2014 outlook for the global automotive industry
TRANSCRIPT
2014 Automotive Industry Outlook:
Bold Predictions and Trends
Sarwant Singh, Senior Partner & Practice Director
Shwetha Surender, Senior Research AnalystAutomotive & Transportation
A Joint Presentation with
Pete KellyManaging Director, LMC Automotive
© 2014 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of
Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
12 February 2014
2
Today’s Presenters
Sarwant Singh
Senior Partner and Practice Director,
Frost & Sullivan
Shwetha Surender
Senior Research Analyst
Frost & Sullivan
Pete Kelly
Managing Partner
LMC Automotive
3
Focus Points of Our Presentation Today
1. Key Predictions and Top Trends for 2014
2. Market Growth Forecasts
3. Highlight Key Growing Markets, Customer Segments
4. Models And Opportunities For Industry Players
4
POLL QUESTION
Which OEM do you think has all the right strategies to lead the
market in 2014?
A. Toyota
B. Volkswagen
C. General Motors
D. Hyundai
E. None of the above
5
The 2013 Global Automotive Market in Perspective -
Actuals vs Forecast
Our Top 5 Predictions for 2013 What actually happened – Highlights of 2013
• China will sell 20 million vehicles. • China crossed 21 million unit sales.
• An OEM could sell over 10 million units in
2013.
• At 9.96 million units (cars + trucks), Toyota came closest to
the 10 million mark.
• At least one inter-brand JV, consolidation or
M&A.• Fiat and Chrysler consolidated (valued at $4.35 billion)
• VW group will become number one• Toyota was the leading automaker, while the Volkswagen
Group at 9.5 million was number three
• One billion vehicles in operation, creating
aftermarket opportunities
• In 2013, the Global Aftermarket grew by 4.8%, and eRetailing
Aftermarket by 25-30%.
• Autonomous Driving to be a hot R&D topic
with a possibility of a trial test in sub-city
• Audi was the first automaker to get the first testing license to
autonomous vehicles in Nevada, USA. Continental and Google
were two other key players who were awarded the testing license.
6
Top Predictions for 2014
China is expected to sell 23-24 million vehicles and U.S. is expected to cross the 16 million mark.
We expect 2 Major OEMs to cross 10 million unit sales in 2014.
The Luxury Car market is expected to accelerate in 2014, growing in double digits.
2014 to see OEMs launch new mobility business models (such as integrated muti-
modal mobility platforms, Corporate Car sharing solutions) and volume OEMs to
launch carsharing operations.
Future of car retailing will evolve to become digital by convergence of the bricks and
the clicks transforming the customer experience.
7
Top Trends for 2014
Stan and Jan
countries to
be a region of
focus
Small /
Compact
SUV’s and
Crossovers
to continue to
gain
momentum
Rise of
alternative
fuel vehicles
(fuel
cell, hybrid
and EV)
Connected
mobility, tethe
ring and V2V
and V2X
2014 will be
the Year of
Big Data
8
POLL QUESTION
Which trend in your opinion would have the greatest
impact on the market in 2014?
A. Daimler could become no. 2 luxury car OEM overtaking
Audi
B. The Hybrid Electric Vehicle (HEV) market to accelerate
C. Fuel cell vehicles could what Toyota Prius was a decade
ago
D. Connectivity in vehicles to be major source of revenues
E. Semi autonomous car features and possibly fully
automated pilot to hit roads
9
Global Light Vehicle Sales by Region in 2014—A
Snapshot China at 24 million to account for over 1/4th of global sales and the U.S. to reach 16
million mark, but the market in Europe will still be challenging
2013 2014
0
5
10
15
20
25
30
35
40
45
Africa Asia Eastern Europe
The Middle East
North America
Latin America
Western Europe
Light Vehicle Sales, Global, 2013 and 2014
Note: Africa - South Africa
Asia - Australia, China, India, Indonesia, Japan, South Korea, Malaysia, the Philippines, Taiwan, Thailand, New Zealand
Eastern Europe – Bulgaria, Bosnia, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey,
Ukraine
The Middle East – Egypt, Iran
North America - Canada, Mexico, USA
Latin America - Argentina, Brazil, Chile, Colombia, Ecuador, Uruguay, Venezuela
Western Europe - Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, the UK
Un
its (
Millio
n)
China 24.2
Japan 5.0
India 3.2
Russia 2.8
Poland 0.3
Turkey 0.8
USA 16.2
Argentina
France 2.2
Germany 3.2
Spain 0.7 UK 2.3
Indonesia 1.2
~ 88.5 Million
Africa
Asia
Easter Europe
The Middle East
North America
Others
Western Europe
Africa
Asia
Eastern Europe
The Middle East
North America
Others
Latin America
Western Europe
~ 84.3 Million
Latin America
2014
5.38% YoY growth (2013–14)
Note: All figures are rounded; the base year is 2013. Sources: LMC Automotive, Frost & Sullivan.
10
Global Medium and Heavy Truck Market Forecast 2014 The Economic Recovery in Markets Such as China and North America, and the Improvement in EU MD-HD
Truck Market Will Lead to a 3.7 Percent Growth in Truck Sales in 2014
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
North America
South America
China India Russia Europe Next 11 RoW
MCV HCV
2013
2014 Regional Shares
85.1 %
2014
~2.74 million~2.87 million
46%
35%
30%
52%24%
25%49%
55%
37%37%
63%
54%65%
70%
48% 76%75%
51%45%
63%
Next 11 includes the following countries: Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, Vietnam, and Bangladesh.
Un
its
MCV: 6T to 16T
HCV: 16T and above Note: All figures are rounded; the base year is 2013. Source: Frost & Sullivan analysis.
Global CV Outlook 2014: Unit Shipments—Global: 2013–2014
3.7% YoY Growth
11
Global Light Vehicle Production by OEM in 2014—A
Snapshot (Excludes MCV and HCV) OEMs globally are banking on growth in emerging markets and
to offset the downturn in Europe
0 2 4 6 8 10 12
Mazda Motors
Daimler Group
Other Chinese Manufacturers
SAIC Group
BMW Group
Suzuki Group
PSA Group
Fiat-Chrysler Group
Honda Group
Ford Group
Hyundai Group
Renault-Nissan Group
General Motors Group
Toyota Group
Volkswagen Group
Units (Million)2014 2013
7.23%
1.69%
4.01%
3.34%
3.66%
4.66%
11.74%
-2.42%
4.59%
1.50%
18.77%
12.27%
16.43%
5.02%
5.27%
Light Vehicle Production by OEM, Global, 2013 and 2014
Note: All figures are rounded; the base year is 2013. Sources: LMC Automotive, Frost & Sullivan.
12
Key Regional Markets—BRI, MISTA (N5) and the Stan and
Jan After the BRI and MISTA economies, OEMs will focus on the Stan and Jan countries which are
considered the next frontier.
2.3%
4.9%
6.4%
16.1%
8.1%
10.2%
0.9%
4.1%
9.1%
3.9%
7.8%
2.3%
5.1%
11.8%
India
Brazil
Russia
Indonesia
S.Korea
Thailand
Mexico
Turkey
Argentina
Poland
Ukraine
Kazakhstan
Czech…
Slovakia
Brazil
India
Russia
S.Korea
Thailand
Indonesia
Mexico
Argentina
Turkey
Poland
Ukraine
Czech…
Kazakhstan
Slovakia
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Note: All figures are rounded; the base year is 2013. Sources: LMC Automotive, Frost & Sullivan.
Light Vehicle Sales, BRI, MISTA, Stan and Jan, 2013 and 2020
3,573K
2,927K
2,762K
1,504K
1,278K
1,094K
1,067K
893K
834K
330K
229K
176K
159K
70K
7,225K
5,003K
3,604K
1,846K
1,604K
1,508K
1,403K
1,147K
1,051K
601K
501K
315K
269K
119K
Ranking
CAGR
‘13-’20
13
Growth in Fleet and Leasing Market in EuropeTurkey promises to be an exciting market for fleet leasing followed by Spain, while UK, France and
Germany will continue to be big market for company car fleet
Note: Company cars includes outright purchase, operational and financial leasing. Source: Frost & Sullivan
0
2
4
6
8
10
12
25% 30% 35% 40% 45% 50%
Company Car Penetration of Total PV Sales in 2012 and 2020 (Dark metallic Bubbles represent 2012 while lighter shade represent 2020)
20
12
-2
02
0 O
pe
rati
on
al
Le
as
ing
Ma
rke
t C
AG
R
(%)
2012 2020
4.2 Million
Company Car
Registrations
SpainUK
Netherlands
FranceItaly
Germany
Belgium
Turkey
Italy
France
UK
NLTurkey
Spain
Germany
Italy
France
UK
NL
Turkey
Spain
Germany
Belgium
Belgium
5.1 Million
Company Car
Registration
Total Corporate Fleet and Leasing Market Unit Sales, Europe 2012 and 2020
14
Global Powertrain Mix—Sales by Region SnapshotGasoline is to remain the main fuel type, accounting for over 70% of the global fuel market; diesel
powertrain growth will occur in India
*Note: Light vehicle includes personal vehicles (PVs) and light commercial vehicles (LCVs). The Powertrain Mix in China and Japan consider only PVs. The mild and full
hybrids in Japan are shown under the “full hybrid” legend. Mild and full hybrids are shown as a part of gasoline and Diesel in China, India, South America and Korea.
Total for 2014 represents the sum of regions shown. All figures are rounded. The base year is 2013. Source: LMC Automotive and Frost & Sullivan
98.0–98.5%
69.0–72.0% 37–38%
43–45%
92–94%
33–34% 72–75%
1–2%
0.5–1.2%
55-56%
51.5–53.5%
2–3.5%
9–10%
16–20%
7–8%
2–3%
0.2–0.5%
56–58% 4–6%
0.5–1%
1–1.3%
27-29%
1–1.5%
2.5–3.5%0.2–0.4%
1–1.5% 0.2–0.3%
0.4–0.7% 0.5–1%
~0.02%
0.1–0.2%
0
2
4
6
8
10
12
14
16
18
20
China Japan India Europe North America
South America
Korea
Gasoline
Diesel
Alt. Fuels
Mild Hybrids
Full Hybrids
EVs
Expected Light Vehicle* Unit Shipment by Region and Powertrain Mix, Global, 2014
Un
its (
Mil
lio
n)
~72.0 Million
72–75%
17–20%
5–6%
2014
China, 19.
2 M
Japan,
4.2 M
India,
4.1 M
North America,
18.6 M
South
America, 6.1 M
Europe,
18.1 M
Korea
1.6 M
Others
3–4%
15
Electric Vehicle Sales—2013In 2013, EV sales increased by 58.6 percent and about 190,000 units were sold globally - in comparison to
119,748 units sold in 2012-2014, Forecast Suggests 280k unit sales
The United States50%
Europe26%
China5%
Australia0%
Japan17%
BEV58%
eREV14%
NEV2%
PHEV22%
Unclassified4%
Electric Vehicles, Sales by Country, Global, 2013
Note: Figures are rounded. The base year is 2013. Source: Frost & Sullivan
97,936
6,88914,204
7,6651,728 453 1,071
8,272820 1,840 1,422 3,800
31,180
9,532278
Un
its
Country Note: Others include - other European countries
Electric Vehicles, Sales Breakdown by Region, Global, 2013 Electric Vehicles, Sales Breakdown by EV Type, Global, 2012
Note: November & December 2013 sales have been extrapolated
16
Key 2014 Powertrain Market Trends Global emissions norms (Euro 6/7, EPA,
2020 ACEA) and fuel economy standards (CAFE, CAFC) constantly encouraging OEMs and the
automotive value chain to innovate and adopt varying global powertrain strategies
Turbo Engine
DownsizingAlternative
Fuels
Powertrain Modularity
and Lightweighting
High Speed
Transmissions
Dual Clutch
Transmissions
Powertrain
Electrification
Emission reduction
& Fuel Efficient ICE
technologies
2- and 3-cylinder
engines, Reduced engine
displacement, Downspeeding
High speed DCT, 8/9/10-Speed
Aluminium, Modular
construction, parts commonality
Wet and Dry clutch DCT PHEVs, Diesel
hybrids, transmission
electrification, EVs, Range
Extenders
Ethanol, LPG, CNG, Hydrogen
Fuel Cell, gas plants
DI, VVT, SCR, EGR, LNT, Start-
Stop, Cylinder Deactivation, GPF
Drivers: Euro6, ACEA,EPA, CAFE
Fuels, Lubricants
and Engine Oils
Low Viscous Oils – 0W
Low-SAPS
Enhanced Additives
17
Shift from Vehicle Ownership to Vehicle UsershipThe divisions between segments is reducing. The market is moving away from traditional car ownership and
car leasing model to a more dynamic and flexible mobility afforded by car sharing and car rentals
0
5
10
15
20
25
up to 24 hrs up to 2 weeks up to 36 months
~45.0–50.0% share
by
Enterprise, Hertz, Avi
s, Europcar
Others include
D‟Ieteren, Sixt AG
and so on
ALD
~75.0–78.0
Others include VW
Leasing, Arval, Sumitomo
Mitsui, Alphabet, RCI
Banque, Lex
Autolease, Athlon and so
on.
Car Sharing Car Rentals Car Leasing
About 30.0–
35.0% of the
global share
is held by
Zipcar, Car2
Go and Drive
Now
GE Capital
ARI
ORIX
Un
its
(Mil
lio
ns)
~5.26 million
~31 million
~450,000
2012
2020
~53,600
~4.15 million
~19.25 million
Note: All figures are rounded; the base year is 2012. Sources: LMC Automotive, Frost & Sullivan.
Vehicle Rental Business, Europe, 2013 and 2014
18
Corporate Carsharing to be a Key Growth Market in 2014 ~1,750 vehicles used for corporate carsharing in Europe (2013); the providers were a broad mix of OEMs,
leasing providers, Carsharing Operators, and mobility/technology providers, indicating the opportunity for
partnership & convergence
Key Participants Typology Corporate
Solution
Vehicles (2013) Countries (2013)
BMW OEM AlphaCity* 200
PSA/ Sixt OEM/ Leasing Share Your Fleet 0 (launched Oct „13)
Volvo/ Sunfleet OEM/ Traditional CSO Sunfleet 30
ALD Automotive Group Leasing ALD Sharing 50
Avis/ LeasePlan Car Rental/ Leasing Avis on Demand 10 Luxembourg**
Mobility Carsharing Traditional CSO Mobility Carsharing 420
Move About Traditional CSO Move About 90 Norway
Mobility Mixx Mobility Solutions Provider Mobility Pool 400
Carbox Services
(excluding indirect
relationships through
leasing companies)
Mobility Solutions Provider Carbox 500
Others
(Renault, Arval, Athlon,
Greenwheels)
OEM, Leasing, CSOCAR+ Autopartage,
Athlon Car Lease, Est. 50
Corporate Carsharing Strategy of Key Participants, Europe, 2013
Others are Renault, Arval, Athlon Car Lease and Greenwheels.
* AlphaCity launched in Spain and Austria in Q4 2013.
** Flag symbol not used since Luxembourg‟s flag is almost identical to that of the Netherlands;
Note: Mobility Mixx is an initiative of LeasePlan Netherlands. It is different from the LeasePlan/Avis venture and has been defined as one of the market participants in this study
Source: Frost & Sullivan
19
Future of Car Retailing : eRetailing and Digital Retailing to
Grow By 2016 OEMs are expected to open more than 100 digital showroom/lifestyle stores globally,
strategically located in city centres.
2013-14
Before Clicks
2014–2015
After Clicks
Digital Showrooms, pop-up
stores, lifestyle stores
Single-channel auto retail Omnichannel (click-based retail)
Car loan financing at dealerships Online leasing /finance
TV ads and campaigns Social media and digital campaigns
Big-box format
car showrooms
Images and logos are only for illustration; Source: Frost & Sullivan.
20
Automotive Parts eRetailing Showing Huge Global
Promise
Online parts sales
represent 7-8% of
total DIY parts
revenue, compar
ed to just 3% for
total aftermarket
revenue
Amazon, eBay
drive over 65-70
percent of total
automotive parts
and accessories
merchandise
value
Traditional parts
retailers creating
aggressive
strategies, acqui
ring eRetailers to
increase share
Unlike U.S., tires
are top sellers in
EU
regions, accounti
ng for about 20-
25 percent of
total online sales
Online parts
pricing (20%-40%
cheaper) key
success driver;
shipping times,
cost will
determine next
wave of
competition
The DIY
Choice
Marketplace
Winning
Parts Retailers
Ramping UpTires
Top CategoryAll About
Pricing
What does this mean for OEMs?
Diversification of digital
channels (apps,
dedicated portals, product
videos) for DIY customers
Partnerships with current
aggregators /eRetailers and
emerging ones such as Google
‘Bricks and clicks’ strategy
with emphasis on fulfilment
(delivery times, options)
1 2 3 4 5
Images and logos are only for illustration; Source: Frost & Sullivan.
21
OEM Comparative Analysis – Overall Automated Driving
Strategy While traditional OEMs tend to target an identical launch plan across functions, segments
and regions, Google‟s model agnostic approach could be the game changer
OEM Automation
Level
Launch
Year
First Models Top Level Functions Region of Introduction
TJA APA Hwy
BMW Semi-
Highly
2014
2017
X5
5- / 7-series
Europe & North America
Mercedes Benz Semi-
Highly
2014
2017
E-Class
S-Class
Europe, North America, Australia
Audi Semi-
Highly
2016 A8 Europe & North America
Volkswagen Semi- 2017 Passat Europe & North America
General Motors (Cadillac)
Semi-
Highly-
2018
>2020
SRX,
ATS & XTS
North America
Ford Semi-
Highly
2017
2020
Fusion
Explorer
Europe & North America
Lexus Highly 2020 LS Japan, Europe & North America
Nissan Highly 2020 Leaf Europe & North America
Volvo Semi 2015 XC90 Europe & North America
Google Fully- 2018 Model / OEM
agnostic
North America
TJA – Traffic Jam Assist APA – Autonomous Parking Assist Hwy – Automated Highway Driving
Source: Frost & Sullivan analysis.
22
By 2020, about 90% of vehicle will be connected and geo-
connected North America has been at the forefront in the connected car space because of OEM
willingness to risk new business models and dedicated partnerships/ecosystem efforts
2%
2013
Europe North America China ROW
15%
Emb
Emb+Teth
80%
40-50%
Emb+Teth
100%
Emb+Teth
Emb
50%
Emb
2013 2020 2013 2020 2020
1%
Emb
50%
Emb
2013 2020
Connectivity Market Update, Global, 2013 to 2020
Emb - Embedded Teth - TetheredSource: Frost & Sullivan analysis.
23
Current OEM Telematics Service Offering in EuropeOEMs like BMW and Volvo who have had branded telematics service for over 6 years have seen minimal
uptake because of cost. Ford and Mercedes Benz are new entrants from 2012
OEM BMW Mercedes
Benz
PSA Ford Volvo
Telematics
ProgramAssist eCall
Peugeot
Connect
SYNC
EmergencyOn Call
Integrated with
Navigation
Systems
Yes Yes No
Yes (Part of
SYNC Hands
Free System)
No
Upfront Costs
(Euros)~3100 ~3120 290 ~900 ~400-650
Trial Period 3 years Lifetime 10 years Lifetime 2 Years
Subscription
Fee (Euros)~200/Year NA NA NA ~200/Year
Automatic &
Manual eCallYes Yes Yes Only Automatic Yes
Embedded SIM Yes- 2G Yes-2G Yes- 2G Tethered Yes- 2G
Key Partners Vodafone, ATX BoschIMA, P&T
LuxemborgNA
Wireless Car,
Telenor
Connexion
Source: Frost & Sullivan.
24
Why Big Data – The Business Case Key driver for implementing a three
pronged big data (internal, external and connected) strategy is the billion dollar cost savings it can provide
OEMs/year, and new revenue generation opportunities it can generate across the industry eco system
Digital Leads
Warranty Costs
Reduction, Predictive
Maintenance
User & Dealer Satisfaction
Internet Aggregators
Advanced Mobility services,
Dynamic Navigation and
Parking
Product Performance
Analysis, Production and
Supply Chain
Images and logos are only for representation Source: Frost & Sullivan.
25
Key Conclusions
Key Conclusions
1Global sales are expected to grow by 5 percent to reach 88.5 million vehicles. The U.S.
market is expected to reach 16 million and China to cross 24 million in sales.
2The compact vehicle segment is expected to be the most attractive, accounting for over 31
percent share. The SUV and luxury vehicle segments are expected to increase market
growth in the U.S. and China.
3More than 50,000 cars are expected to be sold exclusively online which includes Daimler,
Renault, BMW i brand, Dacia, Ford.
4Changes in emission norms in key global markets is to impact powertrain technologies
and regional OEMs strategies
5Netherlands, Denmark, Austria, Germany and France to become the first European
nations for Vehicle to Infrastructure communication implementation with the C-ITS
corridor.
26
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For Additional Information
Pete Kelly
Managing Director
LMC Automotive, Ltd.
+44 1865 791737
Shwetha Surender
Senior Research Analyst
Automotive & Transportation
(+91) 44 6681 4041
Sarwant Singh
Senior Partner
Automotive & Transportation
+44 (0) 207 915 7843
Katja Feick
Corporate Communications Manager
Europe
+49 (0) 69 7703343