The New Face of the North American Production Landscape by 2012

The New Face of the North American Production Landscape by 2012

Haig StoddardManager, North American Production

Copyright © 2007 Global Insight, Inc.2007 GLOBAL AUTOMOTIVE CONFERENCE 2

The Culmination of Current Trends:

• A streamlined Big 3 — less production, but solid capacity utilization

• More production from Toyota, Honda, Nissan and others

• Crossovers become top truck production segment

• Fewer traditional trucks (Pickups, SUVs, Fullsize Vans)

• Volumes surge for combined car/CUV platforms — more platforms carry a wider variety of products (cars, vans, CUVs)

What Will the New Face Be in 2012?


• Fallout from union contracts is good in terms of survival for each of the Big 3

• Manufacturing base stays mostly intact after already announced plant closures by Big 3

• Each of the Big 3 stems market share losses by 2012 and has capacity in line with demand

• Cerberus does not dissolve major parts of Chrysler• Toyota, Honda, Nissan continue strategy to source most of

their products for North America in North America• BMW, Mercedes, Volkswagen continue using local plants as

export bases — view North American production as a currency buffer

• Toyota sales juggernaut continues

Forecast Assumptions


North American Light-Vehicle Production Outlook(Annual Forecasts and 5-Year Average)

14.0

15.0

16.0

17.0

18.0

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Annual Total Rolling 5-Yr. Avg.

No big rebound back to previous production peaks.

No big rebound back to previous production peaks.

It will never be perfect, but by 2012, the industry should have capacity adjusted to market needs. In other words, the Big 3 should be done with capacity cuts.

It will never be perfect, but by 2012, the industry should have capacity adjusted to market needs. In other words, the Big 3 should be done with capacity cuts.

Units in Millions


• GM, Ford and Chrysler – manufacturers that source over 90% of their sales volume from North American plants — are forecast to continue losing market share

• Higher gas prices will favor sales of affordable overseas-built vehicles– Increased emphasis on small, entry-level vehicles will encourage

more sourcing from overseas, including from the Big 3

• Big 3 more cautious about overproducing• Fewer shipping points means less inventory to carry

– Big 3 looking to pare retail outlets (dealers)– Growing manufacturers (i.e. Toyota, Honda) already have efficient

dealer placement, i.e. each dealer covers a lot of territory

Why Not a Bigger Production Surge by 2012


The Panoramic View: Shift in the Country Mix Away from the United States, Albeit Small, Continues through 2012

01020304050607080

MEXICO CANADA UNITEDSTATES

2002 2007 2012

As well documented, the U.S. production mix by 2012 will increase in the Southern states, while the Midwest will stabilize. But no significant growth forecast for the U.S.

As well documented, the U.S. production mix by 2012 will increase in the Southern states, while the Midwest will stabilize. But no significant growth forecast for the U.S.

Mexico increases its piece of the production pie. Canada stays flat.

Mexico increases its piece of the production pie. Canada stays flat.

Percent Share by Country


Forecast Production by Manufacturer Group

0.0

1.0

2.0

3.0

4.0

5.0

6.0

GM

Ford

Chrysler

Toyota

Honda

Nissan

Other A

sia H

QEuro

pe H

Q

2002 2007 2012

Except for upswing by GM, recent patterns continue through 2012: Ford, Chrysler down; Toyota producing over 2 million annually; most others up.

Except for upswing by GM, recent patterns continue through 2012: Ford, Chrysler down; Toyota producing over 2 million annually; most others up.

Units in millions, incl. joint venture output


North American Production by Selected Segment Grouping

2.20.32.20.32.30.4FULLSIZE VAN

18.93.021.83.221.23.5PICKUP

7.51.212.21.818.02.9SPORT/UTILITY

5.50.95.80.98.21.3MID VANS

20.43.212.21.84.30.7CROSS/UTILITY

3.40.53.40.51.10.2SPORT TOURING

WAGON

42.26.642.46.344.97.4CAR

Pct.Vol.Pct.Vol.Pct.Vol.

201220072002One-in-five vehicles built in North America in 2012 will be a CUV.

One-in-five vehicles built in North America in 2012 will be a CUV.

Traditional trucks, led by a severe decline in SUVs, and a significant drop in pickups, will fall to less than one-third of the manufacturing base (from 36% in 2007 to 29% in 2012).

Traditional trucks, led by a severe decline in SUVs, and a significant drop in pickups, will fall to less than one-third of the manufacturing base (from 36% in 2007 to 29% in 2012).

Cars will hold their own, but growth in production will be stymied by rising demand for subcompacts, which will favor overseas-built models.

Cars will hold their own, but growth in production will be stymied by rising demand for subcompacts, which will favor overseas-built models.

Volumes in millions


North American Production Comparison by Selected Segment Grouping – Cars

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

SubCompact Compact Lower/Upper Mid Large/NearPremium

Premium Sports/Specialty

2002 2007 2012

Industry volumes stabilize. Re-emphasis on Compact Cars. Industry volumes stabilize. Re-emphasis on Compact Cars.

Units in millions


Car Production by Manufacturer Group

0.0

0.5

1.0

1.5

2.0

2.5

3.0

GM Ford Chrysler Toyota Honda Nissan OtherAsia HQ

EuropeHQ

200220072012

Ever-rising demand supports growth at Toyota, Honda.

Ever-rising demand supports growth at Toyota, Honda.

Rear-drive Zeta and Alpha platforms rejuvenate GM.

Rear-drive Zeta and Alpha platforms rejuvenate GM.

Honda increasing capacity for compact Civic.

Honda increasing capacity for compact Civic.

Nissan utilizing Mexico more for exports (Versa/Tiida).

Nissan utilizing Mexico more for exports (Versa/Tiida).

No Crown Vic, Town Car. No Crown Vic, Town Car.

Slack demand for Sebring, Avenger. Slack demand for Sebring, Avenger.

Units in Millions


Midsize Car Production by Manufacturer Group

0.00.20.40.60.81.01.21.4

GM

Ford

Chrysle

rToy

otaHondaNiss

anOthe

r Asia

HQ

Europe

HQ

200220072012

Despite decline, Midsize Cars (Lower and Upper Mid) by themselves will still constitute the largest production segment in North America.

Despite decline, Midsize Cars (Lower and Upper Mid) by themselves will still constitute the largest production segment in North America.

A positive for Ford.A positive for Ford.

Units in millions


North American Production Comparison by Selected Segment Grouping – Cross/Utility Vehicles

0.0

0.2

0.4

0.6

0.8

1.0

1.2

ENTRY CUV MID CUV LARGE CUV ENTRYPREMIUM CUV

MID PREMIUMCUV

LARGEPREMIUM CUV

2002 2007 2012

Units in millions


CUV Production by Manufacturer Group

0100200300400500600700800900

GM Ford Chrysler Toyota Honda Nissan? OtherAsia HQ

EuropeHQ

200220072012

Nissan could source one if its CUVs locally to fill some of its excess U.S. capacity.

Nissan could source one if its CUVs locally to fill some of its excess U.S. capacity.

GM blanketing the segment. Lambda, TE, Theta platforms all supporting CUV output.

GM blanketing the segment. Lambda, TE, Theta platforms all supporting CUV output.

Units in thousands


North American Production Comparison by Selected Segment Grouping – Pickups

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2002 2007 20122.6

2.8

3.0

3.2

3.4

3.6

Entry/MidFullsizeTotal Pickup (R-Scale)

Bastion of the Big 3 not dying; not helping — even Toyota might have excess capacity.

Bastion of the Big 3 not dying; not helping — even Toyota might have excess capacity.

Units in millions


Pickup Production by Manufacturer Group

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

GM Ford Chrysler Toyota Honda Nissan

200220072012

Units in millions


North American Production Comparison by Selected Segment Grouping – Sport/Utility Vehicles

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

ENTRYSUV

MID SUV FULLSIZESUV

PREMIUMSUV

TOTALSUV

200220072012

Once high-flying segment, and domain of the Big 3, is tanking —additional capacity cuts on the way.

Once high-flying segment, and domain of the Big 3, is tanking —additional capacity cuts on the way.

80% Chrysler80% Chrysler

Units in millions


SUV Production by Manufacturer Group

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

GM Ford Chrysler Toyota Nissan OtherAsia HQ

EuropeHQ

2002

2007

2012

Chrysler becomes the SUV leader thanks to Jeep.

Chrysler becomes the SUV leader thanks to Jeep.

Units in thousands


Sweet 16 Platforms – 2007Pickups, SUVs still dominate high-profile platforms

0.36Sienna, Lexus RX, AvalonCUV, Mid Van, Midsize Car300NTOYOTA

0.31Chrysler 300, ChargerLarge CarLX/LYCHRYSLER

0.37Malibu, AuraMidsize CarEpsilonGM

8.75TOTAL "16"0.30AltimaMidsize CarDNISSAN

0.40Cobalt, HHRCompact Car, STWDeltaGM

0.41RamFullsize pickupDR/DECHRYSLER

0.42CamryMidsize CarMC TOYOTA

0.43Caravan, Town & CountryMid VanNS/RS/RTCHRYSLER

0.47Corolla, MatrixCompact Car, STW330NTOYOTA

0.51Impala, LaCrosseMidsize Car (front-drive)WGM

0.51Edge, Fusion, MKXMidsize Car, CUVCD1-3FORD

0.52Caliber, Sebring, JourneyCUV, Midsize and Compact CarsGSCHRYSLER

0.54Civic,. CR-VCompact Car, CUVCXHONDA

0.86Accord, Pilot, OdysseyMidsize Car, CUV, Van, PickupCYRHONDA

0.93F-Series, ExpeditionFullsize pickup, SUVT1FORD

1.41Silverado, SuburbanFullsize pickup, SUVGMT900GM

Lead VehiclesMain Vehicle TypesPlatformMfr. Vol. in Millions


Sweet 16 Platforms – 2012 Big 3 “truck” platforms still good business

9.89TOTAL "16"0.34Chrysler 300, ChargerLarge CarLX/LYCHRYSLER

0.35RamFullsize pickupDR/DECHRYSLER

0.36Altima, MaximaMidsize CarDNISSAN

0.38Focus, EscapeCompact Car, CUVC2FORD

0.41Enclave, Outlook, TraverseLarge CUVLambdaGM

0.43Caravan, Town & CountryMid VanNS/RS/RTCHRYSLER

0.46Cobalt, HHRCompact Car, STWDeltaGM

0.50Edge, Fusion, FlexMidsize Car, CUVCD3/EUCDFORD

0.50CorollaCompact Car, STWNCVTOYOTA

0.54Camaro, ImpalaLarge and Mid Specialty CarsZetaGM

0.63Sebring, Journey, PatriotCUV, Midsize CarGSCHRYSLER

0.71Civic,. CR-VCompact Car, Entry CUVCXHONDA

0.84F-Series, ExpeditionFullsize pickup, SUVT1FORD

0.96Accord, Pilot, OdysseyMidsize Car, CUV, Van, PickupCYRHONDA

1.17Silverado, SuburbanFullsize pickup, SUVGMT900GM

1.25Camry, Highlander, SiennaMidsize Car, CUV, VanMCTOYOTA

Lead VehiclesMain Vehicle TypesPlatformMfr. Vol. in Millions


Summary

• The manufacturing landscape come 2012 hinges on a lot of well-known variables (economic health, union negotiations, currency fluctuations, geopolitical issues, fuel economy/emission regulations, etc.)

• More capacity reductions, beyond what the Big 3 have announced, and the additional cuts we’ve injected into our forecast, are possible

• Teetering on the brink are plants building vans, mid pickups, fullsize pickups, cars and even CUVs

• A strong alternative scenario has GM, Ford and Chrysler – one or a combination of the three – shifting more production of Compact cars, Lower Mid cars and Entry CUVs to Mexico. Good for Mexico, but along with that would be further consolidation in total North American capacity


Summary - continued

• To end on a more positive note, after 2012 production should undergo some hefty growth through the end of the decade simply from a long-term cyclical rebound

• Manufacturers still standing in 2012 should be in a good position to take advantage of that growth. (If sales accelerate faster than expected after 2007, then it will happen sooner)

• The Big Three will have had five more years to further rectify their product portfolios and financial situations

Thank You

Haig StoddardManager, North American Production

E-mail: [email protected]

Documents

The New Face of the North American Production Landscape by 2012