Automotive industry: Europe slows down, the world drives on
Automotive industry: Europe slows down, the world drives on
Automotive industry: Europe slows down, the world drives on
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<str<strong>on</strong>g>Automotive</str<strong>on</strong>g> <str<strong>on</strong>g>industry</str<strong>on</strong>g>:<br />
<str<strong>on</strong>g>Europe</str<strong>on</strong>g> <str<strong>on</strong>g>slows</str<strong>on</strong>g> <str<strong>on</strong>g>down</str<strong>on</strong>g>,<br />
<str<strong>on</strong>g>the</str<strong>on</strong>g> <str<strong>on</strong>g>world</str<strong>on</strong>g> <str<strong>on</strong>g>drives</str<strong>on</strong>g> <strong>on</strong><br />
Ludovic Subran<br />
Chief Ec<strong>on</strong>omist and<br />
Research Director<br />
Yann Lacroix<br />
Sector Research Manager<br />
Paris, 21 September 2012
C<strong>on</strong>tents<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
1 The <str<strong>on</strong>g>world</str<strong>on</strong>g>wide market is growing<br />
2 Emerging markets are stabilizing<br />
3 The American automotive market is reviving<br />
4 The str<strong>on</strong>g yen is weakening Japanese <str<strong>on</strong>g>industry</str<strong>on</strong>g><br />
5 Most of <str<strong>on</strong>g>the</str<strong>on</strong>g> <str<strong>on</strong>g>Europe</str<strong>on</strong>g>an market is collapsing<br />
6 C<strong>on</strong>clusi<strong>on</strong><br />
2
1 1 The <str<strong>on</strong>g>world</str<strong>on</strong>g>wide market is growing<br />
2 Emerging markets are stabilizing<br />
3 The American automotive market is reviving<br />
4 The str<strong>on</strong>g yen is weakening Japanese <str<strong>on</strong>g>industry</str<strong>on</strong>g><br />
5 Most of <str<strong>on</strong>g>the</str<strong>on</strong>g> <str<strong>on</strong>g>Europe</str<strong>on</strong>g>an market is collapsing<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
6 C<strong>on</strong>clusi<strong>on</strong><br />
3
Worldwide vehicle producti<strong>on</strong> growth is back <strong>on</strong> track…<br />
Worldwide vehicle producti<strong>on</strong> (PCs and CVs)*, in milli<strong>on</strong>s of units<br />
90,0<br />
85,0<br />
80,0<br />
75,0<br />
70,0<br />
65,0<br />
60,0<br />
55,0<br />
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 e 2013 p<br />
*PCs: passenger cars<br />
CVs: commercial vehicles<br />
Sources: OICA, Euler Hermes forecasts<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
Year<br />
Producti<strong>on</strong><br />
(milli<strong>on</strong>)<br />
Change<br />
(y/y)<br />
2007 73.1 6%<br />
2008 70.5 -4%<br />
2009 61.8 -12%<br />
2010 77.9 26%<br />
2011 80.1 3%<br />
2012 (f) 83.3 4%<br />
2013 (f) 86.9 4%<br />
4
… But <str<strong>on</strong>g>the</str<strong>on</strong>g> balance has shifted and producti<strong>on</strong> has<br />
moved to new ec<strong>on</strong>omies<br />
Vehicle producti<strong>on</strong> (PCs and CVs) by country in 2007 and 2011<br />
China<br />
India<br />
Mexico<br />
Brazil<br />
South Korea<br />
Germany<br />
UK<br />
Spain<br />
US<br />
France<br />
Japan<br />
Italy<br />
-38.5%<br />
Source: OICA<br />
-27.6%<br />
-16.4%<br />
-18.5%<br />
-19.7%<br />
-23.9%<br />
1.6%<br />
14.4%<br />
14.0%<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
27.9%<br />
74.7%<br />
107.4%<br />
-60% -40% -20% 0% 20% 40% 60% 80% 100% 120%<br />
PC and CV<br />
producti<strong>on</strong><br />
(milli<strong>on</strong>)<br />
2007 2011<br />
China 8.9 18.4<br />
India 2.3 3.9<br />
Mexico 2.1 2.7<br />
Brazil 3.0 3.4<br />
South Korea 4.1 4.7<br />
Germany 6.2 6.3<br />
UK 1.8 1.5<br />
Spain 2.9 2.4<br />
US 10.8 8.7<br />
France 3.0 2.3<br />
Japan 11.6 8.4<br />
Italy 1.3 0.8<br />
5
2 1 The <str<strong>on</strong>g>world</str<strong>on</strong>g>wide market is growing<br />
2 Emerging markets are stabilizing<br />
3 The American automotive market is reviving<br />
4 The str<strong>on</strong>g yen is weakening Japanese <str<strong>on</strong>g>industry</str<strong>on</strong>g><br />
5 Most of <str<strong>on</strong>g>the</str<strong>on</strong>g> <str<strong>on</strong>g>Europe</str<strong>on</strong>g>an market is collapsing<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
6 C<strong>on</strong>clusi<strong>on</strong><br />
6
China: stimulus-package euphoria in 2009-2010 has subsided<br />
and <str<strong>on</strong>g>the</str<strong>on</strong>g> market is growing at a ‘healthy’ 6% pace again<br />
PV registrati<strong>on</strong>s (year <strong>on</strong> year, milli<strong>on</strong>s of units)<br />
18.0<br />
16.0<br />
14.0<br />
12.0<br />
10.0<br />
8.0<br />
6.0<br />
4.0<br />
2.0<br />
2005 2006 2007 2008 2009 2010 2011 2012 2013<br />
Sources: China Associati<strong>on</strong> of Automobile Manufacturers, Euler Hermes forecasts<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
� Market growth should settle<br />
near 6% in 2012 and 2013<br />
� Growth potential is still<br />
exciting (vehicle equipment<br />
rate less than 5%)<br />
� But <str<strong>on</strong>g>the</str<strong>on</strong>g> pre-owned vehicle<br />
market is emerging<br />
7
India: <str<strong>on</strong>g>the</str<strong>on</strong>g> market is picking up because interest rates are<br />
heading <str<strong>on</strong>g>down</str<strong>on</strong>g> (but <str<strong>on</strong>g>the</str<strong>on</strong>g>y are still high)<br />
PV registrati<strong>on</strong>s (year <strong>on</strong> year, milli<strong>on</strong>s of units)<br />
2.4<br />
2.2<br />
2.0<br />
1.8<br />
1.6<br />
1.4<br />
1.2<br />
1.0<br />
0.8<br />
0.6<br />
0.4<br />
2005 2006 2007 2008 2009 2010 2011 2012 2013<br />
Sources: Society of Indian Automobile Manufacturers, Euler Hermes forecasts<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
� The market is growing at<br />
about 5% a year again,<br />
but is still small<br />
8.00<br />
7.50<br />
7.00<br />
6.50<br />
6.00<br />
5.50<br />
5.00<br />
4.50<br />
4.00<br />
3.50<br />
3.00<br />
Jan 09<br />
Interest rates<br />
Jul 09<br />
Jan 10<br />
Jul 10<br />
Jan 11<br />
Jul 11<br />
Jan 12<br />
Jul 12<br />
8
Brazil: revving up for a fresh boost?<br />
The Government cut its tax <strong>on</strong> industrial goods (IPI) in Spring 2012 to stimulate <str<strong>on</strong>g>the</str<strong>on</strong>g> local<br />
automotive market, probably through end-October 2012.<br />
PV registrati<strong>on</strong>s (year <strong>on</strong> year, milli<strong>on</strong>s of units)<br />
3.5<br />
3.0<br />
2.5<br />
2.0<br />
1.5<br />
1.0<br />
0.5<br />
0.0<br />
2005 2006 2007 2008 2009 2010 2011 2012 2013<br />
Sources: Associação Naci<strong>on</strong>al dos Fabricantes de Veículos Automotores, Euler Hermes forecasts<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
� IPI <strong>on</strong> vehicles with 1-litre<br />
engines made in Brazil or<br />
imported from o<str<strong>on</strong>g>the</str<strong>on</strong>g>r Mercosur<br />
countries or Mexico will drop<br />
from 7% to 0%<br />
� IPI <strong>on</strong> vehicles with ‘flex-fuel’<br />
1 to 2-liter engines made in<br />
Brazil or imported from o<str<strong>on</strong>g>the</str<strong>on</strong>g>r<br />
Mercosur countries or Mexico<br />
will drop from 11% to 5.5%<br />
� Government also asked private<br />
banks to lower interest rates<br />
� Forecasts put growth at 7% in<br />
2012 and 4% in 2013<br />
9
Russia: <str<strong>on</strong>g>Europe</str<strong>on</strong>g> is looking for a new driver<br />
PV registrati<strong>on</strong>s (year <strong>on</strong> year, milli<strong>on</strong>s of units)<br />
3.5<br />
3.0<br />
2.5<br />
2.0<br />
1.5<br />
1.0<br />
0.5<br />
0.0<br />
2006 2007 2008 2009 2010 2011 2012 2013<br />
Sources: nati<strong>on</strong>al statistics, Euler Hermes forecasts<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
� Prospects in <str<strong>on</strong>g>the</str<strong>on</strong>g> Russian<br />
market are exciting<br />
� Vehicle equipment rate is<br />
low (near 25%)<br />
� And vehicles are old<br />
(>10 years <strong>on</strong> average)<br />
� This market should grow<br />
11% in 2012 and 5% in<br />
2013<br />
10
Turkey depends <strong>on</strong> <str<strong>on</strong>g>the</str<strong>on</strong>g> euroz<strong>on</strong>e<br />
PV registrati<strong>on</strong>s and producti<strong>on</strong> (year <strong>on</strong> year, milli<strong>on</strong>s of units)<br />
0.8<br />
0.7<br />
0.6<br />
0.5<br />
0.4<br />
0.3<br />
0.2<br />
Registrati<strong>on</strong>s Producti<strong>on</strong><br />
2005 2006 2007 2008 2009 2010 2011 2012 2013<br />
Sources: nati<strong>on</strong>al statistics, Euler Hermes forecasts<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
� Market has been nose-diving<br />
since H2 2011<br />
� 73% of producti<strong>on</strong> is<br />
exported, principally to<br />
euroz<strong>on</strong>e<br />
� 72% of registered vehicles<br />
are imported<br />
� Medium-term outlook is<br />
never<str<strong>on</strong>g>the</str<strong>on</strong>g>less positive<br />
because level of equipment<br />
rate is <strong>on</strong>ly 10%<br />
� Market should plateau in<br />
2013 after 12% drop in 2012<br />
11
3 1 The <str<strong>on</strong>g>world</str<strong>on</strong>g>wide market is growing<br />
2 Emerging markets are stabilizing<br />
3 The American automotive market is reviving<br />
4 The str<strong>on</strong>g yen is weakening Japanese <str<strong>on</strong>g>industry</str<strong>on</strong>g><br />
5 Most of <str<strong>on</strong>g>the</str<strong>on</strong>g> <str<strong>on</strong>g>Europe</str<strong>on</strong>g>an market is collapsing<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
6 C<strong>on</strong>clusi<strong>on</strong><br />
12
U.S.: <str<strong>on</strong>g>the</str<strong>on</strong>g> market is not yet back at pre-crisis levels<br />
but is climbing <str<strong>on</strong>g>the</str<strong>on</strong>g> slope n<strong>on</strong>e<str<strong>on</strong>g>the</str<strong>on</strong>g>less<br />
PV registrati<strong>on</strong>s (year <strong>on</strong> year, milli<strong>on</strong>s of units)<br />
18.0<br />
17.0<br />
16.0<br />
15.0<br />
14.0<br />
13.0<br />
12.0<br />
11.0<br />
10.0<br />
2005 2006 2007 2008 2009 2010 2011 2012 2013<br />
Sources: Auto Alliance, Euler Hermes forecasts<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
� Market will grow 12% in<br />
2012 and 5% in 2013<br />
� But it will not yet reach<br />
pre-crisis levels (still<br />
1.5 milli<strong>on</strong> vehicles<br />
below)<br />
13
The fierce reshuffle is over and <str<strong>on</strong>g>the</str<strong>on</strong>g> sector is creating<br />
jobs again (100,000 over <str<strong>on</strong>g>the</str<strong>on</strong>g> past two years)<br />
Headcounts have plummeted more than 50% since 2000<br />
1400<br />
1300<br />
1200<br />
1100<br />
1000<br />
900<br />
800<br />
700<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
US vehicle and original equipment manufacturer headcounts<br />
600<br />
2000 2002 2004 2006 2008 2010 2012<br />
Sources: nati<strong>on</strong>al statistics<br />
US carmaker market<br />
shares had been<br />
shrinking for a<br />
decade when <str<strong>on</strong>g>the</str<strong>on</strong>g><br />
2008-2009 crisis dealt<br />
<str<strong>on</strong>g>the</str<strong>on</strong>g>m a sec<strong>on</strong>d blow<br />
GM and Ford had<br />
already lost over<br />
$60bn in 2006 and<br />
2007. They closed 18<br />
plants.<br />
14
American companies are growing profitably again<br />
In 2011, U.S. carmakers benefited from <str<strong>on</strong>g>the</str<strong>on</strong>g> difficulties that Japanese manufacturers<br />
encountered due to <str<strong>on</strong>g>the</str<strong>on</strong>g> earthquake and ensuing tsunami. In 2012, however, U.S. losses<br />
deepened in <str<strong>on</strong>g>Europe</str<strong>on</strong>g> and are eroding <str<strong>on</strong>g>the</str<strong>on</strong>g>ir overall profitability.<br />
United States 2010 2011 2012 (f) 2013 (f)<br />
Revenue change 18.2% 8.3% -1.5% 3.9%<br />
Operating profit rate<br />
(profit from operati<strong>on</strong>s<br />
over revenue)<br />
Sources: GM and Ford aggregates, c<strong>on</strong>sensus<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
7.4% 6.5% 4.7% 5.5%<br />
15
4 1 The <str<strong>on</strong>g>world</str<strong>on</strong>g>wide market is growing<br />
2 Emerging markets are stabilizing<br />
3 The American automotive market is reviving<br />
4 The str<strong>on</strong>g yen is weakening Japanese <str<strong>on</strong>g>industry</str<strong>on</strong>g><br />
5 Most of <str<strong>on</strong>g>the</str<strong>on</strong>g> <str<strong>on</strong>g>Europe</str<strong>on</strong>g>an market is collapsing<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
6 C<strong>on</strong>clusi<strong>on</strong><br />
16
Japan: <str<strong>on</strong>g>the</str<strong>on</strong>g> rising yen is still weighing <strong>on</strong> competitiveness<br />
Yen/Euro exchange rates (¥100 to €1)<br />
1.2<br />
1.1<br />
1.0<br />
0.9<br />
0.8<br />
0.7<br />
0.6<br />
Gains in competitiveness<br />
0.5<br />
2000 2002 2004 2006 2008 2010 2012<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
� The yen’s 40% drop against<br />
<str<strong>on</strong>g>the</str<strong>on</strong>g> euro in 2001-2008 gave<br />
Japanese manufacturers a<br />
competitive edge<br />
� The yen has been back at<br />
early-2000s levels since mid-<br />
2008, shattering <str<strong>on</strong>g>the</str<strong>on</strong>g> country’s<br />
competitive advantage and<br />
Loss of<br />
shifting producti<strong>on</strong> away<br />
competitiveness<br />
Producti<strong>on</strong> (milli<strong>on</strong>s of units)<br />
Japanese<br />
manufacturers<br />
2007 2011<br />
In Japan 9.9 7, 2<br />
Abroad 11.9 13.4<br />
Japanese share in<br />
producti<strong>on</strong><br />
46% 35%<br />
17
Japan: <str<strong>on</strong>g>the</str<strong>on</strong>g> market is wea<str<strong>on</strong>g>the</str<strong>on</strong>g>ring a fierce storm, and<br />
shrinking over <str<strong>on</strong>g>the</str<strong>on</strong>g> l<strong>on</strong>g term<br />
PV registrati<strong>on</strong>s (year <strong>on</strong> year, milli<strong>on</strong>s of units)<br />
5.8<br />
5.3<br />
4.8<br />
4.3<br />
3.8<br />
2005 2006 2007 2008 2009 2010 2011 2012 2013<br />
Sources: Jama, Euler Hermes forecasts<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
� 2008 crisis disrupted <str<strong>on</strong>g>the</str<strong>on</strong>g><br />
market<br />
� It bounced back <strong>on</strong> <str<strong>on</strong>g>the</str<strong>on</strong>g><br />
stimulus packages in<br />
2009-2010<br />
� It collapsed in 2011 after<br />
<str<strong>on</strong>g>the</str<strong>on</strong>g> earthquake and<br />
tsunami (over 1 milli<strong>on</strong><br />
unsold vehicles)<br />
� It will bounce back 30% in<br />
2012 before shrinking 5%<br />
in 2013 and settling at 5.3<br />
milli<strong>on</strong> units<br />
18
The yen’s rise is hampering manufacturers’ profits<br />
Profits have halved compared to <str<strong>on</strong>g>the</str<strong>on</strong>g> mid-2000s<br />
Japan 3/2007 3/2010 3/2011 3/2012 3/2013 (f)<br />
Revenue change 12.2% -11.1% 5.7% -2.6% 19.0%<br />
Operating profit rate<br />
(profit from operati<strong>on</strong>s<br />
over revenue)<br />
Sources: accrued Toyota, Nissan, H<strong>on</strong>da, Mazda and Mitsubishi data, c<strong>on</strong>sensus<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
8.0% 2.0% 3.9% 3.0% 4.5%<br />
19
5 1 The <str<strong>on</strong>g>world</str<strong>on</strong>g>wide market is growing<br />
2 Emerging markets are stabilizing<br />
3 The American automotive market is reviving<br />
4 The str<strong>on</strong>g yen is weakening Japanese <str<strong>on</strong>g>industry</str<strong>on</strong>g><br />
5 Most of <str<strong>on</strong>g>the</str<strong>on</strong>g> <str<strong>on</strong>g>Europe</str<strong>on</strong>g>an market is collapsing<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
6 C<strong>on</strong>clusi<strong>on</strong><br />
20
<str<strong>on</strong>g>Europe</str<strong>on</strong>g>: <str<strong>on</strong>g>the</str<strong>on</strong>g> market is in a l<strong>on</strong>g-term slump<br />
PV registrati<strong>on</strong>s (year <strong>on</strong> year, milli<strong>on</strong>s of units)<br />
16.5<br />
16.0<br />
15.5<br />
15.0<br />
14.5<br />
14.0<br />
13.5<br />
13.0<br />
12.5<br />
12.0<br />
2005 2006 2007 2008 2009 2010 2011 2012 2013<br />
Source: ACEA, Euler Hermes forecasts<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
� After dropping 6% in 2012,<br />
<str<strong>on</strong>g>the</str<strong>on</strong>g> <str<strong>on</strong>g>Europe</str<strong>on</strong>g>an market is<br />
expected to shrink 2% to<br />
3% in 2013<br />
� Sou<str<strong>on</strong>g>the</str<strong>on</strong>g>rn <str<strong>on</strong>g>Europe</str<strong>on</strong>g>an<br />
markets particularly will be<br />
very tough<br />
� Volumes are 20% below<br />
pre-crisis levels, i.e. 3.5<br />
milli<strong>on</strong> units fewer<br />
21
Tangent 1: heavy vehicles will not offset wheezing growth<br />
CV (over 17T) registrati<strong>on</strong>s (year <strong>on</strong> year, units)<br />
350,000<br />
300,000<br />
250,000<br />
200,000<br />
150,000<br />
100,000<br />
2008 2009 2010 2011 2012 2013<br />
Source: ACEA, Euler Hermes forecasts<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
� The CV market will be soft<br />
for a l<strong>on</strong>g time<br />
� It should plummet 8% in<br />
2012, and drop 5% deeper<br />
in 2013<br />
� Volume will be 1/3 lower in<br />
2013 than in 2008<br />
22
Tangent 2: <str<strong>on</strong>g>Europe</str<strong>on</strong>g>an equipment manufacturers reorganized<br />
<str<strong>on</strong>g>the</str<strong>on</strong>g>ir producti<strong>on</strong> capacity in 2008-2009 and stepped up <str<strong>on</strong>g>the</str<strong>on</strong>g>ir<br />
internati<strong>on</strong>al expansi<strong>on</strong><br />
In 2010, equipment manufacturers put <str<strong>on</strong>g>the</str<strong>on</strong>g>ir operating profits back where <str<strong>on</strong>g>the</str<strong>on</strong>g>y were<br />
in <str<strong>on</strong>g>the</str<strong>on</strong>g> early 2000s<br />
<str<strong>on</strong>g>Europe</str<strong>on</strong>g> 2008 2009 2010 2011 2012 e 2013 p<br />
Revenue change 12.0% -17.8% 34.7% 16.9% 7.6% 6.1%<br />
Operating profit<br />
rate<br />
(profit from<br />
operati<strong>on</strong>s<br />
over revenue)<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
3.4% 2.1% 6.9% 7.1% 6.8% 7.1%<br />
Sources: accrued C<strong>on</strong>tinental, Faurecia, Valeo, Autoliv and Plastic Omnium data, c<strong>on</strong>sensus<br />
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Producti<strong>on</strong> in Sou<str<strong>on</strong>g>the</str<strong>on</strong>g>rn <str<strong>on</strong>g>Europe</str<strong>on</strong>g>: <str<strong>on</strong>g>the</str<strong>on</strong>g> shuffle is just starting<br />
PV producti<strong>on</strong> (year <strong>on</strong> year, milli<strong>on</strong>s of units)<br />
1.0<br />
0.9<br />
0.8<br />
0.7<br />
0.6<br />
0.5<br />
0.4<br />
2005 2006 2007 2008 2009 2010 2011<br />
Italy: producti<strong>on</strong> has halved since<br />
2007. Fiat still has 5 plants in Italy after<br />
closing Termini (Sicily) in 2011<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
2.3<br />
2.2<br />
2.1<br />
2.0<br />
1.9<br />
1.8<br />
1.7<br />
1.6<br />
1.5<br />
Spain: cost structures are efficient but<br />
producti<strong>on</strong> fluctuates in synch with <str<strong>on</strong>g>the</str<strong>on</strong>g><br />
market, and is 26% lower than in 2005<br />
Sources: nati<strong>on</strong>al statistics<br />
2005 2006 2007 2008 2009 2010 2011<br />
24
France: local PV manufacturers have seen producti<strong>on</strong><br />
dive more than 50% since 2005<br />
PV producti<strong>on</strong> (year <strong>on</strong> year, milli<strong>on</strong>s of units)<br />
3.4<br />
3.2<br />
3.0<br />
2.8<br />
2.6<br />
2.4<br />
2.2<br />
2.0<br />
1.8<br />
1.6<br />
1.4<br />
2005 2006 2007 2008 2009 2010 2011<br />
Source: nati<strong>on</strong>al statistics<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
� After <str<strong>on</strong>g>the</str<strong>on</strong>g> market collapse<br />
and producti<strong>on</strong> relocati<strong>on</strong>,<br />
French plants are making<br />
roughly 1.5 milli<strong>on</strong> cars<br />
� After <str<strong>on</strong>g>down</str<strong>on</strong>g>sizing plants<br />
(cutting <str<strong>on</strong>g>the</str<strong>on</strong>g> number of<br />
producti<strong>on</strong> lines), it is time<br />
to make more drastic<br />
decisi<strong>on</strong>s and take a new<br />
look at fixed costs (e.g.<br />
plans to close <str<strong>on</strong>g>the</str<strong>on</strong>g> PSA<br />
plant in Aulnay, near<br />
Paris)<br />
25
France: broad-based vehicle manufactures need to juggle<br />
dwindling volume in <str<strong>on</strong>g>Europe</str<strong>on</strong>g> and limp internati<strong>on</strong>al expansi<strong>on</strong><br />
French vehicle manufacturers have seen <str<strong>on</strong>g>the</str<strong>on</strong>g>ir profits crumble in 2011 and 2012, and<br />
need to embark <strong>on</strong> heavy, costly rightsizing.<br />
France 2010 2011 2012 e 2013 (p)<br />
Revenue change 15.7% 7.9% -3.3% 4.1%<br />
Operating profit rate<br />
(profit from operati<strong>on</strong>s<br />
over revenue)<br />
Sources: accrued PSA and Renault data, c<strong>on</strong>sensus<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
2.9% 2.1% 1.0% 2.0%<br />
26
Germany: producti<strong>on</strong> is sputtering but still clinging<br />
to high levels<br />
PV producti<strong>on</strong> (year <strong>on</strong> year, milli<strong>on</strong>s of units)<br />
6.10<br />
5.90<br />
5.70<br />
5.50<br />
5.30<br />
5.10<br />
4.90<br />
4.70<br />
4.50<br />
2005 2006 2007 2008 2009 2010 2011<br />
Sources: nati<strong>on</strong>al statistics, VDA<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
� German producti<strong>on</strong> is<br />
back at pre-crisis levels<br />
� But <str<strong>on</strong>g>the</str<strong>on</strong>g> <str<strong>on</strong>g>down</str<strong>on</strong>g>turn across<br />
<str<strong>on</strong>g>Europe</str<strong>on</strong>g> started to hit<br />
in H1 2012<br />
� Opel (which shut its plant<br />
in Antwerp in 2010) and<br />
Ford could be cornered<br />
into rightsizing<br />
producti<strong>on</strong> capacity<br />
27
Germany: premium positi<strong>on</strong> supports profits and exports<br />
Germany manufacturers are offsetting <str<strong>on</strong>g>the</str<strong>on</strong>g> decline <str<strong>on</strong>g>the</str<strong>on</strong>g> <str<strong>on</strong>g>Europe</str<strong>on</strong>g>an markets with<br />
internati<strong>on</strong>al sales, inter alia riding robust growth in China (<str<strong>on</strong>g>the</str<strong>on</strong>g>ir largest<br />
internati<strong>on</strong>al market: 2.7 milli<strong>on</strong>s vehicles sold <str<strong>on</strong>g>the</str<strong>on</strong>g>re in 2011) and recovery in <str<strong>on</strong>g>the</str<strong>on</strong>g><br />
U.S. (<str<strong>on</strong>g>the</str<strong>on</strong>g>ir sec<strong>on</strong>d-largest foreign market, 1 milli<strong>on</strong> vehicles).<br />
Germany 2010 2011 2012 e 2013 (p)<br />
Revenue change 21.4% 17.4% 12.1% 4.2%<br />
Operating profit rate<br />
(profit from operati<strong>on</strong>s<br />
over revenue)<br />
Sources: accrued BMW, Daimler and VW data, c<strong>on</strong>sensus<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
6.1% 7.4% 7.5% 8.3%<br />
28
6 1 The <str<strong>on</strong>g>world</str<strong>on</strong>g>wide market is growing<br />
2 Emerging markets are stabilizing<br />
3 The American automotive market is reviving<br />
4 The str<strong>on</strong>g yen is weakening Japanese <str<strong>on</strong>g>industry</str<strong>on</strong>g><br />
5 Most of <str<strong>on</strong>g>the</str<strong>on</strong>g> <str<strong>on</strong>g>Europe</str<strong>on</strong>g>an market is collapsing<br />
6 C<strong>on</strong>clusi<strong>on</strong><br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
29
C<strong>on</strong>clusi<strong>on</strong><br />
� The <str<strong>on</strong>g>world</str<strong>on</strong>g>wide market is growing 4% a year today, but producti<strong>on</strong> and c<strong>on</strong>sumpti<strong>on</strong><br />
have shifted to <str<strong>on</strong>g>the</str<strong>on</strong>g> new ec<strong>on</strong>omies<br />
� The sharp upswing in <str<strong>on</strong>g>the</str<strong>on</strong>g> U.S. automotive market has been dampened by <str<strong>on</strong>g>the</str<strong>on</strong>g><br />
<str<strong>on</strong>g>down</str<strong>on</strong>g>turn in <str<strong>on</strong>g>Europe</str<strong>on</strong>g>, and Japanese manufacturers are still struggling with <str<strong>on</strong>g>the</str<strong>on</strong>g> str<strong>on</strong>g<br />
yen<br />
� Emerging markets have been stabilizing (at a respectable pace) in 2012, in<br />
particular due to public and private support in Brazil and India<br />
� In <str<strong>on</strong>g>Europe</str<strong>on</strong>g>, lastingly soft demand and scant profitability will necessarily corner broadbased<br />
vehicles manufacturers into adjusting <str<strong>on</strong>g>the</str<strong>on</strong>g>ir industrial capacity<br />
� An effective internati<strong>on</strong>al presence and product range is essential – more than<br />
ever– to generate decent profits and to finance investments and research, as<br />
equipment manufacturers are doing<br />
Worldwide automotive <str<strong>on</strong>g>industry</str<strong>on</strong>g>/ Research Department/ Yann Lacroix<br />
© Copyright Euler Hermes 21-09-2012<br />
30