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© 2017 IHS Markit © 2017 IHS Markit. All Rights Reserved.
Luxury/Premium Portfolio Expansion in light of Regulation
AUTOMOTIVE
Thomas Meininger, Senior Manager, IHS Advisory Services thomas.meininger@ihsmarkit.com
26 January 2017 | Frankfurt, Germany
© 2017 IHS Markit
Changing market framework causes a shift in information requests in the premium/luxury segment
2
2017 New Year’s Briefing | 26 January 2017
?
How do increasing product
offers and competition
shape the segment?
How does regulatory pressure
and changing customer
requirements affect the segment?
Which alternative
powertrain applications
will emerge?
How much volume
opportunity exists for a
new vehicle or version?
How will markets develop and
what are key drivers?
Who are the segment
benchmarks for new technology
and powertrain adoption?
© 2017 IHS Markit
Presentation Agenda
3
2017 New Year’s Briefing | 26 January 2017
Luxury Segment
• Market insights and trends
• Segment development in light of regulation
Premium High Performance Segment
• Market insight and trends
• Segment development in light of regulation
Summary and Key Takeaways
1
2
3
© 2017 IHS Markit
Luxury/ Premium Segment View Growing IHS Forecast and Analysis Coverage
2017 New Year’s Briefing | 26 January 2017
200+
150-200
100-150
50-100
20-50
Pricing in €
High Luxury
Luxury
Upper Premium
Premium
Entry Premium +
Near Premium
Covered by Luxury /
High Performance
Vehicle Forecast
Market Clustering
4 Note: Brand logo allocated for illustration purposes only
© 2017 IHS Markit 5
2017 New Year’s Briefing | 26 January 2017
Growth Drivers Product expansion appeals to growing rich with multi-car ownership
Luxury Vehicle Market Growth Pillars
Bodytypes Variants Markets
Bentayga Cullinan
Urus
DBX Sports Turismo
Levante
AMG GT-R
GTC 4 Lusso T8
Bentayga Diesel
911 R
S400 Maybach
China
South Korea
South Africa
ASEAN Bentley Supersports
Middle East
© 2017 IHS Markit 6
2017 New Year’s Briefing | 26 January 2017
Luxury Forecast Insight US single biggest market, China offers opportunities despite headwinds
0
20
40
60
80
100
120
140
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
United States Germany United Kingdom GCC China Russia ROW
Luxury Vehicle Sales Development by Market
Th
ou
san
ds
6 core markets account
for 75% of global sales
Source: IHS luxury vehicle forecast
© 2017 IHS Markit 7
2017 New Year’s Briefing | 26 January 2017
Luxury Forecast Insight SUV expansion as growth driver, traditional 4-door under pressure
0
20
40
60
80
100
120
140
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
2 Door 4 Door SUV
Luxury Vehicle Sales Development by Bodytype
Th
ou
san
ds
Source: IHS luxury vehicle forecast
© 2017 IHS Markit
Electrification to maintain the traditional engine business
8
2017 New Year’s Briefing | 26 January 2017
Stefano Domenicali
Lamborghini CEO, Sept. 2016
“A totally electric Urus is a maybe,
depending on how technology
and regulations develop”
Mike Flewitt
McLaren CEO, May 2016
“In the latter part of this
business plan to 2022, more than
half our cars will be hybrids.”
Wolfgang Dürheimer
Bentley CEO, Jan. 2017
“From my point of view, plug-in
hybrid technology provides the
best of two worlds”
Andy Palmer
Aston Martin CEO, April 2016
“So the way to keep the V12 and
V8… is to create the opposite …
– pure electric…”
Sergio Marchionne
Ferrari CEO, Nov. 2016
“All Ferraris sold from 2019 will
have some hybrid elements.”
!
!
Source: Official OEM press statements
© 2017 IHS Markit
Luxury Segment Powertrain Outlook Growing offering range and customer acceptance to change the mix
9
2017 New Year’s Briefing | 26 January 2017
Luxury Vehicle Propulsion System Forecast
0
5
10
15
20
25
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
ICE PHEV/ BEV
Th
ou
san
ds
• Alternative propulsion
predominately from performance
plug-in offerings
• Limited BEV adoption starting end
of the forecast timeframe
Source: IHS luxury vehicle forecast
© 2017 IHS Markit
Luxury/ Premium Segment Growing IHS Forecast and Analysis Coverage
2017 New Year’s Briefing | 26 January 2017
200+
150-200
100-150
50-100
20-50
Pricing in €
High Luxury
Luxury
Upper Premium
Premium
Entry Premium +
Near Premium
Covered by Luxury /
High Performance
Vehicle Forecast
Premium/ Luxury Vehicle Market Clustering
10 Note: Brand logo allocated for illustration purposes only
© 2017 IHS Markit
German 3 Performance Vehicle Lineup From emphasis on 2 main vehicle clusters and higher size groups…
11
2017 New Year’s Briefing | 26 January 2017
Sedan 4-door
coupe SUV Crossover
Large
Full Size
Medium
Compact
2007 Hatch Coupe/Cabrio
Roadster Wagon
© 2017 IHS Markit
German 3 Performance Vehicle Lineup …to successful, continued expansion into high demand trend segments
12
2017 New Year’s Briefing | 26 January 2017
Sedan 4-door
coupe SUV Crossover
Large
Full Size
Medium
Compact
2017+ Hatch Coupe/Cabrio
Roadster Wagon
© 2017 IHS Markit
0
5
10
15
20
25
30
35
Audi BMW Mercedes
Performance Vehicle Sales Resulting in major volume growth from compact and entry performance
13
2017 New Year’s Briefing | 26 January 2017
Western Europe Sales Development*
BMW M includes M Performance, AMG includes „43 Sport” models, Audi Sport excludes „S“ vehicles
* based on registration data for main European sales countries
Th
ou
san
ds
© 2017 IHS Markit 14
2017 New Year’s Briefing | 26 January 2017
Sales Growth Implications Positive business case increasingly clouded by CO2 worries
Profitability Opportunity CO2 Threat
VS
Entry vehicle
*Average based on representative models by AUDI, BMW and MERCEDES
+116* % List price
mark up
potential
+77* % More
emissions
CO2
Top-range vehicle
© 2017 IHS Markit
154g
CO2/km
130g
CO2/km
2008
2015
2021 95g CO2/km
According to NEDC Standard
2008
2016
27,5 mpg
34,1 mpg
According to CAFE Standard
5,0l/100km
2015
2020
According to NEDC Standard
6,9l/100km
2027* 2027* 2027* 4,1l/100km 75g CO2/km? 56 mpg
2017 New Year’s Briefing | 26 January 2017
Vehicle Emission Target Regulation
15
© 2017 IHS Markit 16
2017 New Year’s Briefing | 26 January 2017
0
25
50
75
100
125
150
175
200
225
250
275
300
3251 Series 3 Series X4 5 Series X5 7 Series
x 330e
Emissions Overview Performance emissions considerably above target while sales grow
x xDrive40e
x 740e
Current CO2 emission location vs 2021 target
EU 2021 95g
(BMW Fleet 100g)
x
x
x x
x
x
x 530e
CO2
Performance
Standard lineup (shaded)
Plug-in
BMW brand and selected vehicles for illustration purposes, no complete coverage intended | CO2 values based on ECE test cycle
© 2017 IHS Markit
Adjusting the Portfolio Electrification rollout to balance emissions and protect trad. performance
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2017 New Year’s Briefing | 26 January 2017
Source: BMW Group investor factbook Nov. 2016
BMW product portfolio expansion
“i Performance and BMW i
–
Balancing the product
portfolio”
© 2017 IHS Markit
BMW 2021 EU target
100 g/km
M and i vehicles theoretically offsetting each other…
18
2017 New Year’s Briefing | 26 January 2017
340i
330e i3
M3
47 g/km
156 g/km
0 g/km
194 g/km
Ø 101 g/km 97 g/km
BMW brand and selected vehicles for illustration purposes, no complete coverage intended | CO2 values based on ECE test cycle
© 2017 IHS Markit
…yet buying preferences do not enable a compensation
19
2017 New Year’s Briefing | 26 January 2017
47 g/km
156 g/km
0 g/km
194 g/km
Ø 101 g/km 97 g/km BMW 2021 EU target
100 g/km
2016 Sales GER:
871 units
(+ 818 units 335d)
2016 Sales GER:
492 units
2016 Sales GER:
610 units
(+1.189 units M4)
2016 Sales GER:
2.864 units [BUBBLE
SIZE]
[BUBBLE
SIZE]
[BUBBLE
SIZE]
[BUBBLE
SIZE]
Other M vehicles
i3
M3 340i
330e
Source: IHS registration data full year 2016
BMW 2021 EU target
100 g/km
© 2017 IHS Markit
Increasing Evaluation: Penalty vs. Profit? Performance shall not become decisive factor to miss fleet goal
20
2017 New Year’s Briefing | 26 January 2017
CO2
VS 35.000 Units (EU forecast indication)
10.000 € Profit/Vehicle (assumption)
350 Million € Profit
M – Vehicle Profits
Penalty payments
increasing drastically in
2019:
95€ per gram above
target multiplied by
vehicles sold in EU
Simplified calculation for illustration purposes
913.000 Units (IHS forecast EU)
95 € Penalty/Gramm
87€ Million Penalty / Gramm
EU Penalty Payments
© 2017 IHS Markit
Performance Powertrain Outlook Mid-term adoption of performance plug-ins, BEV expected long-term
21
2017 New Year’s Briefing | 26 January 2017
Phase 1 Phase 2 Phase 3
Now 2021 2025+
Performance ICEs Continued downsizing
Mild hybridization to reduce emissions
Performance PHEVs PHEV used as performance boost while reducing emissions
Performance BEVs With BEV technology progress
(power to weight), performance
variants to emerge
Powertrain Roadmap
Source: IHS analysis
© 2017 IHS Markit
Performance Powertrain Outlook Assuming clear reduction targets imposed, up to 30% xEV required
22
2017 New Year’s Briefing | 26 January 2017
Phase 1 Phase 2 Phase 3
Now 2021 2025+
Performance ICEs
Continued downsizing
Mild hybridization to reduce emissions
Performance PHEVs
PHEV used as performance booster while reducing emissions
Performance BEVs
With BEV technology progress,
performance variants to emerge
Powertrain Roadmap
ICE 80,5%
[CATEGORY NAME]
19%
BEV 0,5%
ICE
PHEV
BEV [CATEGORY NAME]
69%
[CATEGORY NAME]
25%
BEV 6,0%
ICE
PHEV
BEV[CATEGORY NAME] 100%
ICE
Source: IHS initial working analysis results
© 2017 IHS Markit
Summary and Key Takeaways
23
• Expansion of luxury/ premium performance offerings leading to a sizable volume growth forecast.
• US and West Europe remain the key sales markets, China is growing with roomier concepts and lower engine size versions.
• The business is highly profitable, but tightening emission regulation will make the combination of high volume / high emissions an issue.
• Mid-term outlook: Securing traditional high-cylinder ICEs by means of latest fuel saving technology, downsizing and eventually plug-in applications. Understanding competitive measures and conquest vs. cannibalization effects becomes key.
• Long-term outlook: Power oriented plug-ins gaining solid volume share and are a necessity (e.g. China cities). BEV performance variants arriving mid-2020s after required technology progress.
2017 New Year’s Briefing | 26 January 2017
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