US AUTO INDUSTRY CHARTBOOK 1Q 218
Key Messages 1. Economic fundamentals and financial conditions remain supportive of demand 2. However, increasing off-lease returns will continue to exert downward pressures on sales and prices of new vehicles 3. The structural shift towards light-trucks has kept transaction prices high, supporting profitability 4. Sales of electric vehicles hit a record in 217; a substitution effect between hybrids and plug-ins is taking place 5. Autonomous driving, shared mobility, connectivity and electrification will transform the industry in the following years 2
SALES
Sales U.S. Total light weight vehicle sales (SAAR, million units) 25 2 Avg. 24-27 = 16.6 Feb-18 = 17.1 15 1 5 24 25 26 27 28 29 21 211 212 213 214 215 216 217 218 Total Domestic Imported Source: BBVA Research and Haver Analytics 4
Sales U.S. Total vehicle sales (SAAR, million units) 14.6 12.5 1 8 6 4.4.3.2 2.1. 24 25 26 27 28 29 21 211 212 213 214 215 216 217 218 Cars Light trucks Medium and heavy trucks (right axis) Source: BBVA Research and Haver Analytics 5
Sales U.S. Total vehicle sales (Share of total) 8% 7% 6% 5% 4% 3% 2% 1% % 24 25 26 27 28 29 21 211 212 213 214 215 216 217 218 Cars Trucks Source: BBVA Research and Haver Analytics 6
Sales U.S. Auto dealers: revenue (Year-over-year % change, 4Q moving average) 25 2 15 1 5 New Vehicle Sales Used Vehicle Sales Parts & Service Source: BBVA Research and Bloomberg 7
Sales U.S. Domestic auto inventory/sales ratio (Seasonally adjusted) 5. 4.5 4. 3.5 3. 2.5 2. 1.5 1..5. 24 25 26 27 28 29 21 211 212 213 214 215 216 217 218 Source: BBVA Research and Haver Analytics 8
Q4 Q4 Sales U.S. Sales growth by brand and market share (217, yoy % change and % market share) Share.5 1. 5 Share 5 1.5 2. 5 1 Brand Audi BMW 15 Brand Fiat Chrysler Land Rover Ford Mazda Mercedes-Benz -5 GM Hyundai -5 Mini Kia Mitsubishi Subaru Porsche VolksWagen -1 Toyota -1-5 5 Q3 Volvo -5 5 Q3 Source: BBVA Research and Bloomberg 9
Prices U.S. Consumer price index: cars and trucks (yoy % change) 2% 15% 1% 5% % -5% -1% -15% 27 28 29 21 211 212 213 214 215 216 217 New Used Source: BBVA Research and Haver Analytics 1
Prices U.S. Auto Prices 14 4, 135 13 125 12 35, 115 11 15 3, 1 95 9 27 28 29 21 211 212 213 214 215 216 217 218 Manheim used vehicles value index Edmunds Vehicle True Market Value (right axis) 25, Source: BBVA Research, Haver Analytics and Bloomberg 11
Financial conditions U.S. Interest rates (yoy % change) 8 7 6 5 4 3 2 21 211 212 213 214 215 216 217 218 48-month new car loan 36-month used car loan 6-month new car Source: BBVA Research and Haver Analytics 12
Financial conditions U.S. Newly originated installment auto loans ($ billion, eop, 4-qtr moving avg.) 16 14 12 1 8 6 4 2 27 28 29 21 211 212 213 214 215 216 217 Source: BBVA Research and Haver Analytics 13
Financial conditions U.S. Auto loan 9+ days delinquent (% of balance) 6 5 4 3 2 1 26 27 28 29 21 211 212 213 214 215 216 217 Source: BBVA Research and Haver Analytics 14
Leasing U.S. Leasing penetration rate (%) 35 3 25 2 15 1 5 25 26 27 28 29 21 211 212 213 214 215 216 217 Source: BBVA Research and Bloomberg 15
Leasing Off-Lease returns and supply* (Fiscal years, millions units) 6 5 4.45 4.98 5.35 4 4.1 3.21 3 2.81 2 1 214 215 216 217f 218f 219f *Assumes 36-month lease terms Source: BBVA Research and Bloomberg 16
Gasoline U.S. Spot price (cents per gallon) 45 4 35 3 25 2 15 1 5 27 28 29 21 211 212 213 214 215 216 217 218 Source: BBVA Research and Haver Analytics 17
CONSUMERS
Consumers U.S. Consumer sentiment index 14 12 1 8 6 4 2 27 28 29 21 211 212 213 214 215 216 217 218 Current economic conditions Consumer expectations Source: BBVA Research and Haver Analytics 19
Consumers U.S. Plans to buy a car within 6 months (% of respondents) 14 13 12 11 1 9 8 27 28 29 21 211 212 213 214 215 216 217 Source: BBVA Research and Haver Analytics 2
Consumers U.S. Employment and real disposable personal income (yoy % change) 6% 4% 2% % -2% -4% -6% 27 28 29 21 211 212 213 214 215 216 217 Real disposable personal income Nonfarm payroll Average RDI 21-1Q18 Source: BBVA Research and Haver Analytics 21
Consumers U.S. Household equity and home prices 16 14 12 1 8 6 4 2 27 28 29 21 211 212 213 214 215 216 217 Owners equity in real estate (NSA billion $, left axis) FHFA house price index (yoy change, right axis) 1% 8% 6% 4% 2% % -2% -4% -6% -8% -1% -12% Source: BBVA Research and Haver Analytics 22
PRODUCTION
Production U.S. Auto production 12 1 8 6 4 2 27 28 29 21 211 212 213 214 215 216 217 Industrial production index: autos (27=1, left axis) BEA Auto Production Estimate (SAAR, million units, right axis) 5. 4.5 4. 3.5 3. 2.5 2. 1.5 1..5. Source: BBVA Research and Haver Analytics 24
STRUCTURAL
1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 216 1976 1979 1982 1985 1988 1991 1994 1997 2 23 26 29 212 215 Miles per capita Million miles Fundamentals Mean age of passenger cars in operation (years) Vehicle miles of travel (total and adjusted by labor force) 12. 14 35 11.5 12 3 11. 1 25 1.5 8 2 1. 9.5 216: 11.6 6 15 9. 4 1 8.5 2 5 8. Population adjusted (left axis) Total (right axis) Source: BBVA Research and Haver Analytics 26
Demographics U.S. Population projections by age (millions) 3 25 2 15 1 5 21 213 216 219 222 225 228 231 234 237 24 243 246 249 252 255 258 15-44 years 65 years and over Source: BBVA Research and Haver Analytics 27
Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Electric vehicles U.S. Electric vehicle sales (units) 4 12 35 1 3 25 8 2 6 15 4 1 5 2 Hybrids Plug-in Hybrid (right axis) Battery Electric Vehicle (right axis) Source: BBVA Research and Haver Analytics 28
Disruptive trends transforming the auto industry Autonomous Driving Shared Mobility Connectivity Electrification 8% of the top OEMs have announced plans for highly autonomous technology to be ready for the road by 225 $32 billion had been invested in ridesharing start-ups alone. US customers expect usage of shared mobility to increase by around 8% once robo-taxis are available The percentage of consumers ready and willing to change car brands for better connectivity has doubled over the past two years Many massmarket OEMs are planning to add ten or more EV models as they can reach potential sales of up to 6K units in the next five years Source: Heineke, Kersten; Moller, Timo; Padhi, Asutosh, and Tschiesner, Andreas (217), The automotive revolution is speeding up, McKinsey & Company, September. 29
FORECASTS
Forecast Auto sales (millions units) Real GDP growth (% change) Unemployment rate (% avg.) Fed funds (%, eop) 5-year Treasuries (%, avg) 215 216 217 218 219 22 221 222 17.5 17.5 17.3 16.6 16.8 17.1 17.3 17.3 2.9 1.5 2.3 2.8 2.8 2.5 2.3 2.2 5.3 4.9 4.4 3.9 3.6 3.7 4. 4.3.5.75 1.5 2.5 3. 3. 3. 3. 1.5 1.3 1.9 2.7 3.2 3.4 3.6 3.7 Source: BBVA Research 31
US AUTO INDUSTRY CHARTBOOK 1Q 218