Arial 44 – One Word · 2020-04-30 · © 2020 LMC Automotive Limited, All Rights Reserved. Impact...

© 2020 LMC Automotive Limited, All Rights Reserved.

Impact

Jeff Schuster, LMC Automotive

30 April 2020

Automotive Outlook - Path to Recovery


Outline

2

Recent sales results, implications and scenarios

Production impact


Latest Light Vehicle market data (selling rates) …

3Source: LMC Automotive

-

5

10

15

20

25

30M

illio

ns

China

Feb-20:

-80% yoy

Mar-20

-46%

-

5

10

15

20

25

Millio

ns

Western Europe

Feb-20:

-7% yoy

Mar-20:

-51%

0.0

0.5

1.0

1.5

2.0

2.5

Millio

ns

Korea

Feb-20:

-18% yoy

Mar-20:

+10%

02468

101214161820

Millio

ns

USA

Feb-20:

+8% yoy

Mar-20:

-39%


Global Light Vehicle sales – off a cliff

Source: LMC Automotive 4

40

50

60

70

80

90

100

110

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Millions


Outlook scenarios for 20-21: V, U or L


Q1/Q2 lockdown is the longest and most extreme. Social distancing and other measures remain during relaxation, but do not present large economic costs.

OEMs develop novel sales approaches combining online activity with respect for new norms in social contact, and sales and production rebound.

Global selling rate dips further in April but begins steady recovery, averaging >80 mn units/year in Q3.

V

Q1/Q2 is still the most extreme lockdown, but subsequent social controls continue to take a toll on vehicle sales and economic activity.

Economic scarring and heavy blows to confidence undermine recovery in underlying demand conditions.

Global selling rate averages <60 mn units/year for H2. 2021 starts to see larger improvement, from very low 2020 base.

U

Q1/Q2 is still the most extreme lockdown, but subsequent social controls continue to take a toll on vehicle sales and economic activity.

Economic slowdown is severe and lasting. The macroeconomic recovery that comes in H2 is far too weak to undo damage. There is a permanent and significant loss of output.

Global selling rate slightly below U in 2020, but recovery in 2021 is weak, with sales rising only by single-digit millions.

L


Outlook scenarios for 20-21: V, U or L


95 9490

70

8275

85

60

79

57

66

40

50

60

70

80

90

100

2017 2018 2019 2020 2021

LMC V U L

Global Light Vehicle Sales (millions)


Composition of decline from 2019 to 2020


Global Light Vehicle Sales (millions)


US sales pattern as of end of March 2020

5

7

9

11

13

15

17

19

Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20

US Light Vehicle SAAR

Pre-COVID-19 Projected SAAR

Source: LMC Automotive


Current US sales pattern

5

7

9

11

13

15

17

19

Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20

US Light Vehicle SAAR

Pre-COVID-19 Projected SAAR



US Sales show significant risk ahead

13.2

10.411.6

12.8

14.515.6

16.417.4 17.5 17.2 17.2 17.0

12.2

13.914.7

8

9

10

11

12

13

14

15

16

17

18

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Mill

ions

US LV Sales Volume Risk

10

12.9

15.1

16.2



Outline

11

Questions

Recent sales results, implications and scenarios

Production impact


88.9

71.0

82.6

2019 2020 2021

Production expected down 20% and dependent on complex assembly restart.

Risks expected to follow levels and patterns of demand.

Pre-COVID-19 levels not expected until 2023 or 2024.

Latest global production baseline estimate

-20.1%

12

+16.3%



April expected to be off 65% and the low point of the year.

Projected pattern shows levels not turning positive until December – typically low levels in 3Q could be stronger if restart plan holds.

2020 global light vehicle production trend by month

13

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

0

2

4

6

8

10

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

Mill

ions

2019 2020 % change

Mill

ions



North American production recovery path

16.9 16.3 12.2 14.2 15.8 16.7

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

0

2

4

6

8

10

12

14

16

18

20

2018 2019 2020 2021 2022 2023

Production Risk Utilization

14

Mill

ions

Base case volume down 21%,

with utilization below 60% in

2020 returning to 70% by 2023.

Idle capacity is expected to be

nearly 8mn in short-term,

illustrating pressure on cost

structure and higher cash burn

across the industry.

With the restart beginning to

take shape, risk remains high,

but inventory is low.


LV Production

12.8

16.517.2

15.0


Reminder of supply chain complexity

Tier 3 / Raw Materials

Tier 2 component

suppliers

Tier 1 and module sub-

assembly

OEM parts plants

OEM Logistics to

sales channel


China went through destocking in 2019 and was expected to see increased levels in 2020 – similar to North America and Europe.

All assembly plants in China have restarted after being down for an average of 16 days (varied between 7-41 days) – slow ramp-up with some plants running single shifts.

Is China a model for restart in NA and Europe?

16

-90%

-70%

-50%

-30%

-10%

10%


Monthly Production % change from 2019



Europe – Some distortion to year-on-year comparison but follows similar pattern with restart slated for May.

North America – Mercedes was first! May restart for most others (some in early May and D3 moved to Mid-May). Expect slow ramp up with single shift operations at first.

Asia – India down until May; S. Korea and Japan slow due to exports

A view of Europe and NA plant restart

17

-110%

-90%

-70%

-50%

-30%

-10%

10%


Europe Monthly Production % change from 2019


-110%

-90%

-70%

-50%

-30%

-10%

10%


N. America Monthly Production % change from 2019


Inventory metrics


74 7261

8778

697367

57

76 69

95

3.30

3.40

3.50

3.60

3.70

3.80

0

20

40

60

80

100

Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20

Mil

lio

ns

US Light Vehicle Days' Supply

Yr-Ago Days' Supply Days' Supply Inventory

The pullback in demand has caused a similar spike in days’ supply in March, even as

inventory levels fall.

A significant cut in production, as plant are shutdown, will pull down days supply

levels back to the 60-70-day level by next month.

60 65 5972

100

4.00

4.20

4.40

4.60

4.80

5.00

0

20

40

60

80

100

120

1Q19 2Q19 3Q19 4Q19 1Q20

Mil

lio

ns

European Light Vehicle Days' Supply

Inventory


Global launch activity by quarter


47

150

5968

63

83

4Q19 1Q20 2Q20 3Q20 4Q20 1Q21

Redesigns and New Entries

• 470 launches over 18-month period

• 92 – started but ramp-up impacted

• 214 – expected delayed 2+ months

• 81 – at risk to slip into 2021


Pan-Europe launch activity by group


1Q20 2Q20 3Q20 4Q20 1Q21

Daimler PSA R-N-M Hyundai Volkswagen Other

31

24 23 22

31

Key Launches and Delays

8 all-new BEV models – 5

from VW Group (inc. ID.3,

ID.4)

Key Volume Models

including: Golf, Qashqai,

Mokka, A3, Kuga

Delays

Disrupted newly localised

models: Jeep Compass,

Hyundai Kona.

Audi A3 to May (2-months)

Nissan Qashqai to Dec (2-

months)


North America launch activity by group


1Q20 2Q20 3Q20 4Q20 1Q21

GM Ford FCA Toyota R-N-M Hyundai Honda VW Other

45

10 10

5

Key Launches and Delays

BEV activity – Several start-

ups including Rivian, Karma,

Lucid and Bollinger at risk

Key programs include: F150,

GM Large SUVs, Nissan

Rogue, Tesla Model Y

Delays:

Mustang Mach-E to Sep-20

GM Large SUVs – one month

G Cherokee/G Wagoneer –

3-month delay

Frontier delayed from May-20

to Apr-21


North America launch delay analysis

0 1 2 3 4 5

High Importance

Medium Importance

Low Importance

2020 SOP delay in months Average delay in region is 2.35 months

with longer delays in late 2Q and 3Q

SOPs.

OEMs are prioritizing new programs

based on importance

Facelift activity is even lower priority and

further down the priority list will be

facelift activity that has not been started

Additional delays dependent on restart

plan and cashflow but several future

programs planned could be impacted as

investment is constrained.



Final Thought

23

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Arial 44 – One Word · 2020-04-30 · © 2020 LMC Automotive Limited, All Rights Reserved. Impact...

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Transcript of Arial 44 – One Word · 2020-04-30 · © 2020 LMC Automotive Limited, All Rights Reserved. Impact...