commercial vehicles: market trends in mexico & north america amda … · 2021. 3. 11. · amda...

Confidential. © 2021 IHS Markit®. All Rights Reserved.

Commercial Vehicles: Market Trends in Mexico & North America

AMDA Commercial Vehicles Forum 2021

Thursday March 11, 2021

Andrej Divis, Director, Automotive

IHS Markit

[email protected]

mailto:[email protected]


Outline

• About IHS Markit

• Mexico’s commercial-vehicle market in the global context

• Recovery in 2021 and beyond

• Structural issues

2

IHS Markit MHCV forecast overview for AMDA March 11, 2021


About IHS Markit


A world leader in critical information, analytics and solutionsAddressing strategic challenges with interconnected capabilities

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Sustainability50,000+ customers in over

140 countries

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Global 500

94/100largest US corporates

$4Bannual revenue

NYSE: INFO


4


2008 2010 2013 2017

2016

2015

IHS + Markit

2019

Other acquisitions: IMS Research, BDW, and Global Mapping Solutions


5


Unmatched credentials

Global long-term

forecasts covering almost 100%

of light & medium/heavy commercial vehicle

sales & production

Address issuesdriving industry

95%of the top automotive suppliers

with revenue greater than $5 billion

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14 OEMs with revenue greater than $50 billion

900+automotive expertson the ground in 16 countries

Vehicles in Operation

(VIO) coveragefor 70+ countries (95% of industry)

Autonomous &

mobility forecasts covering US, Europe, China and India

with 5 years of historical data and 12 year forecasts

100%of the top MHCV providers


6

Confidential. © 2021 IHS Markit®. All Rights Reserved.7

COMPLIANCE &

PERFORMANCE

- Alternative Propulsion FC

- Compliance

- Performance

- Fuel Efficiency

- CO2 benchmarking

- Cost To Comply

FORECASTING

- Sales/Demand Forecasting

- Production Forecasting

- Medium and Heavy Commercial

Vehicle Forecasting

- Economic Forecasting

AFTERSALES SOLUTIONS

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Launch Planning

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COMPONENTS, FEATURES

& TECHNOLOGY

SOLUTIONS

- Component Forecasting

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Vehicle Specification Comparison

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MARKET REPORTING

- Sales Performance

- National and subnational

Reporting

- Sales Channels

- Vehicles in Operation

- Market Share Analysis

PAST

PRESENT

FUTURE MOBILITY & ENERGY

FUTURE

- Electrification

- Car Sharing/

Smart Cities

- Autonomous Driving

- Evolving of vehicle fleets

- Mobility service companies

$€¥



Global context

8


Comparing the Class 4-8 truck-market size by IHS Markit and INEGIExample based on reported 2020 figures

9

15

17

19

21

23

25

27

INEGI Class 4-8 (2020) Add Chinese brands + Ford + Ram IHS Markit Class 4-8 (2020)

Tho

usands

Market-size difference of ~5k units reflects handling of specific brands

~26k

~21k

+5k



In medium- & heavy-truck sales alike, Mexico ranks in the top fifteen globally

#12

0 50 100 150 200

Thousands

2019 global truck sales ranking (>6T)

10



$0

$10

$20

$30

$40

$50

$60

$70

0 5 10 15 20 25 30

Tho

usa

nd

s o

f $

US

in p

er-

cap

ita

GD

P

Thousands of trucks (>6T) per million persons

Motorization path of other global, regional economies suggests more growth

• Economic growth, truck population (parc)

closely correlated

• Increased overall income and per capita

income parallels increased truck sales

11

MXAR

PR



Pro

• Solid trend economic growth expected

• High transport-intensity of economy

• Close relationship w/ neighboring US economy

Con

From <30,000, annual sales of 40,000-50,000 new trucks >6T may be possible

• Post-COVID recovery

• Structural headwinds to the economy

• Truck-specific challenges

12



Recovery in 2021 and beyond


Recovery is underway,… but will take time

14

60

65

70

75

80

85

90

95

100

105

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20

Argentina Brazil Mexico Peru Chile Colombia

Monthly index of economic activity, January 2020 =100

Source: IHS Markit © 2021 IHS Markit



Fiscal adjustment needed in 2021In Mexico, the fiscal burden comes from PEMEX, the state-owned oil company

15

-16.0

-14.0

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

Argentina Brazil Chile Colombia Mexico Peru Uruguay Latin America

2019 2020 2021

Fiscal Balance as a Percentage of Nominal GDP, Annual




Investment will continue to constrain growth in MexicoRelatively low oil prices preclude government spending on infrastructure. AMLO must get trust from private investors.

16

-40

-30

-20

-10

0

10

20

30

Q3-2011

Q1-2012

Q3-2012

Q1-2013

Q3-2013

Q1-2014

Q3-2014

Q1-2015

Q3-2015

Q1-2016

Q3-2016

Q1-2017

Q3-2017

Q1-2018

Q3-2018

Q1-2019

Q3-2019

Q1-2020

Q3-2020

Total Private Public

Mexico: Fixed investment

pe

rce

nt

ch

an

ge

ove

r p

revio

us

Source: : National Statistics Office of Mexico (INEGI) © 2020 IHS Markit



Credit continues to decline

17

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

Mar-

14

Jun-1

4

Sep-1

4

Dec-1

4

Mar-

15

Jun-1

5

Sep-1

5

Dec-1

5

Ma

r-16

Jun-1

6

Se

p-1

6

Dec-1

6

Mar-

17

Jun-1

7

Sep-1

7

Dec-1

7

Mar-

18

Jun-1

8

Sep-1

8

Dec-1

8

Mar-

19

Jun-1

9

Sep-1

9

Dec-1

9

Mar-

20

Jun-2

0

Sep-2

0

Dec-2

0

Consumption Mortgage Credits to Firms TOTAL

Mexico: credit to the private sector (% change over previous year)

© 2021 IHS Markit



Labor Market: 12 million people left the labor force in April, by December 9.5

million had returned. Not all have found a job, still 2 million jobs missing

18

0

1

2

3

4

5

6

7

Ja

n-0

7

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Ja

n-1

5

Ja

n-1

6

Ja

n-1

7

Ja

n-1

8

Ja

n-1

9

Ja

n-2

0

Ja

n-2

1

Mexico: Unemployment rate (percent)

Source: IHS Markit © 2021

42

44

46

48

50

52

54

56

58Mexico employment, in millions of people

Source: IHS Markit © 2021



Volatility still reigns in FX markets, but the worst may be over

19

80

90

100

110

120

130

140

150

160

Brazil Mexico Peru Chile Colombia Uruguay

Nominal exchange rates: local currencies vs US dollar. December 31, 2019 = 100



Confidential. © 2021 IHS Markit®. All Rights Reserved. 20

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023

Q3 2023

Q4 2023

Q1 2024

Q2 2024

Q3 2024

Q4 2024

Q1 2025

Q2 2025

ParaguayBrazil

Uruguay

Peru

Chile*

*Chile’s Q4 2019 was unusually low because of social unrest; we have used GDP levels from Q3 2019 to determine when Chile will return to pre-pandemic levels

The forecast GDP “crossovers” vary significantly→ when will GDP return to pre-pandemic (Q4 2019) levels?

Colombia

Mexico (Jun’21 & Mar’22

vaccine milestones)

Argentina



Mexico: Macroeconomic outlookPrivate household consumption expected to lead medium- and long-term growth

21

Concept 2019 2020 2021 2022 2023 2024-28

Real GDP -0.1 -8.7 4.4 2.8 2.6 2.2

Real imports -0.7 -15.2 10.1 5.3 3.7 2.4

Real exports 1.5 -8.7 9.8 6.1 1.4 1.9

Real private consumption 0.6 -10.9 4.0 2.9 3.4 2.8

Real govt. consumption -1.3 4.0 5.1 0.8 2.7 1.3

Real fixed investment -4.6 -18.5 5.0 3.3 2.5 1.8



Mexico’s forecast driven by US expansion

• The US macro team at IHS Markit has sizably revised up GDP growth for the US in 2021 and

2022 mostly owing to the impact of a sizeable stimulus package in the US. This implies better

exports for Mexico and also stronger remittances as well as increased foreign direct investment.

These factors led to Mexico’s GDP growth forecast being revised from 3.7% to 4.4% in 2021.

• Operational risks are increasing, and this may be a major constraint to investment and growth.

Recent regulatory actions by the Mexican government that favor state-owned companies have

created major distrust about Mexico's regulatory processes in the energy sector.

• COVID-19 vaccinations started in Mexico in late December 2020, and according to their calendar,

all inhabitants 40 years and older would be vaccinated by end-June 2021. This calendar

anticipates that all the population will be inoculated by March 2022.

22



Large truck-buying cycles in Mexico mirror the US

0

5

10

15

20

25

30

35

40

45

50

0

100

200

300

400

500

600

CY 2000 CY 2004 CY 2008 CY 2012 CY 2016 CY 2020Th

ou

san

ds

Tho

usa

nd

s

Class 4-8 new-truck demand in MX, US

United States Mexico

US growth springing back quickly, with stimulus tailwind

23

Mexico: Influence of US economic and truck-market developments

Real GDP

Percent change 2019 2020 2021 2022

World 2.6 -3.7 5.0 4.2

United States 2.2 -3.5 5.7 4.1

Canada 1.9 -5.5 5.0 4.0

Eurozone 1.3 -6.8 3.8 3.9

Mexico -0.1 -8.2 4.4 2.8

Mainland China 6.0 2.3 7.6 5.6

Japan 0.3 -4.8 2.2 1.8

India* 4.2 -8.2 9.8 5.7

Brazil 1.4 -4.1 3.9 2.6

Russia 1.3 -3.1 2.1 2.4

Class 4-8 new-truck demand in MX & US



Published “2021Q1” outlook: Upside opportunities and downside risks remain

24

United States: Class 4-8 truck registrations outlook

187 187

251

269

197

226 231

207

231243

-30%

-20%

-10%

0%

10%

20%

30%

0

50

100

150

200

250

300

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Th

ou

sa

nd

s

Class 8 Registrations % y/y chg.

203212

230239

216226 227 228 233 239

-30%

-20%

-10%

0%

10%

20%

30%

0

50

100

150

200

250

300

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Th

ou

sa

nd

s

Class 4-7 Registrations % y/y chg.


0

2

4

6

8

10

12

Freightliner Kenworth International Ram Isuzu Others

Thousands

Sum of CY 2019 Sum of CY 2020

17.302

21.354

10.737

15.466

0

5

10

15

20

25

Tractor T. Straight T.

Thousands

Sum of CY 2019 Sum of CY 2020

What happened in the truck market in 2020?

25

Straight trucks & tractor trucks (y/y %cha)

-38%

-28%

Class 4-8 sales by brand: 2020 vs. 2019


Source: Historical data based on INEGI, IHS Markit; forecasts by IHS Markit.


Monthly data reveal that the market is turning sharply upwardAfter hitting bottom in May 2020, annualized new-truck sales nearly back at pre-COVID levels

26

0

10

20

30

40

50

60

70

80

Th

ou

sa

nd

s

Annualized monthly Class 4-8 truck sales (endpoint=Dec’20)

SAAR Trend

New

emissions

rules COVID


Source: Historical data based on INEGI, IHS Markit; seasonal adjustment & annualization by IHS Markit.


Mexico: Class 4-8 sales forecast to achieve 2021-28 CAGR of +2.7%Boosted by post-COVID recovery, new-truck sales to exceed “trend” in short- and medium-terms

27

0

5

10

15

20

25

30

35

40

45

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Tho

usands

Actual and forecast sales of new Class 4-8 trucks (excl. buses)

Published forecast Trend (modelled)




Mexico: In 2021, medium-duty recovery to outpace heavy-duty rebound

28

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

Class 4-7 Class 8

IHS Markit expectations for 2021 truck sales growth (%cha y/y)

+43%

(forecast)

+16%

(forecast)




Mexico: Risks & opportunities around the baseline truck sales forecast

29

Short term Medium term Long term

• Next step of emissions standards to Euro VI now postponed

• Stronger sales during bounce-back expected after 2021

• Unexpectedly robust US economic rebound (US$1.9 trillion stimulus)

• Possible infrastructural investments could boost truck demand – if realised

• Economy expected to expand at steady pace

• Manufacturing and cross-border traffic showing increase, while T-MEC (USMCA) provides stability

• Fleets growing in size

• For manufacturers, rest of world (ROW) offering opportunities

• Economic growth within trade area to continue: positive for traffic flow, equipment demand

• Return to higher oil prices would support nation’s important energy sector, fiscal spending (is it likely?)

• Tighter emissions controls may limit used-truck imports

• Economy now off track

• Pandemic-related risks

• Country’s dependency on petrochemical industry offers limited market opportunities

• Market demand for trucks in the shadow of 2019 bubble, economy

• Few public projects to expect

• Political climate, with its security risks

• Expectation of tougher Euro VI emissions rules may cause pre-buy bubble, to erode sales afterwards

• Availability of “clean diesel” needs to be expanded

• Further regulations may hit independent operators particularly hard

• Political/security situation likely to remain unsettled, even in longer term; new restrictions on trucks in future possible

General

• Mid-2019 pre-buy underlined long-term shift in MD/HD ratio: Post-Euro V drop much harsher for Class 8 trucks

• Advantageous cost structure but limited domestic market

• Still lucrative production base – logistics, costs, continuity

• Stepping stone for North American market entry

• Technical conformity in unison with regional market



Structural issues

30


Mexico is among the most transport-intense economies in the worldAs a %share of total economic output, land-transport is seen returning to pre-COVID levels

31


* Source: IHS Markit World industry Service (WIS). Based on land-transport gross output (GO) in real $US as share of total economy output in real $US.

2019 2020 2021 2022 2023 2024 2025

La

nd

tra

nsp

ort

%sh

are

of e

co

no

mic

ou

tpu

t


Mexico: Changing import landscape has squeezed established playersEstimated first-time registrations in Mexico, by source (incl. first-time registrations of used trucks)

95%

2009 (NAFTA relaxes used-import rules)

Established brands Mainland China OEMs Used-truck imports


32

87%

2019

Established brands Mainland China OEMs Used-truck imports


Mexico: Used-truck imports by yearImports of used trucks >5T GVW (includes some Class 3, in addition to Class 4-8) *

33

0

5

10

15

20

25

30

35

40

45

50

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Tho

usands

MX used-truck imports


* Source: IHS Markit Global Trade Atlas (GTA). NB: US export statistics suggest a much lower figure for 2013.


Mexico: Used trucks boosted age of Class 4-8 parc initially; age falling againAge profile estimates for medium- and heavy-commercial-vehicle truck parc (VIO)

34

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2016 2017 2018 2019

Mexico:Registered Class 4-8 trucks by calendar year and according to estimated age

>=14 years 11-13 years 6-10 years 0-5 years


* Source: IHS Markit


35

“Showroom” transition in Mexico: Following new emissions regulations,

established brands have updated their offerings


Freightliner Columbia + Cascadia Classic

•Then… •…and now

Freightliner new Cascadia + Cascadia Classic

International Prostar International LT

Mack Vision (CH) Mack Anthem


Mexico: Trend toward greater market opening seen continuingClass 4-8 truck sales by source country, incl. known and estimated (2020)

0%3%0%1%

3%3%

82%

1%

7%

0%

Sum of CY 2020

Austria

Brazil

Germany

India

Japan

Mainland China

Mexico

Netherlands

United States

Unknown

36


* Source: IHS Markit


Mexico: Focus on medium & heavy-duty truck imports from Mainland %share of new-truck market seen reaching ~8%, exceeding pre-pandemic ~6%

37

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

0.0

0.5

1.0

1.5

2.0

2.5

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Thousands

Selected brands’ actual and forecast truck imports from Mainland China to Mexico (not all brands shown in units)

CNHTC Foton Jianghuai Shacman Chinese brand share percentage


%sh

are

of n

ew

-truck m

ark

et

* Source: Forecasts by IHS Markit


Mexico: Other issues

• US Stimulus 3.0 (impact on Mexico)

• Supply vs. Demand

• Chips

• Regulation (T-MEC/USMCA & emissions)

• Technology



Conclusion

39


Summary

• A top global truck market, Mexico is expected to return to growth and approach (and possibly exceed) prior records this decade

• Post-COVID recovery may be slower than elsewhere in region, but US stimulus represents an upside, through various channels

• There is a chance neighboring US could see new-truck sales possibly snap back to near 2019 levels

• The years 2021-22, in particular, could see even stronger new-truck sales than expected

• In addition to economic factors, other influences shaping Mexico’s truck market include competition from used trucks and new players

following an import-based strategy, and these influences are expected to continue as T-MEX/USMCA enters into force

40



Questions?

41


commercial vehicles: market trends in mexico & north america amda … · 2021. 3. 11. · amda...

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