Automotive Industry Forecast
Sean P. McAlinden, Ph.D.
Executive Vice President, Chief Economist
Center for Automotive Research
Steel Manufacturers Association
Ypsilanti, Michigan
March 25, 2014
The Center for Automotive Research conducts leadingedge research that impacts the future of the global
automotive industry.
• Automotive industry contract research and
service organization
• CAR is a standalone Non-Profit 501(c)3 since 2003
• Based in Ann Arbor, MI – 30+ Employees
• CAR forecasts industry trends, advises on public
policy, and sponsors multi-stakeholder
communication forums
CAR’s Automotive Industry Affiliates
GDP Outlook Through 2015 –
U.S., China, NAFTA, and Rest of World
(In 2005 $Billions, constant PPPs)
U.S.
China
NAFTA excl. U.S.
ROW
40,000
35,000
GDP Growth Rate:
ROW: 3.3%
30,000
25,000
20,000
15,000
U.S.: 2.6%
10,000
China: 7.7%
5,000
NAFTA excl. U.S.: 2.7%
-
1970
1975
1980
1985
1990
1995
2000
2005
2010
Source: OECD Economic Outlook, No 94 – November 2013 - OECD Annual Projections, Gross domestic product, volume, at 2005 PPP, USD.
2015
Vehicle Density and GDP Per Capita,
2003-2012
Vehicles Per 1,000 Population
USA
100
RUS
BRA
1,000
JPN
DEU
KOR
MEX
100
CHN
IND
1,000
10,000
GDP Per Capita, PPP Current $
Source: Ward’s World Motor Vehicle Data; The World Bank
10
100,000
20
18
16
14
12
10
25
China
22.0
17.2
16.9
16.9
16.8
16.8 17.0
16.6
16.5
16.2
16.0
15.5
19.3
15.4
15.4
15.4
15.1
15.0
15.0
15.0
14.9 14.5
18.5
14.7
18.1 14.5
14.2
13.9
13.9
13.8
13.2
12.8
12.8
12.3
12.1
11.6
11.2
13.7
10.6
10.4
10.4
20
U.S.
8
Japan
6
4
15
10
9.4
8.8
7.2
5.8
5.1
4.4
3.2
2.02.3
1.31.61.41.8
5
Germany
2
Canada
S. Korea
0
1978
1983
0
1988
1993
Source: Automotive News; Ward’s Auto Yearbook; CAAM; JAMA
1998
2003
2008
2013
Millions
Millions
Motor Vehicle Sales in Units
1978 – 2013
Motor Vehicle Production By Regions
1997-2013
Millions
East Asia
China
Europe
N.A.
25
22.1
20
18.3 18.4
15
13.6
10
7.6
5
-
19.3
1.6 1.6 1.8 2.1 2.3
3.3
8.9 9.2
5.7
4.5 5.1
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
East Asia: Japan and S. Korea;
Europe: Germany, Spain, France, UK, Czech Rep., Slovakia, Italy, Poland, Belgium, and Romania;
N.A.: Canada, USA, and Mexico.
U.S. Light Vehicle Sales
Percent Change YTD Through February:
2014 vs. 2013
Total
2,203,668
-32,404
100%
Light Trucks
1,130,004
+ 50,009
51.3%
Passenger Cars -7.1%
Source: Automotive News; CAR Research
1,073,664
-82,413
48.7%
-1.4%
4.6%
U.S. Light Vehicle Monthly Sales and SAAR
February 2012 – February 2014
1.8
15.5
15.8
15.6 15.4 15.2
15.3 15.3 15.2
14.9
15.9
14.5
14.4 14.4
14.3
14.1 14.1
13.8
1.4
1.2
1.5
1.4
1.3
1.3
1.2
1.1
1.4
1.3
1.2
1.2
1.1
1.4
15.4
15.4
15.3
15.2
1.5
15.2
1.4
1.2
1.1
1.2
16
14
1.4
1.3
1.3
1.1
16.4
16.1
12
1.2
1.2
10
1.0
1.0
Source: Automotive News; CAR Research
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
0
Nov-12
0.2
Oct-12
2
Sep-12
0.4
Aug-12
4
Jul-12
0.6
Jun-12
6
May-12
0.8
Apr-12
8
Mar-12
1.0
Feb-12
Monthly Sales (Millions)
1.6
15.1
SAAR
Monthly SAAR
SALES
Are Sales Back?
1995-2013
17.2
479.9 18
450
16
400
15.53
14
Spending back to 2006 level
Vehicle sales at mid-90s
350
12
300
10
250
8
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Billion $ (2005 dollar)
500
In Units
Source: BEA
Million Units
In Spending (Billion of 2009 $)
Percent Change in Sales of Light Vehicles Per OEM:
YTD Through February: 2014 vs. 2013
-1.4%
TOTAL
Nissan
14.0%
9.9%
Fiat-Chrysler
Hyundai-Kia
-1.5%
Honda
-4.8%
Toyota
-7%
GM
-6.1%
Ford
-6.7%
-10%
Source: Automotive News; CAR Research
-5%
0%
5%
10%
15%
2,203,688
-32,384
100%
205,830
+ 25,275
9.3%
282,049
+ 25,303
12.8%
171,237
-2,594
7.8%
192,036
-9,577
8.7%
305,649
-18,453
13.9%
393,590
-25,423
17.9%
336,843
-24,330
15.3%
20%
N.A. Light Vehicle Production Percent Change
YTD Through February: 2014 vs. 2013
TOTAL
1.0%
Fiat-Chrysler
32.4%
Nissan
18.3%
GM
4.6%
-4.8%
Hyundai-Kia
Honda
-9.4%
Toyota
-9.7%
Ford
-13.4%
-20%
Source: Automotive News; CAR Research
-10%
0%
10%
20%
30%
40%
2,726,796
+ 25,905
100%
491,626
+ 120,360
18.0%
279,108
+ 43,217
10.2%
570,225
+ 24,835
20.9%
126,923
-6,364
4.7%
283,730
-29,561
10.4%
265,437
-28,486
9.7%
445,770
-68,799
16.3%
Big 7 Inventory in Days
(Jan 2013-Mar 2014)
600
62
61
500
400
73
300
200
Toyota
Nissan
80
Hyundai-Kia
87
Honda
GM
91
100
Source: Automotive News
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Month-Year
Mar-14
85
0
Feb-14
Total Big 7 Days in Inventory
700
Ford
Chrysler
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 automotive operating income per vehicle sold. Global average for Chrysler figure. Honda also excludes
motorcycle, finance, and power products.
Now We’re Talking. . .
North American Automotive Revenue Per Vehicle
2006 – 2013
GM
Ford
Chrysler
$34,000
$31,632
$32,000
$30,859
$29,639
$30,000
$27,669
$28,000
$31,333
$28,700
$30,000
$29,406
$28,789
2012
2013
$29,991
$27,931
$26,700
$25,798
$26,000
$24,900
$24,348
$24,154
$24,176
$22,604
$21,969
$22,839
$22,896
2006
2007
$24,267
$24,000
$22,793
$21,845
$22,000
$20,000
2008
2009
Source: CAR Research based on companies’ financial reports.
2010
2011
Per Vehicle Profits*, North America
2006 - 2013
$3,000
$3,000
$1,921
$2,000
$1,391
$1,000
$2,058
$2,275
$2,000
$1,237
$1,543
$1,094
$2,226
$995
$1,000
$975
$452
$(306)
$$(1,000)
$-
Detroit Three
$(1,054)
$(1,416)
Toyota and Honda
$(2,000)
$(1,000)
$(2,000)
$(3,308) $(3,229)
$(3,000)
$(3,000)
$(4,000)
$(4,000)
2006
2007
2008
2009
2010
2011
2012
*EBIT or automotive operating income per vehicle sold. Global average for Chrysler figure. Honda excludes
motorcycle, finance, and power products.
2013
Market Share: Segment Breakdown – U.S. LV Sales
February YTD 2014
21.1%
Middle CUV
Middle Car
18.9%
Small Car
18.7%
13.3%
Pickup
7.4%
Luxury Car
6.3%
SUV
5.0%
Van
Small CUV
3.5%
Large CUV
3.3%
Large Car
0.0%
Source: Ward’s Automotive Reports
2.5%
5.0%
10.0%
15.0%
20.0%
25.0%
Segment Breakdown - U.S. LV Sales Percent Change
February YTD 2014 vs. February YTD 2013
-1.5%
Total
38.7%
Large Car
24.9%
Small CUV
10.7%
Middle CUV
3.7%
Van
1.9%
Luxury Car
-2.3%
Pickup
SUV
-3.9%
Large CUV
-4.3%
-5.5%
Small Car
Middle Car
-15.4%
-25.0%
Source: Ward’s Automotive Reports
-15.0%
-5.0%
5.0%
15.0%
25.0%
35.0%
45.0%
2014 U.S. Sales Forecasts
(Units in Millions)
16.2
(3/14)
16.2
(3/14)
16.4
(12/13)
16.3
(3/14)
16.0
(1/14)
16.4
(3/14)
16.0
(1/14)
16.4
(1/14)
16.5
16.5
Sources: Various
(1/14)
CAR Forecast – Notes
March 2014
•
•
•
•
•
•
•
•
•
•
2013 ended with 1.9% GDP growth, but corporate profitability reached to a new high. Good news
for long term employment growth? Maybe not . . .
Employment has grown back to near pre-recession level, despite record share for part-time jobs.
However, majority of 2013 job creation was full-time.
Bad weather slowed 1Q 2014 economic activities. Vehicle output was cut.
But for the rest of 2014, vehicle demand will be strong, backing by a bullish employment outlook.
Vehicle supply will be in shortage. Vehicle price will be even higher.
Young people delay entering labor market. Unemployment rate will no longer be back to
pre-recession level. 6% is the natural unemployment rate from now on.
Without young generation entering labor market, labor participation rate will remain low. GDP
growth will be hindered. Labor productivity won’t grow forever.
Household net worth growth rate was much higher than income growth rate. Interest rate was low.
Good time to buy big-ticket items such as cars.
Consumer confidence was marginally up from a year ago. Gas prices should be stable, credit very
available.
Housing starts are still low comparing to pre-recession levels. It is correlated to employment growth
and vehicle sales.
Operating vehicles still getting older but since over half are over 11 years old – scrap should
increase a lot soon . . .
They are Getting Old . . .
U.S. Light Vehicle Age and
Scrappage Rate
Average Age
8.6
8.8
8.8
6.78
8.9
6.74
5.88 5.76
8.9
9.0
9.1
9.4
Scrappage Rate (%)
9.5
9.7
9.8 10.0
6.40 6.19
5.50
4.76
5.03 5.24
4.35
10.3
5.66
10.6
5.21
10.9
11.2 11.4
5.70
4.90 4.80
4.12
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: R.L. Polk
Jan-03
May-03
Sep-03
Jan-04
May-04
Sep-04
Jan-05
May-05
Sep-05
Jan-06
May-06
Sep-06
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Jan-14
May-14
Price Per Gallon
Gasoline Prices (Nominal)
Jan. ‘03 – Jan. ‘14
$4.50
$3.99
$4.00
$3.50
$3.00
$2.50
$2.00 $1.64
Source: EIA
$3.90 $3.96
$3.12
$3.06
$2.86 $2.92
$2.85
$3.36
$2.60
$2.21
$1.95
$1.62
$1.50
$1.00
Household Net Worth and Vehicle Sales
1978-2013
Household Net Worth
Net Worth (Real $)
18
90
16
80
14
70
12
60
10
50
8
40
6
30
4
20
2
10
0
0
1975
1980
1985
1990
1995
2000
Source: Federal Reserve Statistical Release , Z.1, Flow of Funds Accounts of the United States
Real Household net worth is deflated by CPI.
2005
2010
Household Net Worth in Trillions
Light Vehicle Sales
Light Vehicle Sales
U.S. Sales Forecast: 2014-2018
18
16
14
Million
12
16.1
15.6
14.5
13.2
12.8
11.6
10.4
10
7.6%
16.8
16.2 16.4 16.5 16.7
3.8%
13.3%
10.4%
11.6%
8
6
4
2
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: CAR Research, March 2014
24
U.S. Production Forecast: 2014-2018
14
12
Million
10
10.8
10.4
8.7
8.7
7.8
8
6
5.8
11.1
6.7%
12.2
11.7 11.9 11.9 12.0
5.4%
19.5%
11.5%
34.5%
4
2
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: CAR Research, March 2014
25
North American Production Forecast: 2014-2018
20
18
16
Million
14
15.6
15.2
12.0
12
10
5.8%
13.3
12.7
17.5 17.7 18.0
17.3
16.5 16.8
1.8%
17.3%
10.8%
8.6
39.5%
8
6
4
2
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: CAR Research, March 2014
26
U.S. Light Vehicle Sales & Production Forecasts
2007 – 2013; 2014F-2020F
U.S. Sales
U.S. Production
U.S. Light Vehicle Sales/Production
in Million Units
20
18
16
16.1
10
16.1
16.5
17.0
17.2
17.4
17.6
14.4
14
12
15.5
16.8
13.2
12.7
11.6
10.5
10.4
10.1
8.5
7.6
8
10.9
11.2
11.7
11.8
12.2
12.3
12.2
12.3
8.4
5.6
6
4
2
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: CAR Research; LMC Automotive.
N.A. Sales
N.A. Production
N.A. Light Vehicle Sales/Production
in Million Units
25.0
20.0
18.9
18.4
19.0
19.5
19.8
20.1
20.3
20.6
20.8
17.1
15.9
15.0
15.2
13.9
12.7
10.0
15.4
15.4
12.9
5.0
12.2
16.2
16.6
17.3
17.7
18.3
18.5
18.6
18.6
13.1
8.8
0.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: CAR Research; LMC Automotive.
Trends in Fuel Economy Standards for Select
Countries and Regions, MPG, 2000-2025
Miles per Gasoline Gallon normalized to CAFE Test Cycle
65
60
Solid dots and lines: historical performance
Solid dots and dashed lines: enacted targets
Solid dots and dotted lines: proposed targets
Hollow dots and dotted lines: target under study
EU 2020: 60.6
Japan 2020: 55.1
55
China 2020[1]: 50.1
50
US 2025[2]: 49.1
45
US-LDV
Korea 2015: 39.3
40
Canada-LDV
EU
Mexico 2016: 35.1
Canada 2016: 34.5
35
Japan
China
30
S. Korea
25
Australia
Mexico
20
2000
2005
2010
2015
2020
[1] China's target reflects gasoline vehicles only. The target may be higher after new energy vehicles are considered.
[2] United States , Canada, and Mexico light-duty vehicles include light-commercial vehicles.
© Center for Automotive Research, March
2013
2025
Source: The World Bank
29
54.5 MPG
Goodbye to the American Pickup?
(38.0 MPG for All Trucks w/ AC/credits)
Dodge Warren Truck Assembly, MI
GM Flint Truck Assembly, MI
GM Fort Wayne Truck, IN
Ford Dearborn, MI Truck Assembly
Ford Kansas City, MO Truck Assembly
GM Arlington, TX Truck Assembly
Ford Kentucky Truck, Louisville, KY
GM Powertrain Romulus, MI
GM Powertrain Toledo, OH
Ford Powertrain Windsor, ON
Ford Powertrain, Romeo Michigan
Chrysler Mack Ave. V8 Detroit, MI
Ford Livonia/Sharonville, MI/OH Transmission
Chrysler Kokomo, IN Transmission
Lightweighting
High Strength Steel, Aluminum & Composites
Take on the Heavyweights
Why Light Weighting?
“Excess weight kills any self-propelled
vehicle. There are a lot of fool ideas
about weight … Whenever anyone
suggests to me that I might increase
weight or add a part, I look into
decreasing weight and eliminating a
part!” – Henry Ford, 1922
Every automotive manufacturer is pursuing light weighting
as a key strategy to reduce fuel consumption—irrespective
of the powertrain technology pathway. A 10% reduction in vehicle weight
generates a 6-7% improvement in fuel consumption
© Center for Automotive Research, March
2013
32
Lightweighting
Material Architectural Strategy
Ford 2015 F-150
All technology pathways anticipate lightweighting
The “monolithic” car with one dominant material is:
– Easier to design, and
– Easier to manufacture, but
– Not optimum for reducing mass and cost
•
Future Steel Vehicle
– 35% reduction in body mass
Source: Center for Automotive Research
•
Aluminum Intensive
–
45% reduction in body mass
Aluminum body & bed
Steel frame
•
Composite Car
- 55% reduction in body mass
Key Material Trends (Next 10 years)
• 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
• Fiber reinforced plastics (glass and carbon)
for structural components are still several
years away from high volume production
• Joining complexity: more laser welding,
fasteners and adhesives
Structural Adhesive
Rise of Aluminum – Hasn’t Affected Total Steel Yet . . .
1985 - 2012
56.0%
3,694
3,187
3,902
4,040
Steel%
4,044
4,097
% of Vehicle Weight
Alum%
4,039
3,939
3,962
4,035
60.0%
3,920
52.3%
3,141
50.0%
40.0%
30.0%
20.0%
9.3%
10.0%
Year
2012
2011
2010
2009
2008
2007
2006
2005
2000
1995
0.0%
1990
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
-
1985
Pounds per N.A. Vehicle
Total Weight
Materials and Mass Reduction
Expectations
Material
Magnesium
Carbon Fiber Composites
Material Replaced
Steel, Cast Iron
Mass Reduction %
60 – 75%
Steel
50 – 60
Aluminum Matrix Composites
Steel, Cast Iron
40 – 60
Aluminum
Steel, Cast Iron
40 – 60
Alloy Steel
40 – 55
Glass Fiber Composites
Steel
25 – 35
Advanced High Strength
Steels
Mild Steel, Carbon Steel
15 – 25
Mild Steel
10 – 15
Titanium
High Strength Steel
Source: US Department of Energy
Materials’ manufacturing challenges
Why Steel is Better
(for now)
•
•
•
•
•
•
•
•
Supply chain exists
Manuf. Equipment/Tooling exists
Cheaper
Improving
Repair aftermarket exists!
More durable
Easier recycling
Easier to manufacture?
-maybe not HSSs

2014 Adec Trade In Sale (until 31.08.14)