german share gains in europe: unprecedentedand until the euro … · 2018. 11. 21. · 3 european...
TRANSCRIPT
See Disclosure Appendix of this report for important Disclosures and Analyst Certifications See Disclosure Appendix of this report for important Disclosures and Analyst Certifications
June 21, 2012
Global Autos
German Share Gains In Europe: Unprecedented...And Until The Euro Or China Cracks...Unstoppable?
(A Capital Markets’ View Of The European Auto Industry)
Max Warburton
Global Automotive Equity Analyst [email protected]
Prudential Tower 50 Berkeley St No. 30 Cecil Street London Singapore 049712 W1B 8SB, UK +65-6230-4600 +44-207-170-0588
European Autos 2 2 Global Autos
The Decline And Fall Of European Profitability
European Volume OEMs Average EBIT Margin
European OEM EBIT margins have been in structural decline for two decades
Source: IHS Global Insight and Bernstein analysis
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
EBIT
Mar
gin
(%)
European Autos 3 3 Global Autos
Is Anybody Making Money In European Autos?
2007 vs. 2011 Auto EBIT Margins
Source: Corporate Reports and Bernstein analysis 1. FY 2012 for Japanese OEMs
German OEMs have seen a margin step up, while almost everyone else is in decline…if we isolate core Western Europe, mass market Europeans set to lose over E2bn in 2012
6.4%
9.1%8.0%
2.6% 2.0% 1.8%3.0%
2.0%
-7.3%
3.5% 4.0%
11.8%
9.0%
12.1%
4.0%
1.2%
-0.2%
2.8%
-0.1%
-2.8%
0.9% 1.4%
-10%
-5%
0%
5%
10%
15%
BMW Mercedes Audi VW brand Renault PSA Fiat Ford Europe GM Europe Toyota Europe¹
Nissan Europe¹
EBIT
Mar
gin
(%)
2007 2011
European Autos 4 4 Global Autos
Unstoppable German Market Share Gains since The €uro
2000 vs. 2011 German OEM Market Share in Western Europe
Source: IHS Global Insight and Bernstein analysis 1. Includes Volkswagen, Audi, SEAT and Skoda
“We are all talking German now”…onwards and upwards, German OEMs have gained market share since 2000...the point where the Euro was introduced…
25.9%26.3%
26.0% 25.7% 25.7%
26.9%
28.0% 27.9%
29.1%28.4%
29.2%
31.3%
20.0%
22.0%
24.0%
26.0%
28.0%
30.0%
32.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Mar
ket S
hare
(%)
European Autos 5 5 Global Autos
Is This Unprecedented? In Europe – Yes; Globally – No.
US Market Share of Japanese OEMs 1990-2005
US Market Share of Korean OEMs 2005-2011
UK Market Share of French and German OEMs 1990-2005
Source: IHS Global Insight and Bernstein analysis
Several of the automotive success stories of the past few decades…
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
2005
2006
2007
2008
2009
2010
2011
Mar
ket S
hare
(%)
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Mar
ket S
hare
(%)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Mar
ket S
hare
(%)
German Mkt Share French Mkt Share
European Autos 6 6 Global Autos
Currency Explains A Lot Of It
US Market Share of Japanese OEMs 1990-2005
US Market Share of Korean OEMs 2005-2011
UK Market Share of French and German OEMs 1990-2005
Source: IHS Global Insight and Bernstein analysis
…can be partially explained by favourable foreign exchange rates
0
20
40
60
80
100
120
140
160
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
USD
/JPY
Mar
ket S
hare
(%)
Market Share USD/JPY
0
200
400
600
800
1000
1200
1400
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
2005
2006
2007
2008
2009
2010
2011
USD
/KR
W
Mar
ket S
hare
(%)
Market Share USD/KRW
0
20
40
60
80
100
120
140
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Exch
ange
Rat
es R
ebas
ed to
100
as
of J
an 1
, 199
0
Mar
ket S
hare
(%)
German Mkt Share French Mkt ShareGBP/DEM GBP/FRF
European Autos 7 7 Global Autos
When Did Germans Focus On Europe?
VW Operating Profit in North America 2000-2011 VW Market Share in Europe 2000-2011
Source: ACEA, Bloomberg, IHS Global Insight and Bernstein analysis
VW used to rely on the US for its profitability...this was wiped out in 2003 by US$ devaluation....almost immediately after, VW turned its attention to growth WITHIN Europe
1,664
1,287
-168
-907 -843
-607-700
-900-700
-500-300
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
-1500
-1000
-500
0
500
1000
1500
2000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
EUR
/USD
Ope
ratin
g Pr
ofit
(EU
R m
n)
18.9%18.4%18.2%18.1%
18.9%
19.8%19.5%
20.4%20.9%21.0%
22.9%
15.0%
16.0%
17.0%
18.0%
19.0%
20.0%
21.0%
22.0%
23.0%
24.0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Mar
ket S
hare
%
European Autos 8 8 Global Autos
Do German Gains In Europe Look Like A Currency War?
Germany and Eurozone Real Effective Exchange Rate 1999-2011
Adjusted for cost competitiveness, Germany’s real effective exchange rate has depreciated almost 20% relative to the Eurozone since 1999
Currency specialists argue Germany’s exchange rate without the Euro would be closer to $2 (e.g. Euro/US$ equivalent)
Source: Eurostat and Bernstein analysis
107.3
88.9
80
85
90
95
100
105
110
115
120
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
1999
= 1
00
Eurozone Germany
European Autos 9 9 Global Autos
0
1
2
2002 2012
USD/EUR
0.1
0.2
2002 2012
USD
/ RM
B
0.005
0.015
2002 2012
USD
/ JPY
0
1
2
2002 2012
EUR/USD
0
1
2
2002 2012
GBP/EUR
Should a Creditor Nation Have A “Natural Brake”?
Current Account Balance
Source: IMF, Bloomberg and Bernstein analysis
Currency Movement 2002-2012
+30.0% +68.3%
201120
205
-46
-473-600
-500
-400
-300
-200
-100
0
100
200
300
China Japan Germany UK US
Cur
rent
Acc
ount
Bal
ance
(U
SD b
n)
+39.8% -24.5% -28.5%
Since 2002 ‘creditor’ countries (China & Japan) have seen their currencies appreciate 46.0% while debtor countries (US and UK) have seen their currencies depreciate
26.5%...meanwhile Germany, the biggest creditor country of all, has seen...NO CHANGE versus its biggest trading partners (other European peers)
European Autos 10 10 Global Autos
Previous Crises Saw Competitive Devaluations
French OEMs Market Share in Western Europe Italian OEMs Market Share in Western Europe
French & Italian OEMs benefitted from weaker domestic currencies in the early to mid-1990s
Source: IHS Global Insight, Bloomberg and Bernstein analysis
3.2
3.25
3.3
3.35
3.4
3.45
3.5
3.55
3.6
21.0%
21.5%
22.0%
22.5%
23.0%
23.5%
24.0%
24.5%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
DEM
/FR
F
Mak
ret S
hare
(%)
French OEM Market Share DEM/FRF
0
0.0002
0.0004
0.0006
0.0008
0.001
0.0012
0.0014
0.0016
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
9.0%
9.5%
10.0%
10.5%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
DEM
/ITL
Mak
ret S
hare
(%)
Italian OEM Market Share DEM/ITL
European Autos 11 11 Global Autos Global Autos
Devaluation = Automotive Success
UK Trade Balance in Cars 2000-2012
Q: What European country saw the biggest % increase in auto production in 2011? A: The UK....in Q1 2012 the UK recorded a trade surplus in cars – its first since 1976
Source: UK ONS and Bernstein analysis
1.5
1.55
1.6
1.65
1.7
1.75
1.8
-1000
-800
-600
-400
-200
0
200
400
600
Jan-
00M
ay-0
0Se
p-00
Jan-
01M
ay-0
1Se
p-01
Jan-
02M
ay-0
2Se
p-02
Jan-
03M
ay-0
3Se
p-03
Jan-
04M
ay-0
4Se
p-04
Jan-
05M
ay-0
5Se
p-05
Jan-
06M
ay-0
6Se
p-06
Jan-
07M
ay-0
7Se
p-07
Jan-
08M
ay-0
8Se
p-08
Jan-
09M
ay-0
9Se
p-09
Jan-
10M
ay-1
0Se
p-10
Jan-
11M
ay-1
1Se
p-11
Jan-
12
GB
P/EU
R
Trad
e B
alan
ce (G
BP
mn)
UK Trade Balance in Cars GBP/EUR
European Autos 12 12 Global Autos
What Can Be Done Absent A Currency Break?
Unit Labour Cost Among European Countries
In 2000, Germany’s unit labour cost was highest among European countries...since then it has become far more competitive
Source: Eurostat and Bernstein analysis 1. 2012 and 2013 are Eurostat estimates
122.9
110.6
122.5
129.5
134.3137.0
80.0
90.0
100.0
110.0
120.0
130.0
140.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E
Reb
ased
: 200
0 =
100
Eurozone Germany Spain France Italy UK
European Autos 13 13 Global Autos Global Autos
VW – How Is It Taking So Much Share In Europe?
Source: Volkswagen
VW products may be more attractive, the brand better managed, the quality stronger and the technology superior – but the most important weapon has been price
European Autos 14 14 Global Autos
VW – Chinese Profits Subsidising European Strategy
VW Group: China Proportionate Operating Profit (Q1:02-Q1:12)
Source: Company reports and Bernstein analysis
VW reports pro-forma EBIT for its Chinese JVs...this continues to show incredible momentum...but VW also makes money from numerous other Chinese sources
-100
0
100
200
300
400
500
600
700
800
900
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
EURmn
European Autos 15 15 Global Autos
VW – Just How Much Is It Making In China?....Parts Sales
VW Group: Parts/Components Revenue From Chinese JVs (2001-2010)
VW Group: Parts/Components EBIT From Chinese JVs (2001-2010)
Source: Company reports and Bernstein analysis
Parts and component revenue makes a very substantial contribution to VW brand profit and cash flow, subsidising European operations
1,7192,121
2,896 2,846
1,666 1,578
2,717
3,2133,469
4,838
7,368
1,968
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Q1:12
EURmn
430
530
724 712
333 316
543
643694
968
1,474
394
0
200
400
600
800
1,000
1,200
1,400
1,600
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Q1:12
EURmn
European Autos 16 16 Global Autos Global Autos
VW – Just How Much Is It Making In China? II – Putting It Together
VW Group: China Contribution (2011) – estimated 60% of all profits
Type Amount (€mn) Tax Post-tax (€mn) EPS Impact (€) NotesChinese JVs Equity Income 2,616 0% 2,616 5.81 We assume no financing costs
- VW Brand 2,215 0% 2,215 4.92- Audi (reported) 270 0% 270 0.60- Skoda (est) 131 0% 131 0.29
EBIT From Parts Sales To Chinese JVs 1,474 30% 1,031 2.29- VW Brand 603 30% 422 0.94- Audi 871 30% 610 1.35
EBIT From Exports To China 792 30% 555 1.23- VW Brand 176 30% 123 0.27- Audi Brand 579 30% 405 0.90- Lamborghini, Bentley 38 30% 26 0.06
License Fees - Chinese JVs 1,506 30% 1,054 2.34- VW Brand 1,071 30% 750 1.67- Audi 300 30% 210 0.47- Skoda 135 30% 94 0.21
Total - VW Group China EBIT 3,772 30% 2,640 5.87
VW Group - 2011 EPS (excludes Porsche revaluation gain) 19.50
China contribution 60%
VW Group: China Contribution (2011)
Source: Bernstein analysis
European Autos 17 17 Global Autos Global Autos
The China Dream – How Long Will It Last?
Appetite for premium vehicles amongst >$100k earners have accelerated
dramatically this decade…
40
72 76
12297 93
130
161177
231
340
0
50
100
150
200
250
300
350
400
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Sal
es p
er T
hous
and
China: Premium Car Sales per Households with Annual Disposable Income Over $100k
(2000-10)
…and China has the highest premium consumption per >$100k earners of countries sampled
Source: Euromonitor International, U.S. Census Bureau, Forbes, IHS Global Insight and Bernstein analysis
340
176 169
11186
64 58 5340 38 34
15
0
50
100
150
200
250
300
350
400
Chi
na UK
Ger
man
y
Italy
Spai
n
Can
ada
US
Switz
erla
nd
Fran
ce
Aust
ralia
Braz
il
Japa
n
Sale
s pe
r Tho
usan
d
Global: Premium Car Sales perHouseholds with Annual Disposable
IncomeOver $100k (2010)
European Autos 18 18 Global Autos Global Autos
The China Dream II - Premium Car Saturation?
Nationally, premium sales penetration remains below that of the US (7% vs. 11%); however, at a coastal level, premium penetration is already above US levels
Source: C.A.D. and Bernstein analysis
European Autos 19 19 Global Autos
China ARPU Is Uniquely High…
BMW Global ARPU by Region – 2011
Source: Company reports and Bernstein analysis
China affords BMW the highest ARPU it achieves globally…
33,87838,910 37,545
67,987
45,946
26,62630,927
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Europe ex Germany & UK
North America Germany China Imports (+parts)
Other Asia UK Other Markets
AR
PU (E
UR
)
Average = 37,050
European Autos 20 20 Global Autos
…Meaning China Profitability Is Consequently Huge
BMW Global profit by Region – 2011
Source: Company reports and Bernstein analysis
…and BMW’s largest region in terms of profit contribution
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Europe ex Germany & UK
North America Germany Asia (non China) China UK Other Markets
EUR
mn
2010 2011 2012E
?
European Autos 21 21 Global Autos Global Autos
The “Debtor” OEMs Without Chinese Profits: How Bad Is It?
Note: The French OEMs report changes in net debt on a half-year basis. * Fiat Auto includes consolidation of Chrysler’s net debt. Source: Corporate reports and Bernstein estimates and analysis.
7.1
12.9
0.41.4
-2.1
13.5
9.0
3.1
-6.0
-2.9
-7.9
8.09.0
7.3
-4.4
-2.0
-5.9
10.611.3 11.9
-0.5 -1.2 -1.4
18.6
12.3 12.0
-5.5
-2.9
-0.3
17.0
-10
-5
0
5
10
15
20
BMW Daimler Fiat Auto* PSA Renault VW
€bn
European OEMs: Net Cash/(Debt) (2007-2011)
FY:2007 FY:2008 FY:2009 FY:2010 FY:2011
European OEM balance sheets shows a picture similar to national balance sheets...
European Autos 22 22 Global Autos
What Does The Stock Market Think?
2008-2012 Global OEMs Stock Price Performance 2010-2012 OEM Groups Stock Price Performance
Source: Bloomberg and Bernstein analysis
0
50
100
150
200
250
300
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12
Reb
ased
to 1
00 a
s of
Jan
1, 2
010
German French Japanese Korean US
0
100
200
300
400
500
600
700
800
900
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Reb
ased
to 1
00 a
s of
Jan
1, 2
008
VW BMW Daimler PSARenault Toyota Nissan HondaHyundai Kia Ford GM
European Autos 23 23 Global Autos Global Autos
What Happens From Here?
Source: Bloomberg, corporate reports and Bernstein analysis
Global OEMs: Market Cap vs. 2011 Sales Volume
0.01.02.03.04.05.06.07.08.09.0
0
20
40
60
80
100
120
Toyo
ta
VW G
roup
Hon
da
Dai
mle
r
BMW
Hyu
ndai
-Kia
Nis
san
Ford
GM
SAIC
RN
O
Suzu
ki
Fiat
Gro
up
PSA
Maz
da 2011
Sal
es V
olum
e (m
n U
nits
)
Mar
ket C
ap (E
UR
bn)
Market Cap (LHS) 2011 Sales Volume (RHS)
The value of companies gives an idea of how financial markets see the future...there is little or no correlation between volume and value (see PSA and Fiat)...plus the market is
anticipating ‘mean reversion’ (German margins to roll over and Japanese climb?)
European Autos 24 24 Global Autos
Disclosure Appendix
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European Autos 25 25 Global Autos
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European Autos 26 26 Global Autos
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