Automotive Central America and Caribbean Volume Source in the Shadow Diego Portillo Mazal Senior Market Analyst, Latin America Detroit, October 8, 2003
Central American and Caribbean Have Largely Been Ignored This is both a result of their relatively small importance in terms of economic growth and potential and to the sheer number of very small nations Central America has 7 countries with a combined population of around 37 million people, while the Caribbean has well over twenty island nations with roughly the same combined population While the countries vary in natural resources, wealth and density of population, they all have one thing in common --- tourism Enhanced standard of living, more stable economies, foreign currency from tourism and improved consumer credit allowed vehicle markets in the region to grow in the 1990 s Severe weather conditions, can have both a negative and positive effect on car sales. They destroy crops and hurt tourism, but destruction of parts of the parc can prompt replacement demand 2
Light Vehicle Sales Distribution 2002 Sales 16.5 (thousands of units) 11.4 43.8 11.6 13.8 122.8 15.9 PUERTO RICO DOMINICAN REPUBLIC GUATEMALA COSTA RICA PANAMA OTHER CARIBBEAN OTHER CENTRAL AM Puerto Rico represents the same volume of sales as all the other countries put together For this reason, and others, Puerto Rico deserves to be analyzed alone Only four other markets in the region have sales of over 10,000 units Some twenty islands in the Caribbean make up those 44,000 units shown Without Puerto Rico, the region sells roughly the equivalent of Chile s yearly consumption 3
We Could Look at Exhaustive Detail Percent Share of 2002 Regional Sales 4.8% 4.9% 52.1% 5.2% 5.8% 6.7% PUERTO RICO DOMINICAN REPUBLIC GUATEMALA OTHER CARIBBEAN COSTA RICA PANAMA EL SALVADOR TRINIDAD & TOBAGO CUBA NETHERLANDS ANTILLES HONDURAS NICARAGUA BAHAMAS JAMAICA BARDADOS HAITI BERMUDA BELIZE 4
Segmentation has Changed 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Light Vehicle Sales in Central America and Caribbean (not including Puerto Rico) 1990 1992 1994 1996 1998 2000 2002 A B C1 C2 D1 D2 E1 E2 CDV HVAN MVAN MIC MPV N/K PUP SUV 5
LCVs Steadily Taking Share The region is an oil importer, so there was always a call for fuelefficient vehicles In 1990, passenger cars represented 63% of the total sales A, B and C1 car sales made up over 50% of the vehicle market. Despite this, C1 segment has been much more important than the B segment has been in South America With new offerings and better features LCVs become more that just commercial vehicles PUP sales grew from just over 38,300 units in 1990 to over 88,500 units at the peak of sales in 1998 SUV sales, similarly, tripled from 10,100 units in 1998 to 33,400 units in 2000 With this, the sector has also been gaining in importance, displacing cars as the market leader, and taking over 50% of the sales in 2002 6
Best Selling Cars 2002 MODEL SEGMENT SALES SHARE 1 TOYOTA YARIS B 4,451 8.5% 2 NISSAN TSURU/SENTRA C1 3,828 7.3% 3 MITSUBISHI LANCER C2 3,101 5.9% 4 HONDA CIVIC C1 2,664 5.1% 5 MAZDA FAMILIA C1 2,497 4.8% 6 HYUNDAI VERNA C1 2,082 4.0% 7 PEUGEOT 206 B 1,723 3.3% 8 TOYOTA COROLLA C1 1,710 3.3% 9 NISSAN PULSAR C1 1,173 2.2% 10 SUZUKI KEI A 1,133 2.2% OTHER 27,960 53.4% Car Sales are dominated by Japanese models All Top 5 are Japanese In the Top 10, eight are Japanese, one is Korean and the other is French The market, however, is wide open The Top 10 models represent 53% of the cars sales Another 132 models made up the remaining sales in 2002 A total of 39 different brands show passenger car sales in the region in 2002 7
Best Selling LCVs Again, the best sellers are Japanese All Top 5 are Japanese In the Top 10, eight are Japanese, one is Korean and the other is French The presence of MVANs and HVANs in the Top 5, indicate that there is still a strong commercial component The Top 10 models represent 53% of the cars sales Another 132 models made up the remaining sales in 2002 A total of 39 different brands show passenger car sales in the region in 2002 2002 MODEL SEGMENT SALES SHARE 1 TOYOTA HILUX PUP 4,451 7.3% 2 MITSUBISHI PAJERO SUV 3,828 6.3% 3 TOYOTA HIACE MVAN 3,101 5.1% 4 DAIHATSU DELTA HVAN 2,664 4.4% 5 SUZUKI ESCUDO SUV 2,497 4.1% 6 TOYOTA RAV-4 SUV 2,082 3.4% 7 CITROEN BERLINGO CDV 1,723 2.8% 8 NISSAN PICKUP PUP 1,710 2.8% 9 TOYOTA LAND CRUISER SUV 1,173 1.9% 10 HYUNDAI SANTA FE SUV 1,133 1.9% OTHER 36,284 59.8% 8
America s Backyard Overlooked Market Share 1990 2002 Japanese 64.1% 58.0% Korean 10.3% 15.6% French 13.5% 7.3% Big 3 7.7% 11.9% Other 3.2% 2.8% The Big Three have by and large ignored this region that they should by all rights be able to easily supply Some share has been gained, but the Big Three have failed to capitalize on the growth of the SUV and PUP segments, that should be their strength It is important to note that less than 10% of the regional sales are sourced out of North America The Japanese have traditionally sold wherever there is even small volume to be found Japanese brands are seen as a good combination of quality and price The Koreans have come in strong in the second half of the 1990 s, taking some of the volume on the strength of price 9
European Luxury ROVER 14% Other European 6% AUDI 12% 2002 Share of Prestige Brand Sales Others 5% LAND ROVER 18% BMW 24% M-BENZ 21% Prestige Brand sales in the region has grown dramatically since 1990 Prestige brand sales grew from just under 2,500 units in 1990 to 5,900 units last year Most likely as a mix of the increase in wealth in the region and the demand for prestige vehicles by the tourism industry When consumers in the region think of luxury, they think of European (especially, German) Mercedes-Benz and BMWs are seen as the most status-asserting brands U.S. prestige brands, and brands like Acura and Lexus, are seen only in extremely modest numbers 10
Puerto Rico Moves More Like the U.S. 16% 14% 12% Light Vehicle Growth USA PRI By and large, Puerto Rico sales exhibit the same trend behavior as the US light vehicle market 10% 8% 6% 4% Exceptions, of course, can be found when extreme weather hits the island, which affects demand also in the following year 2% 0% -2% -4% -6% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 This pattern would probably also be found at the regional level inside the U.S. The forecast for Puerto Rico is positive but very cautious Most, if not all, the economic hiccups that affect the U.S. will also show up in Puerto Rico 11
Big Three Shows in Puerto Rico Percent Share of Light Vehicle Sales 80% 70% 60% 50% 40% 30% 20% 10% 0% 1996 1998 2000 2002 2004 2006 2008 Puerto Rico is somewhere between a Caribbean nation and the U.S. market, with the Big Three showing an average share of 30% Compared to 60% + in the mainland, and just over 10% in the rest of the Caribbean and Central America USA PRI CA 12
Puerto Rico: US-inspired Prestige Other US 5% 2002 Share of Prestige Brand Sales Others 13% LEXUS 16% Puerto Rico tastes seem more influenced by the U.S. market Prestige brand sales represent 4,600 units (roughly 3%) of the total vehicle sales in 2003 L ROVER 7% BMW 21% We expect that prestige brands will grow, as luxury brands expand their line-up downward INFINITI 7% We see here brands made for the U.S. market BUICK 9% M-BENZ 14% ACURA 14% Strong performance of Japanese luxury brands, specifically badged for the U.S. market, like Lexus, Acura and Infiniti 13
Total Light Vehicle Sales thousands of units 140 120 100 80 60 40 20 0 1996 1998 2000 2002 2004 2006 2008 2010 Caribbean Central America Puerto Rico 14
Central American and Caribbean Small Volume Remains Overshadowed We expect some growth in the region as their economies continue to grow, and as the countries seek further exports through trade accords These very open markets would have to fight very hard to have a voice at the table of any trade negotiation with important producers (not just consumers) like the USA, Canada, Mexico and Brazil We expect growth to be uneven from year to year as different effects hit each of the 27 nations (and two territories) in our forecast. We do not foresee sales in the region of over 260,000 units until after 2010 As a result, we see the relatively small region being overshadowed by its Southern and Northern neighbors 15
Automotive Thank You! Diego Portillo Mazal Senior Market Analyst, Latin America diego.portillo@globalinsight.com Tel: 781 301 9053