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Key Automotive Trends Impacting the North American Aftermarket

Mark SengGlobal Aftermarket Practice LeaderMay 1, 2018

© 2018 IHS Markit. All Rights Reserved.

Agenda

> New Sales – plateauing at record levels

> Vehicles-in-Operation (VIO) – continues to grow

> Vehicle Mix – rapidly evolving

> Aging Vehicle Population – having a major impact on repair opportunities

> Battery Electric Vehicles – on their way, but new ICE technology coming faster

> Autonomous Vehicles – on the horizon, but enabling technology is here now

New light vehicle sales declined…

…to 17.2 million units in 2017

Source: IHS Markit


SAAR Highlights Slowing Pace of Sales

8

10

12

14

16

18

20

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

SAAR 3 Month average

U.S. Light Vehicle Sales Seasonally Adjusted Selling Rate

Source: IHS Markit © 2017 IHS Markit


Hurricane Impacts to Drive Replacement Volume & Scrappage

• Impacted areas: Houston, Corpus Christi, New Orleans and San Antonio

• Total VIO: Apprx. 9.8m

• Estimated replacement: 400-500k • Most impacted segments: Pickup (15.9%), Midsize Car

(11.9%) and Compact Car 10.2%

• Most impacted OEMs: Ford (17.8%), Chevy (15.9%) and Toyota (12.5%)

• Impacted areas: Miami, Savannah (GA), Ft. Myers, Tampa, Jacksonville and Orlando

• Total VIO: Apprx. 14.4m

• Estimated replacement: 550-700k• Most impacted segments: Midsize Car (14%), Compact

Car (13.6%) and Compact CUV (9.2%)

• Most impacted OEMs: Ford (14.5%), Toyota (13.2%) and Chevy (10.8%)

Hurricane Harvey Hurricane Irma

Another slight decline in 2018…

…to 16.9 million units

Source: IHS Markit


0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

MIL

LIO

NS

11.3%

13.2%

-22%

10.2%

7.5%5.4%

-17.5%

2017 = 17.2 million units

Peak at 17.6M in 2016

5.8%

U.S. Light Vehicle Sales

History Forecast

Flat

7

Source: IHS Markit

-1.8%


0

50

100

150

200

250

300

350

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F 2023F

Million

s o

f U

nit

s

VIO will Increase 8% by 2023VIO will Increase 8% by 2023

History Forecast

U.S. Light Vehicles in Operation

Data as of January 1 each year.

Source: IHS Markit

2018 = 272 million units


U.S. New Light Vehicle Sales Growth

Growth in Annual Units2009 v 2017

+7 M

54% of Growth Came from CUV Body Style Alone

Growth in CUV Body Style

+3.8 MSource: IHS Markit


COMPACT CUV

TRADITIONAL COMPACT

TRADITIONAL MID SIZE

FULL SIZE PICKUPS

4 Segments represent 57% of all new U.S. registrations in 201720%

12.6%Mid-Size CUV

8%

Change in U.S. Vehicle Mix – Crossover Body Style Dominating

201314%

201517%

13%

11%

Source: IHS Markit


U.S. New Light Vehicle Sales: Imports v Domestic 3

Source: IHS Markit

Total Units Added to Fleet

+100 M

Gain of13M Units 2017-2022

Domestic Makes44%

Import Makes56%

Import Makes Outpace Domestics – 2017 - 2022

© 2018 IHS Markit. All Rights Reserved. Source: IHS Markit

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

IMPORT MAKES DOMESTIC 3

28%

45%

48%

U.S. Light Vehicle VIO – Domestic 3 v Import Makes

© 2018 IHS Markit. All Rights Reserved. Source: IHS Markit

2017 Total Korean Makes 13M units

2022 Total Korean Makes 18M units

2017 Total Japanese Makes 89M units

2022 Total Japanese Makes 102M units

2017 Total European Makes 20M units

2022 Total European Makes 25M units

U.S. Light Vehicle VIO – Growth of Import Make Units 2017-2022

Source: IHS Markit


8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

10.3

9.6 9.79.8 9.8

9.7

11.511.6 11.7

11.111.3

11.4

10.6

10.9

10.09.9

Cars & Light Trucks Combined

# o

f Y

ears

Source: IHS Markit

Average Age History


Impact on VIO Age Groups - 2017-2022

Vehiclesnew to 5 yrs

old grow

10%

Source: IHS Markit

The oldest vehicles – 16 years & older – will grow nearly 30% !!

Vehicles6 to 11 yrs old grow

18%

Vehicles12 to 15 yrs

old grow

-23%Vehicles16+ yrs old grow

28%


Average Age Impact on VIO Units

2002 New – 5 Year Old 84m units



Segment remains relatively flat after decline due to recession’s impact on new vehicle sales & current plateau.

Source: IHS Markit


2002 16+ Year Old 35m units



20 million units will be 25 years or older by 2021!

Average Age Impact on VIO Units

Source: IHS Markit


Global CO2 & Fuel Efficiency Regulations

2016

2025

CAFÉ & Global Standards are Merging

54.5 MPG

35 MPG

To reach this goal, every OEM must improve fuel

efficiency by 5% per year!

To reach this goal, every OEM must improve fuel

efficiency by 5% per year!

86 MPG2030


Compliance Gaps EmergingOEMs are developing strategies for widening compliance gaps:

New technologies, light-weighting & electrification will all play critical roles.

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60

Fu

el Eco

nom

y

U.S. Passenger Cars

0

5

10

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20

25

30

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40

45

Fu

el Eco

nom

y

U.S. Light Trucks

CAFE TargetGapCAFE Target

Gap

Compliance gaps are

increasing in NA, Europe and China

Source: IHS Markit


OEMs Preparing for Transition to Electrification

ConventionalPlatform

Some conventional platforms can

implement batteries, but

cannot change the overall architecture to form a battery

driven vehicle assembly.

Multi-energyPlatform

Initially designed to support both BEV and conventional

powertrain vehicles. Structure is not

skateboard style, but is more flexible than conventional

platform.

BEV Platform

Platform is designed only for

pure BEV applications.

Skateboard style architecture allows for more battery

capacity and more interior space with the same vehicle

size.

Source: IHS Markit

© 2018 IHS Markit. All Rights Reserved.Source: IHS Markit

0

2

4

6

8

10

12

14

VW

Gro

up

Hyu

nd

ai

Ren

au

lt/

Nis

san

Gen

era

lM

oto

rs

To

yo

ta

Daim

ler

FC

A

Ford

BM

W

Ho

nd

a

Geely

PS

A

Mazd

a

Su

zuki

Mil

lio

ns

EVConventionalMulti-energy

Major Platform Types in Use by 2024

© 2017 IHS MarkitSource: IHS Markit

OEMs Preparing for Transition to Electrification

OEM’s not well positioned to efficiently produce large numbers

of EV’s well into next decade.


United States xEV Sales Volume

0

100

200

300

400

500

600

700

800

2016 2018 2020 2022 2024 2026 2028

TH

OU

SAN

DS

Electric

0

2

4

6

8

10

12

14

2016 2018 2020 2022 2024 2026 2028

TH

OU

SAN

DS

Fuel Cell

0

1

2

3

2016 2018 2020 2022 2024 2026 2028

MIL

LIO

NS

Hybrid-Mild

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2016 2018 2020 2022 2024 2026 2028

MIL

LIO

NS

Full Hybrid-EVPlug-in Hybrid-EV

4.6 Million Units/Year by 2028

New Sales Forecast for 2028 = 17.3M

27% = xEV

73% = ICE only

Source: IHS Markit


North American Powertrain Analysis

5%11%

28% 27%

40%47%

50%

52%

44% 41%

35%35%

27%22%

27% 31%23%

17% 14% 10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2005 2010 2015 2020 2025

Engine Cylinder Count

Electric 1-3 4 5 6 8 10-16

Cylinder Count and Displacement Continue to Shrink

1% 4% 5%8% 8% 7%15%

24% 26%22% 20%35%

35%

34%39%

32% 33%

31%

30%23%

19%

18% 16%

8%3%

1%19% 23% 18% 16% 14% 11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2005 2010 2015 2020 2025

Engine Displacement

Electric 1-1.9L+ 2-2.9L+

3-3.9L+ 4-4.9L+ 5.0L+

Source: IHS Markit

68%<=4 cyl

70%<3L


0

5

10

15

20

25

30

35

40

45

50

2005 2010 2015 2020 2025

Au

to,

DC

T &

AM

T T

ran

s -

Mil

lio

ns

Global Auto, DCT & AMT Trans by Speed

3 4 5 6 7 8 9 10 11

51%44%

44%

35%

12%

6%

39%

26%

13%

14%

4%

Global Transmission Type by Share

Manual Auto CVT DCT EVT Reduction AMT IVT

Global Transmission ProductionIncreased Complexity, Greater Speeds

2025

2015

2005

94%>5 spd 95%

65%

Source: IHS Markit

5%>5 spd

86%>5 spd


Levels of Autonomous Driving

Based on Society of Automotive Engineers levels of automation (SAE J3016)

No AutomationL0

Driver AssistanceSingle Function Automation

L1

High Automation – Self-driving CarL4

Partial AutomationMulti-function Automation

L2

Conditional AutomationLimited Self-Driving

L3

Full Automation – Driverless CarL5

Collision warningLane departure warningBlind spot information

Adaptive cruise controlLane keep assistAutonomous parking

AutopilotTraffic jam assist

Advanced autopilotsDrivers intermittently re-engage

Fully autonomous autopilotsDrivers disengage longer & in more situations

Fully autonomous driverless fleetsMobility service business model

2010 2015 2020 2025 2030

Assistance

Autonomous

60

Technology is entering repair bays today!

AutomatedDriver attention monitoring• Hands on wheel• Following line of sight

First L3 in Production 2018 Audi A8

Driver wake up alarm!


Autonomous Vehicles on the Road Today – but not for saleRegulatory/insurance, infrastructure & sensing/connectivity issues slowing progress

26


The Vehicle Sensing Systems – Under Development

Ultrasonic

Radar Lidar

Camera

• Sound wave

• Short-range (0–2m)

• Applied in very low speeds

• Relatively inexpensive

• Snow and rain interference

• Electromagnetic wave

• Short and long-range (0–250m)

• Other car speed and distance in real time

• Relatively high cost

• Robustness to rain, snow and fog interferences

• Laser beam

• Short & long-range (0–200m)

• Obstacles identification

• Even more expensive than radar (cost coming down)

• No interference or metallic material reflection

• Colors and fonts identification

• Short and long-range (0–125m)

• Traffic signs, lights, & lane markers identification

• Requires significant computing resources

• Weather condition interferences


Latency TimeWaiting time for signal from vehicle to detect a road obstruction

and start communication with the car to avoid the obstacle

LT = 50 milliseconds

LT = 1 millisecond*

* In development


TCU Bandwidth – Global Light Vehicle Production

Source: IHS Markit © 2017 IHS

Connectivity – Telematics Control Unit (TCU) Bandwidth Group

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2016 2017 2018 2019 2020 2021 2022 2023

2G+ 3G 3G+ 4G LTE 4G+ 5G

45%<4G

15%<4G

7% = 5G


IHS Markit Forecast: Fully autonomous driving cars global forecast

0%

10%

20%

30%

40%

50%

60%

Fully Autonomous Global Light Vehicle Sales

Source: IHS Markit Year

Pe

ne

tra

tio

n R

ate

L4 Self-driving cars:

L5 Driverless cars:

0.6M4.5M

20.7M

Source: IHS Markit


Heads Up Display Evolution…or Revolution?


Head-up display, location by volume – Global Production

Source: IHS MarkitHead-up display model level forecast: January 2018 revision © 2018 IHS Markit

Head-Up Display volume surpasses 11m units in 2023

• HUD volume will more than TRIPLE over 7 year period (2016-2023)

• HUDs will reach nearly 13% global penetration

• Windscreen projection and Combiner will essentially split the market

0%

2%

4%

6%

8%

10%

12%

14%

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

2016 2017 2018 2019 2020 2021 2022 2023

Windscreen (MinusCWO)

Combiner

Collision Warning Only

Automotive HUDPenetration Rate


Head-up display, top 5 supplier share by revenue - 2023

© 2018 IHS MarkitSource: IHS MarkitHead-up display model level forecast: January 2018 revision

Head-up display, top 5 supplier share by revenue - 2018

Source: IHS MarkitHead-up display model level forecast: January 2018 revision © 2018 IHS Markit

As HUDs proliferate, supplier opportunity emerges

Continental33%

Nippon Seiki23%

Denso14%

Visteon8%

Alps Electric

7%

Other15%

Continental34%

Nippon Seiki15%Denso

10%

Visteon8%

Bosch5%

Other28%

• $908m HUD market• Top 5 represents 85% of total revenue

• $2.6b HUD market• Top 5 represents 72% of total revenue

+1.7b +188% in 5 yrs


0 10 20 30 40 50 60

Autopilot

Autonomous Park Assist

Lane Departure Warning

Collision Warning & Avoidance

Driver Monitoring

Surround View

Adaptive Cruise Control

Blind Spot Detection

Side & Rear Mirror Camera

Park Assist

Global

ADAS - Advanced Driver Assist Systems Growing RapidlyBuilding Blocks of Autonomy Offer Compelling Near-Term Growth Prospects

ADAS Unit Growth – CAGR 2016-2023

Full Driver Control Driver Assisted Fully Autonomous CarSource: IHS Markit


Aftermarket Outlook Includes both Challenges & Opportunities


Medium Term:• VIO growth continues• Aging vehicle population – selling to 3rd, 4th 5th owner• Electrification coming – but will see more ICE &

transmission technology coming on even faster• ADAS technology already here and accelerating• Must convince consumer we have parts & trained

technicians to repair the next generation vehicles

Medium Term:• VIO growth continues• Aging vehicle population – selling to 3rd, 4th 5th owner• Electrification coming – but will see more ICE &

transmission technology coming on even faster• ADAS technology already here and accelerating• Must convince consumer we have parts & trained

technicians to repair the next generation vehicles



Longer Term:• Personal vehicle ownership replaced by fleet services• Reduced VIO as mobility model changes• Much higher VMT per vehicle• Repair model shifts from consumer making decisions

to fleet contract service• Threat from lack of access to vehicle generated data

Longer Term:• Personal vehicle ownership replaced by fleet services• Reduced VIO as mobility model changes• Much higher VMT per vehicle• Repair model shifts from consumer making decisions

to fleet contract service• Threat from lack of access to vehicle generated data


Thank You

Mark SengGlobal Aftermarket Practice LeaderIHS [email protected]

seng ihsm - 5 in 5 - eti tool tech - may 1 2018 - final 2018...,+6 0dunlw $oo 5ljkwv 5hvhuyhg...

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