North America Light Vehicle Outlookmexicoautosummit.com/presentations/guido_vildozo.pdf · 2019. 11. 5. · Slide in worldwide auto sales preceded projected slowdown of global economy

Confidential. © 2019 IHS Markit®. All Rights Reserved.

North America Light Vehicle OutlookMEXICO’S AUTO INDUSTRY SUMMITGuido Vildozo, Senior Manager, Americas Light Vehicle Sales Forecasts

30 October 2019

Confidential. © 2019 IHS MarkitTM. All Rights Reserved.

2008 2010 2013 20172016


Global economics

GDP decelerating faster and earlier than forecast, below trend in coming years

MEXICO’S AUTO INDUSTRY SUMMIT

3

Source: IHS Markit © 2019 IHS Markit

1.5

2.0

2.5

3.0

3.5

4.0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Aug 2019 Aug 2018

Trade and multiple layers of policy uncertainty have also pulled down business capital expenditure (CAPEX), which will have implications for lower productivity growth for several years

Real GDP growth comparison

Pe

rce

nt


Global light vehicle demand

Sales have suffered an unusual, sudden disconnect with the macroeconomy

4

88

89

90

91

92

93

94

95

93.7

million

-4.1%Sa

les in

mill

ion

s

89.9

million

Automotive demand in the cross-currents—Multiple factors are shocking global light vehicle demand growth

+56,000 +39,000 +16,000

-78,000 -94,000 -181,000

-522,000

-574,000

-1.85 mil.


-184,000-468,000

Note: September 2019 Light Vehicle Sales Forecast.



93.789.9

90.1

104.3

95.697.5 99.3

111.8

0

20

40

60

80

100

120

September 2019 forecast September 2018 forecast


Slide in worldwide auto sales preceded projected slowdown of global economy

• Desynchronized auto sales may continue for a year or two after that, with sales picking up in 2020/21, provided the economic slowdown is not more aggressive than our current forecasts and China’s car market does not permanently decouple from its underlying drivers.

• Deep correction in sales is far more than would be expected by overall

global economic conditions. Key drivers include:

• Crisis conditions in a few economies—unrelated reasons (Iran, Argentina, Turkey)—explain about 30% of the 2019 global forecast downgrade. Premium exposure for Turkey

• China’s first auto recession—totally not forecast and amplified by the 2018 trajectory being forecast from a high-water point before being hit by many negative forces from second half 2018. China downgrade explains ~50% of forecast downgrade over the near and medium terms

• Longer term, the total market fails to recover to previous trend

projections. Reasons include:

• Structural lowering of the trend in the Chinese market because of permanent loss of unconventional financing avenue plus initial long-term impacts of trade tensions on resourcing of manufacturing

• Persisting risk premium associated with the crisis-hit economies.

• New, lower market trajectory for India, where the downgrade builds progressively outbound. September 2019 brings further forecast downgrade

5

Source: IHS Markit

Structural decoupling of car sales with economic conditions discomforting

© 2019 IHS Markit

Mill

ions





Mature-market slowdown vs. Emerging-market downturn

6

43.843.2

42.242.3

43.8 43.242.4

25

30

35

40

45

50

Sep 2019 FC Sep 2018 FC

Source: IHS Markit

Mature-market development: Light vehicle sales

© 2019 IHS Markit

Mill

ions

49.946.7

47.8

62.151.854.3

56.9

0

10

20

30

40

50

60

70

80Sep 2019 FC Sep 2018 FC

Source: IHS Markit

Emerging-market development: Light vehicle sales

© 2019 IHS Markit

Mill

ions

Note: September 2019 Light Vehicle Sales Forecast; mature markets: West Europe, US, Canada, Japan, South Korea, Oceania. Note: September 2019 Light Vehicle Sales Forecast.



0

20

40

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2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Millo

nes

BEV PHEV REEV FCEV HEV MHEV ICE ICE: Stop/Start

Global production of alternative propulsion vehicles 2019–2031

© 2019 IHS Markit

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hic

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Notes: Source: IHS Markit

7


Growth in alternative propulsionThe evolving picture out to 2031 with broader split in technology

Electrification will increasingly supplement and displace pure internal combustion engine propulsion means to

tackle the light passenger vehicle’s contribution to carbon dioxide emissions and air quality

Note: ICE = internal combustion engine: MHEV = mild hybrid electric vehicle; HEV = hybrid electric vehicle; PHEV = plug-in electric vehicle, BEV = battery electric vehicle, REEV = range-extended electric vehicle, FCEV = fuel cell electric vehicle



8

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2017 2018 2019 2020 2021 2022 2023 2024

Bil

lio

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(U

SD

)

Battery Pack Power Electronics ICE components Radar, Lidar, Camera UI/UX

Market size by component bundle


Note: Power electronics inverter, converter, on-board charger; ICE components—22 including SCR and catalytic converter; UI/UX-center stack display, head-up display, instrument cluster

Market development of component businessesCar makers are increasingly bringing high-potential component opportunities in-house


US economy

Expansion continues, the unemployment rate falls to 3.5% in 2019

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Real GDP and unemployment

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2007 2009 2011 2013 2015 2017 2019 2021 2023

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Real GDP growth (left scale) Unemployment rate (right scale)

Strong employment has previously generated inflation




US economy

After recent declines, interest rates are expected to edge upward

Interest rates

Source: IHS Markit

10

0

2

4

6

8

10

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1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023

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Federal funds 10-year Treasury 30-year mortgage BAA corporate

Monetary policy vs. trade policy?

© 2019 IHS Markit



Real GDP growth rates in US expansions since World War II

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0

1

2

3

4

5

6

7

8

1949Q4–1953Q2

1954Q2–1957Q3

1958Q2–1960Q2

1961Q1–1969Q4

1970Q4–1973Q4

1975Q1–1980Q1

1980Q3–1981Q3

1982Q4–1990Q3

1991Q1–2001Q1

2001Q4–2007Q4

2009Q2–2019Q2*

Real GDP growth rates in US expansions since World War II


%c

ha

ng

e, y/y

* Latest observation in a continuing expansion

Weakest recovery to date MEXICO’S AUTO INDUSTRY SUMMIT


US economy

Tariffs implemented since January 2018 have raised prices of US imports

12

110

112

114

116

118

2016 2017 2018 2019

Ind

ex

: 1

00

in

ye

ar

20

00

Gross of tariffs Net of tariffs (reported price index)

Tariffs

Prices of US imports of goods excluding petroleum

Source: Bureau of Labor Statistics, IHS Markit

Tariffs will slowly erode disposable income

© 2019 IHS Markit



US light vehicle sales

Section 232 tariffs to impact industry, not just individual OEMs or countries

2018 sales by production region

Non-US Non-NAFTA

Aston Martin 100.0% 100.0%

BMW 67.0% 67.0%

Daimler 62.9% 62.9%

FCA 49.7% 7.0%

Ferrari 100.0% 100.0%

Ford 20.9% 3.6%

Geely (Volvo) 99.7% 99.7%

General Motors 36.9% 6.3%

Honda 31.1% 6.9%

Hyundai 61.8% 49.9%

Karma Automotive 0.0% 0.0%

Mazda 100.0% 85.4%

McLaren 100.0% 100.0%

Renault-Nissan-Mitsubishi 51.9% 30.3%

Subaru 51.2% 51.2%

Tata 100.0% 100.0%

Tesla 0.0% 0.0%

Toyota 55.3% 29.3%

Volkswagen 84.2% 36.4%

US total sales 46.6% 22.5%


13

$0

$10

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$80

2016 2017 2018

Imp

ort

va

lue

(U

SD

, b

il.)

Core Parts Principle Parts

US parts imports excluding NAFTA


Trade policy is the biggest risk to automotive demand MEXICO’S AUTO INDUSTRY SUMMIT


North American light vehicle sales

Light vehicle sales alternative scenarios

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Mil

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Baseline Optimistic Pessimistic

North America’s light vehicle sales


Note: Alternative Scenarios September 2019.

Optimism has little room for improvement MEXICO’S AUTO INDUSTRY SUMMIT


4.8

2.9

12.212.8

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5

6

7

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9

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19

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67

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07

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09

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11

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20

25

US light vehicle sales

Light vehicle sales outlook

15

Car

Light truck

Post market peak: weaker buying conditions, slower job creation, affordability risks driven by higher interest rates, legislated content, rising ATPs

16.5

17.517.6

An

nu

al

sa

les

, m

illi

on

s

17.3

16.716.3

17.0

Source: IHS Markit

US light vehicle sales forecast

© 2019 IHS Markit

Entering the sub-17-million zone soon




Mexican light vehicle sales

Impact of “Chocolates” is felt

16

Concept Units Brazil Mexico Argentina Chile Colombia

Economic indicators (current US dollars)

Consumption Billions of USD 83.9% 17.1% 71.8% 96.0% 91.9%

Gross domestic product Billions of USD 86.8% 17.1% 78.7% 95.9% 91.5%

Disposable income index Billions of USD 87.4% 21.2% 64.7% 96.0% 91.9%

Profits Billions of USD 80.8% 18.8% 77.9% 93.8% 91.6%

Employee compensation Billions of USD 68.9% 21.6% 73.5% 93.9% 89.8%

Economic indicators (constant 2015 US dollars)

Consumption Billions of 2015 USD 65.0% 59.0% 89.4% 89.8% 77.2%

Gross domestic product Billions of 2015 USD 71.2% 56.7% 92.7% 88.9% 79.8%

Disposable income index Billions of 2015 USD 76.3% 64.4% 39.3% 90.1% 77.5%

Economic indicators (rate)

Bank rate Rate 68.3% 5.0% 0.8% 36.3% 67.2%

PPP conversion factor PPP$/USD 78.1% 51.6% 50.9% 68.4% 69.5%

Real PPP conversion factor PPP$/2015 USD 0.0% 0.0% 0.0% 0.0%

Exchange rate LCU/USD 17.4% 60.8% 28.8% 5.5% 3.9%

Labor force

Labor force Millions 36.6% 39.3% 70.5% 89.9% 69.6%

Female labor force Millions 38.6% 40.1% 74.1% 89.5% 71.9%

Male labor force Millions 33.7% 38.7% 63.5% 90.0% 66.8%

Labor participating rate Rate 10.1% 3.6% 26.9% 90.6% 12.9%




Light vehicle sales outlook – HHOLD Model vs Forecast

17

Source: IHS Markit

Mexico’s light vehicle sales forecast

© 2019 IHS Markit

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

Mill

on

es

Título del gráfico

Actual Forecast Dif % ( R ) Lineal (Actual) Lineal (Forecast) Lineal (Dif % ( R ))




Light vehicle sales outlook

18

Source: IHS Markit

Mexico’s light vehicle sales forecast

© 2019 IHS Markit

-30%

-20%

-10%

0%

10%

20%

30%

0

0.2

0.4

0.6

0.8

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1.8

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Mill

on

es

Sales Change




Light vehicle sales outlook by country of origin

19

Source: IHS Markit

Mexico’s light vehicle sales forecast by country of origin

© 2019 IHS Markit

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

India United States Japan China Brazil Thailand South Korea Germany Colombia Spain Canada



Source: IHS Markit

Mexico’s light vehicle top-10 brands

© 2019 IHS Markit


Light vehicle sales outlook, top-10 brands

20


Nissan Chevrolet VW Toyota Kia Honda Ford Mazda Hyundai Renault Others

2012 24.8% 18.2% 13.6% 5.7% 0.0% 5.3% 8.2% 2.6% 0.2% 2.5% 18.9%

2018 21.9% 15.9% 11.0% 7.6% 6.6% 5.9% 4.7% 4.1% 3.5% 2.0% 16.7%

2019 20.5% 14.6% 11.2% 8.0% 7.3% 5.9% 4.4% 4.6% 3.4% 2.6% 17.6%

2020 21.0% 14.3% 12.2% 8.0% 7.2% 5.4% 4.3% 4.1% 4.1% 2.7% 16.8%

0%

5%

10%

15%

20%

25%

30%



Light vehicle sales outlook by body type

21

Source: IHS Markit

Mexico’s light vehicle sales forecast by body type

© 2019 IHS Markit

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Sedan SUV Hatchback Pickup Van MPV Coupe Wagon Chassis-Cab Roadster Convertible



Mexico’s new models in market

050

100150200250300350400450

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Wagon Van

SUV Sedan

Roadster Pickup

MPV Hatchback

Coupe Convertible

Chassis-Cab

0

5

10

15

20

25

30

35

40

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Wagon Van

SUV Sedan

Roadster Pickup

MPV Hatchback

Coupe Convertible

Chassis-Cab

22

Source: IHS Markit

Number of nameplates in market

© 2019 IHS Markit

Source: IHS Markit

New nameplates

© 2019 IHS Markit



North AmericaIn the cross-currents

23

Source: IHS Markit

North America light vehicle production

© 2019 IHS Markit

9.2 8.6 8.6 8.3 7.5 7.6 7.6 7.7 7.8 7.8 7.9

8.68.5 8.3 8.4

8.7 8.7 9.0 9.1 9.2 9.3 9.4

17.817.1 17.0 16.7

16.2 16.4 16.6 16.8 17.0 17.1 17.2

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

2016 2018 2020 2022 2024 2026

Mil

lon

es

US Three Transplants

Divergent trajectories

Growth paths – 2018 to 2026

Total: 256,000 units or 1.5%

Domestics

Down 758,000 units or -8.8%

Offshoring

Transplants

Up 1.0 million units or 12.2%

Onshoring

New capacity and maximization

Short term

Transition from car to truck

2020 upside outside of recession

Long term

New products and import substitution

Export growth: 19% to 1.7 million units



North AmericaIntra-regional production shifts

24

Source: IHS Markit

North America light vehicle production

© 2019 IHS Markit

12.011.0 11.0 10.9 10.8 11.0 11.2 11.4 11.3 11.2 11.3

2.4

2.2 2.0 1.9 1.6 1.6 1.7 1.7 1.8 1.8 1.8

3.53.9 3.9 3.9

3.7 3.8 3.7 3.7 3.9 4.0 4.1

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

2016 2018 2020 2022 2024 2026

Mil

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es

USA Canada Mexico

Muted growth amid uncertainty

United States-Mexico-Canada Agreement (USMCA) implications

Trade-related resourcing risks

Underutilized plants:

US: Fairfax, Grand River, Orion, Belvidere

Canada: Brampton, Windsor, Oakville, CAMI

Mexico: Cuautitlan, El Salto, Tijuana

Mexico plant investments:

Kia—Monterrey (2016)

Audi—San Jose Chiapa (2016)

COMPAS—Aguascalientes (2017)

BMW—San Luis Potosi (2019)

Toyota—Guanajuato (2021)



North AmericaLaunches by vehicle type

25

Source: IHS Markit

North America light vehicle production launches

© 2019 IHS Markit

711

6 6 6

13

5

14

3

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36 7

4

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12

1520

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21 13

21

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24

29 29

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34

30 31 31

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2018 2020 2022 2024 2026

Car Truck Utility

Strong launch activity

Launches amid industry slowdown

Will new product be king?

Quality volume versus quantity

Utility vehicle expansion continues

Competitiveness weighs on leaders

Pricing and margin pressure

BEV activity

27 all-new nameplates

5.5% or 954,000 units of North American production by 2026

Tesla from 82% to 51% of total

Product redundancy

Varied strategies

Legacy programs as a hedge

Extended lifecycles amid future costs



North AmericaUAW strike implications

26

Source: IHS Markit

North America light vehicle production – manufacturer impact and footprint

© 2019 IHS Markit

General Motors Ford Fiat Chrysler Automobiles

Volume implications

US = 8,100 units per day

Canada = 1,550 units per days

Mexico = 3,600 units per day

Total = 13,250 units per day

US = 61% of production

4 weeks: 226,000 units

Limited recovery opportunities

Volume implications






Trucks all produced in USA

Impact to launches


Volume implications






Most diversified footprint


* Loss to date through full day Monday, September 30, 2019


IHS Markit Customer Care

[email protected]

Americas: +1 800 IHS CARE (+1 800 447 2273)

Europe, Middle East, and Africa: +44 (0) 1344 328 300

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Disclaimer

The information contained in this presentation is confidential. Any unauthorized use, disclosure, reproduction, or dissemination, in full or in part, in any media or by any means, without the prior written permission of IHS Markit Ltd. or any of its affiliates ("IHS Markit") is strictly prohibited. IHS Markit owns all IHS Markit logos and trade names contained in this presentation that are subject to license. Opinions, statements, estimates, and projections in this presentation (including other media) are solely those of the individual author(s) at the time of writing and do not necessarily reflect the opinions of IHS Markit. Neither IHS Markit nor the author(s) has any obligation to update this presentation in the event that any content, opinion, statement, estimate, or projection (collectively, "information") changes or subsequently becomes inaccurate. IHS Markit makes no warranty, expressed or implied, as to the accuracy, completeness, or timeliness of any information in this presentation, and shall not in any way be liable to any recipient for any inaccuracies or omissions. Without limiting the foregoing, IHS Markit shall have no liability whatsoever to any recipient, whether in contract, in tort (including negligence), under warranty, under statute or otherwise, in respect of any loss or damage suffered by any recipient as a result of or in connection with any information provided, or any course of action determined, by it or any third party, whether or not based on any information provided. The inclusion of a link to an external website by IHS Markit should not be understood to be an endorsement of that website or the site's owners (or their products/services). IHS Markit is not responsible for either the content or output of external websites. Copyright © 2019, IHS Markit®. All rights reserved and all intellectual property rights are retained by IHS Markit.

Guido Vildozo, Senior Manager+1 781 301 [email protected]

Christopher Hopson, Manager+1 781 301 [email protected]

Nicholas Hess, Market Analyst+1 248 728 [email protected]

Roberto Barros, Senior Analyst+55 19 3578 [email protected]

João Rebouças, Market Analyst+55 19 3578 [email protected]

mailto:[email protected]





Documents

North America Light Vehicle Outlookmexicoautosummit.com/presentations/guido_vildozo.pdf · 2019. 11. 5. · Slide in worldwide auto sales preceded projected slowdown of global economy