US Automotive Industry Update Q2 2012

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Q2 2012 Auto Industry Analysis presented by BBVA Research

Text of US Automotive Industry Update Q2 2012

  • 1. U.S. Automotive Industry April2012
  • 2. Index1 Automotive Demand2 U.S. Dealerships 2
  • 3. Auto Demand: Key Messages Manufacturers are l ki abroad for sales growth: i 2009 China became the worlds M f t looking b df l th in 2009, Chi b th ld largest auto market. In the U.S., auto sales will increase gradually over the next four-five years Auto sales are linked to growth of real p g per-capita disposable income. Growth here p p requires expansion in real wages and/or more workers, but full employment will not return until after 2014. There is currently a glut of automobiles relative to employment, and working age population growth is slowing Consumers are d l C de-leveraging and reducing their debt burdens: particularly in the i d d i th i d bt b d ti l l i th mortgage market. Outstanding auto debt is no longer declining, and delinquency rates appear to have stabilized. Autos remain essential for transportation to/from work in most areas of the country The U.S. still remains the largest market defined by total expenditure and total amount financed. High per-capita wealth supports higher unit prices of autos, and the U.S. financial system allows all types of buyers to finance a car within their budget Leasing is attractive f many buyers : lower down payments, attractive lease deals put L i i tt ti for b l d t tt ti l d l t consumers in a new car for a low monthly payment. Leases are significant among luxury autos 3
  • 4. Autos: A Global Market Global auto manufacturers will focus on emerging markets during this decade as households move up the income ladderAutomobiles Production Global Auto PenetrationMillions of Units 600 Italy Germany 70 France Switzerland 500 England Japan USA als g Belgium Vehicles per 1000 individua 60 Slovenia Norway N Spain Mature markets: 50 400 CzechPortugal Republic Higher auto spending per- Latvia 40 capita and access to credit 300 Poland 30 p Slovakia 20 200 South Korea Markets with high growth 10 Brazil rates, potential for credit Mexico 0 100 South Africa expansion, and rising Turkey household incomes 2007 2010 China 0 India Resto of the Rest del Mundo BRICS BRICS 0 10,000 20,000 30,000 40,000 world Income per capita, USD Source: BBVA Research & PWC Source: BBVA Research & VDA 4
  • 5. Autos: China and Brazil In China, a growing middle class has created the worlds largest auto market. A tightening labor market in Brazil supports new demand China: Housing Prices and Auto Sales Brazil Prices, yoy % change (left); Autos, millions, annualized (right) Unemployment Rate & Auto Sales (Annual units)14 25 10.0 2.6 Home Prices (left)12 Auto Sales (right) 2.5 9.510 20 2.4 9.08 2.3 15 8.56 2.2 8.04 2.1 10 7.5 752 2.0 7.00 Unemploymentrate(lhs) 1.9 5 6.5 1.8-2 AutoSales(millionsofunits,rhs)-4 0 6.0 1.7 05 06 07 08 09 10 07 08 09 10 Source: Bloomberg Source: Bloomberg 5
  • 6. U.S. Market Size Sales of new vehicles declined precipitously during the recession; however, the U.S. remains the worlds largest market by sales value and finance opportunities world s Size of Finance Market for New Vehicles, $Bn Annual New and Used Vehicle Sales (1990-2010)