Advantages of Being a Proactive Supplier - IHS Markit
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AUTOMOTIVE Advantages of Being a Proactive Supplier Industry Changes – Weight Loss & Power Unit Strategy 19 October 2016 | Tokyo, Japan Shou Osako Director, East Asia | Automotive Advisory Services +813 6262 1726, shou.osako@ihsmarkit.com © 2016 IHS Markit. All Rights Reserved.
Table of Contents Structural/Industry Issues • Regulatory Impacts : US/NA and China Forecasts • Industry Issues Solutions • Body-In-White Material Forecasts • VPAC Bench & Scenarios • Supplier Strategic Planning & Opportunity Targeting • Competitor Analysis © 2016 IHS Markit
Automotive Conference – Tokyo | October 2016
Regulations Strengthen : Compliance Gaps Emerge
Global CO2 Targets Are Aggressive and Converging
Notes: Reduced CO2 emission equates to improved fuel efficiency. Global convergence toward 2025.
Source: icct © 2016 IHS Markit
© 2016 IHS Markit 3
Automotive Conference – Tokyo | October 2016
U.S. Midterm Evaluation Scenario
By 2021, IHS Markit and EPA/NHTSA largely agree; the gap to compliance is relatively small
> However, the years after that will be increasingly difficult for OEMs to comply
> This will require much more technology than currently assumed by EPA/NHTSA
U.S. Passenger Cars U.S. Light Trucks
60 45
40
50
35
CAFE Target
Fuel Economy
Fuel Economy
40 30
25
30
20
20 15
10
10
5
0 0
© 2016 IHS Markit 4
Automotive Conference – Tokyo | October 2016
Electrification Takes Hold
Shift From S/S to Mild/Full Hybrids Starts Next Decade
Propulsion Systems – North America Electrification is
100% Required
• Larger D & E segment
90% offerings require
80% several solutions
70% • Fewer options into the
next decade
60%
• 48V is an enabler
50% though a learning/cost
curve ensues
40%
• Low oil environment
30% complicates
20% • CARB electrification
mandate complicates
10%
0%
Electrification =Stop/start, MHEV,
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 FHEV & BEV
BEV Full Hybrid Mild Hybrid Start/Stop ICE Only
© 2016 IHS Markit
© 2016 IHS Markit 5
Automotive Conference – Tokyo | October 2016
Growth Plateaus: Mix Becomes Critical
Industry - Pickup, Sedan and S/CUV
Detroit
Detroit33&&Asian
Asian 4 Quarterly Volume
Quarterly Volume Quarterly Volume
2.6 1.9
1.7
NA Output (Mil)
NA Output (Mil)
2.4 1.5
1.3
2.2
1.1
2.0 0.9
0.7
6 Month Rolling Average 6 Month Rolling Average
1.8 0.5
Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18
Detroit 3 - Pickup, Sedan and S/CUV
• Asian 4 volume eclipses D3 in 2017 1.0 Quarterly Volume
Sedan decline at D3 not compensated 0.9
NA Output (Mil)
• SUV
by S/CUV & Pickups 0.8
0.7 Pickup
• Industry needs to react to the new 0.6
marketplace 0.5
0.4
6 Month Rolling Average
0.3
Asian 4: Honda, Hyundai, Nissan, Toyota Q1 14 Q1 15 Q1 16 Q1 17 Q1 18
© 2016 IHS Markit 6
Automotive Conference – Tokyo | October 2016
2016 China Fuel Efficiency Forecast
Problems for big vehicles since 2016
2016 Gap 2016Target 2016 Base
L/100km
16 80%
14.4
70%
14 60%
Average gap ~20% or 1.5L/100km
12 40%
28%
26%
20% 22%
10 20% 20%
10.8
8% 9.5 9.4 9.5
3% 9.3
-24% -5% 0% -2% -7% -2%
8 7.5 0%
7.0 7.9 8.4 8.4
6.7 6.7 7.8 7.5 7.8 7.8
7.3
6.2 7.0 6.8 7.3
6 5.9 6.6 6.2 -20%
5.9
4.5
-1.42 -0.29 -0.02 -0.12 -0.49 -0.15 0.61 0.25 1.53 1.96 1.58 1.73 2.37 5.91
4 -40%
A B B MPV B SUV C C MPV C SUV D D MPV D SUV E E MPV E SUV F
*The baseline fuel consumption forecast is simulated by VPaC
© 2016 IHS Markit
Automotive Conference – Tokyo | October 2016
2016 China Fuel Efficiency Forecast
CAFC Forecast 2016 vs. 2020
2016 Gap 2020 Gap FE Growth
Unit：L/100km
2016 Market Share 2020 Market Share 2020 Target
16 2020 Base 2016 Target 2016 Base
80%
71%
70%
14 60%
46%
43%
12 32%
40%
34% 35% 31%
29% 28%
26%
24% 20% 22%
20% 18% 20% 22% 20% 22% 22% 16%
10 13% 13% 11%
20%
12% 11%
11% 9% 10% 8% 8%
8%
2% 3%
8 0%
-1% -5% 0% -2% -2%
-7%
6 -20%
-24%
4 0.63 1.08 0.90 0.43 1.06 1.58 1.06 1.92 1.97 2.54 1.90 2.92 4.53 -40%
A B B MPV B SUV C C MPV C SUV D D MPV D SUV E E MPV E SUV F
© 2016 IHS Markit *The baseline fuel consumption forecast is simulated by VPaC
Automotive Conference – Tokyo | October 2016
Electrification is the major trend of Chinese PV market
Total PV Market
Propulsion SystemsDevelopment by Propulsion--China
– North America
Electrification is
100% Required
90% • Pure ICE engine still
80% took 80% of total PV
market in 2015
70%
• stop/start will
60% massively equipped in
50% the next 5 years and
then replaced by
40% Hybrid-Mild beyond
30% 2022
20% • Low oil environment
complicates
10%
• electrification
0%
mandate complicates
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
ICE: Stop/Start Mild-Hybrid PHEV ICE Electric HEV
© 2016 IHS Markit 9
Automotive Conference – Tokyo | October 2016
Three Disruptive Realities
How Do Industry Participants Adapt ….
•S/S >> Plug-in Mild Hybrid >> Full Hybrid >> BEV
•Enablers – Legislation, 48V, mass reduction
Electrif- •Implementation depends on segment, geography, scale, infrastructure and customer purchase capability
•How does the ICE and accessories adapt through this process? What about transmissions and driveline?
ication
•Speed of implementation depends more on legislation versus technical capability
•Several disruptors enter with little patience for automotive timelines, processes and structure
Automated •Will the lack of driver intervention alter content and structure of the powertrain?
•Areas of the vehicle materially altered by automated driving: Interior, Powertrain, Electrical & Chassis
Driving
•New generations live in a more global, urban and environmentally-friendly world
•Ride sharing and reduced/limited driver input changes ownership, maintenance and use structures
Shared •Impact on municipalities, healthcare, dealer/service infrastructure, need for a license
Mobility & •How does shared mobility alter the vehicle cycle, supply base, insurance, aftermarket, standardization and safety?
Connected
Car
2015-2020 2020-2025 2025+
•PHEVs •Increased Electrification •BEVs & Infrastructure
•Level 2 >> 3 Driving •Level 3 >> 4 •Level 3 & 4 >>> 5
•Uber/Lyft •Expanding Mobility Solutions •Vehicle Park Reflects Shifts
© 2016 IHS Markit 10Automotive Conference – Tokyo | October 2016
A Looming Cost Cliff Alters The Market
OEMs, Suppliers, Regulators and Customers Are All Impacted
Success in a Rising
L3/4 Autonomy, Global influences, System Profit Pools Shift Cost Environment
~2025
Full Hybrid, BEV and Alternative Drive Formats Rise • Understand your
costs, markets & risk
Integration of ‘Non-Standard Materials’ & Joining Methods profile
• Diversify customers,
L3 Autonomy, More ADAS Content, Warranty Visibility
~2020
segments and cadence
Mild Hybrid Rise Starts in Larger Segments, 48V
• Hedge technologies
Mass Reduction Shifts Beyond The ‘Edge Segments’ • Smart vertical
integration
ADAS & Connectivity Content Rises, Warranty Costs
• Proactive engagement
Today
Down Displacement, Multi-speed Trans & S/S
• Today’s differentiators
BIW & Chassis System Lightweighting Begins are not tomorrow’s
© 2016 IHS Markit 11Automotive Conference – Tokyo | October 2016
Supplier Business Planning Needs to Change
• Increased Competition
• Faster Cycles
• Global Interconnections
> More than 70% of platforms are built in 2+ regions.
• Value Chain and Profit Pools Shift
> Suppliers hold a higher value of vehicles value: ~65% and growing
> Increased ‘Buy’ focused on electronics and powertrain vs. traditional systems
• Innovation Origination
> Suppliers drive more of the innovation and capital risk
• Product and Process Complexity
> Despite platform count reductions, homologation, legislation, reduced cadence and trim
level expansion drives increased complexity
© 2016 IHS Markit 12Automotive Conference – Tokyo | October 2016
Foresight Reigns: Suppliers Need to be More Proactive
• Anticipate market and technology trends
• Understand their organization’s priorities
• Do they have the right customer mix?
• Is there a globalization strategy?
• Are the right human resources and physical footprint in place?
• Should they entertain joint venture or affiliations to reach new markets?
Suppliers Need expand their business planning past traditional vehicle and
powertrain forecasts in an increasingly complex marketplace.
© 2016 IHS Markit 1314 Solutions • Body-In-White Material Forecasts • VPAC Bench & Scenarios • Supplier Strategic Planning & Opportunity Targeting • Competitor Analysis © 2016 IHS Markit
Automotive Conference – Tokyo | October 2016
The BIW Material Forecast Process
Establish BIW Share by System, Usage & Material
• Output in Excel and
Current Vehicle Structure
Forecasted Structures
Integral Business Planning
• IHS LV Production • IHS LV Production
Forecast Forecast PowerPoint
• 3rd Party Research • IHS Sales-Based • Ability to drive
Powertrain gap material, process &
• Industry Contacts/ location trends
Interviews analysis
• Linked to the IHS
• Primary & Secondary • Capital, supplier production forecast
Research affiliations, • Unique approach
• Multi-Material competition, suited to suppliers
exposure capability & cost of all tiers
© 2016 IHS Markit 15Automotive Conference – Tokyo | October 2016
Material Change Priority by System/Location in BIW
• Dependent upon OEM, Segment,
Cost/Availability & Compliance Gap
• Material Shift Order of Operations Assumptions (By
Segment)
• Hood
• Decklid
• Closures
• Fenders
• Front shock towers
• Roof
BIW Structure (Above)
BIW analysis also includes hood,
• A & B-Post fenders, closures, roof and decklids
• Rest of BIW bodies
© 2016 IHS Markit 16Automotive Conference – Tokyo | October 2016
Material Forecast Analysis
Total NA LV Industry By Pounds
Total BIW declines despite growth in CUVs and rising NA output
20
1010
18
Billions of Pounds (Net Usage)
0.4 0.4
Average BIW Mass (line)
16 0.5
1.0 1.5
0.7
14 2.1
2.6
12 960
1.4
1.1
10 5.1
2.6
8
6 2.6 910
4
7.0
2 5.0
0 860
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Mild Steel High Strength Steel Advanced High Strength Steel
Ultra High Strength Steel GigaPascal Steel Aluminum - Sheet
Aluminum - Cast/Ext CFRP/SMC/Plastic Other
Source: April 2016 Material Forecast
© 2016 IHS Markit 1718 Solutions • Body-In-White Material Forecasts • VPAC Bench & Scenarios • Supplier Strategic Planning & Opportunity Targeting • Competitor Analysis © 2016 IHS Markit
Automotive Conference – Tokyo | October 2016
VPaC Planning Process
• IHS Markit will set up a workshop to understand your goals:
• Europe dropping diesels from A and B segment vehicles?
• Global 2-3 cylinder dominance?
• Cost/benefit for compliance, EV or PHEV?
Workshop Quote Kickoff VPaC Custom
•Define Needs •Based on Meeting Development
•Capabilities workshop •In-person or via •Incorporation of Presentation
•Potential specifications Web Conference Sales Based
Solutions
of Findings
Powertrain
• Outputs will leverage VPaC data to answer critical
questions about the market or opportunity.
> Delivered in PowerPoint with a robust discussion of
findings between IHS Markit and you
© 2016 IHS Markit 19Automotive Conference – Tokyo | October 2016
Example: U.S. Powertrain Technology Trend
Out of the Base
forecast, IHS predicts;
• Which technologies
will gain, remain,
shrink
• When you will see
robust growth
• Electrification Trend
• Trends not only
Engine/Transmission
but other related
components
• Fuel efficiency for
each vehicle and
Power unit level
© 2016 IHS Markit 20Automotive Conference – Tokyo | October 2016
Example: U.S. Midterm Evaluation Scenario
90
MY 2021
80 Passenger Car
• There are significant gaps in
70
technology assumptions
Production Share [%]
60 EPA Phase 2
50 NHTSA Phase 2
between IHS Markit and
40 EPA TAR EPA/NHTSA
NHTSA TAR
30
20
IHS Markit
> GDI
10
0
> Stop/start
Turbocharging Gasoline Direct Injection non-Hybrid Stop-Start
> Full HEVs
16
MY 2021
14 Passenger Car > Plug-ins
12
Production Share [%]
10 EPA Phase 2
NHTSA Phase 2
8
EPA TAR • However, EPA and NHTSA
6 NHTSA TAR indicate that this is enough
4 IHS Markit technology for OEMs to
2 comply with 2021 FE and GHG
0 targets.
Mild SI-E Hybrid Full SI-E Hybrid Plug-in Hybrid Electric
© 2016 IHS Markit 21Automotive Conference – Tokyo | October 2016
Example: U.S. Midterm Evaluation Scenario
U.S. Passenger Cars
60 • What would happen if we
added additional technology to
the fleet in order for the
50
vehicles to comply in the 2022-
2025 range?
CAFE Target
40
Fuel Economy (MPG)
30 • IHS Markit works together with
our partners to set up
20
scenarios/views of a possible
future:
10 > Highest level of technology
> Specific technology path
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
> Lowest cost for compliance
© 2016 IHS Markit
© 2016 IHS Markit 2223 Solutions • Body-In-White Material Forecasts • VPAC Bench & Scenarios • Supplier Strategic Planning & Opportunity Targeting • Competitor Analysis © 2016 IHS Markit
Automotive Conference – Tokyo | October 2016
Supplier Business Planning is Continuous
Organizational IHS Markit
Priorities
• Competitor & Market Assessment
Plan • Legislative/Regulatory Impact
Goals & Vehicle/Powertrain & Component Forecasts
Communication •
Priorities
& Execution • Opportunity Analysis
Supplier Business planning involves all facets of
Capability/
the suppliers organization:
Targets &
Resource Finance, Sales, Marketing, Design, Engineering,
Goals
Planning
Supply Chain, Manufacturing, Logistics,
Suppliers, Customers and Stakeholders.
Opportunity
Analysis
Plan
Organizational Opportunity Capability/
Targets & Goals Gap Analysis Communication &
Priorities Analysis Resource Planning
Execution
© 2016 IHS Markit 24Automotive Conference – Tokyo | October 2016
Engine Opportunity Targeting
Supplier-specific
opportunity
targeting analysis
given unique
criteria:
• Sourcing Window
• Sourcing
Structure
• Volume,
technology,
region and
incumbent
criteria
© 2016 IHS Markit 25Automotive Conference – Tokyo | October 2016
Top 10 Opportunities – 24 Months
Average Volume
VP: Production
Nameplate 0K 10K 20K 30K 40K 50K 60K 70K 80K 90K 100K 110K 120K 130K 140K 150K 160K 170K
E: Platform E: Program E: Model VP: Platform VP: Program
S2G (HR) HR16DE (XH16) 1.6L 16V DOHC L4 Sentra CMF-C/D L21B 166.9K
DURATEC35 D33 TI-VCT 3.3L 24V DOHC V6 Explorer CD6 U625 117.2K
New ZR 2.0ZR 2.0L 16V DOHC L4 Corolla GA-C 150B 148.9K
New ZR 2.0ZR 2.0L 16V DOHC L4 Corolla GA-C 150B 141.9K
CSS-NGE/NDE (L3T) G45T-3 1.35L 12V DOHC L3 Trax VSS-F B/C 9BUC 89.7K
DRAGON DRAGON 1.5 1.5L 12V DOHC L3 Escape C2 CX482 86.6K
CUMMINS ISB ETJ 6.7L 24V OHV L6 2500/3500 DS/DJ DK 115.2K
GEN II/III/IV/V L83 - GEN V - 5.3L AFM 5.3L 16V OHV V8 Silverado VSS-T T1XC 82.4K
PENTASTAR 3.6L UPGRADE 3.6L 24V DOHC V6 Grand Cherokee WK/WK(2) WL 95.9K
VQ VQ35VD 3.5L 24V DOHC V6 Pathfinder D P42R 82.9K
2019 2020 2021 2022 2023 2024
Engine Start of Production
© 2016 IHS MarkitAutomotive Conference – Tokyo | October 2016
Top 10 Opportunities – 36 Months
Average Volume
VP: Production
Nameplate 0K 10K 20K 30K 40K 50K 60K 70K 80K 90K 100K 110K 120K
E: Platform E: Program E: Model VP: Platform VP: Program
G4-NU NU-2.0L 2.0L 16V DOHC L4 Sonata N LF(2) 117.3K
GR 7GR 3.5L 24V DOHC V6 Sienna GA-K 580L(2) 81.3K
ED6 - TIGER SHARK
WORLD ENGINE L4 2.4L 16V SOHC L4 Cherokee C-EVO/CUSW KL(2) 92.6K
M-AIR
ELECTRIC Electric 0L 0V None None Model 3 CUV GEN III Model E 75.9K
GR 7GR 3.5L 24V DOHC V6 Highlander GA-K 440A(2) 87.5K
FB FB20_DI 2.0L 16V DOHC H4 Outback SGP BF4(2) 97.4K
DURATEC35 D35 GTDI TI-VCT 3.5L 24V DOHC V6 F-150 SuperCrew T3 P702 61.5K
DRAGON DRAGON 1.5 1.5L 12V DOHC L3 C-CUV C2 CX430 53.3K
G4-NU NU-2.0L 2.0L 16V DOHC L4 Optima N JF(2) 61.4K
New-L (AP2) L15B MFI(AP2) 1.5L 16V DOHC L4 Fit GSP(2) 2WF(2) 47.8K
2020 2021 2022 2023 2024
Engine Start of Production
© 2016 IHS MarkitAutomotive Conference – Tokyo | October 2016
Top 10 Opportunities – 48 Months
Average Volume
VP: Production
Nameplate 0K 10K 20K 30K 40K 50K 60K 70K 80K 90K 100K
E: Platform E: Program E: Model VP: Platform VP: Program
New-L (AP2) L15B GDI(AP2) 1.5L 16V DOHC L4 Civic CCA 2SV(2) 91.6K
J New-J30 turbo (AP5) 3.0L 24V DOHC V6 Pilot 2SL/2SF 2SF(2) 58.3K
G4-NU NU-1.8L 1.8L 16V DOHC L4 Elantra KP3 AD(2) 65.6K
AR 8AR-FTS 2.0L 16V DOHC L4 RX GA-K 760A(2) 68.4K
New-K (AP4) New-K20 GDI 2.0L 16V DOHC L4 Civic CCA 2SV(2) 64.8K
New-K (AP4) New-K20 GDI 2.0L 16V DOHC L4 Civic CCA 2SV(2) 61.1K
G4-NU NU-2.0L 2.0L 16V DOHC L4 Optima N JF(2) 61.4K
New ZR 2.0ZR-HEV 2.0L 16V DOHC L4 Prius GA-C 690X 60.4K
SGE LFV 1.5L 16V DOHC L4 Malibu VSS-F D/E 9DSC 99.2K
G4-NU NU-1.8L 1.8L 16V DOHC L4 Sorento N UM(2) 45.2K
2021 2022 2023 2024
Engine Start of Production
© 2016 IHS Markit29 Solutions • Body-In-White Material Forecasts • VPAC Bench & Scenarios • Supplier Strategic Planning & Opportunity Targeting • Competitor Analysis © 2016 IHS Markit
Automotive Conference – Tokyo | October 2016
Competitor/Technology Assessment
Critically important to
understand;
Competitors’ Profile :
Finance, footprint etc.
Their product offerings
and tech roadmap
Differentiation strategy
Local procurement and
logistics
M&A, Investment
Market share and
Customer share
In which area change will
occur? what’s your plan?
© 2016 IHS Markit 30Automotive Conference – Tokyo | October 2016 Summary • Lack of volume growth in key markets shifts the focus to optimizing mix and focusing on high margin opportunities • Unprecedented number of challenges facing the industry: • Global regulatory initiatives • Shifting of resources and energy towards non-traditional systems • Supplier consolidation and investment expectations of multi-regional strategies • Three Disruptors: Electrification, Autonomous Vehicles & Shared Mobility • Strategies to navigate the impending ‘Cost Cliff’ • Actionable Innovation, Vertical Integration and Risk Mitigation © 2016 IHS Markit 31
IHS Markit Customer Care: CustomerCare@ihsmarkit.com Americas: +1 800 IHS CARE (+1 800 447 2273) Europe, Middle East, and Africa: +44 (0) 1344 328 300 Asia and the Pacific Rim: +604 291 3600 IHS MarkitTM COPYRIGHT NOTICE AND DISCLAIMER © 2016 IHS Markit. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent of IHS Markit. Content reproduced or redistributed with IHS Markit permission must display IHS Markit legal notices and attributions of authorship. The information contained herein is from sources considered reliable, but its accuracy and completeness are not warranted, nor are the opinions and analyses that are based upon it, and to the extent permitted by law, IHS Markit shall not be liable for any errors or omissions or any loss, damage, or expense incurred by reliance on information or any statement contained herein. In particular, please note that no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any projections, forecasts, estimates, or assumptions, and, due to various risks and uncertainties, actual events and results may differ materially from forecasts and statements of belief noted herein. This presentation is not to be construed as legal or financial advice, and use of or reliance on any information in this publication is entirely at your own risk. IHS Markit and the IHS Markit logo are trademarks of IHS Markit.
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