Global Macro & Autos Outlook Anna-Marie Baisden BMI Research Head of Autos Analysis
Agenda Global macro and autos outlook Key trends driving global autos sector Turkey autos outlook Turkey s part in global trends Q&A
Global: Slow Growth Increases In 2015/16 Global growth will only be slightly higher at 2.8% in 2015, but getting stronger from 2016. Developed market (DM) economies will accelerate, picking up the slack from decelerating emerging markets (EM). Disappointing US data in the early part of the year has weighed on our DM aggregate even as our outlooks for the eurozone and Japan have improved. A few crisis-ridden EM countries (Brazil, South Africa) have continued to slow further, but are now reaching the bottom of their economic cycles. 2012 2013 2014 2015 2016 2017 Global 2.7 2.7 2.8 2.9 3.1 3.2 United States 2.3 2.2 2.4 2.5 2.6 2.5 Eurozone -0.7-0.5 0.9 1.6 1.7 1.5 China 7.7 7.7 7.4 6.7 5.9 5.9
Global: Autos Market Reflects Economic Picture MENA to outperform in 2015 and 2016, supported by strong GCC. The US will be led by light trucks as fuel prices stay low. 15 10 5 Vehicle sales growth forecasts (% chg y-o-y) LatAm weighed down in 2015 by another poor year in Brazil. 0-5 Europe Emerging Asia LatAm MENA SSA US Japan 2015 2016 There are clear winners and losers from lower oil prices, but not as clear cut as it might first appear when industry specific factors are included. -10-15 Source: BMI forecasts
Regulation Driving Innovation Safety Fuel Economy Connected Cars Regulation
Turkey: Weak Economic Outlook Low oil prices and QE have not provided the expected lift in 2015. Growth Momentum Slowing Sharply Turkey - Real GDP, % chg y-o-y & Central Bank of Turkey Leading Indicator GDP forecasts for 2015 and 2016 revised down to 2.2% (from 2.8%) and 2.7% (from 3.5%) respectively. Increased political instability is harming sentiment and investment. Eurozone demand growth is positive, but demand from key oilproducing partners such as Russia and Iraq unlikely to increase. Source: CBRT, Turkstat, Macrobond
Turkey: Weak Economic Outlook High inflation, rising interest rates, weak currency, all negative for consumer sentiment. Confidence Suffering Turkey - Consumer & Business Confidence Indices Unemployment rate at four-year highs. Subdued credit growth weighing on private consumption. Lack of policy clarity and rising security risks impede business investment. Source: CBRT, Turkstat, Macrobond
Turkey: Autos Defying Weak Consumer Outlook For Now Light vehicle sales for 8M15 up 45.7% y-o-y on low base from 2014. On Course For Record 2015 Monthly Light vehicle Sales And 5-yr Average 1200000 Slower Growth To 2019 Light Vehicle Sales And Forecasts BMI forecasts sales growth of 27.4% for 2015. Advance purchases will take away demand from 2016 and beyond. Total market will still be at record levels, topping 1.1mn by 2019 1000000 800000 600000 400000 200000 0 2012 2013 2014 2015 2016 2017 2018 2019 Source: OSD, BMI forecasts LCV sales Car sales
Turkey: Import Reliance Will Derail Growth Around 65% of new sales are imported. Lira Weakness Threatening Import-Reliant Market EUR/TYR Exchange Rate (LHS) & Import Penetration (Sales By Origin And Imports As % Of Total Sales) (RHS) Weak lira will make imported vehicles and components increasingly expensive. Measured against euro as majority of imports are from Europe. Price increases expected from Q415 onward, dampening demand. Source: Bloomberg, OSD, BMI
Turkey: Europe Dominates Light Vehicle Market Over 80% of both cars and LCVs come from EU and EFTA. Asia s Small Share Getting Smaller Asian share has diminished over last five years was 10% of cars and 20% of LCVs in 2010. Opens up Turkey to European standards, trends, processes. Vulnerable to lira weakness against the euro. Source: OSD, BMI forecasts
Turkey: Fleet Growth Quicker Than New Sales By 2019, fleet size will have tripled compared to 2000. Passenger cars form majority of the fleet at around 70%. Fleet forecast to grow quicker than new sales, with average annual growth of 5% to 2019. Similar composition of vehicle origins to new sales. 40000000 35000000 30000000 25000000 20000000 15000000 10000000 5000000 Fleet size growth y-o-y 0 Fleet Size Near Developed Standards Total vehicle fleet size (CBUs) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: National associations, BMI forecasts Sweden United Kingdom Turkey 2014 2015 2016 2017 2018 2019 Spain 0.4 1.8 0.2 0.6 0.7 0.6 Turkey 4.9 5.0 5.1 5.1 5.0 4.9 United Kingdom 1.1 0.8 0.7 0.7 0.7 0.7 Sweden 1.0 1.1 1.1 1.1 1.1 1.1 Spain
Turkey: European Vehicles Dominate Fleet Only two Asian brands in the top 10, accounting for 1.3mn units. Despite new sales being largely imported, top four brands in the fleet produce locally. Toyota, 3.9 Hyundai, 5.3 Opel, 5.3 Fleet Is Largely European Vehicle Fleet By Brand 2014 (%) Mercedes, 3.5 Honda, 1.8 Peugeot, 3.6 Renault, 17.4 Opens Turkish market up to Global trends both from imports and producing for export. VW, 7.1 Tofas, 8.2 Fiat, 9.6 Ford, 12.3 Source: OSD
Turkey: Industry Immersed In Global Trends Fiat Aegea exported to 40 EMEA countries, needs to meet all standards Majority of USD1.5bn investment went to R&D Aim to produce domestic EV by 2020 Aselsan and IBM partner for battery range extension project
Turkey: Industry Immersed In Global Trends Turkcell leading connected car initiatives with Volvo and Subaru 7.0 Cars Just A Small Part Turkish M2M Market 14000 6.0 12000 An evolution of Turkcell s CV tracking systems 5.0 4.0 10000 8000 Total M2M modules in Turkey forecast to triple over the next five years. 3.0 2.0 1.0 6000 4000 2000 M2M Modules (000) M2M ARPU (USD) Cars still a small part and mostly premium models 0.0 2011 2012 2013 2014 2015e 2016f 2017f 2018f 2019f f = BMI forecast. Source: BMI, Turkcell 0
Thank You