The IAM in 2030 Pre-Selection of global automotive trends impacting the independent multi-brand aftermarket 10th of June 2016
The automotive aftermarket is based on a highly complex value chain with a set of different players and interactions Overview aftermarket value chain Manufacturing Distribution Service Customers OEM/parts manufacturer Mainly OEM branded OEM parts distribution OEM workshops Owned/franchis e-dealer Multibrand dealers "Intermediaries" OEM-financial services "End customers" Private End customers Offline Parts manufacturer Tool manufacturer Provider of technical information Parts/ tools/ information distribution Servicenetworks Independent workshops Roadside rescue service PTI centers Insurance companies Leasing companies Routing portals DIY (Do it yourself) DIFM (Do it for me) Business Fleet (>50 vehicles) Corporate Rental Online Online channels Source: Roland Berger 2
The multi-brand aftermarket value chain plays an important role in ensuring innovation, safety/environmental compliance, and mobility in Europe Key facts 1 2 3 4 Competitive product and services are offered to the 284 million vehicles in the EU by the independent aftermarket service sector Out of 12 mio. jobs often quoted for the automotive industry, 5 mio. jobs are transport (mobility) jobs and out of the remaining 7 mio. jobs, some 3.5 mio. people are employed in the multibrand aftermarket value chain 18 bn spent by parts suppliers in R&D 30,000 companies trading with vehicle parts, components and accessories to ensure an overnight parts availability across Europe The independent aftermarket for vehicle parts, tools, servicing & repair is the complementary part of the automotive industry It keeps vehicles running through a dedicated value chain Source: Eurostat, FIGIEFA, CLEPA, Roland Berger; 3
GEAR 2030 Working Group 1 has pre-identified 16 trends for the global automotive landscape 2030 Overview trend hierarchy Environment and health challenges Consumer and social demands Mega Trends Technological innovation Economic shift 1. Emissions reduction 2. Resource/energy scarcity 3. Increased safety Market and Customer Trends 4. Ageing population 5. Urbanization 6. New customer profiles 7. Ownership mutations 8. Some population still isolated 9. Alternative powertrains 10. Automation/ connectivity 11. Advanced manufacturing 12. Increasing demand from emerging economies 13. Business opportunities in energy efficiency 14. Technological innovations 15. Shift in consumer demand 16. Emergence of new players What are the key relevant trends for the IAM in 2030? 4
Roland Berger have identified 5 main trends with disruptive and opportunity potential for the independent aftermarket value chain Key drivers for disruption in the IAM value chain Main questions: > Development of trend? > Impact on IAM value chain? > Necessity of legal/political support? Safer and automated driving New digital ecosystem Technological Innovation Connectivity Change of customer structure Powertrain technology Business Model Innovation Source: Roland Berger 5
Trend: Safer and automated driving Implementation of ADAS systems is fostered by regulations and customer demands Implementation timeline of ADAS systems (Selection) Driving Parking Safety ~2013 ~2014 ~2015 ~2016 ~2017 ~2018 ~2019 ~2020 ~2025 >2025 Lane change assistant Traffic jam assist Lane departure warning Parking assistant (steering only) Intersection assistant Highway pilot Exit2Exit Traffic jam pilot "Parking with app" Valet parking Construction area assist Emergency cut-off Emergency steering assistant Emergency braking assistant and pedestrian detection Level 3 Level 4 Automated city driving Fully automated driving Level 5 > Selected ADAS safety systems will be mandatory from 2020 onwards > BUT penetration in total vehicle park will take time > Nevertheless the increase of ADAS systems will have an impact on crash statistics and thus on crash parts volume in future 1) Level 0: No automation; Level 1: Driver assistance; Level 2: Partial automation; Level 3: Conditional automation; Level 4: High automation; Level 5: Full automation Source: Press research; conference papers; fka; Roland Berger 6
Trend: Safer and automated driving Only minor share of sold vehicles will be Level 4 or higher equipped in 2025, which is a prerequisite for automated driving Development of car production differentiated by HAD-Level des [Mio. units] Europe 19.6 3.8 15.8 20.7 0.7 0.4 8.1 11.6 21.7 0.1 3.7 5.0 9.5 Level 4 Level 3 Level 2 Level 1 CAGR 2020-2025 Total 0.9% - 59.6% 50.2% 3.4% > In 2025, 50% of new vehicle sales will be at least Level 1 equipped > Minor share of vehicles will be Level 3 and higher equipped > Fully automated driving is expected in 2025-2030 3.3 Level 0-22.4% 2016 2020 2025 Source: IHS figures, adapted by Roland Berger expert judgment (scenario based) 7
Trend: Connectivity Connectivity is an increasing trend and happens already today: 60% of European vehicle fleet will be connected by 2025 Share of connected vehicles in light vehicles park [in %, Europe] 100 94 100 82 8 100 37 14 49 Share of connected vehicles in light vehicle annual sales [in %, Europe, incl. retrofit] 100 63 24 100 43 20 36 100 9 11 81 > In addition to originally connected cars, a retrofit aftermarket is expected to develop > For 2025, it is expected that almost every vehicle that is sold will be connected > Continuously penetration of current vehicle park also due retrofit solutions 6 10 13 13 14 15 16 17 18 19 20 21 22 23 24 25 13 14 15 16 17 18 19 20 21 22 23 24 25 Non connected cars Source: Roland Berger scenario 2025 Connected cars (retrofit) Connected cars (original equipment) 8
Trend: New digital ecosystem The connected vehicle shifts the system boundaries, creating an open digital ecosystem TODAY FUTURE IAM OEM Car-sharing Current players Tailored insurance offers Proactive repairs and maintenance Remote software updates Customer Targeted marketing campaigns New players Car health update Intermediaries Traffic optimization Spare parts ordering and many more Parking space Comfort zone Clearly defined tasks and responsibilities Clear processes and structures Long-established business models and rules New players, business models and rules May pose opportunities to offer innovative and new services to the customer Source: Roland Berger; 9
Trend: Powertrain technology Sales of EVs & hybrids could around 25% in Europe by 2025 ICE powertrain (Diesel and gasoline) will continue to dominate Powertrain hybridization/electrification in Europe 2025 [% of sales] Europe Diesel mild hybrid 9% Diesel 18% Battery EV 10% Plug-in hybrid EV 6% Full hybrid 1% 9% Mild hybrid > Growth in electric solutions is heavily caused by CO2 emissions regulation and limited access to metropolis regions > Increase of electric vehicles in new car sales will have an impact on parts volume in future > But the ICE powertrain will continue to dominate 48% Gasoline > IAM needs to be prepare to service a mixed vehicle park in future Source: Roland Berger; mid scenario 2025 details see next page 10
Trend: Powertrain technology Accompanying explanation for the mid scenario 2025 to estimate the powertrain hybridization/electrification of new car sales in Europe Drives for EU electrification scenarios 2016 2021 2025 High Push > 130 g corporate CO 2 target > 95 g corporate CO 2 target > +75 g corporate CO 2 target Pull > Subsidies in a selected numbers on countries > Limited subsidies > First city access limitation s for ICE > Many metropolis regions with access limitation for ICE > ICE ban in Norway and 1 add. small country Mid Push Pull > 130 g corporate CO 2 target > Subsidies in a selected numbers on countries > 95 g corporate CO 2 target > Limited subsidies > First city access limitation s for ICE > 81 g corporate CO 2 target (100% vehicle with 75g target in 2027) > Few metropolis regions with access limitation for ICE > ICE ban in Norway Low Push Pull > 130 g corporate CO 2 target > Subsidies in a selected numbers on countries > 95 g corporate CO 2 target > Limited subsidies > First city access limitation s for ICE > 85 g corporate CO 2 target (75g target in 2030) > Only small cities access limitation for ICE > ICE ban in Norway Very strong driver for shift towards E-Mobility Source: Roland Berger 11
Trend: Change of customer structure through new mobility New mobility supports the ongoing trend towards corporate customers New car registration Total vs. true fleets 1) in EU5 (in thousands '000) Total True fleet customers 9,034 9,524 10,366 +1,332 > True fleet customers (incl. new mobility concepts) are the main growth driver of new car registration in EU5 > The share of true fleet customers of new car registration is growing from 23.2% in 2013 to 25% in 2015 2,096 2013 2014 2,352 2015 2,591 +496 > Therefore corporate customers needs (e.g. European coverage, professional buying centers, etc.) will become more important in future 1) True Fleet: fleet without rent a car business and in-house car dealer registrations; EU5: Germany, France, Italy, Spain and UK Source: Dataforce; ACEA, Roland Berger 12
Going forward Key points to be considered Summary 1 2 3 4 5 Implementation of ADAS systems is fostered by regulations and customer demands And will have an impact on crash statistics and thus on crash part volume in future Only minor share of vehicles will be Level 4 or higher equipped in 2025 Thus fully automated driving is not expected before 2025 Connectivity is a increasing trend and happens already today New business models, players and rules will arise, creating new ecosystems. This engenders the need for the aftermarket supply chain to offer and innovate new services to be part of the future ecosystem ICE powertrain will continue to dominate in future; electric powertrains will play a minor role IAM needs to be prepared to service a mixed vehicle park in future New mobility concepts will change the customer structure towards a higher share of corporate customers Need to find answers to more EU-wide and globally structured customers. Source: Roland Berger 13