Mark Seng – Trends Impacting the Global Automotive Aftermarket

Trends Impacting the Global Automotive Aftermarket

Mark SengGlobal Aftermarket Practice LeaderJune 17, 2015

© 2015, IHS Inc.

Agenda

• Where Do Our Insights Come From

• Key Industry Driver

• The Trends

© 2015, IHS Inc.

• IHS acquired in July 2013

• IHS Automotive – Southfield, MI

• IHS – Denver, CO – started in 1959 as a provider of product catalog databases

IHS Automotive

Automotive market intelligence and solutions

Vehicle history reports for U.S. consumers and dealers

© 2015, IHS Inc.

AEROSPACE & DEFENSE

100+ years’ experience delivering unrivaled news, insight and intelligence on defense and security equipment, markets, industries and risk

CHEMICALOver 200 leading industry authorities creating integrated views and analysis across more than 300 chemical markets and 2,000 processes for 95 industries

FINANCE

Research on 200+ countries and territorieswith harmonized indicatorsfrom IHS analysts andeconomists

TECHNOLOGY

World’s largest electronics componentdatabase with more than 350 million parts

AUTOMOTIVE

The world’s largest teamof automotive analysts with hundreds of experts located in 15 key markets around the world covering the entire automotive value chain

ENERGY

Extensive Oil & Gas well information on 5.5+ million wells worldwide dating back as far as 1860

MARITIME

World’s largest maritime database with an information gathering heritage of 250+ years with comprehensive information on all vessels 100 GT and over

IHS Verticals

© 2015, IHS Inc.

Global Footprint

• 180+ Automotive analysts in 27 offices = global capability w/local expertise• VIO & Forecasts covering nearly every country in the world• Cover 97% of global vehicle demand, 99% of production & 97% of VIO

IHS Automotive office

LV sales key countries

LV sales countries with TIV

LV sales rest of world coverage

Key Driver: Vehicles Miles Traveled (VMT)

© 2015, IHS Inc.

First positive trend after 6 years of sustained flat miles driven.

First time > 3 trillion miles since 2007 peak.

Change in Driving Volume

Source: IHS Automotive, DOT and FHWA

© 2015, IHS Inc.

Change in Driving Volumes – Yr-o-Yr

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

• 2012 Up 0.3%• 2013 Up 0.6%• 2014 Up 1.7%

Source: IHS Automotive, DOT and FHWA

The Trends

Light vehicle sales continue their strong recovery – here and around the world.

The auto industry is back!

© 2015, IHS Inc.

U.S. light vehicle saleshit 16.5 million units in 2014…

…first time > 16M since 2007.

Source: IHS Automotive

U.S. Light Vehicle Sales

© 2015, IHS Inc.

U.S. light vehicle saleswill hit 16.9 million units in 2015…

…could break 17 million for first time in 10 years.



© 2015, IHS Inc.

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

MILLIONS 11.3%

10.2%

13.2%

‐22%

7.5%5.4%

History Forecast

‐17.5%



2014 = 16.5 million units

© 2014 IHS

$430 Billion Annual Contribution to26 Governments

Growth Rate: Global 4.1% CAGR

Employment9M Direct, 50M Adjacent

Global Manufacturing5% of Total

Research & Development$85 Billion: Annual Spend $5Trillion

AUTOS

Assembled Vehicles80M growing to 100M units

Annual Output

Global Auto Industry

© 2014 IHS

Global Auto Industry

Investment: $11.5 Billion for23 New Vehicle Assembly Plants

Materials Demand:+43% Increase

100MillionAUTOS

2020 Annual Production

Investment: $4.2 Billion for70 New Auto Parts Plants

© 2015, IHS Inc.

Global light vehicle sales were over 86 million units in 2014…

…and will break100 million units by 2020.


Global Light Vehicle Sales

© 2015, IHS Inc.

0

5

10

15

20

25

30

35

40

45

50

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Mature Markets China Others

Global Light Vehicle Sales


© 2015, IHS Inc.

Global Light Vehicle Sales Forecast

2015:16.9 million

5.13.4

2.2 2.9 1.6 3.1

24.8

0

5

10

15

20

25

30

35United

States

Japan

Germany

France

Brazil

Russia

India

China

Annual Light Vehicle Sales Volume (in millions, 2006 – 2022)

Source: IHS Automotive Light Vehicle Sales Forecast

Top 8 markets account for close to 70% of global sales

China Remains Dominant; Little Sales Growth Expected for Developed Markets

© 2015, IHS Inc.

Billion vehicles by 2021

Billion vehicles by 2040

Global VIO

growing

over next6 years

27%

Global Light Vehicles-in-Operation

© 2015, IHS Inc.

0

50

100

150

200

250

300United

States

China

Japan

Germany

France

India

Brazil

Russia

Source: CY 2002‐2015‐2020, IHS Automotive

2015

• China and India to see fleets nearly double over forecast horizon – oil import cost exposure improving dramatically.

• Policies to promote more fuel efficient vehicles facing more difficult economics.

World Total2013 1.02 Billion2021 1.35 Billion

Global Light Vehicle VIO

© 2015, IHS Inc.

0

50

100

150

200

250

300

MILLIONS

VIO will Increase 9.2% by 2020

History Forecast

Aftermarket


U.S. Light Vehicles in Operation

Data as of January1 each year.

Aftermarket must prepare for the vehicles entering service bays for years to come.

As VIO & new sales grow, the U.S. vehicle mix continues to evolve.

© 2015, IHS Inc.

COMPACT CUV

TRADITIONAL MID SIZE

TRADITIONAL COMPACT

FULL SIZE PICKUPS

Represent over 58% of all new U.S. registrations in 2014

4 non-Luxury Segments Dominate

15.7%

15.1%

15.1%

12.2%6.8%

Mid‐Size CUV


© 2015, IHS Inc.

0

1

2

3

4

5

6

7

8

Car

CUV

Pickup

SUV

MPV

Sports Car

Van

Shift in Favor of CUV Design Continues in the Near Term

MILLIONS

US Light Vehicle Sales


© 2015, IHS Inc.

0

1

2

3

4

5

6

7

Mid-Size

Full-Size

Compact

Subcompact

Mini

Micro

Compact & Midsize Maintain Dominance

US Passenger Car SalesMILLIONS


© 2015, IHS Inc.

A-Segment

B-Segment

C-Segment

D-Segment

Full-Size Full-Frame

E-Segment

Small/Mid-Size Full-Frame

A B C D E CompactFull

Full-SizeFull

Global Production by Segment

A B C D E CompactFull

Full-SizeFull

NAFTA Production by Segment

2000 – 2020Smallest 3 Segments Grow

Share by 64%

2000 – 2020Smallest 3 Segments Grow Share by 27%


Shift to Smaller Vehicles

© 2015, IHS Inc.

Smaller Size - More Power

4 Cylinder Engines


© 2015, IHS Inc.

4 Cylinder Engines Gaining in Popularity

2012: 50% Market Share2013: 53% Market Share

2008: 41% Market Share

2014: 55% Market Share

4 Cylinder Engines


© 2015, IHS Inc.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2008 2009 2010 2011 2012 2013 2014 2015

DOMESTIC CAR DOMESTIC LIGHT TRUCK IMPORT CAR IMPORT LIGHT TRUCK

27.5%

39.3%

23.0%

10.2%

19.6%

37.4%

27.3%

15.7%

-7.9

-1.9

4.3

5.5

% o

f Tot

al U

.S. V

ehic

les-

in-O

pera

tion

Change in Mix – Domestics vs Imports


© 2015, IHS Inc.

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015

DOMESTIC CAR IMPORT CAR

-26%

+23%

Cars - Continued Import Strength

© 2015, IHS Inc. Source: IHS Automotive

Light Trucks - Imports Gaining Share

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

100,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015DOMESTIC LIGHT TRUCK IMPORT LIGHT TRUCK

-1.5%

+59%


VIO Import Growth Forecast

-

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

Domestic Import

-15%

89%

As vehicles age around the world,Aftermarket repair opportunities are beginning to evolve.

© 2014 IHS

Global Passenger Car Average Age 2010-2020

+53%+14%

+5%

-14%

+9.5%+9.3%


Note: US is calculated to 2019

© 2014 IHS

Average Age - Europe

0

2

4

6

8

10

12

Belgium France Germany Italy Netherlands Spain UnitedKingdom

2000

2005

2010

2014

2020

Passenger Cars

Year

s


© 2014 IHS

Average Age - BRIC

Passenger Cars

Year

s

0

2

4

6

8

10

12

14

Brazil Russia India China

2010

2014

2020


© 2015, IHS Inc.

9.6 9.7 9.7 9.8 9.8 9.9 10.010.3

10.6

10.911.1

11.3 11.4 11.5

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Year

s

Cars & Light Trucks Combined

Average Age History – U.S.


© 2015, IHS Inc.

%drop in new vehicle registrations

The market feltthe impact of the

Impact of New Vehicle Drop Off


© 2015, IHS Inc.

2007

2002

3%

2014

15%

2007

2019

2014

3%

Rapid acceleration of average light

vehicle age in the U.S. is slowing

down.

Average Vehicle Age Slows Down


© 2015, IHS Inc.

Vehiclesnew to 5 years

old grow

32%

Vehicles6‐11 years old

decline

Impact on VIO Age Groups - by 2019

‐21%

Vehicles12 + years old

grow

15%Is the aftermarket “sweet spot” really shrinking – or just changing?


Increasing vehicle complexityBrings both challenges and opportunity

© 2015, IHS Inc.

To reach this goal, every OEM must improve fuel

efficiency by 5% per year!

To reach this goal, every OEM must improve fuel

efficiency by 5% per year!

OEM New Technology Driving Vehicle Complexity


2014 Top 10 Markets for Hybrid Registrations - > 30% of Total

© 2015, IHS Inc.

• Gasoline direct‐injection

• Turbo chargers

• Stop/start capability

• Cylinder de‐activation

• AWD disconnect

• More efficient transmissions

– More speeds and CVTs

The Traditional Internal Combustion Engine – w/New Technology


© 2015, IHS Inc.

Powertrain Technology by Region

-

2

4

6

8

10

12

14

Prod

uctio

n in

Mill

ions

EuropeGCJKNAFTASASasia

Mech. Tech TransmissionElec. Tech

OEM Powertrain Investment - 2013


© 2015, IHS Inc.

- 2 4 6 8

10 12 14 16 18 20

Prod

uctio

n in

Mill

ions

EuropeGCJKNAFTASASasia

Mech. Tech TransmissionElec. Tech

Powertrain Technology by Region

OEM Powertrain Investment - 2021


© 2015, IHS Inc.

Ultrasonic Parking SensorsCamera Parking Sensors

Radar Collision/ACC Sensors

Stereoscopic Multi-purpose Forward Camera Sensors

Additional Sensors, ECUs

Infrared Night Vision Sensors

Electronics & Sensors Increasing

© 2015, IHS Inc.

The Aftermarket has the needed parts & trained technicians to service this new technology just

as efficiently & more cost‐effectively than other channels.

The Aftermarket has the needed parts & trained technicians to service this new technology just

as efficiently & more cost‐effectively than other channels.

Complexity = Opportunity

1. The auto industry is back! Global light vehicle sales continue strong recovery2. As new sales & VIO continue to grow, the vehicle mix is changing rapidly3. As vehicles age, the aftermarket repair opportunities are evolving4. Increasing vehicle complexity brings both challenges & opportunity

Thank You

Mark SengGlobal Aftermarket Practice [email protected]

Mark Seng – Trends Impacting the Global Automotive Aftermarket

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