Senior Vice President February 19,2014 Presentation.pdf · The Overall Economy in North America...

Automotive Market Outlook Full Speed Ahead?…Eyes on the Road!

Jeff Schuster Senior Vice President February 19,2014

21 February 2014 © LMC Automotive 2

Outline

• Global Automotive Overview

• North America Demand Environment

• North American Production Dynamics

• Summary

Falling markets: down 1.8 mn units

2012-13 Change in Global LV Sales Contribution

LV Sales Country, volume growth (millions), % of total growth markets

Growth markets:

up 4.8 mn units

Source: LMC Automotive

LV Sales Country, volume decline (thousands), % of total falling markets

2013 84.4mn

+4%



N. America Volume: 16.2 Growth: 8% Share: 19%

China Volume: 20.5 Growth: 155% Share: 24%

Japan Volume: 9.1 Growth: -18% Share: 11%

Korea Volume: 4.5 Growth: 12% Share: 5%

Other Asia Volume: 4.7 Growth: 70% Share: 6%

India Volume: 3.6 Growth: 83% Share: 4%

Russia Volume: 2.1 Growth: 36% Share: 2%

Other E. Eur. Volume: 4.7 Growth: 5% Share: 6%

W. Europe Volume: 12.4 Growth: -23% Share: 15%

MEA Volume: 1.3 Growth: -19% Share: 2%

Brazil Volume: 3.5 Growth: 32% Share: 4%

Other S. Am. Volume: 1.1 Growth: 18% Share: 1%

World Light Vehicle production growth from 2007 to 2013: +19%

LV production (mn), change since 2007, global share – 2013 84.4mn, +4%

2013 Global LV Production Footprint


Modest Economic Growth in 2014


World Real GDP Growth (%)

-2

-1

0

1

2

3

4

5

2007 2008 2009 2010 2011 2012 2013 2014 2015


Strong End to 2013 a Basis For 2014?

Global Light Vehicle Sales, seasonally adjusted and annualized


Final quarter SAAR 86.5 mn

units/year


Global Light Vehicle Sales – Topline Growth Continues!


Light Vehicle Sales (mn)

70.366.6 64.5

73.676.8

81.284.2

88.3

50

55

60

65

70

75

80

85

90

95

2007 2008 2009 2010 2011 2012 2013 2014

4.8% 3.7%

5.8%

4.3% 14.1%

-3.1% -5.4%

5.4%

Q4 2013


Further Emerging Market Risks Still Remain …

• Argentina

▫ Rising economic and financial risk, policy interventions

• Brazil

▫ Weakened economic outlook, costs, political unrest

• India

▫ Economic underperformance, political uncertainty, financial flows

• Russia

▫ Slow economic growth

• Thailand

▫ Political unrest

• Turkey

▫ Financial flows



Short-term Global Production – Up 4%

0

5

10

15

20

25

30

35

40

45

50

Asia Europe NA SA ROW

2013

2014

+5%

+2%+3%

+0%+6%




Global Capacity Walk – 2012 to 2017



Outline




• OEM Production Outlook

• Summary

The Overall Economy in North America

• US GDP grew by a solid 3.2% annualized rate in the final quarter of 2013. However, survey data at the end of 2013 and early 2014 have been on the softer side, pointing to a more modest Q1. Outlook remains at or above 3% growth.

• This year is expected to be the turning point for the Canadian economy, with growth forecast to rebalance towards a greater contribution from investment and exports. GDP outlook revised upward slight to 2.3%

• A number of indicators suggest that Mexico’s economy had less momentum than expected in Q4 2013. Despite a slightly softer performance in Q4, GDP growth is expected to average 3.8% this year (with help from the growth in the US).

Source: Oxford Economic Forecasts, LMC Automotive


2012 2013 2014 2015 2016

United States GDP Growth 2.8% 1.9% 3.0% 3.4% 3.2%

Consumer Spending Growth 2.2% 2.0% 2.9% 3.3% 3.0%

Short-term Interest Rate 0.4% 0.3% 0.3% 0.5% 1.1%

Unemployment Level 8.1% 7.4% 6.5% 6.3% 5.9%

Canada GDP Growth 1.7% 1.7% 2.3% 2.7% 2.8%


Mexico GDP Growth 3.7% 1.3% 3.8% 3.9% 4.1%



2014 NAIAS - A Return to “Normal”, but…

Sporty/Performance

Aff

ord

able

Lu

xu

ry

Pic

kup

s

11.612.7

14.515.6

16.2 16.517.4

1.61.6

1.71.7

1.8 1.81.8

.8.9

1.0

1.11.1 1.2

1.4

2010 2011 2012 2013 2014 2015 2020

North America Light Vehicle Sales Outlook

2013: 1.74mn

+3%

2013: 15.57mn

+8%

2013: 1.06mn

+8%



Mill

ion

s

18.4 19.0

13.9

19.4 20.6

15.2

17.1

+4%

Pricing & Revenue Inventory

Summary

Transaction Prices rose by 1.6% from prior year levels, to a record for January at $29.7K. Days-to-Turn jumped by 5 days, to highest level in 54 months.

M-O-M Y-O-Y

Jan-13 Dec-13 Jan-14 Delta % Chg Delta % Chg

CFTP $ 29,243 $ 30,454 $ 29,708 $ (746) -2.4% $ 465 1.6%

Revenue/Unit $ 27,511 $ 28,993 $ 28,064 $ (930) -3.2% $ 553 2.0%

Incentives/Unit $ 2,789 $ 3,122 $ 2,886 $ (236) -7.6% $ 97 3.5%

Days to Turn 58 59 64 5 8.9% 6 11.1%

Source: J.D. Power PIN

US Auto Industry Health Metrics


12.8mn

11.7mn

2012 2013 1.

Disposable

Income

2.

Unemp. Stock

Market

4. 3.

Housing

Market

5.

Fuel

Prices

6.

Credit

Avail.

10.

Product

Activity

7.

Vehicle

Equity

2014F

Vo

lum

e

Vehicle

Price

8. 9.

Incentive

Actions

Total Sales 15.6mn 13.3mn

13.1mn

Risk 4%

YoY

16.2mn Total Sales

Macro Factors Consumer Internals & OEM Drivers

Source: LMC Automotive, Oxford Economics, Industry Sources

U.S. Retail Sales Trend – Stable in 2014


0

50

100

150

200

250

300

350

Chevrolet Ford Honda Hyundai Nissan ToyotaTh

ou

san

ds

2012 2013 2014

0

50

100

150

200

250

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

Tho

usa

nd

s

2011 2012 2013 2014

Expected Industry Lease Maturities Expected Lease Maturities by Nameplate

Lease maturities are expected to resume in earnest for domestic competitors in 2014, bringing the industry back up to H1 2011 levels

+109k

+141k

U.S. Lease Maturities Drive Pace

Source: J.D. Power PIN


2014 US Sales Segment Share Movement

15.6% Share

Pickup Segment is battleground, but slows with changeover

D Segment Cars hold position

12.0% Share

-0.1%

12.6% Share Premium recovers on low-end

expansion

Non-premium CUVs cool from robust 2013 as fragmentation takes over


-0.6%

21.3% Share

-0.7%

Sporty is back!

-0.4%

2.5% Share


0.4%

0.0%

-0.6% 0.2%

0.0%

-0.2%

-5%

0%

5%

10%

15%

20%C

om

p P

rem

Sp

ort

y

Mid

Pre

m S

po

rty

Co

mp

MP

V

Co

mp

Pre

m C

UV

Lg P

rem

Co

nv

Mid

Pre

m U

tili

ty

Co

mp

Sp

ort

y

Lg P

rem

Sp

ort

y

Mid

Pre

m C

on

v

Mid

Pic

kup

Lg U

tili

ty

Lg V

an

Mid

Sp

ort

y

Sub

-Co

mp

Co

nv

Lg P

rem

Uti

lity

Co

mp

Pre

m C

on

v

Sup

er

Pre

miu

m

Co

mp

Co

nv

Ind

ust

ry

Mid

CU

V

Lg P

icku

p

Co

mp

CU

V

Lg C

on

v

Mid

Co

nv

Mid

Pre

m C

UV

Co

mp

Uti

lity

Mid

Uti

lity

Mid

Van

US LV Sales – Segment 5-YR CAGR (2012-17)

• Industry ~3%

• Fragmentation Increases

• Premium Gains

• Growth vs Mature Segments



Hybrids and EVs —Hype or Substance?

268274

447503

583

1,023

900

796

678

1953

98 111 135181

223203

0

250

500

750

1,000

1,250

2010 2011 2012 2013 2014 2015 2016 2017 2018

HEV PHEV/BEVThousands


© LMC Automotive 20 21 February 2014

• Combined growth 2013 was strong, increasing 20% from 2012 – share of industry at 3.9%.

• 2014 shaping up to continue the trend, with share up slightly to 4.2% of LVs.

• Long-term prospects for growth driven push/pull (regulations and consumers) but may struggle to meet buzz – share approaches 8% by 2018 with more than 150 HEVs, BEVs, PHEVs in the market.


Outline




• Summary

15.0 16.5

3.7 1.7

2007 2014

Mill

ion

s

NA Production Underutilized Capacity

16.1mn 16.2mn

US sales

• Post Recovery: Expansion, Localization and Exports bolstering regional output

• Inventory in Manageable Range with Some Pockets of Trouble

NA Production - Then and Now

90% 80%



VAG

Ren-Niss

Hyundai

Honda

GM

Fuji Heavy

Ford

Fiat-Chrysler

BMW

Toyota

Daimler

Other

-20% 0% 20% 40% 60% 80% 100%

NA Near-term Production by OEM Group 2013 to 2014 Year-over-Year Change


16.12

16.53

2013 2014

+3%

• Ford’s decline impacted by F-150 changeover and some inventory correction

• Nissan adds Murano; BMW and MB gain with additional models

• Fiat-Chrysler’s test will be 200 and full-year Cherokee; Other gain is Mazda w/ Mazda3


0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

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

Pro

du

ctio

n V

olu

me

(m

illio

ns)

-5%

0%

5%

10%

15%

20%

% Y

/Y C

ha

ng

e

% Y/Y Change 2013 2014

• 500k unit growth in ’14 with similar pattern to ‘13

• Inventory concerns grow, but likely to be in check by Spring

– Pockets of trouble

– 1Q14 still expected 2% higher than 1Q13

• Reduced July shutdown expected to be more widespread but may change

• Key Programs launching throughout year may cause some disruption

2014 NA Production by Month



31

40

19

24

1916 16

25

15

42

2725

34

24 23

18

1411

13 12

20

1619

6 7 6

11

6

1 2 31

0

5

10

15

20

25

30

35

40

45

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

New Entry/Redesigns Drops

Mo

de

ls

Model Activity – NA Production Launches


Significant Activity – 128 New Models


• Increasing NA sourcing and exports drive production expansion – Global platforms

• Demand driven growth supports level, leaner build environment continues

15.715.2 15.012.6

8.511.8 13.1

15.4 16.116.517.3 17.818.3 18.518.6 18.6

3.6 3.8 3.76.0

9.25.3 4.2

2.1 1.6 1.71.7 2.3 2.0 1.8 1.8 1.7

0

5

10

15

20

25

2005 2007 2009 2011 2013 2015 2017 2019

Mill

ions

0%

20%

40%

60%

80%

100%

NA Production Underutilized Capacity % Utilization

NA Production and Capacity Long-term Trend



NA Production and Sales Gap Narrows


Capacity Expansion

Localization

(Mil.)

Restructuring

Exports


~ 4mn

~ 2mn

North America…An Export Hub?

Exports

862K

1,298K

1,835K

2010 2013 2018

• Exports in 2013 were 8% of total production; 2018 expected to be at least 10%

• BMW continues to use US as main CUV source - adds X4

• Audi plant comes online with exports of Q5 and Q6 expected to Europe and Asia

• Honda plans to grow exports significantly, with NA being global source for Acura and

Insight; volume to SA and EU expected to grow (some of this has been pared back)

• FCA has aggressive growth plans for the Chrysler Group – Can they hit targets? Source: LMC Automotive, BEA, Industry Sources


• Underlying shift in segment mix; greater production diversity

• Fundamental reduction in cost structures translates to margins on small cars

• Component of change - consumer preference, economic and regulatory derived

NA Production Segment Shift



Production Shift – 2000 to 2020


1.6

4.1

US - South1.9

4.1

Mexico

Millions

Industry 2000 17.2mn 2020 18.6mn


17.5

20.4 1.2

1.8

.1

.0

5.0

10.0

15.0

20.0

25.0

2012 Capacity USA Canada Mexico 2020 Capacity

Capacity Expansion Honda – Alliston Toyota – Cambridge

Capacity Reduction GM – Oshawa 2

66% 66%

12%

23%

Investment Pours into North America

Capacity Expansion SIA – Lafayette Honda – Greensburg Honda – Lincoln Hyundai – West Point GM – Spring Hill BMW – Spartanburg Daimler – Vance VW – Chattanooga Toyota – Georgetown Toyota – Tupelo Toyota – Princeton Fiat Chrysler – SH South

New Capacity Honda – Celaya Mazda – Salamanca Nissan – Aquascalientes II Toyota – Salamanca w/Mazda Fiat-Chrysler – Saltillo Van Audi – San Jose Chiapa Daimler – Aquascalientes II w/Nissan BMW/Hyundai - ???

66%

16%

18%

65%


+2.9mn


Mill

ion

s


Outline




• Summary

Summary

• 2014 globally is back on track with recovery in trouble spots with slower but continued growth elsewhere – Emerging market volatility adds risk

• US demand expected to be stable in near-term and long-term NA demand outlook will remain positive

• North American production passed 16mn in 2013 for first time since 2002 and 2014 continues but growth slows – Inventory on watch

• Long-term production is supported by import substitution and increased exports – market pushes toward 19 million units with substantial increase in launch activity

• A renewed and pronounced shift to Mexico and the Southern US drives most of growth in region


Accurate Real-Time Automotive

Forecasting

and Market Intelligence

Oxford ● Detroit ● Frankfurt ● Paris ● Bangkok ● Shanghai ● Tokyo ● São Paulo

www.lmc-auto.com

[email protected]


http://www.lmc-auto.com/



Senior Vice President February 19,2014 Presentation.pdf · The Overall Economy in North America...

Documents

Transcript of Senior Vice President February 19,2014 Presentation.pdf · The Overall Economy in North America...