us auto industry - bbva research · taking place between hybrid-gasoline and ... leasing 2.81 3.21...

AUTO

INDUSTRY

US

AUGUST 2017

CHARTBOOK

U.S. AUTO INDUSTRY CHARTBOOK │ AUGUST 2017

2

• Despite supportive economic fundamentals and generous incentives,

demand for new vehicles continues to slow down

• Increasing off-lease returns exert downward pressures on sales and prices

of new cars and trucks

• Consumers continue to show a strong bias towards light-trucks, which

reached 63% of total sales in July

• The shift to light-trucks has kept transaction prices high, supporting

profitability in spite of lower volumes

• Leasing could wane as the industry struggles with lower terminal values and

a glut of pre-owned units, opening opportunities for traditional auto lending

• The alternative fuel segment continues to expand, a substitution effect is

taking place between hybrid-gasoline and increasingly reliable PHEV and

BEV


SALES

U.S. AUTO INDUSTRY CHARTBOOK │ AUGUST 2017 SALES

4

*SAAR = seasonally adjusted annual rate

Source: Haver Analytics

U.S. Total light weight vehicle sales

(SAAR*, million units)

Sales

0

2

4

6

8

10

12

14

16

18

20

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Total Domestic Imported

Average 2001-2007: 16.7 million

Jul. 2017: 16.8 million


5



U.S. Total vehicle sales

(SAAR*, million units)

Sales

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0

2

4

6

8

10

12

14

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Cars (left axis) Light trucks (left axis) Medium and heavy trucks (right axis)


6



U.S. Total vehicle sales

(yoy % change)

Sales

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Cars Light trucks


7



U.S. Total light weight vehicle sales

(share of total)

Sales

30%

35%

40%

45%

50%

55%

60%

65%

70%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Cars Light trucks


8 Source: Haver Analytics

U.S. Domestic auto inventory/sales ratio

(seasonally adjusted)

Sales

0.3

0.8

1.3

1.8

2.3

2.8

3.3

3.8

4.3

4.8

5.3

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017


9 Source: Bloomberg

U.S. Market share by brand

(%)

Sales

0

5

10

15

20

25

G

M

F

ord

T

oyo

ta

F

iat

Chry

sle

r

H

on

da

N

issan

H

yun

da

i

K

ia

S

uba

ru

M

erc

ed

es-

Ben

z

Volk

sW

age

n

B

MW

M

azd

a

A

udi

V

olv

o

L

and

Rover

P

ors

che

Ja

gua

r

T

esla

2Q17 2Q07


10 Source: Bloomberg

U.S. Quarterly unit sales

(yoy % change)

Sales

-40

-30

-20

-10

0

10

20

30

40

50

60

2Q17 2Q07


11

Prices


U.S. Consumer price index: cars and trucks

(yoy % change)

-15%

-10%

-5%

0%

5%

10%

15%

20%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

New Used


12

Prices

Source: Haver Analytics & Bloomberg

U.S. Auto prices

25

27

29

31

33

35

37

95

100

105

110

115

120

125

130

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Th

ou

sa

nd

s

Manheim used vehicle value index (left axis)

True market value (avg. all segments, $ thous, 4-Q moving average, right axis)


13

Financing Conditions


U.S. Car loan rates

(%)

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

2010 2011 2012 2013 2014 2015 2016 2017

48-month new car loan 36-month used car loan 60-month new car


14



U.S. Auto loan 90+ days delinquent

(% of balance)

0

1

2

3

4

5

6

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016


15

Leasing

Source: Bloomberg

U.S. Leasing penetration rate

(%)

10

15

20

25

30

35

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016


Leasing

2.81 3.21

4.01

4.45

4.98 5.35

0

1

2

3

4

5

6

2014 2015 2016 2017f 2018f 2019f

Off-Lease returns and supply*

(Fiscal years, millions of units)

*Assumes 36-month lease terms

Source: Bloomberg with data from company filings and Edmunds.com


17



U.S. Newly originated installment auto loans

($ billion, eop, 4-qtr moving avg.)

40

60

80

100

120

140

160

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016


18

Gasoline


U.S. Spot price

($/gallon)

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017


CONSUMERS

U.S. AUTO INDUSTRY CHARTBOOK │ AUGUST 2017 CONSUMERS

20

Consumers


U.S. Consumer sentiment index

40

50

60

70

80

90

100

110

120

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Current economic conditions Consumer expectations


21

Consumers


U.S. Plans to buy a car within 6 months

(% of respondents)

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017


22

Consumers


U.S. Employment and real disposable personal income

(yoy % change)

-6%

-4%

-2%

0%

2%

4%

6%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Real disposable personal income Employment growth

Average RDPI growth 2000-2006 = 3.2%

Average RDPI growth 2010-2Q17 = 2.0%


23

Household Equity


U.S. Household equity and home prices

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

0

20

40

60

80

100

120

140

160

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Owners equity in real estate (NSA, Bil $, left axis) FHFA house price index (yoy change, right axis)


PRODUCTION

U.S. AUTO INDUSTRY CHARTBOOK │ AUGUST 2017 PRODUCTION

25

Production

SAAR = seasonally adjusted annual rate, BEA = U.S. Bureau of Economic Analysis


U.S. Auto production

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

0

20

40

60

80

100

120

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Industrial production index: autos (2007=100, left axis) BEA auto production estimate (SAAR, million.units, right axis)


STRUCTURAL

U.S. AUTO INDUSTRY CHARTBOOK │ AUGUST 2017 STRUCTURAL

27

Fundamentals


Mean age of passenger cars in operation

(years)

Vehicle miles of travel

(total and adjusted by labor force)

8

9

10

11

12

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0

2

4

6

8

10

12

14

197

6

198

1

198

6

199

1

199

6

200

1

200

6

201

1

201

6

Trilli

on

mile

s

Th

ou

sa

nd

mile

s/p

ers

on

Adjusted (lhs) Total (rhs)

2016: 3.16

2016: 11.6


28

Demographics


U.S. Population projections by age

(millions)

0

50

100

150

200

250

300

201

0

201

2

201

4

201

6

201

8

202

0

202

2

202

4

202

6

202

8

203

0

203

2

203

4

203

6

203

8

204

0

204

2

204

4

204

6

204

8

205

0

205

2

205

4

205

6

205

8

206

0

65 years and over 15-44 years


29

Alternative vehicles

Source: Bloomberg

U.S. New plug-in vehicle sales

(thousands)

0

10

20

30

40

50

60

70

Au

g-1

0

Oct-

10

Dec-1

0

Feb

-11

Ap

r-1

1

Ju

n-1

1

Au

g-1

1

Oct-

11

Dec-1

1

Feb

-12

Ap

r-1

2

Ju

n-1

2

Au

g-1

2

Oct-

12

Dec-1

2

Feb

-13

Ap

r-1

3

Ju

n-1

3

Au

g-1

3

Oct-

13

Dec-1

3

Feb

-14

Apr-

14

Ju

n-1

4

Aug-1

4

Oct-

14

Dec-1

4

Feb

-15

Ap

r-1

5

Ju

n-1

5

Au

g-1

5

Oct-

15

Dec-1

5

Feb

-16

Ap

r-1

6

Ju

n-1

6

Au

g-1

6

Oct-

16

Dec-1

6

Feb

-17

Ap

r-1

7

Ju

n-1

7

Plug-in Hybrid (PHEV) Hybrids Battery Electric Vehicle (BEV)


30


* Top ten OEMs by number of models in 2016

Source: DOE

Alternative fueled vehicle/hybrid electric vehicle models by OEMs

(units)*

0

20

40

60

80

100

120

140

160

180 Tesla

Lincoln

Buick

Ram

Mercury

Cadillac

BMW

Audi

Lexus

Nissan

Chrysler

Mercedes-Benz

Honda

Toyota

Dodge

GMC

Chevrolet

Ford


31


Source: DOE

PHEV Battery Cost and Energy Density PEV registrations per 1,000 people

0

50

100

150

200

250

300

350

400

450

0

200

400

600

800

1000

1200

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

202

1

202

2

PHEV battery cost ($/kWh, lhs)DOE target costEnergy density (Wh/L, rhs)DOE target density

0.00 to 0.260.26 to 0.460.46 to 0.680.68 to 4.25

Source: DOE

0.00 to 0.26

0.26 to 0.46

0.46 to 0.68

0.68 to 4.25


FORECASTS

U.S. AUTO INDUSTRY CHARTBOOK │ AUGUST 2017 FORECASTS

33

Forecasts

Source: BBVA Research

2014 2015 2016 2017 2018 2019

Auto sales (millions units)

16.5 17.4 17.5 16.8 16.3 16.6

Real GDP growth (% change)

2.4 2.6 1.6 2.1 2.2 2.1

Unemployment rate (% avg.)

6.2 5.3 4.8 4.3 3.9 4.0

Fed funds (%, eop)

0.25 0.50 0.75 1.50 2.00 2.50

5-year Treasuries (%, avg)

1.64 1.53 1.34 1.90 2.31 2.71


This document and the information, opinions, estimates and recommendations expressed herein, have been prepared by Banco Bilbao Vizcaya Argentaria, S.A.(hereinafter called “BBVA”) to provide its customers with

general information regarding the date of issue of the report and are subject to changes without prior notice. BBVA is not liable for giving notice of such changes or for updating the contents hereof.

This document and its contents do not constitute an offer, invitation or solicitation to purchase or subscribe to any securities or other instruments, or to undertake or divest investments. Neither shall this document nor its

contents form the basis of any contract, commitment or decision of any kind.

Investors who have access to this document should be aware that the securities, instruments or investments to which it refers may not be appropriate for them due to their specific investment goals, financial positions or

risk profiles, as these have not been taken into account to prepare this report. Therefore, investors should make their own investment decisions considering the said circumstances and obtaining such specialized advice

as may be necessary. The contents of this document is based upon information available to the public that has been obtained from sources considered to be reliable. However, such information has not been

independently verified by BBVA and therefore no warranty, either express or implicit, is given regarding its accuracy, integrity or correctness. BBVA accepts no liability of any type for any direct or indirect losses arising

from the use of the document or its contents. Investors should note that the past performance of securities or instruments or the historical results of investments do not guarantee future performance.

The market prices of securities or instruments or the results of investments could fluctuate against the interests of investors. Investors should be aware that they could even face a loss of their investment. Transactions in

futures, options and securities or high-yield securities can involve high risks and are not appropriate for every investor. Indeed, in the case of some investments, the potential losses may exceed the amount of initial

investment and, in such circumstances, investors may be required to pay more money to support those losses. Thus, before undertaking any transaction with these instruments, investors should be aware of their

operation, as well as the rights, liabilities and risks implied by the same and the underlying stocks. Investors should also be aware that secondary markets for the said instruments may be limited or even not exist.

BBVA or any of its affiliates, as well as their respective executives and employees, may have a position in any of the securities or instruments referred to, directly or indirectly, in this document, or in any other related

thereto; they may trade for their own account or for third-party account in those securities, provide consulting or other services to the issuer of the aforementioned securities or instruments or to companies related thereto

or to their shareholders, executives or employees, or may have interests or perform transactions in those securities or instruments or related investments before or after the publication of this report, to the extent

permitted by the applicable law.

BBVA or any of its affiliates´ salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to its clients that reflect opinions that are contrary to the opinions expressed

herein. Furthermore, BBVA or any of its affiliates’ proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. No part of this document

may be (i) copied, photocopied or duplicated by any other form or means (ii) redistributed or (iii) quoted, without the prior written consent of BBVA. No part of this report may be copied, conveyed, distributed or furnished

to any person or entity in any country (or persons or entities in the same) in which its distribution is prohibited by law. Failure to comply with these restrictions may breach the laws of the relevant jurisdiction.

In the United Kingdom, this document is directed only at persons who (i) have professional experience in matters relating to investments falling within article 19(5) of the financial services and markets act 2000 (financial

promotion) order 2005 (as amended, the “financial promotion order”), (ii) are persons falling within article 49(2) (a) to (d) (“high net worth companies, unincorporated associations, etc.”) Of the financial promotion order,

or (iii) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the financial services and markets act 2000) may otherwise lawfully be communicated (all such

persons together being referred to as “relevant persons”). This document is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or

investment activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons. The remuneration system concerning the analyst/s author/s of this report is based

on multiple criteria, including the revenues obtained by BBVA and, indirectly, the results of BBVA Group in the fiscal year, which, in turn, include the results generated by the investment banking business; nevertheless,

they do not receive any remuneration based on revenues from any specific transaction in investment banking.

BBVA is not a member of the FINRA and is not subject to the rules of disclosure affecting such members.

“BBVA is subject to the BBVA Group Code of Conduct for Security Market Operations which, among other regulations, includes rules to prevent and avoid conflicts of interests with the ratings given, including information

barriers. The BBVA Group Code of Conduct for Security Market Operations is available for reference at the following web site:

www.bbva.com / Corporate Governance”.

BBVA, S.A. is a bank supervised by the Bank of Spain and by Spain’s Stock Exchange Commission (CNMV), registered with the Bank of Spain with number 0182.

Disclaimer

AUTO

INDUSTRY

US

AUGUST 2017

CHARTBOOK

us auto industry - bbva research · taking place between hybrid-gasoline and ... leasing 2.81 3.21...

Documents