North American Production: Upheaval in Manufacturing and the Landscape by 2015 Tracy Handler North American Production Analyst

Emerging from the Crisis • What does the North American production landscape look like in 2015? • Where are the gains and losses? • Will capacity become a constraint in North America by 2015? • What segments see the most growth? • Which manufacturers are prepared to weather the storm?

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North American Calendar Year Light Vehicle Production 2007: 15.03M units 2008: 12.58M units 2009: 8.61M units 2010: 10.27M units (Units in millions)

Production Production does does not not approach approach trend trend level level of of 1997–2007 until 2015 1997–2007 until 2015

18.0 17.0

60%

16.0 55%

15.0 14.0 13.0

50%

12.0 11.0 10.0

45%

9.0 8.0 7.0

40% 1997

1999

2001

2003

VOLUME / UNITS - L Copyright © 2009 IHS Global Insight. All Rights Reserved.

2005

2007

2009

2011

2013

2015

% CAR (R-Scale) AUTOMOTIVE CONFERENCE

Domestic and Transplant Production: Volume and Share (Units in millions)

80.0%

18 16 14 12 10 8 6 4 2 0

70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 2000

• • •

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

DETROIT 3

ASIAN BIG 3

OTHER ASIAN

EUROPEAN

DOMESTIC BIG 3 SHARE

TRANSPLANT SHARE

2015

The share of Detroit 3 production continues its decade-long slide until it stabilizes at 51% It could fall further if Chrysler and GM market share continue to drop Growth is seen in the Asian Big 3 and Hyundai

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Where does North American Production Go from Here? • Production in 2009 is half what it was in 2000 • Growth will be slow: – Will level off by 2015 – Fifteen million units will be a really good year – As break-even points have decreased, profit will be seen sooner

• The split between cars and trucks will stabilize at 51% cars as the manufacturers meet fuel economy regulations

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Big 6 Production Trends Ford Ford production production matches matches GM GM in in 2009 and beyond. 2009 and beyond. Chrysler Chrysler drops drops to to 5th 5th place place in in North North America America

(Units in millions) 5 4.5 4

By By 2015 2015 there there are are only 2 million units only 2 million units separating separating the the Big Big 66 North North American American manufacturers manufacturers

3.5 3 2.5 2 1.5 1 0.5 0 2005

2006

2007

2008 CHRYSLER LLC

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2009 FORD

2010 GM

2011 HONDA

2012 NISSAN

2013

2014

2015

TOYOTA

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North American Straight-time Capacity • Based on 2, 8-hour shifts per day, 235 work-days per year • Long-term straight-time utilization shows industry should be done downsizing by 2013 Roughly Roughly 85 85 assembly assembly sites sites (Units in millions)

20

120%

Roughly Roughly 67 67 assembly assembly sites sites

18

100%

16 14

80%

12

60%

10 8

40%

6 4

20%

2

0%

0 2005

2006

2007

2008

2009

2010

Straight Time Capacity Copyright © 2009 IHS Global Insight. All Rights Reserved.

2011

2012

2013

2014

2015

Utilization (R-Scale) AUTOMOTIVE CONFERENCE

North American Straight-time Capacity Car vs. Light Truck A A 30% 30% cut cut in in truck truck capacity capacity will will leave the industry with over leave the industry with over 50% 50% car car capacity capacity by by 2013 2013

(Units in millions)

22

55%

20

53%

18 16

50%

14 12

48%

10 8

45%

6 4

43%

2

40%

0 2005

2006

2007

2008 CAR

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2009

2010

TRUCK

2011

2012

2013

2014

2015

% CAR (R-Scale)

AUTOMOTIVE CONFERENCE

Adjusted North American Straight-time Capacity • Includes additional capacity from plants that typically have used a third shift or crew • Long-term adjusted capacity utilization outlook does not necessarily portend new greenfield sites for existing manufacturers beyond what has been announced (Units in millions)

Roughly Roughly 85 85 assembly assembly sites sites Roughly Roughly 67 67 assembly assembly sites sites

20

120%

18

100%

16 14

80%

12

60%

10 8

40%

6 4

20%

2

0%

0 2005

2006

2007

2008

2009

2010

Adjusted Capacity Copyright © 2009 IHS Global Insight. All Rights Reserved.

2011

2012

2013

2014

2015

Utilization (R-Scale) AUTOMOTIVE CONFERENCE

Assembly Plant Changes

• Between 2005 and 2015 eleven plants will open in North America – They are chiefly small car and CUV plants – Predominantly transplants – Southeastern United States is the prime beneficiary of these plants

• Between 2005 and 2015, 31 assembly plants will close – They are predominantly truck, SUV, and large car plants – Most of these losses are in the mid-west and east coast Copyright © 2009 IHS Global Insight. All Rights Reserved.

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Production Volume by Segment for Cars Subcompacts Subcompacts will will grow grow from from 1% 1% to to 5.5% 5.5% of of the the market market

Upper Upper Mid Mid and and Large Large Cars Cars see see losses losses in in the the next next five five years years while while Subcompacts Subcompacts and and Lower Lower Mid Mid grow grow

(Units in millions) 3.5 3 2.5 2 1.5 1 0.5 0 SUBCOMPACT

COMPACT

2000

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LOWER MID

2005

UPPER MID AND LARGE

2010

MID SPECIALTY

2015

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Production Volume by Segment for Light Trucks The The CUV CUV segment segment is is the the only only light light truck truck to to see see growth growth between between 2000 2000 and and 2015 2015

(Units in millions) 4 3.5 3 2.5 2 1.5 1 0.5 0 STW

CUV

2000

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SUV

2005

VAN

2010

PICKUP

2015

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Production Volume by Segment for Cross Utility Vehicles All All segments segments of of CUV CUV see see growth, growth, but but the the entry entry CUV CUV segment segment will will have have volume volume over over 1.4 1.4 million million units units by by 2015 2015 increasing increasing its its market market share share from from under under 1% 1% to to 9.5% 9.5%

(Units in thousands) 1600 1400 1200 1000 800 600 400 200 0 ENTRY CUV

MID CUV

2000

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2005

2010

LARGE CUV

2015

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Platform Leaders: 2005 •

Top 15 platforms make up 55% of volume Top 15 Platforms by Volume in 2005 Manufacturer

Platform

Main Vehicle Types

Lead Vehicles

GM

GMT800

Fullsize Pickup, SUV

Silverado, Sierra, Tahoe

HONDA

CYR

Midsize Car, CUV, Van Pickup

TOYOTA

CAMRY (300N)

FORD

Volume

Percentage

1511148

9.60

Accord, Pilot, Odyssey

957414

6.08

Midsize Car, CUV, Van

Camry, Sienna

774948

4.92

T1

Fullsize Pickup, SUV

F-Series, Expedition

650017

4.13

CHRYSLER

NS/RS/RT

Mid Van

Caravan, Town & Country

607618

3.86

TOYOTA

COROLLA (330N)

Compact Car

Corolla, Vibe

481359

3.06

GM

DELTA

Compact, STW

Cobalt, HHR

474279

3.01

CHRYSLER

DR/DE

Fullsize Pickup

Ram

448943

2.85

NISSAN

FFL

Midsize Car

Altima, Maxima

423815

2.69

GM

W3

Midsize Car

Impala, Grand Prix

402016

2.55

GM

GMT360/370

Midsize SUV

Trailblazer, Envoy

401214

2.55

HONDA

CX

Compact Car, Entry CUV

Civic, CR-V

391483

2.49

FORD

P131

Fullsize Pickup

Super-Duty

376716

2.39

GM

EPSILON

Midsize Car

Malibu, G6

369247

2.35

CHRYSLER

LX

Large Car

300, Charger, Challenger

319721

2.03

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Top-15 Platforms: 2015 •

Top-15 platforms make up 66% of the total North American production volume Top 15 Platforms by Volume in 2005 Manufacturer

Platform

Main Vehicle Types

Lead Vehicles

Volume

Percentage

TOYOTA

MC

Midsize Car, CUV, Van

Camry, Sienna, RAV4

1334301

8.68

HONDA

CYR

Midsize Car, CUV, Van Pickup

Accord, Pilot, Odyssey

1093310

7.11

GM

K2XX

Fullsize Pickup, SUV

Silverado, Sierra, Suburban

1031404

6.71

FORD

T1

Fullsize Pickup, SUV

F-Series, Expedition, Super-Duty

933730

6.07

FORD

C2

Compact Car, Entry CUV

Focus, C-Max, Escape

835390

5.43

HONDA

CX

Compact Car, Entry CUV

Civic, CR-V

785136

5.11

FORD

CD4

Midsize Car, CUV

Fusion, Edge

618069

4.02

GM

EPSILON

Midsize Car

Malibu, Impala, LaCrosse

583645

3.80

HYUNDAI

Y4

Compact Car, Entry CUV

Sonata, Elantra

532109

3.46

TOYOTA

COROLLA

Compact Car

Corolla

503891

3.28

GM

DELTA

Compact, STW

Cobalt, Orlando, Volt

436235

2.84

CHRYSLER

NS/RS/RT

Mid Van

Caravan, Town & Country

433579

2.82

VW

PQ37 (A7)

Compact Car

Super-Duty

377198

2.45

NISSAN

D

Midsize Car

Altima, Maxima

350460

2.28

CHRYSLER

DR/DE

Fullsize Pickup

Ram

331659

2.16

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Platform Changes • Of the Top-15 platforms in 2005, 5 accounting for 22% of production were body-on-frame truck architectures — in 2015, there will be 3 in the Top-15 accounting for 15% of production • In 2005, 10 of the Top-15 platforms belonged to the domestic Big 3 — in 2015, 8 will belong to the Big 3 • In 2015, Hyundai and Volkswagen will each have an entry in the Top-15 — none in 2005 • In 2005, 4 of the Top-15 were dual car/truck platforms (16.5% of production) — in 2015, 7 of the top platforms will be the basis for cars and trucks, and equal 37% of production Copyright © 2009 IHS Global Insight. All Rights Reserved.

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GM North American Production (Units in millions)

As As GM GM closes closes plants plants and and improves improves its its utilization utilization rates rates they they can can approach approach profitability profitability

7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2005

2006

2007

2008

2009

PRODUCTION VOLUME

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2010

2011

2012

2013

2014

2015

STRAIGHT TIME CAPACITY

AUTOMOTIVE CONFERENCE

Ford North American Production

(Units in millions)

Ford Ford should should return return to to profitability by 2011 profitability by 2011 with with strong strong capacity capacity utilization utilization rates rates

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2005

2006

2007

2008

2009

PRODUCTION VOLUME Copyright © 2009 IHS Global Insight. All Rights Reserved.

2010

2011

2012

2013

2014

2015

STRAIGHT TIME CAPACITY AUTOMOTIVE CONFERENCE

Chrysler North American Production Even Even with with Fiat Fiat production production at at Chrysler Chrysler plants, plants, Chrysler Chrysler has has excess capacity excess capacity

(Units in millions)

3.5 3 2.5 2 1.5 1 0.5 0 2005

2006

2007

2008

2009

2010

PRODUCTION VOLUME

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2011

2012

2013

2014

2015

STRAIGHT TIME CAPACITY

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Toyota North American Production Blue Blue Springs Springs opens opens in in 2012, 2012, Central Central Mexico Mexico opens opens in in 2013 2013

(Units in millions)

2.6

Nummi Nummi closes closes in 2010 in 2010

2.4 2.2 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 2005

2006

2007

2008

2009

2010

PRODUCTION VOLUME

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2011

2012

2013

2014

2015

STRAIGHT TIME CAPACITY

AUTOMOTIVE CONFERENCE

Honda North American Production Honda Honda is is poised poised for for additional additional production production growth growth in in 2015 2015

(Units in millions)

2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2005

2006

2007

2008

2009

PRODUCTION VOLUME

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2010

2011

2012

2013

2014

2015

STRAIGHT TIME CAPACITY

AUTOMOTIVE CONFERENCE

Nissan North American Production What What products products should should Nissan Nissan add add to to take take advantage advantage of of excess excess capacity? capacity?

(Units in millions)

1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2005

2006

2007

2008

2009

PRODUCTION VOLUME

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2010

2011

2012

2013

2014

2015

STRAIGHT TIME CAPACITY

AUTOMOTIVE CONFERENCE

Hyunda/Kia North American Production Units in Thousands

600 Job Job one one for for new new plant plant in in Georgia Georgia late late 2009 2009

500 400 300 200 100 0 2005

2006

2007

2008

HYUNDAI PLANT

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2009

2010

KIA PLANT

2011

2012

2013

2014

2015

STRAIGHT TIME CAPACITY

AUTOMOTIVE CONFERENCE

BMW North American Production

Units in Thousands

300

BMW BMW adds adds X3 X3

250 200 150 100 50 0 2005

2006

2007

2008

2009

PRODUCTION VOLUME Copyright © 2009 IHS Global Insight. All Rights Reserved.

2010

2011

2012

2013

2014

2015

STRAIGHT TIME CAPACITY AUTOMOTIVE CONFERENCE

Mercedes North American Production Units in Thousands

200 180 160 140 120 100 80 60 40 20 0 2005

2006

2007

2008

2009

PRODUCTION VOLUME

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2010

2011

2012

2013

2014

2015

STRAIGHT TIME CAPACITY

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Volkswagen North American Production New New plant plant in in Tennessee Tennessee opens. opens. What What new new products products will will fill fill that capacity that capacity

Units in Thousands

700 600 500 400 300 200 100 0 2005

2006

2007

2008

2009

PRODUCTION VOLUME Copyright © 2009 IHS Global Insight. All Rights Reserved.

2010

2011

2012

2013

2014

2015

STRAIGHT TIME CAPACITY AUTOMOTIVE CONFERENCE

Other OEM North American Production

Units in Thousands

160 140 120 100 80 60 40 20 0 2003

2004

2005

2006

2007

SUBARU

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2008

2009

2010

MITSUBISHI

2011

2012

2013

2014

2015

2016

SUZUKI

AUTOMOTIVE CONFERENCE

Conclusions • The key word for North American production in 2015 is “Smaller” – A smaller production share for the Domestic 3 – The smaller segment sizes, whether cars or CUVs will be emphasized – Capacity will be smaller as plants close and no new plants are needed – Production will be smaller than the peak of 2000, but will stabilize at 15 million units

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Implications • In order to take advantage of the smaller North American production landscape suppliers must – Work with the transplants – Focus on small cars and CUV’s – Concentrate on the top platforms – Ride out the storm until 2013 when production capacity is right-sized – Don’t expect any new assembly plants soon

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Thank You! Tracy Handler North American Production Analyst [email protected]