European MHCV Outlook - MarkitConfidential. © 2017 IHS MarkitTM.All Rights Reserved. Sales Outlook...

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

© 2017 IHS Markit. All Rights Reserved.

7 February 2018 | Frankfurt, Germany

Christiane Stein, Principal Research Analyst,

+49 89 895 269 035, [email protected]

EuropeanMHCV Outlook


Agenda

• Sales Outlook

• Global Truck Markets

• European Drivers

• European Top Truck Markets

• Production Outlook

• Global Truck Output

• Global Bus Output

• European Output

• Technology Outlook

• Emission Standard overview

• Global fuel type overview

• European Regulations

• IHS Automotive view of autonomous driving, connectivity and

alternative fuels

2

MHCV Outlook / February 2018


Sales Outlook


3

Christiane Stein, Principal Research Analyst, +49 89 895 269 035, [email protected]

mailto:[email protected]


Mixed Outlook in 2018 – Vanishing Special Effects in China Shrink the Global

Truck Demand – Eastern Europe & North America on the rise


4

World Truck Sales >6t

Source: IHS Markit

© 2018 IHS Markit. All rights reserved. Provided “as is”, without any warranty. This map is not to be reproduced or disseminated and is not to be used nor cited as evidence in connection with any territorial claim. IHS Markit is impartial and not an authority on international boundaries

which might be subject to unresolved claims by multiple jurisdictions.

0

0,5

1

1,5

2

17 18 19 20

Mill

ion

s

AsiaChina India Rest

0

0,2

0,4

0,6

17 18 19 20

Mill

ion

s

EuropeWE CE EE

0

0,2

0,4

0,6

0,8

17 18 19 20

Mill

ion

s

AmericasNA SA

0

0,5

1

1,5

2

2,5

3

3,5

17 18 19 20

Mill

ion

s

World


Drivers of the European Truck market

Brexit

• UK triggered Art. 50 on 29 Mar 2017

• High degree of uncertainty around

the future relations of the UK with the

EU not good for business

• Hard Brexit:

• Independent trade deals

• Losing full access to single market

• Reverting to WTO rules

• Applying new rules within the UK

• Soft Brexit:

• Remaining close to the existing

arrangements with the EU

• Accepting free movement of

goods, services, people and capital

• Britain’s exports would not be a

subject to border’s checks

Political

5


Elections

• Presidential in

• Czech Republic

• Cyprus

• Finland

• Ireland

• Russia

• General/ Parliatmentary in

• Hungary

• Italy

• Latvia

• Slovenia

• Sweden



Exports to the UK

6


• The relative importance of the UK market for

exports varies across the EU

• Currently, around 44% of UK exports of goods

and services go to the EU

• Future trade impact will depend on UK/EU

negotiations

Share of merchandise exports to the UK (%)

Source: IHS Markit

Western Europe – Merchandise Export Growth (%)

Source: IHS Markit

15,0

10,28,3

7,2 7,1 7,0 6,5 6,1 5,3 4,83,6

0

5

10

15

20

IRL NLD BEL FRA SPA DEU POL PRT ITA CZE GRC

-15

-10

-5

0

5

10

15

20

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020



• Freight transport in Europe

Freight Transport in Europe

7


EU Freight Land Transport (tkm)

Source: EU Commission

EU Land Transport

Source: IHS Markit

Russian Freight Land Transport (tkm)

Source: Invest Russia

Russia Land Transport

Source: IHS Markit

Inland Waterway; 6,3%

Oil Pipeline; 4,7%

Road; 71,9%

Rail; 17,1%

-6,0%

-3,0%

0,0%

3,0%

6,0%

-80,0

-40,0

0,0

40,0

80,0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Performance ($real) %cha. y/y

Inland Waterway; 3,2%

Air; 0,2%

Road; 9,9%

Rail; 86,8%

-4,0%

-2,0%

0,0%

2,0%

4,0%

-800,0

-400,0

0,0

400,0

800,0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Performance ($real) %cha. y/y


Most TOP Markets remain stable in 2018, Russia’s and Turkey’s growth carry

the European demand to the 500,000 mark in 2019


8

European Truck Sales >6t

Source: IHS Markit

0

20000

40000

60000

80000

100000

120000

France Germany Italy Poland Russia Spain Turkey UnitedKingdom

2017 2018 2019 2020

0

100000

200000

300000

400000

500000

600000

Europe


Model Level Sales Forecast – New Truck Product Launches ahead and after

Euro VI Introduction Reached nearly 50% of Western European Market

• IHS Markit tracks introductions of major new

systems in trucks, including cabs and frames,

as well as engines

• Changes aimed at meetings needs of drivers

and fleets

• New Model Level Sales will forecast

introduction of new model generations


9

New vehicles, percent total (>= model year 2011)

Source: IHS Markit

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014 2015 2016

old new


Production Outlook


10




Output Follows Demand – Chinese Downturn Decreases Output,

World Production Remains above 3 Million Trucks


11

World Truck Production >6t

Source: IHS Markit



0

0,5

1

1,5

2

17 18 19 20

Mill

ion

s


0

0,2

0,4

0,6

0,8

17 18 19 20

Mill

ion

s

EuropeWE CE EE

0

0,2

0,4

0,6

0,8

17 18 19 20

Mill

ion

s

AmericasNA SA

0

0,5

1

1,5

2

2,5

3

3,5

17 18 19 20

Mill

ion

s

World


Worldwide Bus Output is increasing 1-2% annually.

Compared to Trucks the Production has only 12-14% of the Size.


12

World Bus Production >6t

Source: IHS Markit



0

100

200

300

17 18 19 20

Tho

usands


0

20

40

60

80

17 18 19 20

Tho

usands

EuropeWE CE EE

0

20

40

60

80

100

17 18 19 20

Tho

usands

AmericasNA SA

0

100

200

300

400

500

17 18 19 20

Tho

usands

World


IHS Markit forecasts Western European Truck Production to Remain Stable in

2018, Majority of Suppliers Show Optimism


13

Forecast Q1/2018

Source: IHS Markit

Supplier Survey

Source: IHS Markit

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

2016 2017 2018 2019 2020

0 1 2 3 4 5 6 7 8

Significantly Optimistic (> +5%; > 480k)

Optimistic (> +3% to +5%; > 471k to 480k)

Somewhat Optimistic (> +0.5% to 3%; > 459k to471k)

Output remains stable (- 0.5% to 0.5%; 455k to459k)

Somewhat Pessimistic (> -0.5% to 3%; >443k to<455k)

Pessimistic (> -3% to -5%; > 434k to 443k)

Significantly Pessimistic (> -5%; < 434k)

Truck Production 2018 - Western Europe


Turkish Truck Production Expected to Increase by less than 5% in 2018,

Output hike in 2020


14

Forecast Q1/2018

Source: IHS Markit

Supplier Survey

Source: IHS Markit

0 1 2 3 4 5 6

Significantly optimistic (>10% y/y or >24,640 units)

Optimistic (+5-10% y/y)

Somewhat optimistic (+0-5% y/y)

Stable

Somewhat pessimistic (>-10% y/y or <20,160units)

Pessimistic (-5-10% y/y)

Significantly pessimistic (-0-5% y/y)

Truck Production 2018 - Turkey

0

5000

10000

15000

20000

25000

30000

35000

2016 2017 2018 2019 2020


Russian Truck Production is back on a Growth Track as Economy and Truck

Demand are recovering


15

Forecast Q1/2018

Source: IHS Markit

Supplier Survey

Source: IHS Markit

0 1 2 3 4 5

Significantly optimistic (>10% y/y or >96,580 units)

Optimistic (+5-10% y/y)

Somewhat optimistic (+0-5% y/y)

Stable

Significantly pessimistic (-0-5% y/y)

Pessimistic (-5-10% y/y)

Somewhat pessimistic (>-10% y/y or <79,000units)

Truck Production 2018 - Russia

0

20000

40000

60000

80000

100000

120000

140000

2016 2017 2018 2019 2020


Suppliers are influenced mainly by demand volatility, customer forecast

accuracy and cost and availability of raw materials


16

Business Influences

Source: IHS Markit

0

1

2

3

4

5

6

7

8

9

10

Brexit OE customerforecastaccuracy

Demandvolatility

Lack of pricingpower

Production(tool) Capacity

Regulatory &Legal issues

Direct &indirect labor

concerns

Cost of rawmaterials

Availability ofraw materials

Insignificant Somewhat significant Highly significant


Technology Outlook


17




Most of the Major MHCV markets will have switched to Euro VI by the

beginning of the next decade


18

Emission Standards 2005-2025

Source: IHS Markit

Country/ Region 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

China

India

Indonesia Euro V

Japan

Malaysia

Philippines

South Korea

Thailand

Russia

Turkey

Europe (WE/CE)

Saudi Arabia

South Africa

Mexico

United States

USA/Canada (CO2)

Argentina Euro IV

Brazil

Euro VIChina V=EuroV

Euro V

Euro V

GHG 2GHG 1

EPA 2004 = Euro IVEPA 2007 = Euro V

Euro IV

Euro V

Euro III

Euro V Euro VIEuro II

Euro VI

Euro IV/ V

Euro VI CO2 Legislation

EPA 2010 = Euro VI

Euro III

Euro VI

Euro I Euro IV Euro V Euro VI

Euro I Euro II Euro III

post JP09 = Euro VIJP09 = Euro V

China IV=Euro IV

Euro III

China II = Euro II

Euro I

China III = Euro III

Euro II Euro III

Euro II

Euro III Euro IV

Euro III

Euro IV

Euro I (assumed) Euro II

Euro I (not enforced) RSA CF1 = Euro II RSA CF2 = Euro IV

Euro V Euro VI

Euro V

Euro IV

Euro IV

Euro IV Euro VI

Euro I Euro II Euro IV

JP05 = Euro V

Euro II

Euro III Euro VI

Euro II


Alternative Drivelines are Significantly Higher in the Bus Market –

Electric Trucks are expected to penetrate the market in the next decade

World

19


60%

65%

70%

75%

80%

85%

90%

95%

100%

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Truck

DIESEL E100 GAS GAS CNG LNG LPG ELECTRICITY Hydrogen

60%

65%

70%

75%

80%

85%

90%

95%

100%

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Bus

DIESEL DIESEL LNG GAS GAS CNG LNG LPG ELECTRICITY Hydrogen


Europe – Powertrain Split

Diesel continues to be the primary fuel for Heavy-duty vehicles

MHCV Outlook / February 2018Powertrain split based upon industry estimates & PT production

2020

99.1% 0.2%

0.6% <0.1%

DIESELELECTRIFIED

HYBRID/PLUG-IN

NATURAL GAS GASOLINE

52%

MHCV fuel types

14%

34% 0%

DIESELELECTRIFIED

HYBRID/PLUG-IN

NATURAL GASGASOLINE

Current 2040

Diesel

Gasoline

Hybrid

Natural Gas (CNG/LNG)

Hydrogen

Biofuels


Low Emission Zone Access regulation Charging scheme

Athens

Barcelona

Berlin

Bratislava

Copenhagen

Frankfurt

Glasgow

Helsinki

London

Lyon

Madrid

Milan

Munich

Oslo

Paris

Prague

Rome

Stockholm

Stuttgart

Turin

Vienna

Bologna

Bucharest

Budapest

Dublin

London

Madrid

Milan

Munich

Paris

Poznan

Prague

Riga

Rome

Rotterdam

Sofia

Toulouse

Warsaw

Wroclaw

Bergen

Durham

Gothenburg

Kristiansand

London

Milan

Oslo

Palermo

Stockholm

Trondheim

Valetta

European Cities use different options to limit trafic and increase air quality

for their inhabitants – several make use of more than one


21

Source: http://urbanaccessregulations.eu/

• Transport causes 25% of green-house gas emissions

• Heavy-duty vehicles account for 5%

• CO2 Legislation to become effective for 2020+

CO2

• Entrance limits or additional charge for vehicles with higher emissions

Low emission zones (LEZ)

• Congestion charges are already in place in many Cities in Europe –among them Stockholm & London

Congestion charges

Urban Access Regulations

Safer Lorries• Many European cities have already

begun to roll out local policies to

support the introduction of safer lorries


Autonomous Driving, Connectivity, Electricity –

Where we are and where we go?

Autonomous Driving

• Expected to swiftly follow the US

example (2022/2023), and under

going fleet tests in other regions.

• It is imperative to create enabling

regulations

• Application: long-haul

(platooning), short-haul (closed

off areas, garbage collection)

Connectivity

• V2V and V2Infrastructure

communication

• Radically changes the logistic

system and transport process:

efficient use of vehicles,

manpower and infrastructure

• Enables platooning and other

autonomous driving options

Electricity

• Battery EV fits to urban and

short haul usage:

• Zero Emission

• Zero Noise

• Easy system integration to

autonomous drive

• FuelCell commercial vehicles on

the verge

• Need to develop Infrastructure

and energy management

22



Coming soon: our new Commercial Vehicle Trend Study!


23


Key takeaways


24

• Mixed outlook in 2018: vanishing special effects in China shrink the global truck demand – Eastern

Europe & North America on the rise, Western European truck sales expected to face cyclical

downturn in 2018-2020

• Output follows demand: Chinese downturn decreases output, world production remains above 3

million trucks, Western European output expected to be stable in 2018, gaining from 2019

• Worldwide bus output is increasing 1-2% annually. Compared to trucks only 12-14% of the size.

• Most of the major MHCV markets will have switched to Euro VI by the beginning of the next

decade, Europe will introduce CO2 legislation

• Alternative drivelines are significantly higher in the bus market – electric trucks are expected to

penetrate the market in the next decade

• The power of autonomous driving, connectivity and electricity lies in the combination of the three

technologies

IHS Markit Customer Care

[email protected]

Americas: +1 800 IHS CARE (+1 800 447 2273)

Europe, Middle East, and Africa: +44 (0) 1344 328 300

Asia and the Pacific Rim: +604 291 3600

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European MHCV Outlook - MarkitConfidential. © 2017 IHS MarkitTM.All Rights Reserved. Sales Outlook...

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