SMMTs Production Outlook and Economic Forecast 28 January 2015 Ian - PowerPoint PPT Presentation

SMMT’s Production Outlook and Economic Forecast 28 January 2015 Ian Henry, Director, AutoAnalysis Aleksandra Taskovic, Business Economist, SMMT Robert Morbin, Member Relations Manager, SMMT SMMT, the ‘S’ symbol and the ‘Driving the motor SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED industry’ brandline are trademarks of SMMT Ltd

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UK Economy Update Aleksandra Taskovic, Business Economist, SMMT SMMT, the ‘S’ symbol and the ‘Driving the motor SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED industry’ brandline are trademarks of SMMT Ltd

UK Economy – reflecting on 2014 • Economy in 2014 much better positioned on recovery trend • But, problems in Eurozone and expected austerity measures • Autumn Statement – boost to UK investments, exports and skills • Car buyer confidence was strong throughout 2014 SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 4

UK Economy – 2015 forecasts • Recent strong growth momentum – low inflation, interest rates and oil prices – positive impact on household purchasing power and consumer confidence • Immediate growth prospects now boosted by oil, but uneven distribution of benefits • Strong business confidence – continuation in 2015 depends on political factors • Unemployment rate remains low and is forecast to continue to decline SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 5

Forecasting pack - prospects for the UK in 2015 (1) HM Treasury Monthly Poll of independent forecasts for 2015 - averages of key percentage change year before variables comparison of survey conducted at July 2014 and January 2015 house prices - % Real GDP Consumer Manufacturing House Prices (Q4) Source: HM Treasury SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 6

Forecasting pack - prospects for the UK in 2015 (2) HM Treasury Monthly Poll of independent forecasts for 2015 - averages of key percent change year before / base rate variables comparison of survey conducted at July 2014 and January 2015 Oil $pbl CPI (Q4) RPI (Q4) base repo rate (Q4) OIL $pbl Source: HM Treasury SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 7

UK Economy – challenges ahead • Weaker demand in key export markets • UK’s persistent current account deficit • Low, yet unstable oil and commodity prices • Persistent volatility in global foreign exchange markets • Expected austerity policies SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 8

UK vehicle markets – all recovered; stable for now • New car, van truck and bus markets better positioned too • Recent growth trends vary, yet demand levels are all up • Current growth potential keyed-in to domestic confidence • Probably resilient, albeit differences of emphasis by vehicle-buyer-market types and marketing needs • Yet significant and serial restructuring tensions in the mix: 1) challenges of cyclical peaks, leasing and funding streams 2) connected structural - technology - environmental agendas 3) OEM’s competition, collaboration and competitiveness SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 9

UK new car TIV trends to 2015 2600 2600 SMMT Forecast (Oct 2014) High - Projection SMMT - Actual 2500 2500 SMMT - Forecast Low - Projection 2400 2400 2300 2300 2200 2200 2100 2100 Thousands 2000 2000 rolling 4 quarter yearly totals to quarters shown; actual data to Q4 2014 1900 1900 SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 10

UK light commercials TIV trends to 2015 370 370 SMMT Forecast ( at Oct 2014) High - Projection SMMT - Actual 350 350 SMMT - Forecast Low - Projection 330 330 310 310 290 290 270 270 Thousands 250 250 4 quarter rolling years to quarters shown; actual data to Q4 2014 230 230 SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 11

In the mix (1) – cars and brands 2007 - 2014 Vauxhall 2014 - 2007 Renault Honda UK car registrations by marque: Peugeot Toyota change in volumes 2007 to 2014 Saab Ford these 25 marques = 94% of all 2014 registrations Chevrolet Citroen 2 exits = Saab and to be Chevrolet Mazda Chrysler Jeep Daihatsu volume changes of 5,000 and more units and minus 5,000 and more units on 2007 annual volumes Mini Fiat Land Rover Volvo Volkswagen Seat Dacia BMW Skoda Mercedes-Benz Kia Hyundai Audi Nissan -80,000 -60,000 -40,000 -20,000 0 20,000 40,000 60,000 80,000 SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 12

In the mix (2) – cars and segments 1999 - 2014 UK new cars - shifts in segments 1999 to 2014 100% 7.17% 6.92% 7.68% 8.95% 90% 9.21% segment's percentage share of total new car registrations 14.21% 17.90% 80% 23.35% Exc/Lux/SpeSport 26.07% 70% 26.61% Upper Medium 60% 28.40% Lower Medium 6.76% 32.02% 50% 4.75% Multi Purpose 11.72% 6.64% 4.91% 40% Dual Purpose 6.99% 2.35% Super Mini 4.50% 30% Mini 37.20% 35.79% 20% 32.70% 27.02% 10% 0% 1999 2004 2009 2014 SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 13

In the mix (3) – cars and alternatives 2007 - 2014 55,000 UK Alternatively fuelled cars - number of new registrations 50,000 Petrol/electric Diesel/electric Pure Electric Petrol/alcohol Petrol/gas Other 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 calendar years SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 14

Alternatives in the CV mix – how green is my CV UK CV registrations - LCVs and Trucks: conventional and alternative-fuelled 375000 700 Diesel and petrol 350000 600 all AFV types - pure electric/hybrids/CNG 325000 500 300000 400 275000 300 250000 200 225000 100 200000 0 2010 2011 2012 2013 2014 Calendar years SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 15

Key agenda items for vehicle markets 2015 and beyond • Technology and innovation in supply • OEM vehicle marketing and lease-funding strategies • Roads, public transport policies and role of vehicles • Cities , traffic congestion and air quality • Population growth, urban (re)development and vehicle use • Government Grant Aid for suppliers & vehicle owner-users SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 16

In sum: sound prospects for firm UK domestic demand • Constraints on demand have eased ; uncertainties raised again, but monetary policy ultra supportive and for longer • Confidence and credit impulse remains firm ; base rate rises parked; jobs growth to continue; real wage growth up • Twin deficits and other restructuring challenges remain • UK vehicle markets recovered, stable volumes, but vulnerable to confidence effects and markets restructuring • Changing patterns of car use and leasing to continue SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 17

European Car and Light Commercial Vehicle Production Outlook Ian Henry, AutoAnalysis SMMT, the ‘S’ symbol and the ‘Driving the motor SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED industry’ brandline are trademarks of SMMT Ltd

Europe in 2014  Recovery continued through 2014, pent-up demand returned, boosted by several new model launches  More than 12 months’ year -on-year rises in EU registrations. 2014 the first year since 2007 to show annual rise  Medium term production outlook in Europe is broadly positive  2014 European production est., ex. Russia, c18.24m vs. 17.47m in 2013  Production growth in: Czech Rep., Germany, Hungary, Spain, Slovenia and Turkey  PSA cut jobs in France; PSA & Renault shifted small car production eastwards, although Renault will maintain domestic production with increased van production, including for other brands.  Ford also cutting jobs in Romania, but opened a new plant in Turkey; switched production from Belgium to Spain SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 19

The UK in 2014  Positive sales story continued in 2014 - strong retail demand and consumer confidence, despite economic uncertainty; UK market up 9.3% to nearly 2.5m, a 10-year high  2014 production c1.58m cars and LCVs, almost unchanged on 2013  JLR up >30,000 to nearly 464,000. GM and Mini up slightly, but Japanese VMs fell  Model cycles effects responsible for downturn at Nissan and slow ramp-up at Mini  Positive news at JLR – announcements re Jaguar XE and Land Rover Discovery Sport production. More good news in 2015 with F-PACE  New models at JLR, Vauxhall and Nissan, plus full year production of new Mini and Qashqai should push UK output over 1.6m in 2015  2014 also saw very positive news re supply chain, with multiple announcements of new contracts and investments SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 20