Automotive Outlook: Long Term Impacts on U.S. Auto Sales Kim Hill Research Director September 29, 2014 Agenda • • • • Current sales Factors that affect sales The current industry A look forward Total U.S. Light Vehicle Sales Percent Change YTD Through August: 2014 vs. 2013 5.1% Light Trucks Passenger Cars Source: Automo,ve News; CAR Research 9.4% 0.9% Detroit Three at 43.6% in August 2014 U.S. Market Share: August 2014 & YTD Total 17.7% 17.2% GM 15.2% 14.0% 14.5% 15.5% 12.4% 12.5% Ford Toyota Fiat-Chrysler 9.3% 10.5% 8.6% 8.5% 8.1% 7.9% Honda Nissan Hyundai-Kia 0% Source: Automotive News; CAR Research 5% 10% YTD 2014 15% 20% Segment Breakdown U.S. Light Vehicles Sales Percent Change August YTD: 2014 vs. 2013 Total SUV CUV Van Pickup Luxury Car Small Car Middle Car Electrified Large Car -15.0% 4.9% 2.6% 2.4% 2.2% 1.2% -‐3.0% 12.9% 11.0% 10.7% -‐9.2% -10.0% -5.0% 0.0% 5.0% Note: Electrified Segment consists of BEVs, HEVs and PHEVs; all other segments are sales exclusive of Hybrid models Source: Ward’s Automotive Reports, HybridCars.com and CAR Research 10.0% 15.0% Market Share: Segment Breakdown U.S. Light Vehicles Sales August YTD 2014 26.5% CUV 18.8% 17.2% Small Car Middle Car 13.0% Pickup SUV Luxury Car Van Electrified Large Car 0.0% 6.9% 6.3% 5.5% 3.6% 2.0% 5.0% 10.0% 15.0% 20.0% 25.0% Note: Electrified Segment consists of BEVs, HEVs and PHEVs; all other segments are sales exclusive of Hybrid models Source: Ward’s Automotive Reports, HybridCars.com and CAR Research 30.0% Long Term Economic Indicators That Affect Sales • • • • • • Diminishing labor force par,cipa,on Increasing household financial burdens Household budget outlays are shiCing Motor vehicle price is rising Full-‐,me employment drives up auto sales Household wealth effect Labor Force Participation Rate Is Falling Even After the Last Two Recessions Labor Force Participation Rate 1978 – 2014 Labor Force ParVcipaVon Rate 68% 67% 66% Economy Boomed. GDP grew 3.8% per year 65% 64% 63% 62% 61% Women’s par,cipa,on In labor force 60% Source: Current Popula,on Survey, Bureau of Labor Sta,s,cs Lowest since 1978 Younger Generations Are Facing Tougher Challenges Unemployment Rate by Age January 2000 – June 2014 Unemployment Rate (%) 16-‐24 25-‐34 35-‐44 45-‐54 55-‐64 65+ 20 15 10 5 0 2000 2002 2004 Source: Current Popula,on Survey, Bureau of Labor Sta,s,cs 2006 2008 2010 2012 2014 And Households Are Carrying More Debt Household Non-Mortgage Aggregate Debt 1Q 2003 – 1Q 2014 Auto Loans Home Equity Loans Credit Card Other Total 1,200 3,500 1,000 3,000 2,500 800 2,000 600 1,500 400 1,000 200 -‐ 500 1Q 2003 1Q 2004 1Q 2005 Source: FRBNY Consumer Credit Panel/Equifax 1Q 2006 1Q 2007 1Q 2008 1Q 2009 1Q 2010 1Q 2011 1Q 2012 1Q 2013 1Q 2014 -‐ Total in Billion $ Debt in Billion $ Student Loans Household Budget Outlays Are Shifting To Non Auto Categories Monthly Expenditure Per Household By Selected Products and Services, 1999-2013 Real U.S. Dollars (Chained 2009 $) MV & Parts 2,500 Gasoline and Fuel MV Service Consumer Electronics Telephone and Internet Health Care 2,000 1,211 1,500 945 1,000 398 130 500 705 596 -‐ 1999 2001 2003 2005 2007 2009 Source: CAR research based on Personal Consump,on Expenditures by Type of Product, Bureau of Economic Analysis 2011 2013 Increase in Full-Time Employment Drives Up Sales October 1996 – June 2014 New Auto Sales Full-‐Time Employment 120 20 115 15 110 10 105 5 100 2000 Source: BEA; BLS 125 2002 2004 2006 2008 2010 2012 2014 Full-‐Time Employment (million) Light Vehicle Sales (millions SAAR) 25 Growth in Household Wealth Drives Up Auto Sales January 2000 – April 2014 Auto Sales Geo. Mean of S&P and Home Equity 600 500 20 400 15 300 200 10 5 2000 100 2002 2004 2006 2008 Source: BEA; Yahoo Finance; Na,onal Composite Home Price Index for the United States 2010 2012 2014 0 Geometric Mean Value S&P and Home Equity Light Vehicle Sales (millions SAAR) 25 Beware of the Next Downturn! U.S. Monthly LV Sales and Automotive Business Cycle Monthly Sales 12-‐Month Moving Average 22 U.S. Monthly LV Sales (million SAAR) 20 18 78 months 16 Dot Com Bubble Fed Rescue 14 12 Oil Embargo 10 Oil Shock and a Fed Pullback 8 1976 Source: BEA 102 months 124 months 1981 1986 S&L Crisis And Fed Pullback 1991 1996 2001 2006 ( Collapse of Stock Market and Student Loan Bubble?) Housing Bubble 2011 2016 U.S. Light Vehicle Monthly Sales and SAAR August 2012 – August 2014 1.6 17.5 17.0 16.5 16.8 16.4 16.1 16.1 15.6 15.4 15.2 15.3 15.2 15.9 15.8 14.9 15.3 15.2 15.4 15.2 15.4 14.5 1.6 14.3 1.6 15.5 15.3 1.5 16.4 1.4 1.3 1.2 1.5 1.4 1.2 1.3 1.2 1.1 1.1 1.4 1.4 1.5 1.3 1.1 1.0 1.2 1.2 1.4 1.4 1.4 1.4 18 16 14 12 1.2 10 1.0 1.0 8 Source: Automotive News; CAR Research Aug-14 Jul-14 Jun-14 May-14 Apr-14 Mar-14 Feb-14 Jan-14 Dec-13 Nov-13 Oct-13 Sep-13 Aug-13 Jul-13 Jun-13 May-13 Apr-13 0 Mar-13 0.2 Feb-13 2 Jan-13 0.4 Dec-12 4 Nov-12 0.6 Oct-12 6 Sep-12 0.8 Aug-12 Monthly Sales (Millions) 1.8 SAAR Monthly SAAR 2.0 SALES Are Sales Back? 1995-2014 In Units 550 18 500 16 450 400 350 14 12 300 10 250 8 Source: BEA, Table 7.2.6B. Real Motor Vehicle Output, Chained Dollars Million Units Billion $ (2005 dollar) In Spending (Billion of 2009 $) Motor Vehicle & Parts Manufacturing Employment 1999 –2014 Michigan 300,000 316,300 250,000 50% change 64% change 53% change 100,000 0 1,000,000 727,300 800,000 200,000 153,500 150,000 50,000 105,100 1,200,000 47% change 163,300 600,000 90,100 400,000 74,600 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 May-‐14 Jun-‐14 Source: BLS, U.S. DOL, Statistics Canada 200,000 0 U.S. State Level 400,000 1,130,900 350,000 Indiana Big 7 Monthly U.S. Market Share 1999 – 2014 YTD (August) 35% Percent of U.S. Market Sales 30% 25% Ford GM Chrysler Honda Hyundai-‐Kia Nissan Toyota 29.4% 24.7% 20% 15% 15.6% 10% 8.7% 5% 6.4% 4% 0% 1.8% Source: Automotive News; CAR Research 17.7% 15.2% 14.5% 12.4% 9.3% 8.6% 8.1% U.S. Sales Forecast: 2014-2018 20 16.1 Million 15 13.2 10.4 10 11.6 12.8 14.5 13.3% 16.5 16.6 16.8 16.9 16.3 15.6 7.6% 5.1% 10.4% 11.6% 5 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: CAR Research, Aug 2014 19 U.S. Vehicle Production Forecast: 2007-2018 14 12 10.8 Million 10 10.4 8.7 8 7.8 5.8 6 8.7 19.5% 11.1 6.7% 12.3 12.5 11.7 12.0 12.2 5.4% 11.5% 34.5% 4 2 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: CAR Research, Aug 2014 20 North American Production Forecast: 2007-2018 20 Million 15 15.6 15.2 12.7 12.0 8.6 10 13.3 16.5 5.8% 18.5 18.7 17.5 17.7 18.0 6.0% 17.3% 10.8% 39.5% 5 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: CAR Research, Aug 2014 21 Footprint of the North American Automotive Industry Almost 500 automaker faciliVes, and over 7500 supplier faciliVes in the United States Source: CAR / BLS 2012 U.S. Motor Vehicle Related Value Chain Exceeds $1 Trillion Suppliers $307 Bil. Fuels and Lubricants $343 Bil. Auto Makers $119 Bil. Leasing, Rental, and Parking $62 Bil. Source: NADA, BEA, U.S. Census, R.L. Polk, CAR Research, 2007 esLmates Repair Service & Ahermarket $213 Bil. Dealers $37 Bil. Resale $117 Bil. Finance & Insurance $80 Bil. Salvage $4 Bil. AutomoVve-‐related Taxes and Fees Sales Tax Revenues • New Vehicles (New) • Used Vehicles (Fleet) • Parts/Services (Fleet) Business Taxes • Manufacturers (New) • Dealerships (New/Fleet) Use Tax Revenues • Fuel (Fleet) • Title/Registra,on (Fleet) • Driver’s License (Fleet) Personal Income Taxes • Automakers (New) • Suppliers (New) • Dealerships (New/Fleet) What is Auto Manufacturing? Automotive Employment and Establishments 120,000 100,000 TOTAL Michigan AutomoVve Industry: 250,000 Employees 4,500 Establishments Engineering Services Employment 80,000 Metal Stamping 60,000 40,000 CoaVng, Engraving & Heat TreaVng 20,000 Machine Shops & Threaded Product 0 SeaVng/Interior Trim Brake Systems Steering/Suspension Electric Equipment Tool/Die/Mold/ Jig/Fixture Powertrain Assembly Forging & Stamping Nonferrous Ferrous 332 331 3335 3363 3361 Fabricated Metal Foundaries Metalworking Machinery Motor Vehicle Parts & Components Motor Vehicle Manufacturing Source: U.S. Department of Labor, Bureau of Labor Statistics, QCEW 25 Other Parts Gasoline Engine/Parts 2013 Per Vehicle Profits North America $2,844 3,000 2,500 $2,307 2,000 1,500 $1,323 $1,254 $1,225 Chrysler Honda Toyota 1,000 500 0 GM Ford EBIT or automoLve operaLng income per vehicle sold. Global average for Chrysler figure. Honda also excludes motorcycle, finance, and power products. Announced North American Automaker Investments 2013 and Current 2014 Canada 2014: $0 billion 2013: $0.9 billion Total North America 2014: $7.9 billion 2013: $8.8 billion United States 2014: $4.5 billion 2013: $6.4 billion Mexico 2014: $3.4 billion 2013: $1.5 billion Source: CAR Research, Book of Deals The New Big Three Technology Shock ! New Jobs? New Rules? New Players? Materials Source: BLM 2013 28 Powertrain Connectivity Market Share of U.S. Electrified Light Vehicle Sales and Selected OEM Share of U.S. Electrified Sales Electrified Total Toyota Ford Hyundai-‐Kia Nissan GM Honda Volkswagen August YTD 2014 vs. 2013 3.9% 3.6% 5.6% 6.2% 3.5% 6.0% 8.4% 5.3% 3.1% 4.8% 1.1% 0.76% 0% 10% 59.6% 55.9% 14.7% 15.9% 2013 YTD 2014 YTD 20% Note: Electrified Light Vehicles consist of BEV, HEV and PHEV Source: Ward’s Automotive Reports; HybridCars.com; CAR Research 30% 40% 50% 60% 70% Key Material Trends in Next 10 Years - All technology pathways anticipate light-weighting • Increased use of ultra high strength steel for structural components around the “safety cage” to prevent intrusion • Aluminum use for chassis and exterior panels is increasing—Ford F-‐150 • Fiber reinforced plas,cs (glass and carbon) for structural components are s,ll several years away from high volume produc,on • Joining complexity: more laser welding, fasteners and adhesives 30 Structural Adhesive Growth in Electronics (>40%) An average vehicle contains around 60 microprocessors to run electric content – four ,mes as many as a decade ago. More than 300 million lines of soCware code run a typical vehicle’s sophis,cated computer network. Intelligent Mobility 32 40 Jan-‐07 Apr-‐07 Jul-‐07 Oct-‐07 Jan-‐08 Apr-‐08 Jul-‐08 Oct-‐08 Jan-‐09 Apr-‐09 Jul-‐09 Oct-‐09 Jan-‐10 Apr-‐10 Jul-‐10 Oct-‐10 Jan-‐11 Apr-‐11 Jul-‐11 Oct-‐11 Jan-‐12 Apr-‐12 Jul-‐12 Oct-‐12 Jan-‐13 Apr-‐13 Jul-‐13 U.S. Auto Parts Manufacturing % of Capacity Utilization 100 90 80 70 60 50 Source: U.S. Federal Reserve Board of Governors, 2013 Generally, All Is Good, But Keep An Eye On These • Labor force par,cipa,on • rates • • Household financial burdens • • ShiCing household budget • outlays • Full-‐,me employment • Household wealth effect • External shocks Student debt GDP growth Gas prices Interest rates Thank You Kim Hill [email protected] 734-‐929-‐0488
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