asia’s automotive market updates and outlook... · some countries like india which have seen the...

Asia’s automotive market updates and outlook

Dr. Marco H. Hecker | Chief Strategy Officer Deloitte ChinaAutomechanika, July 6th 2020

Deloitte State of the Consumer TrackerCopyright © 2020 Deloitte Development LLC. All rights reserved. 2

Global light vehicle sales headed for double-digit declines this year. Some Governments have released major stimulus measures in an effort to boost vehicle demand.

• Global light vehicle sales expected to be down by 22% in 2020 due to the spread of the COVID-19 virus, lockdown measures, and a resulting slowdown in the global economy.

• Significantly higher decline than - 8% during 2008/09 fin. crisis

Varying government stimulus packages :

• China: NEV subsidy; 0% NEV purchase tax are extended beyond 2020; Delay of “China 6” until Jan 2021; lower auto finance down payment, lower interest rate as well as extended auto loan terms; Encouragement to scrap 1 mil “China 3” (and older) diesel trucks

• Japan: USD1trn general stimulus- policies directed towards businesses/ employment security. Earmarked $2.2 bn to help OEMs shift production from CN to stabilize supply chains

• India: No direct Stimuli for Auto Sector. Gov. announced packages for Micro, Small and Medium Enterprises. Tier2 and some Tier 1 suppliers will benefit from the gov. soft loans. Also EMI moratorium from March’20 till Aug’20 with “6 months interest payment holiday”*)

Sales forecasts

Source: IHS Markit, Reuters *) interest will continue to accumulate

89.7

70.1

78.0

-4.0%

-21.9%

11.3%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

60

70

80

90

100

2019 2020F 2021F

Annual %

change

Vehic

le U

nits (

Millions)

Global light vehicle salesand growth (2019-2021F)

Global sales % change


COVID-19 wreaks havoc on Asia’s automotive industry; the high uncertainty of the pandemic signals demand will be slow to recover

Source: IHS Markit, Reuters *) interest will continue to accumulate. Note1: All types of vehicles; IHS, CAAM, JAMA, FCAI, TAIA, TAIAI, MAA, LTA, VAMA, CAMPI, Deloitte research & analysis

2020 Monthly Vehicle1 Sales by Markets

1,927 310

1,430 2,070 2,194

360 430 581

270 218

338 310 156

0

278

56 62 61 27 42

349 338 292 134 154

China

Japan

India

AUS

SEA

Jan Feb Mar Apr May

2020E2018 2019 2021E 2022E 2023E

24.827.1

-13%

-20%

-32%

-18%

2020E2018 2019 2021E 2022E 2023E

5.1 4.54.2 4.64.65.2

2020E2018 2019 2021E 2022E 2023E

2020E2018 2019 2021E 2022E 2023E

2020E2018 2019 2021E 2022E 2023E

-37%3.5

2.72.2

3.43.14.0

1.0 0.90.81.00.91.1

3.42.72.3

3.33.03.4

23.421.525.924.7

Light Vehicles Sales Forecast (2018-2023)in k units in mn units


Collective anxiety has started to ease in a majority of global markets, but navigating the re-opening is critical.

Q3: To what extent do you agree or disagree with the following statements?

• Net consumer anxiety has receded across many countries compared to the mid-April timeframe. One of the likely reasons is the cautious reopening of economies .

• Some countries like India which have seen the pandemic hit later than other countries continue to show higher levels of net anxiety while countries that have relaxed their stay-at-home orders more widely have seen some reduction in the overall level of consumer anxiety.

• However, it remains to be seen whether this trend will continue given a growing number of medical officials pointing to the looming specter of a second wave of virus.

“I’m more anxious than I was last week” (Net Anxiety*)

Note: * Net anxiety = (% agree) – (% disagree); ** countries were not part of wave 1 fielding period.

-37%

-30%

-27%

-13%

-12%

-11%

-7%

-7%

-5%

-5%

-5%

-4%

-3%

-2%

-2%

5%

20%

31%

-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%

G e r m a n y

N e t h e r l a n d s

J a p a n

B e l g i u m *

C a n a d a

F r a n c e

A u s t r a l i a

I r e l a n d *

P o l a n d *

S o u t h K o r e a

I t a l y

U K

C h i n a

U S

S p a i n

M e x i c o *

C h i l e *

I n d i a

State of the Consumer Tracker


Demand recovery in several markets may be stunted by a consumer intention to keep existing vehicles longer.

IN CL PL CN MX IE ES KR JP AU IT FR US CA UK BE DE NL

Wave 4 79% 64% 67% 61% 57% 56% 61% 55% 57% 56% 49% 48% 53% 44% 47% 39% 34%

Wave 5 82% 70% 65% 65% 63% 58% 56% 63% 48% 54% 56% 51% 47% 53% 45% 44% 40% 36%

Wave 6 76% 71% 68% 67% 62% 61% 60% 59% 55% 54% 53% 50% 50% 50% 49% 46% 45% 32%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Note: Percentage of respondents who said “agree” or “strongly agree” have been added together.

• Health concerns have largely kept consumers out of the auto retail market for several weeks.

• But, the prolonged global economic shutdown is also starting to weigh on consumer finances, causing many people to reconsider large purchases going forward.

• At least half of the vehicle owners in most countries are planning to keep their current car longer than expected, representing a significant challenge for automotive manufacturers looking to kickstart demand.

• Also, when consumers return to the market, questions remain regarding the type of vehicles people will buy (given expected affordability concerns).

“I’m planning to keep my current vehicle longer than I was originally expecting” (% agree)


=

=


Intent to delay vehicle maintenance is mixed as some consumers divert spending to more immediate needs.

IN CN CL MX UK AU IT IE US ES FR CA DE KR PL BE NL JP

Wave 4 63% 51% 42% 28% 32% 30% 33% 26% 30% 27% 28% 19% 20% 19% 18% 15% 12%

Wave 5 79% 43% 45% 41% 25% 30% 26% 29% 25% 28% 25% 26% 17% 22% 17% 17% 13% 13%

Wave 6 67% 50% 50% 41% 28% 28% 28% 27% 25% 25% 24% 23% 19% 18% 17% 17% 14% 12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Note: Percentage of respondents who said “agree” or “strongly agree” have been added together.

• Along with concerns for their long-term financial wellbeing, consumers are also somewhat hesitant regarding near-term spending.

• Along with core questions around forward-looking demand, this represents another key challenge facing the automotive value chain, particularly dealers that rely on their aftersales business for profitability.

• Having said that, there are positive signals coming from consumers in Europe, Canada, Japan, and South Korea who are perhaps acknowledging the need to maintain their current vehicle (especially if they intend to keep it longer than expected).

“I’m putting off regular maintenance for my vehicle” (% agree)


=

=


Over the next 6 to 24 months, we can expect sectors to be impacted by COVID-19 and experience the stages of the crisis cycle at different lengths and severity

2020 2021

Apr May June Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June Jul Aug

CN

KR

AU

NZ

IN

JP

SEA –VN

SEA-IND

SEA-MY

SEA-TH

SEA-SG

ThriveRecoverRespond











Emerging perspectives on the Auto Sector in Asia Pacific


Highly capital/ labor intensive businesses with highly complex& globalized supply chains are hindering OEMs to transform fast.

RESPONDActions to address immediate &

short-term challenges

RECOVERActions to enable organisational recovery & adjust to

scenarios

REINVENT to THRIVEActions to position the organisation for post crisis

demand & the ‘new normal

Business performance

Workforce scenariomodelling & redesign

Workforce safety, wellbeing, policies & communications

Supply Chain Visibility

Rapid Cost &Working Capital Control

Structural cost review

Accelerate growth opportunity

Enabling the Virtual Workforce

Accelerated Cloud migration

Rapid Supplier RiskAssessment & Mobilisation

Scaling Digital infrastructure& eCommerce

Review& upgradeTech & digital roadmap

Strategic & Capital Portfolio Review

Adjusting customer experience in a COVID-19 world

Workforce &

Cost Control

Supply Chain & Financial Management Marketing &

Customer

Restructuring & Integration Transf

ormat

ion

Agile analytics &decision support

Domains:

1. Crisis response & integrated planning

2. Workforce & talent

3. Liquidity & business continuity

4. Customer interactions & service mgmt.

5. End-to-end supply chain

6. Technology & digital enablement

7. Strategicresponse, scenarios & policy

Sample actions to address the emerging issues


Double-click on retail trends

Due to changing customer requirements, growing competition& increasing availability of data, OEMs are re-evaluating their business models to drive long-term growth

• High discount leading to 0% RoS

• Online offline integration trend

• Separation of sales and aftersales

Sales, channel, format strategy

• Adopt agency-based direct sales model

• Seamlessly integrate online and offline

• Develop new and innovative formats

Customer journey& process

• No differentiating experience/ service

• Dealer organization not customer-centric

• Unable to obtain customer data

• Engage customers effectively across lifecycle

• Re-organize dealer to enable “one-face”

• Re-design sales process

Network restructure

• Optimization opportunities brought by online

• Changing consumption pattern

• Inefficient network

• Phase out underperforming dealers

• Re-structure network based on intra-city geo-analytics and sociodemographic analysis

Aftersales

• Competition from IAM

• Revenue impact caused by BEV

• New network requirements due to sales innovation

• Centralize B&P services to improve efficiency

• Offer simple aftersales services in city center

• Crate aftersales packages to lock-in customers

Used Car & fleet

• UC market to grow at CAGR of 20%

• UC penetration lower by ~2x vs. mature countries

• Mobility segment to grow ~16% p.a

• Expand trade-in volume

• Re-design dealer KPIs to encourage UC business

• Tailor products and services for 2B customers

Dealer risk management

• Market downturn leads to intense risk level

• Decreasing dealer profitability

• Inadequate protocols to manage dealer risks

• Design risk identification model and classification rules

• Develop response strategy and mechanism

Sample opportunitiesObservation on trends

Future of Automotive Sales and Aftersales | Impact of current industry trends on OEM revenues and profits until 2035 10

Different future scenarios, require the modelling of specific strategic option spaces for all players in the automotive value chain

Future of Automotive Sales and Aftersales | Impact of current industry trends on OEM revenues and profits until 2035

Deloitte Study- Future of Automotive Sales & Aftersales | Impact of

current trends on OEM revenues and profits until 2035

We present a differentiated perspective of future industry effects based on two scenarios of trend emergence.

Beyond that, we distinguish between two degrees of future OEM dominance over the competitive landscape, resulting in four possible future states in 2035.

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Copyright © 2020 Deloitte Development LLC. All rights reserved.

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Marco H. Hecker

Chief Strategy Officer Deloitte China

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asia’s automotive market updates and outlook... · some countries like india which have seen the...

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