U.S. Auto Industry

Chartbook

BBVA Research USA

Houston, TX Third Quarter 2015

Key messages

• Light motor vehicle sales reached 18.16 million in September, the highest level since July 2005

• Sales of light and heavy trucks follow an upward trend boosted by cheap fuel, employment growth and low interest rates

• Financial conditions are favorable, with rates still at historical lows and loan originations currently in pre-crisis levels

• Sustained economic growth and low energy prices will continue to support demand for light motor vehicle sales

• At 11.4, the average age of vehicle fleet could spur replacement in the short-term

• Demand for plug-in hybrids improved slightly in 3Q15, but remains constrained by the impact of low gasoline prices

3

Sales

4

SalesU.S. Total light weight vehicle sales (SAAR*, million units)

0

5

10

15

20

25

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

TotalDomesticImported

Average 2001-2007: 16.7 million

Sep 2015: 18.16 million

*SAAR = seasonally adjusted annual rateSource: BBVA Research & Haver Analytics

5

SalesU.S. Total vehicle sales (SAAR, million units)

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0

2

4

6

8

10

12

14

2003 2005 2007 2009 2011 2013 2015

Cars (left axis)

Light trucks (left axis)

Medium and heavy trucks (right axis)

*SAAR = seasonally adjusted annual rateSource: BBVA Research & Haver Analytics

6

Sales

Source: Bloomberg

U.S. Vehicle days to turn (industry average)

40

45

50

55

60

65

70

75

2010 2011 2012 2013 2014 2015

7

SalesU.S. Market share by brand (%)

0

5

10

15

20

25

30

35

3Q15 3Q05

Source: Bloomberg

8

SalesU.S. Quarterly unit sales (yoy % change)

Source: Bloomberg

-30%

-20%

-10%

0%

10%

20%

30%

40%

2015 Q3 2014 Q3

9

PricesU.S. Consumer price index: cars and trucks (yoy % change)

-15%

-10%

-5%

0%

5%

10%

15%

20%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

New

Used

Source: Haver Analytics

10

PricesU.S. Auto prices

25

26

27

28

29

30

31

32

33

34

95

100

105

110

115

120

125

130

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Manheim used vehicle value index (left axis)

True market value (avg. all segments, $thous, 4-Q moving average, right axis)

Source: Haver Analytics & Bloomberg

11

Financing conditions

2

3

4

5

6

7

8

2008 2009 2010 2011 2012 2013 2014 2015

48-month new car loan

36-month used car loan

60-month new car

U.S. Car loan rates (%)

Source: Haver Analytics

12

Financing conditions

0

1

2

3

4

5

6

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

U.S. Auto loan 90+ days delinquent (% of balance)

Source: Haver Analytics

13

Financing conditions

10

15

20

25

30

35

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

U.S. Leasing penetration rate, %

Source: Bloomberg

14

Financing conditions

40

50

60

70

80

90

100

110

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

U.S. Newly originated installment auto loans ($ billion, eop, 4-qtr moving average)

Source: Haver Analytics

15

Gasoline

1.5

2.0

2.5

3.0

3.5

4.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

U.S. Spot price ($/gallon)

Source: Haver Analytics

16

Consumers

17

Consumers

40

50

60

70

80

90

100

110

120

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Current economic conditions

Consumer expectations

U.S. Consumer sentiment index

Source: Haver Analytics

18

Consumers

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

U.S. Plans to buy a car within 6 months, % of respondents

Source: Haver Analytics

19

Consumers

-6%

-4%

-2%

0%

2%

4%

6%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Real disposablepersonal income

Employment growth

Average RDPI growth 2001-2006 = 3.2%

Average RDPI growth 2010-2Q15 = 1.9%

U.S. Employment and real disposable personal income growth (yoy % change)

Source: BBVA Research and Haver Analytics

20

Household equity

-15%

-10%

-5%

0%

5%

10%

15%

0

20

40

60

80

100

120

140

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Owners equity in real estate (NSA, Bil $, left axis)

FHFA house price index (yoy change, right axis)

U.S. Household equity and home prices

Source: Haver Analytics

21

Savings and deleverage

0

1

2

3

4

5

6

7

8

9

10

6

7

8

9

10

11

12

13

14

15

16

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Debt service ratio (right axis)

Personal savings (left axis)

12 per. Mov. Avg. (Personal savings (left axis))

U.S. Debt-to-income ratio and savings rate

Source: Haver Analytics

22

Production

23

Production

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

0

20

40

60

80

100

120

140

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Industrial production index: autos (2007=100, left axis)

BEA auto production estimate (SAAR, million.units, right axis)

U.S. Auto production

SAAR = seasonally adjusted annual rate, BEA = U.S. Bureau of Economic AnalysisSource: BBVA Research & Haver Analytics

24

Structural

25

FundamentalsU.S. Vehicle miles of travelTrillions

U.S. Mean age of passenger cars in operationYears

8

9

10

11

12

04

05

06

07

08

09 10 11 12 13

2014: 11.4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

74 79 84

89

94

99

04

09 14

2014: 3.03

Source: Haver Analytics

26

Demographics

0

50

100

150

200

250

300

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

204

0

204

2

204

4

204

6

204

8

2050

2052

2054

2056

2058

206

0

65 years and over

15-44 years

U.S. Population projections by age (millions)

Source: Haver Analytics

27

Demographics

Les than 19years old

20-29 30-39 40-49 50-59 60-69 70 and more0%

5%

10%

15%

20%

25%

2002 2012

U.S. Licensed drivers by age

Source: Haver Analytics

28

Alternative vehicles

0

2

4

6

8

10

12

14

Feb

-11

Ap

r-11

Jun

-11

Au

g-1

1

Oct

-11

Dec

-11

Feb

-12

Ap

r-12

Jun

-12

Au

g-1

2

Oct

-12

Dec

-12

Feb

-13

Ap

r-13

Jun

-13

Au

g-1

3

Oct

-13

Dec

-13

Feb

-14

Ap

r-14

Jun

-14

Au

g-1

4

Oct

-14

Dec

-14

Feb

-15

Ap

r-15

Jun

-15

Au

g-1

5

U.S. New plug-in vehicle sales (thousands)

Source: Electric Drive Transportation Association

29

Forecasts

30

Forecasts

Average 2012 2013 2014 2015 2016

Auto sales (millions units) 14.5 15.6 16.5 17.4 17.2

GDP growth(% change) 2.3 2.2 2.4 2.5 2.8*

Unemployment rate (% avg.)

8.1 7.4 6.2 5.3 4.9

Fed funds(%, eop) 0.25 0.25 0.25 0.50 1.00

5-year Treasuries(%, avg) 0.76 1.17 1.64 1.51 1.79

* Currently under revisionSource: BBVA Research

U.S. Auto Industry

Chartbook

BBVA Research USA

Houston, TX Third Quarter 3Q15