AUTOMOTIVE The Slowdown and the Stimulus China Demand Outlook 27 October 2016 Shanghai Lin Huaibin, Manager, China Light Vehicles Sales Forecast +86 21 2422 9061, lin.huaibin@ihsmarkit.com 2016 IHS Markit. All 版权所有 Rights Reserved.
Chinese GDP growth Slowing down gradually over years, not collapsing overnight GDP development 2006 16 Percent change 16 14 12 10 8 6 4 2 GDP Growth 2016: 6.6% 2017: 6.2% 2018: 6.4% 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: IHS Markit 2016 IHS Markit 60
How much payback should we expect in 2017? <1.6L >1.6L 0.5 0.4 0.3 0.2 0.1 0-0.1-0.2
Millions 35 30 25 20 15 Total industry volume 17.0 Vehicle Purchase Tax cut from 10% to 5% for vehicles (1.6L and below) in October 2015 December 2016 Improving GDP growth of 6.6% in 2016 17.6 18.6 21.4 23.1 24.4 GDP growth to trough out from 2018 with an average growth of 6.4% in 2018 20 Supported by replacement demand coming from scrappage of vehicles (Euro I and below) in 2014 17 26.0 26.2 27.0 Termination of tax incentives GDP growth rate of 6.2% in 2017 28.3 29.7 30.7 31.6 The government could usher in vehicle demand management because of rising energy security concerns 32.3 14% 12% 10% 8% 6% 10 4% 5 2% 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0%
When will the JV share cap be lifted in the auto industry? Unit: 100 million USD FDI inflow FDI outflow Outflow as % of inflow 1600 1400 1200 1000 800 724 727 2005-2013 CAGR:28% 1,083 950 835 1,147 688 1,240 747 1,211 878 1,239 1,285 1,231 1,010 93% 1,457 1,356 1.2 1 0.8 0.6 600 559 565 0.4 400 200 17% 123 212 265 0.2 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 19 19 18 12 6 4 7 4 3 3 2 0 Sources: UNCTAD; ( ) refers to Outward Investment Ranking by Country. China excl. Hongkong and Taiwan
The day of JV share cap to be numbered
Body types diversity SUV sales keep expanding over proportionally in the long term 8% 65% 39% China North America Europe 8% 5% 18% 1% 12% 2010 44% 3% 8% 44% 39% 3% 3% 7%4% 38% 45% 13% 9% 4% 11% 10% 13% 36% 15% 47% 2010 2010 2025 2025 2025 34% SUV Hatchback Wagon Convertible Sedan MPV Coupe SUV Hatchback Coupe Convertible Sedan MPV Wagon Roadster SUV Sedan MPV Convertible Hatchback Wagon Coupe Roadster 65
IQS between domestic and international OEMs narrowed again in 2016 Unit: Problems per 100 Vehicles 900 GAP Chinese OEMs IQS International OEMs IQS 800 700 600 500 400 396 300 200 100 142 153 191 185 190 179 139 145 116 89 101 95 51 36 22 14 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2018 Source: JD Power 66
Would the Chinese OEMs share continue to rise? Sales of JV cars based on old platform Chinese OEMs market share (as % of PV) Millions 3.5 3.0 2.5 2.0 30.6% 27.5% 2.4 2.3 2.7 26.7% 3.1 3.2 26.6% 25.2% 30.5% 2.9 33.2% 2.6 31.3% 31.6% 31.8% 32.0% 35% 30% 25% 2.2 2.2 2.1 2.1 20% 1.5 15% 1.0 0.5 0.0 Citroen C-Elysee Hyundai Elantra VW Lavida Chevrolet Cruze Classic 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 10% 5% 0% 67
IHS definitions of China city tiers TIER-1 TIER-1.5 TIER-2 TIER-3 TIER-4 TIER-5 TIER-6 Major Cities Beijing, Shanghai, Guangzhou, Shenzhen Tianjin, Chongqing, Hangzhou, Suzhou Changsha, Dongguan, Foshan, Qingdao Changzhou, Changchun, Harbin, Shijiazhuang Guiyang, Lanzhou, Luoyang, Handan Anqing, Changde, Datong, Guilin Aksu, Baiyin, Garzee, Puer Number of Cities (%) 4 Cities (1.2%) 7 Cities (2.1%) 11 Cities (3.2%) 37 Cities (10.8%) 30 Cities (8.8%) 87 Cities (25.5%) 165 Cities (48.4%) Location Core area of major economic zones Key cities in coastal or central China Important cities in coastal or central China Important cities in coastal or central China Most cities in Central and West China Most cities in West and Central China Most cities in West and Central China Total Population 70.7 million (6.5%) 98.8 million (9.0%) 72 million (6.6%) 177.4 million (16.2%) 98.3 million (9.0%) 278.6 million (25.5%) 295.7 million (27.1%) GDP (%) 8,354 billion yuan (11.8%) 8,824 billion yuan (12.5%) 8,286 billion yuan (11.7%) 14,764 billion yuan (20.8%) 7,855 billion yuan (11.1%) 12,754 billion yuan (18.0%) 10,039 billion yuan (14.2%) GDP per Capita (average) 2015 PV SALES 125,000 renminbi 99,000 renminbi 90,000 renminbi 64,000 renminbi 45,000 renminbi 42,000 renminbi 28,000 renminbi 1.2 million (6.4%) 2.2 million (11.8%) 2.5 million (13.3%) 4.5 million (23.8%) 2.1 million (11.2%) 3.4 million (17.9%) 3.0 million (15.7%) 68
Economy vs. car sales: City tier development Tier 4 Tier 6 cities market shares increase with Tier 1 share declining GDP share by city tier 2010 15 PV market share by city tier 2010 15 T5 18% T5 18% T4 11% T4 11% T6 14% T6 14% T1 12% T1 12% T3 21% T3 21% T1.512% 12% T2 12% T1.5 T2 12% 2010 2015 T5 18% T5 15% T4 10% T4 11% T6 16% T6 12% T3 24% T1 6% T1 13% T3 24% T1.5 12% T1.5 13% T2 13% 2010 T2 13% 2015 69
Are Tier 4-6 cities the new El Dorado? Where are the +11k new dealers? Q2 2016 vs 2013 T1 4% T1.5 8% City tier dealer share vs. city tier sales share 25% 2015 dealer share Y2015 sales share T6 22% T2 9% 20% 15% T4-T6:58% T5 24% T4 12% T3 21% 10% 5% 0% T1 T1.5 T2 T3 T4 T5 T6 70
Dealer throughput 2013 15: Profitability pressure not only for dealers but ultimately for OEMs/suppliers 1400 1200 1000 800 600 China dealer throughput 2013 15 by city tier 1,230 1,048 942 872 923 925 908 813 773 733 636 846 654 662 929 746 1000 900 800 700 600 500 US dealer throughput 2005 15 874 778 784 812 773 771 719 660 656 921 945 400 400 300 200 200 100 0 T1 T1.5 T2 T3 T4 T5 T6 National 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 71
New OEM entrances and brand expansion New entrants from other industries drive brand expansion Mega tech companies New OEMs Brand number 25 62 78 94 Existing small OEMs Sharing economy Premium brands 2000 2010 2015 2025 4 19 20 23
Product nameplates for sales OEMs moving to emerging market quickly to gain customers Number of nameplates 2006 23 1,000 900 915 800 700 600 500 435 463 448 463 400 354 300 233 282 200 100 0 United China Japan Germany France India Brazil Russia Source: IHS Markit 2016 IHS Markit 73
Economics of pepper Heilongjiang GDP growth by province H1 2016(%) Chongqing Tianjin Anhui Fujian Jiangsu Xinjiang Ningxia Zhejiang Sichuan Shandong Guangxi Jilin Beijing Yunnan Liaoning -1.0 3.4 5.7 9.2 9.1 8.6 8.3 8.3 8.2 8.2 8.1 8.0 8.0 7.9 7.8 7.7 7.6 7.5 7.4 7.3 7.2 7.2 7.1 6.7 6.7 6.7 6.7 6.6 6.6 10.6 10.6 10.5-2 3 8 74
Car sales by provinces: Is pepper still hot? As % of national total 55% 45% 2016 YTD PV sales y/y (%) SHANXI NINGXIA HEBEI FUJIAN ZHEJIANG INNER MONGOLIA CHONGQING National JIANGSU YUNNAN BEIJING GUANGXI ANHUI TIBET GUANGDONG GUIZHOU 0% 1% 1% 2% 2% 3% 3% 5% 5% 6% 6% 7% 7% 8% 8% 8% 9% 9% 9% 10% 10% 10% 13% 13% 13% 13% 15% 16% 16% 17% 18% 23% 0% 5% 10% 15% 20% 25% 30% 75
NEV development in China EV demand is exploding in the near future; hybrid as main driver in the long term EV/hybrid PV production in China Millions 11 10 9 8 7 6 5 4 3 2 1 0 Inception period 48V system will be the first priority option in the mild hybrid sector EV might NOT be market dominator despite strong stimulus policy today Development period 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Electric Plug-in hybrid Full hybrid Mild hybrid Source: IHS Markit 2016 IHS Markit 76
Car sharing growing rapidly but business models challenged with lack of profitability In Chongqing from Apr 2016 with 400 cars With Drivers
Is car sharing becoming a real threat to vehicle demand?: What P2P tells us No. of models by body type Sedan MPV SUV No. of models by car age >=3 yrs <3 yrs 5% 11% 29% 71% 84% No. of models by brand positioning Mass Luxury 8% Total No of cars:+17k Cities Covered: 22 92% Source: AT Zuche,PP Zuche as of Sept 2016
Car sharing, or really?
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