Confidential. © 2017 IHS Markit TM . All Rights Reserved. Confidential. © 2017 IHS Markit TM . All Rights Reserved. U.S. New Vehicle Industry Overview - 2017 Trends to Watch
Confidential. © 2017 IHS MarkitTM. All Rights Reserved.Confidential. © 2017 IHS MarkitTM. All Rights Reserved.
U.S. New Vehicle Industry Overview -2017 Trends to Watch
Confidential. © 2017 IHS MarkitTM. All Rights Reserved.
Annual New Vehicle Registrations – It’s All Relative
2
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17.1 17.3 17.2 17.1
Industry plateauing: U.S. sales forecasted at 16.8 to 17.1 million
3
U.S. Light-Vehicle Sales
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
10.4
Source: July 2017 IHS Markit Forecast
17.617.3 million
17.0 17.1 16.9 16.8
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Ramifications of Plateauing
4
Greater emphasis on conquesting
Higher incentive
spendHigher fleet
mix
Increased pressure on
sales and F&I depts.
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Light trucks dominate: they will account for 66% of new sales by 2020
5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Car Light Truck
66%
Car-Light Truck Vehicle Sales Split by Year17.3 million
Source: July 2017 IHS Markit Forecast
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New players and growth in high-end shoppers will drive the luxury segment to double by 2020
1.9 1.9
1.5
1.21.4
1.4
1.61.8
1.92.1 2.1 2.1 2.3 2.3 2.5
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Non-Luxury Total Luxury
6
Luxury-Non-Luxury Vehicle Sales Split by Year (in millions)
Source: July 2017 IHS Markit Forecast
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SUVs/CUVs—Growth Continues
7
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SUV/CUV share takes the crown at 41.7%
8
IHS Markit Registration Type: Total * July 2017 CYTD
U.S. New Vehicle Registrations Market Share by Body Style
41.7%
28.0%
15.5% 5.1%
4.4% 2.3%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2012 2013 2014 2015 2016 2017*
SportUtility Sedan Pickups Van Hatchback Coupe
Body
Sty
le U
.S. M
arke
t Sha
re
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More than half of all luxury sales are SUV/CUVs
9
IHS Markit Registration Type: Total * July 2017 CYTD
SUV/CUV Market Share – Luxury and Mainstream
41.7%
54.1%
40.1%
20%
25%
30%
35%
40%
45%
50%
55%
60%
2012 2013 2014 2015 2016 2017*
Industry Luxury Mainstream
SUV/
CU
V U
.S. M
arke
t Sha
re
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SUV/CUV loyalty dominates, with almost two thirds of households acquiring another one
10
*June 2017 CYTD
Body Type Loyalty
Note: “Total Sport Utility” includes SUV, CUV and ”Truck Wagon”
65%
52% 49% 50%
33% 26%
0%
10%
20%
30%
40%
50%
60%
70%
TotalSportUtility Industry Sedan Pickups Van Hatchback
2012 2013 2014
2015 2016 2017*
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SUV/CUV Dominance*
§ #1 body type in new registrations§ #1 body type for body type loyalty§ #1 and #2 and #3 models in industry (Rogue, CR-V and RAV4) after three full
size pickups § #1 segment in industry (non-luxury compact CUV)§ #1 segment in mainstream (same)§ #1 and #2 segments in luxury (luxury midsize and compact CUV)
11
*Based on IHS Markit new vehicle registration data
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SUV/CUV Dominance* (Continued)
§ #1, 2 and 3 model May 2017 CYTD for: BMW, Buick, Jeep, Land Rover and Subaru
§ #1 and 2 May CYTD for:Acura, Cadillac, Lexus, Mitsubishi, Porsche and Volvo
§ #1 May CYTD forAudi, Honda, Jaguar, Lincoln, Mazda, Nissan and Toyota
12
*Based on IHS Markit new vehicle registration data
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Pickup Competition
13
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Fullsize pickup share of industry has climbed more than two percentage points from its low point in 2009
14
0%
2%
4%
6%
8%
10%
12%
14%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 July2017CYTD
NONLUXURYFULLSIZEHALFTONPICKUP NONLUXURYFULLSIZE3QTRTO1TONPICKUP
13.3%
ShareofU.S.Ind
ustry
11.9%
10.7%11.5% 11.6%
11.2%12.1% 12.2% 12.3%
12.6%13.1%
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Fullsize Pickup is one of the most profitable categories in the industry, rivaled only by fullsize SUVs
Model* 2016 CY Total New U.S. Registrations
Estimated Net Profit Per Unit
Estimated 2016 Net Profit from PU Model
F SERIES 774,963 $8,000 $6,199,704,000
SILVERADO 581,050 $8,000 $4,648,400,000
RAM 472,646 $8,000 $3,781,168,000
15
*Models include all series; models are light duty only
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Although Silverado has been #2 every year for the past ten years, through seven months in 2017 it leads Ram by less than 28,000 Units
16
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 July2017CYTDFSERIES 639,549 480,059 389,981 500,391 545,191 600,081 709,711 700,095 727,846 774,963 485,539
RAM 356,271 245,260 175,276 189,741 234,683 279,827 341,630 422,922 432,986 472,646 288,534
SILVERADO 614,938 469,655 315,325 366,857 411,730 415,399 476,081 523,809 596,749 581,050 316,197
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
NewVehicleRegistratio
ns
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And Ram has outsold Silverado in three of the first seven months of 2017
17
Jan-2016 Feb-2016 Mar-2016 Apr-2016 May-2016 Jun-2016 Jul-2016 Aug-2016 Sep-2016 Oct-2016 Nov-2016 Dec-2016 Jan-2017 Feb-2017 Mar-2017 Apr-2017
May-2017 Jun-2017 Jul-2017
FSERIES 54,339 60,691 65,683 63,973 70,273 66,072 60,196 66,790 66,193 62,280 66,080 72,393 65,506 63,916 74,089 66,218 77,734 69,870 68,022
RAM 32,812 38,685 41,170 36,712 41,368 38,816 36,966 41,939 47,757 42,976 35,387 38,058 39,321 37,977 43,134 39,880 47,480 40,838 39,860
SILVERADO 44,387 45,445 45,644 47,241 48,690 47,855 54,555 53,644 48,638 50,290 45,133 49,528 38,417 52,197 43,080 40,800 45,240 48,295 48,113
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
TotalN
ewRegistratio
ns
Registration Type: Total
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0
1000
2000
3000
4000
5000
6000
7000
8000
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-1
5
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-1
6
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-1
7
RAM Silverado F-Series
The Silverado and Ram are in an incentives battle, while Ford consistently spends less per unit than either competitor
18
Ince
ntiv
e Sp
end
Per
Uni
t
Data source: AutodataNote: Data are for complete model, including all series (for example, Ford includes F-150, F-250 and F-350)
Incentivespendmetricincludesconsumerrebates,discountfinancing,leaseratesubvention,residualexposure,dealerallowances,volumebonuspaymentsandcontests.
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Four years ago Ram consistently ranked fourth on brand loyalty, but in the past six quarters it has been near to or equal to the GMC Sierra
19
0
10
20
30
40
50
60
70
80
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
2012 2013 2014 2015 2016 2017
F150 Silverado1500 RAM1500 Sierra1500
BrandLoyalty
%
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Ram Pickup has had a positive C/D ratio with each of its three primary competitors every quarter since the start of 2015
20
1 2 3 4 1 2 3 4 1 22015 2016 2017
Ram1500vs.Silverado1500 4.33 2.57 2.15 1.91 1.63 1.54 2.17 2.56 2.51 2.66Ram1500vs.Sierra1500 5.72 2.49 2.44 1.9 1.97 1.85 2.15 2.45 2.02 2.45Ram1500vs.F1500 4.76 4.53 2.74 2.1 2.26 1.7 2.26 1.78 1.83 1.69
0
1
2
3
4
5
6
7
Conq
uest/D
efectio
nRa
tio
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Silverado 1500 and Sierra 1500 households are three times as likely to defect to a midsize pickup as Ram 1500 or F-150 households
21
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
2012 2013 2014 2015 2016 2017
Silverado1500 Sierra1500 Ram1500 FordF-150
Percento
fDefectio
nsto
MidsizePickup
Segment
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
2012 2013 2014 2015 2016 2017Sierra15002dr Silverado15002dr
Silverado15004dr Sierra15004dr
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Pickup Product Activity – Remainder of 2017 – 2019
§ Ram 1500 Re-Design - February 2018§ Silverado 1500 and Sierra 1500 Re-Design – August 2018§ Ranger US Launch - December 2018§ Frontier Re-Design – January 2019§ Hyundai Santa Cruz US Launch – May 2019§ Jeep Pickup US Launch – May 2019§ Silverado and Sierra HD Re-Design – July 2019
22
Source: IHS Forecasting
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Parity
23
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16.9%
14.9% 14.1%
12.5%
9.5% 9.5% 7.7%
GM FORD TOYOTA FCA NISSAN HONDA HYUNDAI
21.4%
16.8%
14.5%
11.5% 10.9%
7.2% 5.4%
GM TOYOTA FORD FCA HONDA NISSAN HYUNDAI
Market share range among the seven leading OEMs has declined from about 16 pp to about 9 pp
24
U.S. Market Share
Jan – Jul 2008 Jan – Jul 2017
15.9 pp9.2 pp
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Mainstream and Luxury brand leaders remain close to one another in registrations and share
1,413,050 1,231,839 1,145,246
14.2%
12.4%
11.5%
11.0%
11.5%
12.0%
12.5%
13.0%
13.5%
14.0%
14.5%
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
FORD TOYOTA CHEVROLET
New RegistrationsU.S. Market Share
187,247 170,753 169,315
1.9%
1.7%1.7%
1.60%
1.65%
1.70%
1.75%
1.80%
1.85%
1.90%
160,000
165,000
170,000
175,000
180,000
185,000
190,000
MERCEDES-BENZ* BMW LEXUS
25
*Excludes Sprinter
Mainstream Brand Leaders Luxury Brand Leaders
1,438
Time Period: July 2017 CYTD
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“Best Selling” margins can be very small
26
Note: All data are based on total new registrations July 2017 CYTD
Luxury Compact CUV Luxury Midsize CarNon-Luxury Compact CUV Non-Luxury Compact Car
4,46610,082
229,584 223,646 219,502211,162
194,438
32,533 30,633 28,509 28,067 29,327 27,580
0
50,000
100,000
150,000
200,000
250,000
TOYOTARAV4
NISSANROGUE
HONDACR-V HONDACIVIC TOYOTACOROLLA
LEXUSNX ACURARDX BMWX3 AUDIQ5 LEXUSES MERCEDES-BENZE-CLASS
16,724 1,747
New
Veh
icle
Reg
istra
tions
Jul
y 20
17 C
YTD
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Implications of Parity
27
Heavier targeted
incentivesHigher fleet
mix?
Pressure to reduce
product life cycles/
increase cadence
Impact on residuals?
Pressure to increase
availability/inventories
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ICE Forever?Internal Combustion Engine
28
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Fuel Type U.S. Market Share
Gasoline vehicles continue to dominate, with over 84% share
29
84.8%
2.7% 2.6% 0.6% 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
GASOLINE DIESEL HYBRID ELECTRIC
2012 2013 2014 2015 2016 July2017CYTD
Shar
e of
U.S
. Mar
ket
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Electric Vehicle Volumes and Market Share – July 2017 CYTD
Tesla (Models S and X), Leaf and Bolt account for 79% of all electric vehicle registrations
16,106
9,7028,900 8,751
3,831
2,2071,212 1,116 998 821 375 371 140
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
New Vehicle Registrations EV Share
30
New
Reg
istra
tion
Volu
me
Shar
e of
Tot
al E
V
Note: IHS Markit classifies Electric Vehicles as those powered solely by electricity, with no extended range gasoline support system
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Electric Vehicles in Operation (VIO) by State
50% in California
31
Note: IHS Markit Data as of July 2017
49.1%
5.4%
4.9%
3 states combined
account for 60%
32 states combined
account for 10%
49.5%
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Tesla Model S leads the Luxury Sedan category by a wide margin, with more registrations than the S-Class and 7-Series combined
50
1,652
1,746
2,257
2,365
3,619
5,824
6,359
6,558
8,774
16,106
HYUNDAI EQUUS
AUDI A8
TOTAL XJ
GENESIS G90
LEXUS LS
PORSCHE PANAMERA
7 SERIES
CADILLAC CT6
MERCEDES-BENZ S-CLASS
CADILLAC XTS
TESLA MODEL S
Luxury Sedan New Vehicle Registration Volume
IHS Markit July 2017 CYTD
32
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Hybrids and Evs will gain share, but gasoline will remain dominant
33
2017 2018 2019 2020 2021 2022 2023 2024 2025Hybrid 3.5% 4.3% 7.4% 9.4% 11.9% 13.3% 14.9% 16.5% 18.4% EV 0.6% 1.1% 1.2% 1.8% 2.1% 2.4% 2.5% 2.7% 2.9% Fuel Cell 0.0% 0.0% 0.0% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% Gasoline 95.9% 94.6% 91.3% 88.7% 86.0% 84.2% 82.5% 80.6% 78.5%
0%
20%
40%
60%
80%
100%
120%
0% 2% 4% 6% 8%
10% 12% 14% 16% 18% 20%
Fuel
Typ
e S
hare
-Al
l Fue
l Typ
es
Exce
pt G
asol
ine
Fuel
Typ
e Sh
are
–G
asol
ine
Onl
y
IHS Markit Fuel Type Mix Forecast
Note: Diesel not included in forecast
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Loyalty on the Rise
34
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U.S. Industry Brand Loyalty %
Brand loyalty has surpassed the 50% mark, as brands on average now retain more customers than they lose
48.249.6 50.2
51.552.9 53.4
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
2012 2013 2014 2015 2016 2017
35
Data displayed are Q2 make loyalty results
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Lincoln and Mercedes-Benz are tied for luxury brand loyalty leadership
64%61%
60%58% 58% 58% 57% 56%
54%52%
54%
FORD CHEVROLET TOYOTA LINCOLN MERCEDES-BENZ HONDA NISSAN SUBARU BMW LEXUS INDUSTRY
36
Brands with Highest Brand Loyalty
IHS MarkitJuly 2017 CYTD
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Leasing Pause
37
LEASING
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Retail Lease Penetration
Leases continue to account for almost a third of all new vehicle transactions, though their penetration appears to have peaked
38
20.2% 23.3%
25.3% 26.7%
31.6% 30.3% 30.1% 29.5%
0%
5%
10%
15%
20%
25%
30%
35%
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
2012 2013 2014 2015 2016 2017
Note: Retail lease penetration = retail lease/total retail
Ret
ail L
ease
% T
otal
Ret
ail
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39
Retail Lease Penetration – Top 5 Segments Retail Lease Penetration in Luxury Compact Car Segment – Top 5 Models
30%
52%
60%
62%
67%
69%
0% 10% 20% 30% 40% 50% 60% 70% 80%
INDUSTRY
LUXURYCOMPACTCUV
LUXURYPRESTIGEFULLSIZECAR
LUXURYMIDSIZECAR
LUXURYCOMPACTCAR
LUXURYSUBCOMPACTCAR
71%
73%
77%
78%
83%
64% 66% 68% 70% 72% 74% 76% 78% 80% 82% 84%
MBC-CLASS
INFINITIQ60
JAGUARXE
BMW330
INFINITIQ50
Time Period: Q2 2017
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In the non-luxury compact CUV segment, younger, wealthier and/or Hispanic households are better lease conquest targets
40
42%
39% 37%
36%
25%
27%
29%
31%
33%
35%
37%
39%
41%
43%
18-34 35-44 45-54 65+
36% 37%
39% 41% 40%
25%
27%
29%
31%
33%
35%
37%
39%
41%
43%
45%
32%
26%
34%
25%
27%
29%
31%
33%
35%
37%
39%
AFRICAN AMERICAN
ASIAN HISPANIC
Time Period: April 2017 CYTD
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In the Pipeline
41
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Asians launch 33 all-new or re-designed products in U.S. in next 15 months
Brand Model Body Type Car/LT Brand Model Body Type Car/LT
Q4 2017 Q2 2018Honda Accord Sedan PV Acura RDX SUV CV
Hyundai Accent Sedan PV Honda Insight Hatchback PVLexus LS Sedan PV Hyundai Santa Fe Sport SUV CVTesla Model 3 Sedan PV Infiniti Q70 Sedan PV
Q1 2018 Kia Stonic SUV CVGenesis G70 Sedan PV Kia Forte Sedan PVHyundai Veloster Hatchback PV Kia Forte Hatchback PVHyundai Kona SUV CV Nissan Kicks SUV CVInfiniti QX50 SUV CV Subaru Ascent SUV CVNissan Leaf Hatchback PV Toyota Avalon Sedan PV
42
U.S. Product Activity at Asian Brands – Q4 2017 - 2018
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Asians launch 33 all-new or re-designed products in U.S. in next 15 months
Brand Model Body Type Car/LTQ3 2018
Genesis G70 Coupe PVKia K900 Sedan PVKia Telluride SUV CV
Lexus ES Sedan PVMazda CX-8 SUV CV
Q4 2018Honda Pilot Sport SUV CV
Hyundai C-SUV EV SUV CVKia Soul SUV PV
Mazda 3 Sedan PVMazda 3 Hatchback PVNissan Altima Sedan PVSubaru Forester SUV CVToyota Prius V MPV PVToyota Corolla iM Hatchback PV
43
U.S. Product Activity at Asian Brands – Q4 2017 - 2018
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Five takeaways
1. 16.5+ million industry will continue through end of decade
2. Targeted conquesting becomes high priority
3. SUV/CUV dominance is industry-wide, will continue in near term
4. Fullsize pickup competition is intense, and will only get more so
5. The traditional internal combustion engine (I.C.E.) will dominate through 2025
44