091005 BRIC Deck - AMDA€¦ · Russia Automotive Market Overview The challenges of an emerging...

BRIC Automotive Markets ReviewForo Automotor 2009

Knowledge Services Organization

PwCAutomotiveInstitute Powered by AUTOFACTS®

BRIC – Fueling Global Automotive Growth

PwC Automotive Institute

BRIC countries in context

Total Light Vehicle SalesBRIC Countries 2003 – 2008 (millions of units)

0

1

2

3

4

5

6

7

8

2003 2004 2005 2006 2007 2008

Brazil Russia India China

China Leading Sales Growth


9%

2%

3%

2%

5%

2%

-15% -5% 5% 15% 25% 35% 45% 55% 65% 75%

MEA

NA

SA

EU

EE

AP China 44%

Czech Republic 2%

Russia 8%

Brazil 7%

Iran 2%

USA 9%

India 15%Japan-10%

BRIC Represents 74% of Anticipated Growth

Source: PwC Automotive Institute 2009 Q4 Data Release

Brazil,15%

Russia,10%

India ,17%

China,58%

CTG by BRIC Country2008 - 2015

Contribution to Assembly Growth – By Country

Contribution to Growth (CTG) by Region2008 - 2015


132

216

251

309

69

70

169

736765

73

0 200 400 600 800 1,000 1,200

Ford (+91%)

Sollers (+210%)

Ren-Nis (+254%)

GAZ (+83%)

AvtoVAZ (+8%)

2015 2007

219

544

613

932

60

19

339

331

743 989

0 200 400 600 800 1,000 1,200

GM (264%)

Ren-Nis (+2,809%)

Hyundai (+81%)

Tata (+182%)

Suzuki (+33%)

2015 2007Bar 3 Bar 4 598

798

1,004

968

366

414

462

568

5361,393

0 200 400 600 800 1,000 1,200 1,400

FAW (+63%)

Chang'an (+93%)

FAW-VW (+117%)

Shanghai-VW (+108%)

SAIC - GM (+160%)

2015 2007

BRIC countries in context

Vehicle Assembler Outlook - Brazil Top 52007 vs. 2015 – (000s)

Vehicle Assembler Outlook - India Top 52007 vs. 2015 – (000s)

Vehicle Assembler Outlook - China Top 52007 vs. 2015 – (000s)

238

293

785

959

117

291

502

683

723831

0 200 400 600 800 1,000 1,200

Renault (+105%)

Ford (+1%)

GM (+45%)

VW (+40%)

Fiat (+16%)

2015 2007

Domestic OEMs

Keeping the Established Order at Bay


Vehicle Assembler Outlook - Russia Top 52007 vs. 2015 – (000s)


0

10

20

30

40

50

60

70

80

90

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

Mature Markets Other Emerging BRIC Countries

Global Light Vehicle Assembly Outlook1990 – 2015 (millions)

Top-line growth rests on BRICGrowth at Varied Speed


Brazil in Focus


The South American market is currently demonstrating a feast or famine scenario, with a strong Brazil able tospur auto sales despite the global downturn, and a weakened Argentina and Venezuela unable to stimulateadditional demand.

South American Automotive Market OverviewSector “Hot Topics”

Economy1

Brazil LeadsSA3

Long-termInvestments2

Olympics4

• Brazil remains the largest player in the South American market despitefurther investment in Argentina to develop its export base.

• As the host of the 2016 Olympic games, Brazil stands to benefit in anumber of ways, including vehicle emission standards.

• Automakers are investing carefully in Brazil to optimize capacityutilization.

AlreadyGreen5 • Brazil could be seen as a bellwether for how to have a successful

renewable fuel industry in a developing market.

• The Brazilian economy is forecast to have a relatively minor contractionin 2009 followed by a return to growth in 2010.


100

125

150

175

200

225

250

275

300

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec2005 2006 2007 2008 2009

Brazilian Auto Sales:2005-2009YTD (Thousands)

Brazil SalesSteady Growth Continues

Source: ANFAVEA

The early successive of government incentives combined with a strengthening economy has lead to recordbreaking sales in Brazil. 2009 should finish stronger than 2008 and break the sales record, however the issueis will sales continue to grow once taxes are progressively reinstated…

PwC Automotive Institute Slide 10

South America Light Vehicle Assembly Outlook1990 – 2015 (Millions)

0

1

2

3

4

5

6

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

Assembly Volume Excess Capacity Utilisation (R-Axis)


Regional Assembly OutlookBrazil leading SA growth

Russia in Focus


Russia Automotive Market OverviewThe challenges of an emerging market

Economy1

ExcessCapacity3

PoorSupply Base2

Protectionist4

• Almost every global OEM is now committed to a Russian plant. Althoughmost scaled-back their plans when the crisis hit, a significant rise in themarket could encourage then to expand their plants, creating an excesscapacity problem.

• Russia could seek to exclude certain brands/vehicles, perhaps in the low-cost segments, to protect the domestic OEMs' markets. This could curtailmarket recovery if domestic product is not renewed with more modern,competitive products.

• This is likely to limit growth of the sector, especially if suppliers cannot beencouraged to localize alongside their customers.

Demographic5 • Russia has a declining population, which means the overall size of themarket will shrink. On a positive side this of course means that per capitaGDP rises, but it would still see the market decline long-term.

• Russian economy is highly dependent on global energy demands, andwill likely only recover with the rest of the global economy. Pre-crisis carsales were driven by the availability of credit, and this also must return tosee sales recover..


Victim of the global recession

Russia Monthly Light Vehicle SalesJan 2006 – Aug 2009 (Thousands)

Source: AEB, PwC Automotive Institute Analysis

Russia – Sales Update

0

50

100

150

200

250

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2006 2007 2008 2009


Russian Light Vehicle Assembly Outlook1990 – 2015 (Millions)

0

1

2

3

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Assembly Volume


Regional Assembly OutlookNo long term damage

India in Focus


Automotive sales returning to growth

India Monthly Light Vehicle SalesJan 2006 – June 2009 (Thousands)

Source: SIAM, PwC Automotive Institute Analysis

India – Sales Update

As the political and economic uncertainties within India have begun to settle, consumers are returning to themarketplace — albeit consciously. Automakers still have to coax consumers into buying vehicles by offeringincentives and attractive financing options.

80

100

120

140

160

180

200


2006 2007 2008 2009

Sales levels appear to be stabilizing, with themarket poised for growth ahead of the festiveseason


India Light Vehicle Assembly Outlook1990 – 2015 (Millions)

0

1

2

3

4

5

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

Assembly Volume


0.0 0.2 0.4 0.6 0.8 1.0

Other

Fiat

Renault-Nissan

VW-Porsche

Ford

Toyota

Honda

GM

Mahindra

Tata

Hyundai

Suzuki

2010 2009 2008

India Current Alliance Group Assembly Outlook2008 – 2010 (Millions)

India − Assembly OutlookLow-cost cars will be key

From 2008 through 2012, nearly 1.8 million units of capacity are expected to be added to India, with mostgeared toward subcompact cars. With the launch of multiple products in this range at unprecedented stickerprices, the sales environment in India is expected to pick up in 2010.

Growth driven primarilyby low-cost cars

China in Focus


ChineseOEMs

ProductMix

GovernmentSupport

RegionalGrowth

DomesticDemand

Mega Trend Summary

3 • Major Chinese automakers are launching independent products andbrands that are being well-received by the Chinese market. Withgovernment support, many of these major automakers are likely to grow.

4 • While consumer preferences have moved toward smaller, cheapervehicles with small displacements, it remains to be seen whether this is atemporary shift driven by government incentives or a longer-term trend.

2 • Identifying the automotive sector as one of the "pillars" of China'seconomy, the government has laid out clear plans to nurture and growthe industry through periods of crisis and prosperity.

5 • Automotive sales growth in China in the mid- to long-term will be drivenby regions and smaller cities scattered throughout China’s interior, ratherthan by the developed coastal belt.

1 • With a growing number of middle-aged affluent buyers, thanks to theprojected GDP/per capita of 9.5%.

China Market Overview

Slide 19

China is on the road to become the world’s largest automotive market. However, unlike other large automotivemarkets, the Chinese industry is highly fragmented, has a lot of government influence, and has yet to tap thepotential of more than two-thirds of the country.


China Market OutlookFavorable stimulus actions have helped China “recover” from the crisis

China Monthly Passenger Vehicle SalesJan 2008 – Jun 2009 (Thousands)

0

100

200

300

400

500

600

700

800

900

Jan-

08

Feb

-08

Mar

-08

Apr

-08

May

-08

Jun-

08

Jul-0

8

Aug

-08

Sep

-08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb

-09

Mar

-09

Apr

-09

May

-09

Jun-

09

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Sales Volume YoY Growth (R Axis)

Source: PwC Automotive, CBU Data, Ward’s

Purchase Tax Trimming

• Effective January 1, 2009, thepurchase tax for passenger vehicles(PVs) with displacement below 1.6Lreduced from 10% to 5%. No reductionfor PVs with larger displacement.

• This policy effective only for 2009.

Car Subsidy Program for Rural Areas

• Effective from March 1 to December31, 2009, a subsidy of RMB2000 to10% of the car price provided to ruralhouseholds who scrap their light trucksand purchase a new car or minivan.

• The total subsidy is RMB1 billion.

Subsidy for Vehicle Scrap

• Effective from July 2009, an additionalscrap subsidy program has beenannounced with total subsidy reachedRMB4 billion. The program coversmedium trucks/buses, lighttrucks/buses, and mini buses.

From the beginning of 2009, the Chinese government has issued a series of favorable policies to stimulate theauto market, with total budgeted subsidies reaching 5 billion RMB. The stimulus plans target light vehiclesincluding mini-vans and low-displacement cars.


300

400

500

600

700

800

900

1000


2006 2007 2008 2009

Slide 21

China’s automotive sales buck the global trend

China Monthly Light Vehicle SalesJan 2006 – Jun 2009 (Thousands)

Source: Ward’s Automotive Reports, PwC Automotive Institute Analysis

Government stimulusdirectives taking full effect

China − Sales Update

China successfully managed to buck the trend of declining automotive sales by introducing a number of marketstimuli since January 2009. As a result, the market was able to reverse the YoY declines witnessed toward theend of 2008 and post a growth rate of over 23% for the first half of 2009.


China Light Vehicle Assembly Outlook1990 – 2015 (Millions)

0

2

4

6

8

10

12

14

16

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

Assembly Volume


-0.5 0.5 1.5 2.5 3.5

Other*

Ren-Nis

Ford

Honda

Toyota

Chery

Chang'an

Hyundai

VW-Porsche

GM

2010 2009 2008

China Current Alliance Group Assembly Outlook2008 – 2010 (Millions)

China − Assembly OutlookApproaching the 10 million landmark during 2010

Given China’s resilience during the global financial downturn, Chinese domestic demand will likely continue togrow at a much faster rate than previously expected. Also, the resumption of global demand for China’s exportswill propel Chinese assembly toward the 10 million mark by 2010 and the 14 million mark by 2015.

* Other comprises 30 different alliance groups, which highlights thefragmented nature of the Chinese market


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© 2009 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP (a Delaware limited liability partnership) or, as thecontext requires, other member firms of PricewaterhouseCoopers International Ltd., each of which is a separate and independent legal entity. *connectedthinking is atrademark of PricewaterhouseCoopers LLP.

The information contained in this report represents the culmination of proprietary research conducted by the PwC Automotive Institute, an analytical group within thePricewaterhouseCoopers Knowledge Services Organisation. All material contained in this report was developed independently of any PricewaterhouseCoopers clientrelationship and does not represent the firm’s view as an auditor to any legal business entity. While every effort has been made to ensure the quality of information provided,no representation or warranty of any kind (whether expressed or implied) is given by PricewaterhouseCoopers as to the accuracy, completeness or fitness for any purpose ofthis document. As such, this document does not constitute the giving of investment advice, nor a part of any advice on investment decisions. Accordingly, regardless of theform of action, whether in contract, tort or otherwise, and to the extent permitted by applicable law, PricewaterhouseCoopers accepts no liability of any kind and disclaims allresponsibility for the consequences of any person acting or refraining from acting in reliance on this document.

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PwC Automotive InstituteCapabilities Summary: 2009 Q4

Slide 5PwC Automotive Institute

Assembly is expected to decline in the near-term as the US economic downturn pressures volumes to a 15-yearlow of 13.6 million units in 2008. Important to note, increased capacity investment to mitigate exchange rateexposure amplifies market recovery in the out years.

Assembly OutlookNew investment lifts assembly growth

North America Light Vehicle Outlook1995 – 2015 (millions)

10

11

12

13

14

15

16

17

18

19

20

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

74%

76%

78%

80%

82%

84%

86%

88%

90%

Assembly Volume Excess Capacity

Utilisation (R-Axis)

Source: PwC Automotive 2008 Q3 Data Release

0.3

0.2

0.4

1.2

2.5

1.4

1.8

2.9

4.2

0.4

0.6

0.7

1.3

1.8

1.9

2.4

2.6

3.8

0.3

0.2

0.0 1.0 2.0 3.0 4.0 5.0

Other (49%)

BMW (55%)

VW-P (50%)

Hyundai (182%)

Ren-Nis (10%)

Chrysler (-29%)

Honda (32%)

Toyota (34%)

Ford (-10%)

GM (-9%)

2007 2015

North America Alliance Group Assembly Outlook2007 vs. 2015 (millions)

Engine Program Risk AssessmentPwC Automotive Institute

Confidential

4

467

693

965

1,086

1,278

1,445 1,482

49

44

72

78

129 152167

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2007 2008 2009 2010 2011 2012 2013

3.6L 2.8L Client Forecast

Consumption Volume2007-2013 (000)

Section Two: Key Engine Program Analysis

Program: GM High Feature V6Select Product Programs:

Risk Issues

Several new / refreshed vehicles coming to market in 2011 / 2012 thatheavily utilize the 3.6L High Feature, and GM is expecting strong sales ofthese vehicles. Should any of these vehicles fail to meet expectations,High Feature volumes would be adversely affected.

As six cylinder applications begin to replace V8 offerings, so to will I4sbegin pulling at entry level V6 volume. As fuel prices are expected toremain high, consumers may begin choosing more I4 applications overthe larger V6s.

Opportunity Areas

With several variants (2.8L, 3.2L, 3.6L) and available technologies (VVT,Direct Injection, Hybrid, etc.), the High Feature family has the ability toserve many segments and fill many powertrain needs, providing GM withthe flexibility it needs at a minimal future development cost.

As the High Feature is expected to become GM’s premier V6 enginefamily, there are no threats of cannibalization from other V6 offeringswithin the GM stable, offering relative volume stability.

The High Feature is considered by many to be one of the benchmark V6engine offerings in the industry, achieving both high power and fueleconomy, while being easily interchangeable across vehicle segmentsand technology applications.

Materials: All engines in the High Feature family utilize aluminum engineblocks and cylinder heads, as well as cast iron cylinder liners.

Key Features: Variable valve timing (VVT), turbocharged, direct injection, futurehybrid applications (LCS)

Build Plant(s): Flint, MI USA St. Catharines, CanadaFishermens Bend, Australia Sagara Engine, Japan

272-273 @ 5200302-304 @ 6300-64003.6L VVT DI V6 (LLT)225-254 @ 2000-3200240-275 @ 6000-66003.6L VVT V6 (LY7)219 @ 3200227 @ 66003.2L VVT V6 (XXX)258-295 @ 2000255-280 @ 55002.8L VVT Turbo V6 (LP9)181 @ 3600211 @ 68002.8L VVT V6 (LPI1)Torque (Lb-ft.)Power (Hp)Performance

091005 BRIC Deck - AMDA€¦ · Russia Automotive Market Overview The challenges of an emerging...

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