the steel consumption in the automotive industry in europe 2 nd metal expert europe steel trade...

The Steel Consumption in the Automotive Industry in Europe

2nd Metal Expert Europe Steel Trade Conference

Peter FußSenior Advisory Partner AutomotiveApril 28, 2014

Steel Consumption in the Automotive Industry in Europe

The state and outlook for the auto industry


-5% 0% 5% 10% 15% 20%

-10%

-5%

0%

5%

10%

15%

20%

Markets offering growth over the next few years*:► US: growth anticipated in the near term; SUVs and pickup trucks outpacing the overall market

growth► Brazil, China and India: short-term slowdown in growth (restrictions on car sales in China and

return of IPI tax in Brazil in 2014); however, medium-term growth story still intact; SUVs (especially in the interior regions and lower tier cities) to witness uptake in China

► Russia: Considerable sales decline, nevertheless, SUVs, both economical and premium models, witnessing considerable growth ; rising middle class and low car density to drive growth in the long term

LV sales growth in major markets

Source: LMC Automotive (4Q13, 4Q10)

Within Europe, Eastern Europe LV sales expected to recover and grow faster than Western Europe, while Global LV sales growth is estimated to be driven by BRICS market

Note: Size of the bubble indicates LV sales during 2013, sales in million units have also been mentioned in parenthesis after the name of country

CA

GR

20

13

-17

fCAGR 2009-13

Eastern Europe (1.9)

Western Europe (12.8)

Japan (5.2)

North America (18.4)

China (21.3)

India (2.9)

Brazil (3.6) Russia

(2.8)

*Period under consideration for the growth forecast: 2013-17


0% 5% 10% 15% 20% 25% 30% 35%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

LV production growth in major markets

Over the next few years, Europe is estimated to witness higher production growth than in 2009-13

Markets offering growth over the next few years*:► Brazil, Russia: For Brazil, production of SUVs and A segment (Basic) cars, while for Russia

production of Pick-up and C segment (Compact) cars to witness highest growth ► China, India: production of SUVs and large-plus cars to witness highest growth ► North America: production of G segment (sports) cars and vans to grow at a CAGR of 137% and

17%, respectively

*Period under consideration for the growth forecast: 2013-17

Note: Size of the bubble indicates LV production during 2013, production in million units have also been mentioned in parenthesis after the name of country

CA

GR

20

13

-17

f

CAGR 2009-13

Eastern Europe (4.4)

Western Europe (12.4)

Japan (9.1)

North America (16.2)

China (20.5)

India (3.6)

Brazil (3.5)

Russia (2.1)

Source: LMC Automotive (4Q13, 4Q10)


The auto industry’s weight agenda

vehicle weight

fuel economy

If car weight 2009 = 2011

CO2 emissions would have been 4 g/km lower

6%-8%10%

2020

2013

Plastics

of volume50% of weight10-12%


Owing to growing concerns of environmental stability, stringent emission norms are being implemented; industry participants look to re-invent product and manufacturing to meet the targets

80

120

160

200

EU China Japan US

2010 2015F 2020F

Industry participants consider several alternatives to achieve targets

Source: International Council for Clean Transportation

Alternate powertrain

Light-weighting

Vehicle design improvements

Efficient engine and power transmission

Oil

Historic emission levels and future targets (in gCO2/km) for key markets


Added safety and comfort equipment led to the rise in weight of vehicles till 2011; with an aim to achieve emission targets, industry participants adopt light weighting measures

2004 2005 2006 2007 2008 2009 2010 2011 2012F 2016F 2020F1,000

1,100

1,200

1,300

1,400

After reaching a peak in 2011, OEM’s, suppliers and material suppliers have begun focusing energies on inverting the “weight spiral”

Source: European Aluminium Association, TRW and EY analysis

Evolution of average mass of new car registrations in Europe (kg)


Explore usage of light-weight alternate materials to meet stringent emission norms

AluminiumHigh-strength

steel

Plastic compos-ites**

Magnesium

Traditional steel

Reduction in weight

Ris

e in

cost

Comparison of traditional steel with alternate materials

*AHSS: Advanced High-strength steel; **Plastic composites include Fiber Reinforced Plastics, Thermoplastic etc.

21%

13%

1%

11%

52%

2%

AHSS* Aluminium

Magnesium Plastics

Traditional steel Others

7%

10%

9%

72%

2017F

2010

EU: Automotive materials breakdown based on volumes (2010, 2017F)

Source: Frost & Sullivan, ICIS Source: US Department of Energy


Plastic composites offer a significant opportunity for weight loss in new vehicle development

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Today Tomorrow

-40% vs. steel

Long term weight reduction potentialEngineering plastic demand in automotive

2011 2020F0

0.5

1

1.5

2

2.5

1.3

2.2

In m

illion t

ons CAGR: 6%

Source: BASF, BCG and EY analysis

Weig

ht

-50to75% vs. steel


Industry participants come together and adopt myriad of light weighting strategies…

Efficient manufacturing processes

Module downsizing

Use of low-density, high-strength materials

Vehicle manufacture

rs

Component suppliers

Material suppliers

Light-weighting strategies


Many thanks for your attention !

Phone +49 6196 996 27412 Mobile +49 160 939 27412Fax +49 181 3943 27412Email [email protected]

Peter FußSenior Advisory Partner Automotive GSA

Ernst & Young GmbHWirtschaftsprüfungsgesellschaft Mergenthalerallee 3 – 565760 EschbornGermany

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How EY’s Global Automotive Center can help your business The global recession reset the automotive sector landscape. As the sector recovers, automotive companies across the value chain must focus on profitable and sustainable growth, financial and operational stability, investments in new technologies and seizing opportunities in high-growth markets. If you lead an automotive business, you need to anticipate trends, identify implications and make informed decisions that support your business goals. Our Global Automotive Center enables our worldwide network of more than 7,000 sector-focused assurance, tax, transaction and advisory professionals to share powerful insights and deep sector knowledge with businesses like yours. These insights, combined with our technical experience in every major global automotive market, will help you to accelerate strategies and improve performance. Whichever segment of the automotive sector you are in — from component suppliers to commercial or light vehicle manufacturers or retailers — we can provide the insights you need to succeed.

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the steel consumption in the automotive industry in europe 2 nd metal expert europe steel trade...

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