Swiecki presentation

1. The Automotive Industry in North America
- What Lies Ahead?
Bernard Swiecki
Center for Automotive Research (CAR)
Regional Auto Growth Summit
September 11, 2015

2. Sales, Production, and Employment Forecasts

3. U.S. Market Share
2000 – 2015 YTD (Aug)
28.2%
17.7%
24.2%
15.1%
9.3%
14.4%
14.5%
12.7%
4.3%
8.6%6.7%
8.8%
2.3%
8.0%
0%
5%
10%
15%
20%
25%
30%
35%
PercentofU.S.MarketSales
Year
GM
Ford
Toyota
Chrysler
Nissan
Honda
Hyundai-Kia
Source: Automotive News; CAR Research

4. U.S. Light Vehicle Monthly Sales and SAAR
Aug 2013 – Aug 2015
1.5
1.1
1.2 1.2
1.4
1.0
1.2
1.5
1.4
1.6
1.4 1.4
1.6
1.2 1.3 1.3
1.5
1.2
1.3
1.5
1.5
1.6
1.5 1.5
1.6
16.1
15.3 15.2
16.4
15.415.2
15.4
16.4 16.1
16.8
17.0
16.5
17.5
16.4 16.5
17.2
16.9 16.716.2
17.1
16.5
17.8
17.2
17.6 17.8
0
2
4
6
8
10
12
14
16
18
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
MonthlySAAR
MonthlySales(Millions)
SALES SAAR
Source: Automotive News; CAR Research

5. U.S. Light Vehicle Sales
Percent Change YTD Through Aug: 2015 vs. 2014
-3.0%
10.3%
3.8%
Passenger Cars
Light Trucks
Total
Source: Automotive News; CAR Research
+ 424,952
+ 589,180
+ -164,228
6,301,473
54.3%
5,309,706
45.7%
11,611,179
100%

6. Percent Change in Sales of Light Vehicles Per OEM:
YTD Through Aug: 2015 vs. 2014
1.2%
2.7%
2.8%
3.2%
3.8%
4.2%
5.8%
3.8%
0% 5%
Honda
Ford
Toyota
GM
Hyundai- Kia
Nissan
FCA US
TOTAL
Source: Automotive News; CAR Research
+ 424,952
+ 78,950
+ 40,389
+ 34,498
+ 64,086
+ 45,493
46,016
+ 12,434
1,054,816
9.1%
8.6%
14.4%
1,000,706
1,744,213
15.0%
11,611,179
940,335
1,432,978
2,048,537
1,673,002
17.6%
12.3%
8.1%
100%

7. U.S. Market Share:
YTD Aug 2015
Units: 940,335
Units: 1,000,706
Units: 1,054,816
Units: 1,432,978
Units: 1,673,002
Units: 1,744,213
Units: 2,048,537
8.1%
8.6%
9.1%
12.3%
14.4%
15.0%
17.6%
Hyundai-Kia
Nissan
Honda
FCA US
Toyota
Ford
GM
Source: Automotive News; CAR Research

8. Market Share: Segment Breakdown –
U.S. LV Sales Aug YTD 2015
1.8%
3.2%
4.4%
5.1%
6.7%
7.1%
13.9%
18.0%
18.2%
21.5%
0% 5% 10% 15% 20% 25%
Large Car
Large CUV
Small CUV
Van
Luxury Car
SUV
Pickup
Middle Car
Small Car
Middle CUV
Source: Ward’s Automotive Reports

9. Segment Breakdown - U.S. LV Sales Percent Change
Aug YTD 2015 vs. Aug YTD 2014
-15.5%
-4.1%
-2.8%
-2.7%
-1.4%
6.1%
7.2%
10.6%
10.6%
37.6%
3.9%
-20% -10% 0% 10% 20% 30% 40% 50%
Large Car
Van
Middle Car
Luxury Car
Small Car
SUV
Large CUV
Middle CUV
Pickup
Small CUV
Total
Source: Ward’s Automotive Reports

10. CAR U.S. Light Vehicle Sales Forecast:
2015-2018
16.1
13.2
10.4
11.6
12.8
14.5
15.6
16.5 17.2 17.5 17.7 17.8
0
5
10
15
20
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
U.S.LVSalesinMillions
2.3%
Source: BEA; CAR Research, July 2015
4.2%
1.1%

11. U.S. Vehicle Production Forecast: 2015-2018
10.8
8.7
5.7
7.7
8.7
10.3
11.1
11.7 12.0 12.3 12.4 12.4
0
2
4
6
8
10
12
14
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Million
11
2.6%
2.5%
*Includes heavy duty trucks. Source: Ward’s Auto; CAR Research, July 2015
0.1%

12. U.S. Vehicle Production &
Automotive Employment Forecasts
2015-2018
2013 2014 2015 2016 2017 2018
Automotive Employment 686,100 736,000 760,000 790,000 800,000 810,000
Vehicle Production 11,066,432 11,660,702 12,000,000 12,300,000 12,400,000 12,400,000
500,000
600,000
700,000
800,000
900,000
10,000,000
10,500,000
11,000,000
11,500,000
12,000,000
12,500,000
13,000,000
Employment
Production
Production includes HD trucks. Source: Ward’s Auto; CAR Research; BLS, July 2015

13. CAR Sales Forecast
Source: CAR Research, July 2015
- 5.9 M
- 15.9 M
15.0 M
16.0 M
17.2 M 17.8 M?
+9.5 M
+14.3 M

14. They are Getting Old . . .
U.S. Light Vehicle Age and
Scrappage Rate
8.6 8.8 8.8 8.9 8.9 9.0 9.1 9.4 9.5 9.7 9.8 10.0 10.3 10.6 10.9 11.2 11.4
6.8
5.9 5.8
6.7 6.4 6.2
5.5
4.8 4.3
5.0 5.2
5.7
4.1
5.2 4.9 4.8
5.7
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Average Age Scrappage Rate (%)
Source: R.L. Polk

15. Investment Summary

16. 0
50
100
150
200
250
2009 2010 2011 2012 2013 2014
OEM Announcements Supplier Announcements
Annual Automaker and Supplier Announcements
Source: Center for Automotive Research Book of Deals

17. 0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2009 2010 2011 2012 2013 2014
Millions
OEM Investment Supplier Investment
Annual Automaker and Supplier Investment
Source: Center for Automotive Research Book of Deals

18. What Are These Investments?
Automaker and Supplier Announcements by Type
North American Investment Activity in 2010-2013
OEM Supplier Overall
Total Announcements 293 528 821
----- New Facilities 53 195 248
----- Expansions 102 267 369
----- Retooling 126 33 159
----- Other 12 33 45
Observed Investment Activity in 2014 through December
OEM Supplier Overall
Total Announcements 51 208 259
----- New Facilities 16 96 112
----- Expansions 27 109 136
----- Retooling 5 3 8
----- Other 3 0 3
30%
45%
19%
6%
2010-2013
New Facilities
Expansions
Retooling
Other
43%
53%
3% 1%
2014
New Facilities
Expansions
Retooling
Other
Source: Center for Automotive Research Book of Deals

19. Canada
$0.8 billion
Total
$18.2 billion
United States
$10.5 billion
Mexico
$7.0 billion
Announced North American Automaker Investments
January - December 2014 Source: CAR Research, Book of Deals

20. Why Are Automakers and Suppliers
Locating in Mexico?
 Automakers
• Lower costs
• Trade Position (FTAs with 40+ countries
generating 70% of global GDP)
• Proximity to South American markets
(Pacific to Atlantic in 3.5 hour drive)
• Favorable “quality/price ratio”
 Suppliers
• Lower costs
• Product characteristics
• Labor intensity
• Weight
• Fragility
• Automaker demands
• Lower costs
• Product characteristics
• FTA content requirements
• Favorable “quality/price ratio”

21. Mexico’s Weaknesses = ACP Region Opportunities
 Crime
 Corruption
 Inefficient judicial system
• Unacceptable duration and cost of contract enforcement
 Insufficient access to financing
 High employee turnover
 Insufficient engineering hiring pool
 Lackluster economic growth (only 1.3 % GDP growth in 2013)
• Weak internal market (< 1 million units annually)
 High shipping costs
 Out-of-date labor laws and practices
 Energy cost and reliability concerns
 Insufficient supply of raw materials

22. U.S. Automotive Trade with Mexico
1989-2013
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
$Million
MEX MV&P Imports MV&P Exports to MEX Auto Trade Deficit
Source: U.S. International Trade Commission, U.S. Imports/Exports Data
Start of NAFTA
22

23. U.S. Automotive Trade with Mexico –
Motor Vehicle
1989-2013
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
$Million
MEX MV Imports MV Exports to MEX Auto Trade Deficit
Source: U.S. International Trade Commission, U.S. Imports/Exports Data
Start of NAFTA
23

24. U.S. Automotive Trades with Mexico –
Auto Parts
1989-2013
(5,000)
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
$Million
MEX Parts Imports Parts Exports to MEX Auto Parts Trade Deficit
Source: U.S. International Trade Commission, U.S. Imports/Exports Data
Start of NAFTA
24

25. Automotive Investment:
U.S. / Mexico Comparison

26. THANK YOU
BSWIECKI@CARGROUP.ORG