Automotive Industry Outlook - Butzel Long
Automotive Industry
Outlook:
Staying Ahead of the Curve in a Rapidly Changing Landscape
March 2021
Mike Wall Executive Director, Automotive Analysis +1 248 728 8400 Direct +1 616 446 6885 Mobile Mike.Wall@
? 2021 IHS Markit. All Rights Reserved.
2
A World Leader in Critical Information, Analytics and Solutions
Addressing Strategic Challenges with Interconnected Capabilities
Energy
50,000+
customers in over 140 countries
94/100
largest US corporates
80%
of the Fortune Global 500
$4B
annual revenue NYSE: INFO
Agribusiness Climate & Sustainability
Life Sciences
Chemical
Financial Services
Economics & Country Risk
Engineering & Product Design
Telecoms & Technology
? 2021 IHS Markit. All Rights Reserved.
Maritime & Trade
Automotive
3
World Economic Growth
Global Growth Improved in February; World Real GDP is Projected to Increase 5.1% in 2021
10.0 8.0 6.0
World Average 2021 = +5.1%
2018
Annual Real GDP Growth (in percent)
4.0
2.0
0.0
-2.0
-4.0
-6.0
-8.0
-10.0
World
United States
Source: IHS Markit Data Insight
? 2021 IHS Markit. All Rights Reserved.
2019 2020 2021 2022 2023-2028 Japan Eurozone Brazil Russia India
China (mainland)
4
Introduction to Automotive Semiconductor: From Silicon to Cars
Silicon Ingots and
Raw silicon wafers
Processed wafers
Packaged and tested chips
Electronics Control Units* (ECU)
Car
? 1,000 ? 1,400 chips / car
? $427 chip value / car in 2020
Material suppliers: Shin-Etsu, Siltronics,
Soitec
* Picture from IHS Markit Teardown of Harman ? Mercedes TTG9 Head-Unit
? 2021 IHS Markit. All Rights Reserved.
Manufacturing cycle time: Months
Semiconductor Suppliers NXP, Infineon, Renesas, Texas Instruments, STMicroelectronics, ON Semi, Micron, Samsung...
Foundries (front end): TSMC, Samsung,
GlobalFoundries, UMC, Tower, DB Hitek, SMIC
Packaging & Test (back-end)
Amkor, ASE, UTAC
Service providers
Days
Tier 1: Bosch, Continental, Aptiv, Valeo, Harman, BorgWarner, Denso...
Hours
OEMs: VW, Toyota, Toyota,
GM, RNM...
Annual light vehicle sales (millions) 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028
5
Global Light Vehicle Sales
COVID-19 Impacts the Near-Term Outlook; Aftermath Resets Expectations Longer-Term
Annual growth (%)
100
95
92 94 94
90
88
90
85
Average growth 3.6%
84
80
77
75
70
65
60
55
50
100 12.0% 8.0% 4.0% 0.0% -4.0% -8.0% -12.0% -16.0%
Source: IHS Markit Light Vehicle Sales Forecasts
? 2021 IHS Markit. All Rights Reserved.
MaaS: Mobility as a Service
6
Global Light Vehicle Production Overview
First Quarter 2021 Outlook Dominated by Semiconductor Shortages; Lost Volume Increases Over Prior Outlook as Severe Weather Effects and Japanese Earthquake Compound Challenges
Millions
Global Production
100 94.2 89.0
90
89.6
91.7
93.7
84.1
80
74.6
70
60
50
40 -1%
30 -6%
20
13%
7%
2%
2%
10
0 2018
2019
-16% 2020
2021
2022
2023
2024
Global Production
Year over Year Change
? 2021 IHS Markit. All Rights Reserved.
25% 20% 15% 10% 5% 0% -5% -10% -15% -20%
South Asia raised largely on improved Indian outlook; possibly reflecting links to Japanese and South Korea supply chains ? strong local sales are supportive
MEA is boosted again on stronger Iranian outlook Current disruption does nothing to alleviate upside
pressure from inventory requirements in H2
March update takes 500,000 units from 2021 outlook as disruption intensifies in Europe, China, Americas and Japan/Korea
Challenges beyond semiconductors, plastics shortages an emerging short-term factor, following bad sever weather impacts in North America
Many regions experiencing secondary waves of COVID19 infections and disruptive effects could emerge quickly, lockdown measures tightening again in many markets,
Downside risk remains in the near-term given volatility of the situation and potential for shortages to extend deeper into the second quarter. Expect OEMs will continue to prioritize production of higher margin vehicles at the expense of less important offerings
Source: IHS Markit
7
Global Light Vehicle Production
Semiconductor and Other Supply Chain Pressures Present Near-Term Production Challenges
Global Light Vehicle Production: 1Q 2021 ? Mar 2021 vs. Dec 2020
0
Thousands
-100
-200
-300
-400
-500
-600
North America
Europe Mainland China
Japan
South America
South Korea
Source: IHS Markit
Net change Semiconductor impact
? 2021 IHS Markit
? 2021 IHS Markit. All Rights Reserved.
? Globally nearly 1.2M units estimated to be lost from 1Q due to semiconductor shortages
? Biggest disruptions:
? Mainland China: 350,000 units ? Europe: 282,000 units ? North America: 264,000 units
? Semiconductor shortages are not the only influence on Q1 developments:
? Upside in China from Lunar New Year ? North America and Europe compounded by
weather and ongoing public health and lockdown measures ? Port congestion/disruptions impacting product flow
? Extent of disruption and long lead for semiconductors pointing to more protracted vehicle production constraints
? Recovery opportunities dissipating
? Risk in North America for trucks and utility vehicles amid low inventory levels
8
Mainland China Production Overview
Despite Strong Q1, Full-year Outlook is Reduced on Payback Particularly with Light Commercial Vehicles and Semiconductor Concerns
Millions Thousands
Yearly Production
30 25
26.61 24.42 23.35 24.66 26.01 26.98 28.23
8.0% 6.0%
20
5.6% 5.5%
4.7% 3.7%
4.0% 2.0%
0.0%
15
-2.0%
10
-4.0%
-4.0% 5
-4.4%
-6.0% -8.0%
0
-8.2%
-10.0%
2018 2019 2020 2021 2022 2023 2024
Mainland China Production
Year over Year Change
3,000 2,500
Monthly Production Evolution
407%
500% 400%
2,000
300%
1,500 1,000
31%
58% 4%
200% 100%
500
0%
-1% -7%-10% - -5% -5% -9%-4%
0
-100%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
YoY Evolution 2021 Forecast
2020 2022 Forecast
2021 Estimates
The economic development has been upgraded again by increasing GDP growth prediction to 7.8% in 2021.
Strong demand in Q1 2021 ahead of Lunar New Year holiday. Additional incentives have been released during National Congresses in
March, further motivating the output and sales in following months. Commercial vehicle sector responds to infrastructure investment
? 2021 IHS Markit. All Rights Reserved.
The semiconductor shortage brings risks of plant shutdowns could further deteriorate in Q2 2021. The impact started to expand from JV brands to Chinese domestic brands.
The polyamide (PA66) shortage owing to the snowstorm in US, would be another interruption in H1 2021.
Some fluctuations in the stock market could bring uncertainties to potential demand.
Source: IHS Markit
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