automotive 2017: bumpy road ahead global automotive...

© 2017 IHS Markit© 2017 IHS Markit. All Rights Reserved.

23 March 2017 | Paris, France

2017: Bumpy road aheadGlobal automotive outlook

AUTOMOTIVE

Colin Couchman, Director, Global Light Vehicle Sales Forecasting, +44 203 159 3462, [email protected]

© 2017 IHS Markit 2

Time for a fundamental reset?!

Contents

© 2017 IHS Markit

Presentation Name / Month 2016

3

© 2017 IHS Markit

Contents Big picture—Global automotive outlook

Global economic outlook

Automotive challenges for 2017 and beyond

Light vehicle demand outlook for top selling regions

Vehicle segmentation outlook

OEM review

Automotive predictions

4


© 2017 IHS Markit

Real GDP growth in major economies

5

Real GDPPercent change 2014 2015 2016 2017 2018World 2.8 2.8 2.5 2.9 3.1

United States 2.4 2.6 1.6 2.3 2.6

Canada 2.6 0.9 1.4 2.3 2.4

Eurozone 1.2 1.9 1.7 1.6 1.6

United Kingdom 3.1 2.2 1.8 1.6 1.2

China 7.3 6.9 6.7 6.5 6.2

Japan 0.2 1.2 1.0 1.1 0.9

India 7.2 7.9 6.7 7.2 7.4

Brazil 0.5 -3.8 -3.5 0.3 1.8

Russia 0.7 -2.8 -0.2 1.0 1.7

Big picture—Global macroeconomic outlook2017 Spring Automotive Conference | 23 March 2017

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Asia-Pacific (excluding Japan) will achieve fastest growth in real GDPReal GDP

Source: IHS Markit © 2017 IHS Markit

Big picture—Global macroeconomic outlook

-2

0

2

4

6

NAFTA OtherAmericas

WesternEurope

EmergingEurope

Mideast-N.Africa

Sub-SaharanAfrica

Japan Other Asia-Pacific

Ann

ual p

erce

nt c

hang

e

2015 2016 2017 2018 2019–23

2017 Spring Automotive Conference | 23 March 2017

© 2017 IHS Markit

Crude-oil prices will gradually recover

• In a six-month accord that takes effect in January, OPEC agreed to cut its production by 1.2 million barrels per day (b/d). Russia’s energy minister announced a reduction of 300,000 b/d.

• The US onshore oil industry is proving effective at cutting costs and achieving efficiencies. US crude-oil production has bottomed in fourth-quarter 2016 near 8.6 million barrels a day (MMb/d) and will increase by about 400,000 b/d during 2017.

• Under a Trump administration, reduced regulation, fewer hurdles for pipeline construction, and an opening of public lands to exploration and production could lead to higher-than-expected oil and gas supplies.

• The price of Dated Brent crude oil is projected to increase from USD44/barrel in 2016 to USD54 in 2017 and USD57 in 2018.

0

25

50

75

100

125

150

2000 2003 2006 2009 2012 2015 2018 2021 2024

Current US dollars 2015 US dollars

Brent Blend crude-oil price (USD/barrel)


Big picture—Global macroeconomic outlook 2017 Spring Automotive Conference | 23 March 2017

© 2017 IHS Markit

1. Global growth begins to pick up Led by the United States and commodity-exporting regions balanced by Brexit-related uncertainties and Eurozone political concerns

2. President Trump—a real wild card3. “Brexit means Brexit”4. China car tax incentives tapering for 2017–185. Demonetization/remonetization in India6. COP21—Paris conference on climate change December 20157. Volkswagen emissions scandal—spotlight on diesel & RDE8. Battery electric vehicles go mainstream (↑OEMs planning BEVs)

9. New mobility gaining traction and progress for autonomous cars

Key challenges affecting the automotive outlook

Big picture—Global automotive outlook2017 Spring Automotive Conference | 23 March 2017

© 2017 IHS Markit

Top 20 winners and losersAuto sales performance 2016 (Total light vehicle market)

Big picture—Global automotive outlook

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

Change 2015–16

Light Vehicles up to 6t GVW

Source: IHS Markit


© 2017 IHS Markit

Global light vehicle sales 2017 outlook

10


90

90.5

91

91.5

92

92.5

93

93.5

94

94.5

92.2

93.8

+0.49

+0.47 +0.24 +0.17 +0.1 +0.1 +0.1 +0.05

-0.07

Mill

ions

+1.8%

in millions

Light vehicles up to 6t GVW



© 2017 IHS Markit

TIV: Global light vehicle sales


• Trends> Trump/Brexit impact adds to

uncertainty> Cautious psychology for

some in near term

• 2016–18> USA wildcard for 2017,

probably pauses for breath> Less net support from China > Europe cautious at best> EM “mixed bag”

• Long term> Maturing emerging markets

means “new” car demand less of a driver

> Future mobility Source: IHS Markit

Forecast on track but near-term uncertainty for key regions

© 2017 IHS Markit

Mill

ions

40.0

60.0

80.0

100.0

120.0

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24

Jan-16 Mar-17


© 2017 IHS Markit

Global light vehicle sales outlook


Mature markets are forecast to stay at pre-crisis levels

Source: IHS

Light Vehicles up to 6t GVW

0

20

40

60

80

100

120

05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Mill

ions

Others

Central/East Europe

Middle East/Africa

Greater China

Japan/Korea

North America

West Europe

93.8

107.7

43.643.8 42.943.1


© 2017 IHS Markit

10

20

30

40

50

60

70

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

Mill

ions

Emerging January 2016

Mature January 2016

Emerging January 2017

Mature January 2017

TIV: Global light vehicle sales—mature vs. emerging• China’s economic growth will slow further

because of imbalances in credit, housing, and industrial markets, meaning less momentum behind autos sales growth.

• Political uncertainties could contribute to “oddball” phase of globalization. Also, the slow pace of economic reforms in many emerging-market economies is holding back income growth and car demand.

• Russia and Brazil will begin to recover in 2017, but deep economic crises have magnified impacts on car sales and both markets are unlikely to “snap back.” Wide economic dislocation has a lasting and lowering effect on car market potential.

• Many mature markets have been running hot with quicker releases of pent-up demand from the recession/crisis years. Record low auto financing deals have helped fund this mini-boom. A Brexit handbrake could take the shine off the European outlook through 2017–19.

Mild downgrade for potential of emerging markets


Source: IHS Markit


© 2017 IHS Markit

TIV: China light vehicle sales


• Trends> Autos demand grows with

subdued pace owing to slower economic growth

• 2016–18> Smaller car tax incentives

rolled back (5% to 7.5%)> Yellow label scrappage

program ends> Payback effect after smaller

car tax incentives end

• Long term> CAFC / NEV program> Replacement demand

evolves to half of demand> Lower GDP trend level

Source: IHS Markit

Demand loses momentum as auto stimulus program tapers in 2016–18

© 2017 IHS Markit

Mill

ions

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24

Jan-16 Mar-17


© 2017 IHS Markit

TIV: North America light vehicle sales


• Trends> Emerging Trump Doctrine

“America First”

• 2016–18> US sales volumes expected to

slip 1% for 2017 (17.37 million) then re-accelerate for 2018

> US car-truck mix evolves further to trucks (2018 ↑ 63%)

> Canada softer demand in 2017 (1.9 million/-2%)

> Mexico on track for 1.7 million in 2017 (+6%)

• Long-Term> Wildcards: EPA/CARB

emissions rulings and tradeSource: IHS Markit

North America—baseline forecast March 2017

© 2017 IHS Markit

Mill

ions

0.0

5.0

10.0

15.0

20.0

25.0

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24

Jan-16 Mar-17


© 2017 IHS Markit

Risks to the US forecast


Scenario CharacteristicsRecession induced by strained trade relations(Probability = 25%)

“Bad Trump”

• Strained trade relations with Mexico and China undermine business confidence, investment, and productivity.

• A major stock market correction, a surge in oil prices, and a weakening job market hurt consumer spending.

• The US suffers a recession in the middle quarters of 2018.

Lower taxes and fewer regulations(Probability = 15%)

“Good Trump”

• A rollback of regulations and lower corporate taxes result in higher capital spending and productivity.

• Consumer and housing markets benefit from higher incomes and lower inflation and interest rates.

• Stronger global economic growth helps exports.

Baseline forecast(Probability = 60%)

“Contained Trump”

• The US Federal Reserve gradually raises interest rates through 2019.• Personal and corporate income tax rates are cut in 2018.• Consumer spending growth continues; capital spending on

equipment and structures rebounds.• Global economic growth picks up moderately in 2017–18.

Source: IHS Markit


© 2017 IHS Markit

Long-term new vehicle sales growth in Europe


0.0

5.0

10.0

15.0

20.0

25.0

Mill

ions

Rest C/E Europe

Poland

Turkey

Russia

Rest WE Europe

Netherlands

Belgium

Spain

Italy

France

United Kingdom

Germany

22.3

19.820.2

22.1

Light vehicles up to 6t gross vehicle weight

Big Five

Rest of Western Europe

Central Europe



© 2017 IHS Markit

0

0.5

1

1.5

2

2.5

3

3.5

Mill

ions

Jan 2016 FC Mar 2017 FC

TIV: UK light vehicle salesUK—”Brexit means Brexit”


Source: IHS Markit

• The UK economy was resilient in the second half of 2016 led by robust gains in consumer spending.

• With rising inflation draining purchasing power, retail sales decreased in December and January.

• Economic growth is expected to slow in 2017–18 as uncertainty about Brexit dampens investment, hiring, and consumer spending.

• Under Prime Minister May’s Brexit plan, the United Kingdom would leave the EU single market and customs union but seek the greatest possible market access on a reciprocal basis.

• As Brexit triggers capital flight, sterling will depreciate to a low of USD1.12, fueling inflation. Once trading relationships are clarified, the currency will recover.There is a long, uncertain road ahead and many recently

positive autos drivers are expected to turn negative. Autos demand stabilizes and normalizes once Brexit fog begins to lift; 2017–19 looks set to be quite a ride.


© 2017 IHS Markit

TIV: Russia light vehicle sales


• Trends> Illusion of strong growth—in

reality from very low base

• 2016-2018> Oil extraction at record levels> Sanctions to end mid-2017,

long-term sanctions to remain

> Oil prices recover to USD80 (critical level for Russian budget) by 2021

• Long-Term> Oil USD100/barrel by 2024> Stagnation, economic and

political reforms > Unfavorable demographics

Source: IHS Markit

3 million-unit mark only reachable under ultra-optimistic scenario

© 2017 IHS Markit

Mill

ions

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24

Jan-16 Mar-17


© 2017 IHS Markit

Global light vehicle sales by segment

20

Global vehicle segmentation outlook

10.0

13.9

25.0

17.0

6.7

7.9

18.2

37.5

21.8

8.1

9.3

23.6

41.9

23.7

8.9

0 10 20 30 40 50

A

B

C

D

E/F

Units (millions)

CY 2024

CY 2017

CY 2010 Glo

bal

se

gm

ent

20

17

–2

4

gro

wth

(m

illio

ns)

Sh

are

ofg

row

th

E/F 0.8 6.0%

D 1.8 13.2%

C 4.4 31.6%

B 5.4 39.1%

A 1.4 10.2%



© 2017 IHS Markit

Global light vehicle sales by subsegment

21


41.7

10.2

9.4

6.5

0.6

4.3

42.9

28.0

9.1

7.2

0.7

5.6

46.8

36.0

10.2

7.3

0.8

6.2

0 10 20 30 40 50

Car

SUV

Van

MPV

SPORT

PUP

Units (millions)

2024

2017

2010

Glo

bal

se

gm

ent

20

17

–2

4

gro

wth

(m

illio

ns)

Sh

are

ofg

row

th

Van 1.1 8.1%

MPV 0.2 1.1%

SPORT 0.1 0.9%

PUP 0.6 4.6%

SUV 8.0 57.4%

Car 3.9 27.8%



© 2017 IHS Markit

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24

Segments: Global SUV sales


Source: IHS Markit

SUV boom largely continues (1 in 4 sales for 2016—soon to be 1 in 3)

© 2017 IHS Markit

Mill

ions

• Trend> Solid growth from product

activity & demand (push/pull)

• 2017 growth continues> Model launches > New generations

• Mid-Term> Products age and launch

impacts more subdued> China SUV boom calms> Rising oil prices/CO2/FE taxes

• Long-Term> New generations launch in more

saturated market> Euro-SUVs work without diesel?> Evolving mobility risk:

Is SUV a private car concept?


© 2017 IHS Markit

Source: IHS Markit

New order could emerge as growth slows and search for scale intensifies

Top OEMs by volume 2016

23

0.0

2.0

4.0

6.0

8.0

10.0

12.0Million units

© 2017 IHS Markit


© 2017 IHS Markit

Top 20 subject to potential consolidation driven by new collaboration

Top OEMs by volume 2024

24

0.02.04.06.08.0

10.012.014.016.018.020.0

Toyota + Suzuki + Mazda

+ Fuji

VW +

TATA

R/N +

Mits.

GM/SAIC- Opel

Hyu

ndai

Ford

Hon

da

FCAPSA

+ Opel

Dai

mle

r

BM

W Geely +

Proton BA

IC

Cha

ngan

Gre

at W

all

Million units

© 2017 IHS MarkitSource: IHS Markit


© 2017 IHS Markit

Top “Autonomics” predictions for 2017

1. Uncertainty levels have risen—but the risk of declining global autos sales remains low.

2. Autos sales for 2017 should set a new record—autos is still a growth industry.

3. Tapered Chinese autos stimulus programs should help deliver another year of growth.

4. US autos sales expected to slow for 2017—think pre-Trump-stimulus pause for breath.

5. Europe struggles to shrug off Brexit and other political uncertainties—momentum slows.

6. Russia back in growth phase—”risk of recovery” could surprise us all.

7. Iran—the biggest car market you never thought about—firmly back in growth territory.

8. Not much of a prediction—the global SUV boom continues! SUVs soon represent 1 in 3 sales.

9. New mobility concerns more mid-to-long-term issues—make the most of 2017!


It’s going to be a bumpy ride!


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