SMMT Webinar. Vehicle production outlook and economic forecast for January 2010

Transcription

1 SMMT Webinar Vehicle production outlook and economic forecast for January 2010

2 Paul Everitt Chief executive SMMT

3 During presentations (10.30am 11am) everyone will be muted so that only the presenters will be heard. There will be a Q&A session straight after presentations (approx 11am). If you are experiencing any technical problems please call , or

4 Robert Baker Chief economist SMMT

5 Uncertain No one can be confidently sure on what will happen in 2010 Recession and financial crisis was a profound shock Positive signs of stabilisation in demand and activity since Q3 2009

6 Unconvincing Recession over bottomed-out spring 2009 Green shoots of recovery called too early and too hopefully GDP growth returned Q4 2009, but path may be disjointed and disrupted

7 Unsteady Growth recovery profile from Q probably slow and shaky Caution not confidence still persists and may remain in 2010 Exceptional fiscal & monetary policy aid to be lifted impact & timing

8 UK economy still adjusting, but growth will pick-up Table1: 2010 the current consensus on the UK macroeconomy Economic variables at Mar 09 at Dec 09 percentage change on 2009 or as stated real GDP growth real household/consumer spending Claimant unemployed total (Q4) mn percent rate of workforce (32.6mn) % % RPI (Q4) Bank (policy) rate House price inflation (Q4) Manufacturing output PSNBR 2010/11 142bn Consensus of latest* economic forecasts for the UK for 2010 Summary of new views on key items over the past month

9 percentage change - previous quarter 2010 recovery and a possible GDP growth path Chart 1 UK GDP growth cash and real 2005 to 2013F (actual to Q3 2009) Forecasts from Oxford Economics (Oct09) & HM Treasury PBR09 (Dec09) UK GDP, cash value at market prices UK real GDP at market prices PBR(09)HM Treasury Forecast

10 Spending & demand volume slower to return Chart firmer growth in 2011, but late 2012 before back on 2007/08 par real GDP volume 2005 base year mn UK real GDP at market prices Change in UK GDP volume, forecasts from Oxford Economics (Oct 09)

11 UK new vehicle sales a major & volatile drop Link to economic and credit cycles amplifies knock-on impacts For cars, as across Europe, drop in demand rescued by scrapaid schemes For van and trucks no immediate offset from policy-aid

12 Autosector recovery prospects also disjointed and divergent Pay-back from scrap-aid for cars, cautious revival in fleet demand On-going caution in business demand for vans and trucks and coaches Buses only just crashing into recession lagged the pack

13 UK new car market short-term outlook demand weakening again (1) Table 2 : SMMT Forecast (Oct) for UK new car registrations millions All Diesel Private Fleet Business ave Actual F Actual F F Sales aided by ultra low interest rates, unexpectedly low unemployment and stable or rising house and equity prices Squeeze on incomes, uncertainty on taxation and abrupt cuts in public expenditure and volatile price trends likely to restrain confidence to buy Focus of fleet and business demand to offset weaker private demand

14 registrations in thousands UK new car market short-term outlook may have been worse (2) Rolling year (annual) trends Sept 2007 to Dec Actual data SMMT consensus forecast (Oct 09) excluding scrappage - actual (to Dec 09) & expected (to June 10)

15 UK CV market short-term outlooks demand emaciated Table 3: SMMT Forecast/Projection (Oct) for UK new registrations thousands Van truck 3.5t+ truck 6t+ Bus Coach ave Actual F/P <=35.0 <= Actual F/P F/P Past experience after such major drops in demand show that both van and truck demand may be becalmed for some time before recovery takes hold Recovery in confidence and commitment to buy in large fleets, the leasing sector and large freight transport-dependent businesses is vital

16 Economic fundamentals stable and improving or disturbed? Huge cutbacks in stocks, investment & discretionary spending ending Restocking & improved discretionary spending will give a growth impetus Exceptional monetary and fiscal policy & big devaluation still supportive Durable recovery needs confidence, commitment, & credibility Refocus - over to exports, investment, FDI and more restrained consumers

17 Perspective on European new vehicle sales outlook a tough 2010! Table 4:EC(15) new vehicle registrations context and outlook thousands Cars LCVs to3.5t trucks>3.5t trucks>16t ave. 14,490 1, Actual 13,365 1, F 13,191 1, Actual 13,153 1, F 11,500 1, F 12,200 1, EC(15) sales = 90+ percent of EC(27). Forecasts ACEA & independents Q4 09

18 In conclusion Uncertainty on UK economic recovery on-alert for a relapse New vehicle markets still stabilising & adjusting not out of the woods Past experience & shock may suggest listless demand before bounce-back Longer term potential to return to noughties vehicle sales norms?

19 Ian Henry Director AutoAnalysis

20 Introduction Global economic situation stabilised Recovery will be slow, starting in production likely to be down on 2009 Scrappage schemes prevented total market collapse in 2009 But they did bring some demand forward

21 Scrappage scheme impact Bank of England data suggests scrappage schemes increased registrations significantly: UK 52%, USA 32% Germany 40% France 9% French impact much lower due to earlier impact of bonus/malus scheme Total cost of scrappage schemes est. <0.1% GDP in euro area: And had some impact on consumer expenditure in other areas

22 Industry restructuring - in addition to GM Antwerp, plants we believe will close Fiat Termini Imerese Jaguar Castle Bromwich Saab Trollhattan Ford Southampton PSA Madrid

23 Despite plant closures new plants are opening Decisions re all-new plants and refurbishment of old plants were made some years ago, in good times too late to stop them now Mercedes Hungary 100k+ pa - new Renault-Nissan Morocco 100k pa - new Ford Romania 200k+ pa refurb. of old plant Fiat Serbia 200k+ pa refurb. of old plant At least 3 Chinese VMs building new plants two in Turkey, one in Bulgaria

24 EVs & hybrids = saviours? Renault s EV strategy helped to save Valladolid plant in Spain and boost viability of Flins plant near Paris We expect Nissan Leaf and GM Ampera to help underpin Nissan and GM UK production Ditto Toyota and Honda hybrids

25 = <16mn, but 2014 = 20mn This recovery assumes no double-dip recession and VMs follow through with switch to new, smaller cars, incl. EVs and hybrids By 2014, European production should be back to pre-2008 levels European Production Outlook to BMW 1,225,215 1,113,690 1,088,000 1,120,200 1,259,100 1,313,150 1,386,500 Daimler 1,396,715 1,096,325 1,139,650 1,099,900 1,213,650 1,392,150 1,489,900 Fiat 1,678,825 1,677,325 1,599,625 1,774,600 2,093,200 2,219,400 2,196,900 Ford 2,198,837 1,787,150 1,696,500 1,789,400 1,910,250 1,997,000 2,162,500 GM 1,590,227 1,215,500 1,175,750 1,206,000 1,322,000 1,408,500 1,427,500 Honda 280,516 88, , , , , ,000 Hyundai-Kia 295, , , , , , ,500 Mitsubishi 63,135 53,000 64, , , , ,000 PSA 2,471,782 2,092,150 2,087,400 2,187,450 2,425,000 2,407,250 2,513,500 Renault-Nissan-Dacia 2,367,787 2,065,425 2,022,250 1,946,000 1,985,500 2,385,300 2,608,000 Suzuki 286, , , , , , ,000 Tata JLR 260, , , , , , ,000 Toyota 686, , , , , , ,000 VW incl. Porsche 4,175,569 3,625,830 3,393,475 3,642,500 4,000,325 4,242,800 4,364,375 Others 16,263 2,705 2,900 5,125 6,650 8,705 8,600 Total 18,993,599 15,994,625 15,693,800 16,580,175 18,184,675 19,529,005 20,431,275

26 VM review

27 BMW optimising manufacturing footprint Rise in X1 production means end of 3-series at Leipzig, and increase at Regensburg New X3 made in USA (centre of BMW SUV production) Expansion of JV in China

28 Daimler smaller cars, optimising manufacturing C-class production arrangements changing, centralised in one location in Germany (Bremen) and adding US production Also expanding in China Derivatives of A- and B-class made in new plant in Hungary Probable JV with Renault for small cars, for Mercedes and Smart

29 Fiat also changing production footprint Vehicle production in Sicilian plant to end Controlling stake taken in Zastava of Serbia New Panda production shift from Poland to Italy Ending MPV JV with PSA Bertone to make Chryslers and Jeeps for Europe (Chrysler to be badged Lancia)

30 Ford factories specialising Ford s European plants are becoming more focused on specific models Saarlouis = Focus, Cologne = Fiesta, Romania = small high roof vehicles, Genk = large cars, Kocaeli = large vans Only Valencia will be a flex plant Volvo should be sold to Geely will Belgian plant be retained?

31 GM new co. structure becoming clear Job cuts planned under Magna deal still going through 5 core plants Russelsheim, Eisenach, Gliwice, Zaragoza and Ellesmere Port Bochum long term future questionable Antwerp will close and Luton s future is bleak Saab to close too unless a miracle happens

32 Honda UK plant medium term future secured with Jazz, followed by new Civic Hybrid also expected CRV to shift to US, or possibly Turkey

33 Hyundai-Kia Expansion continues, across four countries Turkey for i20 Slovakia for ix35 and other Kias Czech for Hyundai and Kia mid-sized MPVs Russia for new C-segment model for domestic market

34 PSA control of Mitsubishi next? Cutting capacity at all French plants Long term future of Madrid plant still very doubtful Citroen range trying to move into premium segment with DS range Alliance with Mitsubishi getting closer Sourcing EVs and SUVs from Mitsubishi core to filling gaps in range

35 Renault-Nissan-Dacia EVs are the future At least 5 EVs within 2-3 years 4 Renault, 1 Nissan Substantial investment in battery production at car plants Investment in AvtoVAZ continuing despite collapse of Russian market Dacia growth linked to Russia Renault LCV production moves back to France, Nissan adding its own LCV in Spain Impending political fight over future of Clio production Turkey becoming second Renault production base ahead of Spain

36 Suzuki uncertainty prevails Alliance with VW will shape global strategy Implications for European production not yet clear Could be used as additional production location for Up! range But production in Hungary will fall with loss of Fiat and Opel contracts Russian plant plans continue

37 Tata Jaguar-Land Rover: one plant closing Castle Bromwich expected to close by mid-2010s Jaguar production likely to be shared between Solihull and Halewood Small Land Rover range expanding

38 Toyota questions to answer Toyota s ambitions to make 800,000-1mn cars pa in Europe yet to be fulfilled Can Auris and Avensis keep UK and Turkish plants fully occupied? Is Auris hybrid the start of major change in production make-up? Do new models need to be added to European production for factories to be utilised fully and ambitions fulfilled?

39 VW group Ownership battle with Porsche resolved VW won Stake taken in Suzuki to add further small car expertise Major investment in Germany continuing, especially at Audi, and in China and Brazil: VW US plant proceeding, Audi likely to follow suit soon as well New model programme continuing Adoption of new MQB platform key to economic success Future of Seat Martorell plant under review

40 Summary 2010 will see a further, small fall in European production; recovery starts in 2011; switch to smaller cars/hybrids and EVs should mean 2007 production levels reached by 2014 Scrappage schemes brought forward some demand Overcapacity issue being addressed 7 plants to close within 5 years, may be double this number within 10 years Alliances between VMs increasing Fiat-Chrysler and VW-Suzuki to be followed by PSA-Mitsubishi what will be next? Permanent end to shifts to cut capacity elsewhere, eg PSA, Renault Reorganisation of VM s production footprint accelerating, eg Mercedes, Ford, GM, Fiat, Renault New plants still coming on stream (from investment decisions made in boom times), eg Ford Craiova, Fiat Serbia, Mercedes Hungary The Chinese are coming first to Turkey; how long before into central Europe? EVs and hybrid production will be >250k pa by 2015, 1mn by 2020? UK has a genuine opportunity in EVs and hybrids

41 Question and Answers Please click on the hand symbol to raise your hand if you have a question. memberservices@smmt.co.uk with your questions after this session. Slides available after the event at

42 SMMT Webinar Vehicle production outlook and economic forecast for