the u.s. automobile industry outlook · 2016. 1. 19. · october 17, 2011 kim hill group director...
TRANSCRIPT
The U.S. Automobile Industry Outlook
FTA Conference Charleston, West Virginia
October 17, 2011
Kim Hill Group Director Associate Director, Research Center for Automotive Research
Sales in U.S. (where are they?)
It’s All About Product
U.S. Light Vehicle Sales Percent Change
YTD Through September: 2011 vs. 2010
6.3
15.1
10.4
0 5 10 15 20
Passenger Cars
Light Trucks
Total
Percent Change
Source: Automotive News
4,847,751 +285,720 (50.9%
4,671,194 +611,804 (49.1%)
9,659,752 +715,511
Percent Change in Sales of Light Vehicles Per OEM: YTD Through September: 2011 vs. 2010
16.3%
11.3%
23.1%
26.9%
14.9%
-8.9%
-5.8%
10.4%
-15% -10% -5% 0% 5% 10% 15% 20% 25% 30%
GM
Ford*
Chrysler-Fiat
Hyundai-Kia
Nissan
Toyota
Honda
Total
Source: Automotive News *Ford = Ford, Lincoln, & Mercury divisions only
SAAR Up Last Month U.S. Light Vehicle Sales Monthly SAAR:
September 2010 Through September 2011
12,217
12,687
12,250
13,099
12,640
13,450
13,120
13,170
11,780 11,430
12,240
12,130
13,090
9,000
9,500
10,000
10,500
11,000
11,500
12,000
12,500
13,000
13,500
14,000
Uni
t Sal
es in
Tho
usan
ds
Source: Automotive News Data Center
But Not Sales . . . U.S. Light Vehicle Sales by Month:
September 2010 Through September 2011
959 950
873
1,145
820
994
1,247
1,158 1,062 1,053 1,060 1,072 1,054
0
200
400
600
800
1,000
1,200
1,400
Uni
t Sal
es in
Tho
usan
ds
Source: Automotive News Data Center
Down Below 50%: “Detroit 3” U.S. Market Share 1986 – September 2011
(Sales of Detroit 3 N. American “owned” producWon)
21.8 24.5 25.2
16.6
39.2
35.4 33.2
19.5
11.4
11.1
14.6
10.7
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
86 87 88 89 90 91 92 93 94 98 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Sep 11
Perc
ent
Year
Ford GM Chrysler
Source: CAR Research
N.A. Light Vehicle ProducWon Percent Change YTD Through September 2011 vs. 2010
11.6
10.6
21.4
-23.1
-22.1
14.5
43.1
8.0
-40 -20 0 20 40 60
GM
Ford
Chrysler Group
Toyota
Honda
Nissan
Hyundai-Kia
Total
444,252 +133,853
847,277 +107,603
747,392 -211,432
837,841 -251,633
1,954,645 +187,847
2,296,926 +239,024
Percentage Change
Source: Automotive News
1,430,679 +251,752
9,659,752 +715,511
Updated 10/7/2011
INDIA Wage: $1.32 Employment: 450,000 (2006) Wage Growth*: 80.6%
BRAZIL Wage: $14.61 Employment: 447,859 (2008) Wage Growth*: 195.7%
POLAND Wage: $7.65 Employment: 312,700 (2008) Wage Growth*: 95.2%
CANADA Wage: $44.24 Employment: 109,320 (2009) Wage Growth*: 83.9%
UNITED KINGDOM Wage: $30.19 Employment: 156,191 (2008) Wage Growth*: 39.5%
JAPAN Wage: $32.31 Employment: 866,000 (2008) Wage Growth*: 35.9%
GERMANY Wage: $52.60 Employment: 829,000 (2008) Wage Growth*: 63.5%
MEXICO Wage: $3.94 Employment: 486,669 (2009) Wage Growth*: 11.7%
FRANCE Wage: $33.03 Employment: 189,479 (2008) Wage Growth*: 67.5%
UNITED STATES Wage: $34.59 Employment: 674,000 (2010) Wage Growth*: 6.9%
ITALY Wage: $29.41 Employment: 163,800 (2009) Wage Growth*: 69.9%
Automotive Manufacturing Labor Compensation, Employment, and Compensation Growth by Country, 2010
Source: CAR Research, BLS, and Wards Onshore Nearshore Offshore
KOREA Wage: $18.72 Employment: 377,738 (2006) Wage Growth*: 55.7%
CHINA Wage: $3.45 Employment: 2,745,303 (2008) Wage Growth*: 221.3%
*Wage growth defined as % change between 2002 and 2010
Detroit Three Manufacturing Plants
International Automotive Manufacturing Plants
Automotive Suppliers
Source: ELM 2009
Typical Assembly Plant
2,000 Jobs
.56 Powertrain Plants or 450 Jobs
.56 Stamping Plants or 650 Jobs
2,900 Parts & Component Jobs or a Total of
6,000 Manufacturing Jobs!
And another 6,800 Non-manufacturing jobs For a total of 12,800 jobs
Vehicle Assembly is Huge Driver of Economy
Estimated Total Employment Impacts
The 1.7 million direct jobs* in the automotive industry’s total U.S. automotive operations:
• support 8 million total private sector jobs,
• contributing more than $500 billion in annual compensation
• and nearly $70 billion in personal tax revenues.
*These jobs include new vehicle development and production, parts manufacturing, and the sales and service of new vehicles.
Top 5 Employer
Top Employer
(Ranked by Size Compared to Other Industries in State)
Parts Suppliers Are Top Employer in 7 States, Top 5 employer in 12 Other States
Automaker Investments: 2010-2011
Source: CAR Research, Book of Deals
Automotive Industry Total Employment
Total Automotive Employment by StateLess than 20,000
20,000 to 70,000
70,000 to 150,000
150,000 to 300,000
More than 300,000Note: Includes direct and estimated intermediate jobs
Automotive Industry Employment as a Percentage of State Labor Force
Source: Quarterly Census of Employment and Wages, BLS 2008
Total Automotive Employment as a Percentage of State Labor Force
Less than 1%
1 to 2%
2 to 4%
4 to 8%
More than 8%Note: Includes direct and estimated intermediate jobs
Where are we going?
20
(well, it depends how you feel…)
Only 1.8% Growth in 1st Half 2011 Need 3% GDP Growth To Have a PosiWve Sales Growth
GDP Growth Rate and Sales Growth Rate, 1950-‐ 1H 2011
-‐30
-‐20
-‐10
0
10
20
30
40
50
-‐4 -‐3 -‐2 -‐1 0 1 2 3 4 5 6 7 8 9 10 Sales G
rowth, %
GDP Growth, %
1H 2011
Source: BEA
Quarterly GDP Growth Rate and Forecast Q1 2007-‐Q4 2011
0.5
3.6 3.0
1.7
-‐1.8
1.3
-‐3.7
-‐8.9
-‐6.7
-‐0.7
1.7
3.8 3.9 3.8
2.5 2.3
0.4 1.3 1.2 1.5
-‐10.0
-‐8.0
-‐6.0
-‐4.0
-‐2.0
0.0
2.0
4.0
6.0
Q1 2007
Q3 2007
Q1 2008
Q3 2008
Q1 2009
Q3 2009
Q1 2010
Q3 2010
Q1 2011
Q3 2011
Source: Bureau of Economic Analysis, CAR esKmates
Need Unemployment Rate Below 6% to Have Growth?
Light Vehicle Sales and Unemployment Rate, 1978-‐ 1H 2011
8 9
10 11 12 13 14 15 16 17 18
3 4 5 6 7 8 9 10 11 12
Light V
ehicle Sales, M
illions
Unemployment Rate, %
1H 2011
Source: BEA, BLS
U.S. Unemployment Rate and Forecast Q1 2007-‐Q4 2011
4.5 4.5 4.6 4.8 5.0 5.3 6.0
7.0
8.2
9.3 9.6 10.0 9.7 9.7 9.5 9.6
8.9 9.1 9.1 9.0
0
2
4
6
8
10
12
Q1 2007
Q3 2007
Q1 2008
Q3 2008
Q1 2009
Q3 2009
Q1 2010
Q3 2010
Q1 2011
Q3 2011
Source: BLS; CAR esKmates
U.S. Housing Price: M/M % Changes Q4 1994 – Q2 2011
-‐8
-‐6
-‐4
-‐2
0
2
4
6
Q4 1994
Q4 1995
Q4 1996
Q4 1997
Q4 1998
Q4 1999
Q4 2000
Q4 2001
Q4 2002
Q4 2003
Q4 2004
Q4 2005
Q4 2006
Q4 2007
Q4 2008
Q4 2009
Q4 2010
Q4 2011
FHFA S&P/CASE-‐SHILLER
Source: Federal Housing Finance Agency; S&P/Case Shiller Home Price Indices
DOW JONES INDEX*
5000
Oct ’07 – Feb ’08: - 49% Dec ’99 – Sep ’02: -34% Feb ’09 – Nov ’10: +46%
*Logarithmic Index
16000 Apr ’11 – Oct. ’11: -17%
Current Value is 59.4! U of M Consumer SenWment Index
1978-‐2010
10
11
12
13
14
15
16
17
18
60 70 80 90 100 110 120
Light V
ehicle Sales (M
illion)
Consumer SenWment Index Source: Thomson Reuters
Comfort zone
The Only Good News Changes from Jan ’07:
CPI-‐New Vehicle and CPI-‐Used Vehicle
-‐15%
-‐10%
-‐5%
0%
5%
10%
15%
Jan-‐07
Mar-‐07
May-‐07
Jul-‐0
7
Sep-‐07
Nov-‐07
Jan-‐08
Mar-‐08
May-‐08
Jul-‐0
8
Sep-‐08
Nov-‐08
Jan-‐09
Mar-‐09
May-‐09
Jul-‐0
9
Sep-‐09
Nov-‐09
Jan-‐10
Mar-‐10
May-‐10
Jul-‐1
0
Sep-‐10
Nov-‐10
Jan-‐11
Mar-‐11
May-‐11
Jul-‐1
1
New Vehicle ('97 = 100) Used Vehicle ('82-‐'84 = 100)
Small Car Segment Market Share & Real Regular Gasoline Price: 1980-‐2010
25.1
26.8
24.6 23.1
22.4 22.4 22.6
24.3 24.2
22.4 22.3 23.0
21.0 20.0
17.3
15.5 14.9 14.0
12.6 13.0
15.2 15.1 14.7 14.1 13.6 14.2 15.3 15.8
19.0 19.6
17.8
3.33 3.34
2.87 2.67
2.49 2.39
1.78 1.77 1.69 1.76 1.90
1.78 1.71 1.63 1.60 1.61 1.69 1.65
1.39 1.51
1.90 1.77
1.65
1.87
2.16
2.56
2.82 2.98
3.33
2.41
2.81
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
1980
19
81
1982
19
83
1984
19
85
1986
19
87
1988
19
89
1990
19
91
1992
19
93
1994
19
95
1996
19
97
1998
19
99
2000
20
01
2002
20
03
2004
20
05
2006
20
07
2008
20
09
2010
0
5
10
15
20
25
30 Market Share Price of Gas
Source: Ward’s Automotive, Energy Information Administration
Market S
hare Pric
e Pe
r Gal
lon
Gasoline Prices (Nominal)
9/03$1.62
5/04$1.95
9/05$2.86
7/06$2.92
5/07$3.12
7/08$4.00
12/08$1.67
6/09$2.60 4/10
$2.85
4/11$3.80
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
Source: Energy Informa1on Administra1on, USDOE, 6/8/09
Price Pe
r Gallon
*Regular Conven1onal Gasoline All Price Nominal
2011 U.S. Sales Forecasts (Units in Millions)
12.6
12.6
12.6
12.5
(9/11)
(9/11)
(9/11)
(9/11)
12.8 (9/11)
13.0 (13.0-13.5)
12.5 (12.5- 13.0)
12.7 (12.5-12.9)
12.4
U.S. Light Vehicle CAR Sales Forecast
16.1
13.2
10.4 11.6
12.6 13.8 14.1
0 2 4 6 8
10 12 14 16 18
2007 2008 2009 2010 2011 2012 2013
2007 2008 2009 2010 2011 2012 2013
Source: CAR Research, IHS Global Insight
Where is the Pent-‐Up Demand? U.S. Light Vehicle Age and
Scrappage Rate
8.6 8.8 8.8 8.9 8.9 9.0 9.1 9.4 9.5 9.7 9.8 10.0 10.2 10.6
6.8 5.9 5.8
6.7 6.4 6.2 5.5
4.8 4.3
5.0 5.2 5.7
6.1
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Average Age Scrappage Rate (%)
Source: R.L. Polk
CAR’s Long Run Forecast
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Sept 2011 12.6 13.8 14.1 14.8 15.2 15.5 15.6 15.7 15.7 15.6
U.S. Sales Forecast (Millions)
+ 17 M
+ 3.2 M
- 6.2 M
- 14.6 M
+ 2.6 M
ProducWon Will Rise U.S. Vehicle ProducWon &
AutomoWve Manufacturing Employment Forecasts
2010 2011 2012 2013 2014 2015
Vehicle ProducKon 7,592,725 8,285,711 9,319,907 10,026,321 10,517,018 10,783,777 Auto Manuf. Employment 566,400 580,000 650,000 697,000 731,600 750,000
500,000
600,000
700,000
800,000
900,000
-‐
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
Employmen
t
Prod
ucWo
n
Source: IHS Global Insight; BLS; CAR Research, September 2011
+70K +50K +35K +20K
Motor Vehicle & Parts Manufacturing Employment 2000 – 2011*
316,300
126,700
105,100
58,900
153,500
73,400
1,130,900
582,500
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*
U.S.
State Level
Michigan Indiana Ohio U.S.
49% change
61% change
51% change
46% change
*2011 through August
Source: BLS, U.S. DOL
11% increase
21% increase from July 2009
Detroit Three Motor Vehicle Production 2000-2015
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
Michigan
U.S.
U.S. Michigan
Source: IHS Global Insight
+59%
+30%
Chrysler Ford GM Signing bonus
$3,750 (paid in two installments) $6,000 ($5,000 for <1 year seniority) $5,000
Wages Entry level $15.78-‐19.28, four year progression; no change for first Ker
Entry level $14.78-‐19.28, four year progression; no change for first Ker
Jobs Promises 2,100 new entry-‐level jobs; 10,000 retained
Promises 5,750 new entry-‐level jobs; 6,250 previously announced
job creaWon/retenWon
Promises 6,400 new entry-‐level jobs; 11,800 previously announced
job creaWon/retenWon Buyouts None $100,000 for skilled trades and
$50,000 for producKon workers who reKre by 3/31/12
$75,000 for skilled trades who reKre by 3/31/12; $10,000 for any workers
who leave by 2013 Profit-‐sharing
$1 for every $1 million profit based on 85% of worldwide profit; capped
at $12,000 per year
$1 for every $1 million in North American profit (Avg. $3,752 payout in November based on Q1-‐2 2011);
capped at $12,000 per year
$1 for every $1 million in North American profit; capped at $12,000
per year
ReWrees No change to pensions and no bonuses; health care trust may get 10% of workers' profit-‐sharing
COLA None
Other bonuses
Four annual payments of $500; between $500-‐1,000 annual quality bonus; $300 one-‐Kme afendance bonus for perfect afendance
Four annual payments of $1,500 for inflaKon protecKon; and four annual payments up to $250 per year for
compeKKveness bonus
Three annual payments of $1,000 for inflaKon protecKon (2012-‐2014); and four annual payments up to $250 per year quality bonus
Health care No change to worker contribuKon; $20 co-‐pay for unlimited office visits
No change to worker contribuKon; $20 co-‐pay for unlimited office visits
No change to worker contribuKon; $25 co-‐pay for unlimited office visits
New UAW Contracts and Jobs
Source: UAW-‐Chrysler, UAW-‐Ford, and UAW-‐GM White Books
Jobs and Impacts
4-‐YEAR CONTRACT TOTALS Minimum Cash Payouts
Jobs Created/ Retained
Chrysler $7,750 2,100/10,000
Ford $16,752* 5,750/6,250
GM $12,500* 6,400/11,800
• Jobs Created: 14,250 – Impact: 114,000 jobs
• Jobs retained: 28,050 – Impact: 224,400 jobs
IMPACTS
*Includes minimum 2011 profit sharing payout Source: UAW-Chrysler, UAW-Ford, and UAW-GM White Books
Marking Time in Auto—a Lot of ‘Ifs’
• U.S. economy may take several years to recover to produce a real auto sales recovery
• Pent-‐up demand may actually be quite modest – sales will not reach 16 million unKl aner 2020
• Detroit 3 should capture about half of the market • U.S. consumers will not drasKcally increase purchase of small
vehicles in the long run . . . • Possibility of a new downturn – is at least 50% • Gas prices as volaKle as ever—what are the expectaKons? • Auto sector is adding jobs—favorable contract negoKaKons
guarantee some of them, unless… • Auto producing states will see posiKve impacts
U.S. Auto Sales are StagnaKng with the Economy Good: • Used Vehicle prices and age of fleet are high • Credit is more available/interest rates low • Dollar is low against Yen and against Euro
But . . . Bad: • Economy growing at “stall speed” • Unemployment rate and length is terrible • House prices are still falling and will fall more . . . • Stock market is volatile • States/Cities cutting spending and employment • Consumer confidence at record low . . . • Gas prices spiking with food prices • Higher commodity prices = higher auto prices • Japan crisis still cutting sales inventories and hurt sales – for Toyota/Honda • Employers are hesitant to hire or invest . . . Until?
