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2009 04 Automotive Market Outlook   Frost & Sullivan
 

2009 04 Automotive Market Outlook Frost & Sullivan

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A grim market condition awaits automakers, burdened with a huge pile-up of inventory, due to weak demand and have had to cutback significantly on vehicle production plans and profitability targets for ...

A grim market condition awaits automakers, burdened with a huge pile-up of inventory, due to weak demand and have had to cutback significantly on vehicle production plans and profitability targets for 2009 since the advent of the economic slowdown. The uncertainty surrounding economic recovery and the continued lack of sufficient credit in the market is hurting sales and consumer confidence, which are key requirements for re-bound in positive sales.

This presentation provides Frost & Sullivan\'s perspective on how growth is expected to unfold in the next two years and what the opportunities under current market conditions are.

Take the opportunity to submit a question by sending an email to alvin.chuafrost.com and include the title of the event in the subject line.

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    2009 04 Automotive Market Outlook   Frost & Sullivan 2009 04 Automotive Market Outlook Frost & Sullivan Presentation Transcript

    • Automotive & Transportation Crisis hits Carmakers: Impact of Economic Slowdown and Future Automotive Market Outlook Vivek Vaidya – Director, Asia Pacific Automotive & Transportation Practice Andriy Ivchenko – Team Leader Russia & CEE, Automotive & Transportation Practice Vigneshwaran Chandran – Team Leader, Business Strategy and Innovation Group, Europe 28th April 2009
    • Agenda Impact of Economic Slowdown & Future Automotive Market Global Response of Governments to Automotive Industry: Outlook Support required to stimulate consumer spending on purchase of cars Automotive Industry Outlook: Government Bailout Packages (World), 2008 Packages (US$ Billion) Overview of Global Automotive Sales – History, Note: All figures as per 24 th March 2009 US$ 22.4 20 Weak health of Carmakers requiring financing support Greater focus on 15 providing consumer incentives to 10 stimulate demand $ 9.2 $ 5.3 $ 5.9 5 $ 3.7 $ 3.3 $ 2.0 $ 2.0 $ 2.3 $ 1.6 0 Italy Argentina Germany China Brazil UK Spain Russia France USA Forecast and Breakdown by Segments 1 US$ = €0.75 Tax rebates / Scrapping Bonus / Loans / Credit Assurances / Source: Frost & Sullivan Cash Subsidies Investment Government Credit Consumer Incentives to Financing Stimulate Car Sales Conditional Bailout Nationalization 4 Developed Markets in Red; Russia and CEE are expected to clock positive growth in 2010; West EU down until mid ‘10 European Auto Sales, 2008 European Auto Sales, 2008 18.0 3.5 -19.5% Million Units -11.8% Million Units -2.1% 12.0 2.5 Western European Automotive Sales Outlook 6.0 1.5 -3.4% -2.3% 4.8% 0.0 0.5 2007 2008 2009 2010 2007 2008 2009 2010 Germany France UK Italy Eastern Europe* Western Europe Spain Russia West EU* *Eastern Europe excludes Russia volumes *Austria, Belgium, Denmark, Finland, Greece, Ireland, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland • Russia and Turkey are the only considerable growth markets in 2010 with positive growth trends, although they are also expected to witness weakness in 2009 • Russia is expected to become the largest market in Europe on par with Germany by 2010 • All key 5 western European markets are expected to witness negative growth with 2010 expected to be the year of recovery with improving economic conditions 7 Increasing competition between Chinese and Global OEMs – Chinese brands expected to account for more than 32% of passenger car sales by 2012 Automotive Industry Outlook: Light Vehicle Sales Automotive Industry Outlook: Light Vehicle Sales – by VMs (China), 2008 – by Segment (China), 2008 Asia Automotive Sales Outlook (China, India, SHANGHAI-GM 100% 8.0% Sports, Van & Others 35.4% 7.4% SAIC-SGM-WULING 18.4% 18.0% FAW VW Pickup / Truck 7.3% SHANGHAI VW SUV 6.1% 6.9% FAW 75% Vehicle Segment % 4.8% 4.5% MPV 1.6% CHANGAN 3.0% 2.7% 1.4% Super Luxury 7.2% GUANGZHOU HONDA 13.2% 13.1% FAW TOYO TA High Luxury 6.5% DO NGFENG NISSAN 50% 3.9% Low Luxury 4.1% 6.3% 4.5% 4.7% 4.7% CHERY 33.8% Large Beijing Hyundai 35.7% Source: Frost & Sullivan Others High Medium 25% Low Medium • The Chinese market is still highly fragmented with no Indonesia, Malaysia & Thailand) 10.3% 12.8% Small OEM having more than 8% of the total market 7.0% 6.8% Basic • Many large OEMs except brands such as Toyota and 0% 2008 2010 Nissan, are expected to see a sales downturn in 2009 Source: Frost & Sullivan • OEMs such as Changan Mazda, FAW Toyota etc are • The low medium segment is the largest segment in cutting production and others such as FAW and Chery China and is expected to grow at a moderate 5% have delayed their market expansion plans into the US CAGR between 2007 and 2010 • New models launches such as Besturn B50 from FAW, • SUV demand has been high in China in the past few Florid from Great Wall and Fiesta from Ford have been years and is expected to grow from less than 6% delayed until market recovery market share in 2007 to more than 8% in 2010 11 Low credit availability for VMs, suppliers and retail buyers has severely affected Russian car sales; Recovery not until Q4`09 Automotive Industry Outlook: Light Vehicle Sales Government Measures: (Russia), 2007 – 2010 • The Russian government has earmarked a total of 4 200 Billion Rubles as bailout package for Auto market Units (Million) 3 • Increase import duties on foreign-made cars, to 10.1% increase local production and stimulate growth -36.1% Russia & Turkey Automotive Sales Outlook 2 7.0% • As with other major global bailout packages, end- consumer incentives form a very marginal part (1%) of government expenditure for the Auto industry 1 Outlook: 2007 2008 2009 2010 Source: Frost & Sullivan • Increasing pressure on used car imports with revision of used vehicle age to 5 years from 7 years, • The Russian market which grew explosively at 24% and to stimulate demand in the new car market 30% in 2006 and 2007 respectively, is expected to slowdown drastically due to the global economic crisis • Although high import duties on foreign and used cars may impact short-term sales, it is expected to • The market is expected to fall an estimated 36% in 2009 support the long term production growth in Russia on the back of a slowdown in imported cars and a huge lack of credit financing • Huge potential for low-cost (affordable cars) with three fourths of cars sold being under US$20,000 • Vehicle imports which constitutes more than 40% of sales, are expected to almost halve in 2009 • Governmental measures to subsidize auto loans for Russians are expected to generate additional • OEMs such as Hyundai and Renault have delayed 200,000 units in sales in 2009 opening of production or assembly facilities 21 Road to Recovery: Frost & Sullivan expects a V-shaped sales downturn and recovery – Global Car Sales expected to reach 2006 levels only by 2012 Automotive Industry Outlook: Light Vehicle Sales – Recession and Recovery (World), 2006 - 2012 65 • Global EV volume to exceed 200,000 • 5.4m micro-hybrid sales globally 62 Million • 0.9m full hybrids Q4 ’07 US Enters Recession Q3 ’08 EU Conclusions & Future Outlook Unit Sales (Million) Enters • 17 New EV model 60 Recession launches • 2.6m micro-hybrid sales globally • 0.6m full hybrids Q4 ’08 BRIC Q3’10 EU & Markets Slow Russian market, Down start recovery 55 Q4’09 / Q1’10 US recovers Q3’09 Emerging markets, India, China stage recovery 50 2006 2007 2008 2009 2010 2011 2012 Recession expected to impact Source: Frost & Sullivan sales for at least two full years 25 Question & Answer (Q&A) Session 2
    • Recessions in the Automotive Industry usually last for 2 years; 2010 is expected to be the turnaround year Global Automotive Passenger Cars Production History 1950 – 2008 30 31.2 30.8 36.3 35.5 41.3 41.4 28.9 30 35.1 34.2 40.1 28.6 26 25 27.5 26.7 60 1973 1974 1975 1976 1978 1979 1980 1981 1982 1983 1990 1991 1992 1993 2000 2001 2002 50 4 3 Units (Million) 40 1 2 Collapse of the housing market in the 30 US, leads to bank collapses in the US and Europe. Credit availability is 20 sharply curtailed and consumer confidence falls to a low. 10 0 1950 1955 1960 1965 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: American Automobile Manufacturers Association, DRI-WEFA, and Global Insight; Frost & Sullivan Analysis 1 1973 – 75 2 1980 – 82 3 1990 – 93 4 2001 – 03 -1973 Oil Crisis driven by OPEC -1973 oil crisis and 1979 energy -The 1987 stock market crash, -Dot-com bubble bursts driving embargo on oil exports to west, crisis leads to high inflation and followed by the 1990 Gulf war the economy down leads to global economic economic stagnation (stagflation) and a resulting rise in Oil prices -September 11 attacks on the US slowdown affected global industrial further causes an economic production contraction 3
    • Global Response of Governments to Automotive Industry: Support required to stimulate consumer spending on purchase of cars Automotive Industry Outlook: Government Bailout Packages (World), 2008 Packages (US$ Billion) Note: All figures as per 24th March 2009 US$ 22.4 20 Weak health of Carmakers requiring financing support Greater focus on 15 providing consumer incentives to 10 stimulate demand $ 9.2 $ 5.3 $ 5.9 5 $ 3.7 $ 3.3 $ 2.0 $ 2.0 $ 2.3 $ 1.6 0 Italy Argentina Germany China Brazil UK Spain Russia France USA 1 US$ = €0.75 Tax rebates / Scrapping Bonus / Loans / Credit Assurances / Source: Frost & Sullivan Cash Subsidies Investment Government Credit Consumer Incentives to Financing Stimulate Car Sales Conditional Bailout Nationalization 4
    • The global automotive market is expected to contract at a CAGR of close to -5% between 2007 and 2010 Automotive Industry Outlook: Sales Volumes of Light Vehicles (World), 2007 – 2010 CAGR : –4.6% 63.7 million 55.2 million 7.9m 3.0m 2.0m 0.54m 0.53m 6.3m 0.49m 0.43m 2.4m 1.5m China Brazil India Malaysia Indonesia 20.0 With import barriers and 2007 2010 15.0 collapsing vehicle credit Units (Million) financing, sales is expected to plummet a whopping 10.0 36% in 2009 and stabilize in 2010. Imports expected to halve in 2009 to 0.55m 5.0 0.0 2007 2007 North Western Eastern Russia South Asia Japan Middle East 2010 2010 America Europe Europe America & Africa Note: CAGR calculated for 2007 to 2010 Note: All figures are rounded; the base year is 2008. Source: Frost & Sullivan 5
    • Small, affordable and clean cars are mega trend in the auto industry in the next 5 years Global Sales Volumes of Light Vehicles – by Vehicle Segment, 2008 18.9m 13.2m • Basic and small cars have a 10% 5.0m strong sales trend in Europe Vans 13.5m 9% and Asia at present making 13% Vans one fourth of the market size Vans 42% • USA to witness a strong growth of Small cars and super-minis in 2009 and 10 30% • Pickup sales expected to reach close to 1m units, while SUVs are expected to sell 1.3m units in Asia by 2010 41% • Asia and Europe are big 49% markets for commercial Vans, while Japan has Vans in the 16.1% passenger segment too Europe USA Asia* Japan (including Russia) Basic Small Low Medium High Medium Large Low Luxury High Luxury Super Luxury MPV *(India, China, Thailand, Malaysia, SUV Pickup / Truck Sports, Van & Others Indonesia, Korea) 6
    • Developed Markets in Red; Russia and CEE are expected to clock positive growth in 2010; West EU down until mid ‘10 European Auto Sales, 2008 European Auto Sales, 2008 18.0 3.5 -19.5% Million Units Million Units -11.8% -2.1% 12.0 2.5 6.0 1.5 -3.4% -2.3% 4.8% 0.0 0.5 2007 2008 2009 2010 2007 2008 2009 2010 Germany France UK Italy Eastern Europe* Western Europe Spain Russia West EU* *Eastern Europe excludes Russia volumes *Austria, Belgium, Denmark, Finland, Greece, Ireland, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland • Russia and Turkey are the only considerable growth markets in 2010 with positive growth trends, although they are also expected to witness weakness in 2009 • Russia is expected to become the largest market in Europe on par with Germany by 2010 • All key 5 western European markets are expected to witness negative growth with 2010 expected to be the year of recovery with improving economic conditions 7
    • Small segment cars expected to witness growth in Eastern Europe, especially post 2010 with the launch of low-cost cars designed for CEE and Russia Automotive Industry Outlook: Light Vehicle Sales Automotive Industry Outlook: European – by VMs (Europe), 2008 Powertrain Mix (Europe), 2015 Volkswagen Group 2% 1.7% PSA Group 7% 8.8% 17.0% 18% 4.4% Renault-Nissan Group 4.4% Ford Group 5.5% General Motors Group 41% 12.5% Fiat Group 32% 5.7% Toyota Group Daimler Group 8.4% 11.7% BMW Group 8.4% Hyundai Group 11.5% Gasoline Diesel Suzuki Group Others Hybrids Alternative Fuels Note: 1. *Ford Group includes volumes of Jaguar and Land Rover account 0.7% market share Electric Vehicles Source: Frost & Sullivan 2. Figures exclude Russia • Micro Hybridisation to continue on a large scale in • Volkswagen leads sales in Europe with a strong 2008 in Europe a rapidly falling market • EVs infrastructure – public paid recharging stations • PSA had a weak sales in the second half of 2008 and to cater to both EVs and plug-in Hybrids. end with total annual sales down by more than 15%, in sync with the market • Downsizing and Turbocharging – Drive towards compliance with ACEA CO2 norms in Europe; SCR • Renault, which has a strong focus on emerging markets systems - EURO 6 application in passenger vehicles including Russia and Eastern Europe saw a fall in sales likely. of more than 5% in 2008 8
    • China will continue to grow in 2009, although at a very low- rate than anticipated Automotive Industry Outlook: Light Vehicle Sales Government Measures: (China), 2007 – 2010 • The National Development and Reform Commission launched a rescue package for sustaining more than Units (Million) 8 8.2% 12% growth of the automotive industry, by: 3.6% 12.1% 1. RMB 5bn towards boosting local consumption through vehicle purchase tax cuts and incentives to 6 scrap old models in favour of new ones 2. RMB 10bn Government funding supporting development of fuel efficient vehicles and new-energy 4 2007 2008 2009 2010 vehicles Source: Frost & Sullivan • Reduction in Consumption tax from 3% to 1% for • The Chinese market is expected to continue sales small cars with engine size less than 1 litre (Sept 08) growth, although at a slower rate – 8% CAGR from 6.3 Outlook: million units in 2007 to 7.9 million units by 2010 • Chinese OEMs such as Chery are delaying their • While Sales in China has seen an explosive CAGR of market entry into developed markets such as US, due over 20% between 2002 and 2007, it is expected to to the global slowdown cool down and moderate to 3.6% in 2009 • Chinese OEMs are trying to penetrate tier 2 and tier 3 • RMB appreciation, rise in raw material prices, low cities in China for growth of vehicle sales demand in export markets (Middle east & South America) and low credit availability have affected • Exports to emerging markets such as Russia, Ukraine China's auto export market and Vietnam are a popular growth routes too 9
    • Increasing competition between Chinese and Global OEMs – Chinese brands expected to account for more than 32% of passenger car sales by 2012 Automotive Industry Outlook: Light Vehicle Sales Automotive Industry Outlook: Light Vehicle – by VMs (China), 2008 Sales – by Segment (China), 2008 SHANGHAI-GM 100% 8.0% Sports, Van & Others 35.4% 7.4% SAIC-SGM-WULING 18.4% 18.0% FAW VW Pickup / Truck 7.3% SHANGHAI VW SUV 6.1% 6.9% FAW 75% 4.8% 4.5% Vehicle Segment % 1.6% MPV CHANGAN 3.0% 2.7% 1.4% Super Luxury 7.2% GUANGZHOU HONDA 13.2% 13.1% FAW TOYOTA High Luxury 6.5% DONGFENG NISSAN 50% 3.9% 6.3% Low Luxury 4.1% 4.5% 4.7% 4.7% CHERY 33.8% Large Beijing Hyundai 35.7% Source: Frost & Sullivan Others High Medium 25% • The Chinese market is still highly fragmented with no Low Medium OEM having more than 8% of the total market 10.3% 12.8% Small • Many large OEMs except brands such as Toyota and 7.0% 6.8% Basic 0% Nissan, are expected to see a sales downturn in 2009 2008 2010 Source: Frost & Sullivan • OEMs such as Changan Mazda, FAW Toyota etc are • The low medium segment is the largest segment in cutting production and others such as FAW and Chery China and is expected to grow at a moderate 5% have delayed their market expansion plans into the US CAGR between 2007 and 2010 • New models launches such as Besturn B50 from FAW, • SUV demand has been high in China in the past few Florid from Great Wall and Fiesta from Ford have been years and is expected to grow from less than 6% delayed until market recovery market share in 2007 to more than 8% in 2010 10
    • Booming exports to constitute one-fourth of total production (3.5million) by 2015 Automotive Industry Outlook: Light Vehicle Sales Government Measures: (India), 2007 – 2010 • The government’s fiscal package to stimulate passenger 2.5 cars (PC) sales include a 4% excise duty cut for all Units (Million) vehicle types 2.0 • PSU banks to provide a line of credit to NBFCs, to 14.0% encourage lending to consumers for buying commercial 11.0% vehicles (CV) 2.1% 1.5 • Consumer incentives for CV purchases in the form of accelerated depreciation at 50% for purchases between January 1 and March 31 1.0 2007 2008 2009 2010 Outlook: Source: Frost & Sullivan • Government stimulus for PC segment has resulted in • The growing population of middle class with increasing YOY sales growth in Feb 09, although CV sales continued to slip in January & February 2009 affordability to buy basic mobility is expected to spur growth of Indian market • An increasing demand for personal mobility and the narrowing price gap between two-wheelers and low-cost • The automotive market is expected to continue to grow cars (Ex., Tata Nano) will drive growth in India, with sales growth increasing rapidly, touching • Hyundai, Suzuki and Tata are aiming to make India a the two million mark in 2010 low-cost production hub • Growth in the low-cost car segment is expected to be • Exports expected to exceed one-fourth of total vehicle moderate until 2010, with Tata’s planned production of production between 2012 and 2015 the Nano to amount to only 40,000 units in 2009 11
    • India to become the home for manufacture of low-cost cars with demand both from domestic and South Asian population Automotive Industry Outlook: Light Vehicle Sales Automotive Industry Outlook: Light Vehicle – by VMs (India), 2008 Sales – by Segment (India), 2008 100% 1.1% Maruti Suzuki Group 5.3% Sports, Van & Others 2.2% 3.5% 4.5% 13.1% 9.0% Tata Pickup / Truck 3.9% 4.3% 46.8% Hyundai Group 13.0% 11.6% SUV 75% Mahindra & Mahindra MPV Vehicle Segment % 6.7% 5.5% 7.7% 0.5% 1.5% General Motors Group 3.9% Super Luxury 4.3% Honda Group 17.4% High Luxury 50% 18.4% 13.5% Toyota Group Low Luxury Ford Group Large 14.6% Others High Medium Source: Frost & Sullivan 25% 45.2% 42.2% Low Medium • Maruti-Suzuki joint venture is the market leader Small commanding about 40% of the total market share Basic 0% • Tata to gain a significant portion of the low-cost car market 2008 2010 Source: Frost & Sullivan with production of its Nano peaking at 250,000 units in • Alto, Indica, Wagon R and Santo are the most successful 2010 basic segment models with a combined sales of 0.6 million, more than 75% of segment sales • Hyundai has a huge production base of 300,000 cars which was expanded to 600,000 units in 2008; Potential low-cost • Medium segment cars along with Pickups are expected to car beyond 2010 witness considerable growth at a CAGR > 20% • New market entrants, such as Renault-Bajaj, expected • The phase out of models such as Suzuki Versa and Omni after 2010 with increasing demand for low-cost cars is expected to wipe out the Van segment 12
    • 2008 was a historical year for Indonesia market with highest ever sales and became No. 2 market in ASEAN Automotive Industry Outlook: Light Vehicle Sales Government Measures: (Indonesia), 2006 – 2009 0.7 • JIEPA (Japan Indonesia Economic Partnership Agreement), signed in 2007 would benefit Indonesian Units (Million) 0.6 automotive & auto parts industries 39.3% (29.2%) 0.5 • Under this agreement, Japanese import in Indonesia 35.9% would be cheaper 0.4 • Japanese companies set to train manpower to improve 0.3 overall capability of auto component sector • Indonesia automotive industry stands to gain from this 0.2 2006 2007 2008 2009 in long term Source: Frost & Sullivan • Government intends to continue with initiatives for • Indonesian market rebound strongly from the lows of 2007 stimulating exports from Indonesia, such as zero import in 2008 but is expected to drop by 29.2% in 2009 due to duty on components for exports-oriented units economic slowdown and limited model launch Outlook: • 2008 saw a stronger purchasing power of people outside of • Chinese manufacturers plan to make Indonesia as Java and higher demand of commercial vehicles due to the automotive production base rise of commodity export (coal, CPO, etc). • GM is likely to reopen the facilities; Proton is likely to • Strong economic condition and low interest rate in the first assemble the MPV half of 2008 increased the new customers confidence in taking up new loan for first vehicle ownership and • Eco cars are set to enter Indonesian market following replacement. encouraging response in Thailand 13
    • Toyota, Daihatsu, Nissan, Mitsubishi and Isuzu gained market share at the expense of Suzuki, Honda and other makes; MPV segment would continue to dominate the Indonesia segment Automotive Industry Outlook: Light Vehicle Sales Automotive Industry Outlook: Light Vehicle – by VMs (Indonesia), 2008 Sales – by Segment (Indonesia), 2008 100% 3.1% 3.2% 6.9% Toyota 5.7% 5.6% 4.3% 35.1% Mitsubishi 5.3% 24.3% Daihatsu 26.8% 75% 8.7% Vehicle Segment % Suzuki O t he rs S e da n Honda P ic k up Nissan 50% 12.3% 4 x2 t ype Isuzu 12.9% 14.5% Others 64.4% 66.8% Source: Frost & Sullivan 25% • Toyota remains as no.1 while Suzuki market share dropped due to the stronger sales growth by Daihatsu and Nissan. 0% 2008 2009 Source: Frost & Sullivan • Grand Livina, Livina XR and Livina X-Gear launched in • Demand of 4x2 MPV is likely to be affected by global crisis. January and May 2008 helped Nissan reach sales of 31K - a Affordable and fuel efficient MPV with price range between more than 67% sales growth in 2008 Rp 100-200 millions will continue to gain good sales, due • Mitsubishi benefited from the rise of commodity export to condition of Indonesia family mobility needs and shift that created higher demand for pickups and trucks. This from higher price segment. has helped its sales reach 87K units in 2008, a more than • Sedan sales is expected to drop especially cars above Rp 42% growth. 200 millions. 14
    • New model launch and stronger purchasing power assisted the high growth of the Malaysia automotive industry in 2008 Automotive Industry Outlook: Light Vehicle Sales Government Measures: (Malaysia), 2006 – 2009 0.6 • Bank Negara’s move to cut the Statutory Reserve Requirement (SRR) and Overnight Policy Rate (OPR) will Units (Million) assist in lowering the consumer financing rate (8.5%) 12.5% • Car financing rate is expected to lower slightly around 0.5 (0.7%) 2.8%~2.9% in first half of 2009 • High domestic consumption and active countermeasures by the government will continue to support the economic activities 0.4 2006 2007 2008 2009 Outlook: Source: Frost & Sullivan • Passenger vehicle will see a higher concentration of sales in entry level models which will benefit the national • Malaysia automotive industry has achieved another high carmakers in retaining their sales point of domestic sales in 2008 with a good growth of 12.5% in 2008 • MPV sales will grow in anticipation of Proton MPV launch in the first quarter, and Perodua MPV in the fourth • TIV is projected to drop by 8.5% in 2009 due to economic quarter slowdown and limited new model launch • Commercial vehicle segment will see the biggest drop as • Passenger vehicles will be affected by the economic many companies are freezing their new asset purchase situation as consumer will be more cautious in taking up due to the slow economic activities new loan and may hold up their vehicle replacement plan 15
    • Toyota, Daihatsu, Nissan, Mitsubishi and Isuzu gained market share at the expense of Suzuki, Honda and other makes; MPV segment would continue to dominate the Indonesia segment Automotive Industry Outlook: Light Vehicle Sales Automotive Industry Outlook: Light Vehicle – by VMs (Malaysia), 2008 Sales – by Segment (Malaysia), 2008 100% 9.2% 7.8% Perodua 9.0% 33.8% 1 .4% 1 4.4% 1 % 0.1 Proton 2.9% 6.7% 3.0% 75% Vehicle Segment % Toyota CV M PV Honda S UV 50% 17.4% Nissan C ar 77.7% 78.0% 28.7% Others Source: Frost & Sullivan 25% • Perodua market share dropped by 2.8% due to the stronger sales growth by Proton, Toyota & Nissan 0% 2008 2009 Source: Frost & Sullivan • Proton market share increment is mainly contributed by • Passenger cars segment sales is expected to drop by 8% New Saga model making it the biggest gainer in 2008 with due to hold up in big purchase by customers. additional 24k units • MPV segment will be the only segment that will see • Grand Livina launched in December 2007 helped Nissan growth in 2009. reach sales of 33k- a 97% sales growth in 2008 • SUVs will see a drop as concentration in sales among the • Toyota also benefited from the launch of new model Vios & private buyer will be shifting towards passenger car / MPV Rush. with lower engine capacity & price segment. 16
    • Current domestic uncertainties and the fallout of the global financial crises led to vehicle sales slowdown in 2008 Automotive Industry Outlook: Light Vehicle Sales Government Measures: (Thailand), 2006 – 2009 0.7 • US$3.33 billion economic stimulus and social-welfare package approved by Thailand’s new cabinet Units (Million) (7.5%) • Stimulus package is expected to add a full percentage 0.6 (2.5%) point to a Bank of Thailand forecast of zero to 2.5-per- (12.9%) cent GDP growth, which should help the automotive markets 0.5 • New eco car models are instrumental in driving up sales of passenger cars in Thailand 0.4 2006 2007 2008 2009 • Lower tax rates and cheaper fuel for alternative fuel cars help drive passenger cars sales Source: Frost & Sullivan • Thai automotive market shrank by 2.5% due to domestic Outlook: political turmoil and global economic crisis • In spite of decline in TIV, small and compact cars are • Domestic pick-up truck sales are dwindling expected to grow • % contribution of pick-up trucks has dropped from 66% in • Cars with low cost of ownership likely to grow faster 2006 to 54% in 2008, have lost a volume of over 115,000 • Eco car being export oriented policy, would help to boost units the production further • Passenger car sales are growing sharply, have added a • Alternative fuel policy can act as a foothold for non- volume of about 35,000 units Japanese suppliers to enter this market and should help Thailand to attract additional investments • TIV is expected to drop by 12.9% in 2009; Pick-up segment continues to drop, PC likely to gain volumes 17
    • Honda Best Placed to Capitalize on the Upswing in PC market, Gained Market Share at Expense of All Other Companies Automotive Industry Outlook: Light Vehicle Sales Automotive Industry Outlook: Light Vehicle – by VMs (Thailand), 2008 Sales – by Segment (Thailand), 2008 100% Toyota 8.8% 8.0% 1.8%1.5% 5.0% 3.6% Isuzu 3.8% 42.6% Honda 5.2% 75% Nissan Vehicle Segment % O t he rs 49.6% Mitsubishi 54.3% O ne - T o n Chevrolet P ic k - up 50% 14.8% Mazda P a s s e nge r C ar Ford 21.7% Others Source: Frost & Sullivan 25% 42.4% 36.9% • Toyota market share dropped by 2.1% due to slower sales of Hilux Vigo and Fortuner which is known to be a fuel 0% guzzler, and shrinking margins for Toyota dealers. 2008 2009 Source: Frost & Sullivan • Isuzu launched its minor change D-Max and MU7 in • Sales of one ton pick-up are expected to decline by 15% October 2008 but the impact is not as big as it normally due to no all-new model launch would be due to the domestic political and economical • Sales of passenger car are expected to grow by 7% woes. • Sales of other commercial vehicle segments including • Honda is the big winner of the Thai Automotive market with trucks, pick-up < 1 ton and vans are expected to shrink market share increment of 5.5%. Driving sales is minor change Civic followed by City. by 15% 18
    • Low credit availability for VMs, suppliers and retail buyers has severely affected Russian car sales; Recovery not until Q4`09 Automotive Industry Outlook: Light Vehicle Sales Government Measures: (Russia), 2007 – 2010 • The Russian government has earmarked a total of 200 4 Billion Rubles as bailout package for Auto market Units (Million) • Increase import duties on foreign-made cars, to increase 3 local production and stimulate growth 10.1% -36.1% • As with other major global bailout packages, end- 7.0% consumer incentives form a very marginal part (1%) of 2 government expenditure for the Auto industry Outlook: 1 2007 2008 2009 2010 • Increasing pressure on used car imports with revision of Source: Frost & Sullivan used vehicle age to 5 years from 7 years, to stimulate demand in the new car market • The Russian market which grew explosively at 24% and 30% in 2006 and 2007 respectively, is expected to slowdown • Although high import duties on foreign and used cars drastically due to the global economic crisis may impact short-term sales, it is expected to support the long term production growth in Russia • The market is expected to fall an estimated 36% in 2009 on the back of a slowdown in imported cars and a huge lack of • Huge potential for low-cost (affordable cars) with three credit financing fourths of cars sold being under US$20,000 • Vehicle imports which constitutes more than 40% of sales, • Governmental measures to subsidize auto loans for are expected to almost halve in 2009 Russians are expected to generate additional 200,000 units in sales in 2009 • OEMs such as Hyundai and Renault have delayed opening of production or assembly facilities 19
    • The Kremlin is Expected to Pump Significant Amount of Funds into the Auto Market to Revive Sales Growth Automotive Industry Outlook: Government Bailout Package (Russia), 2008 Funds (in billion Rubles) State procurement for federal needs 12.5 State procurement of commercial and road vehicles 40 State procurement for municipal needs 30 Credit line for leasing companies 43 Auto bailout loans 70 Subsidies to end-consumer 2 Compensation of transportation costs of cars to far-eastern 2 frontier Source: Frost & Sullivan 20
    • Increasing market share of foreign vehicle manufacturers on the back of losing market leader, Avtovaz Automotive Industry Outlook: Light Vehicle Sales Automotive Industry Outlook: Light Vehicle – by VMs (Russia), 2008 Sales – by Segment (Russia), 2008 100% VAZ Sports, Van & Others 11.5% 7.3% 7.9% 24.3% Renault-Nissan Group 1.3% 1.4% 3.1% Pickup / Truck 4.1% General Motors Group 17.1% 17.3% SUV 4.1% Hyundai Group 75% 4.3% MPV Vehicle Segment % 5.4% Ford Group 0.9% 4.9% GAZ Group 7.6% 8.6% Super Luxury 8.7% Toyota Group High Luxury 6.5% Chinese VMs 50% Low Luxury 9.5% 11.8% Mitsubishi Motors 42.3% 39.4% 11.0% Large Volkswagen Group Source: Frost & Sullivan High Medium Others 25% Low Medium • AvtoVAZ continued to lose market share in 2008, with a share of about 24.3% of the Russian market in the year 14.7% 13.9% Small Basic • With high import duties, there is an increasing pressure on 0% 4.2% 5.4% foreign brands to set-up production facilities locally, and this 2008 2010 Source: Frost & Sullivan will help increase their market share • The Basic Segment is expected to grow from 3% in 2007 • Renault is expected to develop a low-cost car catering to to 5% in 2010, with growing popularity of cars such as local market needs in partnership with AvtoVAZ, its partner the Chevrolet Spark and Hyundai i10 in Russia • SUV sales to remain strong at around 17% of sales • Hyundai is expected to grow market share with strong sales • Low medium segment will continue to dominate sales with in small and compact segment cars such as Hyundai i20, i30, two-thirds sales of local brands and one-third of imported Accent, Kia Picanto etc. cars falling under this category 21
    • The Market in Numbers: 2008 and 2009 Automotive production and sales expected to contract 10% in 2009 Automotive Industry Outlook: Global Light Vehicle Automotive Industry Outlook: Global Light Vehicle Sales (World), 2008 and 2009 Production (World), 2008 and 2009 -9.5% -10.6% • Global auto sales is under severe • Global light vehicle production fell 63.6 58.3 pressure and fell from 64 million in million 56.9 from a peak of 68 million units in million 52.8 million 2007 to 58 million in 2008 2007 to 64 million in 2008 million • 2009 is expected to witness a • Industry continues to battle with further 9% fall to 53 million units unsold vehicle inventory in Q1 09 • Profitability has taken a severe • Production is expected to further fall beating especially for vehicle to 57 million units in 2009 and manufacturers (VMs) having high recover to 60 million by 2010 sales exposure to North America 2008 2009 Source: Frost & Sullivan 2008 2009 Source: Frost & Sullivan Automotive Industry Outlook: Global OEM Operating (Margin) Performance (World), 2007 and 2008 Company Estimates 10% Operating margin % YTD 09 5% (Apr – Dec) Ford GM 0% Audi A udi BMW BM W Mercedes- M e rc e de s - V o lk s wa ge n Hyundai H yunda i Renault- R e na ult - Chrysler Honda* C hrys le r H o nda T aTata up t a G ro B e nz G ro up G ro up N is s a n Benz Group Nissan Group* Toyota* -5% Weak US sales has severely 2007 2008 -10% *Consolidated Financial Results Published for Fiscal Year April – March affected VM profitability Note: Operating margin has been used to measure Operating performance of VMs Source: Company Annual Reports; Frost & Sullivan 22
    • Road to Recovery: Frost & Sullivan expects a V-shaped sales downturn and recovery – Global Car Sales expected to reach 2006 levels only by 2012 Automotive Industry Outlook: Light Vehicle Sales – Recession and Recovery (World), 2006 - 2012 65 • Global EV volume to exceed 200,000 • 5.4m micro-hybrid sales globally 62 Million • 0.9m full hybrids Q4 ’07 US Enters Recession Q3 ’08 EU Unit Sales (Million) • 17 New EV model Enters 60 launches Recession • 2.6m micro-hybrid sales globally • 0.6m full hybrids Q4 ’08 BRIC Q3’10 EU & Markets Slow Russian market, 55 Down start recovery Q4’09 / Q1’10 US recovers Q3’09 Emerging markets, India, China stage recovery 50 2006 2007 2008 2009 2010 2011 2012 Recession expected to impact Source: Frost & Sullivan sales for at least two full years 23
    • Next Steps Request a proposal for Growth Partnership Services to support you and your team to accelerate the growth of your company. Attend Frost & Sullivan Executive MindXchange best practice networking events (http://www.frost.com/cal) to share and address strategic challenges Consider Conducting a 360 Degree Growth Workshop to support your long-term growth strategy Join us at a Growth, Innovation and Leadership 2009: A Frost & Sullivan Global Congress on Corporate Growth (www.frost.com/gilglobal) Register for the next Chairman’s Series on Growth: (http://www.frost.com/growthapac) Schedule a Recession Strategy Session with a Frost & Sullivan Industry consultant (email us: alvin.chua@frost.com) Schedule a One-on-One Growth Strategy Dialogue with a Frost & Sullivan Growth Consultant (email us: alvin.chua@frost.com) Register for Frost & Sullivan’s Growth Opportunity Newsletter and Growth Team Membership e Bulletin to keep abreast of growth opportunities in your industry and best practices in your career track. (www.frost.com) 24
    • Contact Us If you have questions or would like further information about anything we discussed, please send your query to the email provided below and we will get back to you shortly. Alvin Chua Account Manager Automotive, Transportation & Logistics DID: +65 6890 0997 Mob: +65 9199 4566 eMail: alvin.chua@frost.com 25