Small Cars: Reality Or Myth?

Small Cars: Reality or Myth?

Michael Robinet Director, Global Production Forecasts IHS Automotive

February 24, 2011 Agenda

• Going Global • US Sales Prospects • NA Sourcing • Summary

Actuals and forecast reflect CSM Worldwide’s light vehicle production and Global Insight’s light vehicle sales for vehicles up to 6t GVW Copyright © 2010 IHS Inc. All Rights Reserved. Global Scale High Volume, Global Platforms – Top 10 by 2016

Segment (Top Nameplate)

Honda - GSP 1.6 B (Fit) • Every top 10 global platform has/will have Ford - B2e 1.7 B (Fiesta) exposure to North America • March of global platforms Honda - C5 1.8 C (Civic) into developing markets Hyundai - PB 2.0 B (Accent) accounts for overall growth • Volume expansion also Ford - C1 MCA 2.0 C (Focus) driven by major OEM platform consolidation in GM - Global Delta/D2XX 536 C (Astra/Cruze) B- through D-segments Renault/Nissan - B 2.1 B (Versa/Clio) and enhances design flexibility VW - MQB A/B 2.9 C/D (Golf) • Platform consolidation alters competitive dynamic Hyundai - HD 2.9 C (Elantra) toward larger, more Toyota - MC-M 3.7C/D (Camry) diversified players

0 1 2 3 4 Millions

Contribution to Growth 100% 2010-2013 25 30% Segment% Changesin 90% A-Segment 25% 20 80% 2010-2013 20% 70% D-Segment 15 60% 15% B-Segment 10 50% 10% 40% Full-Frame 5 5% 30% 0 0% 20% C-Segment 2010 Global in Segments Millions 2010 AA B B C D E F-F 10% 0% • North America shifted output from full-frame offerings to B-, C- and D-segment offerings, due to higher commodity costs and regulatory constraints. • The average age of core B-, C- and D-segment vehicles in the market will decline, due to consumer demand and requirements for integrating new fuel economy technologies. • The B- and C-segments are the key growth markets in Brazil and China.

100 CAGR (2010-17) 90 2.8% 80

70 5.8%

Millions 50 3.2%

30 67%

20 7.2% 52% 10

0 2002 2006 2010 2014 2017 D-FFSegment Developed Mkts D-FF Segment Emerging Mkts A-C Segment Developed Mkts A-C Segment Emerging Mkts

• Going Global • US Sales Prospects • NA Sourcing • Summary

Honda Civic Honda Accord • 1978 – OAL* 150”, WB** 87” • 1978 – OAL 163”, WB 94” • 1988 – OAL 163”, WB 97” • 1988 – OAL 180”, WB 102” • 1998 – OAL 175”, WB 103” • 1998 – OAL 189”, WB 107” • 2008 – OAL 177”, WB 106” • 2008 – OAL 194”, WB 110”

• Smaller segment car sizes have inched up steadily over the past 30 years - and especially in the last 10 years. • Today’s Toyota Yaris 4-door B-Car is approximately the size of a 10-year-old Civic C-Car.

. OAL 169”, WB 100”

* OAL – Overall Length; ** WB – Wheel Base

Current Market Conditions • Fuel prices: moderately stable; relatively low • Constrained consumers However … Oil - WTI (US$ per barrel) $120

$100

$80

$60

$40

$20 Price Per Barrel US InDollars Barrel Per Price $0 2006 2007 2008 2009 2010 2011 2012 2013

2000 2005 Gen Y Depress 11% Depress Gen Y 12% 19% 20% Gen X Quiets 14% 20% Quiets Gen X Baby 14% 20% Baby Boomer Boomer s s 36% 34%

2010 Depress 2015 - 57% will be under 50 years old 5% Quiets Quiets Gen Z Gen Y 12% 13% 12% 29% Gen Y Baby Baby 27% Boomer Gen X Boomer s 19% s 31% 34% Gen X 18%

Despite the struggles of the only entry in this segment, the Smart ForTwo, 140 more OEMs are bringing vehicles into this segment. 0.8%

120 0.7%

0.6% 100 Electrification will be prevalent 0.5% 80 0.4% 60 Thousands 0.3% Share of of Market Share 40 0.2%

20 0.1%

0 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Smart ForTwo Fiat 500 Chevy Spark Mitsubishi iMiEV Scion iQ % Share of TIV

1.0 6% OEMs are introducing many new models but 0.9 volume has never been particularly strong. 5% 0.8 0.7 4% 0.6 0.5 3% Millions 0.4

2% of Market Share 0.3 0.2 1% 0.1 0.0 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

VW Toyota Scion Suzuki Nissan Mitsibishi Mazda Kia Honda Chevrolet Ford Smart Chrysler/Dodge MINI BMW % Share of TIV

5.0 Model proliferation is high, content is emphasized 30% 4.5 25% 4.0 3.5 20% 3.0 2.5 15% Millions 2.0

10% of Market Share 1.5 1.0 5% 0.5 0.0 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Other Jeep Cadillac Buick Lexus Lincoln Audi Chrysler Scion Mitsubishi Dodge Kia Subaru Mazda Hyundai Volkswagen Toyota Nissan Chevrolet Honda Ford Share of TIV

• Going Global • US Sales Prospects • NA Sourcing • Summary

Growth in Mexico, import substitution, bodystyle proliferation, export 6 opportunities and market dynamics drive a rising share in NAFTA 35%

5 30%

25% 4 20% Millions 3 15% 2

10% of Production Share

1 5%

0 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Other OEMs Fiat/Chrysler Hyundai Toyota Volkswagen Renault/Nissan Honda General Motors Ford Share of NAFTA Output

• Going Global • US Sales Prospects • NA Sourcing • Summary

• Global platforms add a new dynamic – export sourcing, greater economies of scale, increase content/value • CAFE is a driver though ownership costs and demographics are also critical • Demand from Mexico is a key anchor for B-segment volume in NAFTA • Increased production flexibility reduces downstream risk versus last generation efforts

Michael Robinet Michael. [email protected]

[email protected]