Asia A Focus on the Key Markets

Transcription

1 Automotive Asia A Focus on the Key Markets Richard Walles Director, Heavy Truck Industry Research 6 October, 24 Salon Köln, Maritim Hotel Stuttgart Presentation Outline A focus on the Key Markets in the Region China, Japan, India Key Factors Driving Growth: Demand drivers, Structural changes Market trends Manufacturer and market developments Medium term outlook 2 1

2 Asia...the Region Awakens Truck demand recovers strongly from recession in 1998 sales will have doubled (+97%) to a long term high by the end of 24. The Chinese market has taken a leading role in the recovery as demand for trucks has soared on the back of major infrastructure investment projects. China s share of regional sales has risen to 54%, from below 4% in the 199s. Meanwhile, Japan s malaise continues; restructuring in the transport industry has helped little, and truck demand has re-adjusted to a new, lower level. Other markets continue in recovery mode, following the earlier recession. 1 Truck Sales s units OTHER INDONESIA S. KOREA INDIA JAPAN CHINA Other includes: 2 Australia, Hong Kong, Malaysia, New Zealand, Pakistan, Philippines, 1% 3% 15% 24% 1% 11% Singapore, Thailand, & Taiwan 3 Prospects for Growth in Asia: Index of Truck Production by Country 25 Baseline index of truck output: 2 = INDIA CHINA ASIA JAPAN S. KOREA

3 China: Key Demand Drivers Strong economic growth will mean healthy demand in freight transport Firm growth in overall tonne-km Infrastructure spending high until at least 28 Support demand for construction vehicles Considerable scope for shift from waterways and rail, to road Higher Replacement demand Inferior build Quality Inferior Road conditions Overloading Restrictions on overloading will result in demand for more, higher GVW trucks Possible clampdown on credit Some concern over default rates Truck sales will follow cyclical pattern 5 China: Freight Transport and Efficiency Road Freight Transport Statistics under-state true freight movement High Level of overloading not properly reported 15% overloading common Freight Rates are low Overloading essential to make profit Much lower transport efficiency in China Average payload drops due to empty running Dominance of owner operators - unsophisticated logistics Some test projects to control overloading > 1%: -5%: Penalty linked to overloading Penalty considered quite high 6 3

4 China: Heavy Truck Sales Take Off 4, 35, HEAVY MEDIUM 8yr heavy 8yr med Heavy truck sales Infrastructure developments have forced changes in the composition of truck requirement 3, 25, 2, 15, 1, Medium truck Fleet of <8 year old trucks 5, HEAVY weight fleet of <8 year old trucks The switch-over to heavy trucks began in earnest only in 2 as new generation, higher payload, vehicles added to rapidly developing demand for ultra-heavy construction type trucks Tepid replacement demand overall, kept the >6t fleet of trucks under 8 years of age constant until 22, despite strong growth in the heavy sector since 2 7 China: Who is Who in the Truck Market? Estimated truck sales in 23 DONGFENG FAW TORCH CNHTC BEIJING AUTO. DAIMLERCHRYSLER ISUZU MITSUBISHI VOLVO NISSAN OTHERS HEAVY MEDIUM 5, 1, 15, Others includes: Wangpai, Shitong, Nanjing, Hanyang Other brands such as Norinoco, MAN, Hino, Scania, Hyundai, Fiat/Iveco had volumes below 1, units in

5 China: Opportunities as New OEMS Hit the Scene Data in s of units Production and Assembly VOLVO DC HINO-Toyata ISUZU OTHER BEIJING AUTO CNHTC-STEYR TORCH FAW DONGFENG 9 Japan The economy has rebounded strongly in 24 (+4.3% GDP) after remaining stagnant in recent years. Improved business investment and stronger manufacturing output should set a more positive base for 25 In December 2, the Tokyo Metropolitan Government adopted a new Ordinance of Environmental Preservation Effective April 21 A series of new engine emission standards effective in certain metropolitan regions starting from October 23, and new national standards to be introduced in 25, have revitalised truck sales as fleets moved to overcome stiff penalties for non-compliance. Truck sales which had declined for seven consecutive years from jumped 47% in 23 on a pre-buy spree ahead of the new regulations. After stabilising this year, strong growth in sales is expected again in 25 before new national regulations kick in Lower demand for freight transportation has brought much restructuring as national transport fleets fight for survival and adjust to a lower demand in the future 1 5

6 Japan: Decline and Stagnation Follow the Bubble Years of the Late 198s Contraction and structural changes in the economy following the bubble boom had a dramatic impact on truck requirement, leading to a bust in sales 25 s Sales <8-year-old 2 15 Truck demand has shrunk to levels of the 197s what s more, it is unlikely to see much of a recovery. Both truck sectors have been affected equally 14 s Medium Heavy Japan: Production 3 s Medium Heavy Truck output in Japan halved in the 199s. (35k->175k) The impact from a contraction in domestic sales came on top of sharp falls in traditionally important export markets, as the whole region was mired in recession. The upturn in truck production during the last four years owes more to a return in export demand, than to any sustained improvement in domestic sales, despite the revitalisation which has been driven by new engine emission requirements 12 6

7 India: A Very Volatile Market Place 175 s HEAVY MEDIUM Strong economic growth averaging 5-6% p.a. but heavily dependant on agriculture and monsoon conditions. The manufacturing sector is expanding fast The current boom in truck sales is driven by special factors such as extensive road construction programs and heavy infrastructure investment which is fuelling demand for transport-intensive items such as cement, steel Improvements in the road network and construction of new expressways is a major catalyst for the swing towards greater use of heavy trucks 13 India: Truck Production is Dominated by the Two Indigenous Producers Ashok Leyland Others Tata (Telco) Other-assembly With limited exports out of India, truck production trends closely follow domestic sales The leading producer Tata accounts for 67% of production in will continue dominating the scene in the foreseeable future. Their new range of heavy duty trucks Newgen brings the latest technology to the market Volvo was the first foreign assembler to establish a presence but others including MAN are beginning to find the prospects of strong growth in a large market very tempting 14 7

8 Production Prospects in the Key Truck Producing Countries 5 S KOREA INDIA 45 JAPAN CHINA 4 35 CHINA JAPAN 1 5 INDIA S KOREA China has taken over as the main truck producer in the region. Foreign brands produced/to be produced include:-steyr, DC, Isuzu, Volvo (23),and Hino. Production in Japan largely supported by exports, which account for around 5% of output. Industry restructuring means output unlikely to return to previous levels. India - production largely dependant on domestic market. Strong trend towards heavy trucks which account for 4% of output. 15 Automotive Thank you! Richard Walles Director, Heavy Truck Industry Research richard.walles@globalinsight.com Tel: