Asian Markets and Manufacturers Dominating the Global Auto Industry. Ashvin Chotai Director, Asian Automotive Industry Research

Transcription

1 Asian Markets and Manufacturers Dominating the Global Auto Industry Ashvin Chotai Director, Asian Automotive Industry Research

2 Asia Accounted For Nearly Half of Global Growth in Sales in : Global sales growth 664K units China sales growth 972K units 2003: China responsible for 76% of global vehicle sales growth Global sales growth: 1.42m units Asian sales growth: 1.32m units: 93% of global growth China sales growth: 1.09m units 2004: China accounted for 19.3% of global sales growth Global sales growth: 3.7m units Asian sales growth: 1.24m units China sales growth: 707K units Strong growth in USA, Turkey, India, Russia, Brazil 2005: China accounted for 28% of global sales growth Global sales growth : 2.24m units, Asian sales growth 1.09m units China sales growth 628K units Strong growth in USA, Russia, South Africa 2

3 Japanese Big 3 Enjoy Superior Operating Margins Accounted For ~58% of Global Industry Level Operating Profits Billion US$ Combined operating profits of Toyota, Honda and Nissan were US$ 32.9 billion Combined operating profits of VW, Renault and PSA were US$ 8 billion -5 Toyota Honda Nissan Mazda Daihatsu Suzuki MMC Ford GM DCX BMW VW Renault PSA Hyundai Kia Operating Margin Net Margin Operating Margin 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Operating income excluding special items For Japanese companies: Fiscal year ending March Exchange rate of 1US$ =110 Yen For US and European companies: Calendar year Exchange rate of 1 Euro = US$1.25 Toyota Honda Nissan Mazda Daihatsu Suzuki MMC Ford GM DCX BMW VW Renault PSA Hyundai Kia 3

4 Presentation Outline Review of 2005 Performance Outlook For Vehicle Demand and Production in Asia Focus on China, India, ASEAN Key developments Manufacturer level performance Outlook For Japanese and Korean OEMs Growth outlook and challenges Overseas expansion 4

5 China the Main Growth Engine Toyota, Hyundai and Nissan Accounted For 57% of Global Sales Growth Growth in Sales in 2005: Global: 2.24m units, Asian 1.09m units 2004 Global growth in sales: 3.67m Japanese and Korean OEM growth: 1.80m 49% CHINA UNITED STATES RUSSIA SOUTH AFRICA ARGENTINA INDIA VENEZUELA THAILAND BRAZIL ROMANIA FRANCE GERMANY SPAIN MALAYSIA UKRAINE 2005 Sales Growth 2005 Sales Growth Most significant declines in UK, Poland and Iran TOYOTA HYUNDAI NISSAN DAIMLERCHRYSLER HONDA SUZUKI BMW CHERY SAIC PSA GM CHANGAN MAZDA GEELY TATA RENAULT m 1.63m 73% m 0.88m 64% Change in Vehicle Sales (Thousand units) Change in Vehicle Sales (Thousand units) 5

6 China Again the Main Growth Engine But Solid Growth in Production in Japan, Korea and Thailand Growth in Production in 2005: Global 2.1m units, Asian 1.63m units 2005 Production Growth By Country CHINA JAPAN SOUTH KOREA BRAZIL THAILAND GERMANY CZECH REPUBLIC INDIA MEXICO MALAYSIA SOUTH AFRICA Most significant declines in Spain, France and Italy Strong exports supporting production increases in Japan, Korea and Thailand Change in Vehicle Production (Thousand units) 6

7 Global Production Growth Ranking (2005 vs 2004) Asian OEMs Accounted For Virtually All the Growth 2.1 Million Units Increase in Production in 2005 GM TOYOTA FORD VW GROUP DAIMLERCHRYSLER HYUNDAI NISSAN PSA HONDA RENAULT FIAT GROUP SUZUKI BMW MAZDA MITSUBISHI Total Production 2004: 64.7 million units 2005: 66.8 million units Increase in Vehicle Production (000 units) North America South America West Europe East Europe Japan Asia Middle East/Africa 7

8 China Outlook For Short and Medium Term Declining Profitability Manufacturer Performance Comparison 8

9 China Economy: Strong Growth Continues in 2005 No Signs of a Slowdown Landing Strong growth continues in China.. less risk of a hard landing Officially, real GDP growth of 10.0% in 2003, 10.1% in 2004 and 9.9% in 2005 Investment levels need to moderate further Domestic demand needs to grow more rapidly 2005 growth again driven by exports and investments Export growth of 24.8% in 2005, imports rose by 17.6% Higher oil imports offset by weaker imports of capital goods Retail sales growth of 12.9% Government continues to take steps to curb corporate investment growth especially in hot areas such as property, cement, steel and even automotive Requiring more equity Another interest rate hike in late April Foreign investment continues to be strong $60.2 billion in FDI on 2005, down slightly from $60.6 billion in 2004 $14.2 billion in Q

10 China Car, SUV, MPV Sales Growth of Around 22.5% in 2006 Car Sales (Thousand units) 2004 Car Sales: 2.54 million units (Domestic Built Vehicles Only) 2005 Car Sales: 3.17 million units (Domestic Built Vehicle Only) 2006 Car Sales: 3.88 million units (Domestic Built Vehicle Only) K units sold in Q Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec

11 Market Share Adjustments Continue VW Sales Recovering Assembler Sales Change (2005 Vs 2004) Change (2006 Vs 2005) Unit Percentage Unit Percentage SHANGHAI-GM FAW SHANGHAI VW BEIJING HYUNDAI FAW VW CHERY GUANGZHOU HONDA GEELY AUTOMOTIVE FAW TOYOTA DONGFENG NISSAN DONGFENG PEUGEOT CITROEN DONGFENG YUEDA KIA CHANGAN FORD CHANGAN SUZUKI HARBIN HAFEI SOUTHEAST AUTO DONGFENG HONDA OTHER TOTAL

12 New Consumption Tax Introduced from April 2006 Biggest Impact on SUVs New Tax Structure For Cars and SUVs 16% Major Impact Pre April 2006 SUV <2.4Litre was 3% SUV >2.4 litre was 5% 14% 12% 10% 8% 6% Reduce fuel consumption and pollution Discourage ownership of cars with big engine size and SUVs 4% 2% 0% <1.0L L L L L Pre-April % 5% 5% 5% 8% 8% 8% Post April % 3% 5% 9% 9% 12% 15% Pre-April 2006 Post April L L Increase to 5 categories of engine size, with bigger taxation gap among the categories Will local authorities abolish bias towards cars with engine size below 1.0L? 12

13 China Vehicle Demand: Medium- and Long- Term Reason for Caution Investment and asset bubble Further tightening and interest rate hikes likely Imbalances in the economy Regional disparities Can the government achieve more balanced development Structural risks Social / Income inequality Unemployment level Banking and State Sector restructuring High percent growth more difficult from higher base levels Less support from pent-up demand Rare for demand to maintain double digit growth in medium and long term Energy consumption and Infrastructure constraints China is already the second largest oil importer Higher fuel taxation or non-fossil fuel solution needed to support growth Traffic and congestion - especially in large cities with purchasing power What if China reaches motorisation rate of 100 cars per 000 people? 13

14 China Sales Solid Short-Term Growth But Growth Rates Will Moderate in the Medium Term 6, Sales Car Sales: 5.1 million, LCV Sales: 3.36 million HCV: 662K 5,000 4,000 3,000 2,000 1, Sales (Thousand Units) Car LCV Truck and Bus 14

15 China Shows Changing Segmentation Profile Changing customer mix Traditionally SOEs, government, taxi firms Then private buyers in big cities Motorisation now spreading to small cities More consumer choice Investment boom has resulted in greater competition, more choice and lower prices Energy and environmental concerns Fuel efficiency standards will encourage move to smaller cars Development of used car market Repositioning of older models into interior Greater popularity of SUVs and MPVs But fuel price concerns 15

16 China: B and C Segments Expected to Account For Around Half of All Growth in the Period Sales Increase ( ) Total Growth: 2.34 million units Includes Cars, SUVs and MPVs But Excludes Minibuses -100 A B C D E SUV MPV 2011 Total Sales: 5.62 million units Sales Level In A B C D E SUV MPV 16

17 China Profitability Under Pressure Downward Pressure on Prices Price war continues Greater consumer choice and intense competition Looming over-capacity in the medium and long term Upward Pressure on Costs Faster pace of new model launch Higher tooling and product costs Rising commodity and oil prices Higher sales and marketing costs Greater competition Cost Reduction Measures Greater scale economies and efficiencies Higher local content levels Fresh investments in lower cost cities in interior Greater use of domestic suppliers 17

18 Booming Unit Sales But Decline in Profits at Most Ventures Change in Operating Profits 2005 vs 2004 CNHTC Shanghai GM Wulin Anhui Jianghuai Great Wall Nanjing Automotive Dongfeng Honda Dongfeng-Nissan Guangzhou-Honda FAW Dongfeng Peugeot Citroen Beijing Hyundai Shanghai GM Changan Chery Shanghai-VW FAW-VW Foton -250% -200% -150% -100% -50% 0% 50% 100% 150% 18

19 China Operating Margins Declining But Still Healthy 15.0% 10.0% 5.0% Great Wall Guangzhou-Honda Shanghai GM Dongfeng-Nissan CNHTC Dongfeng Honda Anhui Jianghuai Beijing Hyundai Dongfeng (Shiyan) Shanghai GM Wulin Shanghai-VW FAW Changan Chery FAW-VW Foton Dongfeng Peugeot Citroen Nanjing Automotive 0.0% -5.0% -10.0% 19

20 Global and Domestic Companies Positioning For Growth Sino-foreign JVs All Global OEMS now present in China Traditional SOEs FAW, SAIC, Nanjing, Changan, Beijing Automotive now striving to develop independent brands Conflict of interest with JVs Traditional Mini-vehicle assemblers Changhe, Harbin, Changan New Chinese companies Chery, Geely, Great Wall, Zhongxing, BYD, China Brilliance Pure import brands Jaguar, Porsche, Aston Martin 20

21 Growth Prospects By Company: China LV Production Increase of 3.6 Million Units in the Period TOYOTA HYUNDAI CHANGAN GM SAIC CHERY FORD-MAZDA VW GROUP BEIJING AUTOMOTIVE HONDA RENAULT-NISSAN AVICHINA FAW BYD AUTO Based on Ownership of Technology Increase in Vehicle Production (000 units) 2011 Vs 2005 SAIC-GM Wulin part of GM or SAIC?

22 China: Production Scale By Major Group in 2011 CHANGAN VW GROUP HYUNDAI TOYOTA BEIJING AUTOMOTIVE AVICHINA FORD-MAZDA HONDA CHERY RENAULT-NISSAN GEELY LV Production Levels in 2011: Total 8.8 Million GM SAIC FAW PSA Based on Ownership of Technology Vehicle Production (000 units) SAIC-GM Wulin part of GM or SAIC?

23 India Healthy Fundamentals, But. Unlikely to Match China s Rates of Growth 23

24 Improving Economic and Vehicle Market Fundamentals But Unlikely to Match China Economy firing on all cylinders in India One of the best performing stock markets Totally different growth profile compared to China Real GDP growth of 6.9% in 2005 and 6.4% in 2006 Pace of economic reforms needs to accelerate to sustain higher growth rates Large fiscal deficit limits government spending (4.5% of GDP in 2003) Accelerate privatisation Improve tax collection Infrastructure (Power, Ports, Roads) are bottlenecks No investment boom like China Less successful in attracting FDI Focus has been on rationalisation and restructuring Private investment has been accelerating 24

25 India: Key Vehicle Demand Drivers Unlike China Gradual Rather Than Spectacular Growth Income is low but positive signs of growth IT and outsourcing boom creating young middle class Unlike China, very little support from government demand Less scope for demand boost due to lower prices Indian cars are some of the cheapest in the world Gradual reduction in excise and import duties Auto finance sector relatively well developed Low interest rates increasing affordability Better risk management compared to China Positive signs of improvements in road infrastructure Golden quadrilateral and north-south expressways Progress will continue to be much slower than in China Poor driving habits Shortage of good quality parking Market dominated by small cars Very slow migration to larger vehicles Diesels very popular 25

26 India: Small Car Makers Best Placed For Growth Light Vehicle Production Increase of 1.58 Million Units in the Period TATA HYUNDAI SUZUKI GM MAHINDRA & MAHINDRA TOYOTA RENAULT HONDA FORD Microcar, Ace New Plant, More Export Production New Plant, Diesel Engines,YY4, MR Wagon, New Wagon R New Plant, Add Aveo and Spark New MPV in 2008 Plans to Launch Small Car Delayed Logan 2005 Produciton Production Growth Production (000 units) 26

27 ASEAN Slump in Indonesia and Slower Demand Growth in Thailand and Malaysia But Exports Supporting Thai Production 27

28 ASEAN Vehicle Market: Positives and Negatives Reasons for Optimism Income growth continues to be healthy and motorisation remains low Affordability will continue to improve Gradual reduction in tax burden on vehicle purchase Intense competition Lower prices Attractive financing/ incentives New products Some positive signs of controlling used car imports in Philippines Cause for Concern High oil prices and reduction in subsidies fuelling inflation Short term pain, especially in Indonesia Political instability in Thailand Rising interest rates Demand running out of steam after post-crisis recovery? Traffic, congestion and environment High excise taxation and fragmented markets Little/No progress with ASEAN excise tax harmonisation 28

29 Exports Supporting Thai Production Slump in Indonesia in 2006 Thailand Sales 703K 748K Prod 1125K 1229K Malaysia Sales 551K 596K Prod 563K 623K Philippines Sales 97K 105K Prod 72K 74K Indonesia Sales 534K 385K Prod 486K 388K Key Projects Toyota accounted for 73% of production growth in 2005 Transfer of Hilux production from Japan to Thailand boosted production in 2005 MMC Triton also providing a boost Toyota Yaris, Honda Civic and Nissan Tiida in 2006 Nissan will transfer pick-up production in 2007 Limited exports from Indonesia Avanza/Xenia Innova -- mainly kits Suzuki APV Still uncertain investment environment in Malaysia Taxes on ASEAN imports cut to 5% Japanese and Korean OEMs gradually displacing Proton 29

30 Production Location: ASEAN Countries Compared Thailand Strong government support for auto industry Favourable policy and incentives Largest production and supplier base FTA Established global pick-up hub Malaysia Largest car market in ASEAN Scale economies in car component sourcing But less domestic growth potential Policy regime still unclear Less investment incentives Unclear role in global context Indonesia Large population and considerable long term growth potential Slump in demand in 2006 Significant investment and security risks Undeveloped supplier industry Philippines Very small domestic market Government slow to curb used Imports Undeveloped supplier industry But Japanese OEMs have made Philippines the transmission assembly hub 30

31 ASEAN: Exports Crucial in Supporting Production Volumes Japanese OEMs in Firm Control Most of the Transfer of Pick-ups from Japan to Thailand Now Complete 1.14 Million Units Production Increase in the Period TOYOTA ISUZU MITSUBISHI PROTON HONDA SUZUKI NISSAN-RENAULT FORD HYUNDAI DAIMLERCHRYSLER GM Total Production 2005: 2.25 million units 2011: 3.39 million units Increase in Vehicle Production (000 units) 2005 Production Growth

32 Japanese and Korean OEMs Strong Financial Performance Global Expansion Continues 32

33 Asian OEMs: Challenges and Opportunities Negatives Lower global sales growth Downward shift in segmentation Will hit margins Weak US$ & Yen strength High oil and commodity prices High capital expenditures Higher depreciation load Declining margins in China Limited scope for further cost reduction Management uncertainties at Hyundai/Kia Positives Japanese and Korean brands will continue to gain market share around the globe Strong product momentum and confidence in brands Weak financial position of Western OEMs Overseas production supporting growth Japanese and Korean OEMs well favourably positioned for downshift in segmentation Less pricing pressure and incentives in North America 33

34 Japanese OEM Export Ratio: Mazda Most Dependent On Exports Suzuki, Daihatsu and Honda Least Dependent NISSAN DIESEL 2005 Export Ratio for Industry was 47% DAIHATSU SUZUKI HONDA HINO SUBARU NISSAN FUSO MITSUBISHI TOYOTA ISUZU MAZDA 15% 25% 34 41% 43% Total Exports: 5.05 million Total Production: 10.8 million 46% 47% 46% 48% 53% 54% Exports as percent of production 58% 70% 0% 10% 20% 30% 40% 50% 60% 70% 80%

35 Vehicle Production by Japanese Assemblers Will Exceed 25 Million Units by % Overseas Japan Asia North America Europe Rest of the World Production (000 Units)

36 Japanese OEMs: Strong Position in North America and Asia But Slow Progress in Europe and South America Overseas Production Levels in 2011 TOYOTA HONDA NISSAN SUZUKI MITSUBISHI MAZDA ISUZU Total Overseas Production 2005: 10.7 million units 2011: 14.3 million units FUJI HEAVY Vehicle Production (000 units) NORTH AMERICA WEST EUROPE EAST EUROPE ASIA SOUTH AMERICA MIDDLE EAST/AFRICA 36

37 2.25 Million Unit Production Growth in Asia in the Period UNITED STATES Japanese OEM Production Increase in Asia 2.25 Million Units Between 2005 and 2011 CHINA THAILAND INDIA Increase in Production in Period in Thousand units CANADA K units in N. America MEXICO 156 INDONESIA MALAYSIA TAIWAN Total Production in Asia ex-japan 2005: 4.10 million units 2011: 6.35 million units Increase in Vehicle Production (000 units) 37

38 Korea: Hyundai / Kia Expansion Mainly Outside Exports Boosting Output at GM-Daewoo and Samsung Korea Production Increase of 355,000 Units in the Period Mainly supported by export of Chevrolet badged vehicles GM-DAEWOO 266 RENAULT SSANGYONG Export push will accelerate post-2007 Two SUVs for export to Europe -16 KIA Slovakia and US plant will constrain export growth -50 HYUNDAI US production of Sonata and Santa Fe Transfer export production of Getz (TB) to India post Increase in Vehicle Production (000 units) 2011 Vs

39 Hyundai and Kia: Overseas Production of 2.5 Million Units By 2011 China, India and U.S. Will Account for 66% OTHERS RUSSIA TURKEY MALAYSIA SLOVAKIA CZECH REPUBLIC UNITED STATES INDIA CHINA KOREA 39

40 Asia Will Account For 65% of Growth in Global Production in the Period Growth in Sales in : Global: 10.8m units, Asian 6.6m units Growth in Production : Global 11.0m units, Asian 7.2m units CHINA INDIA UNITED STATES JAPAN BRAZIL IRAN SOUTH KOREA THAILAND GERMANY MEXICO FRANCE RUSSIA MALAYSIA INDONESIA Sales Growth: Production Growth CHINA INDIA THAILAND BRAZIL SLOVAKIA UNITED STATES MEXICO IRAN SOUTH KOREA CZECH REPUBLIC GERMANY TURKEY JAPAN MALAYSIA INDONESIA ITALY ARGENTINA Change in Vehicle Sales (Thousand units) Change in Vehicle Sales (Thousand units) 40

41 Global Production Growth Performance (2011 vs 2005) 11 Million Units Increase in the Period Million Units in Asia GM TOYOTA FORD VW GROUP DAIMLERCHRYSLER HYUNDAI NISSAN PSA HONDA RENAULT FIAT GROUP SUZUKI BMW MAZDA MITSUBISHI Total Production 2005: 66.8 million units 2006: 77.8 million units Increase in Vehicle Production (000 units) North America South America West Europe East Europe Japan Asia Middle East/Africa 41

42 Global Production Ranking 2010 Toyota Will Surpass GM in 2006 TOYOTA GM FORD-MAZDA RENAULT-NISSAN VW GROUP DAIMLERCHRYSLER HYUNDAI HONDA PSA FIAT GROUP SUZUKI BMW Million units Global Sales

43 Thank You Ashvin Chotai Director: Asian Automotive Industry Research