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Confidential. © 2020 IHS MarkitTM. All Rights Reserved.Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
North America Light Vehicle OutlookAutomotive in the cross-currents
SAA Automotive Outlook Conference January 21, 2020
Joe Langley, Associate DirectorNorth America Light Vehicle Production Forecasting & Analysis+1 248 465 [email protected]
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
Source: IHS Markit
US light vehicle inventory
© 2020 IHS Markit
US light vehicle salesInventory correction in progress
2
Inventory update Inventory to Sale Index in negative for
6 of the last 8 months indicating inventory levels are being depleted Implications from GM-UAW strike
Lowest inventory since Sep. 2015 Alignment of production to continue No longer a car and truck mix issue Increasing concern surrounding
elevated truck and utility inventory No movement in inventory
Dec. 2019 = 3.45M units Down 352,850 units from Dec. 2018 Down 166,550 units from Nov. 2019
50- to 100,000 units of excess inventory at current levels
SAA Automotive Outlook Conference / January 2020
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
Source: IHS Markit
North America light vehicle production
© 2020 IHS Markit
North AmericaFlat and stable production environment
3
SAA Automotive Outlook Conference / January 2020
Short term GM-UAW skews metrics Weight of pricing and product mix Car to utility transition continues Maintain inventory alignment Strong product cadence
Long term Record production not in sight On- and off-shoring Capacity expansion and maximization Continued shift to trucks and utilities BEV implications Policy and regulatory uncertainty Exports grow 11% to 1.6 million units
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
North AmericaTransplants driving growth
4
Source: IHS Markit
North America light vehicle production
© 2020 IHS Markit
Divergent trajectories – 2019 to 2026 Domestics
-43K units or -0.5% Offshoring to China Build where you sell Increasing shift to trucks More closely tied to US sales
Transplants +732K units or +9.2% Localization; build where you sell Capacity expansion Increasing exports Global sourcing
Start-ups +108K units or +30% Tesla largest component
SAA Automotive Outlook Conference / January 2020
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
North AmericaIntra-regional production shifts
5
Source: IHS Markit
North America light vehicle production
© 2020 IHS Markit
Mexico: 2019 – 2026 +4.0% growth 150K units at 3.94M 23% of regional output New plants:
Kia-Monterrey (2016) Audi-San Jose Chiapa (2016) COMPAS-Aguascalientes (2017) BMW-San Luis Potosi (2019) Toyota-Guanajuato (2019)
USMCA implications Resourcing risks
Plants Products
Exchange rates
SAA Automotive Outlook Conference / January 2020
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
North AmericaShifting portfolio mix
6
Source: IHS Markit
North America light vehicle production
© 2020 IHS Markit
Vehicle Mix: 2019 – 2026 Shift in mix:
Car: down 14% or -624K units Truck: up 2.7% or 111K units Utility: up 17% or 1.3M units
Factors driving utility growth: Demographics Consumers Regulations
Further downside risk for cars Re-inventing the car strategies:
Strategy One: Acceptance Strategy Two: Futility
Electrification stems fuel price fears Trucks remain steady
SAA Automotive Outlook Conference / January 2020
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
Source: IHS Markit
North America light vehicle production and capacity
© 2020 IHS Markit
North AmericaCapacity
7
Doing more with less Pre-recession
Unions forced higher employment levels resulting in underutilization
2-shifts operating pattern the norm
Post-recession Detroit 3 capacity ‘right-sized’ with 3-
shift work patterns become the norm Labor now acts as variable capacity Detroit 3 can reduce labor footprint
amid weakness without plant closures German and Korea automakers also
leverage 3-shifts 3-shifts operating pattern accounts for
around 50% of production since 2013 Japanese automakers predominantly
operate on 2-shifts
SAA Automotive Outlook Conference / January 2020
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
US salesLaunches by vehicle type
8
Source: IHS Markit
US light vehicle launches
© 2020 IHS Markit
Strong launch activity: 2019 – 2026 Luxury activity 52% (15.5% of total)
Cars = 62% (5.4% of total) Trucks = 1% (0.2% of total) Utilities = 56% (9.9% of total)
Cars Disproportionate number of luxury and
exotic launches skew Average 10 mainstream car launches Legacy redesigns and EVs
Trucks Increasing activity in mid-size
Utilities Expansion across all segments Redesigns of legacy nameplates EV nameplates
SAA Automotive Outlook Conference / January 2020
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
US Three ManufacturersOffshoring takes a toll
9
Source: IHS Markit
North America production
© 2020 IHS Markit
Positive Trucks and utilities; margins Retail focus Capacity footprint
Negative Launches Global luxury Offshoring Portfolio diversification
OEM Notables GM: CUVs, Trucks, New Mobility Ford: Product cadence, Volkswagen FCA: Ram, Jeep, post Sergio
SAA Automotive Outlook Conference / January 2020
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
Source: IHS Markit
North America production
© 2020 IHS Markit
Asian Four ManufacturersOn-shoring and capacity expansion drive growth
10
Positive Retail focus Flexibility Capacity maximization efforts
Negative Trucks Portfolio expansion Global luxury
OEM Notables Toyota: Portfolio mix, partners, EV Honda: Portfolio mix, partners, EV Nissan: Restructuring, holding pattern Hyundai: Reset and restructuring
SAA Automotive Outlook Conference / January 2020
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
Source: IHS Markit
North America production
© 2020 IHS Markit
German Three ManufacturersGrowth at the crossroads
11
Positive Global scale and luxury Localization Image
Negative Offshoring Aggressive targets Over proliferation Distractions
OEM Notables VW: CUVs and EVs BMW: Capacity expansion, sourcing Daimler: CUVs and EVs
SAA Automotive Outlook Conference / January 2020
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
Other ManufacturersRisk versus reward
12
Source: IHS Markit
North America production
© 2020 IHS Markit
Positive Localization Niche
Negative Conquest dependent Size and scale Financial and technology risks
OEM Notables Subaru: Measured growth, constraints Tesla: Scaling business, China, EU Mazda: JV with Toyota, CUVs Volvo: Long-term focus, trade Rivian: Niche EV, partnerships
SAA Automotive Outlook Conference / January 2020
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
US light vehicle salesConsumer shift to continue
13
Source: IHS Markit
US light vehicle share by vehicle type
© 2020 IHS Markit
Re-inventing the car Strategy One: Acceptance
Embrace being a car Greater design freedom Focus on driving dynamics
Strategy Two: Futility Give in, increase utility Bodystyles; wagon, hatchback Limited success, lack of authenticity
Demographics at play Regulations favor trucks and utilities Freedom from ‘Volume Trap’ Recapture consumer’s imagination
BEVs create new opportunities Unique skateboard packaging
2016 Pivot
SAA Automotive Outlook Conference / January 2020
IHS Markit Customer [email protected]: +1 800 IHS CARE (+1 800 447 2273)Europe, Middle East, and Africa: +44 (0) 1344 328 300Asia and the Pacific Rim: +604 291 3600
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2018 Spring Automotive Client Briefing—COP