remanufacturing and sustainability conference...global aftermarket practice leader ihs markit a...

A Division of MEMA

9:15 a.m. | Panel Discussion

Industry Outlook and Insight

Remanufacturing and Sustainability Conference

Gary MeteerDirector, Commercial Vehicle Solutions

IHS Markit

Paul McCarthySr. Vice President, Strategy and Planning

MEMA

Paul TraubSenior Business Economist

Federal Reserve Bank of Chicago

Mark SengGlobal Aftermarket Practice Leader

IHS Markit

A Division of MEMA Paul McCarthySr. VP, Strategy and PlanningMEMA

MODERATORTOPIC


PANELISTS

Paul TraubSenior Business EconomistFederal Reserve Bankof Chicago

Mark SengGlobal Automotive

Practice LeaderIHS Markit

Gary MeteerDirector, CommercialVehicle SolutionsIHS Markit

Paul TraubSenior Business Economist

Federal Reserve Bank of ChicagoSeptember 28, 2016

Economic UpdateMotor Equipment Remanufacturing Association

September 28, 2016 25Federal Reserve Bank of Chicago

Main Economic IndicatorsYear-over-year Comparison

Source: U.S. Bureau of Economic Analysis, Census Bureau and Bureau of Labor Statistics

Actual 2015 2015 2016

GDP – Annual Growth Rate 1 2.6% 3.0% 1.2%

Unemployment Rate 2 5.3% 5.1% 4.9%

Nonfarm Job Growth (Monthly Avg.) 3 228,700 218,600 181,500

PCE Core Inflation Yr. / Yr. 3 1.4% 1.4% 1.6%

Initial Unemployment Claims 4 278,039280,914 266,486

1. Year‐over‐year 2015, Q2 ‘15 and Q2 ‘162. 2015 Annual Average, Aug ‘15 and Aug ’163. 2015 Annual Average, 2015 and Jul ’15 and Jul 16 YTD4. Year‐to‐date Average – Dec ‘15, Aug ’15 and Aug ‘16

September

Billions Chained $2009, % Change Q/Q at SAAR

‐10.0

‐7.5

‐5.0

‐2.5

0.0

2.5

5.0

7.5

10.0

12.5

15.0

12,000

12,500

13,000

13,500

14,000

14,500

15,000

15,500

16,000

16,500

17,000

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

$ Billions

Q4 ‘07$14,992

Q2 ‘16$16,570.2

1.1%


U.S. Real GDP

Q4 ‘08‐8.3%

Percent

Source: U.S. Bureau of Economic Analysis


Contribution to Percent Change, Q2, 2016 - Q/Q at SAAR

U.S. Real GDP

1.1

2.9

‐1.7

0.1

‐0.3

‐3.0

‐2.0

‐1.0

0.0

1.0

2.0

3.0

4.0

GDP Consumption PrivateInvestment

Net Exports Government

Percent


Note: Private domestic investment includes: nonresidential ‐0.11. residential ‐0.30 and ‐1.26 inventory change .

Net Exports includes: Exports 0.14 and Imports ‐0.04.Government Consumption and Investment includes: Federal ‐0.02 and State and Local ‐0.25.

Consumer Sentiment

28Federal Reserve Bank of ChicagoSeptember 28, 2016

University of Michigan

Index

20

40

60

80

100

120

140

'82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16

January ‘00112.0

Source: Thomson Reuters / University of Michigan

Aug ’16 89.8


Percent Change – Q1 ‘14 to Q4 ‘15 and Jul ‘16 at SAAR

1.9

3.8 3.7

4.6

2.42.9

2.72.3

1.6

4.44.0

0.0

1.0

2.0

3.0

4.0

5.0

Q1 '14 Q2 Q3 Q4 Q1 '15 Q2 Q3 Q4 Q1 '16 Q2 Jul

Percent


Real Personal Consumption Expenditures

Expenditures on goods was up 7.5% (durables 25.4%, nondurables -0.8%). July, 2016 Detail:

Expenditures on services was up 2.4%.


6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

SAAR Annual Average

Aug ’0914.6

Aug ‘1617.2 YTD

16.9

Feb ’099.0

S.A.A.R – Millions of Units

Millions

U.S. Light Vehicle Sales

Cash for Clunkers

Source: Ward’s Automotive and BEA


‐40.0

‐30.0

‐20.0

‐10.0

0.0

10.0

20.0

30.0

40.0

50.0

1,000

1,250

1,500

1,750

2,000

2,250

2,500

2,750

3,000

3,250

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

$ Billions

Q2 ’16

$2,769.9

‐9.7%


Real Gross Private Domestic Investment

Percent



Private Fixed Investment

1.0 2.0

‐2.3 ‐3.3

‐9.7

4.35.7

‐0.2 ‐0.9‐2.5

1.63.9

‐3.3 ‐3.4‐0.9

14.812.6 11.5

7.8

‐7.7

‐15.0

‐10.0

‐5.0

0.0

5.0

10.0

15.0

20.0

Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16

Total Fixed Investment Nonresidential Residential

Percent


Billions of Chained $2009, Percent Change - Q/Q at SAAR


New Orders and Industrial ProductionIndex – 2014 = 100

88.0

92.0

96.0

100.0

104.0

108.0

2014 2015 2016

New Orders Industrial Production

Note: New Orders Nondefense Capital Goods Excluding Aircraft.

Aug ‘1699.5

Jul ‘1693.8

Percent


Private Fixed Investment - Change in InventoriesBillions of Chained $2009 - SAAR

$31.7

$55.2 $66.8

$76.9

$114.4

$93.8

$70.9 $56.9

$40.7

($12.4)

($40.0)

($20.0)

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

2014 Q2 Q3 Q4 2015 Q2 Q3 Q4 2016 Q2


$Billions


In Thousands of Units (SAAR) and Annual Average

(000)’s

Source: U.S. Census Bureau

U.S. Housing Starts

Note: The United States averaged 1.5 million housing starts per year 1990 to 2004.

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Annual Average SAAR

Aug ‘161,142

1,108


‐10.0

‐8.0

‐6.0

‐4.0

‐2.0

0.0

2.0

4.0

6.0

8.0

10.0

2,000

2,125

2,250

2,375

2,500

2,625

2,750

2,875

3,000

3,125

3,250

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

$ Billions

Q2 ’16$2.902.1

‐1.5%


Real Government Consumption & Investment

Percent



60.0

70.0

80.0

90.0

100.0

110.0

120.0

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Trade Weighted DollarExchange Value of US Dollar Versus Major Currencies – Index Jan ‘00 = 100

Source: Federal Reserve Board and Haver Analytics

Sep 14, 201693.73

Index

Billions Chained $2009, Index – 2005 = 100

‐$1,000

‐$800

‐$600

‐$400

‐$200

$0

$200

$400

$600

$800

$1,000

0

20

40

60

80

100

120

140

160

180

200

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Net Exports Exports Imports

Index

Q2 ‘16152.6

123.4

‐$562.0


Real Imports and Exports



Global Outlook for 2016 & 2017IMF Forecast for Growth, % Chg. Yr./Yr.

3.4

2.1

4.3

3.2

1.8

4.4

3.1

1.8

4.1

0.0

1.0

2.0

3.0

4.0

5.0

6.0

World Advanced Emerging

January April July

3.6

2.1

4.7

3.5

1.9

4.9

3.4

1.8

4.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

World Advanced Emerging

January April July

Percent Change 2016 / 2015 Percent Change 2017 / 2016

Forecast Month Forecast Month

Source: IMF World Economic Outlook


U.S. Real GDP Blue Chip ForecastAnnual Percent Change – Chained $2009

2.5

2.1 2.12.0

1.81.9 1.9

1.5 1.5

2.52.4 2.4

2.3 2.3 2.32.2 2.2 2.2

1.0

1.3

1.5

1.8

2.0

2.3

2.5

2.8

3.0

Jan '16 Feb '16 Mar '16 Apr '16 May '16 Jun '16 Jul '16 Aug '16 Sep '16

2015 2016

Source: Blue Chip Economic Indicators

Percent

September 28, 2016 Federal Reserve Bank of Chicago 41

Monetary PolicyEmployment & Inflation


F.O.M.C Statement

1. Information since the F.O.M.C. met in July indicates that the labor market strengthened and growth of economic activity has picked up from the modest pace seen in the first half of this year.

2. Although the unemployment rate is little changed in recent months, job gains have been solid, on average.

3. Household spending has been growing strongly but business fixed investment has remained soft.

4. Inflation has continued to run below the Committee’s 2 percent longer‐run objective, partly reflecting earlier declines in energy prices and in prices of non‐energy imports.

5. Market‐based measures of inflation compensation remain low; most surveyed based measures of longer‐term expectations are little changed, on balance, in recent months.

September 21, 2016

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

'09 '10 '11 '12 '13 '14 '15 '16

Actual Target


Unemployment Rate & PCE InflationPercent Unemployed, PCE % Change Yr./Yr.

Source: U.S. Department of Labor: Bureau of Labor Statistics , Bureau of Economic Analysis and the Federal Reserve

1.2 1.31.5

1.9

1.5 1.51.3

0.0

0.5

1.0

1.5

2.0

2.5

3.0

'09 '10 '11 '12 '13 '14 '15 '16

Annual Actual Target

Unemployment Inflation – Core PCE

2.0%

Jul ‘161.6%

Aug ‘164.9%

Percent Percent

60.0

61.0

62.0

63.0

64.0

65.0

66.0

67.0

68.0

'00 '02 '04 '06 '08 '10 '12 '14 '16


Labor Force Participation RateIn Percent


Aug ‘1662.8%

Percent


0

50

100

150

200

250

300

350

400

2012 2013 2014 2015 2016

Monthly Actual Annual Average

U.S. Nonfarm PayrollsMonthly and Annual Average Job Change – In Thousands

Thousands

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

2012179.1

2013192.6

2014251.3 2015

228.7

2016 YTD181.5Aug ‘16151

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

'00 '02 '04 '06 '08 '10 '12 '14 '16


Underutilization of LaborU6 Unemployment Rate ‐ SA


Aug ‘169.7%

Percent

Includes total unemployed plus marginally attached workers plus employed part‐time for economic reasons.


Nonfarm BusinessLabor Productivity – Output Per Hour, Index 2009 = 100

‐1.00

‐0.50

0.00

0.50

1.00

1.50

100.0

102.0

104.0

106.0

108.0

110.0

'10 '11 '12 '13 '14 '15 '16

M/M % Chg. Index

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

Index Percent

Q2 ‘16106.0

‐0.14


Average Hourly Earnings & Hours WorkedTotal Private, All Employees – % Change Y/Y and Hours, SA

33.4

33.6

33.8

34.0

34.2

34.4

34.6

34.8

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Earnings (Left) Hours (Right)

Aug 16

34.3

2.4%

Percent

Source: U.S. Department of Labor: Bureau of Labor Statistics data.

Jun ’0734.53.6%

Hours


Inflation ExpectationsPCE Core Inflation – Yr./Yr. & Q4/Q4

Source: Bureau of Economic Analysis and FRB Philadelphia Q1 ‘16 Survey

Survey of Professional Forecasters – Q3 ‘16 ForecastPercent

1.5

1.3

1.6 1.6

1.81.9

2.0

1.6 1.6 1.6

1.8 1.81.9

0.0

0.4

0.8

1.2

1.6

2.0

2014 2015 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 2016 2017 2018

Actual Expectations


Economic Projections ComparisonsSeptember 2015 versus September 2016

2.32.2

2.0 2.01.8

2.0 2.01.8 1.8

1.0

1.5

2.0

2.5

2016 2017 2018 2019 Longer runSep '15 Sep '16

Percent GDP ‐ % Chg. Q4/Q4

4.8 4.8 4.8 4.94.84.6 4.5 4.6

4.8

3.5

4

4.5

5

5.5


Percent Unemployment Rate – Q4 Est.

1.71.9

2.0 2.0

1.3

1.92.0 2.0 2.0

1.0

1.5

2.0

2.5


Percent PCE Inflation ‐ Annual

1.71.9

2.0

1.71.8

2.0 2.0

1.0

1.5

2.0

2.5

2016 2017 2018 2019Sep '15 Sep '16

Percent PCE Core Inflation ‐ Annual

Source: Board of Governors – Federal Reserve System, September 2015 & September 2016


Appropriate pace of policy firmingMidpoint of target range or target level of the Fed Funds Rate

Percent

Source: Board of Governors – Federal Reserve System, September 2015 & September 2016

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2015 2016 2017 2018 2019

Sep '15 Sep '16 Market Expectations

Longer‐run


Yield Curve10 Year – 1 Year Treasuries in Basis Points

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

'12 '13 '14 '15 '16

10 Yr ‐ 1 Yr T‐Bill Spread 1 Year Treasury 10 Year Treasury

23‐Sep‐2016167 bps

106 bps

61 bps

Percent

Source: Board of Governors – Federal Reserve System

Thank You!


MODERATORTOPIC


PANELISTS





© 2016 IHS Markit. All Rights Reserved.© 2016 IHS Markit. All Rights Reserved.

MERA-Golisano Annual Conference


September 28, 2016

Key Trends Impacting the North American Automotive Aftermarket

© 2016 IHS Markit. All Rights Reserved.

Agenda

• Vehicle Miles Traveled

• Light Vehicle Sales & VIO Trends

• Average Age

• New Technology & the Autonomous Vehicle


Change in U.S. Driving Volume

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,500

2,750

3,000

3,250

3,500

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Historical Vehicle Miles Traveled (billions of miles)

4 year positive trend after 7 years of sustained flat or declining miles driven.

2 consecutive years > 3 trillion miles

Source: IHS Automotive, DOT and FHWA

• 2012 Up 0.3%• 2013 Up 0.6%• 2014 Up 1.7%• 2015 Up 3.5%• 2016YTD June Up 3.3%


0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

MIL

LIO

NS

11.3%10.2%

13.2%

-22%

7.5%5.4%

-17.5%

Source: IHS Automotive

2015 = 17.5 million units

Forecast Peak = 17.7MM in 2017

5.8%

U.S. Light Vehicle Sales

History Forecast


0

50

100

150

200

250

300

Mill

ion

s o

f U

nit

s

VIO will Increase 6.6% by 2020VIO will Increase 6.6% by 2020

History Forecast

U.S. Light Vehicles in Operation

Data as of January1 each year.



COMPACT CUV

TRADITIONAL COMPACT

TRADITIONAL MID SIZE

FULL SIZE PICKUPS

Represent 58% of all new U.S. registrations in 2015

Mid-Size CUV

17.3%

14.1%

14.0%

12.3%7.2%

4 non-Luxury Segments Dominate



Smaller Size - More Power

4 Cylinder Engines



4 Cylinder Engines Gaining in Popularity

2012: 50% Market Share






4 Cylinder Engines


Yea

rs

Average Age History


9.6 9.7 9.7 9.8 9.8 9.910.0

10.3

10.6

10.911.1

11.311.4

11.511.6

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Cars & Light Trucks Combined


%drop in new vehicle

registrations

The market feltthe impact of the

Impact of New Vehicle Drop Off



Impact on VIO Age Groups - 2015-2020

Vehicles12 + years old grow

15%

Is the aftermarket “sweet spot” really shrinking – or just changing?Source: IHS Automotive

Vehiclesnew to 5 years

old grow

24%

Vehicles6-11 years old

decline

-11%


Average Age Impact on VIO


2002 New – 5 Year Old 84m units



Segment remains flat after decline due to recession’s impact on new vehicle sales.

© 2016 IHS Markit. All Rights Reserved.Source: IHS Automotive

2002 16+ Year Old 35m units



19 million units will be 25 years or older by 2020!

Average Age Impact on VIO


Global CO2 & Fuel Efficiency Regulations

2016

2025

CAFÉ & Global Standards are Merging

54.5 MPG

35 MPG

To reach this goal, every OEM must

improve fuel efficiency by 5% per year!

To reach this goal, every OEM must

improve fuel efficiency by 5% per year!

86 MPG2030


Share of Global Sales

Mild 2.0% 4.8%

Full 4.6% 6.3%

EV 1.0% 1.5%

2021 2025



The Traditional Internal Combustion Engine (ICE)

• Gasoline direct-injection

• Turbo chargers

• Stop/start capability

• Cylinder de-activation

• AWD disconnect

• More efficient transmissions> more speeds and CVTs


ADAS Sensor Technology Drives Increase ECU’s as WellADAS ECU Supply Chain – Audi RS6 (2015)

© 2015 IHS

Supplier: Hella Applications: BSD

Radar Module (Secondary)

Supplier: Hella Applications: BSD

Radar Module (Primary)

Supplier: KufatecApplications: Surround-view Park Assist

Camera Module

Supplier: ValeoApplications: Park Assist

Park Assistance ECU

Supplier: BoschApplications: ACC

Supplier: Bosch/ ContinentalApplications: LDW, ACC, TSR & HBC

Front-view Camera Module

Radar Module

Supplier: BoschApplications: LDW, ACC & TSR

Additional Data Processing Module

Supplier: AutolivApplications: Night Vision

Night Vision Camera Module

Supplier: AutolivApplications: Night Vision

Night Vision Control Unit

TSR – Traffic Sign RecognitionHBC – High Beam ControlACC – Adaptive Cruise Control

Full Driver Control Driver Assisted Fully Autonomous Car


0.00

2.00

4.00

6.00

8.00

10.00

12.00

'25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35

Mill

ions

L4 SDC+HDC

L5 SDC Only

L4+L5

HDC = Human Driven Car

SDC = Self-Driving Car

SOURCE: IHS Automotive Autonomous Driving Portal

Self-Driving Light Vehicle Forecast: Global Annual Sales


But What Timing is Actually Relevant for the Aftermarket? Ever Heard of George Hotz?

Hacked the iPhone in 2007

Allowing it to be used with any wireless carrier – despite AT&T and Apple’s intentions

George was 17 years old

Next trick was hacking into Sony’s PlayStation 3 - gaining read and write access to its system memory

George was 20 years old


George is now 26…..

He has built an autonomous car from a stock version of the 2016 Acura ILX

In his garage….

His company – Comma.ai –will offer an aftermarket ADAS kit with lane-keeping assistance and emergency breaking…

…with his history, I don’t doubt him….

But What Timing is Actually Relevant for the Aftermarket?


MERA-Golisano Annual Conference


October 3, 2016

Thank You


MODERATORTOPIC


PANELISTS






Current Market Performance COMMERCIAL

28 September 2016 | Conference

Gary Meteer, Director Commercial Vehicle Solutions, +1 248 728 7405, [email protected]

© 2016 IHS MARKIT

Commercial Vehicle IntelligenceNew Registrations – Business Ownership by GVW

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014 2015 2016

GVW 1C GVW 2 GVW 3 GVWs 4-6 GVW 7 GVW 8

© 2016 IHS MARKIT

Commercial Vehicle IntelligenceGVW New Registrations

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Index

GVWs 4-7 Share GVW 8 Share Total 4-8 Units

© 2016 IHS MARKIT

Commercial Vehicle IntelligenceNew Registrations of GVW 8 Vehicles by Large Fleets

80

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0

50000

100000

150000

200000

250000

300000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Index

IND GVW 8 Units Fleets 500+ Share

© 2016 IHS MARKIT

Commercial Vehicle IntelligenceNew Registrations GVWs 4-8 by Manufacturer

FORD17%

F'LINER20%

INT'NATIONAL20%

KENWORTH5%

PETERBILT5%

OTHER33%

2000FORD23%

F'LINER17%

INT'NATIONAL12%

KENWORTH6%

PETERBILT6%

OTHER36%

2007

FORD17%

F'LINER29%

INT'NATIONAL9%

KENWORTH9%

PETERBILT8%

OTHER28%

2015

FORD22%

F'LINER28%

INT'NATIONAL9%

KENWORTH8%

PETERBILT7%

OTHER26%

2016 6 mo’s

© 2016 IHS MARKIT

Commercial Vehicle IntelligenceNew Registrations by Vehicle Type for GVWs 4-8

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

CABCHASSIS

CUTAWAY STRAIGHTTRUCK

TRACTORTRUCK

OTHER

2016 6 mo’s

CABCHASSIS

CUTAWAY STRAIGHTTRUCK

TRACTORTRUCK

OTHER

2006-2015

© 2016 IHS MARKIT

Commercial Vehicle IntelligenceNew Registrations by Fuel Type for GVWs 4-8

COMPRESSEDNATURAL GAS

DIESEL GAS OTHER

2006-2015

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

COMPRESSEDNATURAL GAS

DIESEL GAS OTHER

2016 6 mo's

© 2016 IHS MARKIT

Commercial Vehicle IntelligenceDiesel share of GVW New Registrations

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20166 mo.

Die

sel s

har

e of

GV

Ws

4-8

Die

sel S

har

e o

f G

VW

GVW 4 Share GVW 5 Share GVW 6 Share GVW 7 Share GVW 8 Share DIESEL SHARE OF GVWs 4-8

© 2016 IHS MARKIT

Commercial Vehicle IntelligenceDiesel Engine Manufacturers Share of GVWs 4-8

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Top

Man

ufa

ctu

rers

sh

are

of t

otal

die

sel i

nst

alla

tion

s

Man

ufa

ctu

rer

shar

e of

tot

al d

iese

l in

stal

lati

ons

CATERPILLAR SHARE CUMMINS SHARE DETROIT DIESEL SHARE

FORD SHARE PACCAR SHARE TOP 4 MAKES SHARE

© 2016 IHS MARKIT

Commercial Vehicle Intelligence GVW Performance within each Region

GVW 3 GVW 4 GVW 5 GVW 6 GVW 7 GVW 8 Total

Northeast 15.0 20.1 14.1 39.5 20.6 1.8 14.6

Central -11.0 6.1 15.8 -16.3 -6.6 -22.8 -14.7

South -.3 17.2 17.6 10.5 11.8 -14.8 -.9

West 2.4 29.9 17.5 49.3 .1 -6.2 8.1

Total .5 20.3 16.3 15.7 6.2 -14.7 .8

Shaded areas denote a better percent change versus industry within a GVW.

© 2016 IHS MARKIT

Commercial Vehicle IntelligenceGVW 4-8 Fleet Size Comparison

The initial registration of new vehicles is heavily influenced by large fleets; however, when these vehicles transition to the second or third owner they are registered by small-mid size fleets.

New Registrations Vehicles in Operation

Fleets 500+ Fleets 500+

GVW 4 36% 17%

GVW 5 30% 18%

GVW 6 54% 19%

GVW 7 48% 24%

GVW 8 45% 24%

Total 43% 22%

© 2016 IHS MARKIT

14

12

21

16

13

14.0 Ave Age

Commercial Vehicle IntelligenceAverage Age of the Vehicle Population

10

13

18

13

11

12.0 Ave Age

GVW 4

GVW 5

GVW 6

GVW 7

GVW 8

2007 CYE

VIO 7.7M units

2016 6 mo’s

VIO 9.1M units

© 2016 IHS MARKIT

Commercial Vehicle Intelligence Vehicles in Operation Summaries

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

GVW4

GVW5

GVW6

GVW7

GVW8

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

Region

Vehicle Type GVW

© 2016 IHS MARKIT

Commercial Vehicle IntelligenceAftermarket Commercial Parts DemandReManufactured Parts/$$’s

Commercial Vehicle Replacement Demand Units (Thousands)

NUMBER NEW TOTAL TOTAL REMAN %PART CATEGORY OF PARTS PARTS REMAN OTHER DEMAND TOTAL

Brakes 19 13,500 10,300 200 24,000 43%Cooling 2 600 200 100 900 22%

Electrical 2 700 1,400 100 2,200 64%Engine 9 500 4,700 200 9,700 48%

Steering 2 600 500 100 1,200 42%TOTAL 34 15,900 17,100 700 38,000 45%

Commercial Vehicle Replacement Demand $$'s (Millions)

NUMBER NEW TOTAL TOTAL REMAN %PART CATEGORY OF PARTS PARTS REMAN OTHER DEMAND TOTAL

Brakes 19 1,700 1,065 11 2,776 38%Cooling 2 540 50 10 600 8%

Electrical 2 175 315 12 502 63%Engine 9 1,620 1,586 29 3,235 49%

Steering 2 186 105 9 300 35%TOTAL 34 4,221 3,121 71 7,413 42%

© 2016 IHS MARKIT

60%

20%

9%

3%2%

6% Light-DutyVehicles

Heavy-DutyTrucks andBuses

Aircraft

Ships and Boats

Heavy-Duty

Commercial Vehicle IntelligenceU.S. Transportation Sector Energy Use

Source: U.S. Energy Information AdministrationAnnual Energy Outlook 2014

Heavy-duty vehicles responsible for about one fifth of the energy use and GHG emissions from transportation sources In terms of energy

use, heavy-duty vehicles are also the fastest growing transportation sector in the U.S. and globally

© 2016 IHS MARKIT

Commercial Vehicle IntelligenceGovernment Fuel Economy RegulationsHeavy-duty fuel efficiency and GHG standardsPhase 1

Begin in Model Year 2018 for EPA trailer standards, which were not regulated Begin in Model Year 2021 for all other EPA categories All Phase 2 standards will be fully phased in by Model Year 2027

Final program is technology-advancing and performance-based, and can be met through a combination of existing technologies and advanced technologies

Requires full use of most Phase 1 technologies with improvements in effectiveness

Significant use of emerging and advanced technologies by 2027

Phase 2

First-ever standards for heavy-duty vehicles, started in 2014 and will be fully phased in by 2018…Manufacturers are complying with Phase 1 with “off-the-shelf” technologies

© 2016 IHS MARKIT

Commercial Vehicle IntelligenceHeavy-Duty Truck Regulatory Categories

Large Pickups &

Vans

Combination Tractors

60% of HD Fuel Consumption & GHG Inventory

(together)

Trailers Pulled by Combinati

on Tractors

(currently unregulated Federally)

17% of HD Fuel Consumption & GHG

Inventory

VocationalVehicles

23% of HD Fuel Consumption

& GHG Inventory

NEW!

© 2016 IHS MARKIT

Phase 2 Reductions

2027 CO2/Fuel ConsumptionReductions

(per new vehicle)Tractors (includes engine reductions) 25%

Trailers 9%Vocational Vehicles (includes engine reductions) 24%

Pick-ups & Vans 16%

Separate Engine Standards (for Tractor and Vehicle applications, diesel value shown)

5% tractor 4% vocational

Maximum vehicle fuel savings and tailpipe GHG reduction (%) based on per vehicle emissions standards versus baseline standards

Other subcategory reductions may vary

Commercial Vehicle IntelligenceGovernment Fuel Economy RegulationsPhase 2 Final Program Summary

© 2016 IHS MARKIT

Commercial Vehicle IntelligenceVehicle Outlook

0

50

100

150

200

250

US retail sales class 4-7 (Thousands)

0

50

100

150

200

250

300

US retail sales class 8 (Thousands)

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