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2013 Outlook of the Global Automotive Industry Frost & Sullivan

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The top 5 predictions for 2013: China will sell 20 million vehicles, an OEM will sell over 10 million units in 2013, there will be at least one inter-brand JV between OEMs this year, and a …

The top 5 predictions for 2013: China will sell 20 million vehicles, an OEM will sell over 10 million units in 2013, there will be at least one inter-brand JV between OEMs this year, and a consolidation or M&A, online vehicle retailing to take off in 2013 with OEMs implementing an Omni channel strategy to sell more vehicles digitally, Autonomous Driving to be the most exciting topic of R&D in 2013 with a possibility of a trial test in sub-city condition going live by end of 2013/early 2014.

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  • 1. 2013 Outlook of the Global Automotive IndustryAn OEM expected to hit 10 million sales. Global vehicles in operation to exceed 1 billion. M930-18 February 2013
  • 2. Research Team Lead Analyst Contributing Analyst Shwetha Surender Mohamed Mubarak Moosa Senior Research Analyst Programme Manager Automotive and Transportation Automotive and Transportation +91 44 6160 6666 +90 212 709 8804 shwethas@frost.com mohamedm@frost.com Research Director Strategic Review Committee Leader Martyn Briggs Sarwant Singh Programme Manager Partner and Business Unit Leader Automotive and Transportation Automotive and Transportation +44 207 915 7830 +44 207 915 7843 Martyn.Briggs@frost.com sarwant.singh@frost.com Special Thanks Jason Huang Vivek Vaidya Lisa Whalen Masaki Honda Krishnasami Rajagopalan Consulting Director - Vice President, Asia Vice President, North Consultant - Japan Programme Manager - EU China Pacific America M930-18 2
  • 3. ContentsSection Slide Numbers Executive Summary 7 Top 5 Key Predictions and Trends for 2013 8 Highlights of 2012 9 Winners of 2012 10 Top 5 Markets by Sales in 2012 11 Indonesia and the Global Context 12 Global Light Vehicle Sales by Region in 2013 – A Snapshot 13 Global Light Vehicle Sales by OEM in 2013 – A Snapshot 14 Key Regional Market – Europe (G5 vs E5) 15 Key Regional Market – Emerging Economies (BRIC Vs. N5) 16 Key Regional Market (US and Japan) 17 ASEAN Vehicle Production 18 Global Electric Vehicle Sales – 2012 19 Key Launches in 2013 20 Research Scope, Objectives, Background and Methodology 22 Research Scope 23 M930-18 3
  • 4. Contents (continued)Section Slide Numbers Key OEM Groups Compared in this Study 24 Key Global OEMs – Luxury Brand Portfolio 25 Vehicle Segment Definitions 26 Key Markets to Watch-Out 27 Budget Car Syndrome is Back 28 Attractive Vehicle Segment 29 Top OEMs in the Global Compact Market 30 Global Light Vehicle Sales by Segment in 2013 – Developed Markets 31 Global Light Vehicle Sales by Segment in 2013 – Emerging Markets 32 LV Market in ASEAN 33 Global SUV and Pick-Up Market 34 Top 10 SUV and Pick-Up Market 35 Key Luxury Vehicle Markets 37 Key OEMs Strategies for Luxury Car Market 39 Outlook of Global Carsharing 2013 41 Outlook of Global Peer-to-peer Carsharing 2013 42 M930-18 4
  • 5. Contents (continued)Section Slide Numbers OEM Mobility Strategies 43 eRetailing Market Outlook for 2013-14 44 Evolution of the Bricks and Clicks Model in New Car Retailing 45 eRetailing Strategy of OEMs 47 Body Styling Strategy of OEMs 48 Body Styling Strategy in 2013 49 Body Styling Trends – Key Segment Analysis 50 Electric Vehicle Sales – 2012 51 EV Market Outlook for 2013-14 52 Powertrain Market Outlook 53 Global Powertrain Mix by Region in 2013 [Sales] – A Snapshot 54 Key Powertrain Technologies to watch 55 Top 5 Powertrain Investments by OEMs 57 Infotainment and Telematics Outlook – Top 5 Predictions 58 Infotainment and Telematics Outlook – 2012 NA Market Highlights 59 M930-18 5
  • 6. Contents (continued)Section Slide Numbers Infotainment and Telematics Outlook - 2012 EU Market Highlights 60 Infotainment and Telematics Outlook - 2012 China Market Highlights 61 Standard vs. Optional Features 62 Global Light Vehicles in Operation 63 Top 20 Parts Aftermarket Products 64 Global Aftermarket - Hot Spots 65 Key Conclusions 67 Appendix 69 M930-18 6
  • 7. Executive SummaryM930-18 7
  • 8. Top 5 Key Predictions and Trends for 2013 Top 5 Predictions for 2013 Top 5 Trends for 2013 • Budget car syndrome is back: Compact vehicles priced • China will sell 20 million vehicles $10,000–$15,000 are expected to further increase their popularity in developed economies, with a share of about 29 per cent. • Small is the new big: Small/compact SUVs and cross-overs are • An OEM will sell over 10 million to account for about 50 per cent of the overall SUV and pickup units in 2013 market • Rich get richer: The luxury market is to grow in BRIC • There will be at least one inter-brand economies, and China could continue to be the second-largest JV between OEMs this year, and a market for luxury vehicles. 17-20 luxury vehicle models are consolidation or M&A expected to be launched in 2013. • Mobility to reinvent the automobile industry: OEMs are likely • On-line vehicle retailing to take off to be aggressive in entering and expanding the carsharing in 2013 with OEMs implementing an network, and also launching new urban mobility models and Omni channel strategy to sell more platforms, including in new regions such as Asia and Latin vehicles digitally America. • Autonomous Driving to be the most exciting topic of Research and • Leasing: An increase in leasing contracts in key Western Development in 2013 with a possibility countries as well as in China is likely. of a trial test in sub-city condition going live by end of 2013/early 2014 Source: Frost & Sullivan analysis. M930-18 8
  • 9. Highlights of 2012The growth in the US and China balanced the decline in Europe, while the Indonesian market grewexponentially to achieve vehicle sales of over 1 million. Key Highlights • 2012 witnessed a world record of 1 billion cars on the road globally for the first time in history. • In spite of the slow economic recovery, the US automotive market grew at a rate of 13.8 per cent in 2012, while the Chinese market remained the world’s largest car market, hitting the 19 million sales. • The Thai and Indonesian automotive markets crossed the 1 million vehicle sales in 2012. The ASEAN market as a whole grew by 34 per cent to become the eighth-largest market in the world. • 10,000 cars were sold online in the US, EU, Australia and China for the first time. This is expected to grow to 4.5 million units by 2020. OEMs such as Ford, GM and Dacia launched inline sales Web sites in 2012. • OEMs have increased their focus on Integrated Mobility, which is clear from Daimler’s launch of Moovel and Leaseplan’s MobilityMixx, following the success of NS Business. • Among the top ten OEMs, Honda had the highest growth rate of 23 per cent, followed closely by Toyota at 21 per cent. Both the OEMs had recovered from their tsunami-affected 2011 sales. Most of Honda’s growth was due to high sales in the US and Japan. • The sale of electric vehicles increased by over 154 per cent and over 109,700 units. Source: Frost & Sullivan analysis. M930-18 9
  • 10. Winners of 2012Toyota regained its position with 21 per cent growth, while VW remains the undisputed leader. Automotive Industry Outlook: OEM Light Vehicle China, Germany and Brazil were the top three markets for Sales, Global, 2011, 2012 Volkswagen (VW) in 2012. Globally, the Polo and the Jetta were Growth the main contributors to VW’s sales growth. OEMs Trend Rate (%) Japan and the US, each accounted for one-fourth of Toyota’s Volkswagen 8.86% global sales. Toyota’s sales in China declined by 4.9 per cent due 8.8 to the consumer backlash cause by political strife. VW 8.1 Toyota 20.95% The US continued to be the most successful market for GM, with the re-launched Silverado driving sales. GM competed with VW to GM 1.16% retain sales leadership in China in 2012. The Chevy Lacetti wasUnits (Million) Toyota 8.4 7 Renault- its most successful model in China. GM also benefitted from high (2.05%) Nissan (RN) sales for the Sonic and Cruze models. This indicates more demand Hyundai for smaller cars due to sustained high gas prices. 7.64% 7.4 GM 7.5 (HMC) Renault entered the micro-mobility market with the launch of the Ford 0.17% Twizy in March 2012. Slower European sales were offset by growth in the US, China and the emerging markets of Brazil, Mexico and 7.2 RN 7 Fiat-Chrysler 4.75% India. The Nissan Sunny was the most successful model in the 22.99% emerging markets. Honda 5.7 HMC 6.1 China was Hyundai’s largest market in 2012, with sales growing in PSA (11.82%) the wake of boycotting Japanese products. Sales in the US also 2011 2012 witnessed a sizeable growth of 12 per cent. In the US, the Sonata Years Suzuki 3.81% Note: All figures are rounded; the base year is 2012. The data from was the most successful model, while in China, the Elantra was the LMC accounts only for 65 out of 190 countries. largest-selling model. Sources: LMC forecasting, Frost & Sullivan analysis. M930-18 10
  • 11. Top 5 Markets by Sales in 2012The US market continued its ascent and the Japanese market rebounded; the UK was the only market thatwitnessed positive growth in Europe Automotive Industry Outlook: Increasing customer confidence, declining prices as well as Top 5 Light Vehicle Markets by Sales, Global, discounts increased LV sales in China, post Q3. European 2011–2012 OEMs sold more in China than in Europe, while Japanese OEMs experienced declining sales in China. 19.3 The US market witnessed positive growth for the third China 7.0% consecutive year. Demand for pickups and SUVs drove the market, with the SUV and Pickup segment accounting for 14.5 USA 13.8% over 42 per cent of the light vehicle sales. Boosted by subsidy programmes, the Japanese market 5.1 Japan 22.8% witnessed a recovery in 2012. Emerging after the natural calamity, the government had allocated about JPY 300 billion 3.6 Brazil 11.0% ($3.8 billion) to incentivize customers to buy ‘eco cars’. The stimulus programme boosted the LV market in Brazil. 3.3Germany (3.0%) Reduction in the IPI tax also helped increase vehicle sales. Fiat was the market leader, followed by VW and GM 0 10 20 30 (Chevrolet). Units (million) The market in Europe’s largest economy (Germany) declined 2012 2011 by 3 per cent due to the Euro crisis.Note: All figures are rounded; the base year is 2012. Sources: LMC forecasting, Frost & Sullivan analysis. M930-18 11
  • 12. Indonesia and the Global ContextAmong the major passenger car markets of the world, Indonesia has climbed up four places to the 14th position.In 2012, Indonesia was one of the three fastest-growing car markets in the world. 7% Automotive Industry Outlook: Top 21 Automotive Markets, Global, 2012 20 18 13.8% 16 Units (Million) 14 Indonesia Jump from Thailand Jump from 12 18th to 14h rank 19th to 13th rank 10 22.8% 8 3.4% (3%) 5% 10% (13.3%) (21.0%) 6 5% 56.0% (5.5%) 6.5% (8%) 8.0% (13.4%) 39.3% 9.0% (10.0%) (5.0%) 4 0.1% 2 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21• Indonesia is among the fastest-growing markets in the world for passenger cars, matched only by Russia and Thailand.• Despite the phenomenal growth rate, Indonesia has only seen marginal progress in the global market.• This outlines its dependence on ASEAN as a region to attract more investments and Indonesias ability to share in the investments. Note: All figures are rounded; the base year is 2012. Sources: LMC forecasting, Frost & Sullivan analysis. M930-18 12
  • 13. Global Light Vehicle Sales by Region in 2013—A SnapshotChina to cross 20 million sales, and the US to reach 15 million sales, but the market in Europe still in red Automotive Industry Outlook: Light Vehicle Sales, Global, 2012–2013 3.9% YoY growth (2012–13) ~ 83.5 Million 80.4 Million 40 Western Europe 15%Western Europe 16% 35 Latin America 7% Other 3.5 Indonesia 1 Latin America 7% Others 6% 30 Units (Million) South Korea 1.5 Others 5% North America India 3.3North America 21% 25 21% Japan 4.7 The Middle East 2%The Middle East 2% 20 Mexico 1.0 Eastern Europe 6%Eastern Europe 6% Canada 1.7 15 Argentina 0.8 Others 2.9 10 Poland 0.3 Spain 0.7 UK 2.3 Others 0.9 Other 1.1 Italy 1.5 Asia 41% Asia 42% China 20.0 5 USA 15 France 2.2 Turkey 0.8 Others 0.3 Brazil 3.9 Germany 5.03 Russia 3 Iran 1.7 3.2 0 Africa 1% Africa 1% Africa Asia Eastern The North Latin Western Rest of 2012 Europe Middle America America Europe the World 2013 Note: Africa - South Africa East Asia - Australia, China, India, Indonesia, Japan, South Korea, Malaysia, the Philippines, Taiwan, Thailand, New Zealand Eastern Europe – Bulgaria, Bosnia, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey, Ukraine The Middle East – Egypt, Iran North America - Canada, Mexico, USA Latin America - Argentina, Brazil, Chile, Colombia, Ecuador, Uruguay, Venezuela Western Europe - Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, the UK Others – Rest of the countries in the region/world Note: All figures are rounded; the base year is 2012. Sources: LMC forecasting, Frost & Sullivan analysis. M930-18 13
  • 14. Global Light Vehicle Sales by OEM in 2013—A SnapshotEuropean OEMs are banking on growth in emerging markets to offset the downturn in Europe Automotive Industry Outlook: Light Vehicle Sales by OEM, Global, 2012–2013 Who can reach 10 million vehicle sales in 2013? Growth Rate • With political strife affecting the sales Volkswagen Group of Japanese OEMs in China, VW and 2.03% GM are likely to increase their share in Toyota Group 6.8% China.General Motors Group 4.57% • GM is expected to launch two newRenault-Nissan Group 4.17% models, and is investing in expanding Hyundai Group 3.99% its dealerships and production facilities to drive sales in China. Ford Group 6.47% • For the NA market, GM is focusing on Fiat-Chrysler Group 2.10% its pickup range. Honda Group 8.44% • Ford is focusing on compact segment PSA Group 4.00% sales with the re-launched Focus and Fusion in 2013. Suzuki Group (1.09%) Other Chinese… • Honda is relying on growth in sales of 22.86% its compact segment models such as BMW Group 2.57% the Fit and its diesel engine models in Daimler Group 6.95% the emerging markets. Tata Group 12.34% • Daimlers growth in 2013 is to be Geely Group driven by the A-Class’s expansion into 19.35% additional markets. The new S-Class, 0 2 4 6 8 10 E-Class and CLA will probably further 2013 2012 Units (Million) drive sales and help regain marketNote: All figures are rounded; the base year is 2012. share.The data from LMC accounts only for 65 out of 190 countries. Sources: LMC forecasting, Frost & Sullivan analysis. M930-18 14
  • 15. Key Regional Market—Europe (G5 vs E5)Growth in the UK, Italy and certain East European countries to balance the decline in Europe Automotive Industry Outlook: YoY Growth YoY Growth • The West European LV market declined by 8.5 LV Sales, G5, E5, 2012–13 (‘11–12) (‘12–13) per cent in 2012 due to the uncertainties of the Euro crisis, which affected the largest auto Germany (3%) (4%) markets such as Germany and France, along with the continued decline in Italy and Spain. France (13%) (3%) • With uncertainties prevailing in the market, the UK 5% 2% outlook for 2013 is conservative, with a 1.5 per cent decline expected in West Europe. Italy 0.3% • The UK was the only LV market that witnessed an (21%) increase in sales in 2012, and is expected to Spain (13%) (5%) experience the same the next year as well. • Although the recession affected the auto market in Italy, causing a decline of 21 per cent in 2012, the expected tax cuts after the elections in 2013 are expected to positively impact LV sales. Russia 10% 3.4% • Slowing economy and the Euro crisis are likely to Turkey (10%) (0.5%) flatten the growth rate in East Europe, by negatively affecting the markets in Poland and Poland (3%) Turkey. (3.0%) • Russia is expected to reach the 3 million sales. Ukraine 5% 5.0% • The government’s decision to increase the The Czech 1% Special Consumption Tax (SCT) of vehicles up 2.0% Republic to 1.6 cc to 40 per cent in Turkey affected the 2013 - 2012 2 4 market in 2012. Units (million) Note: All figures are rounded; the base year is 2012. Sources: LMC forecasting, Frost & Sullivan analysis. M930-18 15
  • 16. Key Regional Market—Emerging Economies (BRIC vs N5)Mexico to reach the 1 million sales in 2013 Automotive Industry Outlook: Light Vehicle Sales, BRIC, N5, 2011, 2012, 2013 30 8.0% Units (Million) 20.8 20 10 2.5% 6.0% 6.0% 6.0% (12.0%) 7.5% 5.0% 0.5% 4.0 3.1 3.3 1.5 1.1 1.2 1.1 0.8 - Brazil Russia India China South Thailand Indonesia Mexico Argentina Korea 2011 2012 2013 • China: The continuing economic growth is expected to increase market growth by 8 per cent to reach the 20 million sales in 2013. SUV, pickup and premium vehicles are likely to continue to be the popular segments. Low vehicle penetration, increasing income levels and urbanisation could increase the market for vehicles. • The economic growth of about 3.5 per cent due to the infrastructure developments for the FIFA World Cup in 2014, the reduction in interest rates and the local production of Brazil-specific models will probably maintain the YoY growth in Brazil for 2013. • Replacement market and high customer confidence are expected to increase the growth of the Russian light vehicle market to reach the 3 million sales in 2013. Budget cars and premium models are predicted to continue to drive the market. • Rising inflation is a key reason expected to slow down the growth rate for vehicles in the Indian market. Note: All figures are rounded; the base year is 2012. Sources: LMC forecasting, Frost & Sullivan analysis. M930-18 16
  • 17. Key Regional Market (The US and Japan)The US is expected to exceed 15 million sales in 2013 Automotive Industry Outlook: Light Vehicle Sales, US, Japan, 2010–2013 • The US is expected to witness moderate growth of 20 up to 3.5 per cent in 2013. • Although the existing replacement demand is US expected to increase sales, ongoing economic uncertainty is expected to restrain market growth in 15.0 the initial few months of 2013. 14.5 15 12.7 • With the gradual economic recovery, the market is expected to reach the 15 million sales in 2013. Unit Sales (Million) 11.6 • The market for pickups and SUVs is expected to drive growth, and account for about 43 per cent of 10 light vehicle sales. Japan 4.9 5.1 4.7 • The Japanese market, which recovered with the 5 4.1 support of government subsidies, is expected to decline as funds for the subsidies get exhausted. • Although Japanese OEMs are expected to face a slowdown in China due to territorial disputes, they are expected to fare well in North America and 0 2010 2011 2012 2013 other markets. Note: All figures are rounded; the base year is 2012. Sources: LMC forecasting, Frost & Sullivan analysis. M930-18 17
  • 18. ASEAN Countries Vehicle ProductionThailand witnessed 71 per cent growth in 2012. The success of the Thai Eco Car programme overshadowedthe accelerated growth across all markets Automotive Industry Outlook: Total Production Automotive Industry Outlook: Production Volume, ASEAN, 2011, 2012 Breakdown, ASEAN, 2012 4.23 million 3% 4.50 0.14 6% 2012 3 million 0.57 4.00 41% 14% Unit Sales (Million) 2011 3.50 (12%) 1.10 0.17 18% 3.00 0.53 7% 49% 2.50 ASEAN 0.84 31% PRODUCTION 2.00 71% SHARE 58% 1.50 2.50 25% 1.00 1.46 0.50 28% 0.00 Year 2011 2012 (F) Thailand Indonesia Malaysia Other ASEAN • Thailand accounts for 58 per cent of the production in the region, compared to 49 per cent in 2011. • Indonesia accounts for 25 per cent of the region’s production, which is set to increase in the next few years due to capacity addition. Note: All figures are rounded. Others – Rest of the countries in the region/world Sources: AAF, MTA, Gaikindo, MAA, VAMA, TAIA; Frost & Sullivan analysis. M930-18 18
  • 19. Electric Vehicle SalesThe sale of electric vehicles has increased by over 100% and over 109,748 units have been soldglobally until December 2012 as compared to 43,200 sold in 2011 Electric Vehicle Market: Electric Vehicle Sales, Global, 2012 54,520 25,474 7,665 4,911 2,739 3,250 3,671 1,423 463 1,266 1,579 1,105 569 1,030 83Electric Vehicle Market: Breakdown by Region, Global, 2012 Electric Vehicle Market: Breakdown by EV Type Japan Unclassified PHEV 4% 23% USA 16% NEV China 50% 1% 1% BEV eREV 50% Europe 29% 26% Source: Frost & Sullivan analysis. M930-18 19
  • 20. Key Launches in 2013 The BMW Group • The launch of the BMW i series signifies BMW’s entry into the electric vehicle market. • The i3 is a city car targeted at the compact car segment, while the i8 is a sports car offering. • Combined sales of 5,500 are expected from both BMW i 8 BMW i 3 models. The Daimler Group • Mercedes-Benz CLA is the first of the new Mercedes compact range that is headed to the US • The new S-Class and E-Class are also expected to help the group recover market share. Mercedes Benz CLA Audi A3 The Volkswagen Group • The redesigned Audi A3 is expected to expand sales in the European and North American markets. • The Golf, one of VW’s best sellers in 2013 is Volkswagen Golf expected to continue to expand its market share. Sources: Company Media Web sites. Images used for illustration purposes only, Frost & Sullivan analysis. M930-18 20
  • 21. Key Launches in 2013 (continued) Ford Group • Ford is positioning itself as a strong competitor in the growing mid-sized sedan segment with the launch of the redesigned Fusion. • The Fusion hybrid, which offers superior fuel efficiency, is expected to drive sales in the US. Ford Fusion General Motors Group Chevrolet Silverado • Keeping in line with the SUV/Pickup trend, General Motors has re-launched the Chevrolet Silverado • The updated Chevrolet Malibu has been reintroduced to compete in the growing mid-sized segment. Chevrolet Malibu Fiat-Chrysler Group • Fiat 500X is a highly anticipated launch for Fiat that is expected to help the company gain leverage in the SUV/cross-over segment. • The new sports car, Alpha Romeo 4C, is also expected to be launched in 2013. Fiat 500X Sources: Company Media Web sites. Images used for illustration purposes only, Frost & Sullivan analysis. M930-18 21

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