Aftermarket Trends: What will Drive Future Aftermarket Repair Opportunities in North America?

Transcription

1 Aftermarket Trends: What will Drive Future Aftermarket Repair Opportunities in North America? Mark Seng Global Aftermarket Practice Leader July 29, Vehicles - Powertrains - Technology & How the OEM s are Coming After Our Customers

2 Key Driver: Vehicles Miles Traveled (VMT)

3 Change in Driving Volume 3,000 2,750 2,500 2,250 2,000 1,750 1,500 1,250 1, Historical Vehicle Miles Traveled (billions) First time seeing sustained flat miles driven under 3 trillion miles since IHS 3 Source: IHS Automotive and FHWA

4 Change in Driving Volumes Year-o-Year 6.0% 5.0% 4.0% 2012 Up 0.3% 2013 Up 0.6% Down 2% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% 2014 IHS Source: IHS Automotive and FHWA

5 Vehicle Miles Traveled per Capita Total Miles Traveled 2013 = 2004 Miles per Capita 2013 = Miles traveled + 3.5% per year Milles per capita + 2.5% Since 2005 Miles traveled Flat Miles per capita -1.0% 2014 IHS Source: IHS Automotive, DOT and FHWA

6 The auto industry is back! Light vehicle sales continue their strong recovery.

7 U.S. Light Vehicle Registrations 15.4 Million 7.5% Broke 15 million units last year 1 st time since 2007! Source: IHS Automotive

8 Millions U.S. Light Vehicle Registration Trend % % 11.3% 10.2% 13.2% % F 2015F 2016F 2017F Source: IHS Automotive

9 Winners are Offering the Most Options Fueling the comeback Dramatic increase in number of new models and redesigns.

10 New Launch Activity 50 North American Major Program Launches Source: IHS Automotive Light Vehicle Production Forecast

11 Winners are Offering the Most Options new models & 2015 redesigns 70 % new models & 2012 redesigns Includes all model changes impacting US registrations. Source: IHS Automotive

12 MILLIONS Aftermarket U.S. Vehicles In Operation 280 VIO will Increase 6.5% by History Forecast Source: IHS Automotive

13 Impact of New Vehicle Drop Off The market will begin to feel impact of the 40 % drop in new vehicle registrations

14 Impact on VIO Age Groups - by 2019 Vehicles new to 5 years old grow 32 % Vehicles 6-11 years old decline 21 % Vehicles 12 + years old grow 15 % Is the aftermarket sweet spot changing? Source: IHS Automotive

15 As registrations recover, the vehicle mix continues to evolve Aftermarket must be ready for changing vehicles and consumers going into the future

16 4 Segments Emerging as Dominant: Represent over 58% of all new registrations in % NON LUXURY TRADITIONAL MID SIZE 15.9% NON LUXURY TRADITIONAL COMPACT NON LUXURY COMPACT CUV NON LUXURY FULL SIZE PICKUP 13.8% 12.1% Source: IHS Automotive

17 4 Cylinder Engines Smaller Size but More Power

18 US New Vehicle Registrations: 4 Cylinder Engines Gaining in Popularity 2013: 55% market Add pics of share pickups All large vehicle segments in decline except large pickups Large trucks not growing as fast as they once did but segment remains strong 2012: 50% market share 2008: 41% market share Source: IHS Automotive

19 % of Vehicles in Operation Changing Mix Domestic v Import 100.0% 90.0% 11.0% 14.1% 3.1% 80.0% 70.0% 23.6% 26.5% 2.8% 60.0% 50.0% 40.0% 39.3% 38.1% -0.8% 30.0% 20.0% 10.0% 26.2% 21.3% -5.1% 0.0% Domestic Car Domestic Truck Imp Car Imp Truck Source: IHS Automotive

20 Vehicle Population (x000) Cars - Continued Import Strength 80,000,000 70,000,000 15% 60,000,000 50,000,000 40,000,000-23% 30,000,000 20,000,000 10,000, Domestic Cars Import Cars Source: IHS Automotive

21 Vehicle Population (x000) Trucks - Imports Gaining Share 120,000, ,000,000 80,000,000-3% 60,000,000 40,000,000 20,000,000 38% Domestic Light Trucks Import Light Trucks Source: IHS Automotive

22 Vehicle Population (x000) VIO Import Growth - Forecast 180,000, ,000,000-15% 140,000, ,000, ,000,000 80,000,000 89% 60,000,000 40,000,000 20,000, Domestic Import Source: IHS Automotive

23 Are Millennials Losing Interest in Cars? 11.5%: Millennial buyers % of total Percent of Total New Vehicles Registered Ages: % 14% 12% 10% 8% 6% 4% 2% 0% Source: IHS Automotive

24 Consumer The Younger Buyer is Broke -44% -6% +91% Net worth decline between 2001 and 2010 Income decline between 2001 and 2010 Growth in student loan balance between Source: Pew Research

25 Consumer The Younger Buyer is Delaying 22% Delayed having children 20% Delayed marriage 24% Moved back home after college Source: Pew Research

26 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Average Months Owned Length of Ownership Increasing Average Length of Ownership Trend New & used combined > 22 month increase in ownership over last 10 years Quarter New Buyers Used Buyers Total (New and Used) Source: IHS Automotive

27 Length of Ownership & Delayed Purchase Impact 13 vehicles in a lifetime

28 Length of Ownership & Delayed Purchase Impact 9 vehicles in a lifetime

29 As production grows, OEM powertrains are evolving Aftermarket must prepare for new technology entering service bays for years to come

30 Output (Millions) Production Outlook North American Light Vehicle Production by Country Mexico Canada US ,258,000 CAGR = 4.9% -451,000 CAGR = -3.1% +656,000 CAGR = 0.8% Source: IHS Automotive Light Vehicle Production Forecast

31 North American Vehicle Exports (Millions) Production Outlook North American Vehicle Exports by Region 2.0 North American Vehicle Exports by Region Europe South America Middle East/Africa Greater China Other Greater use of global platforms allows for more export ready product 40+ Free trade agreements drive Mexican output EU sovereign debt crisis tempers EU exports So. America & Middle East/Africa markets growing quickly Source: IHS Automotive Light Vehicle Forecast

32 Production Outlook North American Production Mix by Manufacturer Millions Others German 3 Asian 4 Chrysler/ Fiat Ford General Motors Production outlook follows demand recovery with import substitution and export activity providing additional support Most manufacturers are poised to post gains; favors OEMs with further capacity expansion plans: BMW, VW, Nissan, Toyota & Honda Global product/platform strategies enable competitive sourcing shifts Source: IHS Automotive Light Vehicle Production Forecast

33 North American Outlook The Old 17 the New 17 Year Volume 17.2 million units (30% of global) 17.7 million units (19% of global) Location ~25% built south of Ohio ~50% built south of Ohio Global Platform Exposure 20% was deemed global mostly Japanese OEMs 62% is deemed global mainly pickups are regional Design Base 72% of volume NA-designed 34% of volume NA-designed Production OEMs Top 5 OEMs = 89% of total (Largest = 32%) Top 5 OEMs = 73% of total (Largest = 19%)

34 Evolving Powertrains in North America CAFÉ Standards Making an Impact CAFÉ Standards 54.5 MPG MPG CAFÉ requirements dominate product and powertrain planning in the new vehicle industry today

35 Alternative Powertrains: Share of U.S. New Registrations % Share 2.9 % Share 0.3 % Share Source: IHS Automotive

36 The Traditional Internal Combustion Engine Gasoline direct-injection Turbo chargers Stop/start capability Cylinder de-activation AWD disconnect More efficient transmissions more speeds and CVTs

37 Stop Start Mild Hybrid Full Hybrid PHEV EV GDI-T GDI DE-Adv DEAC NAFTA Vehicle Production Powertrain Outlook % 60% 50% 40% 30% 20% 10% 0% Far stronger push on GDI-T and GAS-HEV compared to Europe, as the U.S exit s 2016 CAFE and approaches 2025 targets Barriers to diesel (consumer, CNG, gas fuel price) remain Mechanical opportunity centred on on resegmentation, gasoline rightsizing and driveline efficiencies (Elec. Tech) (Mech. Tech)

38 Aftermarket has the Expertise!

39 OEM globalization becoming the new norm

40 Global VIO Growth New Registrations million units million units Source: IHS Automotive

41 Global VIO Growth Total VIO billion units billion units Source: IHS Automotive

42 Global VIO Growth Changing OEM Production Model Accelerating use of global platforms

43 Reducing Number of Platforms Top 12 Manufacturers Source: IHS Automotive

44 Reducing Number of Platforms 50% fewer platforms 40% fewer platforms

45 More Vehicles per Platform More than double 90% + increase

46 Million Units New Platform Metrics 1.0 Average volume per platform in Average volume per platform in 2020 Number of platforms to support 80% of volume in Hyundai Honda VW Ford R/N PSA GM BMW Toyota Suzuki Fiat Daimler Average platform volume to double, volume manufacturers have greatest opportunities Premium OEMs lack absolute scale but generate high efficiency Toyota, Fiat-Chrysler and GM lag in terms of consolidation 46

47 VW MQB Platform Largest single platform 6 million units by 2020 New modular technology revolutionizes production motortrend.co m

48 Modular Architecture 88% reduction in engine transmission variations 20%-30% reduction in parts costs motortrend.com

49 Aftermarket Opportunity Lower production costs Improving inventory efficiency Reducing cataloging costs

50 OEM technology Providing both opportunity & challenges

51 Dealer Service Retention at Record Lows 35% Retail Non-Warranty Service Retention 30% 25%

52 Service Retention & Repurchase Consideration Retail Service Retention (% of revenue returning to dealership for retail service) Average New Buyer returns to market at 72.1 months: NEW 1 YEAR OLD 2 YEARS OLD 3 YEARS OLD 4 YEARS OLD 5 YEARS OLD 6 YEARS OLD 7 YEARS OLD 8 YEARS OLD 9 YEARS OLD 10 YEARS OLD 11 YEARS OLD

53 OEM s Focused on Service Loyalty KEY: Relationship with Driver of 3-7yr Old Vehicle Positive connection in repeat buying among those who have vehicles serviced by OEM dealer network 45.1% OEM Brand Loyalty Among Those Servicing with OEM Dealer Network 28.4% OEM Brand Loyalty Among Those Servicing with Aftermarket Based on actual results from OEM study provided by IHS Automotive. Brand loyalty was measured among customers with vehicles that were just outside of the traditional warranty period.

54 Maintenance Programs

55 Extending Beyond the Basic Warranty

56 Oil Service Indicator Light

57 Growing as Part of U.S. VIO 21% 10% Source: IHS Automotive

58 Why is This Important to the Aftermarket? Oil Changes Most common service opportunity.

59 Driver Dealer Connectivity Telematics Hello, You are due for an oil change. Touch here to schedule your appointment.

60 Embrace Technology = Aftermarket Opportunity Aftermarket Must Also Leverage Technology to Compete for Consumer Loyalty

61 1. The auto industry is back! Global light vehicle sales continue strong recovery 2. The vehicle mix & the consumer continue to evolve 3. OEM powertrains are evolving 4. OEM globalization becoming the new norm 5. Technology advances bring both challenge AND opportunity

62 Thank You Mark Seng Global Aftermarket Practice Leader