IHS AUTOMOTIVE

Presentation

The Outlook for Global Light Vehicle Sales

IHS Media Briefing
March 19th , 2015

Henner Lehne
Senior Director Light Vehicle Forecasting
henner.lehne@ihs.com
2015 IHS

ihs.com

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Key themes of this years forecast

Lower global economic growth projections across the forecast horizon.
EMs - Downgraded again. Almost all key emerging market economies have
decelerated , some are forecast to enter recession and even medium term trend
growth has been shaved due to inadequate evidence on progress of structural
reforms
Stronger recovery phase for Western mature markets. Overshoot with dip or
uplifting the longer term trend?
How much to adjust car demand forecasts for new price environments
Oil Price collapse
Currency adjustments
China - a new normal and new reform policy approach
Premium defies wider market trend and even gets upgrade
Emotion and now the head global CUV boom

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Global GDP What did change?

2014
Forecast Update

Feb-15 Feb-14

2015
Diff

Feb-15 Feb-14

2016
Diff

Feb-15 Feb-14

Diff

World

2.7

3.3

-0.6

3.8

-0.8

3.4

3.9

-0.5

United States

2.4

2.7

-0.3

3.3

-0.3

2.7

3.4

-0.7

Eurozone

0.9

-0.1

1.5

1.4

0.1

1.8

1.5

0.3

United Kingdom

2.6

2.7

-0.1

2.7

2.6

0.1

2.8

2.6

0.2

Japan

0.2

1.7

-1.5

1.5

-0.5

1.4

0.4

China

7.3

7.8

-0.5

6.5

8.1

-1.6

6.6

7.6

-1

India

5.9

5.4

0.5

6.7

6.1

0.6

6.5

6.9

-0.4

Brazil

2.5

-2.5

-0.5

3.3

-3.8

1.2

-2.8

Russia

0.4

2.5

-2.1

-5

-8

-0.5

3.5

-4

Real GDP growth in %: Mid-February forecasts

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World Light Vehicle Selling Rates

Low oil will help weak global market; China remains the key to industry growth
90
LV Sales SAAR, Millions Sold

85
World

80
75

70
65
60

World Without
China
Global market, without
China, finally back to
pre-recession levels

55
50
45

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

40

Source: IHS Automotive Analysis, monthly data with X12 Seasonal Adjustment

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Global Light Vehicle Sales

2015 Outlook by Region
90
475k

89

493k

429k

33k
-24k

1.63m

88

-145k
-228k
-784k

Sales in Millions

87

+1.8%

86
85
84
83

82
81
80

2015 IHS

86.2
Million

87.3
Million

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Global Light Vehicle Sales: How did the forecast change?

Downgrade builds across forecast
Long term forecast has been lowered by around 2.3% on average

120

Mismatch with the cheap oil

price environment !
Although mature markets
have been upgraded in line
they cannot offset the big
corrections in Russia and
Brazil.

110

Millions

100
Light Vehicle Sales

2.27 m unit forecast

downgrade in 2022

Mar 14
Mar 15

90

80

1.4 million unit

downgrade in
2015

70

Vol

% Chg

2014

86.2

3.5%

2015

87.7

1.8%

2016

90.9

3.6%

60

50
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`05

`06

`07

`08

`09

`10

`11

`12

`13

`14

`15

`16

`17

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Light Vehicle Sales Forecast

Automotive world changing quickly
50
Mature Markets
Annual sales, in millions

40
China
Change 2000 2022:

30

MM down 5%
China up 1360%
Others up 233%

Developing
Markets

20
Recessions in South
America, Russia changing
path temporarily

10

2022

2020

2018

2016

2014

2012

2010

2008

2006

2004

2002

2000

Source: IHS Automotive, Mature Markets = US, Canada, Japan, S Korea, Australia, NZ, W Europe

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Country Light Vehicle Sales Growth

1.8%

10%

2015

2016

Japan

Forecasted Change in LV Sales

20%

South Korea

Among the largest markets, Russia/South America will have a tough year

3.6%

0%
-10%

-20%
-30%

Russia

Brazil

Saudi Arabia

South Africa

Australia

Indonesia

World

Canada

USA

France

UK

Germany

Malaysia

Iran

Italy

Mexico

China

India

Thailand

Turkey

Spain

-40%

Source: IHS Automotive 2015 and 2016 LV sales forecasts

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Large Markets Light Vehicle Sales Forecast

China will continue to dominate; little sales growth expected for developed economies
Annual Light Vehicle Sales Volume (in millions, 2006 2022)

35
Top 8 markets account for
close to 70% of global sales

30

24.7

25
20

2015:
16.9 million

15

2.2

3.0

1.6

3.2

Brazil

Russia

India

Japan

3.4

France

2015

5.2

United
States

10

2015 IHS

China

Germany

Source: IHS Automotive

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Vehicle Penetration Rates

Although volatile, BRIC markets still offer the most growth potential
Light Vehicles in Operation Per 1000 People (2006 - 2022)

900
800

Economic growth creating

large increases in personal
transportation need/desire,
fueling vehicle sales growth
and for years to come.

2014

700
600
500
400
300
200
100

China

India

Russia

Brazil

France

Germany

Japan

United
States

Source: IHS Automotive

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Products In-Market
More variety to continue rising in BRIC and other developing markets
Count of Nameplates (2006-2018)

900
800
700
600

2014

500
400
300

200
100
China

India

Russia

Brazil

France

Germany

Japan

United
States

Source: IHS Automotive

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Automotive Market Concentration

BRIC markets quickly becoming more competitive, China too much

Less Fragmented

HHI Scores (2006 - 2018)

30
25
20

More Fragmented

15

2014

10
5

China

India

Russia

Brazil

France

Germany

Japan

United
States

Source: IHS Automotive calculation of Herfindahl-Hirshman Index, annual data

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New World Oil:

Implications for the
Global Automotive Industry

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Quite a swift reaction to oil price slump : - Its TOO Low !

Feb 2015

Aug 2014

$140
$120
$100
94
USD

$80
$60
$40
44
USD

$20

$0

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Light Vehicle Fleets

Total Car + LCV in Operation (millions)

Fuel savings significant for all, but China gains most

World Total
2013 1.02 Billion
2021 1.35 Billion

China and India to see fleets double

over forecast horizon oil import cost
exposure improving dramatically.

Policies to promote more fuel efficient

vehicles facing more difficult economics.
2014

Source: CY 2001-2014-2021, IHS Automotive

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Subsidized Transport Fuel Countries

Expensive emerging markets issue - lower oil prices may lead to policy changes

Cost savings may not reach consumers helps federal budgets.

Many countries changing policies - Indonesia cuts fuel subsidy 30%
US gasoline taxes may rise federal tax unchanged since 1993.

Sources : IHS Energy, IISD, IMF, IEA

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US Retail Gasoline Price

Pump price now at five year low but rational consumers may be skeptical

$4.00
$3.50

25%

Average Weekly
Price Change
0.72%
1990s
1.86%
2000s
1.28%
2010s

20%
15%

$3.00

10%

$2.50

5%

$2.00

0%

$1.50

-5%

$1.00

-10%

$0.50

Retail Gas
Weekly Change

-15%
-20%

1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

$0.00

Weekly Change

Regular Retail Gasoline, weekly price

$4.50

Source: US EIA Weekly Retail Regular Gas Prices

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Theoretical Impact of low Oil to global LV sales

Outlook optimistic lower oil could help consumers to increase demand

Annual LV sales, in millions

110

Total sales 2007-2014: 597 million

Total sales 2015-2022: 778 million

Low oil price direct impact could

add 5 to 7 million units over
forecast period.

But also, savings may not reach

consumers due to government
policy changes.

100

90

80

70

60

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

50

Source: IHS Automotive Sales Forecasts

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The Third Cycle

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Consumers Technology Investment

Fuel efficient options will suffer; lower oil price hurts payback calculation
Mid-Size Car: 24 mpg

Hybrid Option: $3000, gain 25%mpg

Breakeven Point (in years)

Annual Gasoline Cost

16
14
12
10
8
6
4
2
0

Retail Gasoline Price/Gallon

$8.00

$7.00

$6.00

$5.00

$4.00

$3.00

$2.00

$0

$8.00

$1,000

$7.00

$2,000

$6.00

$3,000

$5.00

$4,000

$4.00

$5,000

20,000 miles/yr
12,000 miles/yr

$3.00

20,000 miles/yr
12,000 miles/yr

$2.00

$6,000

Retail Gasoline Price/Gallon

With gas at $3.50/gallon, it takes 8.7 years to pay back initial investment for a lower mileage user $1 lower gas adds 3.5 years.
With gas at $7.00/gallon, it will take 4.4 years to pay back - $1 lower gas only adds 8 months.
Countries with already low gas prices likely to see drop in technology take rates.
Source Data: IHS Automotive

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Powertrain Technology Investment

Low oil price adds years to consumers payback calculation
Technology
DI Vehicle
Gas & Turbo with Stop/Start
MPG up 11%

Investment
Cost

$1,000

Payback Years @ Fuel Price of:

$2.00
$3.00
$4.00
Payback years at Fuel Price of:

8.1

$2

5.4

$3

$4

4.0

Parallel Hybrid
MPG up 25%

$3,000

12.3

8.2

6.1

EV With Range Extender Hybrid

40mi + 50 MPG

$10,000

Pure Electric Vehicle

$0.034/mile

$20,000

10.6

$2.80

27.0

$3.80

6.4

14.7

4.6

$4.80 (Diesel)

10.1

With lower gasoline prices, length of payback period for a technology investment is
too long for most consumers.

US auto manufacturers planning to meet upcoming fuel economy/emission targets,

lower operating costs for larger vehicles may be a challenge.
Assumptions: 15k miles/year, 24 mpg vehicle
Sources: IHS Automotive, CALCARS.com

2015 IHS

Thank you very much

Henner Lehne
Senior Director Light Vehicle Forecasting
henner.lehne@ihs.com

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