CHINA AUTO INDUSTRY TRENDS Yong Yang Corporate Economics and Strategic Issues November 7, 2012
OUTLINE Slide Country Overview 2-3 Infrastructure Conditions 4-7 Industry Characteristics 8-12 Industry Volume Outlook 13-16 Industry Segmentation Trend 17-18 Industry Pricing Trend 19-21 Auto Financing Outlook 22-26 Ford Business in China 27-29 SLIDE 1
TOTAL LAND AND POPULATION IN BRICS AND U.S. Heilongjiang Jilin Xinjiang Liaoning Beijing Gansu Inner Mongolia Ningxia Tianjin Hebei Shanxi Shandong Qinghai Jiangsu Shanghai Anhui Hubei Sichuan J Shaanxi Henan Tibet i Chongqing Zhejiang i Jiangxi Land Area Population Population Density (Sq. Km.) (2011, Mils.) (People/Sq. Km.) Brazil 8,514,877 197 23 Russia 17,098,242 142 8 India 3,287,263 1,241 377 China 9,596,961 1,344 140 U.S. 9,826,675 312 32 Guizhou Yunnan Hunan Fujian Taiwan Guangxi Guangdong Hainan SLIDE 2
POPULATION AND GDP BY REGION Heilongjiang ② Xinjiang Jilin Liaoning Beijing Inner Mongolia Gansu Ningxia Tianjin Hebei Shanxi Shandong ① Qinghai Shaanxi Henan Hubei Sichuan J ③ Tibet Jiangsu Shanghai Anhui i 2007 GDP PPP per Capita in $2005 Tier 1 GDP per Capita > $6,500 Tier 2 $3,500 < GDP per Capita < $6,500 Tier 3 GDP per Capita < $3,500 Chongqing Guizhou Yunnan Hunan Zhejiang i Jiangxi Fujian Taiwan Guangxi Guangdong Hainan Population (Mils.) Driving-age population (Mils.) GDP PPP per Capita ($2005) 2011 2022 2011 2022 2011 2022 National 1,337 1,390 1,102 1,156 7,457 16,335 Tier 1 391 407 322 338 11,070 24,247 Tier 2 490 510 403 424 6,981 15,291 Tier 3 456 473 375 394 4,867 10,661 SLIDE 3
INFRASTRUCTURE COMPARISON Length of Expressways KM (000) 84.9 75.2 41.0 16.3 0.5 2.1 1990 1995 2000 2005 2011 Latest* U.S. Source: CEIC China Database, CIA World Factbook: *Latest is 2008 SLIDE 4
EXPRESSWAYS IN CHINA (AT A GLANCE) Blue: Red: Existing Expressways Under Construction Source: http://en.wikipedia.org/wiki/file:map_of_nths_expressways_of_china.png SLIDE 5
BRIC AND U.S. ROADWAYS 2011 Roadway Quality (World Ranking) 118 130 Better 85 54 20 Brazil Russia India China U.S. Source: World Economic Forum SLIDE 6
DIFFERENT TRANSPORTATION MODES Passenger KM (Trils.) Highways Railway Civil Aviation Waterways 1.5 0.9 0.4 1991 1994 1997 2000 2003 2006 2009 0.01 Source: Statistics Bureau of China SLIDE 7
FIRST TIME BUYERS DOMINATE 74% 75% 63% China India ASEAN SLIDE 8
CUSTOMERS ARE YOUNG China India 42% 33% 34% 38% 20% 18% 10% 5% 20s 30s 40s 50+ 20s 30s 40s 50+ Source: Survey on National demand for passenger vehicles - private user survey 2009, SIC, McKinsey Automotive Branding Survey 2007 SLIDE 9
REGIONAL DRIVING AGE POPULATION Driving Age Population (Mils.) Tier 1 Tier 2 Tier 3 1,102 1,118 1,130 1,139 1,146 1,156 375 381 385 388 391 394 34% 404 410 414 418 420 424 37% 322 327 331 333 335 338 29% 2011 2013 2015 2017 2019 2022 SLIDE 10
GDP PER CAPITA BY REGION GDP Per Capita ($2005) National Tier 1 Tier 2 Tier 3 Take-off Level of Income ($5,000) Tier 1 Tier 2 Tier 3 2002 2005 2008 2012 2014 2017 2020 2022 Source: World Bank, CESI Data SLIDE 11
REGIONAL VEHICLE DENSITY SATURATION LIMITS Saturation Limit (Parc per 1000 Driving Age Pop.) 465 335 345 275 National Tier 1 Tier 2 Tier 3 Source: CESI SLIDE 12
REGIONAL SALES Vehicle Sales Units (Mils.) Tier 1 Tier 2 Tier 3 32.1 28.6 26% 30% 18.5 4.9 5.5 20.5 5.0 7.2 23.5 25.6 12.0 9.2 6.1 7.5 8.6 9.8 11.0 12.3 37% 38% 44% 8.1 8.3 8.8 8.4 8.3 7.8 24% 2011 2013 2015 2017 2019 2022 Note: Model forecast, not Ford planning assumption Source: CESI SLIDE 13
REGIONAL SALES Volume Decomposition (Mils.) Population Density Growth Scrappage / Replacement Demand 32.1 25.6 14.3 45% 16% 18.5 3.0 9.7 80% 14.7 15.3 17.1 53% 4% 0.8 0.7 0.7 2011 2017 2022 2% Source: CESI SLIDE 14
NATIONAL AND REGIONAL DENSITY TRENDS National Tier 1 Tier 2 Tier 3 Density Trends (Parc per 1000 Driving Age Pop.) 210 234 254 240 210 161 159 125 121 85 79 57 2011 2017 2022 Source: CESI SLIDE 15
REGIONAL VEHICLE PARC Tier 1 Tier 2 Tier 3 Vehicle Parc (Mils.) 270 217 83 30% 22% 35% 43% 184 151 47 120 37 94 28 66 21 53 41 32 60 102 80 40 51 61 70 77 86 2011 2013 2015 2017 2019 2022 38% 32% Source: CESI SLIDE 16
SEGMENTATION TRENDS Segmentation Trends (%) 4.4 3.2 3.7 5.4 6.2 7.2 6.1 6.8 5.7 9.1 12.2 12.9 33.8 30.9 26.5 25.5 19.5 18.4 24.2 27.6 37.9 37.9 39.4 40.3 31.5 31.4 26.2 22.1 22.6 21.1 2002 2004 2006 2008 2010 2012 YTD Source: CESI B and Below C CD, D/E Utilities Premium SLIDE 17
LIGHT VEHICLE CAPACITY Light Vehicle Capacity (Mils.) Excess Production 37 39 31 13 11 21 11 4 17 20 24 28 2011 2013 2015 2017 Memo: Excess as Pct. Of Production 24% 55% 52% 40% Source: IHS Global Insight, September 2012 Forecast SLIDE 19
VEHICLE PRICING TRENDS Auto Price Index, Retail, Passenger Cars Only (Pct. Chg. YoY) 2.2 (4.4) (4.9) 2007 2008 2009 2010 2011 2012 Source: Cheshi.com.cn CAPI SLIDE 20
VEHICLE PRICING TRENDS Vehicle Pricing Trends (Index, Jan. 2004 = 100) 100 81.7 Micro Small Medium Class High Class Luxury 2004 2005 2006 2007 2008 2009 2010 2011 2012 66.3 62.8 61.8 55.8 Source: CEIC SLIDE 21
AUTO FINANCING -- MARKET OVERVIEW Consumer Auto Loans Outstanding, China (Bils., RMB) 200.0 183.2 92.7 18.8 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: CEIC SLIDE 22
AUTO FINANCING -- CROSS-COUNTRY Vehicle Sales Financed, 2009 (%) 80% 49% 37% 8% Source: Ford 2009 SLIDE 23
LOANS OUTSTANDING -- PROJECTION Passenger Vehicle Loans Outstanding (Bils., RMB) Lower Bound Upper Bound Memo: U.S. Auto Loans Outstanding: $670 Bils. 1,406 (220 Bils. USD) 1,087 (170 Bils. USD) 183 2000 2003 2006 2009 2012 2015 2018 Note: Model forecast, not Ford planning assumption Source: CESI SLIDE 25
CONTRIBUTIONS TO LOANS OUTSTANDING GROWTH Contributions to Growth in 2020 Loans Outstanding (Bils., RMB) 147 1,087 391 16% 44% 366 40% 183 2009, Total Industry Volume Financing Penetration Vehicle Price 2020, Total Growth due to Source: CESI SLIDE 26
FORD S FOOTPRINT IN CHINA CFME #1 Engine Plant 长福马发动机工厂 1 Nanjing Plant 南京工厂 CQ#1 Plant 重庆工厂 Beijing Ford Motor (China) Ltd. Beijing Branch 福特汽车 ( 中国 ) 公司北京代表处 CFMA (Passenger Vehicles) CQ#2 Plant 重庆二工厂 CQ#3 Plant 重庆三工厂 Engine Plant 发动机工厂 Transmission plant 变速箱工厂 Hangzhou Plant 杭州工厂 JMC (Commercial Vehicles) Chongqing Shanghai Hangzhou Nanchang Hong Kong Nanchang Plant 南昌工厂 小兰基地 Xiaolan Plant Nanjing Ford REC 福特汽车工程研究中心 Ford APA HQ 福特亚太非总部 Taiwan Ford Lio Ho Motor Company 福特六合汽车股份有限公司 SLIDE 27
AGGRESSIVE PRODUCT PLANS: NEW PRODUCTS Ford EcoSport 翼博 Ford Kuga 翼虎 Ford Explorer 探险者 Ford Focus 福克斯 SLIDE 28
FORD S AMBITIOUS PLAN FOR CHINA $4.9 Bils. investment (USD) To date, Ford and its partners have invested close to USD $4.9 Bils. in China, which has significantly increased our capacity 15 x 15 new vehicles Together with our partners, we will bring 15 new vehicles to China by 2015 1.8 Mils. Capacity by 2015 With the new assembly plants, Ford China capacity will reach 1.8 million units (1.2 Mils. for passenger vehicle and 545K for commercial vehicles) 900+ Dealerships by 2015 By 2015, CFMA & JMC will have more than 960 dealers in China SLIDE 29
THANK YOU! Yong Yang Corporate Economics and Strategic Issues November 7, 2012
GROWING INDUSTRY VOLUME Global Industry Mix 2000 2011 2020 21% 39% 40% Asia Pacific 40% Americas 28% Europe, M. East, & Africa 32% 46% 27% 27% Industry Volume (Mils.) Global 58 79 112 China 2 (4%) 19 (24%) 32 (29%) Source: IHS Global Insight SLIDE 31