Arial 44 – One Word - LMC AUTOMOTIVE · 2020. 6. 11. · No major product delays expected. Risks...

© 2020 LMC Automotive Limited, All Rights Reserved.

Impact

Pete Kelly, Jeff Schuster, LMC Automotive11 June 2020

Automotive Impact WebinarUpdate


Questions from last time

2

“In the U.S., how has fleet demand been impacted by the pandemic?”

“In North America (or USA?), Pick-up trucks were seen with the least sales decline. Any explanation for this? Is COVID encouraging more pick-ups, or was this already a general trend?”

“Do your views vary based on market segmentation, i.e. Premium vs mainstream?”

“How much of EV performance in Europe was linked to registrations being retained from 2019 to 2020?”

“If the presenter thinks that the OEMs will protect themselves by streamlining platforms and models what does he think is going to happen to the supplier sector?”

“Might there be a W-shaped scenario?”


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

3Source: LMC Automotive

95 9490

71

8177

88

58

76

55

65

40

50

60

70

80

90

100

2017 2018 2019 2020 2021LMC V U L

Global Light Vehicle Sales (millions)

V: Q1/Q2 lockdown is the longest and most extreme. Social distancing etc. remain during relaxation, but do not present large economic costs. Incentives support for industry.

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

L: 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.


Consumer confidence

Chart sources: US Conference Board, Eurostat

Sharp decline in consumer confidence, as expected, in April. But not, however, as extreme as for many other measures.

Stabilizing in May, where US levels have been surprisingly resilient. Note unemployment and jobs claims data.

European employment support schemes have helped.

Note: confidence picture is reflected in a number of other countries (e.g. Japan, Korea, Canada); but not UK, China, India.

020406080

100120140160

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

US, Consumer, 1985=100

-25

-20

-15

-10

-5

0

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Eurozone, Consumer, Balance (%)

Eurozone Crisis

But significant job losses are inevitable, leading to weak consumer demand and slow recovery.


Latest Light Vehicle market data (selling rates) …

5

- 2 4 6 8

10 12 14 16 18 20

Jan-

19Fe

b-19

Mar

-19

Apr-

19M

ay-1

9Ju

n-19

Jul-1

9A

ug-1

9Se

p-19

Oct

-19

Nov

-19

Dec

-19

Jan-

20Fe

b-20

Mar

-20

Apr-

20M

ay-2

0

Mill

ions

USA

Apr-20:-46% YoY

May-20-29% YoY

-

5

10

15

20

25

Jan-

19Fe

b-19

Mar

-19

Apr-

19M

ay-1

9Ju

n-19

Jul-1

9A

ug-1

9Se

p-19

Oct

-19

Nov

-19

Dec

-19

Jan-

20Fe

b-20

Mar

-20

Apr-

20M

ay-2

0

Mill

ions

Western Europe

0.0

0.5

1.0

1.5

2.0

2.5

Jan-

19Fe

b-19

Mar

-19

Apr-

19M

ay-1

9Ju

n-19

Jul-1

9A

ug-1

9Se

p-19

Oct

-19

Nov

-19

Dec

-19

Jan-

20Fe

b-20

Mar

-20

Apr-

20M

ay-2

0

Mill

ions

Korea

0

5

10

15

20

25

30

Jan-

19Fe

b-19

Mar

-19

Apr-

19M

ay-1

9Ju

n-19

Jul-1

9A

ug-1

9Se

p-19

Oct

-19

Nov

-19

Dec

-19

Jan-

20Fe

b-20

Mar

-20

Apr-

20M

ay-2

0

Mill

ions

China

Apr-20:-79% YoY

May-20-58% YoY

Apr-20:+9% YoY

May-20+10% YoY

Apr-20:+1% YoY

May-20+8% YoY


Global Light Vehicle sales – April was the low point

6

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

Source: LMC Automotive


What role for incentives in this crisis?

7

Incentives 2009: high impact, when sustained as in Europe; payback inevitable, but did create new demand; focused on industry volume boost.

8 9

10 11 12 13 14 15 16

2008

2009

2010

Mill

ions

Selling Rates, USA (Light Vehicles)

9 10 11 12 13 14 15 16

2008

2009

2010

Mill

ions

Selling Rates, Western Europe (Cars)

+ 2.6mn

- 1.2mn?

‘Cash for Clunkers’+ 400k?

Estimate of non-incentivised sales

Incentives 2020

Geographically patchy: US unclear this time, UK also unclear, many European countries not enthusiastic, but likely more to come.

E-focus: France and German schemes heavily skewed towards full BEV, then to PHEV; Italy may be more neutral; China has halted planned withdrawal of NEV support, …

Volume impact: likely to be much more muted than in/around 2009; xEV supportive (could lead to supply constraint issues there).



Vehicle demand – baseline market projections

8

Light Vehicle sales (millions)

15.7 11.4 13.2

25.522.9 25.0

20.2

15.717.8

20.7

15.518.6

4.1

2.3

3.1

4.0

3.2

3.8

0

10

20

30

40

50

60

70

80

90

100

2019 2020 2021

AP minus China China North America Europe South America ROW

90.3

71.081.6


SAIC 95.1%Geely Group 73.4%VW Group 39.7%Honda 30.6%BMW Group 29.2%GM Group 26.5%Daimler 25.8%R-N-M 16.3%Toyota Group 16.2%Hyundai/Kia 14.2%Ford Group 7.2%PSA Group 3.2%FCA 2.4%Suzuki Group 0.9%

China Share of World Light Vehicle Sales 2019


Change to global Light Vehicle sales forecasts


95 94 90

71

82

88 93

60 65 70 75 80 85 90 95

100 105 110

Mill

ions

Forecast Development

May-20 Dec-19

-19

-30

-37

-44 -50

-55 -60 -60

-50

-40

-30

-20

-10

-2020 2021 2022 2023 2024 2025 2026

Mill

ions

Cumulative Projected Volume Loss (relative to pre-pandemic forecast)

-19

-11

-8-6

-6-5

-5


Driving being strongly favoured at the moment …

10Source: Apple Mobility Trends

USA Brazil

Germany UK

Public Transport

Walking

Driving

© 2020 LMC Automotive Limited, All Rights Reserved. 11

Global Production Update


94.288.8 90.4

70.8

82.3

2018 2019 2020Pre

COVID-19

2020 2021

Light Vehicle production (millions)

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

Risks remain high, including consumer demand, supply chain and plant outbreaks.

COVID-19 may force decisions on some locations already suffering from low utilization.

Latest global production baseline estimate

-20.2%

12

+17.6



Global production decline by major market

13Source: LMC Automotive

Light Vehicle production (millions)

-24%

-23%-21%

-11%-40% -25%

-20%


Utilisation is at lowest level ever in 2020!

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Global Utilisation


Average plant shutdown in weeks

15

0

2

4

6

8

10

12

China AP ex-China

Europe N America S America


China production snapshot

24.3 20.923.0 24.4 25.9

40%

42%

44%

46%

48%

50%

52%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2019 2020 2021 2022 2023

Production Risk Utilization

16

Milli

ons

Base case volume down 11%, with utilisation at just 41% in 2020 returning to nearly 50% by 2023.

Direct Inventory impact is minimal and dealer stocks starting rebuilding.

Most launches not impacted due to duration of shutdown and it was off season for launch activity.

Risks – Covid-19 outbreaks return, potential supply-chain shortage from oversea markets and renewed tariff issues between US and China.


China LV Production

21.725.724.0

% restarted

695%

LevelMonths to Pre-

COVID-19 output

27.2


Asia-China production snapshot

21.815.7

17.8 19.5 20.4

40%

45%

50%

55%

60%

65%

70%

75%

0

5

10

15

20

25

2019 2020 2021 2022 2023


17

Milli

ons

Base case volume down 23%, with utilisation at 54% in 2020 and remaining below 70% though 2023.

Inventory higher – S. Korea at 1.6 months vs 1.2 & 30 days up from 15-20 days in India.

No major product delays expected.

Risks – Some parts disruption expected but weak global economy is largest risk. COVID-19 peak in India not expected until July or later.


Asia-China LV production

16.8

20.919.3

% restarted

1293%

LevelMonths to Pre-

COVID-19 output

21.5


Europe production snapshot

21.215.2

18.2 19.8 21.1

40%

45%

50%

55%

60%

65%

70%

75%

0

5

10

15

20

25

2019 2020 2021 2022 2023


18

Milli

ons

Base case volume down 24%, with utilisation at 52% in 2020, climbing back to 70% by 2023.

Days supply expected to move from a high of 120 days in Q2 down to 60 days in Q3.

SOP of Nissan Qashqai and Toyota Yaris delayed couple of months. Golf and ID3 ramp-up disrupted.

Risks – Demand showing small improvement but too soon to know. Plants in Italy at high risk of further shuttering.


Europe LV production

16.0

20.819.5

% restarted

1893%

LevelMonths to Pre-

COVID-19 output

21.9


North American production snapshot

16.312.5

14.1 15.8 16.7

40%45%50%55%60%65%70%75%80%

0

5

10

15

20

2019 2020 2021 2022 2023


19

Milli

ons

Base case volume down 21%, with utilisation at just 60% in 2020 returning to 74% by 2023. “Normal” output not expected until early 2022.

Inventory at 9 year low at 2.6mn units, 1.3mn below last May.

High profile GM Large SUVs, F-150. Frontier, MDX, Tesla Roadster face significant delay.

Risks – Supply may not be able to meet demand in short-term and flood of used cars a concern.


North America LV production

12.9

16.514.9

% restarted

1795%

LevelMonths to Pre-

COVID-19 output

16.5


South American production snapshot

3.3

1.6

2.4 2.8 3.1

0%

10%

20%

30%

40%

50%

0

0.5

1

1.5

2

2.5

3

3.5

2019 2020 2021 2022 2023


20

Milli

ons

Base case volume down 40%, with utilisation below 30% in 2020 and only improving to 45% by 2023.

Recovery to 2019 volumes won’t take place until 2023.

Influx of new SUVs could be delayed.

Risks – Extended shutdowns could become permanent closures for at-risk faculties.

Risks – Investment risk increased due to lower demand and political turmoil.


LV Production

2.0

3.02.6

% restarted

3260%

LevelMonths to Pre-

COVID-19 output

3.3


Final Thoughts

21

Arial 44 – One Word - LMC AUTOMOTIVE · 2020. 6. 11. · No major product delays expected. Risks...

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Transcript of Arial 44 – One Word - LMC AUTOMOTIVE · 2020. 6. 11. · No major product delays expected. Risks...