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12th
Auto Expo
Greater Noida, Delhi
NAFTA Automotive Challenges & Issues
February 4, 2014
Presentation Outline
• Overview of the APMA
• Global Automotive Production
• Current NAFTA Trends and Issues
• FTAs and Global Trade Issues
• Two major NAFTA issues
–Environmental Regulations
–The Autonomous Car
Overview of the APMA
• About 250 regular and associate members
• Auto parts producers account for $24.5B in revenues and employ 89,100
• APMA members include big players, Magna, Linamar, Martinrea, Brose + many SMEs
• Founded in 1952, a long history in Canada
Why is Canada the best place in the G7 to do business?
Strongest Economic Growth in the G7
The Soundest Banking System in the World
The Lowest Business Costs in the G7
1 The International Monetary Fund. World Economic Outlook April 2010. 2 The World Economic Forum. The Global Competitiveness Report 2010 - 2011. 3 KPMG. Competitive Alternatives 2010.
Global LV Production (2009 – 2020)
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10,000,000
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30,000,000
40,000,000
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Middle-East/Africa
Asia-Pacific
Eastern Europe
Western Europe
South America
North America
Region 2012 (Mil) 2020 (Mil) 2020 VS. 2012 Growth 2020 vs. 2009 CAGR 2020 vs. 2012 CAGR
NA 15.45 17.70 14.6% 6.8% 1.7%
SA 4.29 6.56 52.9% 5.4% 5.5%
WE 12.69 14.94 17.7% 2.1% 2.1%
EE 6.74 8.60 27.6% 5.2% 3.1%
AP 40.39 56.71 40.4% 6.5% 4.3%
ME/A 0.68 0.99 45.6% 7.1% 4.8%
TOTAL 83.65 105.50 26.1% 5.6% 3.5% 5
Top 20 Auto Makers (2012 vs. 2019) Company 2012 Volume 2012 Rank 2019 Volume 2019 Rank
Toyota Motor 9,395,338 1 10,532,427 2 Volkswagen 9,220,829 2 11,370,846 1 General Motors 8,077,262 3 9,094,879 4 Hyundai Motor 7,190,861 4 8,039,188 6 Renault/Nissan 7,150,365 5 10,000,734 3 Ford Motor 5,575,370 6 8,228,695 5 Fiat-Chrysler 4,257,883 7 4,881,815 8 Honda Motor 4,016,676 8 5,410,632 7 PSA/Peugeot-Citroen 2,822,731 9 3,623,837 9 BMW 1,871,635 10 2,443,720 10 Daimler 1,732,224 11 2,235,433 11 SAIC-GM-Wuling 1,471,397 12 1,716,923 14 Suzuki Motor 1,397,664 13 1,810,742 12 Mazda Motor 1,322,791 14 1,663,410 15 Maruti Suzuki 1,220,408 15 1,743,541 13 Tata 1,028,728 16 1,507,183 16 Geely Group 959,094 17 1,480,308 17 Mitsubishi Motors 948,122 18 1,191,566 20 Changan Auto 859,558 19 1,375,745 18 Fuji Heavy Industries 755,959 20 873,934 24 Dongfeng Motors 726,360 21 1,193,582 19
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2019 vs. 2012 Comparison Legend
1 positions moved UP 2+ position moves UP
1 positions moved DOWN 2+ position moves DOWN
No Change
Top 20 Country Ranking (2012 vs. 2019)
Country 2012 Volume 2012 Rank 2019 Volume 2019 Rank
China 18,298,986 1 30,142,514 1 United States 10,121,034 2 11,691,358 2 Japan 9,544,740 3 8,699,998 3 Germany 5,586,276 4 5,862,447 5 South Korea 4,478,899 5 4,525,000 7 India 3,846,068 6 6,450,000 4 Brazil 3,190,204 7 4,747,711 6 Mexico 2,874,460 8 4,146,970 8 Canada 2,454,069 9 1,761,672 14 Thailand 2,402,513 10 3,100,000 9 Russia 2,078,368 11 2,700,000 10 Spain 1,939,351 12 2,599,238 11 France 1,926,863 13 2,218,240 12 United Kingdom 1,563,734 14 1,741,521 15
Czech Republic 1,113,559 15 1,375,047 16 Indonesia 1,030,431 16 1,800,000 13 Turkey 1,008,266 17 1,327,684 17 Slovakia 840,752 18 990,995 19 Argentina 756,880 19 1,091,915 18 Italy 669,322 20 919,442 20
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2019 vs. 2012 Comparison Legend <3 positions moved UP 3+ position moves UP
<3 positions moved DOWN 3+ position moves DOWN
No Change
Less than Global Growth Rate of 29.1%
At or Better than Global Growth of 29.1%
Top 20 Country Growth (2012 vs. 2019) Country 2012 Volume 2019 Volume Growth %
China 18,298,986 30,142,514 64.7% United States 10,121,034 11,691,358 15.5% Japan 9,544,740 8,699,998 -8.9% Germany 5,586,276 5,862,447 4.9% South Korea 4,478,899 4,525,000 1% India 3,846,068 6,450,000 67.7% Brazil 3,190,204 4,747,711 48.8% Mexico 2,874,460 4,146,970 44.3% Canada 2,454,069 1,761,672 -28.2% Thailand 2,402,513 3,100,000 29.0% Russia 2,078,368 2,700,000 29.9% Spain 1,939,351 2,599,238 34% France 1,926,863 2,218,240 15.1% United Kingdom 1,563,734 1,741,521 11.4% Czech Republic 1,113,559 1,375,047 23.5% Indonesia 1,030,431 1,800,000 74.7% Turkey 1,008,266 1,327,684 31.7% Slovakia 840,752 990,995 17.9% Argentina 756,880 1,091,915 44.3% Italy 669,322 919,442 37.4%
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2019 vs. 2012 Comparison Legend
Top Country Growth (2012 vs. 2019)
Country 2012 Volume 2019 Volume Growth % Volume Change
China 18,298,986 30,142,514 64.7% 11,843,528 India 3,846,068 6,450,000 67.7% 2,603,932 Brazil 3,190,204 4,747,711 48.8% 1,557,507 Mexico 2,874,460 4,146,970 44.3% 1,272,510 Thailand 2,402,513 3,100,000 29.0% 697,487 Russia 2,078,368 2,700,000 29.9% 621,632
Spain 1,939,351 2,599,238 34.0% 659,887 Indonesia 1,030,431 1,800,000 74.7% 769,569 Turkey 1,008,266 1,327,684 31.7% 319,418 Argentina 756,880 1,091,915 44.3% 335,035 Italy 669,322 919,442 37.4% 250,120
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Where is the Growth? • Focus on the 11 countries exceeding global growth rate in 2019
• Access to nearly 21 Million units of additional production
• Average growth at 46%
Source: AutomotiveCompass - Sept 2013
NAFTA Light Vehicle Sales Outlook
0
2,000,000
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2010 2012
Mexico
US
Canada
2012 vs. 2011 2013 vs. 2012
Mexico 9.0% 8.5%
US 13.4% 9.0%
Canada 5.7% 3.0%
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• Modest, continued growth expected through 2014
• Pent-up demand and interest rates driving purchases
• Transition period of 2013-2014 MY • Lease turn-in impact for replacements
2011 2012 2013
Mexico 0.904M 0.986M 1.07M
US 12.73M 14.44M 15.74M
Canada 1.58M 1.67M 1.72M
NAFTA LV Production (2009 – 2020)
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Mexico
United States
Canada
11 Source: AutomotiveCompass - Sept 2013
Region 2020 VS. 2012 Growth 2020 vs 2009 CAGR 2020 vs 2012 CAGR
Mexico 47.7% 9.7% 5.0%
United States 15.4% 6.9% 1.8%
Canada -27.8% 1.7% -4.0%
TOTAL NA 14.6% 6.8% 1.7%
NAFTA Greenfield Production
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Honda (US)
Honda (Mexico)
Mazda (Mexico)
RNNS (Mexico)
VW (Mexico)
• Honda Performance Manufacturing Center – Acura NSX
• Honda Celaya – Honda (B-CUV, City, Fit/Jazz)
• Mazda Salamanca – Mazda (2, 3, CX-3)
• RNNS Aguascalientes 2 – Nissan (B-CUV, Sentra, Versa Note)
– Infiniti (C-Sedan)
• VW San Jose Chiapa – Audi (Q5, Q6)
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Canadian LV Production (2009 – 2020)
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500,000
1,000,000
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2,000,000
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VW
Toyota
Honda
GM
Ford
Fiat-Chrysler
13 Source: AutomotiveCompass - Sept 2013
VM 2012 2020 Volume Diff (2020 vs. 2012)
Fiat-Chrysler 577K 440K -137K
Ford 256K 251K -5K
GM 683K 314K -369K
Honda 410K 354K -56K
Toyota 519K 464K -55K
VW 9K 0K -9K
TOTAL 2,454K 1,823K -631K
Megatrend: Globalization
• Importance of Being “Global” Regardless of Size – Huge Opportunity vs. Risk swing
– Opens up more business vs. allows competition in your backyard
– Acquisitions access other markets by acquiring innovative suppliers in area
• Focus on “NAFTA+” and “CANADA+” LV Production – Platforms with NAFTA/Canada and at least one other ROW country
of assembly
– Follow the customer
• Future Trends – Ex. Chinese assembled vehicles associated with Detroit 3 for
IMPORT into NAFTA
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Top 10 Global Platforms (2012 vs. 2017)
Platform Designer Platform Name 2012 Vehicle Volume
Hyundai Motor HD 2,294,082
Toyota Motor MC 2,219,287
Ford Motor C1 1,877,700
Suzuki Motor TC/TY 1,729,992
Toyota Motor 330N 1,603,580
Hyundai Motor NF/CM 1,593,174
Renault/Nissan P2/C 1,589,606
Honda Motor GCP 1,510,965
General Motors Global Delta 1,457,976
Hyundai Motor PB 1,453,682
Top 10 (2012) 17,330,044
Global (2012) 80,239,744
Top 10 (% of Global) 21.60%
Platform Designer Platform Name 2017 Vehicle Volume
Volkswagen MQB 4,216,866
Toyota Motor TNGA 2,968,111
Hyundai Motor HD 2,929,038
Suzuki Motor TC/TY 2,190,802
General Motors Global Delta 2,146,946
Honda Motor GCP 1,981,158
Ford Motor B2e 1,864,061
Renault/Nissan V 1,814,785
Hyundai Motor NF/CM 1,744,491
Honda Motor GSP 1,716,232
Top 10 (2017) 23,572,490
Global (2017) 97,539,536
Top 10 (% of Global) 24.17%
15 Source: AutomotiveCompass - Sept 2013
Global Trade
• APMA supports Global FTA Agreements
• Canada pursuing agreements with Europe, Korea, Japan, TPP, India and others
• Key Challenges are OEM position, rules of origin, NTBs
• Generally positive overall
Zero Import Tariffs – Auto Parts
Source: Finance Canada. The Federal Budget, and World Trade Organization. Trade Profiles.
$2.8
$1.9
$3.0
$1.7
$1.2
$4.3
$0.0$0.0$0.0
Transport equipment Electrical machinery Non-electrical machinery
Average Applied MFN Tariffs On $100 Million In Imports $ millions
Minimum US federal tax 34%
39.53
38.00
37.36
36.66
36.35
35.21
34.27
34.12
32.02
Kentucky
Ohio
Tennessee
Georgia
S. Carolina
Alabama
Michigan
Ontario
Quebec
Source: KPMG, Competitive Alternatives 2006 Edition –
combined manufacturing tax rates
Corporate Income Tax Rates ● Combined federal-
provincial taxes are
lower than the minimum
U.S. federal rate of
34%.
● Federal capital tax
elimination in 2006,
provinces also
eliminating or reducing
capital tax
● Federal Corporate
Income tax rate will be
decreased to 18.5% in
2011
Lower Corporate Income Taxes
Two Key Auto Industry Challenges
• How to make the car more efficient
– Meet the environmental standards
– Do not sacrifice performance, size or utility
• How to use the car more efficiently
– Autonomous car
– Enhanced driver and passenger safety
– Utilize the existing infrastructure more efficiently
– An enhanced user experience
2017 – 2025 Environmental
Standards
• 2017-2025 Environmental Standards - build on current standard of 35.5 mpg by 2016. Finished 2013 around 26 mpg
• 2011 standards move to a foot print requirement • Will save 1.9 trillion gallons of fuel over the life of the program and
over 6 billion tons of greenhouse gases • Two issues – VOCs and GHGs • VOCs – Continued Marginal Improvements
– Auto Industry has done its job, Size is not so much an issue
• GHG’s is a different story – 19 lbs of CO2 for every gallon of gasoline burned, cause of global
warming
• Combined 2025 Car and Truck fleet standards – EPA CO2 is 163 g/mile – NHTSA CAFÉ – 48.7 MPG
• NHTSA predicts cars @ 55.3 MPG, light trucks @ 39.3 – Avg. 48.7 • A 65% improvement in Fuel Economy between now and 2025
Fuel Economy Challenges
NHTSA Café Standards
Sample Vehicle Standards
Technology Valuation
Technology Directions
2017-2025 CAFÉ Standards
• NHTSA forecast the 2025 shortfall and estimates fines at $176/car & $94/light truck
• Why not just pay the fines?
• Biggest challenge is not engineering and manufacturing the technology …. It is being able to sell enough vehicles with that technology at an appropriate price.
• “For the first time last year, we had to scramble to comply with CAFE. We had to run significant incentives on our fuel efficient vehicles to try and shift our sales mix”
Autonomous Car
• Driving task handled by vehicle – no need for driver surveillance
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The Autonomous Car
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The Autonomous Car
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The Autonomous Car
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The Autonomous Car
Autonomous Car
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The Autonomous Car
12th
Auto Expo
Greater Noida, Delhi
NAFTA Automotive Challenges & Issues
February 4, 2014
