North America Light Vehicle Outlook - Economics & · PDF fileNorth America Light Vehicle Outlook . July 18, 2012 . Guido ... forecast horizon in 2019, ... Canada, W Europe, Japan BRICs=Brazil,

North America Light Vehicle Outlook

July 18, 2012

Guido Vildozo Manager, Latin America IHS Automotive

Copyright © 2012 IHS Inc. All Rights Reserved.

Presentation Outline

Global Vehicle Sales Forecasts

North America Overview

Mexico

Brazil

Summary


0.7 0.75 0.8

0.85 0.9

0.95 1

1.05 1.1

1.15 1.2

Apr-05

Aug-05

Dec-05

Apr-06

Aug-06

Dec-06

Apr-07

Aug-07

Dec-07

Apr-08

Aug-08

Dec-08

Apr-09

Aug-09

Dec-09

Apr-10

Aug-10

Dec-10

Apr-11

Aug-11

Dec-11

Apr-12

Synchronized Global Crash in November 08

Lehman Bros Trigger (Sept)

Japan Crisis

World Index of Seasonal Adjusted Annualised Sales Rates

SA

AR

Inde

x =

1 fo

r yea

r 200

7

June12

YTD May Est up 4.6%

Global Light Vehicle SAAR Volume is slowing down


0.5 0.6 0.7 0.8 0.9

1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9

2 2.1 2.2 2.3

Jul-06

Oct-06

Jan-07

Apr-07

Jul-07

Oct-07

Jan-08

Apr-08

Jul-08

Oct-08

Jan-09

Apr-09

Jul-09

Oct-09

Jan-10

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Jul-10

Oct-10

Jan-11

Apr-11

Jul-11

Oct-11

Jan-12

Apr-12

CE EE China J/K NA SA WE

Seas

onal

ly A

djus

ted

Selli

ng R

ates

Inde

xed

2007

=1

2007 Sales Level

Lehman Bros Collapse

Global Light Vehicle Sales Outlook Regional SAARs


Global Light Vehicle Sales Outlook 2010 – 2012 Sales Volume

58

63

68

73

78

83

2010 2011 Greater China

North America

Japan/ Korea

South Asia

South America

Central/ Eastern Europe

Middle East/ Africa

Western Europe

2012

72.5 Million

75.6 Million

1.3 Million

1.6 Million

863,000

216,000 516,000

99,000 -1.2

Million 78.7 Million

+4.1%

-325,000

Sal

es in

Mill

ions


-6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% 16%

0

10

20

30

40

50

60

70

80

90

100

2009 2010 2011 May 2012

YTD 2012

2012 2013 2014

Global Sales Change

Global Sales S

ales

in M

illio

ns

Year-Over-Year C

hange

• YTD 2012 global light vehicle sales rose 5.5% versus YTD 2011. Japan/Korea led the regional ranking, up by 38%, with Japan mounting an impressive 55% rise in demand. North America follows with sales rising a very decent 12.8%. South Asia remains in recovery mode, largely due to production and distribution disruptions in 2011 that resulted from the heavy flooding in Thailand.

• For full-year 2012, we penciled in 78.7 million units, up a further 4.1%, actually a shade higher than our previous forecast. For 2013 and 2014, we downgraded our expectations. Until the end of the forecast horizon in 2019, the global light vehicle sales market is expected to grow at a compound annual growth rate (CAGR) of 4.3% to reach 105.8 million units.

Presenter

Presentation Notes


-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

0 10 20 30 40 50 60 70 80 90

100

2009 2010 2011 May 2012

YTD 2012

Q2 2012

2012 2013 2014

Global Production Change

Global Production P

rodu

ctio

n in

Mill

ions

Year-O

ver-Year Change

• In May 2012, global production is estimated at 6.84 million units, up 12.3% versus 2011 levels, and a weak comparison due to the immediate aftermath of the Japanese tsunami and earthquake. YTD 2012 output is estimated at 34.53 million units, up 9.9%.

• Full-year 2012 output is expected to reach 80.47 million units, the negative trend partially obscured by the positive development year-to-date.

• Growth is expected to slow to 2.9% in 2013 and reach 82.83 million units as the economic woes in Europe continue.

Presenter

Presentation Notes

Data Oct ‘09


40

50

60

70

80

90

4

6

8

10

12

14

16

18

20

22

24

26

Mar 2009

Jun 2009

Sep 2009

Dec 2009

Mar 2010

Jun 2010

Sep 2010

Dec 2010

Mar 2011

Jun 2011

Sep 2011

Dec 2011

Mar 2012

Jun 2012

Sep 2012

Dec 2012

North America Europe China Japan/Korea Global

Regional and Global Production SAAR Rates

Europe Supported by Luxury Exports

Chrysler and GM Bankruptcies

North America Stabilizes

Trend Cycle G

lobal Production S

AA

R in M

illions

Tren

d C

ycle

Pro

duct

ion

SA

AR

in M

illio

ns

Earthquake in Japan Disrupts Production

Economic Uncertainty Slows Growth

Presenter

Presentation Notes

August 2009


Greece Exit Lowers Global Sales by 1m units for 2013

60

65

70

75

80

85

90

95

2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Company Reports, Trade Associations, IHS Automotive.

(Units in Millions Light Vehicles)

Q1 GR Forecast

Debt Crisis Returns

1m Million Unit Downgrade Due to Greek Exit Assumption – Initial Run for 2013 0.1 m out of US forecast – Now 14.8m 0.62 m out of Europe – Now 18.3m 0.26 m out of BRIC’s-Mainly China, (Rus and India slightly higher) -5% -4% 13% 4.3% 4% 4.4% 7%

3/4m units Lost in 2014 (90% Europe)

June 2012 Fcast Japan supply constrains Auto sales

Greece Exits Euro mid 2013


10

0

5

10

15

20

25

30

35

40

45

50 20

00

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

BRICs Mature Markets

Ann

ual L

ight

Veh

icle

Sal

es (i

n m

illion

s)

Note: Mature=US, Canada, W Europe, Japan BRICs=Brazil, Russia, India, China Source: IHS Data Insights

Global LV Sales: Changing of the Guard Long-Term Growth Only In Emerging Markets

Change 2011-2020: BRICs +69%, CAGR = 6.7% Mature +18%, CAGR =1.9%

76%

46%

37%

Share of World Sales in Triad -Mature Markets


10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

70,000

75,000

80,000

85,000

OECD Non-OECD

Bn

US

$ (2

005)

19%

38%

28%

Between 2007 to 2024 Real Per Capita GDP will grow by 33% in OECD countries (down from 36% Last year) but 150% in non OECD countries

World Real GDP : Growing a little slower than previous forecasts and still being Re-distributed

March 12


Recent Signposts to Vortex :- Undercurrents of Protectionism

• China – US

• Solar PV tariffs – US Vs China • Steel Wheel Tariffs • US Built Vehicle Tariffs • China : Rare Earth Policy

• India

• Raises Auto Import Tariffs on CBU in Recent Budget

• Brazil • Backtracks on FTA with Mexico imposes $1.5bn (100k Vol) quota on imports from Mexico • Raises IPI by 30% on imported vehicles (65% local content) • New Industrial Policy ‘Brazil Maior’ adds requirement for localisation of 12 identified major auto

component target of 8 of the 12 by 2013 must be local/regional and 12 of 12 by 2018

• Argentina • 1:1 Auto import measures announced in 2011, • Nationalisation movement (YPF Oil company) – Spain, EU Retaliate • Import delays orchestrated, increasing delays from 30 days to 3-4mths • Argentina – Renege on Bilateral auto trade with Mexico • Luxury Tax started earlier this year from 10 to 25% on cars over $35K

Copyright © 2012 IHS Inc. All Rights Reserved. 13

• Pent – Up demand is driving the auto recovery • The first quarter (the high point for the year) was outstanding but

unsustainable • Retail, rather than fleet, remains the main driver, although

February saw more fleet volume • Sales have improved, as Japanese cars return to the showrooms,

but there are still some issues of availability • High gasoline prices actually helped sales (trade-in gas guzzlers) • Incentive spending has risen modestly, as inventories rebuild, but

there is more pricing discipline today • Auto credit availability is improving • Supply constraints are becoming a concern • The used car and truck market remains very strong • Cost pressures will return but industry profits are good Bottom Line – A weak economy will hurt the release of pent up

demand, slowing not derailing, the auto market recovery

US - Auto Market Overview


Pure Raw Material Cost in a Car – Debt Crisis Lowers Input Costs

European Car @ 2700 Lbs in Euro

US Vehicle @ 3500 Lbs In $

Steel Aluminium Plastic Resins Rubber Glass Iron

(Excludes Fuel, Processing and Transportation costs)

Latest Data Point March 2012

Presenter

Presentation Notes


Intention to Buy New Vehicle in 6 Months

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

6 Month Moving Average Actual

(Percent Yes)

Conference Board


1.0

1.5

2.0

2.5

3.0

3.5

4.0

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011

Direct (Bank) Loans Indirect (Dealer) Loans

(% - Accounts past due 30 days or more)

Months

Source: American Bankers Association

New Auto Loans — Delinquency Rates


New Vehicle Buyers Average Credit Score

6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18%

650 660 670 680 690 700 710 720 730 740 750 760 770 780

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

FICO SCORE % UNDER 670

Avg. Score

Source: CNW Marketing


55%

60%

65%

70%

75%

80%

85%

Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12

Unweighted Average of Prime, Near and Subprime

Months

New Auto Loan Application Approvals



5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Quarters

(Percent)

Federal Reserve Board

New Auto Loan Rates – Commercial Banks


12

14

16

18

20

22

24

26

1/1/2001 1/1/2002 1/3/2003 1/1/2004 1/1/2005 1/1/2006 1/1/2007 1/1/2008 1/1/2009 1/1/2010 1/1/2011 1/1/2012

(Percent)

CNW Marketing Months

Incentives to MSRP


30%

40%

50%

60%

70%

80%

90%

100%

1/1/2006 1/1/2007 1/1/2008 1/1/2009 1/1/2010 1/1/2011 1/1/2012

GM Ford Chrysler Industry Toyota Honda Nissan

Source: CNW Marketing Months

Residual Value Index (Index = Lease contract residual value versus CNW estimate of residual at end of lease term)


20%

21%

22%

23%

24%

25%

26%

27%

28%

29%

1/1/2005 1/1/2006 1/1/2007 1/1/2008 1/1/2009 1/1/2010 1/1/2011 1/1/2012

Leases by Month

(Share)

U.S. Light Vehicle Sales — Lease Penetration



U.S. Light Vehicle Inventory — Units

Months — Seasonally Adjusted

(Units in thousands)

1,500

2,000

2,500

3,000

3,500

4,000

4,500

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012


U.S. Light Vehicle Inventory — Days Supply

30

40

50

60

70

80

90

100

110

120

Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 1/1/2004 1/1/2006 1/1/2008 1/1/2010 1/1/2012

(Days Supply)

Months — Seasonally Adjusted

Light Trucks

Cars


8

10

12

14

16

18

20

22

Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

Actual Forecast

Months

(Units in millions)

United States — Car & Truck Sales, SAAR


(Cents)

Source: DOE Weekly – Updated 6/25/2012

Gasoline Retail Price - All Grades Per Gallon

150

175

200

225

250

275

300

325

350

375

400

425

450

2004 2005 2006 2007 2008 2009 2010 2011 2012


3

4

5

6

7

8

9

10

11

12

13

Jan-00 Jan-02 1/1/2004 1/1/2006 1/1/2008 1/1/2010 1/1/2012

CARS LT. TRUCKS

(Units in millions)

United States — Car & Truck Sales, SAAR


0

1

2

3

4

5

6

7

Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12

GM FORD CHRYSLER

``

Months

(Units in millions)

Big Three by Manufacturer — Car & Truck Sales, SAAR


8

10

12

14

16

18

8

9

10

11

12

13

14

15

16

17

18

1990 1994 1998 2002 2006 2010 2014 2018

June 2012 Forecast July 2011 Forecast

(Units in millions)

U.S. Light Vehicle Sales

2008: 13.2M units 2009: 10.4M units 2010: 11.6M units 2011: 12.7M units 2012: 14.3M units 2013: 14.8M units 2014: 15.6M units 2015: 16.2M units


(Percent)

7%

9%

11%

13%

15%

17%

19%

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Non-farm Payroll

U.S. Light Vehicle Sales: Relative to Employment


U.S. Sales — Major Manufacturers Market Share

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

GM FORD CHRYSLER/FIAT TOYOTA HONDA NISSAN HYUNDAI/KIA


U.S. Sales — Asian Manufacturers Market Share

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

HYUNDAI KIA SUBARU MAZDA MITSUBISHI SUZUKI


U.S. Sales — European Manufacturers Market Share

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

BMW DAIMLER AG VW GROUP PORSCHE


U.S. Sales — By Car Segment (54%)

0% 2% 4% 6% 8%

10% 12% 14% 16% 18% 20% 22%

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Compact Full-Size Micro + Mini Mid-Size Sports Subcompact

(Light Vehicle Share)


U.S. Sales — By Light Truck Segment (46%)

0%

5%

10%

15%

20%

25%

30%

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

CUV MPV PUP SUV VAN

(Light Vehicle Share)


8%

10%

12%

14%

16%

18%

20%

22%

24%

0

2

4

6

8

10

12

14

16

18

20

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Mill

ions

Volume - L Canada- R Mexico - R

`

(Units in millions)

North America - Light Vehicle Production

(Share of NA Prod.)


North America - Light Vehicles Imports

15.0%

17.0%

19.0%

21.0%

23.0%

25.0%

27.0%

29.0%

2.5 2.7 2.9 3.1 3.3 3.5 3.7 3.9 4.1 4.3 4.5

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Mill

ions

Volume - L Share of LV - Sales - R

(Units/)


North America - Light Vehicles Exports

-30%

-20%

-10%

0%

10%

20%

30%

40%

0.0

0.5

1.0

1.5

2.0

2.5

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Mill

ions

Volume - L Change - %

(Units/)


N.A Export Sales – By Region of Destination

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Asia Europe Middle East/Africa South America


Autos - The Bottom Line

• The auto industry is in its best shape to withstand economic adversity • Auto credit quality is outstanding, availability will improve this year • Industry pricing power will continue to improve • Leasing is on the way back • Small cars will gain market share but crossovers will remain very popular • Higher fuel economy standards are the next big challenge (opportunity) • The industry has done a great job reducing capacity and cost, but we can’t

rest on our laurels • Initially replacement demand drives volume, longer term demographics

sustain sales • Eventually the economy will support volume levels that are more normal for

the auto industry • The industry has become more profitable and once volume returns, it will

become even more so


0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1/1/1997 1/1/1999 1/1/2001 1/1/2003 1/1/2005 1/1/2007 1/1/2009 1/1/2011

(Units in Millions)

Mexico Light Vehicle Sales — Seasonally Adjusted Annual Selling Rate - SAAR

Monthly

Annual Average


-30%

-20%

-10%

0%

10%

20%

30%

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

1,500,000

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Light Veh -L Annual Change -R

Mexico - Light Vehicle Sales

Units

Used car imports and credit availability limit growth


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2007 2009 2011 2013 2015 2017 2019 Others Suzuki Daimler BMW Mitsubishi Mazda Honda Toyota Chrysler Ford Volkswagen General Motors Renault/Nissan

Percentage

Mexico –Market Share

Nissan grows in coming years


Mexico — Global Segmentation

0.00

0.10

0.20

0.30

0.40

0.50

0.60

A B C D E F HVAN

Mill

ions

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Units


Mexico — Bodystyle

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

Mill

ions

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Units


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

PROD

Producing for Export

Mexico Light Vehicle Production (millions of units)

Forecast at risk due to Brazil


Mexico to Brazil –ACE 55

47

2009 2010 2011 2012 2013 2014 Imports from Mexico [US$] 947,500,00 1,260,900,000 2,070,000,000 1,450,000,000 1,560,000,000 1,640,000,000

Imports from Mexico [Units] 60,138 76,748 121,745 93,500 100,000 104, 500

Vehicle price per unit [US$] 15,755 16,429 17,003 15,500 15,600 15,700

•Very little impact YOY to 2012 figures, but we had expected 200-250K. Impact will be hardest for 2013 and 2014. •Difficult to compete after quota is hit, so far Asians are down 20-40%


Mexico Light Vehicle Production — By OEM

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Renault/Nissan General Motors Volkswagen Ford Chrysler Fiat Mazda

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Units


*Annual average, **Billions of US dollars

-60 -40 -20

0 20

2004 2006 2008 2010 2012 2014 1.5

2.0

2.5

3.0

2004 2006 2008 2010 2012 2014

-2 0 2 4 6 8

2004 2006 2008 2010 2012 2014

Real GDP Growth (%) Consumer Price Inflation (%)

Exchange Rate per USD* Current-Account Balance**

0

2

4

6

8

2004 2006 2008 2010 2012 2014

Brazil Outlook Summary


0 2 4 6 8

10 12 14 16 18 20

1990 1995 2000 2005 2010 2015 2020 GDP per Capita

(US $ ,000)

Nominal GDP per Capita

GDP per Capita has broken US $10,000, allowing for strong consumer power


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1990 1995 2000 2005 2010 2015 2020 R$/US$

(LCU/US$)

Exchange Rate

FX is poised to remain strong, despite gov’t trying to ease


0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Current Base

Million Units

Brazil Market Outlook

Promising growth outlook with incredible potential


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2007 2009 2011 2013 2015 2017 2019 Others Chery Jianghuai Mitsubishi Honda Toyota PSA Hyundai Renault/Nissan Ford General Motors Volkswagen Fiat

Percentage

Brazil –Market Share

Big four continue to loose


Brazil — Global Segmentation

0.00

0.50

1.00

1.50

2.00

2.50

3.00

A B C D E F HVAN

Mill

ions

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Units


Brazil — Bodystyle

0.00

0.50

1.00

1.50

2.00

2.50

Mill

ions

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Units


Brazil is using the IPI Tax Changes to increase local manufacturing (Manufacturer Wholesale Tax)

OEMs with local content

OEMs that don’t meet requirements

IPI IPI

Passenger Cars Fuel Type

Up to 1000cc Flex-Fuel 7 37

Up to 1000cc Gasoline 7 37

1001cc to 2000cc Flex-Fuel 11 41

1001cc to 2000cc Gasoline 13 43

2001cc Flex-Fuel 18 48

2001cc Gasoline 25 55

HCVs NA 30

Light Commercial Vehicles (PUPs/Vans) NA 4 34

Presenter

Presentation Notes

Data Oct ‘09


Brazil New Regional Content Requirements rely heavily on the types of components

• Brazil has raised the IPI (manufacturers wholesale tax) by 30 percentage points. • The government’s plan, Brasil Maior it aiming at protecting the industry. • An OEM may be exempt from the new IPI if it has 65% regional content and meets eight out of these

12 requirements: Assembly Chassis assembly Chassis production with regional parts Corrosion treatment and paint Drivetrain/steering assembly Engine production Final assembly of cabins and accessorizing Plastic Injection Stamping Transmission production Welding Research and Development


0

1000

2000

3000

4000

5000

6000

7000

8000

Investment OEMs Investment Suppliers

US $ 76 Billion 1980-2010 US $ 26 Billion 2011-2026

US$ Millions

Brazil –Investment by the automotive industry


0.50

1.50

2.50

3.50

4.50

5.50

6.50

7.50

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Light Vehicle Production Capacity

• 5 MM capacity by 2015 • Two new plants in 2012: Hyundai, Toyota

Million Units

Production: Recent Investments Prepare for Market Growth


Bottom Line • With the exception of Western Europe, global demand will

continue to gather momentum • BRICs will outsell TRIAD (USA, WE and Japan) within a

few years • Mexico has to explore new opportunities given this

scenario, South America presents great potential • The US has turned the corner, promising outlook for sales

and production • Mexican demand has broken the million unit mark! • Production is promising but big uncertainties lie in the

future

Thank You for Your Participation!

• Guido Vildozo • Manager, Latin America • IHS Automotive

• Contact: • 24 Hartwell Ave • Lexington, MA 02421 USA

• Ph: +1 781 301 9037 • Em: [email protected]

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North America Light Vehicle Outlook - Economics & · PDF fileNorth America Light Vehicle Outlook . July 18, 2012 . Guido ... forecast horizon in 2019, ... Canada, W Europe, Japan BRICs=Brazil,