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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
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
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%
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
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%
© 2018 IHS Markit. All Rights Reserved.
Average Age Impact on VIO Units
2002 New – 5 Year Old 84m units
2017 New – 5 Year Old 80m units
2022 New – 5 Year Old 88m units
Segment remains relatively flat after decline due to recession’s impact on new vehicle sales & current plateau.
Source: IHS Markit
© 2018 IHS Markit. All Rights Reserved.
2002 16+ Year Old 35m units
2017 16+ Year Old 66m units
2021 16+ Year Old 85m units
20 million units will be 25 years or older by 2021!
Average Age Impact on VIO Units
Source: IHS Markit
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
Compliance Gaps EmergingOEMs are developing strategies for widening compliance gaps:
New technologies, light-weighting & electrification will all play critical roles.
0
10
20
30
40
50
60
Fu
el Eco
nom
y
U.S. Passenger Cars
0
5
10
15
20
25
30
35
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
© 2018 IHS Markit. All Rights Reserved.
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.
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
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
© 2017 IHS Markit. All Rights Reserved.
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!
© 2018 IHS Markit. All Rights Reserved.
Autonomous Vehicles on the Road Today – but not for saleRegulatory/insurance, infrastructure & sensing/connectivity issues slowing progress
26
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
Heads Up Display Evolution…or Revolution?
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
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
© 2018 IHS Markit. All Rights Reserved.
Aftermarket Outlook Includes both Challenges & Opportunities
© 2018 IHS Markit. All Rights Reserved.
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
Aftermarket Outlook Includes both Challenges & Opportunities
© 2018 IHS Markit. All Rights Reserved.
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
Aftermarket Outlook Includes both Challenges & Opportunities
Thank You
Mark SengGlobal Aftermarket Practice LeaderIHS [email protected]