0

2.5

2007 2008 2009 2010

Units (Million)

2.1%11.0%

14.0%



(India), 2007 – 2010

12

14.6%

13.5%

4.5%2.2%

46.8%3.9%

3.5%

4.3%

6.7%

Maruti Suzuki Group

Tata

Hyundai Group

Mahindra & Mahindra


Honda Group

Toyota Group

Ford Group

Others

• Maruti-Suzuki joint venture is the market leader

commanding about 40% of the total market share

• Tata to gain a significant portion of the low-cost car market

with production of its Nano peaking at 250,000 units in

2010

• Hyundai has a huge production base of 300,000 cars which

was expanded to 600,000 units in 2008; Potential low-cost

car beyond 2010

• New market entrants, such as Renault-Bajaj, expected

after 2010 with increasing demand for low-cost cars

• Alto, Indica, Wagon R and Santo are the most successful

basic segment models with a combined sales of 0.6

million, more than 75% of segment sales

• Medium segment cars along with Pickups are expected to

witness considerable growth at a CAGR > 20%

• The phase out of models such as Suzuki Versa and Omni

is expected to wipe out the Van segment

45.2% 42.2%

17.4%18.4%

3.9%4.3%1.5%

13.0% 11.6%

9.0%13.1%

5.3%1.1%

0.5%7.7%5.5%

0%

25%

50%

75%

100%


Pickup / Truck

SUV

MPV

Super Luxury

High Luxury

Low Luxury

Large

High Medium

Low Medium

Small

Basic

2008 2010 Source: Frost & Sullivan

India to become the home for manufacture of low-cost cars with demand both from domestic and South Asian population


Sales – by Segment (India), 2008


– by VMs (India), 2008


13

• Indonesian market rebound strongly from the lows of 2007

in 2008 but is expected to drop by 29.2% in 2009 due to

economic slowdown and limited model launch

• 2008 saw a stronger purchasing power of people outside of

Java and higher demand of commercial vehicles due to the

rise of commodity export (coal, CPO, etc).

• Strong economic condition and low interest rate in the first

half of 2008 increased the new customers confidence in

taking up new loan for first vehicle ownership and

replacement.


• JIEPA (Japan Indonesia Economic Partnership

Agreement), signed in 2007 would benefit Indonesian

automotive & auto parts industries

• Under this agreement, Japanese import in Indonesia

would be cheaper

• Japanese companies set to train manpower to improve

overall capability of auto component sector

• Indonesia automotive industry stands to gain from this

in long term

• Government intends to continue with initiatives for

stimulating exports from Indonesia, such as zero import

duty on components for exports-oriented units

Outlook:

• Chinese manufacturers plan to make Indonesia as

automotive production base

• GM is likely to reopen the facilities; Proton is likely to

assemble the MPV

• Eco cars are set to enter Indonesian market following

encouraging response in Thailand

2008 was a historical year for Indonesia market with highest ever sales and became No. 2 market in ASEAN

0.2

0.3

0.4

0.5

0.6

0.7

2006 2007 2008 2009

35.9%

39.3% (29.2%)


(Indonesia), 2006 – 2009

Units (Million)


14

14.5%12.9%

6.9%

35.1%5.3%

4.3%

8.7%

12.3%

Toyota

Mitsubishi

Daihatsu

Suzuki

Honda

Nissan

Isuzu

Others

• Toyota remains as no.1 while Suzuki market share dropped

due to the stronger sales growth by Daihatsu and Nissan.

• Grand Livina, Livina XR and Livina X-Gear launched in

January and May 2008 helped Nissan reach sales of 31K - a

more than 67% sales growth in 2008

• Mitsubishi benefited from the rise of commodity export

that created higher demand for pickups and trucks. This

has helped its sales reach 87K units in 2008, a more than

42% growth.

• Demand of 4x2 MPV is likely to be affected by global crisis.

Affordable and fuel efficient MPV with price range between

Rp 100-200 millions will continue to gain good sales, due

to condition of Indonesia family mobility needs and shift

from higher price segment.

• Sedan sales is expected to drop especially cars above Rp

200 millions.

66.8%64.4%

26.8%

24.3%

5.7% 5.6%

3.1% 3.2%

0%

25%

50%

75%

100%

Others

Sedan

P ickup

4x2 type


Toyota, Daihatsu, Nissan, Mitsubishi and Isuzu gained market share at the expense of Suzuki, Honda and other makes; MPV segment would continue to dominate the Indonesia segment


Sales – by Segment (Indonesia), 2008


– by VMs (Indonesia), 2008


15

• Malaysia automotive industry has achieved another high

point of domestic sales in 2008 with a good growth of

12.5% in 2008

• TIV is projected to drop by 8.5% in 2009 due to economic

slowdown and limited new model launch

• Passenger vehicles will be affected by the economic

situation as consumer will be more cautious in taking up

new loan and may hold up their vehicle replacement plan


• Bank Negara’s move to cut the Statutory Reserve

Requirement (SRR) and Overnight Policy Rate (OPR) will

assist in lowering the consumer financing rate

• Car financing rate is expected to lower slightly around

2.8%~2.9% in first half of 2009

• High domestic consumption and active countermeasures

by the government will continue to support the economic

activities

Outlook:

• Passenger vehicle will see a higher concentration of sales

in entry level models which will benefit the national

carmakers in retaining their sales

• MPV sales will grow in anticipation of Proton MPV launch

in the first quarter, and Perodua MPV in the fourth

quarter

• Commercial vehicle segment will see the biggest drop as

many companies are freezing their new asset purchase

due to the slow economic activities

New model launch and stronger purchasing power assisted the high growth of the Malaysia automotive industry in 2008

0.4

0.5

0.6

2006 2007 2008 2009

12.5%(8.5%)


(Malaysia), 2006 – 2009

Units (Million)


(0.7%)

16

28.7%

17.4%

6.7%

4.4%9.0% 33.8%

Perodua

Proton

Toyota

Honda

Nissan

Others

• Perodua market share dropped by 2.8% due to the

stronger sales growth by Proton, Toyota & Nissan

• Proton market share increment is mainly contributed by

New Saga model making it the biggest gainer in 2008 with

additional 24k units

• Grand Livina launched in December 2007 helped Nissan

reach sales of 33k- a 97% sales growth in 2008

• Toyota also benefited from the launch of new model Vios &

Rush.

• Passenger cars segment sales is expected to drop by 8%

due to hold up in big purchase by customers.

• MPV segment will be the only segment that will see

growth in 2009.

• SUVs will see a drop as concentration in sales among the

private buyer will be shifting towards passenger car / MPV

with lower engine capacity & price segment.

77.7% 78.0%

2.9%3.0%

11.4%10.1%

7.8%9.2%

0%

25%

50%

75%

100%

C V

M P V

SUV

C ar


Toyota, Daihatsu, Nissan, Mitsubishi and Isuzu gained market share at the expense of Suzuki, Honda and other makes; MPV segment would continue to dominate the Indonesia segment


Sales – by Segment (Malaysia), 2008


– by VMs (Malaysia), 2008


Vehicle Segment %

17

• Thai automotive market shrank by 2.5% due to domestic

political turmoil and global economic crisis

• Domestic pick-up truck sales are dwindling

• % contribution of pick-up trucks has dropped from 66% in

2006 to 54% in 2008, have lost a volume of over 115,000

units

• Passenger car sales are growing sharply, have added a

volume of about 35,000 units

• TIV is expected to drop by 12.9% in 2009; Pick-up segment

continues to drop, PC likely to gain volumes


• US$3.33 billion economic stimulus and social-welfare

package approved by Thailand’s new cabinet

• Stimulus package is expected to add a full percentage

point to a Bank of Thailand forecast of zero to 2.5-per-

cent GDP growth, which should help the automotive

markets

• New eco car models are instrumental in driving up sales

of passenger cars in Thailand

• Lower tax rates and cheaper fuel for alternative fuel cars

help drive passenger cars sales

Outlook:

• In spite of decline in TIV, small and compact cars are

expected to grow

• Cars with low cost of ownership likely to grow faster

• Eco car being export oriented policy, would help to boost

the production further

• Alternative fuel policy can act as a foothold for non-

Japanese suppliers to enter this market and should help

Thailand to attract additional investments

Current domestic uncertainties and the fallout of the global financial crises led to vehicle sales slowdown in 2008

0.4

0.5

0.6

0.7

2006 2007 2008 2009

(2.5%)

(12.9%)


(Thailand), 2006 – 2009

Units (Million)


(7.5%)

18

21.7%

14.8%

5.2%

3.8%

1.8%

3.6%42.6%

1.5%5.0%

Toyota

Isuzu

Honda

Nissan

Mitsubishi

Chevrolet

Mazda

Ford

Others

• Toyota market share dropped by 2.1% due to slower sales

of Hilux Vigo and Fortuner which is known to be a fuel

guzzler, and shrinking margins for Toyota dealers.

• Isuzu launched its minor change D-Max and MU7 in

October 2008 but the impact is not as big as it normally

would be due to the domestic political and economical

woes.

• Honda is the big winner of the Thai Automotive market with

market share increment of 5.5%. Driving sales is minor

change Civic followed by City.

• Sales of one ton pick-up are expected to decline by 15%

due to no all-new model launch

• Sales of passenger car are expected to grow by 7%

• Sales of other commercial vehicle segments including

trucks, pick-up < 1 ton and vans are expected to shrink

by 15%

36.9%42.4%

49.6%

54.3%

8.0%8.8%

0%

25%

50%

75%

100%

Others

One-T o n

P ick-up

P assenger

C ar


Honda Best Placed to Capitalize on the Upswing in PC market, Gained Market Share at Expense of All Other Companies


Sales – by Segment (Thailand), 2008


– by VMs (Thailand), 2008


Vehicle Segment %

19

• The Russian market which grew explosively at 24% and 30%

in 2006 and 2007 respectively, is expected to slowdown

drastically due to the global economic crisis

• The market is expected to fall an estimated 36% in 2009 on

the back of a slowdown in imported cars and a huge lack of

credit financing

• Vehicle imports which constitutes more than 40% of sales,

are expected to almost halve in 2009

• OEMs such as Hyundai and Renault have delayed opening of

production or assembly facilities


• The Russian government has earmarked a total of 200

Billion Rubles as bailout package for Auto market

• Increase import duties on foreign-made cars, to increase

local production and stimulate growth

• As with other major global bailout packages, end-

consumer incentives form a very marginal part (1%) of

government expenditure for the Auto industry

Outlook:

• Increasing pressure on used car imports with revision of

used vehicle age to 5 years from 7 years, to stimulate

demand in the new car market

• Although high import duties on foreign and used cars

may impact short-term sales, it is expected to support

the long term production growth in Russia

• Huge potential for low-cost (affordable cars) with three

fourths of cars sold being under US$20,000

• Governmental measures to subsidize auto loans for

Russians are expected to generate additional 200,000

units in sales in 2009

Low credit availability for VMs, suppliers and retail buyers hasseverely affected Russian car sales; Recovery not until Q4`09

1

2

3

4

2007 2008 2009 2010

Units (Million)

10.1%

-36.1%

7.0%



(Russia), 2007 – 2010

20

The Kremlin is Expected to Pump Significant Amount of Funds into the Auto Market to Revive Sales Growth

Automotive Industry Outlook: Government Bailout Package (Russia), 2008

2Compensation of transportation costs of cars to far-eastern frontier

2Subsidies to end-consumer

70Auto bailout loans

43Credit line for leasing companies

30State procurement for municipal needs

40State procurement of commercial and road vehicles

12.5State procurement for federal needs

Funds (in billion Rubles)


21

• AvtoVAZ continued to lose market share in 2008, with a

share of about 24.3% of the Russian market in the year

• With high import duties, there is an increasing pressure on

foreign brands to set-up production facilities locally, and this

will help increase their market share

• Renault is expected to develop a low-cost car catering to

local market needs in partnership with AvtoVAZ, its partner

in Russia

• Hyundai is expected to grow market share with strong sales

in small and compact segment cars such as Hyundai i20, i30,

Accent, Kia Picanto etc.

• The Basic Segment is expected to grow from 3% in 2007

to 5% in 2010, with growing popularity of cars such as

the Chevrolet Spark and Hyundai i10

• SUV sales to remain strong at around 17% of sales

• Low medium segment will continue to dominate sales with

two-thirds sales of local brands and one-third of imported

cars falling under this category

24.3%

11.8%11.0%

9.5%

6.5%

4.1%3.1%

4.1%

8.7%

5.4%

11.5%VAZ

Renault-Nissan Group


Hyundai Group

Ford Group

GAZ Group

Toyota Group

Chinese VMs

Mitsubishi Motors

Volkswagen Group

Others

4.2% 5.4%

14.7% 13.9%

42.3% 39.4%

7.6%8.6%

17.1% 17.3%

1.3% 1.4%

7.3% 7.9%

0.9% 4.9%4.3%

0%

25%

50%

75%

100%


Pickup / Truck

SUV

MPV

Super Luxury

High Luxury

Low Luxury

Large

High Medium

Low Medium

Small

Basic

2008 2010

Increasing market share of foreign vehicle manufacturers on the back of losing market leader, Avtovaz



Sales – by Segment (Russia), 2008


– by VMs (Russia), 2008


Vehicle Segment %

22

The Market in Numbers: 2008 and 2009

Automotive production and sales expected to contract 10% in 2009

Automotive Industry Outlook: Global Light Vehicle

Sales (World), 2008 and 2009

Automotive Industry Outlook: Global Light Vehicle

Production (World), 2008 and 2009


• Global auto sales is under severe

pressure and fell from 64 million in

2007 to 58 million in 2008

• 2009 is expected to witness a

further 9% fall to 53 million units

• Profitability has taken a severe

beating especially for vehicle

manufacturers (VMs) having high

sales exposure to North America

• Global light vehicle production fell

from a peak of 68 million units in

2007 to 64 million in 2008

• Industry continues to battle with

unsold vehicle inventory in Q1 09

• Production is expected to further fall

to 57 million units in 2009 and

recover to 60 million by 2010

Automotive Industry Outlook: Global OEM Operating (Margin) Performance (World), 2007 and 2008

-10%

-5%

0%

5%

10%

A udi B M W M ercedes-

B enz

Vo lkswagen

Gro up

H yundai

Gro up

R enault -

N issan

C hrysler H o nda T ata Gro up

2007 2008

Source: Company Annual Reports; Frost & SullivanNote: Operating margin has been used to measure Operating performance of VMs

YTD 09(Apr – Dec)

*Consolidated Financial Results Published for Fiscal Year April – March

Audi BMW Mercedes-Benz

HyundaiGroup

Renault-Nissan

Ford GM

Toyota*

Chrysler Honda* TataGroup*

Opera

ting m

arg

in %

Company Estimates

Weak US sales has severely

affected VM profitability

2008 2009

58.3 million 52.8

million

-9.5%

2008 2009

63.6 million 56.9

million

-10.6%


23

Road to Recovery: Frost & Sullivan expects a V-shaped sales downturn and recovery – Global Car Sales expected to reach 2006 levels

only by 2012

Automotive Industry Outlook: Light Vehicle Sales – Recession and Recovery (World), 2006 - 2012

50

55

60

65

2006 2007 2008 2009 2010 2011 2012

Q4 ’07 US Enters Recession

Q3 ’08 EU Enters

Recession

Q3’09 Emerging markets, India, China

stage recovery

• 17 New EV model launches



• Global EV volume to exceed 200,000



Q3’10 EU & Russian market, start recovery

Unit Sales (Million)

Q4 ’08 BRIC Markets Slow

Down

62 Million

Recession expected to impact sales for at least two full years


Q4’09 / Q1’10 US recovers

24

Next Steps

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25

Contact Us

If you have questions or would like further information about anything we discussed, please send your query to the email provided below and we will get back to you shortly.

Alvin Chua

Account Manager

Automotive, Transportation & Logistics

DID: +65 6890 0997

Mob: +65 9199 4566

eMail: [email protected]

Documents

2009 04 Automotive Market Outlook Frost & Sullivan