The North American Automobile Industry Kim Hill Director, Sustainability and Economic Development Strategies Center for Automo;ve Research Ann Arbor, Michigan FTA Revenue Es;ma;ng Conference Hilton Springfield, Springfield, IL October 7, 2013
The Center for Automotive Research conducts leading-edge research that impacts the future of the global automotive industry. Automo;ve industry contract research and service organiza;on CAR is a standalone Non- Profit 501(c)3 since 2003 Based in Ann Arbor, MI 30+ Employees CAR forecasts industry trends, advises on public policy, and sponsors mul;- stakeholder communica;on forums
CAR Research CAR Research and Analysis includes industry impact, economics and forecas;ng: Manufacturing, Engineering and Technology Transporta;on Systems Analysis Industry & Labor Analysis Group Sustainability & Economic Development Strategies
Automotive Industry Economic Analysis Long Range Sales, Produc;on, Employment Outlook CAR Research and Analysis focuses on industry impact, economics and forecasting!
CAR Research & Contribution Examples: Collabora;on & Partnership Development OEM & Supplier Rela;onships Automo;ve Industry Economics Forecas;ng; Sales, Produc;on, Employment Manufacturer Investment Analysis Na;onal Academies of Science Na;onal Research Council (NRC), Fuel Economy Technologies & Strategies Supply Base & Supply Chain Economic Impact Assessments Applied Research & Co- Development Supplier Benchmarking Product Timing Charts Tooling / Materials & Lightweigh;ng Safety Regula;ons Bio- Materials & Green Manufacturing CAR s Book of Deals, N.A. Manufacturing Facili;es Economic Development 50 State Tax Contribu;ons Automaker & Supplier Job Mul;pliers Automo;ve Communi;es Partnership Southern Automo;ve Research Agenda Connected Vehicle & ITS, HMI, Driver Distrac;on Autonomous Vehicles Consumer Percep;ons of Connected Vehicle Technologies Mobile Compu;ng Applica;ons Alterna;ve Powertrains and Electrifica;on Workforce, Skills Gap, Educa;on and policies Employment & Labor Sta;s;cs
The Automotive Communities Partnership Companies and communi;es working on enhancing the automo;ve endowment Widespread par;cipa;on from Ontario to Illinois, with diversity of par;cipants 35 regional ED organiza;ons represen;ng 50 coun;es 7 u;lity companies, 5 automobile companies (DCX, Honda, GM, Ford, Toyota), numerous suppliers (ArvinMeritor, Dana, Denso, JCI, etc.) Specialized analyses Objec;ve advice Best prac;ces Forum for topical issues and ac;ons Providing communi;es with much needed industry informa;on Collabora;ng on a common mission
2012 North American Automaker & Part Supplier Footprint
U.S. Light Vehicle Sales Percent Change YTD Through September: 2013 vs. 2012 11,773,338 Total + 872,677 100.0% 8.0% Light Trucks 5,791,648 + 591,554 49.2% 11.4% Passenger Cars + 281,123 5,981,690 50.8% 4.9% Source: Automotive News; CAR Research
Percent Change in Sales of Light Vehicles Per OEM: YTD Through September: 2013 vs. 2012 TOTAL 9.5% 10,636,091 + 924,391 100% 1,703,220 + 192,606 192,606 16.0% 16.0% 1,053,449 1,053,449 + 104,202 104,202 9.9% 854,248 9.9% + 854,248 79,671 + 79,671 8.0% 1,930,264 8.0% + 1,930,264 172,794 + 172,794 18.1% 1,533,722 18.1% + 1,533,722 134,208 14.4% + 134,208 1,213,986 14.4% + 105,357 1,213,986 11.4% + 871,496 105,357 + 4,898 11.4% 871,496 8.2% + 4,898 8.2% Ford 12.8% Fiat-Chrysler 11.0% GM 10.3% Nissan 9.8% Honda 9.6% Toyota 9.5% Hyundai-Kia 0.6% 0% 5% 10% 15% Source: Automotive News; CAR Research
U.S. Market Share: YTD September 2013 GM Units: 2,117,459 18.0% Ford Units: 1,887,672 16.0% Toyota Units: 1,698,179 14.4% Fiat- Chrysler Units: 1,357,003 11.5% Honda Units: 1,159,012 9.8% Hyundai- Kia Nissan Units: 964,601 Units: 941,116 8.2% 8.0% Source: Automotive News; CAR Research
Big 7 Monthly U.S. Market Share 1999 2013 YTD (September) 35% Ford GM Chrysler Honda Hyundai- Kia Nissan Toyota 30% 29.4% Percent of U.S. Market Sales 25% 20% 15% 10% 5% 24.7% 15.6% 8.7% 6.4% 4.0% 18.0% 16.0% 14.4% 11.5% 9.8% 8.2% 8.0% 0% 1.8% Source: Automotive News; CAR Research Year
U.S. Light Vehicle Monthly Sales and SAAR September 2011 September 2013 Monthly Sales (Millions) 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 15.6 15.4 15.9 14.2 15.1 15.8 14.4 14.4 14.1 13.113.3 13.6 13.6 13.8 14.1 14.5 14.9 15.215.3 15.2 14.3 16.1 15.3 15.5 1.5 15.3 1.5 1.4 1.4 1.4 1.3 1.4 1.3 1.3 1.3 1.3 1.2 1.1 1.2 1.2 1.2 1.1 1.1 1.2 1.1 1.1 1.0 1.0 1.0 0.9 SALES SAAR 16 14 12 10 8 6 4 2 0.2 0 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Monthly SAAR Source: Automotive News; CAR Research
Detroit Three at 45.3% in September 2013 U.S. Market Share: September 2013 & YTD Total GM Ford Toyota Fiat-Chrysler Honda Hyundai-Kia Nissan 9.8% 9.3% 8.2% 8.2% 8.0% 7.6% 11.5% 12.6% 14.4% 14.5% 18.0% 16.5% 16.0% 16.2% YTD 2013 September 2013 Source: Automotive News; CAR Research 0% 5% 10% 15% 20%
Unemployment Rate January 2008 July 2013 15% 14% Michigan Indiana Ohio U.S. 14.2% 13% 12% 11% 10.8% 10.6% 10.6% 10% 9% 8% 7% 6% 5% 4% 7.1% 5.7% 5.0% 4.7% 10.0% 8.8% 8.7% 8.4% 7.4% 7.2% Source: Bureau of Labor Sta/s/cs
Motor Vehicle & Parts Manufacturing Employment 1999 July 2013 Michigan Indiana Ohio U.S. State Level 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 1,130,900 105,100 316,300 153,500 47% change 64% change 53% change 50% change 681,500 148,500 81,500 70,200 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 July 2013 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 U.S. Source: BLS, U.S. DOL
Auto Sales and Economic Growth are Disconnected U.S. GDP Growth Rate and Vehicle Sales Growth Rate 1952 Q2 2013 12.0 Sales Growth GDP Growth 40 10.0 30 GDP Growth Rate 8.0 6.0 4.0 2.0 0.0-2.0 20 10 0-10 - 20 Vehicle Sales Growth Rate - 4.0 52 57 62 67 72 77 82 87 92 97 02 07 12-30 Source: Bureau of Economic Analysis
Household Net Worth and Vehicle Sales 1978-2013* Light Vehicle Sales Household Net Worth Net Worth (Real $) Light Vehicle Sales 18 16 14 12 10 8 6 4 2 0 1975 1980 1985 1990 1995 2000 2005 2010 90 80 70 60 50 40 30 20 10 0 Household Net Worth in Trillions Source: Federal Reserve Sta/s/cal Release, Z.1, Flow of Funds Accounts of the Unite States *Net worth as of Q1 2013; sales as of 1H 2013 SAAR. Real Household net worth is deflated by CPI.
Is the Auto Industry Back? Product? Yes. Producavity? Yes. Profitability? Yes. Investment? Yes. Producaon? Not quite yet. Sales? Not quite yet. Employment? No.
Per Vehicle Profits*, North America 2006 2013/1stH $3,000 $2,000 $1,000 $1,391 $1,094 $2,275 $1,921 $2,058 $2,124 $1,543 $1,120 $995 $975 $3,000 $2,000 $1,000 $- $(306) $452 $- $(1,000) $(1,416) $(1,054) Detroit Three Toyota and Honda $(1,000) $(2,000) $(2,000) $(3,000) $(3,308) $(3,229) $(3,000) $(4,000) 2006 2007 2008 2009 2010 2011 2012 1H 2013 *EBIT or automo;ve opera;ng income per vehicle sold. Global average for Chrysler figure. Honda excludes motorcycle, finance, and power products. $(4,000)
U.S. Auto Sales Are Still Improving Good: Net Household Wealth is improving Unemployment rate at 7.3% Used Vehicle prices and age of fleet are s;ll high scrappage low Auto density increasing... Sales up despite high prices pent- up demand! Increased leasing Credit is very available/interest rates almost record low Consumer confidence steady House prices improving The Cliff turned out to be a molehill so did the Sequester: Deficit down But... Bad: Economy s;ll growing at stall speed? Or reaching escape velocity? More Fiscal Cliffs? S;ll 12 million unemployed, or more... States/Ci;es cuxng spending and employment Corpora;ons nervous to hire Developing economies in trouble Europe is stagnant
They are Getting Old... U.S. Light Vehicle Age and Scrappage Rate 8.6 8.8 8.8 8.9 8.9 9.0 9.1 Average Age Scrappage Rate (%) 9.4 9.5 9.7 9.8 10.0 10.3 10.6 10.9 11.2 11.4 6.78 5.88 5.76 6.74 6.40 6.19 5.50 5.21 4.90 4.76 4.35 5.03 5.24 5.66 4.12 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: R.L. Polk
2013 U.S. Sales Forecasts (Units in Millions) 15.7 15.6 15.6 15.2 15.5 16.0 15.4 15.5 (9/13) (7/13) (7/13) (4/13) (4/13) (1/13) (7/13) (4/13) 15.5 (7/13) 15.3 15.5 (3/13) (8/13)
2013 U.S. Sales Forecasts (Units in Millions) 15.75* (15.5 16.0) 15.25 (15.0 15.5) 14.8 15.2 15.3 * Includes heavy duty trucks
U.S. Light Vehicle CAR Sales Forecast: 2007-2016 18 16 14 12 10 16.1 13.2 10.4 11.6% 11.6 10.4% 12.8 13.3% 14.5 8.3% 15.7 16.0 16.2 16.2 8 6 4 2 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: CAR Research, Jan. 2013
12 10 8 10.8 CAR U.S. Vehicle Production Forecast: 2013-2016 8.7 34.5% 7.8 11.6% 8.7 19.5% 10.4 4.8% 2.8% 10.9 11.2 11.4 11.3 6 4 2 5.8 Output increase: Shorter summer shutdown High Cap. U;l. Rate More lines added Vehicle exports increased 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: CAR Research, July 2013
Economic Contribution Study: Michigan Assembly Plant
Michigan Assembly Plant and Purchases from Independent Suppliers In the past two years, Ford Motor Company has invested over $770 million at Michigan Assembly Plant (MAP) convert the former truck plant to produce Focus and C- MAX The plant purchases over $1 billion in parts annually from Michigan- based businesses each year; $1.8 billion throughout the U.S. $3.2 billion total The Michigan Assembly Plant is served by 179 Tier 1 suppliers from across the United States 80 of these firms located in Michigan.
Economic Contribution of MAP to the Michigan Economy Direct employment at MAP is over 5,000 When supplier and spinoff jobs are taken into account, the facility supports another 19,000 jobs within Michigan 48,000 total jobs in the United States (coun;ng the assembly plant employees) These jobs generate annual wages of $1.8 billion in the state of Michigan $3.6 billion na;onally. MAP and its suppliers add $3 billion to the State Gross Product and almost $5.7 billion to na;onal GDP. MAP and its suppliers generate $70 million in Michigan state taxes annually
MAP Independent Supplier Spending by State (Millions of Dollars), 2011 Source: Center for Automo/ve Research analysis of data supplied by Ford Motor Company
Assessment of Tax Revenue Generated by the Automotive Sector
Study Findings Auto industry generated over $130 billion in government tax revenue in 2010, including $91.5 billion for state governments and $43 billion for the federal government. The sources of these revenues include: Sales taxes ($30 billion) Income taxes ($15 billion) Taxes and fees on use ($89 billion) Business taxes and fees ($750 million)
State Government Revenue Overview Auto industry generated at least $91.5 billion in state government tax revenue in 2010, which is 13 percent of state government tax revenues. $30 billion from taxes on vehicle sales and service $860 million from taxes on direct employment $60 billion from taxes and fees on use of vehicles $750 million from taxes on businesses
Automotive Tax Revenues as a Percentage of Total Taxes Paid to State Governments Michigan 12.6% Indiana 15.9% Illinois 16.2% Oklahoma 23.4% Texas 19.3% < 5% 5 to 10% 10 to 15% 15 to 20% > 20% Florida 19.9% Ohio 16.7%
Small Suppliers: Backbone of the Industry, but Constrained
Assembly Tier 1 Tier 2 Tier 3
Assembly Tier 1 New Investment Announced! $ Million New Jobs To Be Created Unit Produc;on Increase But who will staff that new capacity? Where do those workers come from? Who has the needed skills and background? Tier 2 Be er cancel my vaca;on Tier 3
Questions? Kim Hill Director, Sustainability and Economic Development Strategies Center for Automo;ve Research Ann Arbor, Michigan khill@cargroup.org