North America Light Vehicle Outlookmexicoautosummit.com/presentations/guido_vildozo.pdf · 2019....
Transcript of North America Light Vehicle Outlookmexicoautosummit.com/presentations/guido_vildozo.pdf · 2019....
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North America Light Vehicle OutlookMEXICO’S AUTO INDUSTRY SUMMITGuido Vildozo, Senior Manager, Americas Light Vehicle Sales Forecasts
30 October 2019
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2008 2010 2013 20172016
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Global economics
GDP decelerating faster and earlier than forecast, below trend in coming years
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Source: IHS Markit © 2019 IHS Markit
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3.5
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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Aug 2019 Aug 2018
Trade and multiple layers of policy uncertainty have also pulled down business capital expenditure (CAPEX), which will have implications for lower productivity growth for several years
Real GDP growth comparison
Pe
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Global light vehicle demand
Sales have suffered an unusual, sudden disconnect with the macroeconomy
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Automotive demand in the cross-currents—Multiple factors are shocking global light vehicle demand growth
+56,000 +39,000 +16,000
-78,000 -94,000 -181,000
-522,000
-574,000
-1.85 mil.
Source: IHS Markit © 2019 IHS Markit
-184,000-468,000
Note: September 2019 Light Vehicle Sales Forecast.
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93.789.9
90.1
104.3
95.697.5 99.3
111.8
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September 2019 forecast September 2018 forecast
Global light vehicle demand
Slide in worldwide auto sales preceded projected slowdown of global economy
• Desynchronized auto sales may continue for a year or two after that, with sales picking up in 2020/21, provided the economic slowdown is not more aggressive than our current forecasts and China’s car market does not permanently decouple from its underlying drivers.
• Deep correction in sales is far more than would be expected by overall
global economic conditions. Key drivers include:
• Crisis conditions in a few economies—unrelated reasons (Iran, Argentina, Turkey)—explain about 30% of the 2019 global forecast downgrade. Premium exposure for Turkey
• China’s first auto recession—totally not forecast and amplified by the 2018 trajectory being forecast from a high-water point before being hit by many negative forces from second half 2018. China downgrade explains ~50% of forecast downgrade over the near and medium terms
• Longer term, the total market fails to recover to previous trend
projections. Reasons include:
• Structural lowering of the trend in the Chinese market because of permanent loss of unconventional financing avenue plus initial long-term impacts of trade tensions on resourcing of manufacturing
• Persisting risk premium associated with the crisis-hit economies.
• New, lower market trajectory for India, where the downgrade builds progressively outbound. September 2019 brings further forecast downgrade
5
Source: IHS Markit
Structural decoupling of car sales with economic conditions discomforting
© 2019 IHS Markit
Mill
ions
Note: September 2019 Light Vehicle Sales Forecast.
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Global light vehicle demand
Mature-market slowdown vs. Emerging-market downturn
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43.843.2
42.242.3
43.8 43.242.4
25
30
35
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Sep 2019 FC Sep 2018 FC
Source: IHS Markit
Mature-market development: Light vehicle sales
© 2019 IHS Markit
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ions
49.946.7
47.8
62.151.854.3
56.9
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60
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80Sep 2019 FC Sep 2018 FC
Source: IHS Markit
Emerging-market development: Light vehicle sales
© 2019 IHS Markit
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Note: September 2019 Light Vehicle Sales Forecast; mature markets: West Europe, US, Canada, Japan, South Korea, Oceania. Note: September 2019 Light Vehicle Sales Forecast.
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2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Millo
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BEV PHEV REEV FCEV HEV MHEV ICE ICE: Stop/Start
Global production of alternative propulsion vehicles 2019–2031
© 2019 IHS Markit
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Notes: Source: IHS Markit
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Growth in alternative propulsionThe evolving picture out to 2031 with broader split in technology
Electrification will increasingly supplement and displace pure internal combustion engine propulsion means to
tackle the light passenger vehicle’s contribution to carbon dioxide emissions and air quality
Note: ICE = internal combustion engine: MHEV = mild hybrid electric vehicle; HEV = hybrid electric vehicle; PHEV = plug-in electric vehicle, BEV = battery electric vehicle, REEV = range-extended electric vehicle, FCEV = fuel cell electric vehicle
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SD
)
Battery Pack Power Electronics ICE components Radar, Lidar, Camera UI/UX
Market size by component bundle
Source: IHS Markit © 2019 IHS Markit
Note: Power electronics inverter, converter, on-board charger; ICE components—22 including SCR and catalytic converter; UI/UX-center stack display, head-up display, instrument cluster
Market development of component businessesCar makers are increasingly bringing high-potential component opportunities in-house
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US economy
Expansion continues, the unemployment rate falls to 3.5% in 2019
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Real GDP and unemployment
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2007 2009 2011 2013 2015 2017 2019 2021 2023
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Real GDP growth (left scale) Unemployment rate (right scale)
Strong employment has previously generated inflation
Source: IHS Markit © 2019 IHS Markit
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US economy
After recent declines, interest rates are expected to edge upward
Interest rates
Source: IHS Markit
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1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023
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Federal funds 10-year Treasury 30-year mortgage BAA corporate
Monetary policy vs. trade policy?
© 2019 IHS Markit
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Real GDP growth rates in US expansions since World War II
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1
2
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1949Q4–1953Q2
1954Q2–1957Q3
1958Q2–1960Q2
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1980Q3–1981Q3
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2009Q2–2019Q2*
Real GDP growth rates in US expansions since World War II
Source: IHS Markit © 2019 IHS Markit
%c
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* Latest observation in a continuing expansion
Weakest recovery to date MEXICO’S AUTO INDUSTRY SUMMIT
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US economy
Tariffs implemented since January 2018 have raised prices of US imports
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Gross of tariffs Net of tariffs (reported price index)
Tariffs
Prices of US imports of goods excluding petroleum
Source: Bureau of Labor Statistics, IHS Markit
Tariffs will slowly erode disposable income
© 2019 IHS Markit
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US light vehicle sales
Section 232 tariffs to impact industry, not just individual OEMs or countries
2018 sales by production region
Non-US Non-NAFTA
Aston Martin 100.0% 100.0%
BMW 67.0% 67.0%
Daimler 62.9% 62.9%
FCA 49.7% 7.0%
Ferrari 100.0% 100.0%
Ford 20.9% 3.6%
Geely (Volvo) 99.7% 99.7%
General Motors 36.9% 6.3%
Honda 31.1% 6.9%
Hyundai 61.8% 49.9%
Karma Automotive 0.0% 0.0%
Mazda 100.0% 85.4%
McLaren 100.0% 100.0%
Renault-Nissan-Mitsubishi 51.9% 30.3%
Subaru 51.2% 51.2%
Tata 100.0% 100.0%
Tesla 0.0% 0.0%
Toyota 55.3% 29.3%
Volkswagen 84.2% 36.4%
US total sales 46.6% 22.5%
Source: IHS Markit © 2019 IHS Markit
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Core Parts Principle Parts
US parts imports excluding NAFTA
Source: IHS Markit © 2019 IHS Markit
Trade policy is the biggest risk to automotive demand MEXICO’S AUTO INDUSTRY SUMMIT
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North American light vehicle sales
Light vehicle sales alternative scenarios
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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
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Baseline Optimistic Pessimistic
North America’s light vehicle sales
Source: IHS Markit © 2019 IHS Markit
Note: Alternative Scenarios September 2019.
Optimism has little room for improvement MEXICO’S AUTO INDUSTRY SUMMIT
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4.8
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12.212.8
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US light vehicle sales
Light vehicle sales outlook
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Car
Light truck
Post market peak: weaker buying conditions, slower job creation, affordability risks driven by higher interest rates, legislated content, rising ATPs
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16.716.3
17.0
Source: IHS Markit
US light vehicle sales forecast
© 2019 IHS Markit
Entering the sub-17-million zone soon
Note: September 2019 Light Vehicle Sales Forecast.
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Mexican light vehicle sales
Impact of “Chocolates” is felt
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Concept Units Brazil Mexico Argentina Chile Colombia
Economic indicators (current US dollars)
Consumption Billions of USD 83.9% 17.1% 71.8% 96.0% 91.9%
Gross domestic product Billions of USD 86.8% 17.1% 78.7% 95.9% 91.5%
Disposable income index Billions of USD 87.4% 21.2% 64.7% 96.0% 91.9%
Profits Billions of USD 80.8% 18.8% 77.9% 93.8% 91.6%
Employee compensation Billions of USD 68.9% 21.6% 73.5% 93.9% 89.8%
Economic indicators (constant 2015 US dollars)
Consumption Billions of 2015 USD 65.0% 59.0% 89.4% 89.8% 77.2%
Gross domestic product Billions of 2015 USD 71.2% 56.7% 92.7% 88.9% 79.8%
Disposable income index Billions of 2015 USD 76.3% 64.4% 39.3% 90.1% 77.5%
Economic indicators (rate)
Bank rate Rate 68.3% 5.0% 0.8% 36.3% 67.2%
PPP conversion factor PPP$/USD 78.1% 51.6% 50.9% 68.4% 69.5%
Real PPP conversion factor PPP$/2015 USD 0.0% 0.0% 0.0% 0.0%
Exchange rate LCU/USD 17.4% 60.8% 28.8% 5.5% 3.9%
Labor force
Labor force Millions 36.6% 39.3% 70.5% 89.9% 69.6%
Female labor force Millions 38.6% 40.1% 74.1% 89.5% 71.9%
Male labor force Millions 33.7% 38.7% 63.5% 90.0% 66.8%
Labor participating rate Rate 10.1% 3.6% 26.9% 90.6% 12.9%
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Mexican light vehicle sales
Light vehicle sales outlook – HHOLD Model vs Forecast
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Source: IHS Markit
Mexico’s light vehicle sales forecast
© 2019 IHS Markit
-40.0%
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-10.0%
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Título del gráfico
Actual Forecast Dif % ( R ) Lineal (Actual) Lineal (Forecast) Lineal (Dif % ( R ))
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Mexican light vehicle sales
Light vehicle sales outlook
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Source: IHS Markit
Mexico’s light vehicle sales forecast
© 2019 IHS Markit
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-10%
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30%
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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Mill
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Sales Change
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Mexican light vehicle sales
Light vehicle sales outlook by country of origin
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Source: IHS Markit
Mexico’s light vehicle sales forecast by country of origin
© 2019 IHS Markit
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20,000
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80,000
100,000
120,000
140,000
160,000
180,000
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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
India United States Japan China Brazil Thailand South Korea Germany Colombia Spain Canada
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Source: IHS Markit
Mexico’s light vehicle top-10 brands
© 2019 IHS Markit
Mexican light vehicle sales
Light vehicle sales outlook, top-10 brands
20
MEXICO’S AUTO INDUSTRY SUMMIT
Nissan Chevrolet VW Toyota Kia Honda Ford Mazda Hyundai Renault Others
2012 24.8% 18.2% 13.6% 5.7% 0.0% 5.3% 8.2% 2.6% 0.2% 2.5% 18.9%
2018 21.9% 15.9% 11.0% 7.6% 6.6% 5.9% 4.7% 4.1% 3.5% 2.0% 16.7%
2019 20.5% 14.6% 11.2% 8.0% 7.3% 5.9% 4.4% 4.6% 3.4% 2.6% 17.6%
2020 21.0% 14.3% 12.2% 8.0% 7.2% 5.4% 4.3% 4.1% 4.1% 2.7% 16.8%
0%
5%
10%
15%
20%
25%
30%
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Mexican light vehicle sales
Light vehicle sales outlook by body type
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Source: IHS Markit
Mexico’s light vehicle sales forecast by body type
© 2019 IHS Markit
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Sedan SUV Hatchback Pickup Van MPV Coupe Wagon Chassis-Cab Roadster Convertible
MEXICO’S AUTO INDUSTRY SUMMIT
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Mexico’s new models in market
050
100150200250300350400450
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Wagon Van
SUV Sedan
Roadster Pickup
MPV Hatchback
Coupe Convertible
Chassis-Cab
0
5
10
15
20
25
30
35
40
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Wagon Van
SUV Sedan
Roadster Pickup
MPV Hatchback
Coupe Convertible
Chassis-Cab
22
Source: IHS Markit
Number of nameplates in market
© 2019 IHS Markit
Source: IHS Markit
New nameplates
© 2019 IHS Markit
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North AmericaIn the cross-currents
23
Source: IHS Markit
North America light vehicle production
© 2019 IHS Markit
9.2 8.6 8.6 8.3 7.5 7.6 7.6 7.7 7.8 7.8 7.9
8.68.5 8.3 8.4
8.7 8.7 9.0 9.1 9.2 9.3 9.4
17.817.1 17.0 16.7
16.2 16.4 16.6 16.8 17.0 17.1 17.2
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2016 2018 2020 2022 2024 2026
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US Three Transplants
Divergent trajectories
Growth paths – 2018 to 2026
Total: 256,000 units or 1.5%
Domestics
Down 758,000 units or -8.8%
Offshoring
Transplants
Up 1.0 million units or 12.2%
Onshoring
New capacity and maximization
Short term
Transition from car to truck
2020 upside outside of recession
Long term
New products and import substitution
Export growth: 19% to 1.7 million units
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North AmericaIntra-regional production shifts
24
Source: IHS Markit
North America light vehicle production
© 2019 IHS Markit
12.011.0 11.0 10.9 10.8 11.0 11.2 11.4 11.3 11.2 11.3
2.4
2.2 2.0 1.9 1.6 1.6 1.7 1.7 1.8 1.8 1.8
3.53.9 3.9 3.9
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2016 2018 2020 2022 2024 2026
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USA Canada Mexico
Muted growth amid uncertainty
United States-Mexico-Canada Agreement (USMCA) implications
Trade-related resourcing risks
Underutilized plants:
US: Fairfax, Grand River, Orion, Belvidere
Canada: Brampton, Windsor, Oakville, CAMI
Mexico: Cuautitlan, El Salto, Tijuana
Mexico plant investments:
Kia—Monterrey (2016)
Audi—San Jose Chiapa (2016)
COMPAS—Aguascalientes (2017)
BMW—San Luis Potosi (2019)
Toyota—Guanajuato (2021)
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North AmericaLaunches by vehicle type
25
Source: IHS Markit
North America light vehicle production launches
© 2019 IHS Markit
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29 29
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Car Truck Utility
Strong launch activity
Launches amid industry slowdown
Will new product be king?
Quality volume versus quantity
Utility vehicle expansion continues
Competitiveness weighs on leaders
Pricing and margin pressure
BEV activity
27 all-new nameplates
5.5% or 954,000 units of North American production by 2026
Tesla from 82% to 51% of total
Product redundancy
Varied strategies
Legacy programs as a hedge
Extended lifecycles amid future costs
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North AmericaUAW strike implications
26
Source: IHS Markit
North America light vehicle production – manufacturer impact and footprint
© 2019 IHS Markit
General Motors Ford Fiat Chrysler Automobiles
Volume implications
US = 8,100 units per day
Canada = 1,550 units per days
Mexico = 3,600 units per day
Total = 13,250 units per day
US = 61% of production
4 weeks: 226,000 units
Limited recovery opportunities
Volume implications
US = 8,900 units per day
Canada = 1,050 units per days
Mexico = 1,100 units per day
Total = 11,050 units per day
US = 80% of production
Trucks all produced in USA
Impact to launches
Limited recovery opportunities
Volume implications
US = 5,600 units per day
Canada = 2,400 units per days
Mexico = 2,100 units per day
Total = 10,100 units per day
US = 50% of production
Most diversified footprint
Limited recovery opportunities
* Loss to date through full day Monday, September 30, 2019
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Disclaimer
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Guido Vildozo, Senior Manager+1 781 301 [email protected]
Christopher Hopson, Manager+1 781 301 [email protected]
Nicholas Hess, Market Analyst+1 248 728 [email protected]
Roberto Barros, Senior Analyst+55 19 3578 [email protected]
João Rebouças, Market Analyst+55 19 3578 [email protected]