Global Automotive Market Outlook Where Do We Go From Here? Jeff Schuster Executive Director, Forecasting J.D. Power and Associates
Agenda 0 0 0 Global Automotive Environment NA Light Vehicle Sales and Segment Outlook Summary
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Global Light Vehicle Sales Trend Holds In Positive Territory The Global selling rate has pulled back from the highs at the beginning of the year, with impact from the Japan disaster, a slowing China and US can it recover? 80 78 76 74 72 70 68 66 64 62 60 58 56 54 52 50 Aug'11 Feb '08 70.4 72.4 74.6 66.7 64.1 61.8 66.0 63.9 58.7 C 57.1 56.7 56.6 51.4 54.8 Jan '09 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Monthly (S.A.) Smoothed Annual Total
2011 Global LV Sales Growth Flattens Out Global: 74.6M 3% N. America: 15.1M 8% Europe: 18.7M 3% S. America: 5.1M 5% Asia: 29.9M -0% Germany: 3.4M 10% Russia: 2.4M 24% Japan: 3.9M (20%) China: 17.7M 3% USA: 12.6M 9% Brazil: 3.5M 4% India: 2.9M 7%
Global LV Sales Expected to Cross 100M by 2015 Millions 120 110 100 100 90 88 94 80 70 60 64 70 67 66 64 72 75 73 81 76 85 50 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Top 15 Global LV Markets Continue to Shift Millions 30 25 Top 15 LV Markets - 2010 Top 15 LV Markets - 2015 Millions 30 Top 15 = 58M (80%) Top 15 = 82M (82%) 25 China 20 China 20 USA 15 15 USA 10 10 5 Italy UK France India Germany Brazil Japan Canada Russia Korea Iran Australia Spain 5 UK France Russia Germany Japan Brazil India Iran Italy Canada Korea Mexico Spain
Agenda 0 0 0 Global Environment NA Light Vehicle Sales and Segment Outlook Summary
North American LV Sales Climb Toward Pre-Crisis Levels Millions 22 20 18 16 14 12 10 8 6 4 2 0 USA Canada Mexico 12.6.8 1.5 10.4 +10% 13.9.8 1.6 11.6.9 1.6 12.6 +12%.9 1.6 14.1 2009 2010 2011 2012 U.S. having trouble restarting sales pace after recovery vaporized during summer Canada s growth in 2011 remains largely as expected after not falling as much during recession 2011 Sales in Mexico were recently cut based on linkage to U.S. slowdown, but remain 7% higher than 2010. +11% 15.1 16.6
The U.S. Economy 2008 2009 2010 2011 2012 2013 2014 2015 GDP Growth (% chg.) -0.3-3.5 3.0 1.6 2.2 3.3 3.4 3.1 Private Consumption (% chg.) -0.6-1.9 2.0 2.1 1.8 3.4 3.4 3.1 Unemployment (%) 5.8 9.3 9.6 9.1 8.9 7.5 6.2 5.5 Savings Rate 5.4 5.1 5.3 5.1 6.0 5.4 5.4 5.3 CPI (% chg.) 3.8-0.3 1.6 3.1 2.2 2.1 2.2 2.2 Short-Term Interest Rates 2.9 0.7 0.3 0.3 0.3 0.6 2.3 4.3 Population (mn) 304 307 310 313 316 319 322 326 Economic growth for 2011 cut to 1.6% on a weaker 2Q and slower 2 nd half recovery Unemployment level remains high at 9.1% and isn t expected to fall as quickly in 2012 Consumer confidence plummeted in August Average of Conference board and University of Michigan was at 50.6 from 74.8 in Feb on fears that the economy may retreat However, new household growth and replacement demand will drive long-term automotive volume Source: Oxford Economic Forecasts, J.D. Power Automotive Forecasting
Exceptional Events have Impacted 2011 U.S. Retail SAAR: Impact of Japan Earthquake Did Toyota and Honda Owners Stay Away from the Market? (Toyota/Honda Share of Owners in Market) 12 2010 Q2 2011 Q2 15% 11% decline 11 10 9 8 10.3 11.0 10.5 3/11 Japanese Earthquake 10.8 9.2 9.5 9.5 9.6 10.5 11% 8% decline 10% 13% 7 6 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Honda Toyota The Japanese earthquake restricted sales through low inventories and consumers who delayed their purchase rather than defect to a competitive brand. suggests industry is stronger than sales results indicate.
Changes In Market Share YTD 10 to YTD 11 Share in PPT. 20.0% +1.0% 16.7% +0.2% 12.6% -2.7% 10.6% +1.1% 9.1% +1.2% 9.1% -1.6% 8.2% +0.3% 3.6% +0.3%
2011 U.S. Retail Sales: Recovery Still on Track? Total Sales Risk has increased, but market weathering for now Total Sales 12.6 Volume 11.6 10.2 Risk 11% YoY 8.6 9.2 10.0 2009 2010 1. Disposable Income 2. Unemp. 3. Housing Market 4. Stock Market 5. Fuel Prices 6. Credit Avail. 7. Vehicle Equity 8. 9. Vehicle Price Incentive Actions 10. Product Activity 2011 JDPA Macro Factors Consumer Internals & OEM Drivers, Oxford Economics, Industry Sources
U.S. Light Vehicle Market - Current Health Metrics Pricing & Revenue CFTP Revenue per Unit Incentives per Unit Inventory Days to Turn $30,000 $4,000 80 $28,000 $26,000 $24,000 $22,000 $3,500 $3,000 $2,500 $2,000 $1,500 60 40 20 $20,000 $1,000 0 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Sep 10 Nov 10 Jan 11 Mar 11 May 11 Jul 11 Sep 11 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Sep 10 Nov 10 Jan 11 Mar 11 May 11 Jul 11 Sep 11 Summary M O M Y O Y Sep 10 Aug 11 Sep 11 Delta % Chg Delta % Chg CFTP $ 27,740 $ 28,421 $ 28,663 $ 242 0.9% $ 923 3.3% Revenue/Unit $ 25,685 $ 26,397 $ 26,734 $ 337 1.3% $ 1,049 4.1% Incentives/Unit $ 2,791 $ 2,788 $ 2,715 $ (73) 2.6% $ (76) 2.7% Days to Turn 57 47 45 (2) 4.3% (12) 20.6%
U.S Light Vehicle Sales Forecast Slow, Progressive Recovery! Total Sales 12% 16.7 16.9 17 16.5 16.1 Retail Sales 14.0 13.8 13.2 13.0 12.8 13.2 10.6-21% 11% 11.6 10.4 9.2 8.6 9% 12.6 10.2 14.1 11.5 15.6 12.8 16.3 13.3 16.5 13.5 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Risk remains high in 2012 given subpar economic signals 200-300K at risk GDP growth is expected to return to 3%+, but not until 2013 Long-term recovery driven by pent-up replacement demand and increase in number of households Expect fleet mix to settle in 18-19% range less than historic average of 20-22%
Model Activity Reignites Hyper-competitive Market New Entry Redesign Facelift Drops 50 45 40 35 Models 30 25 20 15 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 Net: -4-26 12 1-21 -11 21 23 8
Key Car Segment Trends 2011 vs. 2016 Sub-Compact Car 1.6% 2016 Share 2011 Share Compact Car -0.3% Midsize Car -1.3% Large Car -0.8% Sporty Car 0.2% Premium Car 2.0% 0% 5% 10% 15% 20%
Key Truck Segment Trends 2011 vs. 2016 Compact MPV 2016 Share 2011 Share 1.6% Minivan -0.6% Compact CUV -1.8% Midsize CUV 0.3% SUV -1.4% Large Pickup -0.2% Premium CUV/SUV 0.7% 0% 5% 10% 15%
U.S. Hybrid and Electric Vehicle Forecast Millions 18 16 14 12 10 8 6 4 2 0 IC ONLY HEV/BEV Hybrid and EV share 14.8 15.3 15.3 15.4 13.6 11.6 12.3 10.1 0.29 0.27 0.28 0.50 0.76 0.98 1.15 1.24 2009 2010 2011 2012 2013 2014 2015 2016 8% 7% 6% 5% 4% 3% 2% 1% 0%
Hybrid and Electric Product Breakdown 2016 US Light Vehicle Sales 2016 US Light Vehicle Alternative Powertrain Sales* IC 15,450,000 Units 290 Traditional ICE Models 151 Alternative * 1,240,000 Powertrain Units Models 69% 128 All Other Models 31% 23 Toyota Models *Forecast of electric vehicles only (HEV, PHEV, BEV) - does not include clean diesel engine models
U.S. Vehicle Forecast by Fuel Type 0.60% 0.90% 6.4% 6.1% 10.0% 8.1% 9.0% 10.0% 76.9% 72.0% 2010 2015 2020
Summary Global automotive environment split between emerging and mature but emerging can t save world this time around U.S. market continues recovery, but pace is even slower and further risk of double dip has increased However, industry supply and demand discipline is holding and financial health has improved Long-term fundamentals remain with pent-up demand and new household creation driving future volume Segment mix will continue to shift with further fragmentation and blurring between premium and non-premium
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