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© 2011 J.D. Power and Associates,The McGraw-Hill Companies, Inc. All Rights Reserved.
Automotive Market:Where Do We Go From Here?
June, 3rd 2011
Federal Reserve Bank of ChicagoEighteenth Annual Automotive Outlook Symposium
Jeff SchusterExecutive Director, Forecasting and Analysis
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.2
Agenda
Global Environment
U.S. Light Vehicle Outlook
Alternative Powertrain Trend
Summary
0
0
0
0
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All Rights Reserved.3
76.0 70.4
66.0
66.7 64.1
61.8
58.7 57.1
56.6 56.7
54.8
51.4
72.3
63.9
50
52
54
56
58
60
62
64
66
68
70
72
74
76
78
80
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Monthly (S.A.) Smoothed Annual Total
Apr '11
Jan '09
C
Feb '08
Source: J.D. Power Automotive Forecasting
Global Light Vehicle Sales Trend
The Global selling rate has pulled by from the highs at the beginning of the year, with impact from the Japan disaster and a slowing China
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.4
2011 Global LV Sales Growth Stabilizes
Global: 76.0M
6%
India: 3.2M
17%
USA: 13.0M
12%
Brazil: 3.6M
8%
N. America: 15.5M
11%
Europe: 18.6M
2%
S. America: 5.2M
7%
Asia: 31.0M
3%
Russia: 2.1M
11%
China: 18.4M
7%
Germany: 3.4M
10%
Japan: 4.0M
(18%)
Source: J.D. Power Automotive Forecasting
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.5
Tohoku Earthquake: Short-Term (through 2Q) Impact on the Production
North America
- 450K
(March – June 2011)
South America
- 11K
(March – June 2011)
Asia/Pacific
- 1.6M
(March – June 2011)
TOTAL
- 2.2M
(March – June 2011)
Source: J.D. Power Automotive Forecasting
Europe
- 100K
(March – June 2011)
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.6
Production Forecasts 2011 – Impact on Year
Europe
19.9M, +200K
(not Japan related)
Risk ~ -50K
North America
12.8M, -40K
Risk ~ -100K
South America
4.6M, No change
Risk ~ -20K
Asia/Pacific
38.4M, -450K
Risk ~ -690K
The risk figure represents our current take on potential impact to 2011 volume if production is not returned to near
normal levels by 4Q11. There is additional risk in supplier capacity constraints in 2H11.
This is not a “worst case” risk assessment. Source: J.D. Power Automotive Forecasting
TOTAL
77.9M, -490K
Risk ~ -860K
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6467 66
74
103
92
97
82
64
7270
50
60
70
80
90
100
110
120
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Global LV Sales Expected to Cross 100M by 2015
Millions
76
Source: J.D. Power Automotive Forecasting
85
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The McGraw-Hill Companies, Inc.
All Rights Reserved.8
Growth Has Become Strongly Dependent on Emerging Markets
0
10
20
30
40
50
60
70
2007 2008 2009 2010 2011 2012 2013 2014 2015
Mature
Emerging
Mature markets are expected to recover former levels, but not until 2015!
Emerging markets – with China at the forefront – have overtaken the mature markets and
won’t look back!
Global Light Vehicle SalesMillions
Source: J.D. Power Automotive Forecasting
Emerging
51%
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Ru
ssia
Ko
rea
Iran
Au
stra
lia
Ch
ina
US
A
Jap
an
Bra
zil
Germ
an
y
Ind
ia
Fra
nce
UK
Italy
Can
ad
a
Sp
ain
5
10
15
20
25
30
Top 15 Global LV Markets Continue to Shift by 2015
UK
Ca
na
da
Ko
rea
Me
xic
o
Sp
ain
Iran
Italy
Fra
nc
e
Ru
ss
ia
Ge
rma
ny
Ja
pa
n
Bra
zil
Ind
iaU
SA
Ch
ina
5
10
15
20
25
30
Top 15 LV Markets - 2010 Top 15 LV Markets - 2015
Top 15 = 58M (80%) Top 15 = 84M (82%)
Source: J.D. Power Automotive Forecasting
Millions Millions
Source: J.D. Power Automotive Forecasting
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.10
Agenda
Global Environment
U.S. Light Vehicle Outlook
Alternative Powertrain Trends
Summary
0
0
0
0
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11.613.0
1.6
1.6.8
.9
10.4
14.7
1.5
1.7
.8
1.0
0
2
4
6
8
10
12
14
16
18
20
22
2009 2010 2011 2012
USA Canada Mexico
North American LV Sales Climb Toward Pre-crisis Levels
Millions
+10%
+12%
12.613.9
15.5
17.4
U.S. strong through April but hits speed bump in May - upside potential vaporizes
Canada’s slightly ahead of expectations YTD, growth in 2011 expected at 3%
Mexico posted an 9% increase in 2010 and is expected to grow at a similar pace in 2011,
heavily dependant on the US economic recovery
+11%
Source: J.D. Power Automotive Forecasting
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The McGraw-Hill Companies, Inc.
All Rights Reserved.12
Retail Sales SAAR Shows Momentum Through April
4
6
8
10
12
14
16
Jan-
08
Mar-
08
May-
08
Jul-
08
Sep-
08
Nov-
08
Jan-
09
Mar-
09
May-
09
Jul-
09
Sep-
09
Nov-
09
Jan-
10
Mar-
10
May-
10
Jul-
10
Sep-
10
Nov-
10
Jan-
11
Mar-
11
May-
11
Millions
CARS Peak
Payback
Trough
Source: J.D. Power Automotive Forecasting
Speed bump?
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The McGraw-Hill Companies, Inc.
All Rights Reserved.13
9.28.6
2009 2010 1.
Disposable
Income
2.
Unemp. Stock
Market
4.3.
Housing
Market
5.
Fuel
Prices
6.
Credit
Avail.
10.
Product
Activity
7.
Vehicle
Equity
2011
JDPA
Vo
lum
e
Vehicle
Price
8. 9.
Incentive
Actions
2011 U.S. Retail Sales: Recovery’s 2nd Gear?
Total Sales
11.610.6
10.4
Risk15%
YoY
13.0
Total Sales
Macro Factors Consumer Internals & OEM Drivers
Source: J.D. Power Automotive Forecasting
Risk variables increasing: no increase to forecast
and 150K of further downside
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North America – Imported Inventory Challenges
Imported models seeing inventory shortages in some regions due to the recent Japan
earthquake/tsunami. Highlights of select models include:
Days Supply - 10 Days Supply - 23 Days Supply - 19
Toyota Prius Honda Civic Nissan Juke Subaru Legacy
Days Supply - 34
Brand Days Supply
Toyota 48
Lexus 39
Scion 43
Honda 36
Acura 51
Nissan 64
Infiniti 85
Subaru 36
Some Japanese OEM’s have reduced incentives in
May as their vehicle inventory lessens — lower
incentives are expected to continue though the
summer
Select North American produced models also could
face shortages into June — as volume starts to
normalize
Some models, such as the Toyota Prius and Lexus
CT-200H virtually ran out in May
Source: J.D. Power Automotive Forecasting, Ward’s Automotive
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.15
12.7
13.9
11.8
10.0
11.0
12.0
13.0
14.0
15.0
2010 2011 2012
Japan Disaster - North America Production Impact
2.5
2.8
3.0
3.3
3.5
3.8
4.0
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
Pre-crisis Forecast Revised Production Risk
Short-Term Production Impact
2011/2012 Production Impact
Source: J.D. Power Automotive Forecasting
Impact on North American Japanese OEM
production has been more severe than initially
expected. Current short-term is projected at -450K
in 2Q; we expect most of this to be made up in 3Q
and 4Q (loss of 40K).
The topline volume to be made up is now
expected to split between the Japanese and non-
Japanese OEMs through the remainder of the
year, but capacity constraints come into play in the
small segments.
Our forecast now assumes that a majority of the
cuts have been announced or planned, so further
risk has been reduced.
Inventory started May at a 54-day supply –
unchanged from early April; Expect it to be in mid-
40s at end of May.
Our NA topline now rounds down to 12.8M from
12.9M and there remains an additional 100K of
risk through the summer.
12.8
Risk:
~ -100K
Millions
Millions
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All Rights Reserved.16
14.0 13.813.2 13.0 12.8
10.6
8.69.2
10.6
12.113.513.312.9
16.7 16.9 1716.5
16.1
10.4
11.6
15.716.3
14.7
13.0
16.5
13.2
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
U.S. Light Vehicle Sales Forecast – Slow, Progressive
Recovery!
Base Case Forecast Trend – Fleet mix expected to settle around 18%
Total Sales
Retail Sales-21% 11%
12%
14%
Source: J.D. Power Automotive Forecasting
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.17
0
5
10
15
20
25
30
35
40
45
50
2006 2007 2008 2009 2010 2011 2012 2013
New Entry Redesign Facelift Drops
Net: -4 -26 12 1 -22 -3 26 10
Mo
dels
Model Activity Reignites Hyper-competitive Market
Source: J.D. Power Automotive Forecasting
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.18
Product Activity Skews Toward Small
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2008 2009 2010 2011 2012 2013
Small Share of Model Activity
Source: J.D. Power Automotive Forecasting
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.19
Small Car Share Will Grow, But…
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
A/B/C Car Segment Share of Industry
Global
US
• Small car demand grows as fuel prices rise and availability increase (push and pull)
• Product activity skews toward small vehicles over next three years
• Regulations will continue to force the issue, but still 6-10 years out and is it what
consumers want?
• Demand in U.S. expected to remain significantly below rest of world
Brazil
Western Europe
Japan
Source: J.D. Power Automotive Forecasting
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.20
U.S. Future Size/Price Landscape Remains Balanced
Sub-
Compact
1%
Premium
12%
Large 27%
Midsize
38%
Compact
23%
Premium
13%
Sub-
Compact
3%
Compact
29%
Midsize
35%
Large 20%
Shift to non-premium small will be more pronounced and will likely lead to
additional body types
Premium growth is expected, but at smaller end of market with new products
Large (including pickup trucks) will suffer continued decline, but will not be extinct
Sub-
Compact
6%
Premium
15%
Large 17%
Midsize
32%
Compact
31%
2005
2010
2015
Source: J.D. Power Automotive Forecasting
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.21
Agenda
Global Environment
U.S. Light Vehicle Outlook
Alternative Powertrain Trends
Summary0
0
0
0
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.22
Global Hybrid/EV Sales by Type
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
FHEV PHEV EREV FCEV MHEV BEV
Hybrid BEV
Global Hybrid/EV Sales to Top Four Million by 2018
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U.S. Hybrid and Electric Vehicle Forecast
0
2
4
6
8
10
12
14
16
18
2009 2010 2011 2012 2013 2014 2015
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%IC ONLY HEV/BEV Hybrid and EV share
Millions
Hybrid sales peaked at 353,000 units in 2007
Hybrid and EV sales finished 2010 at 275,000; Toyota Prius continues to dominate, accounting
for 50% of hybrid sales
2016 CAFE requirements will help hybrid sales reach 1.4m units by 2015, representing 8% of
light vehicle sales
Less than 100k BEVs by 2015, but 150k PHEVs.
© 2011 J.D. Power and Associates,
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All Rights Reserved.2424
U.S. Light Vehicle Demand Breakdown by Fuel Type
Flex fuel vehicles currently have the highest share of the alternative fuel market, but consumers
mostly power them with gasoline
We expect about 1/4 light vehicles sold in the U.S. to be an alternative fuel vehicle by 2015 and
27.5% by 2020
Gasoline-electric hybrids are expected to grow at a faster rate than diesels
Electric vehicle share is expected to remain below 1% until 2020
2010 2015 2020
Gas
72.5%
Electric
1.0%
Flex
8.0%Hybrid
10.0%
Diesel
8.5%
Gas
74.0%
Electric
0.50%
Flex
10.0%Hybrid
7.7%
Diesel
6.8%
Gas
86.0%
Electric
0.02%
Flex
8.7%
Hybrid
2.4%
Diesel
2.6%
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.25
Agenda
Global Environment
U.S. Light Vehicle Outlook
Alternative Powertrain Trends
Summary0
0
0
0
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.26
Summary
Global automotive environment split between emerging and
mature
U.S. market continues recovery, but not without risks!
Supply and demand discipline is holding
Volume will return to 16 million level, but long road ahead
Small and Alternative Power will grow, but balance is key
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.27
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