IHS AUTOMOTIVE
Information | Analytics | Expertise
Automotive Industry Outlook:
Navigating a Volatile Global
Environment
January 2015
Mike Wall
Director, Automotive Analysis
IHS Automotive
© 2015 IHS
© 2015 IHS
IHS AUTOMOTIVE
Global Economic Outlook
Global Growth / Emerging Market Volatility
•
Global growth will pick up in 2015, supported by lower oil prices.
•
The US economy will benefit from accelerations in consumer spending
and homebuilding, along with continued strength in capital spending.
•
The Eurozone’s recovery will proceed at a slow pace.
•
China’s growth will slow further, to 6.5% in 2015, restrained by
imbalances in credit, housing, and industrial markets.
•
Falling oil prices, sanctions, and capital flight are sending the Russian
economy into a severe recession.
•
Growth paths in emerging markets will depend on structural
reforms that raise productivity and allocate capital more
efficiently.
© 2015 IHS
2
IHS AUTOMOTIVE
World Economic Growth
Recovery Continues but Downgrades Slow Pace; U.S. Led Growth
10.0
Annual Real GDP Growth (in percent)
2011
2012
2013
2014
2015
2016-2021
8.0
6.0
World Average
2015 = 3.0%
4.0
2.0
0.0
-2.0
© 2015 IHS
Growth slows in
China, yet
remains
constructive
World
United
States
Japan
Eurozone
Brazil
Russia
India
China
Source: IHS Data Insight
3
IHS AUTOMOTIVE
Brent Blend Crude Oil Price Forecast
Strong Supply Plus Weak Demand Causes Recent Drop in Price
Brent crude price per barrel in USD
Quarterly average
140
120
100
Q3 Forecast
Dec '14 Forecast
80
60
40
20
0
2000
2003
2006
2009
2012
2015
2018
2021
Source: IHS Energy Forecast
© 2015 IHS
4
IHS AUTOMOTIVE
Global Light Vehicle Production
Emerging Asia Recovery Expected in 2015, yet Risks Remain
95
1.9 million
Production (millions)
90
816,000
420,000
286,000
111,000
-7,000
-528,000
90.1
million
85
80
87.2
million
84.7
million
75
+3.4%
70
65
60
2013
2014
Greater
China
South
Asia
North
America
Europe
ME/
Africa
South
America
Japan/
Korea
2015
Source: IHS Automotive Light Vehicle Production Forecast
© 2015 IHS
5
IHS AUTOMOTIVE
Beyond the Recovery
Millions
Global Production Growth
110
19million
106
Millions
100
-2
0
2
4
6
Greater China
90
8
10
8.6
South Asia
4.8
87
80
Europe
3.0
North America
70
27million
60
60
South America
1.9
1.3
Middle East/Africa
0.6
Japan/Korea
-1.6
50
2007 2009 2011 2013 2015 2017 2019 2021
© 2015 IHS
6
IHS AUTOMOTIVE
West European Light Vehicle Sales
Assessing the Big Picture Phases
18.0
17.0
Crisis and Incentives
Cyclical Recovery with
Fiscal Drag
Euro 6+
Compliance Costs
Fall Back and Payback
16.0
15.0
Debt and
PAUSE confidence crises
14.0
Replacement Demand &
New Mobility Dynamics
13.0
12.0
11.0
Driving Age Pop. Grows
at >1.3 million/year
Driving Age Pop. Grows
at 0.5 million/year
Source: IHS Automotive Light Vehicle Sales Forecast
10.0
© 2015 IHS
7
IHS AUTOMOTIVE
European Light Vehicle Production
Euro Crisis Abates; Slow Recovery in Process
2014 – 2021
Eastern/Central
25
Western
22.6
21.4
22.0
20.2
6.0
19.3
15%
20.0
8.3
6.8
16.5
7.3
10%
5%
6.5 6.7
15
4.7
0%
-5%
10
16.0
11.8
13.7
12.6
13.2
14.1
CAGR
2.0%
20%
14.4
Y-O-Y % Change
Output (Millions)
20
Change
-10%
CAGR
3.4%
CAGR
1.3%
-15%
5
-20%
0
-25%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: IHS Automotive Light Vehicle Production Forecast
© 2015 IHS
8
IHS AUTOMOTIVE
Emerging Market Trends
Brazil Sales and Production
5.0
Sales down in 2013/2014
due to strong IPI incentive
comps, higher interest rates
and weak growth
Production
Sales
Production (Millions)
4.0
3.0
2.0
1.0
Prod
Sales
2010
7.7%
10.4%
2011
-0.1%
2.8%
2012
0.8%
6.4%
2013
8.9%
-1.5%
2014
-13.6%
-9.0%
2015
1.6%
0.7%
0.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
© 2015 IHS
Near-term outlook
constrained by lackluster
economic environment and
consumer confidence;
situation in Argentina impacts
Brazil exports; longer term
growth more measured given
volatile nature of the market
Import gap narrows as Inovar
Automotive plan incentivizes
local production and as more
OEMs deploy global
platforms; including premium
brands
9
IHS AUTOMOTIVE
Emerging Market Trends
Russia Sales and Production
3.5
Market declined in 2013 payback for recent growth;
near-term outlook remains
extremely challenged as
market faces a difficult
economic outlook; broader
outlook dominated by oil and
gas pricing
Production
3.0
Sales
Production (Millions)
2.5
2.0
Prod
Sales
2010
102.0%
29.6%
2011
41.3%
41.2%
2012
12.7%
9.6%
2013
-2.1%
-5.4%
2014
-16.3%
-12.4%
2015
-3.4%
-11.9%
1.5
1.0
0.5
0.0
Ongoing Russia/Ukraine
situation and resulting
economic sanctions, as well
as the collapse in oil prices,
create uncertainty and further
downside risk for Russia
Local production cannot
serve demand and has only
limited export potential at this
stage
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
© 2015 IHS
10
IHS AUTOMOTIVE
Emerging Market Trends
India Sales and Production
7.0
Weaker macro outlook, high
fuel prices, interest rates and
negative sentiment impacted
2013 and early 2014
performance
Production
6.0
Sales
Production (Millions)
5.0
4.0
Prod
Sales
2010
31.8%
32.0%
2011
10.9%
9.6%
2012
5.6%
8.5%
2013
-3.9%
-8.3%
2014
-1.5%
-1.6%
2015
9.3%
10.9%
3.0
2.0
1.0
0.0
Recent results indicate some
stabilization is in process;
newly elected government is
expected to revive industry
sentiment in the near term,
although decisive action is
needed
Production serves large
domestic market for small
cars and trucks; strategic
exports: Honda, Hyundai,
Nissan and others to follow
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
© 2015 IHS
11
IHS AUTOMOTIVE
Emerging Market Trends
China Sales and Production
Sales and production growth
following a “soft-ish” landing;
economic volatility, bubbling real
estate and Tier 1 city
registration pressures offset by
penetration into Tier 3-6 cities,
access to financing and ongoing
Yellow-Label vehicle scrappage
35.0
Production
Sales
Production (Millions)
30.0
25.0
20.0
15.0
Prod
Sales
2010
31.1%
31.1%
2011
2.7%
3.6%
2012
5.5%
5.7%
2013
14.7%
15.0%
2014
7.8%
8.0%
2015
8.5%
7.0%
10.0
New Energy Vehicle (NEV)
Policy remains intact; focused
on fuel efficiency technologies
and greater local autonomy;
NEV demand still a concern
As headline growth slows and
congestion increases new
internal markets will need to
expand to support development;
typically served by local OEMs
but global players attracted
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
© 2015 IHS
12
IHS AUTOMOTIVE
U.S. Consumer Behavior
Intention to Buy a New Vehicle on the Rise
Percent of respondents saying “Yes”
6.0
Not just a “needs”based recovery, but
also “wants” driven
Six-month moving average
5.5
Actual
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1.0
Source: Conference Board Survey of intention to buy within 6 months
© 2015 IHS
13
IHS AUTOMOTIVE
U.S.: Light Vehicle Sales Outlook
2,500
300,000
2,000
250,000
200,000
1,500
150,000
1,000
100,000
500
50,000
2014
2013
2012
2011
2010
2009
2008
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
2007
New Housing Starts
Full-Size P/U Sales
0
New Housing Starts (000s)
U.S. Full-Size Pickup Sales
350,000
Thousands
New Housing Starts and Full-Size Pickup Sales
0
• Strong correlation between housing starts and Full-Size Pickup sales
• Housing starts are recovering (slowly) – not expect to reach previous peak; Full-Size
Pickup sales starting to recover with improving commercial fleet sales and
redesigned vehicle offerings (with more forthcoming)
© 2015 IHS
14
IHS AUTOMOTIVE
U.S.: Light Vehicle Sales Outlook
20
17.2 17.5 17.2 17.0 16.9 16.9
16.5 16.9
17.3 17.1
16.8 16.6 16.9 17.0 16.6
16.2
15.6
Units in Millions
16
14.5
13.2
12
12.8
11.6
10.4
8
4
0
Source: IHS Automotive Light Vehicle Sales Forecast
• Sales growth rate moderates somewhat in the near term, yet we are expecting the market to the
pre-crash peak in 2017
• Average vehicle age of 11.4 years provides some sales support – market transitions from those
who “need to buy” to those who “want to buy”; credit availability is a further enabler
• Improving economy, expanding population, wave of new products and favorable demographics
bolster the longer term outlook; engagement of Gen Y is in the spotlight
• Baby boomers ration auto purchases; priorities shift to a retirement lifestyle
© 2015 IHS
15
IHS AUTOMOTIVE
North America Light Vehicle Production
2015 vs. 2014
OEM
2015F
(000s)
2014F
(000s)
%∆
∆ Units
(000s)
GM
3,304
3,369
-1.9%
-65
Ford
3,142
2,952
6.4%
190
Chry/Fiat
2,692
2,770
-2.8%
-78
Detroit 3
9,138
9,091
0.5%
47
Toyota
2,015
1,991
1.2%
24
Honda
1,963
1,815
8.2%
148
Ren/Nissan
1,745
1,756
-0.6%
-11
Hyundai
788
768
2.6%
20
Asian 4
6,511
6,330
2.9%
181
VW
577
604
-4.5%
-27
BMW
381
348
9.5%
33
Daimler
302
249
21.3%
53
German 3
1,260
1,201
4.9%
59
Others
529
396
33.6%
133
Total
17,438
17,018
2.5%
420
Source: IHS Automotive Light Vehicle Production Forecast
© 2015 IHS
• Production growth slows as
region digests recent gains
• GM – Transitions to car
focused launches (Camaro,
Volt, Malibu, etc.)
• Ford – F-Series ramp-up
remains key focus
• Chrysler – Limited new
product launch activity
• Key New Domestic
launches include Honda
Civic, HR-V, Pilot; Nissan
Maxima; Hyundai Elantra;
Lexus ES & RX
• Mexico capacity additions
ramp up in advance of next
wave in 2016/2017
16
IHS AUTOMOTIVE
Production Outlook
North American Vehicle Exports Bolster Prospects
North American Vehicle Exports by Region
North American Vehicle Exports (Millions)
2.0
Europe
1.8
South America
1.6
1.57
Middle East/Africa
Greater China
1.4
1.39
1.50
• Expansion of luxury
segment capability across
the region into Mexico
1.13
0.94
1.0
0.92
0.78
0.74
• EU crisis tempered EU
exports; relief is in sight
helping offset South America
weakness
0.68
0.6
0.4
0.2
0.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: IHS Automotive Light Vehicle Forecast
© 2015 IHS
• 40+ Free Trade Agreements
drive Mexican output
Other
1.2
0.8
1.45
• Greater use of global
platforms allows for more
“export ready” product
1.63
• Sourcing patterns favor NA
expansion as a safe haven;
with currency hedge &
export prospects
17
IHS AUTOMOTIVE
Production Outlook
North American Light Vehicle Production by Country
Mexico
20
Canada
18.3
18
15.4
Output (Millions)
2.5
2.5
8.6
8
3.2
13.1 2.9
2.0
10
6
18.9
2.4
40%
4.8
2.0
1.8
30%
8.5
0%
10.1
11.4
12.3
12.3
+1,594,000
CAGR = 5.9%
-550,000
CAGR = -3.7%
-10%
-20%
5.6
2
20%
10%
2.1
10.6
4
4.0
2.4
1.5
1.5
2014–2021
50%
Y-O-Y % Change
12
Change
17.0
16 15.1
14
US
-30%
0
-40%
+896,000
CAGR = 1.1%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: IHS Automotive Light Vehicle Production Forecast
© 2015 IHS
18
IHS AUTOMOTIVE
Supplier Dynamics
Mega Platforms Drive Production Growth
120
60.0%
52%
47%
100
Million Units
42%
39%
80
40.0%
33%
60
30.0%
20%
40
20%
20.0%
14%
20
10.0%
0
0.0%
2005
2007
2009
2011
1M+ Platform
© 2015 IHS
2013
2015
2017
< 1M Platform
2019
% Share of Global Output
44%
50.0%
2021
Share
19
IHS AUTOMOTIVE
Supplier Dynamics
Top 10 Global Platforms – 2021
Segment (Top Nameplate)
Hyundai - PB/PB(2)
B (Accent)
• Nine of the Top-10
global platforms have or
B (Fit)
will have exposure to
North America in 2021
C/D (Civic/Accord)
Honda - GSP/GSP(2)
Honda - CCA
Toyota - NGA-C
C (Corolla)
B (Polo)
VW - MQB A0
C (Sentra)
Ren/Nissan - CMF-C/D
• Volume expansion also
C/D (Focus/Fusion) driven by major OEM
platform consolidation in
C (Elantra)
B- through D-segments.
Ford - C1/C2
Hyundai - HD/AD
B (Versa)
Ren/Nissan - CMF-B
C (Golf)
VW - MQB A/B
0
North America Exposure
© 2015 IHS
• The march of global
platforms into
developing markets
accounts for overall
growth.
2
4
6
• Platform consolidation
alters competitive
dynamic toward larger,
more diversified players.
Millions
20
IHS AUTOMOTIVE
Supplier Dynamics
Capital Needs Intensify with New Launch Activity – Next Wave is Coming!
North American Program Launches
50
47
43
40
36
34
30
38
30
20 19 19
20
26
25
24 23
21
21 21
16
10
0
Source: IHS Automotive Light Vehicle Production Forecast
© 2015 IHS
21
IHS AUTOMOTIVE
Summary
• North America serves as a critical offset to the volatility and lackluster
growth presented by key Emerging Markets
– North American output surges by over 800,000 units in 2014. Growth rate
subsides going forward, yet long term production volumes approach 19.0
million units in the longer term.
– Surge of new product offerings creates margin pressure for weaker players –
competition will only intensify!
– Emerging market growth varies by country; more measured in near term
• Technology serves as a key differentiator for automakers and suppliers
alike
– Opportunities exist in the areas of ADAS, Infotainment, Powertrain and
Lightweighting, among others.
• Robust long-term prospects remain
– Local output of all-new entries surges, serving as gateways to secure growth
© 2015 IHS
22
Thank You!
Mike Wall
Director, Automotive Analysis
IHS Automotive
mike.wall@ihs.com
+1 616 222 4480 Direct
+1 616 446 6885 Mobile
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© 2015 IHS. No portion of this report may be reproduced, reused, or otherwise distributed in any form without prior written consent, with the exception of any internal client distribution as may be permitted in the license agreement between client and IHS.
Content reproduced or redistributed with IHS permission must display IHS legal notices and attributions of authorship. The information contained herein is from sources considered reliable but its accuracy and completeness are not warranted, nor are the
opinions and analyses which are based upon it, and to the extent permitted by law, IHS shall not be liable for any errors or omissions or any loss, damage or expense incurred by reliance on information or any statement contained herein. For more
information, please contact IHS at Customer Care (see phone numbers and email addresses above). All products, company names or other marks appearing in this publication are the trademarks and property of IHS or their respective owners.
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© 2015 IHS. No portion of this report may be reproduced, reused, or otherwise distributed in any form without prior written consent, with the exception of any internal client distribution as may be permitted in the license agreement between client and IHS.
Content reproduced or redistributed with IHS permission must display IHS legal notices and attributions of authorship. The information contained herein is from sources considered reliable but its accuracy and completeness are not warranted, nor are the
opinions and analyses which are based upon it, and to the extent permitted by law, IHS shall not be liable for any errors or omissions or any loss, damage or expense incurred by reliance on information or any statement contained herein. For more
information, please contact IHS at Customer Care (see phone numbers and email addresses above). All products, company names or other marks appearing in this publication are the trademarks and property of IHS or their respective owners.