Hill: Automotive Outlook - Long Term Impacts on US Auto Sales · 2016. 1. 7. · Household Budget...

Automotive Outlook: Long Term Impacts on U.S. Auto Sales Kim Hill Research Director September 29, 2014

Agenda

•  Current sales •  Factors that affect sales •  The current industry •  A look forward

U.S. Light Vehicle Sales Percent Change YTD Through August:

2014 vs. 2013

0.9%

9.4%

5.1%

Passenger Cars

Light Trucks

Total

Source: Automo,ve News; CAR Research

Detroit Three at 43.6% in August 2014 U.S. Market Share:

August 2014 & YTD Total

7.9%

8.5%

10.5%

12.5%

15.5%

14.0%

17.2%

8.1%

8.6%

9.3%

12.4%

14.5%

15.2%

17.7%

0% 5% 10% 15% 20%

Hyundai-Kia

Nissan

Honda

Fiat-Chrysler

Toyota

Ford

GM

YTD 2014

Source: Automotive News; CAR Research

Segment Breakdown U.S. Light Vehicles Sales Percent Change

August YTD: 2014 vs. 2013

-‐9.2% -‐3.0%

1.2% 2.2% 2.4% 2.6%

10.7% 11.0%

12.9% 4.9%

-15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0%

Large Car Electrified Middle Car Small Car

Luxury Car Pickup

Van CUV SUV Total

Note: Electrified Segment consists of BEVs, HEVs and PHEVs; all other segments are sales exclusive of Hybrid models Source: Ward’s Automotive Reports, HybridCars.com and CAR Research

Market Share: Segment Breakdown U.S. Light Vehicles Sales

August YTD 2014

2.0% 3.6%

5.5% 6.3% 6.9%

13.0% 17.2%

18.8% 26.5%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Large Car Electrified

Van Luxury Car

SUV Pickup

Middle Car Small Car

CUV

Note: Electrified Segment consists of BEVs, HEVs and PHEVs; all other segments are sales exclusive of Hybrid models Source: Ward’s Automotive Reports, HybridCars.com and CAR Research

Long Term Economic Indicators That Affect Sales

•  Diminishing labor force par,cipa,on •  Increasing household financial burdens •  Household budget outlays are shiCing •  Motor vehicle price is rising •  Full-‐,me employment drives up auto sales •  Household wealth effect

Labor Force Participation Rate Is Falling Even After the Last Two Recessions

Labor Force Participation Rate 1978 – 2014

60%

61%

62%

63%

64%

65%

66%

67%

68%

Labo

r Force ParVcipaV

on Rate

Women’s par,cipa,on In labor force

Economy Boomed. GDP grew 3.8% per year

Lowest since 1978

Source: Current Popula,on Survey, Bureau of Labor Sta,s,cs

Younger Generations Are Facing Tougher Challenges Unemployment Rate by Age January 2000 – June 2014

0

5

10

15

20

2000 2002 2004 2006 2008 2010 2012 2014

Une

mploymen

t Rate (%

)

16-‐24 25-‐34 35-‐44 45-‐54 55-‐64 65+

Source: Current Popula,on Survey, Bureau of Labor Sta,s,cs

And Households Are Carrying More Debt Household Non-Mortgage Aggregate Debt 1Q 2003 – 1Q 2014

-‐

500

1,000

1,500

2,000

2,500

3,000

3,500

-‐

200

400

600

800

1,000

1,200

1Q 2003

1Q 2004

1Q 2005

1Q 2006

1Q 2007

1Q 2008

1Q 2009

1Q 2010

1Q 2011

1Q 2012

1Q 2013

1Q 2014

Total in Billion

$

Debt in Billion $

Student Loans Auto Loans Home Equity Loans Credit Card Other Total

Source: FRBNY Consumer Credit Panel/Equifax

Household Budget Outlays Are Shifting To Non Auto Categories

Monthly Expenditure Per Household By Selected Products and Services, 1999-2013

945

1,211

-‐

500

1,000

1,500

2,000

2,500

1999 2001 2003 2005 2007 2009 2011 2013

Real U.S. D

ollars (C

hained

2009 $)

MV & Parts Gasoline and Fuel MV Service Consumer Electronics Telephone and Internet Health Care

705 596

130 398

Source: CAR research based on Personal Consump,on Expenditures by Type of Product, Bureau of Economic Analysis

Increase in Full-Time Employment Drives Up Sales October 1996 – June 2014

100

105

110

115

120

125

5

10

15

20

25

2000 2002 2004 2006 2008 2010 2012 2014

Full-‐Time Em

ploymen

t (m

illion)

Light V

ehicle Sales

(millions SAA

R)

New Auto Sales Full-‐Time Employment

Source: BEA; BLS

Growth in Household Wealth Drives Up Auto Sales January 2000 – April 2014

0 100 200 300 400 500 600

5

10

15

20

25

2000 2002 2004 2006 2008 2010 2012 2014

Geom

etric

Mean Va

lue

S&P an

d Ho

me Eq

uity

Light V

ehicle Sales

(millions SAA

R)

Auto Sales Geo. Mean of S&P and Home Equity

Source: BEA; Yahoo Finance; Na,onal Composite Home Price Index for the United States

Beware of the Next Downturn! U.S. Monthly LV Sales and Automotive Business Cycle

8

10

12

14

16

18

20

22

1976 1981 1986 1991 1996 2001 2006 2011 2016

U.S. M

onthly LV Sales

(million SA

AR)

Monthly Sales 12-‐Month Moving Average

Housing Bubble

Dot Com Bubble Fed Rescue

S&L Crisis And Fed Pullback

Oil Embargo

( Collapse of Stock Market and Student Loan Bubble?)

78 months 124 months 102 months

Oil Shock and a Fed Pullback

Source: BEA

U.S. Light Vehicle Monthly Sales and SAAR August 2012 – August 2014

1.3 1.2

1.1 1.1

1.4

1.0 1.2

1.5 1.3

1.4 1.4 1.3

1.5

1.1 1.2 1.2

1.4

1.0

1.2

1.5 1.4

1.6

1.4 1.4 1.6 14.5

14.9 14.3

15.6 15.4 15.2

15.3

15.3 15.2 15.5

15.9 15.8 16.1 15.3 15.2

16.4

15.4 15.2 15.4 16.4 16.1

16.8 17.0 16.5 17.5

0 2 4 6 8 10 12 14 16 18

0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0

Aug

-12

Sep-

12

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug

-13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Jan-

14

Feb-

14

Mar

-14

Apr

-14

May

-14

Jun-

14

Jul-1

4

Aug

-14

Mon

thly SAA

R

Mon

thly Sales (M

illions)

SALES SAAR


Are Sales Back? 1995-2014

8

10

12

14

16

18

250 300 350 400 450 500 550

Million Units

Billion

$ (2

005 do

llar)

In Spending (Billion of 2009 $) In Units

Source: BEA, Table 7.2.6B. Real Motor Vehicle Output, Chained Dollars

Motor Vehicle & Parts Manufacturing Employment 1999 –2014

316,300

163,300

105,100 74,600

153,500

90,100

1,130,900

727,300

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 2012 2013 May-‐14 Jun-‐14

U.S.

State Level

Michigan Indiana

50% change

64% change

53% change

47% change

Source: BLS, U.S. DOL, Statistics Canada

Big 7 Monthly U.S. Market Share 1999 – 2014 YTD (August)

24.7%

15.2%

29.4%

17.7%

15.6% 12.4%

6.4%

9.3%

1.8%

8.1% 4%

8.6% 8.7%

14.5%

0%

5%

10%

15%

20%

25%

30%

35%

Percen

t of U

.S. M

arket S

ales

Ford GM Chrysler Honda Hyundai-‐Kia Nissan Toyota


U.S. Sales Forecast: 2014-2018

16.1

13.2

10.4 11.6

12.8 14.5

15.6 16.3 16.5 16.6 16.8 16.9

0

5

10

15

20

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Million

Source: CAR Research, Aug 2014 19

10.4%

11.6%

13.3% 7.6%

5.1%

U.S. Vehicle Production Forecast: 2007-2018

10.8

8.7

5.8

7.8 8.7

10.4 11.1 11.7 12.0 12.2 12.3 12.5

0

2

4

6

8

10

12

14

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Million

20

34.5% 11.5%

19.5% 6.7%

5.4%

Source: CAR Research, Aug 2014

North American Production Forecast: 2007-2018

15.2 12.7

8.6

12.0 13.3

15.6 16.5 17.5 17.7 18.0 18.5 18.7

0

5

10

15

20

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Million

21

39.5% 10.8%

17.3%

5.8% 6.0%

Source: CAR Research, Aug 2014

Footprint of the North American Automotive Industry

Almost 500 automaker faciliVes, and over 7500 supplier faciliVes in the United States

Source: CAR / BLS 2012

U.S. Motor Vehicle Related Value Chain Exceeds $1 Trillion

Suppliers $307 Bil.

Auto Makers $119 Bil.

Dealers $37 Bil.

Finance & Insurance $80 Bil.

Fuels and Lubricants $343 Bil.

Leasing, Rental, and Parking $62 Bil.

Resale $117 Bil.

Salvage $4 Bil.

Source: NADA, BEA, U.S. Census, R.L. Polk, CAR Research, 2007 esLmates

Repair Service & Ahermarket $213 Bil.

AutomoVve-‐related Taxes and Fees

Sales Tax Revenues

• New Vehicles (New) • Used Vehicles (Fleet) • Parts/Services (Fleet)

Use Tax Revenues

• Fuel (Fleet) • Title/Registra,on (Fleet) • Driver’s License (Fleet)

Business Taxes

• Manufacturers (New) • Dealerships (New/Fleet)

Personal Income Taxes

• Automakers (New) • Suppliers (New) • Dealerships (New/Fleet)

What is Auto Manufacturing? Automotive Employment and Establishments

Forging & Stamping

Machine Shops & Threaded Product

CoaVng, Engraving & Heat TreaVng

Ferrous Nonferrous

Tool/Die/Mold/ Jig/Fixture

Gasoline Engine/Parts

Powertrain

Electric Equipment Steering/Suspension

Brake Systems

SeaVng/Interior Trim

Metal Stamping

Other Parts

Assembly

0

20,000

40,000

60,000

80,000

100,000

120,000

332 331 3335 3363 3361

Fabricated Metal Foundaries Metalworking Machinery Motor Vehicle Parts & Components

Motor Vehicle Manufacturing

Employmen

t

TOTAL Michigan AutomoVve Industry: 250,000 Employees 4,500 Establishments

Source: U.S. Department of Labor, Bureau of Labor Statistics, QCEW

Engineering Services

25

2013 Per Vehicle Profits North America

$2,307

$2,844

$1,323 $1,254 $1,225

0

500

1,000

1,500

2,000

2,500

3,000

GM Ford Chrysler Honda Toyota

EBIT or automoLve operaLng income per vehicle sold. Global average for Chrysler figure. Honda also excludes motorcycle, finance, and power products.

Canada 2014: $0 billion 2013: $0.9 billion

Total North America 2014: $7.9 billion 2013: $8.8 billion

United States 2014: $4.5 billion 2013: $6.4 billion

Mexico 2014: $3.4 billion 2013: $1.5 billion

Announced North American Automaker Investments 2013 and Current 2014

Source: CAR Research, Book of Deals

The New Big Three - Technology Shock !

Materials Powertrain

Connectivity

New Jobs? New Rules?

New Players?

Source: BLM 2013

28

Market Share of U.S. Electrified Light Vehicle Sales and Selected OEM Share of U.S. Electrified Sales

August YTD 2014 vs. 2013

0.76%

4.8%

5.3%

6.0%

6.2%

15.9%

55.9%

3.6%

1.1%

3.1%

8.4%

3.5%

5.6%

14.7%

59.6%

3.9%

0% 10% 20% 30% 40% 50% 60% 70%

Volkswagen Honda

GM Nissan

Hyundai-‐Kia Ford

Toyota Electrified Total

2013 YTD 2014 YTD

Note: Electrified Light Vehicles consist of BEV, HEV and PHEV Source: Ward’s Automotive Reports; HybridCars.com; CAR Research

Key Material Trends in Next 10 Years - All technology pathways anticipate light-weighting

•  Increased use of ultra high strength steel for structural components around the “safety cage” to prevent intrusion

•  Aluminum use for chassis and exterior panels is increasing—Ford F-‐150

•  Fiber reinforced plas,cs (glass and carbon) for structural components are s,ll several years away from high volume produc,on

•  Joining complexity: more laser welding, fasteners and adhesives

Structural Adhesive

30

An average vehicle contains around 60 microprocessors to run electric content – four ,mes as many as a decade ago. More than 300 million lines of soCware code run a typical vehicle’s sophis,cated computer network.

Growth in Electronics (>40%)

Intelligent Mobility

32

U.S. Auto Parts Manufacturing % of Capacity Utilization

40

50

60

70

80

90

100

Jan-‐07

Ap

r-‐07

Jul-‐0

7 Oct-‐07

Jan-‐08

Ap

r-‐08

Jul-‐0

8 Oct-‐08

Jan-‐09

Ap

r-‐09

Jul-‐0

9 Oct-‐09

Jan-‐10

Ap

r-‐10

Jul-‐1

0 Oct-‐10

Jan-‐11

Ap

r-‐11

Jul-‐1

1 Oct-‐11

Jan-‐12

Ap

r-‐12

Jul-‐1

2 Oct-‐12

Jan-‐13

Ap

r-‐13

Jul-‐1

3

Source: U.S. Federal Reserve Board of Governors, 2013

Generally, All Is Good, But Keep An Eye On These

•  Labor force par,cipa,on rates

•  Household financial burdens •  ShiCing household budget

outlays •  Full-‐,me employment •  Household wealth effect •  External shocks

•  Student debt •  GDP growth •  Gas prices •  Interest rates

Thank You

Kim Hill

[email protected] 734-‐929-‐0488

Hill: Automotive Outlook - Long Term Impacts on US Auto Sales · 2016. 1. 7. · Household Budget...

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