Michigan Automotive Industry Update€¦ · analysis on critical issues ... Passenger Cars Light Trucks Total Source: Wards Auto; CAR Research 5,323,276 ‐122,134 Total 100% 3,719,088

5/16/2019

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Michigan Automotive Industry UpdateKristin Dziczek – Vice President, Industry, Labor, & Economics (ILE) Group

Consensus Revenue Estimating Conference

17 May 2019

2CENTER FOR AUTOMOTIVE RESEARCH

THE CENTER FOR AUTOMOTIVE RESEARCH (CAR)

Automotive industry contract research and service organization (non‐profit ) with more than 30 years experience forecasting industry trends, advising on public

policy, and sponsoring multi‐stakeholder communication forums.

Consortia that bring together industry stakeholders to participate in working groups, networking opportunities, and access to CAR staff.

RESEARCH EVENTS CONNECTIndustry‐driven events and conferences that deliver content, context, and connections.

Independent research and analysis on critical issues facing the industry.

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CENTER FOR AUTOMOTIVE RESEARCH 3

• Sales & Production• Employment• Automaker Investments• GM Announcements• Trade Update

AGEN

DA

4

Sales & Production Overview

Areas to Watch

• Michigan’s share of U.S. vehicle production increased to 18.8%

• Michigan’s engine productionwill decrease and transmission production will increase over the next few years

• Electrified vehicle market share increased to 4.4%, the highest level ever recorded

CENTER FOR AUTOMOTIVE RESEARCH

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Positive Factors in the CAR Forecast

Projected moderate U.S. economic output growth in 2019

Historically low U.S. unemployment rates

Relatively low oil prices continue through 2020

Underlying nominal wage growth continues

High levels of consumer confidence were reached in Q4 2018, and

Solid new housing starts and home prices rebounding to pre‐recession levels


Risks to the Forecast

USMCA Ratification ?

Section 232 Steel & Aluminum Tariffs

Section 232 Auto & Parts Tariffs

U.S.‐China Talks

U.S.‐Japan Talks

U.S.‐EU Talks

U.S.‐U.K. Talks

Section 301 China Tariffs

Recession?

China Auto Sales Slowdown

Japan Economic Slowdown

BREXIT

New• BusinessModels

• Competitors• Technologies

Geopolitical Risks

Consumer Confidence

Interest Rates

UAW Negotiations/Strike

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CAR’s U.S. Light Vehicle Sales Forecast 2019‐2025

17.4 17.517.2 17.2

16.816.5 16.4

16.8

17.317.6 17.7

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

U.S. LV Sales in

Millions

U.S. Sales

Source: CAR Research, January 2019

8

U.S. Light Vehicle Monthly Sales and SAAR:April 2016 to April 2019


16.43

0

2

4

6

8

10

12

14

16

18

20

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

Apr‐16 Jul‐16 Oct‐16 Jan‐17 Apr‐17 Jul‐17 Oct‐17 Jan‐18 Apr‐18 Jul‐18 Oct‐18 Jan‐19 Apr‐19

Monthly SAAR

Ligh

t Veh

icle Sales (Millions)

Sales SAAR

Source: Wards Auto; CAR Research

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9

U.S. Light Vehicle SalesPercent Change (YTD) Through April: 2019 vs. 2018


‐8.5%

0.7%

‐2.2%

‐10% ‐8% ‐6% ‐4% ‐2% 0% 2%

Passenger Cars

Light Trucks

Total


5,323,276

Total‐122,134

100%

3,719,088

Truck+26,807

69.9%

1,604,188

Cars‐148,941

30.1%

10

Percent Change in Sales of Light Vehicles Per OEM:YTD Through April: 2019 vs. 2018


‐6.7%

‐6.0%

‐4.8%

‐3.9%

‐2.4%

1.5%

3.7%

‐2.2%

‐8% ‐6% ‐4% ‐2% 0% 2% 4% 6%

Nissan/Mitsubishi

GM

Toyota

FCA

Ford

Honda

Hyundai‐ Kia

TOTAL LV Sales


5,322,611

TOTAL LV Sales‐121,614

100%

396,794

Hyundai‐ Kia14,324

7.5%

495,562

Honda7,370

9.3%

761,134

Ford‐18,820

14.3%

667,198

FCA ‐27,247

12.5%

727,580

Toyota‐36,809

13.7%

896,013

GM‐56,803

16.8%

510,579

Nissan/Mitsubishi‐36,950

9.6%

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11

U.S. Market Share: YTD April 2019


Units: 396,794

Units: 495,562

Units: 510,579

Units: 667,198

Units: 727,580

Units: 761,134

Units: 896,013

7.5%

9.3%

9.6%

12.5%

13.7%

14.3%

16.8%

0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000

Hyundai‐ Kia

Honda

Nissan/Mitsubishi

FCA

Toyota

Ford

GM


12

U.S. Electrified Light Vehicle Sales by Propulsion Technologies1999 – 2019 YTD Through April


Note: Electrified vehicles consist of BEV, HEV and PHEV

Source: Ward’s Automotive Reports (from 2010 and on), HybridCars.com and CAR Research

2.1% 2.0% 2.0%

0.5% 0.7% 0.5%

0.6%

1.2% 1.7%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Hybrid Plug‐In Hybrid Electric

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CAR’s U.S. Light Vehicle Production Forecast 2019‐2025

11.7

12.1

11.2 11.2 11.3

10.910.6

11.1

11.6 11.7 11.7

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

U.S. V

ehicle Production (millions)

U.S. Production

Source: CAR Research, January 2019

14

2019 Light Vehicle Production:Michigan Ranks 1st in the U.S.; 2nd in NAFTA Region


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

MEX MI CAN KY IN OH ALL OTHERS

AL TN MO TX SC IL

Ligh

t Vehicle Production in Units

2018YTD 2019YTD

Source: Ward’s Auto Intelligence

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15

Michigan Powertrain Production Forecasts:2019 to 2026


4%

‐13%

1%

‐5%

‐12%

‐2%‐4%

0%

‐20%

‐10%

0%

10%

20%

30%

40%

50%

‐

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2019 2020 2021 2022 2023 2024 2025 2026Units

Output Percent Change

‐9%

‐1%3% 5% 5%

‐1%

9% 11%

‐20%

‐10%

0%

10%

20%

30%

40%

50%

60%

70%

‐

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2019 2020 2021 2022 2023 2024 2025 2026

Units

Output Percent Change

Transmission Production Engine Production

Source: LMC Automotive 1Q 2019

16

Employment Overview Areas to Watch:

• At the end of Q1 2019, Michiganmotor vehicle & parts manufacturing employment increased by 2.2% YOY

• Michigan holds the highest share (21.4%) of U.S. automotive employment, down 0.5percentage point from the fourth quarter last year


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Michigan Motor Vehicle Production and Motor Vehicle Employment1995 – 2018

0

50,000

100,000

150,000

200,000

250,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

MV Production 3361 Emp 3363 Emp

Source: Current Employment Statistics, Bureau of Labor StatisticsCENTER FOR AUTOMOTIVE RESEARCH

18

Michigan Employment by Automotive‐Related IndustriesProfessionals And Engineering, Vehicles & Parts Dealer Employment Increased March 2019


‐

100

200

300

400

500

600

700

MANUFACTURING (INCL. AUTO) PROFESSIONAL, SCIENTIFIC & TECHNICAL SERVICES VEHICLE & PARTS DEALERS

Employm

ent in Thousands

2009 average March

+74,300

Compare to last quarter:

Compare to 2009:


+179,400

+13,100


Source: Current Employment Statistics, Bureau of Labor Statistics; NAICS 3361 & 3363

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19

Michigan Automotive Supplier Establishments and Employment Per Establishment2014 – 2018

766 755 743 748 752

154

163

174 176180

100

110

120

130

140

150

160

170

180

190

2014 2015 2016 2017 2018

730

735

740

745

750

755

760

765

770

number of 3363 establishments 3363 emp per establishments

Source: Quarterly Census of Employment and Wage; Current Employment Statistics, Bureau of Labor StatisticsCENTER FOR AUTOMOTIVE RESEARCH

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Michigan Automotive Supplier Establishments and Supplier Employment Per Motor Vehicle Manufacturing Employment2014 – 2018

766 755 743 748 752

3.12 3.13

3.24

3.28

3.37

2.95

3.00

3.05

3.10

3.15

3.20

3.25

3.30

3.35

3.40

2014 2015 2016 2017 2018

730

735

740

745

750

755

760

765

770

number of 3363 establishments 3363‐3361 Ratio

Source: Quarterly Census of Employment and Wage; Current Employment Statistics, Bureau of Labor StatisticsCENTER FOR AUTOMOTIVE RESEARCH

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21

Investment Overview Areas to Watch

• Since the recession, automakers have announced roughly $131.2B across North America

• In Q1 2019, Michigan received 55% of U.S. investment

• FCA has announced 2 of Michigan’s largest investments –both at $1.6B each for Mack Engine and Sterling Heights


Note – the following Book of Deals analysis covers publically announced capital investments made by automakers throughout North America.

22

N.A. Announced Automaker Investment by Region2009 to Q1 2019

Region Investment Amount ($USD)

Canada $8.2B

United States $98.2B

U.S. Great Lakes $63.1B

Michigan $32.8B

South $22.3B

Mexico $24.8B

Total $131.2B

Note: U.S. Great Lakes includes: IL, IN, KY, MI, MO, and OH

South includes: AL, FL, GA, MS, SC, TN, and TX

6%

75%

19%

CENTER FOR AUTOMOTIVE RESEARCHSource: CAR Book of Deals, Q1 2019

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23

Automaker Announced Investment: MI vs. Other StatesQ1 2019

Michigan55%

Illinois14%

Tennessee12%

Ohio9%

Alabama4%

Kentucky3%

West Virginia2% Maryland

1%


Michigan Announced Investment, 2009 to Q1 2019

3.9

54.6%

0%

10%

20%

30%

40%

50%

60%

70%

0

2

4

6

8

10

12

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q12019

Billions

Investment MI Share of U.S.

Share of U.S. Announced Automaker Investment by State, Q1 2019

Source: CAR Book of Deals, Q1 2019

24

Automaker Investments in MichiganQ1 2019


FCA: $3.5 Billion (6 announcements)Mack Ave Engine: $1.6BJefferson North: $900.0MWarren Truck: $500.0MSterling Heights/Warren (Stamping): $400.0MDundee Engine: $119.0MAuburn Hills (Components Plants): $12.6M

GM: $356.0 Million (4 announcements)Orion Township: $300.0MLansing Delta: $36.0MRomulus Powertrain: $20.0MFlint: Not Disclosed

Source: CAR Book of Deals, Q1 2019

Waymo: $13.6 Million (1 announcement)Detroit (AAM’s Tech Center): $13.6M

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25

GM Announcements


Plant Products End of Production

Employment Union Local

Detroit/Hamtramck

LaCrosse, Volt, CT6, Impala

June 1, 2019January 2020

1,542 UAW Local 22

Lordstown Cruze March 1, 2019

1,618 UAW Local 1112

Oshawa Impala, XTS, Silverado,Sierra

Q4 2019 2,900 Unifor Local 222

Warren Trans. 6 Speed Trans August 1, 2019

335 UAW Local 909

Baltimore Ops.

Pickuptransmissions

April 1, 2019 310 UAW Local 239


YOY Change in U.S. Passenger Car Market Shares2013 – 2018

‐25%

‐20%

‐15%

‐10%

‐5%

0%

2013‐2014 2014‐2015 2015‐2016 2016‐2017 2017‐2018

YOY % Chan

ge

All Automakers All But D3 D3 GM

Source: IHS Markit

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GM Vehicle Production Capacity and Capacity Utilization by Country, 2015‐2018, 2019‐2025(f)

Source: CAR analysis of LMC Automotive data

0

1

2

3

4

5

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Millions

Production Capacity

United States Canada Mexico

0%

20%

40%

60%

80%

100%

120%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Capacity Utilization

United States Canada Mexico


GM Transmission Capacity and Capacity Utilization by Country, 2015‐2018, 2019‐2025(f)

0

1

2

3

4

5

6

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Millions

Transmission Capacity

US Canada Mexico

0%

20%

40%

60%

80%

100%

120%

140%

160%

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Capacity Utilization

US Canada Mexico

Source: CAR analysis of LMC Automotive data

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30

Export Overview Areas to Watch

• Michigan automotive exports were $26.8 Billion in 2018

• 61% of Michigan vehicles exports go to Canada

• 70% of Michigan auto parts exports to NAFTA region


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31

Top Ten U.S. States by Automotive Exports in Dollar Terms:Michigan Motor Vehicle Exports decreased 1.03% in 2018 Total


0

5

10

15

20

25

30

MICHIGAN TEXAS OHIO SOUTH CAROLINA

CALIFORNIA INDIANA ALABAMA ILLINOIS TENNESSEE KENTUCKY

Billions of U.S. D

olla

rs

3361 Motor Vehicles 3362 Vehicle Body and Trailer 3363 Auto Parts

• The major destinations for Michigan exports are Mexico and Canada

Source: International Trade Administration TradeStat Express.

32

The United States cannot currently self‐supply the vehicles American dealers sell to U.S. consumers.

Source: IHS|Markit data

FCA, Ford, & GM Represent 43%of Canada & Mexico Imports

Source: CAR; U.S. International Trade Administration

Sourcing of U.S. Light Vehicle Sales2018

U.S. Production

less U.S. Exports

plus U.S. Imports

U.S. Sales

10.8 million

- 1.8 million

+ 8.2 million

= 17.2 million

U.S. Firms28%

International Firms24%

Mexico15%

Canada10%

Japan10%

South Korea5%

Germany3%

UK1%

Other4%

U.S. Sales of Imported Vehicles

47%

U.S. Sales of U.S. Produced

Vehicles

52%


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33

Tariffs are piling up on light vehicles

Steel Tariffs @ 25%

Aluminum Tariffs @ 10%

China Tariffs @ 25%

Potential Parts Tariffs @ 25%

No Tariffs

~60%

Source: Center for Automotive Research CENTER FOR AUTOMOTIVE RESEARCH

34

U.S. Consumer & Economic Impacts of U.S. Automotive Trade Policies

• Assume:• USMCA is ratified,

• Section 232 tariffs on steel & aluminum remain in place on all current countries,

• Section 301 China tariffs remain at current levels, and

• Section 232 auto & parts tariffs are levied at 25% on all trading partners except Canada, Mexico, & South Korea

https://www.cargroup.org/wp‐content/uploads/2019/02/US‐Consumer‐Economic‐Impacts‐of‐US‐Automotive‐Trade‐Policies‐.pdf


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35

Impact of USMCA, Section 232 Steel & Aluminum Tariffs, Section 301 China Tariffs &Potential Section 232 Auto & Parts Tariffs

+$2,750 average+$1,900 U.S.‐built+$3,700 imports

‐$30.4B GDP

‐366,900 jobs

‐1.3M fewer U.S. sales‐$43.6B dealership revenue‐77,000 dealership jobs

Source: Center for Automotive Research CENTER FOR AUTOMOTIVE RESEARCH


Steel & Aluminum Tariffs

36By HurwiczRocks ‐ Own work, CC BY‐SA 3.0, https://commons.wikimedia.org/w/index.php?curid=2929407

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37

NAFTA Timeline Under Trade Promotion Authority


8/31/2018

11/30/2018

9/30/2018

1/28/2019

3/14/2019

Aiming for 1/1/2020

4/19/2019

38

U.S.‐China Light Vehicle & Parts Trade (USD Billions)2016‐2018

8.3

1.2

2.3

12.9

9.5

1.7

2.7

13.2

6.0

1.5

2.7

15.3

DOMESTIC EXPORTS IMPORTS FOR CONSUMPTION DOMESTIC EXPORTS IMPORTS FOR CONSUMPTION

MOTOR VEHICLES MOTOR VEHICLE PARTS

2016 2017 2018


2017‐2018: ‐36.6% ‐13.1% ‐3.0% +15.5%

Source: U.S. International Trade Commission

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39

Trends in Monthly China Motor Vehicle and Parts Domestic Exports and Imports for Consumption2016‐2018


200

400

600

800

1,000

1,200

1,400

1,600

January February March April May June July August September October November December

Millions

Motor Vehicle Exports

50

100

150

200

250

300


Millions

Motor Vehicle Imports

50

100

150

200

250

300


Millions

Motor Vehicle Parts Exports

200

400

600

800

1,000

1,200

1,400

1,600


Millions

Motor Vehicle Parts Imports

Source: U.S. International Trade Commission

40

Brief China Trade Update

U.S. raised tariffs from 10% to 25% – includes all automotive goods

U.S. moves to impose tariffs on nearly all Chinese imports –including consumer goods

China retaliates with tariffs on $60B U.S. imports (rates increase from 5‐10% to 20‐25%)

Average increase in cost due to tariffs/U.S.‐built vehicle = $190


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Section 232 on Autos & Parts Presidential Decision due by Saturday, 18 May 2019;

Executive Order Expected TODAY



5/16/2019

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Thank you

Michigan Automotive Industry Update€¦ · analysis on critical issues ... Passenger Cars Light Trucks Total Source: Wards Auto; CAR Research 5,323,276 ‐122,134 Total 100% 3,719,088

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