Progress of the Global Hybrid Market Lonnie Miller, Director Industry Analysis R. L. Polk & Co. November 10, 2008
Discussion Review of global hybrid vehicle market Growth regions Forecast U.S. Insights Who is the U.S. hybrid buyer? Where are buyers coming from? How loyal are they? Regional penetration rates? Take rates compared to gas-counterparts?
Global Hybrid Market Five Years Ago Top 5 nations represented 99% of global hybrid volume 19 additional nations contributed to the remaining 1%
Global Hybrid Market Today Top 5 nations represent 89% of global hybrid volume with the balance falling into an increasing number of other countries
Global Growth Global Hybrid CAGR: 50% (2003 2007) Global Volumes 2003 2007 65,760 501,022 Western Europe: 98.1% Eastern Europe: 265.8% North America: 51.5% Central Europe: 186.0% Middle East: 344.4% Asia (without Japan): 183.5% Japan: 31.0% Central & South America: 131.2% Africa: 188.8% Based on Compound Annual Growth Rate (2003-2007). Indicates minimum of 2,000 hybrid units during 2007 CYr. Oceania: 76.1%
Growth in Global Hybrid Volumes: 37% CAGR ( 98 08) 600,000 555,824 500,000 400,000 300,000 200,000 157,015 100,000 17,703 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008* * Projection based on Jan. - Aug. 2008
Where will the Global Hybrid Market Be Tomorrow? Hybrid Market Share Forecast (% Share of Total Vehicle Market Per Region) 6.0 5.0 4.0 4.2 5.3 5.0 North Am. Western EU 3.0 2.0 1.0 0.0 2.8 2.4 0.5 0.2 0.2 0.3 2004 2005 2006 2007 2008 2009 2010 2011 2012 Central EU
Where will the Global Hybrid Market be Tomorrow? Continued plans for diverse body styles: Large SUVs and Pickups (US) Luxury offerings Mercedes GL in 2009MY Lexus hybrid-only vehicle in 2010MY Mercedes ML in 2010MY Launch of Fusion & Milan hybrid versions in 2010MY Reintroduction of new Honda Insight in 2010MY New hatchback introduction from Honda (CR-Z) in 2011MY New body style availability with Prius Station Wagon in 2012MY
Risks Supply & Technology Funding Battery supply Manufacturers are petitioning governments for grants to expand research into the types of batteries that could be used for powering hybrid vehicles Price Premiums In the U.S., the green premium can be as much as 44% on the Lexus LS600h Regionally, the premium percentages can vary even for a single model In Europe, the Honda Civic hybrid has a 5.2% ( 1.24) premium over the non-hybrid version In Japan, the Civic hybrid premium is nearly double that at 9.8% ( 215,950) In the US, the premium for the Civic hybrid is greater still at 17.2% ($3,437) Consumer Mind-set Primary demand will be challenged when odds of stable or lower fuel prices are present, particularly with other prevailing consumer financing and economic pressures
U.S. Overview Hybrid buyer profiles Source of sales / owner loyalty Regional penetration Take rates compared to gas-counterparts
Hybrid/Electric Models in U.S. 50 40 30 20 10 0 Number of Hybrid/Electric models (*) U.S. registrations ('000) By Calendar Year 47 350 354 255 31 200 24 15 83 11 46 8 3 5 2003 2004 2005 2006 2007 2008 2009 2010 400 350 300 250 200 150 100 50 0 Honda Insight (1999) Honda Civic (2002) Toyota Prius (2000) Ford Escape Honda Accord Note: Limited volume 05 GM Silverado/Sierra hybrids not included Lexus RX Mercury Mariner Toyota Highlander * Based on Polk s Future Vehicle Table (as of 11-06-2008) ** Discontinued as of November 2008 Lexus GS Saturn Vue Toyota Camry Lexus LS Mazda Tribute Nissan Altima Saturn Aura Cadillac Escalade Chevy Malibu & Tahoe Chrysler Aspen** Dodge Durango** GMC Yukon Honda FCX (Fuel cell) Mercedes GL Tesla Roadster (Electric) BMW X6 Chevy Silverado Honda Insight Ford Fusion GMC Sierra Lexus Hybrid-only Mazda 6 Mercedes ML & S Mercury Milan BMW 7 Chevy Volt Dodge Ram Fisker Karma Ford Edge Honda CR-Z Hyundai Sonata Kia Rio Lincoln MKX Nissan Electric Porsche Cayenne Suzuki Grand Vitara Toyota Corolla, Plugin, Sequoia, Tundra
Age Mix: Not Much Difference Between Hybrid and All Buyers 100% Age Mix 75% 50% 25% 0% * Buying activity during 1 st half 2008 CY Total Industry Hybrid Segment 18-24 Yrs. Old 25-34 Yrs. Old 35-44 Yrs. Old 45-54 Yrs. Old 55-64 Yrs. Old 65-74 Yrs. Old 75+ Yrs. Old
Household Income: Largest Differences Seen at the Two Extremes 100% 80% Household Income Mix 31% over $100k 48% over $100k 60% 40% 20% 0% * Buying activity during 1 st half 2008 CY Total Industry 22% under $40k Hybrid Segment <$20k $20k-30k $30k-40k $40k-50k $50k-75k $75k-100k $100k-125k $125k-150k >$150k 12% under $40k
Multicultural Group: Hybrids Mildly Skew Toward Asian Buyers 100% Ethnic Mix 80% 60% 40% 20% 5% African American 5% Asian 10% Hispanic 0% Total Industry Hybrid Segment * Buying activity during 1 st half 2008 CY Hispanic Asian Am. African Am. Balance 2% African American 7% Asian 6% Hispanic
Source of Hybrid Buyers Tend to Draw from Same Size Class* 55% of hybrid sales from 3 Categories: 27% Midsize Car 15% Midsize SUV 32% Midsize Car 34% Midsize Car 38% Midsize SUV Prius Camry RX400h 13% Small Car * Buying activity during 2007 CY 51% Prestige Lux. 29% Small Car 27% Midsize Car LS600h Civic Aura
On average, 1 in 5 hybrid owners buy same model again* 29% 12% Prius Highlander 16% 11% Civic Camry 15% RX400h Escape * Buying activity during Oct 07 Jun 08. Shown models where min. 2,000 owners returned back to market. 10%
Hybrid Penetration: 2007 CYE % of Total Registrations 1.9%+ 0.2% - 1.9% 0.1% - 0.2% 0.0% - 0.1%
Hybrid Penetration: 1 st Half 2008 % of Total Registrations 1.9%+ 0.2% - 1.9% 0.1% - 0.2% 0.0% - 0.1%
Higher Hybrid Take Rate for SUVs (U.S.) 35% 30% 2-Year Hybrid take-rate trend for Top 5 hybrid models (*) August-October 2007: Highlander Model year change 25% 20% 15% 10% 5% 0% 2006-Q1 2006-Q2 2006-Q3 2006-Q4 2007-Q1 2007-Q2 2007-Q3 2007-Q4 2008-Q1 2008-Q2 ESCAPE CIVIC RX CAMRY HIGHLANDER (*) excl. Toyota Prius
Six Month Take-Rate Trend for the Top 5 Hybrid Models (U.S.)* 6-Month Hybrid take-rate trend for Top 5 hybrid models (*) 400 30% 380 25% 360 340 20% 320 300 280 260 Jan. 2008 Feb. 2008 Mar. 2008 Apr. 2008 May. 2008 Jun. 2008 CAMRY HIGHLANDER ESCAPE CIVIC RX Avg. gas price (*) excl. Toyota Prius 15% 10% 5%
GLOBALLY Take-Rate of Hybrid Models vs. Their Gasoline/Petrol Counterparts Top five hybrid models account for the vast majority (86%) of the overall hybrid market The range varies from 7% of the Civic to 21% of the Highlander Hybrid % Total Model Volume Toyota Highlander Toyota Camry Ford Escape Honda Civic 0% 5% 10% 15% 20% 25% * excl. Toyota Prius
Summary Leverage halo effect having alternative fuel vehicle product line transcends global regions Growth potential certainly exists Monitor take-rates of base model Public believes technology is for real Educate educate educate Continue to monitor buyer motivators Eco-warriors New technology early adopters Save at the gas pump today