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Industry Report - Automotive - August 2015

Asia-Pacific

Automotive Sectors
A Company and Industry Analysis
CONTENTS
Current Environment
Sector Overview
Sector Performance
Leading Automakers
Strategic Alliances
Industry Profile
Industry Size and Value
Sector Investment
Research and Development
Policy and Regulatory
Environment
Market Trends and Outlook
China Pursues Electric Vehicle
Market
Autonomous Vehicles in the
Asia-Pacific
Small SUVs Revitalize Korean
Recreational Vehicle Market
Market Outlook
Country Profiles
China
India
Japan
Malaysia
South Korea
Thailand
Currency Conversion Table
The Scope of this Report
Key References
Comparative Data
Reports Coverage

August 2015

Current Environment Key Points


China showed signs of an economic slowdown, with growth slipping to a five-year low of 7.4% in
2014.
However, automotive production rose by 11% in the January-to-February period of 2015, due to
government initiatives from 2014, a growing middle class and the popularity of more fuel-efficient
vehicles.
Southeast Asian economies remained resilient, registering strong growth on buoyant domestic
demand.
The share prices of eight leading Asia-Pacific automakers tracked by Mergent grew by 17.7%
between October 27, 2014, and March 27, 2015.
Shanghai Automotive Industry Corporation (SHA: 600104) enjoying a 43.9% rise and Japans
Toyota Motor Corps (NYSE: TM) share price rising by 36.8%, while Nissan Motor Co (TYO:
7201) rose by 28.3%.
Toyota kept its position as the worlds largest automaker in 2014, although rivals GM and
Volkswagen AG were close behind.
Industry Profile Key Points
The International Organization of Motor Vehicle Manufacturers (OICA) estimates vehicle output
from the regions top seven producing countries: China, Japan, South Korea, India, Thailand,
Indonesia and Malaysia, totaled more than 40 million in 2014.
In 2014, China was the worlds biggest auto producer and market for the fifth consecutive year,
producing 23.7 million vehicles, 7.3% up from 22.1 million the previous year.
Japan held its position as the second largest automotive manufacturer, which it regained in 2012
after slipping from second to third in 2011 due to unexpected events.
While China is still an attractive foreign investment destination, global automakers are also pouring
money in Thailand, Indonesia and Malaysia to increase capacity.
Market Trends and Outlook Key Points
Over the past six months, China continued its push to become a global leader in electric vehicles
with the Government extending the current incentive subsidy scheme of pure electric, highly
electrified plug-in hybrid and fuel cell vehicles until 2020.
As the world becomes more connected through Internet access, mobility, wearable and Big Data,
self-driving and autonomous vehicles made possible through networking and advanced computer
systems.
In the first quarter of 2015, SUV sales by the countrys five original equipment manufacturers
(OEMs) totaled 108,904, a 22.1% increase from 84,836 in 2014, amid the continued popularity of
leisure-oriented cars.

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Asia-Pacific

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Industry Report - Automotive - August 2015

Publisher
Jonathan Worrall
Director
John Pedernales
Managing Editor
Peter OShea
Research Analyst
Fareez Bin Affandi
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The Asia-Pacific Industry Reports are published by Mergent,


Inc., headquartered in Fort Mill, South Carolina, USA. Each
industry sector report is updated every six months. Mergent, Inc., a
leading provider of global business and financial information on publicly
traded companies, operates sales offices in key North American cities
as well as London, Tokyo and Melbourne.

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Industry Report - Automotive - August 2015

Current Environment
Sector Overview
Asia-Pacific automotive markets saw mixed performances
in the first half of 2015, with the industry helped in
some cases by government incentives to boost national
economies, although this effect is liable to be transitory.
China showed signs of an economic slowdown, with
growth slipping to a five-year low of 7.4% in 2014.
However, automotive production rose by 11% in the
January-to-February period of 2015, compared with
the same period a year ago. It was the fifth straight
month of volume exceeding the two million mark, due
to government initiatives from 2014, a growing middle
class and the popularity of more fuel-efficient vehicles.
Light trucks also performed well, posting the largest yearover-year increase, up 18.2%. The China Association of
Automobile Manufacturers (CAAM) estimates the market
expanded by 7% in 2014, despite the slower economic
growth.
In Japan, new passenger vehicle registrations were down
by 16% in February 2015 and down 18% year-to-date. The
strong contraction is largely due to the first quarter of 2014
being particularly strong, as car buyers brought purchases
forward to avoid a tax increase on April 1, 2014. The
Japan Automobile Manufacturers Association (JAMA)
estimates vehicle sales in the January to February period
fell to 757,200, compared to 924,100 in 2014.
The worlds fifth biggest automotive producer, South
Korea, was affected by the poor sales in the Russian
market, thus the export of cars from South Korea to Russia
dropped by 71.5% year-on-year at the beginning of 2015.
In addition, the Korea-Canada Free Trade Agreement
became effective in 2014, with Canada phasing out its
6.1% tariff on imports of South Korean passenger cars over
three years, and similar annual cuts for South Koreas 8%
tariff on imported cars.

Thailand continued to compete with Malaysia and


Indonesia to become a regional automotive hub,
especially for energy-efficient vehicles. Foreign investors,
particularly the Japanese, saw Thailand as the first choice
in Southeast Asia for their production base because its basic
infrastructure is stronger in comparison to those of other
countries. Increasingly gaining a reputation as the Detroit
of the East, Thailand churns out over two million vehicles
annually. The Thailand Automotive Industry Association
(TAIA) predicts that by 2015 the country will be exporting
about 3.4 million vehicles per year.
The Malaysian automotive sector is expected to introduce
new and enhanced versions of existing models in 2015,
including energy-efficient vehicles (EEVs) at very
competitive prices. However, the current duty exemptions
for CKD hybrid cars and EEV will end on schedule on
December 2015 and December 2017. Uncertainties over
the impact of the goods and services tax (GST), rising
living costs and bleak global economic outlook also may
cause consumers to be careful with spending as the current
weakening of the Malaysian currency against others might
not help either as imports became more expensive, adding
that the first half of 2015 could be very soft.
Sector Performance
The share prices of eight leading Asia-Pacific automakers
tracked by Mergent grew by 17.7% between October 27,
2014 and March 27, 2015. Japan and Chinese automakers
fared better than their South Korean and Indian rivals, with
Chinas Shanghai Automotive Industry Corporation (SHA:
600104) enjoying a 43.9% rise and Japans Toyota Motor
Corps (NYSE: TM) share price rising by 36.8%, while
Nissan Motor Co (TYO: 7201) rose by 28.3%.

The inflation rate in India fell to a five-year low of 2.4%


in September 2014, compared with 3.7% in August, due
to lower food, petrol and diesel prices, helping boost
automotive sales in 2015. The Society of Indian Automobile
Manufacturers (SIAM) estimates passenger vehicle sales
rose to 461,800 in January to February 2015 from 217,700
in 2014 due to hike in demand.

Shanghai Automotive Industry Corp, one of the worlds


largest automotive manufacturers, outperformed the
market and registered a 43.9% rise in stock price during
the six-month period, as the company benefited from its
partnership with General Motors Co (NYSE: GM) and
Volkswagen AG (XETRA: VOW3), which stimulated
sales of popular sedan models such as Lavida and New
Santana. Its share price rose from RMB17.15 (US$2.77) to
RMB24.68 (US$3.98).

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Industry Report - Automotive - August 2015

Current Environment
Table 1: Stock Performances of Major Asia-Pacific Automakers

Automakers
Toyota
Honda
Nissan
Hyundai
Shanghai Automotive Industry
Corporation
Dongfeng Motor Cooperation
Maruti Suzuki
Tata Motors

Country
Japan
Japan
Japan
South Korea

Closing Share Price as of


October 27, 2014
March 27, 2015
6,200
8,481
3,350
3,984
949
1,218
KRW174,000
KRW167,500

Change
36.8%
18.9%
28.3%
-3.7%

China

RMB17.15

RMB24.68

43.9%

China
India
India

RMB11.94
Rs.3,171
Rs.517.00

RMB11.96
Rs.3,610
Rs.535.35

0.17%
13.8%
3.5%
Source: Mergent analysis

Sales of Toyota vehicles also gained momentum, especially


those of compact models Aqua, Prius, the new corolla
hybrid version and Noah, thanks to a rebound in auto
demand, and its share price rose from 6,200 (US$52.12)
to 8,481 (US$71.3). The Japanese vehicle market was
mostly contracting, overshadowed by the increase of sales
taxes on April 1 2014. Nevertheless the auto giant bucked
the trend with a 36.8% gain due to business expansion and
improving sentiment.
South Korean automaker Hyundai Motor Corp (KRX:
005380) was the biggest loser, with its share price falling
by 3.7% to KRW167,500 (US$156.73) on March 27, after
it released its less-than-heartening 2014 financial results.
Its net profit fell by 14.9% in 2014, due to competition
from Toyota Motor Corp and other Japanese rivals in the
global market, as its competitiveness waned because of a
stronger South Korean won.
Leading Automakers
Toyota kept its position as the worlds largest automaker in
2014, although rivals GM and Volkswagen AG were close
behind. The auto giant sold 10.23 million units worldwide
in 2014, up from 10.12 million in 2013. The Japanese
auto giant expects to sell 10.21 million vehicles globally
in 2015, down 1% from its 2014 forecast. Toyota, which
regained the worlds largest automaker title from GM in
2012, is not resting on its laurels, aiming to launch 18 new
hybrid models worldwide between 2013 and 2015.
Hondas (NYSE: HMC) worldwide sales also grew, by
7.4% to 4.51 million in 2014, up from 4.2 million a year

earlier, with global sales of hybrid vehicles surpassing


284,000 from 142,000 in 2013, driven by the launch of the
Accord Hybrid model, the first to use its new two-motor
full hybrid system. Capitalizing on the unique features of
its original lightweight and compact integrated motor assist
(IMA) hybrid system, Honda enhanced its hybrid vehicle
line-up which accounts for 55.7% of its sales in Japan.
With a comprehensive range of 64 models under the Nissan
and Infiniti brands, Nissan Motor Cos (TYO: 7201) global
production rose by 3% year-on-year to 5.09 million in
2014 from 4.9 million, achieving an all-time annual record,
while Nissan sold 670,263 cars in Japan, a 1.3% year-onyear decline from 678,824 in 2013. Nissan strengthened its
reputation as the leading maker of electric vehicles (EV)
and zero-emission vehicles, Expanding into new product
segments with its Leaf model, global sales of which rose
to 60,000 in 2014, from 50,000 a year earlier, and in 2015
will launch the fifth version of the Leaf.
Strategic Alliances
As the industry becomes more competitive, automakers
are eager to find suitable partners with which to form
strategic alliances, and the Asia-Pacific is an attractive
region because of its robust economy. BMW (XETRA:
BMW) extended its joint venture with Brilliance China
Automotive Holdings (HKG: 1114) until 2028. BMW, the
worlds largest maker of luxury cars, expanded its sales in
China by 25% in 2014, on pace to top annual deliveries of
400,000 vehicles for the first time. The joint venture is also
expanding its vehicle production capacity to 400,000 units
in its two production facilities in Shenyang.

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Industry Report - Automotive - August 2015

Current Environment
In November 2014, Lectra SA (LSS.PA), the world
leader in integrated technology solutions for soft material
industries, formed a strategic alliance with Jiangsu
Kuangda Automobile Fabric Group (002516: CH), one of
Chinas largest producers of automotive interior fabrics
and car seat covers, and will open three new factories in
2015. The venture will reduce production costs, help to
develop new technology, and will supply best-practice
expertise and process optimization consulting.
On March 2015, Toyota Motor Corporation announced
it has entered into a sponsorship agreement with the
International Olympic Committee (IOC) to become part of
The Olympic Partner (TOP) program. The agreement runs
through to the end of 2024 in the mobility category, which
includes sponsorship of vehicles (including passenger
cars, urban mobility vehicles and commercial vehicles),
mobility services (including vehicle and road safety and
transportation support systems and services) and certain
transportation and mobility support products.
On January 2015, SAIC Motor Corporation signed a
strategic cooperation agreement with STGCON New
Energy Technology, which shows that the business will
provide 1,000 new energy cars for the latter to launch
lease business. In addition, the two sides will jointly build
charging piles, the first large new energy car order SAIC
Motor gained in 2015. The order includes the Roewe E50
all-electric car and the Roewe 550 plug-in hybrid car.
Nissan has formed a joint venture with Dongfeng Motor
Corp (0489.HK) in China on September 2014, which
will be called Dongfeng Infiniti Motor Co, dedicated to
producing premium Infiniti vehicles in the worlds biggest
automobile market. Nissan and Dongfeng each will control
50% of the venture that will sell locally produced vehicles
bearing the Dongfeng Infiniti badge and imported models
with the Infiniti emblem. The new partnership is aiming to
sell 100,000 cars in China by 2018, over half of which will
be locally made.

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Industry Report - Automotive - August 2015

Industry Profile
Industry Size and Value
The Asia-Pacific has one of the worlds fastest growing
automotive markets, thanks to the rise of its middle class
and growing disposable income, and is home to five of
the worlds six leading auto producing countries. The
International Organization of Motor Vehicle Manufacturers
(OICA) estimates that vehicle output from the regions top
seven producing countries: China, Japan, South Korea,
India, Thailand, Indonesia and Malaysia, totaled more than
40 million in 2014, with the Asia-Pacific producing half of
the worlds vehicles.
In 2014, China was the worlds biggest auto producer
and market for the fifth consecutive year, producing 23.7
million vehicles, 7.3% up from 22.1 million the previous
year. Its strong performance started with it surpassing
Japan in 2009, when auto production plunged because
of reduced inventories during the global financial crisis.
The remarkable performance was due not only to robust
demand in China, augmented by government incentives,
but also to a number of joint ventures between local
automotive companies and international players such as
General Motors, Ford Motor (NYSE: F) and Volkswagen.
Japan held its position as the second largest automotive
manufacturer in 2014, which it regained in 2012 after
slipping from second to third in 2011 due to unexpected
events. The March 2011 earthquake and tsunami disrupted
key supply chains and forced manufacturers to cease
operations for months, while massive floods in Thailand
affected major Japanese automakers local assembly
plants.
As a result, Japanese auto behemoth Toyota, which had been
the top automaker for three consecutive years, dropped to
fourth in global sales in 2011, but made a great comeback
to the top global ranks in 2013. The US regained its status
as the second largest producer in 2011, and maintained it in
2014, when it produced 11.6 million vehicles.
Sector Investment
The Asia-Pacific has absorbed much of global automobile
investment in recent years as it is one of the hottest
markets, attracting new global automakers, while those
who already have a foothold in the region expand their

production capacity to meet demand. Although the market


is cooling, especially after the expiration of government
incentives, local and foreign automakers are still investing
in the region.
In March 2015, Toyota Motor Corp invested an additional
Rp20 trillion (US$315 trillion) in Indonesia, aiming to
make the country a production base for export vehicles.
In addition to cars, Toyota will export car parts, and its
management will tackle local problems in obtaining work
visas, infrastructure and port issues.
Toyota is also investing 20 billion (US$168 million) to
triple Japanese production capacity for its new Mirai fuel
cell vehicle to meet strong corporate and public-sector
demand. The Mirai went on sale in Japan on December 15,
2015, and Toyota is expecting orders to exceed its current
annual capacity of 700 units. The new investment will
boost output of fuel cell stacks and hydrogen tanks at the
Toyota factory in Aichi Prefecture, adding two production
lines by the end of 2015, and upgrade equipment at another
Aichi site that handles vehicle assembly.
Honda Motor Co Ltd is investing Rs9.65 billion (US$152
million) to expand motorcycle and automobile production
in India to meet growing demand in Asias third-largest
economy. It will spend Rs5.85 billion (US$92 million)
at its Narsapura factory in southern India to raise annual
production capacity by a third to 2.4 million units, creating
about 1,900 jobs. Its automobile unit Honda Cars India Ltd
will invest Rs3.8 billion in its Rajasthan factory in northern
India to raise annual capacity by 50% to 180,000 units and
hire an additional 600 workers. The moves will help boost
Hondas overall annual production capacity in India to 6.4
million motorbikes and 300,000 automobiles.
In January 2015, Japans Suzuki Group (TYO: 7269)
announced the setting up of three plants in Gujarats
Hansalpur, with a total annual capacity of 750,000
vehicles, which will exclusively supply Maruti Suzuki
India Ltd. The first plant, scheduled to start production in
mid-2017, is being set up with a Rs3,000 crore (US$472
million) investment and will have an annual capacity of
250,000 units, to help Maruti attain its sales target of two
million vehicles by fiscal 2020.

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Industry Report - Automotive - August 2015

Industry Profile
Chinese auto maker SAIC Motor Corp Ltd is joining
forces with e-commerce giant Alibaba Group Holding Ltd
(NYSE: BABA) to invest RMB1 billion (US$161 million)
to develop internet-connected cars using cloud computing,
aiming to launch their first car in 2016.
Research and Development
Customer preferences are diversifying rapidly, and
businesses are increasingly offering products to meet
individual tastes, addressing consumer needs in safety,
environmental impact and perceived value, and providing
services that cater to their individual requirements.
Auto giants such as Volkswagen, GM, Hyundai and BMW,
already have R&D centers in China to collect information
about Chinas auto market and other factors to incorporate
them into their car designs. French automaker Peugeot was
the first international automaker to have a wholly owned
R&D center in China. The center, in Shanghai, with an
initial investment of RMB1 billion, (US$161 million),
develops cars specifically for Chinese consumers rather
than adapting European models. PSA Peugeot plans to
launch 12 new models and six new engines between 2011
and 2015.
Chinese automaker Dongfeng Motor is heavily committed
to build on in its newly restructured passenger vehicle
brands, Fengshen, Fengxing and Fengdu. It plans to spend
RMB15.65 billion (US$2.5 billion) in R&D from 2013 to
2020 on building its own passenger vehicle unit, employing
international technologies to develop and launch at least
two to three new passenger vehicle models annually up to
2020.
Toyota is offering its Toyota Safety Sense P active
safety package on some new models in 2015. The package
is compatible with advanced vehicle-infrastructure
cooperative systems that use a wireless frequency reserved
for intelligent transport systems (ITS) to gather information
at intersections with poor visibility, information about
oncoming vehicles and pedestrians detected by sensors. The
information is conveyed via road-to-vehicle and vehicleto-vehicle communication, giving audio and visual alerts.
In addition, Toyotas newly-developed Communicating
Radar Cruise Control feature will use millimeter wave
radar to keep the vehicles apart at safe distances.
Hyundais next generation of products, starting with the allnew 2015 Genesis, will allow owners to connect with their

vehicle using smart watch integration with its proprietary


Blue Link platform utilizing Android Wear devices and a
newly developed app. Hyundais cloud-based Blue Link
platform gives drivers features such as remote start, remote
door locking and unlocking, and finding their cars in
crowded parking lots, using voice commands.
Policy and Regulatory Environment
The growing number of cars is having a significant effect on
the regions environment, most notably by increasing traffic
congestion and air pollution, prompting stricter regulations
on air pollutants, noise, safety and fuel economy.
Japanese automakers have worked hard to develop nextgeneration technologies needed to comply with the worlds
most stringent emission standards. Toyota has focused
R&D efforts on new car models and the development of
fuel cell technology to reduce harmful emissions. Japans
Government is encouraging green cars by providing
incentive programs and tax breaks for hybrid, electric
or other low-emission vehicles, offering subsidies of
2 million (US$16,834) from 2015 to promote green
technology.
India, where demand for automobiles continues to grow,
follows European emission norms, but with a time
lag, having introduced Bharat Stage IV, equivalent to
Europes EURO 4, in 2010, in just 30 cities. A panel on
automobile fuel emissions standards has recommended
that the Government introduce the stricter Bharat Stage V
emission norms across India by 2020 to curb growing air
pollution. India is still working on offering subsidies on
green vehicles, 35% for pure electric vehicles and 25% for
hybrid vehicles, which are expected to cost the Government
Rs14,000 crore (US$2.2 billion) up to 2020.
In January 2015, China adopted the long-delayed national
Stage 4 emission standards (NS4), equivalent to Euro 4
standards on diesel vehicles, which will cause the removal
of trucks that produce high levels of pollutants and benefit
those using more eco-friendly technology. China also aims
to reduce average passenger vehicle fuel consumption
to 6.9 liters (1.8 gallons) per 100 kilometers (62 miles)
in 2015, from the current 7.38 liters. To further increase
the incentive for its car-scrapping program, the Tianjin
Government allows drivers who scrap their old vehicles to
keep their licenses for three years, while the Guangzhou
Government gives them two free license renewals.

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Industry Report - Automotive - August 2015

Market Trends & Outlook


China Pursues Electric Vehicle Market
Over the past six months, China continued its push to
become a global leader in electric vehicles with the
Government extending the current incentive subsidy
scheme, which expires at the end of 2015, until 2020.
Subsidies will be granted to buyers of pure electric, highly
electrified plug-in hybrid and fuel cell vehicles, and be
gradually scaled down from 2016 to 2020.
The Government is also launching a ten-year, RMB100
billion (US$16 billion) energy saving and new energy
vehicle development plan to make China a leader in the
field, with auto companies speeding up R&D to qualify for
the subsidies. A group of 16 major state-owned companies
are forming an alliance for R&D and to create standards
for electric and hybrid vehicles.
The Government also plans to boost the number of electric,
hybrid and other alternative fuel-powered public transport
vehicles, aiming to add 200,000 buses and 100,000 taxis
powered by alternative fuels by 2020, with more than
15,000 alternative-fuel-powered buses added in 2014.
Sales of alternative-fuel vehicles have spiked in recent
months as China fights rampant pollution, with the China
Association of Automobile Manufacturers reporting sales
of 5,996 electric vehicles and 6,444 hybrids in January and
February 2015, an increase of 4.2% and 2.2%, respectively,
from 5744 and 6302 a year earlier.
The 1,200-kilometer highway that links Beijing and
Shanghai is being equipped with a charging system for
electric vehicles, with chargers installed every 50 km.
This is a major step in popularizing electric cars as current
models must charge or change batteries every 200 km and
few roads or residential areas are equipped with charging
stations. It is estimated that 60,000 electric and hybrid
electric vehicles were sold in China in 2914, making it the
worlds second-largest market after the US, according to
the China Association of Automobile Manufacturers.
Foxconn Technology Group (2354: Taiwan), the maker of
Apples (NASDAQ: AAPL) iPhone, is investing at least
RMB5 billion (US$806 million) to develop electric car
manufacturing in China. Foxconn has largely focused on
electronics manufacturing for clients, including Microsoft,
Sony and Amazon.com, but is branching out into new

business sectors to increase its revenue streams, aiming to


build electric cars costing less than US$15,000.
Chinese smartphone maker ZTE Corp (SHE: 000063)
plans to invest RMB1.5 billion (US$) in wireless vehicle
charging technology in 2015 and more than RMB2 billion
(US$241 million) in 2016. It has signed agreements
with more than 20 cities to provide wireless charging for
public transportation, a significant boost for the electric
car industry. Wireless charging technology saves space,
allowing governments to install it in bus terminals or car
parks, although the costs for wireless equipment are higher
than for traditional charging facilities.
Autonomous Vehicles in the Asia-Pacific
As the world becomes more connected through Internet
access, mobility, wearable and Big Data, self-driving and
autonomous vehicles made possible through networking
and advanced computer systems. Thanks to a great degree
of development from some of the worlds most renowned
auto manufacturers, the present may be approaching the
time when that myth becomes a reality. Importantly, it
looks as if these self-driving vehicles may even improve
upon the safety of conventional autos.
Japans big three car makers, Toyota, Nissan, and Honda
will team up with electronics giants, Panasonic (TYO:
6752), Hitachi (TYO: 6501) and the government to
propel the country into the front ranks of self-driving car
technology. The private and public sectors may invest 10
billion (US$84 million) to build test courses, a focal point
in international competition, aiming to commercialize selfdriving cars by around 2020.
Furthermore, Nissan signed a Reimbursable Umbrella
Space Act Agreementwith NASA, allows for partnerships
in autonomous vehicle systems, robotics, human-machine
interface, software analysis/verification and networkenabled applications. The first annex to this agreement
initiates cooperative research and development of
algorithms, concepts and integrated prototypes for selfdriving cars. The partnership will accelerate Nissans
development of safe, secure and reliable autonomous drive
technology that will progressively introduce to consumers
beginning in 2016 up to 2020.

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Industry Report - Automotive - August 2015

Market Trends & Outlook


Hyundai is currently focus on mass production of
semiautonomous, driver-assistance technologies and its
upcoming Equus will be able to take their hands off the
steering wheel and feet off the brakes as the South Koreabased automaker plans to integrate a host of self-driving
features into its premium sedan in late 2015, transforming
it into a semiautonomous vehicle. Highway driving
assistance features will allow the new Equus to stay in lane,
slow down and speed up as necessary to avoid collisions.
Nevertheless, Hyundai announced that it will invest KRW2
trillion (US$ 1.8 billion) in driverless technologies by 2018
Small SUVs Revitalize Korean Recreational Vehicle
Market
Demand for recreational vehicles (RVs) and vans is
increasing in South Korea as consumers seek diversity,
with the popularity of small SUVs boosting the recreational
vehicle market, which has seen a rapid spike in recent
years. This is due to changes in consumer preferences,
more carmakers introducing economical diesel powertrains, and SUVs rating higher than sedans in certain crash
tests, making them ideal for family use. Sales of SUVs
peaked in 2004, when they accounted for 30.6% of the
market, but lost ground as consumers were deterred by
their large dimensions, lack of new models and poor fuel
economy. However, they have made a comeback since the
2012 introduction of Hyundai Motor Cos stylish Santa Fe
Sport.

production at its first Mexico plant in the first half of 2016


to help ease capacity constraints at its US factory.
Market Outlook
The Asia-Pacific outlook remains favorable for the next
six months, with most economies in the region expected to
continue growing, albeit at a decelerated pace. The region
will continue to create revenue for most global automakers
over the next six months, due to growing consumer need for
personal vehicles amid rapid urbanization, with the surging
economies of South East Asia being the bright spots.
Opportunities continue to be abundant for investors
who focus on auto companies that are better positioned
to perform in this still challenging environment. Auto
companies with strength in global diversity and balanced
exposure to emerging markets should perform better. The
region continues to be an expanding market for vehicle sales
and the influx of new manufacturing and assembly plants
is expected to continue. Despite challenges, including
some poor economies and higher taxes, governments and
automakers continue to search for new levels of production
efficiency, building new plants and expanding existing
facilities.

In the first quarter of 2015, SUV sales by the countrys


five original equipment manufacturers (OEMs) totaled
108,904, a 22.1% increase from 84,836 in 2014, amid the
continued popularity of leisure-oriented cars. There were
279,844 commercial vehicle sales, SUVs and minivans
accounting for 38.9%, the highest share since 40% in
2004. Sales of minivans during the quarter totaled 20,619,
jumping by 76.4% from 4,866 a year earlier, while SUV
sales rose by 13.9 to 88,285, from 76,013. Hyundai Motor
Co (005380.KS), the countrys largest carmaker, launched
a SUV smaller than its Tucson crossover in early 2015,
based on the architecture of its ix25. KIA Motors (000270:
KS) will launch its all new Sorento SUV later in 2015, and
the domestic market is expected to enjoy solid growth
Hyundai plans to expand its US factory, hoping to ramp
up production of SUVs as lower oil prices boost demand
for recreational vehicles. Its new plant in Alabama will
start SUV production in 2017 and have an annual capacity
of 300,000 vehicles, while KIA Motors plans to start

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Industry Report - Automotive - August 2015

Country Profile
China

Sector Overview
China over the last six months maintained its position as
the world largest car market and vehicle manufacturer, with
IHS Automotive reporting that in 2014, China contributed
about 59% of net profit at Volkswagen AG, 45% at BMW
AG and 37% at General Motors Co.
The Government, which has been promoting energy
efficient cars since 2010, has expanded its pilot program
to put more efficient vehicles on the streets of 40 major
cities, providing a subsidy of RMB60,000 (US$9,674)
on purchases of battery powered cars and RMB35,000
(US$5,643) for hybrid cars. Chinese authorities
announced plans to boost the number of electric, hybrid
and other alternative fuel-powered vehicles used for public
transportation, aiming to add 200,000 buses and 100,000
taxis powered by alternative fuels by 2020.
The Shenzhen City Government alone allocated RMB5
billion (US$806 million) to stimulate green vehicle sales
and energyinfrastructure throughout the city. By creating
charging stations and financially assisting purchasers
Shenzhen hopes to reduce the cost of owning a green
vehicle, and put 35,000 of them on the road by 2017.
Sector Performance
The China Association of Automobile Manufacturers
(CAAM) estimates auto sales for January and February
2015 of 3,912,900, a 4.3% increase from 3,752,900 a year
earlier. Passenger car sales rose by 8.7% to 3,434,700,
from 3,049,300, thanks to the SUV and MPV segment, but
commercial vehicle sales fell by 19.5% to 478,200, from
593,900. Production volumes rose by 11.4%, bringing
the first two months of 2015 total to 3,688,800, up from
3,268,276. Electric vehicle sales continued to grow rapidly
thanks to government subsidies, with production rising by
2.8% from 12,493 in January-February 2014 to 12,853 and
sales by 2.9% from 12,079 to 12,440.
Leading Companies
Leading carmaker Shanghai Automotive Industry Corp
(SAIC) sold 4.19 million vehicles in the first nine months
of 2014, 10.75% up from 3.7 million a year earlier, and
generated net profit of RMB20.41 billion (US$3.2 billion),

a 13.4% increase from RMB17.68 billion (US$2.8 billion),


making it the China market leader. This was due largely to
robust sales by its joint ventures with US auto giant GM
and Germanys Volkswagen, which strengthened its lead
in the domestic auto market. In 2016, SAIC will launch its
first internet-connected car with its joint venture Alibaba,
Asias largest internet company, to create a platform for
development and operation of the technology.
The countrys second largest automaker by sales Dongfeng
Motors consolidated net profit rose by 22% in 2014 to
RMB12.8 billion (US$2 billion), up from RMB10 billion
(US$1.6 billion) a year earlier, as the launch of new models
boosted demand. Revenue increased by 61.8% to RMB
80,954 million (US$13 million), from RMB30.9 million
(US$4.9 million). In 2015, the PSA Peugeot-CitronDongfeng joint venture will take over vehicle imports
currently handled by the French carmakers Asian office
and become the distributor for most imported Peugeot and
Citron vehicles.
FAW Car Ltd Co (000800: CH), which also sells cars in
cooperation with Japanese manufacturers, saw operating
revenue jump by 15.76% year on year to RMB24.29 billion
(US$3.9 billion) in the first nine months of 2014. The stateowned enterprise produces and sells automobiles under
the Hongqi (Red Flag), Xiali, Mazda 6 and Jiefang truck
brands, and produces spare parts. Based in Changchun,
Jilin Province, FAW has an ongoing partnership with
Volkswagen and Mazda, and a joint venture with Toyota.
Industry Size and Value
China has been the worlds largest auto market for six
consecutive years, with sales totalling 23.5 million vehicles
and output topping 23.7 million in 2014. It overtook the
US as the worlds largest auto consumer in 2009, with sales
rising by 46% to more than 13 million, spurred largely by
government policy initiatives. There was another 32.4%
increase in 2010, to a record 18.06 million, followed by
21.9 million sales in 2013.
Since Chinas accession to the World Trade Organization
(WTO) in 2001, annual vehicle output has risen
significantly. China surpassed Germany, South Korea,

10
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Industry Report - Automotive - August 2015

Country Profile - China


Table 2: Chinas Auto Market, Production Levels and Sales

Production

Sales

$25,000,000

$20,000,000

$15,000,000

$10,000,000

$5,000,000

$0
2008

2009

2010

2011

2012

2013

2014

Source: China Association of Automobile Manufacturers

Japan and the US as production grew from 3.28 million in


2002 to 23.7 million in 2014. Growth slowed to 0.8% in
2011, but increased to 4.6% in 2012. There are more than
130 automakers in China but most are small operations
with annual production and sales below 10,000 vehicles.
Market Outlook
The CAAM is likely to lower its forecast for GDP growth
in 2015 to 7%, saying this will provide room for economic
reform and better quality growth. However, the nation
is still attractive to foreign automakers and several are
adding to their product line-ups, with new and improved
models expected in the next few months. CAAM forecasts
annual vehicle sales of 25.13 million in 2015, especially
of SUVs and MPVs. China aims to become the worlds
largest market for green cars and improve the popularity
of electric cars, with the central and local governments
planning enticing incentives to encourage car buyers to
demand energy efficient vehicles.

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Industry Report - Automotive - August 2015

Country Profile
India

Sector Overview
The Indian auto industry is the worlds seventh-largest
producer of automobiles, accounts for close to 7% of the
economy and employs about 19 million people directly
and indirectly. Annual production of 3.9 million vehicles
in 2013, and 3.8 million in 2014, propelled India to sixth
among the worlds largest car markets, behind China, the
US and Japan but ahead of Mexico.
After two consecutive hikes in February and March 2015,
petrol prices fell to Rs60 per liter and diesel to Rs48.50
per liter in April, from Rs64.25 per liter for petrol and
Rs53.35 per liter for diesel, reflecting the recent sharp
fall in global oil prices. Lower fuel prices will increase
demand for vehicles as Indian auto buyers are fuel price
sensitive.
Before the General Election in May 2014, the Indian
Government slashed indirect taxes on cars and twowheelers in a bid to boost economic growth, and the new
Government extended the cuts on four-wheel and twowheel vehicles from December 31, 2014 to March 31
2015. The cuts were aimed at helping the sector, which had
shown some revival signs after a two-year slowdown.
Sector Performance
Economic growth, fuel price cuts, low inflation, the
extended automobile tax cuts and high level infrastructure
activity have strengthened the Indian auto sector. The
Society of Indian Automobile Manufacturers (SIAM)
estimates that from April 2014 to February 2015, sales of
passenger and commercial vehicles, three wheelers and
two wheelers increased by 9.28% to 21,468,103, from
19,645,555 a year earlier, while in January 2015 sales of
medium commercial vehicles increased by 5.68% to 9,073
from 8,556, and of light commercial vehicles by 26.1%,
from 4,588 to 5,733.
Leading Automakers
During the fourth quarter of 2014, the countrys largest
automaker Maruti Suzuki India Ltds (MSIL: IN) sales
totaled 323,911 up 12.4% from 283,746 in the fourth
quarter of 2013. Sales revenue of Rs122,631 million
(US$1.9 million) was 15.5% up from Rs103,623 million

(US$1.6 million), while net profit totaled Rs8,022


million (US$126,363), 17.8% up from Rs6,594 million
(US$103,869).
The improved performance was due to higher volumes,
material cost reduction, favourable foreign exchange, and
year end discounts on some of its top-selling cars including
Swift, Swift Dzire and Ritz. With competition heating up,
the auto giant is planning to introduce several new and
improved products in 2015.
Tata Motors Ltd (TTMT: IN) is Indias largest automobile
company, the leading commercial vehicle manufacturer
and among the top passenger vehicle producers, with
popular products in the compact, midsize and utility vehicle
segments. Its consolidated revenues for fourth quarter
2014 totaled Rs.69,973 crore (US$11 billion), 9.6% up
from Rs.63,853 crore (US$10 billion) a year earlier, with
a continuing weak operating environment more than offset
by an increase in wholesale volumes, and a richer product
and market mix at Jaguar Land Rover (JLR). However,
consolidated profit before tax of Rs.5,732 crore (US$902
million) was down by 6.4% from Rs.6,127 crore (US$965
million) in the fourth quarter of 2013.
Industry Size and Value
India is the worlds second fastest growing automobile
market after China, and now makes quality cars, which
it exports to the rest of the world. The International
Organization of Motor Vehicle Manufacturers (OICA)
estimates the workforce of more than ten million built 3.8
million vehicles in 2014, of which 3.16 million were cars
and 681,945 commercial vehicles.
Vehicle output has more than tripled since 1999, with
commercial vehicle production more than doubling, due
to rising demand for small cars from emerging markets.
This has resulted in an influx of foreign investors,
particularly from Japan and Europe. Latecomers include
US automakers and South Koreas Hyundai, which has
done particularly well due to its low-priced but quality
vehicles. Despite foreign automakers growing sales, local
players Bajaj Auto (BJAUT: IN), Maruti Suzuki and Tata
Motors still have the largest domestic market share.

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Industry Report - Automotive - August 2015

Country Profile - India


Market Outlook
Growth of Indian economy is expected to increase to 6% in
2015 from 5.5% in fiscal 2014, as the recovery in advanced
economies bolsters external demand and government
actions remove some structural bottlenecks impeding
industry and investment. The Government is hoping to
encourage even more investment in car manufacturing,
and has ambitious plans for India to boost its position as a
global hub for carmakers.
The sector is at the center of its Make in India campaign,
which aims to increase the countrys manufacturing
capabilities and attract more foreign investment. Utility
vehicles should continue to sell well as customers buying
patterns shift. Keeping ahead of competition, automakers
Maruti Suzuki and Hyundai are gearing up to launch the
Suzuki S-Cross and Hyundai ix25 utility vehicles in 2015.

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Industry Report - Automotive - August 2015

Country Profile
Japan

Sector Overview
Japans economy struggled over the past six months,
creating an unfavorable operating environment for
automakers that was exacerbated by a sales tax rise. The
increase underlined the tight correlation between sales tax
and consumer sentiment, and a second planned sales tax
increase to 10% is likely to be delayed until April 2017.
Japan is becoming a regional hub for production of energyefficient vehicles and has more battery charging points than
gas stations, 40,000 compared to 34,000 fuel stations, and
numbers are increasing. In addition, the Government plans
to spend US$385 million on hydrogen fuel infrastructure
ahead of the 2020 Olympic Games in Tokyo to construct
35 hydrogen fueling stations in and around Tokyo. The
Government wants Toyota and Honda to have at least
6,000 hydrogen fuel cell vehicles on the road in Japan by
the time the Games open.
Japans big three car makers, Toyota, Nissan, and Honda
will team up with electronics giants, Panasonic, Hitachi
and the government to propel the country into the front
ranks of self-driving car technology. The private and public
sectors may invest 10 billion (US$84 million) to build test
courses, a focal point in international competition, aiming
to commercialize self-driving cars by around 2020.
Sector Performance
The Japan Automobile Manufacturers Association (JAMA)
estimates that new vehicle registrations in January and
February 2015 at 1,595,046, down by 7.4% from 1,724,306
a year earlier. Domestic sales fell by 14.5% from 1,033,005
to 883,469, while domestic passenger car sales dropped by
8.8% to 1,349,014, from 1,479,352. Mini-vehicles with
engine displacement of up to 660cc, which have been
hugely popular over the past few years, were hit hard in
2014, sales falling by 3.9% from 1,828,640 in 2013 to
1,760,000.
Leading Companies
In the nine-months to December 31, 2014, Toyotas net
revenues totaled 20.11 trillion (US$169 billion), 5.2% up
from 19.1 trillion (US$160 billion) a year earlier, thanks
to increased vehicle sales in Europe and North America.

Operating income totaled 2.1trillion (US$17.6 billion),


compared with 1.86 trillion (US$15.6), while net income
increased to 1.73 trillion (US$14.5 billion) from 1.53
trillion (US$12.8 billion). However Japanese sales fell by
7%, from 1,641,420 to 1,528,162, while operating income
fell by 17.8 billion (US$149 million) to 1,143.5 billion
(US$9.6 million) following the sales tax rise and a drop
in real wages as a result of Prime Minister Shinzo Abes
inflationary policies.
Honda Motor Cos consolidated net income for the fiscal
nine months ended December 31, 2014, totaled 424.9
billion (US$3.5 billion), 5.3% up from 403.5 billion
(US$3.3 billion) a year earlier. This was despite a 7.7%
drop in operating income from 584.9 billion (US$4.9
billion) to 539.7 billion (US$4.5 billion), due primarily
to increase in selling, general and administrative expenses
including product warranty expenses and increased R&D
expenses, despite continuing cost reduction efforts and
favorable foreign currency effects.
Nissan Motor Co, benefiting from strong demand for
new products, increased US sales, cost efficiencies and
favorable currency movements, saw fiscal third quarter
2014 (ended March 31, 2015) revenue rise by 1.9% to
8.09 trillion (US$68 billion) from 7.94 trillion (US$66.8
billion) a year earlier. Thanks to its Altima, Rogue, Qashqai
and new Pulsar models, Nissan sold 3.8 million vehicles
globally, 3.5% up from 3.67 million. Operating profit rose
by 12.7% to 417.9 billion (US$3.5 billion), from 370.8
billion (US$3.1 billion) a year earlier, while net income
increased to 338.8 billion (US$2.8 billion) from 274.1
billion (US$2.3 billion). Nissan has mid-term goals of an
8% operating profit margin by the end of fiscal 2016 and
an 8% market share
Industry Size and Value
Japan is the worlds third largest auto producing nation,
behind China and the US, accounting for 11% of global
output, with production totalling 9.8 million vehicles in
2014, up from 9.63 million a year earlier. In 2008, Japan
was the worlds largest auto producer, responsible for
16.4% of global vehicle output. As global sales slumped
in 2009, Toyota, Honda and Nissan slashed production

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Industry Report - Automotive - August 2015

Country Profile - Japan


to reduce inventories and Japans auto output plunged by
31.5% to 7.934 million and was overtaken by Chinas.
Japanese manufacturing expertise has long been the
dominant factor in the success of its automobiles at
home and overseas, with almost half of Japanese vehicle
production exported. Demand for passenger cars and
commercial vehicles totaled 5.55 million in 2014, 3.5%
up from 5.36 million in 2013, with sales of mini-vehicles
totaling 1.87 million, up by 11% from 1.68 million.
Market Outlook
Although there are many business opportunities in Japan,
there are plenty of pitfalls that befallen most of the
industries in particularly the auto sector. The auto industry
remains grim and cautious about the domestic outlook due
to hike in sales tax, which caused low demand for cars and
household spending. JAMA estimates total sales of new
passenger cars and commercial vehicles at 3.1 million
in 2015, down from 4.85 million in 2014. However, the
outlook for the Japans environmental friendly cars seems
bright and promising in the coming years as the government
invested to build more charging facilities and new models
to spur demand for electric vehicles.

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Industry Report - Automotive - August 2015

Country Profile
Malaysia
Sector Overview
Malaysia is one of the growing automobile markets in the
world, and now makes quality cars, which it exports to the
rest of the world. The International Organization of Motor
Vehicle Manufacturers (OICA) estimates the Malaysian
automotive industry delivered 596,600 vehicles in 2014,
of which 547,130 were cars and 43,610 commercial
vehicles.
In 2014, Malaysia announced a new National Automobile
Policy (NAP), which could be a game changer for local
and foreign manufacturers, aiming to make Malaysia
the regional hub for energy efficient vehicles (EEVs) as
national automaker develop its first Energy Efficient
Vehicle (EEV), Perodua Axia. This year (2015) Sunway
Kuala Lumpur will introduce a new public transport
service, the Bus Rapid Transit (BRT), using 15 electric
buses to carry 2,400 passengers an hour on dedicated lanes
to minimise congestion, improve time management and
provide seamless connectivity for commuters.
The Government will also spend RM3 million
(US$845,976) in 2015 to create 300 electric vehicle (EV)
charging stations nationwide in a bid to boost demand for
EVs. Currently, there are only 40 EV charging stations in
major cities, not enough to cope with expected growing
popularity of EVs.
With the Goods and Service Tax (GST) implemented
in April 2015, national and international automakers
announced the cutting price of its models by 3.25% for
Proton, 0.1% to 1.6% for Perodua, 2% for Toyota and
Honda enjoy reduction in prices between RM500 (US$141)
and RM2,500 (US$704) on selected variants, due to 6%
GST superseded the existing sales tax imposed on new
vehicles. Furthermore Buyers of used cars not affected by
the prices as the GST will be imposed only on the dealers
based on the profit from a sale.
Sector Performance
Malaysian carmakers are competing well with foreign
marques, their market share having increased to 55.9% in
January 2015, from 43% in January 2014. The introduction
of new models and attractive offers from car companies
seeking to clear stock boosted sales. The Malaysian

Automotive Association (MAA) estimated that during the


first quarter of 2015, production of vehicles sales rose by
5.2% to 168,306, from 159,913 a year earlier.
In 2014, vehicle sales hit an all-time high of 666,465,
compared with 655,793 in 2013, due to aggressive
promotional campaigns and heavy discounting as dealers
and automakers attempted to clear inventory by year-end.
In January 2015, Perodua introduced a new version of
its Myvi, which has been the nations top-seller since its
launch in 2005
Leading Companies
Thanks to the introduction of the S-Series and aggressive
promotional campaigns, Perodua maintained its position
as Malaysias most popular automotive brand, selling
195,600 vehicles in 2014, up from 196,100 in 2013, with
strong demand for its restyled Myvi and Alza models. It
had a 29.4% market share, down from 29.9% in 2013,
due to intense competition and the tightening of financing
guidelines. With its all new Myvi launched in early 2015,
Perodua hopes to sell 208,000 cars to make 2015 a recordbreaking year.
To further enhance its competitiveness Perodua has drawn
up a five-year roadmap outlining its growth strategy and
meeting one of its biggest challenges, boosting its export
business. Perodua exports to Singapore, Brunei, Mauritius,
Fiji, Sri Lanka, Indonesia and Nepal, and intends to ship
20,000 vehicles overseas in 2015. It has a strong partner
in Daihatsu Motor Co Ltd, which has a 20% stake and
can help Perodua fast-track its overseas sales growth.
Despite launching two models, the Preve in April 2012 and
the Suprima in August 2013, Proton continued to struggle
with slumping sales, which dropped to 115,000 in 2014,
from 138,753 in 2013. With 17,000 bookings, Proton
hopes that its newly launched compact Iriz will boost sales
and help it regain market leadership in 2015. Proton is a
wholly owned subsidiary of investment holding company
DRB-Hicom Bhd, which is involved in automotive
manufacturing and distribution, property development,
construction and services. Proton aims to increase annual
production from 150,000 to 500,000 within the next

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Industry Report - Automotive - August 2015

Country Profile - Malaysia


five years and to sell more cars overseas, particularly in
Australia, Thailand and Indonesia.
Industry Size and Value
Over the past two decades, Malaysias rise in regional
auto rankings has been remarkable. Even after petrol
prices rocketed by 40% when the Government slashed fuel
subsidies in 2007, vehicle sales grew by 12% to 548,115
the following year.
Because of the natural disaster of earthquakes and
tsusanmi which hit japan in 2011, it disrupted the
Malaysian automotive supply chain and made a mere 0.8%
dent in total industry volume (TIV) to 600,123 in 2011.
With favourably improved economy and aggressive sales
campaign by automakers for the past few years enabled
Malaysia to recover and maintain its 23rd global position
in 2013 and 2014.
The implementation of infrastructure projects under
the Governments Economic Transformation Program
(ETP) increased consumer spending and consumption,
contributing to the health of the automotive industry.
Perodua became Malaysias leading automaker in 2006,
selling 32.2% more cars than Proton, and has retained the
lead since then.
Market Outlook
The current duty exemptions for CKD hybrid cars
and EEV will end on schedule on December 2015 and
December 2017, respectively. However policy changes
pose challenges for carmakers, with the Government
giving out manufacturing licenses for EEVs by 2018 and
providing RM2.07 billion (US$583 million) funding for the
development of tools and component technology of over
seven years to attract domestic and foreign investment. The
Malaysian Automotive Institute (MAI) reported National
automakers, Toyota and Honda car prices dropped
depending on the model after the implementation of the
Goods and Services Tax (GST) on April 1, 2015, and MAA
forecasts auto sales in 2015 of 693,500.

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Industry Report - Automotive - August 2015

Country Profile
South Korea
Sector Overview
South Koreas automotive industry, the worlds fifthlargest by production and export volume, began by merely
assembling parts imported from foreign companies but is
today now one the most advanced globally. Production of
nearly 4.6 million vehicles and record sales of 1.7 million
in 2014 (up by 10.9% on the previous year) have put South
Korea ahead of India and Mexico but behind China, the
US and Japan.
The capital, Seoul, is increasing the number of high-speed
electric vehicle (EV) chargers in the city by 136 in 2015,
by 270 in 2016, and to 600 by 2018, to make at least one
charger available within a five-minute drive anywhere in
the city. The city government is also planning to set up an
industrial complex specializing in EVs, while at the same
time providing services for EV sharing, and producing
electric trucks and electric motorcycles.
Despite a 25% fall in gasoline prices in 2015, South Korean
drivers are still flocking to buy fuel efficient hybrid and
diesel-powered cars. In 2014, hybrids accounted for more
than 4% of total sales, a record high, thank to aggressive
discounts by automakers.
Sector Performance
Although production fell to 4.9%, from 729,343 in 2013
to 693,764 in 2014, the automotive sector appears to be
leading the way in South Koreans economic recovery.
Domestic demand grew in the first two months of 2015,
with newly released models proving popular and exports
to North America and the Asia-Pacific increased. The
Korea Automobile Manufacturers Association (KAMA)
estimates that domestic sales increased by 7% year on year
to 214,822, from 213,347, while imported car sales jumped
by 27% to 36,689, from 28701. Eight out of ten foreign
cars sold during the period came from Europe, with the

remainder from the US and Japan, the Korea Automobile


Importers and Distributors Association (KAIDA) reported.
Leading Automakers
South Koreas largest automaker Hyundai Motor Co
sold 4.96 million vehicles worldwide in 2014 (683,532
domestically and 4,278,345 overseas), up from 3.6 million
in 2013. Sales revenue rose by 2.2% to KRW89.26 trillion
(US$83 billion), from KRW65.68 trillion (US$61 billion),
thanks to strong sales of new models, including the Genesis
and Sonata. However, operating profit fell by 9.2% to
KRW7.55 trillion (US$7 billion), from KRW6.29 trillion
(US$5.8 billion), and net profit by 14.9%, from KRW7.65
trillion (US$7.1 billion) to KRW6.86 trillion (US$6.4
billion). Hyundai, aiming to sell 5.05 million vehicles
(690,000 in Korea and 4,360,000 overseas) in 2015, will
launch several new models and accelerate the development
of innovative technologies such as eco-friendly vehicles.
The second-largest automobile manufacturer Kia Motors
(KRX: 000270) experienced less-than-upbeat financial
results due to the strong won and unfavourable business
conditions in global markets offsetting gains in sales.
In 2014, Kias sales totaled KRW47.1 trillion (US$44
billion), down by 11% from KRW52.3trillion (US$48.9
billion) a year earlier, while operating profit fell by 19%,
from KRW3.06 trillion (US$2.8 billion) to KRW2.57
trillion (US$2.4 billion). Nevertheless, the auto giant sold
3,041,048 vehicles domestically and abroad, 7.6% up from
2,809,928 in 2013. Hyundai owns 34% of Kia and together
they have the worlds fifth-biggest car sales.
Industry Size and Value
Despite a 0.1% drop in output, South Korea remained AsiaPacifics fifth largest automotive producer in 2014, behind

Table 3: South Koreas Automotive Market

Overseas Sales
Domestic Sales
Global Sales Total

2013
7,492,774
1,453,811
8,946,585

January February 2015


1,148,896
214,822
1,363,718
Source: Korea Automobile Manufacturers Association

18
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Industry Report - Automotive - August 2015

Country Profile - South Korea


China, the US, Japan and Germany. Its five automakers:
Hyundai Motors, Kia Motors, GM Korea, Renault
Samsung Motors and Ssangyong Motors, had global sales
of 8.9 million and domestic sales of 1.5 million in 2014.
Hyundais Ulsan Plant, the worlds largest, the birthplace
of South Koreas automobile industry, comprises five
independent plants with a combined daily average
production capacity of 5,600 vehicles.
Market Outlook
South Koreas automotive sector expects its weakest sales
growth in more than a decade in 2015 as it struggles to
compete with Japanese rivals benefiting from a weaker
yen. The two biggest automakers, Hyundai Motor Co and
its affiliate Kia Motors, forecast a combined 2.5% increase
in global sales to 8.2 million vehicles in 2015, the lowest
growth rate since 2003 and down from 4.6 million in 2014.
South Korea will continue to promote environmentally
friendly cars, setting up an industrial complex specializing
in EVs and increasing the number of high-speed EV
chargers.

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Industry Report - Automotive - August 2015

Country Profile
Thailand
Sector Overview
Thailands automotive industry suffered a downturn in 2014
and in early 2015, with slowing vehicle sales, particularly
of taxis, pick-ups and light passenger vehicles. Automotive
sales were one of the most dynamic components of Thai
industrial activity up to 2010, when they rose by 64.6%, but
have slowed subsequently. The International Organization
of Motor Vehicle Manufacturers (OICA) estimates sales
totaled 1.9 million vehicles in 2014, compared with 2.5
million in 2013, due to an economic slowdown, delayed
budget disbursement and the expiry of the governments
first-car subsidy scheme.
Following the success of its Eco-Car Program Phase 1,
the Thai Government launched Phase 2 to encourage
production of automobiles with low fuel consumption.
Vehicle requirements include a fuel consumption of less
than 4.3 liters per 100 km, CO2 emissions of less than 100
grams per km, engines displacing 1.3 liters and below
(petrol) or 1.5 liters and below (diesel), and Euro 5, R94
and R95 compliance. Ten car manufacturers, including
five existing eco-car producers, will invest B139 billion
(US$4.2 billion) to manufacture 1.58 million vehicles
under Phase 2, which will begin in 2016 and requires
participants to start production in 2019.
Sector Performance
Since the first car tax rebate scheme ended on December
31, 2012, Thailands auto market has been on a downward
trend. Lower prices for agricultural produce, and stricter
bank procedures on loans due to high household debt
and the number of non-performing loans (NPL) have
affected the market. In first quarter 2015, domestic vehicle
sales and production plunged by 11.8% to 123,670, from
138,263 a year earlier and down 27% to 524,540 from
533,562 in 2014. However, exports increased by 12.6%

to 200,613, from 175,335, thanks to higher demand from


the European, Australian and North, Central and South
American markets.
Leading Companies
Japanese auto giants Toyota, Isuzu (TSE: 7202), Honda,
Nissan and Mitsubishi (TSE: 7211) are Thailands top
auto distributors, with Toyota Motor Thailands (TMT)
dominance the highest in any single country market
globally, and regarded by many Thais as the national car
brand. Latecomers, such as South Koreas Hyundai have
found it difficult to penetrate the market.
With three manufacturing plants in Thailand, Toyota has
maintained its auto market leadership for the past several
years. However, its 2014 performance was sluggish with
a sales plunge of 26.6% from a year earlier, from 414,016
to 327,027, due to the adverse effects of domestic political
uncertainty on consumer sentiment. The auto giant expects
to sell 920,000 vehicles in 2015, with economic growth
gradually restoring consumer confidence.
Honda Motor Co also suffered a sales decline, by 50%
to 106,482 in the first ten months of the year, down from
159,723 a year earlier, due to ongoing economic and
political uncertainty weighing on sentiment. Slow sales
forced Honda to reduce its Ayutthaya plant output to 60%
of capacity, but its 2015 sales target is for a 10% increase
to around 110,000 or 120,000 vehicles, thanks to the new
HRV, Camry facelift 2015 and the hybrid Camry.
Industry Size and Value
Thailand is Asia-Pacifics fifth largest auto market and the
largest passenger car manufacturer in South East Asia.

Table 4: Thai Vehicle Market

Production
Domestic Sales
Export (CBU)

Jan-March
2014
533,562
221,026
286,776

Jan-March
2015
524,540
197,787
328,232

Growth
YTD
-1.72 %
-11.75%
12.63%
Source: Thailand Automotive Institute

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Industry Report - Automotive - August 2015

Country Profile - Thailand


With a workforce of more than 350,000, the industry is the
countrys third largest, contributing 12% of national GDP.
Its passenger car market overtook Malaysias in 2010,
when Japanese automakers shifted their manufacturing
operations to the second largest economy in South East
Asia after Indonesia. This has led to Thailand being
dubbed the Detroit of Asia, with more than 50% of vehicle
production shipped overseas, mainly to the Philippines,
Indonesia and Singapore.
After devastating floods in 2011, manufacturers pressed
ahead with reconstruction and returned to full production
in April 2012, turning out a record 2.45 million vehicles
in 2012, up by 68% from 2011. This made Thailand the
worlds tenth largest auto producer, five years before the
target set by the Government and the industry.
Market Outlook
Thai car production should bounce back in 2015 rising
by an estimated 17% after a 23.5% drop in 2014, as the
economy slowly improves after the military coup in 2014
ended political unrest. Production is forecast at 2.2 million
vehicles, up from about 1.88 million in 2014. Thailand is a
regional vehicle production and export base for the worlds
top carmakers and, with the implementation of Eco-Car
Program Phase 2, is paving becoming a regional hub for
energy-efficient vehicles.

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Industry Report - Automotive - August 2015

Currency Conversion Table


Currency exchange rates as of April 15, 2015

Currency Unit

Units per US$

US$ per Unit

US Dollar (US$)

1.00

1.00

Chinese Renminbi (RMB)

6.21

0.16

Indian Rupee (Rs)

63.6

0.016

Indonesian Rupiah (Rp)

13016.49

0.00007

Malaysian Ringgit (RM)

3.6

0.28

Japanese Yen ()

120.13

0.0083

South Korean Won (KRW)

1083.04

0.00092

33.37

0.03

Thai Baht (THB)

Source: Federal Reserve Bank of New York

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Industry Report - Automotive - August 2015

The Scope Of This Report


This report looks at the automotive industry throughout the Asia-Pacific, with a special focus on China, India, Japan,
Malaysia, South Korea and Thailand. As part of our definition, discussion and analysis, two key industry segments are
examined, namely: motor vehicle and car body manufacturing and; motor vehicle parts and accessories. The report
aims to paint a picture of the environment and industry development in a number of segments, using available data and
examining key public companies in each segment whose core services fall into the above categories. Key financial results
are presented in the comparative data tables on proceeding pages.
Research analysts draw on a range of credible industry and company data sources as well as news and information
services to research and analyze the current trading environment, industry landscape and market trends and outlook for
a particular sector. Primary sources are used, unless otherwise indicated, and include company data, e.g. annual reports
and company financial results; macroeconomic and trade data; data and information from global and country regulatory,
industry and trade bodies; government data; and reports from industry organizations and private research organizations.
Industries covered by the industry reports are defined by standard industry classification systems and leading companies
are identified on this basis.
SIC codes relevant to the industry include: 3711 (Motor Vehicles and Passenger Car Bodies); 3713 (Truck and Bus
Bodies); 3715 (Truck Trailers); 3716 (Motor Homes); 3714 (Motor Vehicle Parts and Accessories); 3592 (Carburetors,
Pistons, Piston Rings, and Valves); 3593 (Fluid Power Cylinders and Actuators); 3594 (Fluid Power Pumps and Motors);
and 3647 (Vehicular Lighting Equipment).

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Industry Report - Automotive - August 2015

Key References
Global
International Organization of Motor Vehicle Manufacturers (OICA)
OICA is a federation of 41 national trade associations around the world and represents all major automobile manufacturing
countries; it develops industrial and economic policy, deals with technical affairs, and collects and publishes industry
statistics.
http: //www.oica.net/
International Confederation of Free Trade Unions (ICFTU)
The ICFTU is a confederation of 215 national trade union centers, representing 125 million members and has 241
affiliated organizations in 156 countries and territories on all five continents; it organizes and directs campaigns on labor
issues worldwide.
http: //www.icftu.org/
World Trade Organization (WTO)
WTO is the global organization dealing with the rules of trade between nations.
http: //www.wto.org/
Association of Southeast Asian Nations (ASEAN)
ASEAN is a geopolitical and economic organization of ten Southeast Asian countries that promotes economic growth,
social progress and cultural development.
http: //www.aseansec.org/

China
China Association of Automobile Manufacturers (CAAM)
The CAAM is a national, non-profit association of automotive, motorcycle and parts companies.
http: //www.caam.org.cn/ (in Chinese)
National Development and Reform Commission (NRDC)
NRDC is a government-controlled macroeconomic regulatory department that develops national economic strategies,
long-term economic plans as well as annual economic plans.
http: //www.nrdc.gov.cn
China Council for the Promotion of International Trade (CCPIT)
Endorsed by the Chinese Government, CCPIT is the most important and the largest institution that promotes foreign trade
in China.
http: //www.ccpit.org

India
Society of Indian Automobile Manufacturers (SIAM)
An apex national association formed in 1998 to represent the Indian auto industry, with an emphasis on environmental
and safety-related issues and the advancement of vehicular technology in India.
http: //www.siamindia.com

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Industry Report - Automotive - August 2015

Japan
Japan Automobile Manufacturers Association (JAMA)
JAMA is a non-profit trade association of manufacturers of passenger cars, trucks, buses and motorcycles.
http: //www.jama.or.jp

Malaysia
Malaysian Automotive Association (MAA)
MAA is a voluntary organization that looks after the interests of local motor vehicle franchise holders and oversees the
interests of all assembly plant operators.
http: //www.maa.org.my
Department of Statistics Malaysia
A government department that is responsible for compiling various industrial, business and social data in Malaysia.
http: //www.statistics.gov.my

South Korea
Korea Automobile Manufacturers Association (KAMA)
A non-profit organization established in 1988 comprising the five manufacturers of passenger cars, buses and trucks in
South Korea, with the main objective of overseeing growth of the automobile industry, the promotion of cooperation
among member companies and the development of the national economy.
http: //www.kama.or.kr
Korea Automobile Importers and Distributors Association (KAIDA)
KAIDA represents 13 importers and distributors of imported automobiles in South Korea. Established in 1995, KAIDA
lobbies to support of its members for government deregulation of the South Korean import auto market, and helps manage
and coordinate joint events for sales promotions and other activities for automobile importers and distributors.
http: //www.kaida.co.kr

Thailand
Thai Automotive Institute (TAI)
TAI conducts research for the formulation of suitable policies and prepares comparative facts on the Thai automotive
industry.
http: //www.thaiauto.or.th
Thai Ministry of Industry (TISI)
TISI is the countrys leading agency for standardization with a commitment to the promotion and development of the
industry, maximizing benefits for entrepreneurs, consumers and the nation as a whole.
http: //www.tisi.go.th
Office of Industrial Economics (OIE)
The OIE is Thailands official source for economic statistics.
http: //www.oie.go.th

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Comparative
Data
| ASIA-PACIFIC
Follow the Industry Company
Reports headline
news feed
on Twitter @MergentIndustry

Company

Industry Report - Automotive - August 2015

Country

Ticker

Exchange

Primary SIC

Toyota Motor Corp

Japan

7203

TSE

3711

3714

3537

3713

Honda Motor Co Ltd

Japan

7267

TSE

3711

3751

3524

3621

Nissan Motor Co Ltd

Other SICs
6141

Japan

7201

TSE

3711

3713

3537

3519

4493

Hyundai Motor Co Ltd

South Korea

5380

KSE

3711

3713

3714

7549

5599

Kia Motors Corp

6141

South Korea

270

KSE

3711

7532

3714

3541

5511

Denso Corp

Japan

6902

TSE

3694

3714

3585

3625

3679

3599

Suzuki Motor Corp

Japan

7269

TSE

3711

3751

3621

Aisin Seiki Co Ltd

Japan

7259

TSE

3714

3593

3585

3561

3571

3639

Mazda Motor Corp

Japan

7261

TSE

3711

3713

3714

3713

8734

6411

7514

Mitsubishi Motors Corp

Japan

7211

TSE

3711

Total Revenue - FYE - 1

Total Revenue - FYE - 2

Total Revenue - FYE - 3

EBITDA - FYE - 1

EBITDA - FYE - 2

EBITDA - FYE - 3

Toyota Motor Corp

$248,905,902,112

$235,418,520,409

$226,546,443,903

$34,839,903,758

$25,959,958,195

$17,356,531,839

Honda Motor Co Ltd

$114,730,895,237

$105,394,825,581

$96,892,287,972

$14,651,677,926

$11,371,509,711

$9,620,686,978

Nissan Motor Co Ltd

$101,555,742,467

$93,224,666,769

$114,701,957,731

$11,018,038,317

$10,741,420,682

$13,789,455,879

Hyundai Motor Co Ltd

$83,020,103,394

$79,113,244,579

$67,142,399,481

$7,986,920,405

$8,303,124,004

$6,972,768,051

Kia Motors Corp

$45,260,443,546

$44,247,118,006

$37,275,346,354

$3,257,793,832

$3,500,800,265

$2,989,389,959

Denso Corp

$39,681,746,800

$38,207,408,382

$38,456,928,158

$5,924,391,767

$5,024,024,803

$4,306,340,164

Suzuki Motor Corp

$28,466,691,203

$27,509,893,554

$30,625,130,846

$2,975,207,007

$2,536,542,064

$2,728,311,830

Aisin Seiki Co Ltd

$27,341,912,033

$26,993,981,088

$28,089,260,306

$3,322,486,778

$3,215,210,280

$3,296,541,491

Mazda Motor Corp

$26,082,681,358

$23,529,590,411

$24,784,258,517

$1,928,727,093

$1,006,729,776

$385,577,447

Mitsubishi Motors Corp

$20,281,163,812

$19,366,728,536

$22,032,040,861

$1,795,554,417

$1,603,198,550

$1,486,830,228

Company

Company

5511

Net Income - FYE - 1

Net Income - FYE - 2

Net Income - FYE - 3

EPS - FYE - 1

EPS - FYE - 2

EPS - FYE - 3

Toyota Motor Corp

$17,662,566,220

$10,265,999,763

$3,456,762,946

$5.57

$3.24

$1.10

Honda Motor Co Ltd

$5,562,008,242

$3,917,373,197

$2,578,098,883

$3.09

$2.17

$1.43

Nissan Motor Co Ltd

$3,769,001,797

$3,639,619,317

$4,162,283,485

$0.90

$0.87

$1.00

Hyundai Motor Co Ltd

$8,551,841,340

$8,486,538,651

$6,994,790,145

$29.90

$29.53

$24.34

Kia Motors Corp

$3,629,609,589

$3,619,631,617

$3,037,228,056

$8.96

$8.94

$7.40

Denso Corp

$2,784,244,792

$1,938,494,173

$1,088,598,907

$3.50

$2.42

$1.35

Suzuki Motor Corp

$1,041,316,155

$857,727,282

$656,916,497

$1.86

$1.53

$1.17

Aisin Seiki Co Ltd

$872,791,589

$827,094,546

$676,543,411

$3.10

$2.93

$2.40

Mazda Motor Corp

$1,314,666,006

$366,013,717

-$1,313,333,177

$2.20

$0.61

-$3.52

Mitsubishi Motors Corp

$1,013,995,702

$405,214,230

$291,697,403

$1.52

$0.70

$0.05

Total Current Assets FYE - 1

Total Current Assets FYE - 2

Total Current Assets FYE - 3

Long-Term Debt FYE - 1

Long-Term Debt FYE - 2

Long-Term Debt FYE - 3

Toyota Motor Corp

$152,274,768,158

$147,080,772,674

$150,203,060,325

$82,803,351,756

$78,292,450,913

$73,659,165,258

Honda Motor Co Ltd

$55,912,624,408

$56,795,429,505

$57,772,445,528

$31,331,967,296

$28,923,928,824

$27,246,070,978

Nissan Motor Co Ltd

$83,407,579,417

$76,976,801,036

$80,580,944,206

$34,888,450,846

$32,263,739,972

$30,025,022,687

Hyundai Motor Co Ltd

$55,965,779,700

$51,369,537,325

$42,225,211,066

$32,319,676,144

$28,578,231,579

$23,421,466,422

Kia Motors Corp

$12,810,779,560

$10,433,045,589

$9,558,287,276

$1,603,912,713

$2,299,293,982

$2,140,511,008

Denso Corp

$22,686,119,338

$24,347,060,879

$25,845,452,888

$2,989,535,713

$3,747,714,145

$5,648,455,420

Suzuki Motor Corp

$17,349,747,034

$16,647,040,908

$18,402,548,874

$2,026,421,932

$2,351,518,630

$821,148,668

Aisin Seiki Co Ltd

$11,124,878,726

$10,709,784,993

$12,331,590,588

$2,964,133,504

$2,864,720,991

$3,647,180,591

Mazda Motor Corp

$10,972,039,199

$10,962,881,174

$12,065,030,266

$5,085,246,963

$5,480,656,363

$7,481,304,499

Mitsubishi Motors Corp

$9,073,471,174

$9,378,429,304

$9,254,785,209

$665,301,468

$1,142,992,637

$1,967,445,829

Return on Equity (Most Recent Yr)

Profit Margin (Most Recent Yr)

Date FYE - 1

Date FYE - 2

Date FYE - 3

Toyota Motor Corp

12.60

7.10

31-Mar-2014

31-Mar-2013

31-Mar-2012

Honda Motor Co Ltd

9.70

4.85

31-Mar-2014

31-Mar-2013

31-Mar-2012

Nissan Motor Co Ltd

8.12

3.71

31-Mar-2014

31-Mar-2013

31-Mar-2012

Hyundai Motor Co Ltd

17.32

10.30

31-Dec-2013

31-Dec-2012

31-Dec-2011

Kia Motors Corp

18.85

8.02

31-Dec-2013

31-Dec-2012

31-Dec-2011

Denso Corp

11.87

7.02

31-Mar-2014

31-Mar-2013

31-Mar-2012

Suzuki Motor Corp

8.33

3.66

31-Mar-2014

31-Mar-2013

31-Mar-2012

Aisin Seiki Co Ltd

10.42

3.19

31-Mar-2014

31-Mar-2013

31-Mar-2012

Mazda Motor Corp

23.05

5.04

31-Mar-2014

31-Mar-2013

31-Mar-2012

Mitsubishi Motors Corp

17.70

5.00

31-Mar-2014

31-Mar-2013

31-Mar-2012

Company

Company

Notes to Comparative Data


- All figures are in United States dollars.

- N/A = Data Not Available.

- All figures are as reported by the company.

- N/L = Not Listed.


- Companies ranked by total revenue for the full year most recently reported.

Definitions
- Total Revenue = All revenues, including net sales, operating revenues, interest income, royalties, excise taxes etc.

- Long Term Debt = Debt due to be paid at a date more than one year in the future.

- EBITDA = Earnings before interest, taxes, depreciation and amortization.

- Return on Equity = The companys earnings divided by its equity (book value).

- EPS Cont Operations = Earnings Per Share as reported by company excluding extraordinary items.

- Profit Margin = The companys net income as a percent of revenues.

- Total Current Assets = All assets expected to be realized within the next year, includes cash, accounts receivable and inventories.

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Industry
Industry Report
Report -- Automotive
Automotive -- August
August 2015
2015

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Industry Report - Automotive - August 2015

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Industry
Industry Report
Report -- Automotive
Automotive -- August
August 2015
2015

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Industry Report - Automotive - August 2015

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