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The North American Automobile Industry
Kim Hill
Director, Sustainability and Economic Development Strategies Center for Automo;ve Research
Ann Arbor, Michigan
FTA Revenue Es;ma;ng Conference Hilton Springfield, Springfield, IL
October 7, 2013
The Center for Automotive Research conducts leading-edge research that impacts the future of the global automotive industry.
• Automo;ve industry contract research and service organiza;on
• CAR is a standalone Non-‐Profit 501(c)3 since 2003 • Based in Ann Arbor, MI – 30+ Employees • CAR forecasts industry trends, advises on public
policy, and sponsors mul;-‐stakeholder communica;on forums
CAR Research
CAR Research and Analysis includes industry impact, economics and forecas;ng:
• Manufacturing, Engineering and Technology
• Transporta;on Systems Analysis
• Industry & Labor Analysis Group
• Sustainability & Economic Development Strategies
Automotive Industry Economic Analysis Long Range Sales, Produc;on, Employment Outlook
CAR Research and Analysis focuses
on industry impact, economics and
forecasting!
CAR Research & Contribution Examples: – Collabora;on & Partnership Development – OEM & Supplier Rela;onships – Automo;ve Industry Economics – Forecas;ng; Sales, Produc;on, Employment – Manufacturer Investment Analysis – Na;onal Academies of Science – Na;onal Research
Council (NRC), Fuel Economy Technologies & Strategies – Supply Base & Supply Chain – Economic Impact Assessments – Applied Research & Co-‐Development – Supplier Benchmarking – Product Timing Charts – Tooling / Materials & Lightweigh;ng – Safety Regula;ons – Bio-‐Materials & Green Manufacturing
– CAR’s Book of Deals, N.A. Manufacturing Facili;es – Economic Development – 50 State Tax Contribu;ons – Automaker & Supplier Job Mul;pliers – Automo;ve Communi;es Partnership – Southern Automo;ve Research Agenda – Connected Vehicle & ITS, HMI, Driver Distrac;on – Autonomous Vehicles – Consumer Percep;ons of Connected Vehicle
Technologies – Mobile Compu;ng Applica;ons – Alterna;ve Powertrains and Electrifica;on – Workforce, Skills Gap, Educa;on and policies – Employment & Labor Sta;s;cs
The Automotive Communities Partnership
• Widespread par;cipa;on from Ontario to Illinois, with diversity of par;cipants • 35 regional ED organiza;ons—
represen;ng 50 coun;es • 7 u;lity companies, 5 automobile
companies (DCX, Honda, GM, Ford, Toyota), numerous suppliers (ArvinMeritor, Dana, Denso, JCI, etc.)
• Specialized analyses • Objec;ve advice
• Best prac;ces • Forum for topical issues and ac;ons • Providing communi;es with much needed industry informa;on
• Collabora;ng on a common mission
Companies and communi;es working on enhancing the automo;ve endowment
Source: Automotive News; CAR Research
U.S. Light Vehicle Sales Percent Change YTD Through September:
2013 vs. 2012
4.9%
11.4%
8.0%
Passenger Cars
Light Trucks
Total + 872,67711,773,338
100.0%
+ 591,5545,791,648
49.2%
+ 281,1235,981,690
50.8%
0.6%
9.5%
9.6%
9.8%
10.3%
11.0%
12.8%
9.5%
0% 5% 10% 15%
Hyundai-Kia
Toyota
Honda
Nissan
GM
Fiat-Chrysler
Ford
TOTAL
Source: Automotive News; CAR Research
+ 924,391
+ 192,606
+ 104,202
+ 79,671
+ 172,794
+ 134,208
+ 105,357
+ 4,898871,496
8.2%
10,636,091
1,703,220
1,053,449
854,248
1,930,2648.0%
9.9%
16.0%
100%
1,213,986
11.4%
14.4%
18.1%1,533,722
0.6%
9.5%
9.6%
9.8%
10.3%
11.0%
12.8%
9.5%
0% 5% 10% 15%
Hyundai-Kia
Toyota
Honda
Nissan
GM
Fiat-Chrysler
Ford
TOTAL + 924,391
+ 192,606
+ 104,202
+ 79,671
+ 172,794
+ 134,208
+ 105,357
+ 4,898871,496
8.2%
10,636,091
1,703,220
1,053,449
854,248
1,930,2648.0%
9.9%
16.0%
100%
1,213,986
11.4%
14.4%
18.1%1,533,722
Percent Change in Sales of Light Vehicles Per OEM: YTD Through September: 2013 vs. 2012
Source: Automotive News; CAR Research
Units: 941,116
Units: 964,601
Units: 1,159,012
Units: 1,357,003
Units: 1,698,179
Units: 1,887,672
Units: 2,117,459
8.0%
8.2%
9.8%
11.5%
14.4%
16.0%
18.0%
Nissan
Hyundai-Kia
Honda
Fiat-Chrysler
Toyota
Ford
GM
U.S. Market Share: YTD September 2013
Big 7 Monthly U.S. Market Share 1999 – 2013 YTD (September)
Source: Automotive News; CAR Research
24.7%
16.0%
29.4%
18.0%
15.6%
11.5%
6.4%
9.8%
1.8%
8.2%
4.0%
8.0% 8.7%
14.4%
0%
5%
10%
15%
20%
25%
30%
35%
Percen
t of U
.S. M
arket S
ales
Year
Ford GM Chrysler Honda Hyundai-‐Kia Nissan Toyota
Source: Automotive News; CAR Research
U.S. Light Vehicle Monthly Sales and SAAR September 2011 – September 2013
1.1 1.0 1.0
1.2
0.9
1.1
1.4
1.2
1.3 1.3
1.2
1.3 1.2
1.1 1.1
1.4
1.0
1.2
1.5
1.3
1.4 1.4 1.3
1.5
1.1
13.1 13.3 13.6 13.6 14.2
15.1 14.4 14.4 13.8
14.1 14.1 14.5 14.9 14.3
15.6 15.4 15.2 15.3
15.3 15.2
15.5
15.9 15.8
16.1
15.3
0
2
4
6
8
10
12
14
16
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8 Se
p-11
O
ct-1
1 N
ov-1
1 D
ec-1
1 Ja
n-12
Fe
b-12
M
ar-1
2 A
pr-1
2 M
ay-1
2 Ju
n-12
Ju
l-12
Aug
-12
Sep-
12
Oct
-12
Nov
-12
Dec
-12
Jan-
13
Feb-
13
Mar
-13
Apr
-13
May
-13
Jun-
13
Jul-1
3 A
ug-1
3 Se
p-13
Mon
thly SAA
R
Mon
thly Sales (M
illions)
SALES SAAR
Source: Automotive News; CAR Research
Detroit Three at 45.3% in September 2013 U.S. Market Share:
September 2013 & YTD Total
7.6%
8.2%
9.3%
12.6%
14.5%
16.2%
16.5%
8.0%
8.2%
9.8%
11.5%
14.4%
16.0%
18.0%
0% 5% 10% 15% 20%
Nissan
Hyundai-Kia
Honda
Fiat-Chrysler
Toyota
Ford
GM
YTD 2013
September 2013
Unemployment Rate January 2008 – July 2013
7.1%
14.2%
10.6%
8.7%
4.7%
10.8%
8.4%
5.7%
10.6%
8.8%
7.2%
5.0%
10.0%
7.4%
4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15%
Michigan Indiana Ohio U.S.
Source: Bureau of Labor Sta/s/cs
Motor Vehicle & Parts Manufacturing Employment 1999 – July 2013
316,300
148,500
105,100
70,200
153,500
81,500
1,130,900
681,500
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 July 2013
U.S.
State Level
Michigan Indiana Ohio U.S.
50% change
64% change
53% change
47% change
Source: BLS, U.S. DOL
Auto Sales and Economic Growth are Disconnected U.S. GDP Growth Rate and Vehicle Sales Growth Rate
1952 – Q2 2013
-‐30
-‐20
-‐10
0
10
20
30
40
-‐4.0
-‐2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
52 57 62 67 72 77 82 87 92 97 02 07 12
Vehicle Sales G
rowth Rate
GDP Grow
th Rate
Sales Growth GDP Growth
Source: Bureau of Economic Analysis
Household Net Worth and Vehicle Sales 1978-2013*
0
2
4
6
8
10
12
14
16
18
1975 1980 1985 1990 1995 2000 2005 2010 0
10
20
30
40
50
60
70
80
90
Light V
ehicle Sales
Househ
old Net W
orth in Trillio
ns
Light Vehicle Sales Household Net Worth Net Worth (Real $)
Source: Federal Reserve Sta/s/cal Release , Z.1, Flow of Funds Accounts of the Unite States *Net worth as of Q1 2013; sales as of 1H 2013 SAAR. Real Household net worth is deflated by CPI.
Is the Auto Industry Back?
Product? Yes. Producavity? Yes.
Profitability? Yes.
Producaon? Not quite yet.
Sales? Not quite yet.
Employment? No.
Investment? Yes.
Per Vehicle Profits*, North America 2006—2013/1stH
$(1,416)
$(306)
$(3,308) $(3,229)
$1,921 $2,058 $2,275 $2,124
$1,391 $1,094
$(1,054)
$452
$1,543
$995 $975
$1,120
$(4,000)
$(3,000)
$(2,000)
$(1,000)
$-‐
$1,000
$2,000
$3,000
$(4,000)
$(3,000)
$(2,000)
$(1,000)
$-‐
$1,000
$2,000
$3,000
2006 2007 2008 2009 2010 2011 2012 1H 2013
Detroit Three Toyota and Honda
*EBIT or automo;ve opera;ng income per vehicle sold. Global average for Chrysler figure. Honda excludes motorcycle, finance, and power products.
U.S. Auto Sales Are Still Improving Good: • Net Household Wealth is improving • Unemployment rate at 7.3% • Used Vehicle prices and age of fleet are s;ll high – scrappage low
Auto density increasing . . . • Sales up despite high prices – pent-‐up demand! Increased leasing • Credit is very available/interest rates almost record low • Consumer confidence steady… House prices improving • The Cliff turned out to be a molehill so did the Sequester: Deficit down
But . . . Bad: • Economy s;ll growing at “stall speed”? Or reaching “escape velocity?” More Fiscal Cliffs? • S;ll 12 million unemployed, or more . . . • States/Ci;es cuxng spending and employment • Corpora;ons nervous to hire • Developing economies in trouble • Europe is stagnant
They are Getting Old . . . U.S. Light Vehicle Age and
Scrappage Rate
8.6 8.8 8.8 8.9 8.9 9.0 9.1 9.4 9.5 9.7 9.8 10.0 10.3 10.6
10.9 11.2 11.4
6.78 5.88 5.76
6.74 6.40 6.19 5.50
4.76 4.35
5.03 5.24 5.66
4.12
5.21 4.90
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Average Age Scrappage Rate (%)
Source: R.L. Polk
2013 U.S. Sales Forecasts (Units in Millions)
15.5
15.7
15.6
15.6
15.5
15.2
15.4
16.0
(4/13)
(7/13)
(7/13)
(9/13)
(7/13)
(4/13)
(4/13)
(1/13)
15.5 (7/13)
(3/13)
15.5
15.3
(8/13)
2013 U.S. Sales Forecasts (Units in Millions)
15.25 (15.0 – 15.5)
15.75* (15.5 – 16.0)
14.8
15.3
* Includes heavy duty trucks
15.2
U.S. Light Vehicle CAR Sales Forecast: 2007-2016
16.1
13.2
10.4 11.6
12.8 14.5
15.7 16.0 16.2 16.2
0
2
4
6
8
10
12
14
16
18
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: CAR Research, Jan. 2013
10.4%
11.6%
13.3% 8.3%
CAR U.S. Vehicle Production Forecast: 2013-2016
10.8
8.7
5.8
7.8 8.7
10.4 10.9 11.2 11.4 11.3
0
2
4
6
8
10
12
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: CAR Research, July 2013
34.5%
11.6%
19.5% 4.8% 2.8%
Output increase: • Shorter summer
shutdown • High Cap. U;l. Rate • More lines added • Vehicle exports
increased
Michigan Assembly Plant and Purchases from Independent Suppliers
• In the past two years, Ford Motor Company has invested over $770 million at Michigan Assembly Plant (MAP) • convert the former truck plant to produce Focus and C-‐MAX
• The plant purchases over $1 billion in parts annually from Michigan-‐based businesses each year; – $1.8 billion throughout the U.S. – $3.2 billion total
• The Michigan Assembly Plant is served by 179 Tier 1 suppliers from across the United States – 80 of these firms located in Michigan.
Economic Contribution of MAP to the Michigan Economy
• Direct employment at MAP is over 5,000 • When supplier and spinoff jobs are taken into account, the
facility supports another 19,000 jobs within Michigan – 48,000 total jobs in the United States (coun;ng the assembly plant
employees)
• These jobs generate annual wages of $1.8 billion in the state of Michigan – $3.6 billion na;onally.
• MAP and its suppliers add $3 billion to the State Gross Product and almost $5.7 billion to na;onal GDP.
• MAP and its suppliers generate $70 million in Michigan state taxes annually
MAP Independent Supplier Spending by State (Millions of Dollars), 2011
Source: Center for Automo/ve Research analysis of data supplied by Ford Motor Company
Study Findings
• Auto industry generated over $130 billion in government tax revenue in 2010, including $91.5 billion for state governments and $43 billion for the federal government.
• The sources of these revenues include:
• Sales taxes ($30 billion)
• Income taxes ($15 billion)
• Taxes and fees on use ($89 billion)
• Business taxes and fees ($750 million)
State Government Revenue Overview
• Auto industry generated at least $91.5 billion in state government tax revenue in 2010, which is 13 percent of state government tax revenues.
• $30 billion from taxes on vehicle sales and service
• $860 million from taxes on direct employment
• $60 billion from taxes and fees on use of vehicles
• $750 million from taxes on businesses
Automotive Tax Revenues as a Percentage of Total Taxes Paid to State Governments
< 5% 5 to 10% 10 to 15% 15 to 20% > 20%
Oklahoma 23.4%
Texas 19.3%
Florida 19.9%
Michigan 12.6%
Ohio 16.7%
Indiana 15.9%
Illinois 16.2%
Assembly
Tier 1
Tier 2
Tier 3
New Investment Announced! $ ___ Million ___ New Jobs To Be Created ___ Unit Produc;on Increase But who will staff that new capacity? Where do those workers come from? Who has the needed skills and background?
Be|er cancel my vaca;on…
Kim Hill Director, Sustainability and Economic Development Strategies Center for Automo;ve Research Ann Arbor, Michigan [email protected]
Questions?