2014 Outlook for the Global Automotive Industry


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In 2014 the global light vehicle market is expected to cross the 88 million unit mark with growth in the Chinese and U.S. markets balancing the downturn in Europe. Key trends influencing the market include corporate carsharing, eRetailing and big data analytics.

This briefing will analyse emerging market trends and make bold predictions for 2014.

Why You Should Attend:

- Uncover key happenings in the global automotive industry
- Understand OEM strategy initiatives to excel in target markets and segments
- Learn about technology trends in 2014
- Participate in an interactive Q&A session with Frost & Sullivan and LMC Automotive thought leaders

Click the below link to access the on-demand recording.

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2014 Outlook for the Global Automotive Industry

  1. 1. 2014 Automotive Industry Outlook: Bold Predictions and Trends Sarwant Singh, Senior Partner & Practice Director Shwetha Surender, Senior Research Analyst Automotive & Transportation 12 February 2014 A Joint Presentation with Pete Kelly Managing Director, LMC Automotive © 2014 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  2. 2. Today’s Presenters Sarwant Singh Shwetha Surender Senior Partner and Practice Director, Senior Research Analyst Frost & Sullivan Frost & Sullivan Pete Kelly Managing Partner LMC Automotive 2
  3. 3. Focus Points of Our Presentation Today 1. Key Predictions and Top Trends for 2014 2. Market Growth Forecasts 3. Highlight Key Growing Markets, Customer Segments 4. Models And Opportunities For Industry Players 3
  4. 4. POLL QUESTION Which OEM do you think has all the right strategies to lead the market in 2014? A. Toyota B. Volkswagen C. General Motors D. Hyundai E. None of the above 4
  5. 5. The 2013 Global Automotive Market in Perspective Actuals vs Forecast Our Top 5 Predictions for 2013 What actually happened – Highlights of 2013 • China will sell 20 million vehicles. • China crossed 21 million unit sales. • An OEM could sell over 10 million units in 2013. • At 9.96 million units (cars + trucks), Toyota came closest to the 10 million mark. • At least one inter-brand JV, consolidation or M&A. • Fiat and Chrysler consolidated (valued at $4.35 billion) • VW group will become number one • Toyota was the leading automaker, while the Volkswagen Group at 9.5 million was number three • One billion vehicles in operation, creating aftermarket opportunities • In 2013, the Global Aftermarket grew by 4.8%, and eRetailing Aftermarket by 25-30%. • Autonomous Driving to be a hot R&D topic with a possibility of a trial test in sub-city • Audi was the first automaker to get the first testing license to autonomous vehicles in Nevada, USA. Continental and Google were two other key players who were awarded the testing license. 5
  6. 6. Top Predictions for 2014 China is expected to sell 23-24 million vehicles and U.S. is expected to cross the 16 million mark. We expect 2 Major OEMs to cross 10 million unit sales in 2014. The Luxury Car market is expected to accelerate in 2014, growing in double digits. 2014 to see OEMs launch new mobility business models (such as integrated mutimodal mobility platforms, Corporate Car sharing solutions) and volume OEMs to launch carsharing operations. Future of car retailing will evolve to become digital by convergence of the bricks and the clicks transforming the customer experience. 6
  7. 7. Top Trends for 2014 Stan and Jan Small / Rise of Connected 2014 will be countries to Compact alternative mobility, tethe the Year of be a region of SUV’s and fuel vehicles ring and V2V Big Data focus Crossovers (fuel and V2X to continue to cell, hybrid gain and EV) momentum 7
  8. 8. POLL QUESTION Which trend in your opinion would have the greatest impact on the market in 2014? A. Daimler could become no. 2 luxury car OEM overtaking Audi B. The Hybrid Electric Vehicle (HEV) market to accelerate C. Fuel cell vehicles could what Toyota Prius was a decade ago D. Connectivity in vehicles to be major source of revenues E. Semi autonomous car features and possibly fully automated pilot to hit roads 8
  9. 9. Global Light Vehicle Sales by Region in 2014—A Snapshot China at 24 million to account for over 1/4 of global sales and the U.S. to reach 16 th million mark, but the market in Europe will still be challenging Light Vehicle Sales, Global, 2013 and 2014 ~ 88.5 Million 5.38% YoY growth (2013–14) ~ 84.3 Million 45 Western Europe 40 Latin America Others 35 Western Europe 2014 Latin America Others Indonesia 1.2 30 25 North America India 3.2 Japan 5.0 North America The Middle East Easter Europe The Middle East 20 Asia Africa 2013 Units (Million) Eastern Europe 15 Argentina 10 China 24.2 Spain 0.7 Poland 0.3 USA 16.2 5 France 2.2 Germany 3.2 Turkey 0.8 Russia 2.8 0 Africa Asia Eastern Europe The Middle East North America UK 2.3 Latin America Western Europe Asia Africa 2014 Note: Africa - South Africa 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 Note: All figures are rounded; the base year is 2013. Sources: LMC Automotive, Frost & Sullivan. 9
  10. 10. Global Medium and Heavy Truck Market Forecast 2014 The Economic Recovery in Markets Such as China and North America, and the Improvement in EU MD-HD Truck Market Will Lead to a 3.7 Percent Growth in Truck Sales in 2014 Global CV Outlook 2014: Unit Shipments—Global: 2013–2014 3.7% YoY Growth MCV 1,200,000 ~2.74 million ~2.87 million 2014 Regional Shares 1,000,000 Units 37% HCV 37% 30% 800,000 600,000 85.1 % 63% 400,000 70% 63% 46% 54% 52% 65% 0 2013 25% 35% 200,000 North South China America America 48% India 49% 24% 76% 75% 51% Russia Europe Next 11 55% 45% RoW 2014 Next 11 includes the following countries: Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, Vietnam, and Bangladesh. MCV: 6T to 16T HCV: 16T and above Note: All figures are rounded; the base year is 2013. Source: Frost & Sullivan analysis. 10
  11. 11. Global Light Vehicle Production by OEM in 2014—A Snapshot (Excludes MCV and HCV) OEMs globally are banking on growth in emerging markets and to offset the downturn in Europe Light Vehicle Production by OEM, Global, 2013 and 2014 Volkswagen Group 7.23% Toyota Group 1.69% General Motors Group 4.01% Renault-Nissan Group 3.34% Hyundai Group 3.66% Ford Group 4.66% Honda Group 11.74% Fiat-Chrysler Group -2.42% PSA Group 4.59% Suzuki Group 1.50% BMW Group 18.77% SAIC Group 12.27% Other Chinese Manufacturers 16.43% Daimler Group 5.02% Mazda Motors 5.27% 0 2 2014 4 2013 6 8 10 Units (Million) 12 Note: All figures are rounded; the base year is 2013. Sources: LMC Automotive, Frost & Sullivan. 11
  12. 12. Key Regional Markets—BRI, MISTA (N5) and the Stan and Jan After the BRI and MISTA economies, OEMs will focus on the Stan and Jan countries which are considered the next frontier. Light Vehicle Sales, BRI, MISTA, Stan and Jan, 2013 and 2020 Ranking 3,573K Brazil 7,225K 1 1 India 2.3% India 1,504K 2 3 3 Russia S.Korea 2,762K 2 Brazil Russia 2,927K 4 4 Indonesia 1,846K 5 S.Korea 1,604K 6 Thailand 1,508K 7 Mexico 1,147K 1,051K Thailand 1,278K 5 5,003K 3,604K 1,094K Indonesia 1,067K Mexico 7 893K Argentina 8 8 Turkey 834K Turkey 9 9 Argentina Poland 10 10 Poland 601K 11 Ukraine 501K 12 Kazakhstan 315K 13 Czech… 269K 14 Slovakia 330K 6 229K Ukraine 176K Czech… 159K Kazakhstan 13 70K Slovakia 11 12 14 CAGR ‘13-’20 1,403K 119K 4.9% 6.4% 16.1% 8.1% 10.2% 0.9% 4.1% 9.1% 3.9% 7.8% 2.3% 5.1% 11.8% Note: All figures are rounded; the base year is 2013. Sources: LMC Automotive, Frost & Sullivan. 12
  13. 13. Growth in Fleet and Leasing Market in Europe Turkey promises to be an exciting market for fleet leasing followed by Spain, while UK, France and Germany will continue to be big market for company car fleet Total Corporate Fleet and Leasing Market Unit Sales, Europe 2012 and 2020 5.1 Million Company Car Registration 2012 -2020 Operational Leasing Market CAGR (%) 4.2 Million Company Car Registrations Turkey NL Belgium Spain 12 Turkey NL Belgium Spain Turkey 10 Italy France Germany UK 2012 Italy 8 France 6 4 UK Italy Spain Germany Germany France 2 Netherlands 0 25% 30% 35% 40% UK Belgium 45% 50% 2020 Company Car Penetration of Total PV Sales in 2012 and 2020 (Dark metallic Bubbles represent 2012 while lighter shade represent 2020) Note: Company cars includes outright purchase, operational and financial leasing. Source: Frost & Sullivan 13
  14. 14. Global Powertrain Mix—Sales by Region Snapshot Gasoline is to remain the main fuel type, accounting for over 70% of the global fuel market; diesel powertrain growth will occur in India Expected Light Vehicle* Unit Shipment by Region and Powertrain Mix, Global, 2014 Europe, 18.1 M China, 19. 2M 0.4–0.7% 20 0.2–0.4% 18 1–2% 0.5–1% North America, 18.6 M Gasoline Diesel 0.5–1% 0.2–0.5% 2.5–3.5% Alt. Fuels Mild Hybrids 1–1.5% 1–1.3% 2–3% 2–3.5% 16 Units (Million) ~72.0 Million Full Hybrids Others 3–4% 5–6% EVs 17–20% 14 12 10 8 51.5– 53.5% Japan, 4.2 M 98.0– 98.5% 27-29% 1–1.5% 6 0.5–1.2% India, 4.1 M South America, 6.1 M 92–94% 0.2–0.3% 9–10% 56–58% 43–45% 69.0– 72.0% 0 China Japan 72–75% 4–6% 16–20% 55-56% 33–34% 37–38% India Korea 1.6 M 0.1–0.2% 7–8% 4 2 ~0.02% Europe North America South America 72–75% Korea 2014 *Note: Light vehicle includes personal vehicles (PVs) and light commercial vehicles (LCVs). The Powertrain Mix in China and Japan consider only PVs. The mild and full hybrids in Japan are shown under the “full hybrid” legend. Mild and full hybrids are shown as a part of gasoline and Diesel in China, India, South America and Korea. Total for 2014 represents the sum of regions shown. All figures are rounded. The base year is 2013. Source: LMC Automotive and Frost & Sullivan 14
  15. 15. Electric Vehicle Sales—2013 In 2013, EV sales increased by 58.6 percent and about 190,000 units were sold globally - in comparison to 119,748 units sold in 2012-2014, Forecast Suggests 280k unit sales Electric Vehicles, Sales by Country, Global, 2013 Units 97,936 31,180 6,889 14,204 7,665 1,728 453 1,071 8,272 820 1,840 Country Electric Vehicles, Sales Breakdown by Region, Global, 2013 1,422 278 Note: Others include - other European countries Electric Vehicles, Sales Breakdown by EV Type, Global, 2012 Japan 17% Unclassified 4% Australia 0% China 5% 9,532 3,800 PHEV 22% The United States 50% Europe 26% Note: November & December 2013 sales have been extrapolated NEV 2% BEV 58% eREV 14% Note: Figures are rounded. The base year is 2013. Source: Frost & Sullivan 15
  16. 16. Key 2014 Powertrain Market Trends Global emissions norms (Euro 6/7, EPA, 2020 ACEA) and fuel economy standards (CAFE, CAFC) constantly encouraging OEMs and the automotive value chain to innovate and adopt varying global powertrain strategies Turbo Engine Downsizing Powertrain Modularity and Lightweighting Alternative Fuels 2- and 3-cylinder engines, Reduced engine displacement, Downspeeding Aluminium, Modular construction, parts commonality Ethanol, LPG, CNG, Hydrogen Fuel Cell, gas plants High Speed Transmissions Dual Clutch Transmissions Powertrain Electrification Fuels, Lubricants and Engine Oils High speed DCT, 8/9/10-Speed Wet and Dry clutch DCT PHEVs, Diesel hybrids, transmission electrification, EVs, Range Extenders Low Viscous Oils – 0W Low-SAPS Enhanced Additives Emission reduction & Fuel Efficient ICE technologies DI, VVT, SCR, EGR, LNT, StartStop, Cylinder Deactivation, GPF Drivers: Euro6, ACEA,EPA, CAFE 16
  17. 17. Shift from Vehicle Ownership to Vehicle Usership The divisions between segments is reducing. The market is moving away from traditional car ownership and car leasing model to a more dynamic and flexible mobility afforded by car sharing and car rentals 2020 Vehicle Rental Business, Europe, 2013 and 2014 25 20 Units (Millions) ~31 million 15 ~450,000 ~53,600 ~19.25 million About 30.0– 35.0% of the global share is held by Zipcar, Car2 Go and Drive Now ~5.26 million ~75.0–78.0 10 ~45.0–50.0% share by Enterprise, Hertz, Avi s, Europcar Others include D‟Ieteren, Sixt AG and so on Others include VW Leasing, Arval, Sumitomo Mitsui, Alphabet, RCI Banque, Lex Autolease, Athlon and so on. ~4.15 million 2012 5 ALD ORIX ARI GE Capital 0 up to 24 hrs up to 2 weeks Car Sharing Car Rentals up to 36 months Car Leasing Note: All figures are rounded; the base year is 2012. Sources: LMC Automotive, Frost & Sullivan. 17
  18. 18. Corporate Carsharing to be a Key Growth Market in 2014 ~1,750 vehicles used for corporate carsharing in Europe (2013); the providers were a broad mix of OEMs, leasing providers, Carsharing Operators, and mobility/technology providers, indicating the opportunity for partnership & convergence Corporate Carsharing Strategy of Key Participants, Europe, 2013 Key Participants Typology Corporate Solution Vehicles (2013) BMW OEM AlphaCity* 200 PSA/ Sixt OEM/ Leasing Share Your Fleet 0 (launched Oct „13) Volvo/ Sunfleet OEM/ Traditional CSO Sunfleet 30 ALD Automotive Group Leasing ALD Sharing 50 Avis/ LeasePlan Car Rental/ Leasing Avis on Demand 10 Mobility Carsharing Traditional CSO Mobility Carsharing 420 Move About Traditional CSO Move About 90 Mobility Mixx Mobility Solutions Provider Mobility Pool 400 Carbox Services (excluding indirect relationships through leasing companies) Mobility Solutions Provider Carbox 500 Others (Renault, Arval, Athlon, Greenwheels) OEM, Leasing, CSO CAR+ Autopartage, Athlon Car Lease, Countries (2013) Est. 50 Luxembourg** Norway Others are Renault, Arval, Athlon Car Lease and Greenwheels. * AlphaCity launched in Spain and Austria in Q4 2013. ** Flag symbol not used since Luxembourg‟s flag is almost identical to that of the Netherlands; Note: Mobility Mixx is an initiative of LeasePlan Netherlands. It is different from the LeasePlan/Avis venture and has been defined as one of the market participants in this study Source: Frost & Sullivan 18
  19. 19. Future of Car Retailing : eRetailing and Digital Retailing to Grow By 2016 OEMs are expected to open more than 100 digital showroom/lifestyle stores globally, strategically located in city centres. 2013-14 Before Clicks Big-box format car showrooms 2014–2015 After Clicks Digital Showrooms, pop-up stores, lifestyle stores Single-channel auto retail Omnichannel (click-based retail) Car loan financing at dealerships Online leasing /finance TV ads and campaigns Social media and digital campaigns Images and logos are only for illustration; Source: Frost & Sullivan. 19
  20. 20. Automotive Parts eRetailing Showing Huge Global Promise 1 The DIY Choice 2 Online parts sales represent 7-8% of total DIY parts revenue, compar ed to just 3% for total aftermarket revenue Marketplace Winning Amazon, eBay drive over 65-70 percent of total automotive parts and accessories merchandise value 3 Parts Retailers Ramping Up Traditional parts retailers creating aggressive strategies, acqui ring eRetailers to increase share 4 Tires Top Category Unlike U.S., tires are top sellers in EU regions, accounti ng for about 2025 percent of total online sales What does this mean for OEMs? Diversification of digital channels (apps, dedicated portals, product videos) for DIY customers Partnerships with current aggregators /eRetailers and emerging ones such as Google 5 All About Pricing Online parts pricing (20%-40% cheaper) key success driver; shipping times, cost will determine next wave of competition ‘Bricks and clicks’ strategy with emphasis on fulfilment (delivery times, options) Images and logos are only for illustration; Source: Frost & Sullivan. 20
  21. 21. OEM Comparative Analysis – Overall Automated Driving Strategy While traditional OEMs tend to target an identical launch plan across functions, segments and regions, Google‟s model agnostic approach could be the game changer Automation Level Launch Year First Models BMW SemiHighly 2014 2017 X5 5- / 7-series Europe & North America Mercedes Benz SemiHighly 2014 2017 E-Class S-Class Europe, North America, Australia Audi SemiHighly 2016 A8 Europe & North America Volkswagen Semi- 2017 Passat Europe & North America General Motors SemiHighly- 2018 >2020 SRX, ATS & XTS North America Ford SemiHighly 2017 2020 Fusion Explorer Europe & North America Lexus Highly 2020 LS Japan, Europe & North America Nissan Highly 2020 Leaf Europe & North America Volvo Semi 2015 XC90 Europe & North America Google Fully- 2018 Model / OEM agnostic North America OEM (Cadillac) TJA – Traffic Jam Assist Top Level Functions TJA APA APA – Autonomous Parking Assist Region of Introduction Hwy Hwy – Automated Highway Driving Source: Frost & Sullivan analysis. 21
  22. 22. By 2020, about 90% of vehicle will be connected and geoconnected North America has been at the forefront in the connected car space because of OEM willingness to risk new business models and dedicated partnerships/ecosystem efforts Connectivity Market Update, Global, 2013 to 2020 Emb+Teth Emb+Teth Emb Emb 100% 50% 80% Emb+Teth 50% 40-50% Emb Emb 15% 2013 Emb 2% 2020 Europe 2013 2020 North America Emb - Embedded 2013 1% 2020 China 2013 2020 ROW Teth - Tethered Source: Frost & Sullivan analysis. 22
  23. 23. Current OEM Telematics Service Offering in Europe OEMs like BMW and Volvo who have had branded telematics service for over 6 years have seen minimal uptake because of cost. Ford and Mercedes Benz are new entrants from 2012 OEM BMW Mercedes Benz Telematics Program Assist eCall PSA Ford Volvo Peugeot Connect SYNC Emergency On Call No Integrated with Navigation Systems Yes Yes No Yes (Part of SYNC Hands Free System) Upfront Costs (Euros) ~3100 ~3120 290 ~900 ~400-650 Trial Period 3 years Lifetime 10 years Lifetime 2 Years Subscription Fee (Euros) ~200/Year NA NA NA ~200/Year Automatic & Manual eCall Yes Yes Yes Only Automatic Yes Yes- 2G Yes-2G Yes- 2G Tethered Yes- 2G Bosch IMA, P&T Luxemborg NA Wireless Car, Telenor Connexion Embedded SIM Key Partners Vodafone, ATX Source: Frost & Sullivan. 23
  24. 24. Why Big Data – The Business Case Key driver for implementing a three pronged big data (internal, external and connected) strategy is the billion dollar cost savings it can provide OEMs/year, and new revenue generation opportunities it can generate across the industry eco system Digital Leads Warranty Costs Reduction, Predictive Maintenance User & Dealer Satisfaction Internet Aggregators Product Performance Analysis, Production and Supply Chain Advanced Mobility services, Dynamic Navigation and Parking Images and logos are only for representation Source: Frost & Sullivan. 24
  25. 25. Key Conclusions Key Conclusions 1 Global sales are expected to grow by 5 percent to reach 88.5 million vehicles. The U.S. market is expected to reach 16 million and China to cross 24 million in sales. 2 The compact vehicle segment is expected to be the most attractive, accounting for over 31 percent share. The SUV and luxury vehicle segments are expected to increase market growth in the U.S. and China. 3 More than 50,000 cars are expected to be sold exclusively online which includes Daimler, Renault, BMW i brand, Dacia, Ford. 4 Changes in emission norms in key global markets is to impact powertrain technologies and regional OEMs strategies 5 Netherlands, Denmark, Austria, Germany and France to become the first European nations for Vehicle to Infrastructure communication implementation with the C-ITS corridor. 25
  26. 26. Join Us At Urban Mobility 3.0 26 June 2014 http://www.urbanmobility.gilcommunity.com 26
  27. 27. Next Steps Develop Your Visionary and Innovative Skills Growth Partnership Service Share your growth thought leadership and ideas or join our GIL Global Community Join our GIL Community Newsletter Keep abreast of innovative growth opportunities 27
  28. 28. Your Feedback is Important to Us What would you like to see from Frost & Sullivan? Growth Forecasts? Competitive Structure? Emerging Trends? Strategic Recommendations? Other? Please inform us by “Rating” this presentation. 28
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  30. 30. For Additional Information Sarwant Singh Senior Partner Automotive & Transportation +44 (0) 207 915 7843 sarwant.singh@frost.com Katja Feick Corporate Communications Manager Europe +49 (0) 69 7703343 katja.feick@frost.com Shwetha Surender Senior Research Analyst Automotive & Transportation (+91) 44 6681 4041 shwethas@frost.com Pete Kelly Managing Director LMC Automotive, Ltd. +44 1865 791737 PKelly@lmc-auto.com 30