china light vehicle outlook - umtri · “china naqs (national air quality standards): in 2013 96%...
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© 2014 IHS
Presentation
ihs.com
IHS AUTOMOTIVE
China Light Vehicle Outlook
University of Michigan
Transportation Research Institute
Inside China Conference
November 12, 2014
Charles ChesbroughSenior Principal Economist
IHS Automotive - Detroit
© 2014 IHS
IHS AUTOMOTIVE
Introduction
Charles ChesbroughSenior Principal Economist– IHSAutomotive
Charles joined IHS in 2006, and is responsible for developing and integrating statistical models
and economic scenarios into IHS worldwide global automotive forecasts. Charles also
presents IHS forecasts and research to organizations, clients and media, and is often invited
as a speakeror panelist at various professionalseminars and international industry events.
Prior to joining IHS, Charles was a senior consultant in Ford Motor Company's North American
marketing strategy group. Charles has also worked for two technology start-up companies,
and he began his career as a floor trader at the Chicago Board of Trade. Charles also is an
expert in market research, data mining and econometric analysis through many years as a
consultant to Fortune 500companies.
Charles earned a bachelor’s degree in economics from Michigan States University, and a
master’s degree in economics from the University of Illinois at Chicago. He was also a student
in Michigan State University’s economicsPhDprogram.
Charles has won numerous economic forecasting accuracy awards, and serves on Oakland
University’s Expert Economist Panel. He is also board member and former President of the
Detroit Association for Business Economics, and is also a member of the National Association
for Business Economics.
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© 2014 IHS
IHS AUTOMOTIVE
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IHS AutomotiveAnalysts based all over the world and provide global industry coverage and perspective
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IHS products utilized for this presentation:
• Automotive forecasting
• Energy forecasting
• Economic forecasting
© 2014 IHS
IHS AUTOMOTIVE
China Light Vehicle Outlook
Agenda
• Light Vehicle Forecast
• Economic and Market Development D
• Threats to the Forecast
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© 2014 IHS
IHS AUTOMOTIVE
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“In June 2014 Ford opened 88 new car
dealerships in China - in one day.”
With primary focus on less competitive Tier 4 cities!
© 2014 IHS
IHS AUTOMOTIVE
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“Audi China plans to open one dealership
per week all the way through to 2017.”
“China NAQS (National Air Quality Standards):
In 2013 96% of major Chinese cities subject to
NAQS failed to meet their goal.”
“Incoming investment into China for local vehicle
manufacturing is estimated to be around 35.7
billion USD in the next 5 years.”
“The average price of a new 4S dealership in
China lies between 3 and 5 million USD.”
© 2014 IHS
IHS AUTOMOTIVE
World Light Vehicle Selling RatesChina providing most of global sales growth
45
50
55
60
65
70
75
80
85
90
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
LV
Sa
les S
AA
R, in
mill
ion
s
World
SAAR
World Without
China SAAR
Source: IHS Automotive Analysis, X12 Seasonal Adjustment
7
© 2014 IHS
IHS AUTOMOTIVE
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2.8
3.0
Ja
n'0
7
Ja
n'0
8
Ja
n'0
9
Ja
n'1
0
Ja
n'1
1
Ja
n'1
2
Ja
n'1
3
Ja
n'1
4
LV
Sa
les S
AA
R,
Ind
exe
d 2
00
7=
1
Source: IHS Automotive Analysis, X12 Seasonal Adjustment
2007
Sales Level
Lehman
Collapse
China
S America
India
ASEAN
J/K
WE
CE
NA
Region Light Vehicle Selling RatesChina remains on different path than rest of world
EE
© 2014 IHS
IHS AUTOMOTIVE
World Light Vehicle Sales ForecastOutlook optimistic from US/Euro recovery and China market growth
Source: IHS Automotive Sales Forecasts
85.7
88.6
50
60
70
80
90
100
110
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Total Sales 2006-2013:
577 Million Vehicles
Total Sales 2014-2021:
767 Million Vehicles
An
nu
al sa
les, in
mill
ion
s
9
© 2014 IHS
IHS AUTOMOTIVE
Light Vehicle Sales ForecastAutomotive world changing quickly
0
10
20
30
40
50
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
Mature Markets
China
Others
Source: IHS Automotive, Mature Markets = US, Canada, Japan, S Korea, Australia, NZ, W Europe
Change 2001 - 2021:
MM down 5%
China up 1400%
Others up 200%
10
An
nu
al sa
les, in
mill
ion
s
© 2014 IHS
IHS AUTOMOTIVE
21.4
23.3
24.9
15.0%
8.9%7.1%
0%
10%
20%
30%
40%
50%
60%
70%
0
5
10
15
20
25
30
35
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
An
nu
al c
ha
ng
e
Source: IHS Automotive
China Light Vehicle Sales ForecastMarket to reach 30 million by end of decade
Sa
les (
in m
illio
ns)
11
© 2014 IHS
IHS AUTOMOTIVE
China Light Vehicle Outlook
Agenda
• Light Vehicle Forecast
• Economic and Market Development
• Threats to the Forecast
12
© 2014 IHS
IHS AUTOMOTIVE
0
100
200
300
400
500
600
700
800
900
$0 $10 $20 $30 $40
Light Vehicle PenetrationScatterplot Reveals Strong Economic - Vehicle Need Relationship
Vehic
les In U
se P
er
1000 P
eople
GDP Per Capita (thousand US$)
US
Sweden
Russia
S Korea
Japan
Australia
Brazil
ItalySlovenia
Spain
China
Poland
Czech Rep
Canada
UK
France
Germany
India
Thailand
Hungary
Mexico
Turkey
Chile
Development Path – economic
success creates millions of new
consumers, and they want cars !
Source: IHS Automotive, CY 2013
Slovakia
Indonesia
13
© 2014 IHS
IHS AUTOMOTIVE
14
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
Un
ite
dS
tate
s
Ch
ina
Ja
pa
n
Ge
rma
ny
Fra
nce
Ind
ia
Bra
zil
Ru
ssia
2000 2014 2021
Total Population (millions)
World: Human Population
Source: IHS Consumer Markets
© 2014 IHS
IHS AUTOMOTIVE
15
0
10,000
20,000
30,000
40,000
50,000
60,000
Un
ite
dS
tate
s
Ch
ina
Ja
pa
n
Ge
rma
ny
Fra
nce
Ind
ia
Bra
zil
Ru
ssia
Real GDP Per Capita (2010 US$)
World: Economic Development
Source: CY 2000-2014-2021, IHS Consumer Markets
© 2014 IHS
IHS AUTOMOTIVE
16
0
100
200
300
400
500
600
700
800
900
Un
ite
dS
tate
s
Ch
ina
Ja
pa
n
Ge
rma
ny
Fra
nce
Ind
ia
Bra
zil
Ru
ssia
Vehicles in Operation Per 1000 People
World: Vehicle Penetration Rates
Source: CY 2000-2014-2021, IHS Automotive
© 2014 IHS
IHS AUTOMOTIVE
17
0
4,000,000
8,000,000
12,000,000
16,000,000
20,000,000
24,000,000
28,000,000
32,000,000U
nite
d S
tate
s
Ch
ina
Ja
pa
n
Ge
rma
ny
Fra
nce
Ind
ia
Bra
zil
Ru
ssia
Annual Volume
World: Light Vehicle Sales Forecast
Source: CY 2000-2014-2021, IHS Automotive
© 2014 IHS
IHS AUTOMOTIVE
18
0
50
100
150
200
250
300
350
Un
ite
dS
tate
s
Ch
ina
Ja
pa
n
Ge
rma
ny
Fra
nce
Ind
ia
Bra
zil
Ru
ssia
Total Car + LCV in Operation (millions)
World: Light Vehicle Fleet
Source: CY 2000-2014-2021, IHS Automotive
© 2014 IHS
IHS AUTOMOTIVE
19
0
100
200
300
400
500
600
700
800
900
Un
ite
dS
tate
s
Ch
ina
Ja
pa
n
Ge
rma
ny
Fra
nce
Ind
ia
Bra
zil
Ru
ssia
Nameplates In Markets
World: Product Availability
Source: CY 2000-2014-2021, IHS Automotive
© 2014 IHS
IHS AUTOMOTIVE
20
0
5
10
15
20
25
Un
ite
dS
tate
s
Ch
ina
Ja
pa
n
Ge
rma
ny
Fra
nce
Ind
ia
Bra
zil
Ru
ssia
HHI Scores
World: Market Concentration
Source: CY 2000-2014-2021, IHS Automotive
Mo
re F
rag
me
nte
dL
es
s F
rag
me
nte
d
© 2014 IHS
IHS AUTOMOTIVE
21
0
1
2
3
4
5
6
7
8
9
10
11
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Car MPV
PUP SPORT
SUV Van
0%
10%
20%
30%
40%
50%
60%
Ca
r
MP
V
PU
P
SP
OR
T
SU
V
Van
2011
2014
2021
Share of Market Average Product Age (years since launch)
China Vehicle SegmentsCars dominate but SUV share expected to increase significantly
Source: IHS Automotive
© 2014 IHS
IHS AUTOMOTIVE
22
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013
2014
2015
2016
2017
2018
2019
2020
2021
Domestic Exported
Forecast by Platform Size Production Purpose
China Light Vehicle Production ForecastC and D sized vehicles will continue to dominate market
Source: IHS Automotive
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
2013
2014
2015
2016
2017
2018
2019
2020
2021
F+HVAN E D C B A
© 2014 IHS
IHS AUTOMOTIVE
China Dealership ExpansionOEMs expanding distribution dramatically
23
664
628
663 654
592 597 592
520
395372
749
718 711
678654
642 634
580
481
414
300
350
400
450
500
550
600
650
700
750
800
FA
W-V
W
FO
RD
Hyun
da
i
NIS
SA
N
FA
W T
OY
OT
A
CH
EV
RO
LE
T
BU
ICK
CIT
RO
EN
PE
UG
EO
T
DF
HO
ND
A
Dec-13 Jun-14
336
407
309
367
435
369
300
350
400
450
AUDI BMW MERCEDES
Dec-13
Jun-14
400
450
500
550
600
650
BYD CHERY
Dec-13
Jun-14
Source: IHS Automotive
Nu
mb
er
of D
ea
lers
hip
s
© 2014 IHS
IHS AUTOMOTIVE
China Automotive FinancingStill primarily a cash market but major OEMs expanding significantly
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2009
2010
2011
2012
2013
24
10%
8%
3%
12%
17%
23%
17%
19% 20%
24% 24%
36%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Hyun
da
i
VW
Ch
ery
To
yo
ta
Audi
BM
W
2009 2013
Sh
are
of P
urc
ha
se
s F
ina
nce
d
Sh
are
of P
urc
ha
se
s F
ina
nce
d
Source: IHS Automotive
© 2014 IHS
IHS AUTOMOTIVE
25
China Premium Vehicle MarketAs market matures, higher priced vehicle share and volume continues to grow
9.5%
10.0%
10.5%
11.0%
11.5%
12.0%
2014
2015
2016
2017
2018
2019
2020
2021
Sept Forecast
Jan Forecast
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Pre
miu
m S
ale
s in
mill
ion
s
US
China
Sh
are
of LV
Sa
les
Source: IHS Automotive
© 2014 IHS
IHS AUTOMOTIVE
China Light Vehicle Outlook
Agenda
• Light Vehicle Forecast
• Economic and Market Development
• Threats to the Forecast
26
© 2014 IHS
IHS AUTOMOTIVE
Vehicle Penetration PathSome signals suggest a paradigm shift occurring
27
Economic Development
City of Today
Peak Car ?
Mature Market Track
Weak Car ?
Emerging Market Track
Vehic
le D
ensity
Rural Path
City of Tomorrow?
Source: IHS Automotive
© 2014 IHS
IHS AUTOMOTIVE
Province New Registrations DensityStage of market development varies greatly
28
Ne
w P
asse
ng
er
Re
gs
Pe
r 1
00
0 P
eo
ple
GDP Per Capita US$
Anhui
Beijing
Chongqing
Fujian
Gansu
Guangdong
Guangxi
GuizhouHainan
Hebei
Heilongjiang
Henan
HubeiHunan
Inner Mongolia
Jiangsu
Jiangxi
Jilin
LiaoningNation
Ningxia
QinghaiShaanxi
Shandong
Shanghai
Shanxi
Sichuan
Tianjin
Tibet
Xinjiang
Yunnan
Zhejiang
7
9
11
13
15
17
19
21
23
25
$3,000 $5,000 $7,000 $9,000 $11,000 $13,000 $15,000 $17,000
Established
MarketsNext
Wave
Rising
Tigers
Late Bloomers
Source: IHS Automotive, based on 2013 passenger vehicle registrations data and economic forecasts
© 2014 IHS
IHS AUTOMOTIVE
Province Passenger Vehicle RegistrationsCity restrictions and legislation changes impacting sales and development
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Sh
and
on
g
Jia
ng
su
Gu
ang
do
ng
Zh
ejia
ng
He
be
i
He
na
n
Sic
hu
an
Lia
onin
g
Be
ijin
g
Hu
na
n
An
hui
Hu
be
i
Sh
anxi
Sh
aan
xi
Fu
jian
Yu
nna
n
Inn
erM
on
go
lia
Tia
njin
Jia
ng
xi
Sh
ang
ha
i
Ch
on
gq
ing
Gu
ang
xi
Heilo
ngjia
ng
Jili
n
Gu
izh
ou
Xin
jian
g
Ga
nsu
Nin
gxia
Ha
ina
n
Qin
gh
ai
Tib
et
PV
re
gis
tra
tio
ns in
20
13
(m
illio
ns)
29
City restrictions already in place
City restrictions expected
No restrictions indicated yet
Source: IHS Automotive, China Province Forecast
© 2014 IHS
IHS AUTOMOTIVE
Province Passenger Vehicles in OperationRecent sales success differences will impact future vehicle fleet opportunities
30
0
50
100
150
200
250
300
350
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
PV
s in
mill
ion
s
Southwest China
South China
Plateau
Northwest China
Northeast China
North China
Middle China
East China
Source: IHS Automotive, China Province Forecast, Personal Vehicle Parc (Including minibus)
Passenger vehicle fleet now at
100m – will surpass 300m by 2025
© 2014 IHS
IHS AUTOMOTIVE
31
World Passenger Vehicle HHI Scores
0
5
10
15
20
25
30
Sou
th K
ore
aIn
do
ne
sia
Ind
iaJa
pa
nM
ala
ysia
Th
aila
nd
Germ
any
Me
xic
oF
ran
ce
Ta
iwa
nS
ha
ngh
ai
Hong
Kon
gS
inga
po
reIt
aly
Bra
zil
Spa
inT
urk
ey
Yun
nan
Beiji
ng
Belg
ium
Un
ited
Sta
tes
Russia
Un
ited
Kin
gd
om
Guiz
ho
uC
hile
Jili
nU
rug
ua
yZ
hejia
ng
Gua
ngxi
Jia
ng
su
Sha
anxi
Sha
nxi
Hain
an
Gua
ngd
ong
Hena
nJia
ng
xi
Heilo
ngjia
ng
Ukra
ine
Sic
hua
nA
nh
ui
Inn
erM
on
go
liaF
ujia
nT
ian
jinH
una
nC
hin
a T
ota
lH
ebe
iQ
ingh
ai
Hube
iS
ha
ndo
ng
Xin
jiang
Lia
on
ing
Nin
gxia
Chon
gqin
gT
ibe
tG
an
su
Herfindahl-Hirschman Index (HHI)
Mo
re
Fra
gm
en
ted
Mo
re
Co
nc
en
tra
ted China’s highly fragmented market suggests
fierce competition with price constantly
under threat and weak profit margins.
Note: HHI market shares based on 2013 passenger vehicle data – Sales Parent Group
Some provinces less fragmented, possibly
more profitable than others. Shanghai has
the highest HHI score – top 2 companies
hold 52% of market share