Center for Automotive Research | LEAP Board Speaker Series

Lansing Economic Area Partnership (LEAP)
Kristin Dziczek – Vice President, Industry, Labor, & Economics (ILE) Group
Bernard Swiecki – Assistant Director, Industry, Labor, & Economics (ILE) Group
2 April 2019

2CENTER FOR AUTOMOTIVE RESEARCH
THE CENTER FOR AUTOMOTIVE RESEARCH (CAR)
Automotive industry contract research and service organization (non-profit ) with
more than 30 years experience forecasting industry trends, advising on public
policy, and sponsoring multi-stakeholder communication forums.
Consortia that bring together
industry stakeholders to
participate in working groups,
networking opportunities,
and access to CAR staff.
RESEARCH EVENTS CONNECT
Industry-driven events and
conferences that deliver
content, context, and
connections.
Independent research and
analysis on critical issues
facing the industry.

3
RESEARCH The Center for Automotive Research conducts leading-edge
research that impacts the future of the global automotive
industry by informing corporate leaders and policymakers and
facilitating communication across the industry.
CAR research and forecasts are produced primarily under
three focused research groups:
MET
TSA
ILE
Transportation Systems Analysis
Industry, Labor, & Economics
Manufacturing, Engineering,
& Technology
CENTER FOR AUTOMOTIVE RESEARCH

N.A Announced Automaker Investment by Region
2009 to 2018
Region Investment Amount ($USD)
Canada $8.2B
United States $91.3B
U.S. Great Lakes $57.5B
Michigan $29.2B
($1.9B LEAP)
South $21.2B
Mexico $24.8B
Total $124.3B
Note: U.S. Great Lakes includes: IL, IN, KY, MI, MO, and OH
South includes: AL, FL, GA, MS, SC, TN, and TX
7%
73%
20%
Source: Center for Automotive Research Book of Deals

N.A. Automaker Investment by Country
2009-2018
0
5
10
15
20
25
30
35
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Billions
United States Mexico Canada

6
U.S. Light Vehicle Monthly Sales and SAAR:
December 2015 to December 2018
17.51
0
2
4
6
8
10
12
14
16
18
20
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18
MonthlySAAR
LightVehicleSales(Millions)
Sales SAAR
Source: Wards Auto; CAR Research

7
U.S. Light Vehicle Monthly Sales
January 2015 – December 2018
900,000
1,000,000
1,100,000
1,200,000
1,300,000
1,400,000
1,500,000
1,600,000
1,700,000
1,800,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
LightVehicleSales
2015 2016 2017 2018

8
U.S. Light Vehicle Monthly Sales
January 2016 – February 2019
900,000
1,000,000
1,100,000
1,200,000
1,300,000
1,400,000
1,500,000
1,600,000
1,700,000
1,800,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
LightVehicleSales
2016 2017 2018 2019

9
U.S. Light Vehicle Sales
Percent Change: 2018 vs. 2017
-12.8%
7.7%
0.5%
-15% -10% -5% 0% 5% 10%
Passenger Cars
Light Trucks
Total
17,210,497
Total+ 78,594
100%
11,906,150
Truck+ 855,196
69.2%
5,304,347
Cars-776,602
30.8%

10
2018 U.S. Market Share
Units: 1,267,619
Units: 1,604,828
Units: 1,611,951
Units: 2,219,270
Units: 2,420,340
Units: 2,426,674
Units: 2,951,221
7.4%
9.3%
9.4%
12.9%
14.1%
14.1%
17.1%
0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000
Hyundai- Kia
Honda
Nissan/Mitsubishi
FCA
Ford
Toyota
GM

11
Percent Change in Sales of Light Vehicles Per OEM:
2018 vs. 2017
-5.0%
-3.7%
-2.2%
-1.6%
-0.6%
-0.3%
8.7%
0.5%
-6% -4% -2% 0% 2% 4% 6% 8% 10%
Nissan/Mitsubishi
Ford
Honda
GM
Hyundai- Kia
Toyota
FCA
TOTAL LV Sales
78,594
177,097
-7,841
-7,604
-48,384
-36,601
-92,541
-85,199
Ford
Nissan/Mitsubishi
Toyota
TOTAL LV Sales
Hyundai- Kia
FCA
Honda
GM
1,611,951
9.4%
14.1%
9.3%
2,426,674
2,420,340
14.1%
17,210,497
1,267,619
2,219,270
2,951,221
1,604,828
17.1%
12.9%
7.4%
100%

12
Market Share: Segment Breakdown
U.S. Light Vehicle Sales 2018
1.3%
3.9%
4.6%
5.4%
8.4%
9.5%
12.6%
16.6%
37.7%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Large Car
Electrified
Luxury Car
Van
SUV
Middle Car
Small Car
Pickup
CUV
Note: Electrified Segment consists of BEVs, HEVs and PHEVs; all other segments are sales exclusive of Hybrid models
Source: Ward’s Automotive Reports and CAR Research

13
Segment Breakdown: U.S. Light Vehicles Sales
Percent Change
2018 vs. 2017
Note: Electrified Segment consists of BEVs, HEVs and PHEVs; all other segments are sales exclusive of Hybrid models
Source: Ward’s Automotive Reports and CAR Research
-15.6%
-15.2%
-15.2%
-14.7%
-0.2%
3.9%
4.3%
11.3%
21.0%
0.5%
-20% -15% -10% -5% 0% 5% 10% 15% 20% 25%
Luxury Car
Small Car
Middle Car
Large Car
Van
SUV
Pickup
CUV
Electrified
Total

14
U.S. Electrified Light Vehicle Sales
by Propulsion Technologies
1999 – 2018
Note: Electrified vehicles consist of BEV, HEV and PHEV
Source: Ward’s Automotive Reports (from 2010 and on), HybridCars.com and CAR Research
2.1% 2.0%
0.5% 0.7%
0.6%
1.2%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Hybrid Plug-In Hybrid Electric

Positive Factors in the CAR Forecast
 Projected moderate U.S. economic output growth in 2019
 Historically low U.S. unemployment rates
 Relatively low oil prices continue through 2020
 Underlying nominal wage growth continues
 High levels of consumer confidence were reached in Q4 2018, and
 Solid new housing starts and home prices rebounding to pre-recession levels

Risks to the Forecast
USMCA Ratification ?
Section 232 Steel & Aluminum Tariffs
Section 232 Auto & Parts Tariffs
U.S.-China Talks
U.S.-Japan Talks
U.S.-EU Talks
U.S.-U.K. Talks
Section 301 China Tariffs
Recession?
China Auto Sales Slowdown
Japan Economic Slowdown
BREXIT
New
• Business
Models
• Competitors
• Technologies
Geopolitical Risks
Consumer Confidence
Interest Rates
UAW Negotiations/Strike

2019 U.S. Sales Forecasts:
Units in Millions
16.8 (1/19)
16.7 (12/18)
16.9 (11/18)
16.8 (12/18)
16.8 (12/18)
16.8 (12/18)
17.0 (1/19)
16.7 (2/19)

CAR’s U.S. Light Vehicle
Sales Forecast
2019-2025
17.4 17.5
17.2 17.2
16.8
16.5 16.4
16.8
17.3
17.6 17.7
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
U.S.LVSalesinMillions
U.S. Sales
Source: CAR Research, January 2019

CAR’s U.S. Light Vehicle
Production Forecast
2019-2025
11.7
12.1
11.2 11.2 11.3
10.9
10.6
11.1
11.6 11.7 11.7
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
U.S.VehicleProduction(millions)
U.S. Production

CAR’s N.A. Light Vehicle
Production Forecast
2019-2025 18.0
18.1
17.5
17.2 17.1
16.8
16.6
17.2
17.8
18.1 18.2
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025N.A.VehicleProduction(millions)
N.A. Production

GM Delta Township Assembly Plant Production Forecast
2015 – 2025
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
IHS Markit Forecast
Buick Enclave Chevrolet Traverse GMC Acadia
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
LMC Automotive Forecast
Buick Enclave Chevrolet Traverse GMC Acadia

GM Grand River Assembly Plant Production Forecast
2015 – 2025
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
IHS Markit Forecast
Chevrolet Camaro Cadillac ATS Cadillac CTS
Cadillac CT4 Cadillac CT5
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Millions
LMC Automotive Forecast
Chevrolet Camaro Cadillac ATS Cadillac CTS
Cadillac CT4 Cadillac CT5 Cadillac CT3

GM Announcements
23

GM Capacity Actions
Plant Products End of Production Employment Union Local
Detroit/Hamtramck LaCrosse, Volt, CT6,
Impala
June 1, 2019
January 2020
1,542 UAW Local 22
Lordstown Cruze March 1, 2019 1,618 UAW Local 1112
Oshawa Impala, XTS,
Silverado, Sierra
Q4 2019 2,900 Unifor Local 222
Warren Trans. 6 Speed Trans August 1, 2019 335 UAW Local 909
Baltimore Ops. Pickup transmissions April 1, 2019 310 UAW Local 239

YOY Change in U.S. Passenger Car Market Shares
2013 – 2018
-25%
-20%
-15%
-10%
-5%
0%
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018
YOY%Change
All Automakers All But D3 D3 GM
Source: IHS Markit

U.S. Motor Vehicle & Parts Capacity Utilization
1948-2018
Source: Federal Reserve Bank of St. Louis, FRED Economic Data

U.S. Vehicle Assembly Capacity Utilization*
By Automaker, 2018
Capacity Utilization %
Daimler (Mercedes-Benz) 116
Honda 95
Toyota 93
SIA (Subaru) 90
Ford 89
FCA 87
BMW 81
Renault-Nissan 77
Hyundai-Kia 73
GM 69
Tesla 64
VW 40
Geely (Volvo) (online late 2018, full 2021) 31
Toyota-Mazda (online 2021) 0.0
AVERAGE 81
* Capacity is defined as
2-shift straight-time
production maximum.
Of the underutilized
capacity:
GM 32%
Ford 17%
FCA 9%
RNM 8%
Toyota 7%
VW 6%
H-K 6%
Tesla 5%
Honda 3%
BMW 3%
Daimler 2%
Subaru 2%
Source: CAR analysis; LMC Automotive data

GM Vehicle Production Capacity and Capacity
Utilization by Country, 2015-2018, 2019-2025(f)
Source: CAR analysis of LMC Automotive data
0
1
2
3
4
5
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Millions
Production Capacity
United States Canada Mexico
0%
20%
40%
60%
80%
100%
120%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Capacity Utilization
United States Canada Mexico

GM Transmission Capacity and Capacity Utilization
by Country, 2015-2018, 2019-2025(f)
0
1
2
3
4
5
6
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Millions
Transmission Capacity
US Canada Mexico
0%
20%
40%
60%
80%
100%
120%
140%
160%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Capacity Utilization
US Canada Mexico
Source: CAR analysis of LMC Automotive data

Brief Trade Update
31

USMCA Status
• Text released 30 September
• Ongoing interpretation, legal
review, & translation to French
& Spanish
• The three parties signed the
agreement at the G20 Summit
in Buenos Aires end of
November
Signing a trade deal does
not bring it into force.

Steel & Aluminum Tariffs
33By HurwiczRocks - Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=2929407

34
NAFTA Timeline Under Trade Promotion Authority
8/31/2018
11/30/2018
9/30/2018
1/28/2019
3/14/2019
Aiming for
1/1/2020
4/19/2019

35
USMCA Passage is not certain.
AFL-CIO
UAW
Steelworkers
Machinists

President Trump admits just one mistake…
President Donald Trump: I could have been earlier with
terminating the NAFTA deal. The problem was, I was
getting to know the leaders. I was getting to know
countries. I didn't wanna do it right outta the box. So I
waited a little while, but I could have done trade a little
bit earlier.
In his October interview on 60
minutes, President Trump was
asked if he’s made any mistakes:
U.S. withdrawal from
NAFTA is still possible

What happens if the President pulls out of NAFTA but
the Congress doesn’t undo the enabling legislation?
ZOMBIE NAFTA

38
Tariffs are piling up on light vehicles
Steel Tariffs @
25%
Aluminum Tariffs
@ 10%
China Tariffs @
(effective rate 12%)
Potential Parts
Tariffs @ 25%
No Tariffs
~60%
Source: Center for Automotive Research

39
The United States cannot currently self-supply the
vehicles American dealers sell to U.S. consumers.
Source: IHS|Markit data
FCA, Ford, & GM Represent 43%
of Canada & Mexico Imports
Source: CAR; U.S. International Trade Administration
Sourcing of U.S. Light Vehicle Sales
2018
U.S. Production
less U.S. Exports
plus U.S. Imports
U.S. Sales
10.8 million
- 1.8 million
+ 8.2 million
= 17.2 million
U.S. Firms
28%
International Firms
24%
Mexico
15%
Canada
10%
Japan
10%
South Korea
5%
Germany
3%
UK
1%
Other
4%
U.S. Sales of
Imported
Vehicles
47%
U.S. Sales of
U.S. Produced
Vehicles
52%

40
U.S. Consumer & Economic Impacts of U.S.
Automotive Trade Policies
• Assume:
• USMCA is ratified,
• Section 232 tariffs on steel & aluminum remain in place on all current
countries,
• Section 301 China tariffs remain at current levels, and
• Section 232 auto & parts tariffs are levied at 25% on all trading partners
except Canada, Mexico, & South Korea
https://www.cargroup.org/wp-content/uploads/2019/02/US-Consumer-
Economic-Impacts-of-US-Automotive-Trade-Policies-.pdf

41
Impact of USMCA, Section 232 Steel & Aluminum
Tariffs, Section 301 China Tariffs &
Potential Section 232 Auto & Parts Tariffs
+$2,750 average
+$1,900 U.S.-built
+$3,700 imports
-$30.4B GDP
-366,900 jobs
-1.3M fewer U.S. sales
-$43.6B dealership revenue
-77,000 dealership jobs

42
Relative Size of U.S. Steel, Aluminum, Motor
Vehicles, & Motor Vehicle Parts Imports, 2017
METALS AUTOS & PARTS
BILLIONSUSD
Motor
Vehicle
Parts
Motor
Vehicles
$46 Billion
$335 Billion
Aluminum
Steel
Source: U.S. Department of Commerce, International Trade Administration

43
Source of Trade Impacts on the Auto Industry
USMCA, 2.2%
301 China, 3.1%
232 Steel & Aluminum,
4.1%
232 Autos & Parts, 90.5%

CENTER FOR AUTOMOTIVE RESEARCH 44
A Quick Update on US-China Automotive Trade:

45
Section 301 Report
Issued
U.S. Initiates
Section 301
U.S. Announces $200B
in Tariffs; Threatens to
Impose Tariffs on all
$500B Chinese Imports
U.S. Imposes Tariffs on
2nd Tranche ($16B)
U.S. Imposes Tariffs on
1st Tranche ($34B)
March 2018 July 2018 August 2018 September 2018 ???August 2017
U.S.-China Trade Actions
Section 301 Investigation
Virtually ALL
automotive parts are
now included – as is
automotive tooling
& China Retaliates
& China Retaliates

46
U.S.-China Light Vehicle & Parts Trade (USD Billions)
2016-2018
8.3
1.2
2.3
12.9
9.5
1.7
2.7
13.2
6.0
1.5
2.7
15.3
DOMESTIC EXPORTS IMPORTS FOR CONSUMPTION DOMESTIC EXPORTS IMPORTS FOR CONSUMPTION
MOTOR VEHICLES MOTOR VEHICLE PARTS
2016 2017 2018
2017-2018: -36.6% -13.1% -3.0% +15.5%
Source: U.S. International Trade Commission

47
Trends in Monthly China Motor Vehicle and Parts Domestic
Exports and Imports for Consumption
2016-2018
200
400
600
800
1,000
1,200
1,400
1,600
January February March April May June July August September October November December
Millions
Motor Vehicle Exports
50
100
150
200
250
300
Millions
Motor Vehicle Imports
50
100
150
200
250
300
Millions
Motor Vehicle Parts Exports
200
400
600
800
1,000
1,200
1,400
1,600
Millions
Motor Vehicle Parts Imports
Source: U.S. International Trade Commission

48
2019 Negotiations
CENTER FOR AUTOMOTIVE RESEARCH 48CENTER FOR AUTOMOTIVE RESEARCH

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