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Commercial Vehicles: Market Trends in Mexico & North America
AMDA Commercial Vehicles Forum 2021
Thursday March 11, 2021
Andrej Divis, Director, Automotive
IHS Markit
Andrej.Divis@ihsmarkit.com
Confidential. © 2021 IHS Markit®. All Rights Reserved.
Outline
• About IHS Markit
• Mexico’s commercial-vehicle market in the global context
• Recovery in 2021 and beyond
• Structural issues
2
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About IHS Markit
Confidential. © 2021 IHS Markit®. All Rights Reserved.
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2008 2010 2013 2017
2016
2015
IHS + Markit
2019
Other acquisitions: IMS Research, BDW, and Global Mapping Solutions
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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Unmatched credentials
Global long-term
forecasts covering almost 100%
of light & medium/heavy commercial vehicle
sales & production
Address issuesdriving industry
95%of the top automotive suppliers
with revenue greater than $5 billion
100%of the top automakers
14 OEMs with revenue greater than $50 billion
900+automotive expertson the ground in 16 countries
Vehicles in Operation
(VIO) coveragefor 70+ countries (95% of industry)
Autonomous &
mobility forecasts covering US, Europe, China and India
with 5 years of historical data and 12 year forecasts
100%of the top MHCV providers
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COMPLIANCE &
PERFORMANCE
- Alternative Propulsion FC
- Compliance
- Performance
- Fuel Efficiency
- CO2 benchmarking
- Cost To Comply
FORECASTING
- Sales/Demand Forecasting
- Production Forecasting
- Medium and Heavy Commercial
Vehicle Forecasting
- Economic Forecasting
AFTERSALES SOLUTIONS
- Predictive Marketing
- Targeted Campaigns
- Parts & Service
Marketing
Automotive Solutions
CONSULTING
- Sales by Powertrain
- EV and Mobility Scenarios
- Product Portfolio and
Launch Planning
NETWORK PLANNING
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COMPONENTS, FEATURES
& TECHNOLOGY
SOLUTIONS
- Component Forecasting
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Vehicle Specification Comparison
- Supplier Profiles
- Sourcing Strategies OEMs
MARKET REPORTING
- Sales Performance
- National and subnational
Reporting
- Sales Channels
- Vehicles in Operation
- Market Share Analysis
PAST
PRESENT
FUTURE MOBILITY & ENERGY
FUTURE
- Electrification
- Car Sharing/
Smart Cities
- Autonomous Driving
- Evolving of vehicle fleets
- Mobility service companies
$€¥
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Global context
8
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Comparing the Class 4-8 truck-market size by IHS Markit and INEGIExample based on reported 2020 figures
9
15
17
19
21
23
25
27
INEGI Class 4-8 (2020) Add Chinese brands + Ford + Ram IHS Markit Class 4-8 (2020)
Tho
usands
Market-size difference of ~5k units reflects handling of specific brands
~26k
~21k
+5k
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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In medium- & heavy-truck sales alike, Mexico ranks in the top fifteen globally
#12
0 50 100 150 200
Thousands
2019 global truck sales ranking (>6T)
10
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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$0
$10
$20
$30
$40
$50
$60
$70
0 5 10 15 20 25 30
Tho
usa
nd
s o
f $
US
in p
er-
cap
ita
GD
P
Thousands of trucks (>6T) per million persons
Motorization path of other global, regional economies suggests more growth
• Economic growth, truck population (parc)
closely correlated
• Increased overall income and per capita
income parallels increased truck sales
11
MXAR
PR
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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Pro
• Solid trend economic growth expected
• High transport-intensity of economy
• Close relationship w/ neighboring US economy
Con
From <30,000, annual sales of 40,000-50,000 new trucks >6T may be possible
• Post-COVID recovery
• Structural headwinds to the economy
• Truck-specific challenges
12
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Recovery in 2021 and beyond
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Recovery is underway,… but will take time
14
60
65
70
75
80
85
90
95
100
105
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Argentina Brazil Mexico Peru Chile Colombia
Monthly index of economic activity, January 2020 =100
Source: IHS Markit © 2021 IHS Markit
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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Fiscal adjustment needed in 2021In Mexico, the fiscal burden comes from PEMEX, the state-owned oil company
15
-16.0
-14.0
-12.0
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
Argentina Brazil Chile Colombia Mexico Peru Uruguay Latin America
2019 2020 2021
Fiscal Balance as a Percentage of Nominal GDP, Annual
Source: IHS Markit © 2021 IHS Markit
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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Investment will continue to constrain growth in MexicoRelatively low oil prices preclude government spending on infrastructure. AMLO must get trust from private investors.
16
-40
-30
-20
-10
0
10
20
30
Q3-2011
Q1-2012
Q3-2012
Q1-2013
Q3-2013
Q1-2014
Q3-2014
Q1-2015
Q3-2015
Q1-2016
Q3-2016
Q1-2017
Q3-2017
Q1-2018
Q3-2018
Q1-2019
Q3-2019
Q1-2020
Q3-2020
Total Private Public
Mexico: Fixed investment
pe
rce
nt
ch
an
ge
ove
r p
revio
us
Source: : National Statistics Office of Mexico (INEGI) © 2020 IHS Markit
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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Credit continues to decline
17
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
Mar-
14
Jun-1
4
Sep-1
4
Dec-1
4
Mar-
15
Jun-1
5
Sep-1
5
Dec-1
5
Ma
r-16
Jun-1
6
Se
p-1
6
Dec-1
6
Mar-
17
Jun-1
7
Sep-1
7
Dec-1
7
Mar-
18
Jun-1
8
Sep-1
8
Dec-1
8
Mar-
19
Jun-1
9
Sep-1
9
Dec-1
9
Mar-
20
Jun-2
0
Sep-2
0
Dec-2
0
Consumption Mortgage Credits to Firms TOTAL
Mexico: credit to the private sector (% change over previous year)
© 2021 IHS Markit
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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Labor Market: 12 million people left the labor force in April, by December 9.5
million had returned. Not all have found a job, still 2 million jobs missing
18
0
1
2
3
4
5
6
7
Ja
n-0
7
Ja
n-0
8
Ja
n-0
9
Ja
n-1
0
Ja
n-1
1
Ja
n-1
2
Ja
n-1
3
Ja
n-1
4
Ja
n-1
5
Ja
n-1
6
Ja
n-1
7
Ja
n-1
8
Ja
n-1
9
Ja
n-2
0
Ja
n-2
1
Mexico: Unemployment rate (percent)
Source: IHS Markit © 2021
42
44
46
48
50
52
54
56
58Mexico employment, in millions of people
Source: IHS Markit © 2021
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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Volatility still reigns in FX markets, but the worst may be over
19
80
90
100
110
120
130
140
150
160
Brazil Mexico Peru Chile Colombia Uruguay
Nominal exchange rates: local currencies vs US dollar. December 31, 2019 = 100
Source: IHS Markit © 2021 IHS Markit
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Q2 2024
Q3 2024
Q4 2024
Q1 2025
Q2 2025
ParaguayBrazil
Uruguay
Peru
Chile*
*Chile’s Q4 2019 was unusually low because of social unrest; we have used GDP levels from Q3 2019 to determine when Chile will return to pre-pandemic levels
The forecast GDP “crossovers” vary significantly→ when will GDP return to pre-pandemic (Q4 2019) levels?
Colombia
Mexico (Jun’21 & Mar’22
vaccine milestones)
Argentina
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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Mexico: Macroeconomic outlookPrivate household consumption expected to lead medium- and long-term growth
21
Concept 2019 2020 2021 2022 2023 2024-28
Real GDP -0.1 -8.7 4.4 2.8 2.6 2.2
Real imports -0.7 -15.2 10.1 5.3 3.7 2.4
Real exports 1.5 -8.7 9.8 6.1 1.4 1.9
Real private consumption 0.6 -10.9 4.0 2.9 3.4 2.8
Real govt. consumption -1.3 4.0 5.1 0.8 2.7 1.3
Real fixed investment -4.6 -18.5 5.0 3.3 2.5 1.8
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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Mexico’s forecast driven by US expansion
• The US macro team at IHS Markit has sizably revised up GDP growth for the US in 2021 and
2022 mostly owing to the impact of a sizeable stimulus package in the US. This implies better
exports for Mexico and also stronger remittances as well as increased foreign direct investment.
These factors led to Mexico’s GDP growth forecast being revised from 3.7% to 4.4% in 2021.
• Operational risks are increasing, and this may be a major constraint to investment and growth.
Recent regulatory actions by the Mexican government that favor state-owned companies have
created major distrust about Mexico's regulatory processes in the energy sector.
• COVID-19 vaccinations started in Mexico in late December 2020, and according to their calendar,
all inhabitants 40 years and older would be vaccinated by end-June 2021. This calendar
anticipates that all the population will be inoculated by March 2022.
22
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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Large truck-buying cycles in Mexico mirror the US
0
5
10
15
20
25
30
35
40
45
50
0
100
200
300
400
500
600
CY 2000 CY 2004 CY 2008 CY 2012 CY 2016 CY 2020Th
ou
san
ds
Tho
usa
nd
s
Class 4-8 new-truck demand in MX, US
United States Mexico
US growth springing back quickly, with stimulus tailwind
23
Mexico: Influence of US economic and truck-market developments
Real GDP
Percent change 2019 2020 2021 2022
World 2.6 -3.7 5.0 4.2
United States 2.2 -3.5 5.7 4.1
Canada 1.9 -5.5 5.0 4.0
Eurozone 1.3 -6.8 3.8 3.9
Mexico -0.1 -8.2 4.4 2.8
Mainland China 6.0 2.3 7.6 5.6
Japan 0.3 -4.8 2.2 1.8
India* 4.2 -8.2 9.8 5.7
Brazil 1.4 -4.1 3.9 2.6
Russia 1.3 -3.1 2.1 2.4
Class 4-8 new-truck demand in MX & US
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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Published “2021Q1” outlook: Upside opportunities and downside risks remain
24
United States: Class 4-8 truck registrations outlook
187 187
251
269
197
226 231
207
231243
-30%
-20%
-10%
0%
10%
20%
30%
0
50
100
150
200
250
300
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Th
ou
sa
nd
s
Class 8 Registrations % y/y chg.
203212
230239
216226 227 228 233 239
-30%
-20%
-10%
0%
10%
20%
30%
0
50
100
150
200
250
300
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Th
ou
sa
nd
s
Class 4-7 Registrations % y/y chg.
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0
2
4
6
8
10
12
Freightliner Kenworth International Ram Isuzu Others
Thousands
Sum of CY 2019 Sum of CY 2020
17.302
21.354
10.737
15.466
0
5
10
15
20
25
Tractor T. Straight T.
Thousands
Sum of CY 2019 Sum of CY 2020
What happened in the truck market in 2020?
25
Straight trucks & tractor trucks (y/y %cha)
-38%
-28%
Class 4-8 sales by brand: 2020 vs. 2019
IHS Markit MHCV forecast overview for AMDA March 11, 2021
Source: Historical data based on INEGI, IHS Markit; forecasts by IHS Markit.
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Monthly data reveal that the market is turning sharply upwardAfter hitting bottom in May 2020, annualized new-truck sales nearly back at pre-COVID levels
26
0
10
20
30
40
50
60
70
80
Th
ou
sa
nd
s
Annualized monthly Class 4-8 truck sales (endpoint=Dec’20)
SAAR Trend
New
emissions
rules COVID
IHS Markit MHCV forecast overview for AMDA March 11, 2021
Source: Historical data based on INEGI, IHS Markit; seasonal adjustment & annualization by IHS Markit.
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Mexico: Class 4-8 sales forecast to achieve 2021-28 CAGR of +2.7%Boosted by post-COVID recovery, new-truck sales to exceed “trend” in short- and medium-terms
27
0
5
10
15
20
25
30
35
40
45
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Tho
usands
Actual and forecast sales of new Class 4-8 trucks (excl. buses)
Published forecast Trend (modelled)
IHS Markit MHCV forecast overview for AMDA March 11, 2021
Source: Historical data based on INEGI, IHS Markit; forecasts by IHS Markit.
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Mexico: In 2021, medium-duty recovery to outpace heavy-duty rebound
28
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Class 4-7 Class 8
IHS Markit expectations for 2021 truck sales growth (%cha y/y)
+43%
(forecast)
+16%
(forecast)
IHS Markit MHCV forecast overview for AMDA March 11, 2021
Source: Historical data based on INEGI, IHS Markit; forecasts by IHS Markit.
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Mexico: Risks & opportunities around the baseline truck sales forecast
29
Short term Medium term Long term
• Next step of emissions standards to Euro VI now postponed
• Stronger sales during bounce-back expected after 2021
• Unexpectedly robust US economic rebound (US$1.9 trillion stimulus)
• Possible infrastructural investments could boost truck demand – if realised
• Economy expected to expand at steady pace
• Manufacturing and cross-border traffic showing increase, while T-MEC (USMCA) provides stability
• Fleets growing in size
• For manufacturers, rest of world (ROW) offering opportunities
• Economic growth within trade area to continue: positive for traffic flow, equipment demand
• Return to higher oil prices would support nation’s important energy sector, fiscal spending (is it likely?)
• Tighter emissions controls may limit used-truck imports
• Economy now off track
• Pandemic-related risks
• Country’s dependency on petrochemical industry offers limited market opportunities
• Market demand for trucks in the shadow of 2019 bubble, economy
• Few public projects to expect
• Political climate, with its security risks
• Expectation of tougher Euro VI emissions rules may cause pre-buy bubble, to erode sales afterwards
• Availability of “clean diesel” needs to be expanded
• Further regulations may hit independent operators particularly hard
• Political/security situation likely to remain unsettled, even in longer term; new restrictions on trucks in future possible
General
• Mid-2019 pre-buy underlined long-term shift in MD/HD ratio: Post-Euro V drop much harsher for Class 8 trucks
• Advantageous cost structure but limited domestic market
• Still lucrative production base – logistics, costs, continuity
• Stepping stone for North American market entry
• Technical conformity in unison with regional market
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Structural issues
30
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Mexico is among the most transport-intense economies in the worldAs a %share of total economic output, land-transport is seen returning to pre-COVID levels
31
IHS Markit MHCV forecast overview for AMDA March 11, 2021
* Source: IHS Markit World industry Service (WIS). Based on land-transport gross output (GO) in real $US as share of total economy output in real $US.
2019 2020 2021 2022 2023 2024 2025
La
nd
tra
nsp
ort
%sh
are
of e
co
no
mic
ou
tpu
t
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Mexico: Changing import landscape has squeezed established playersEstimated first-time registrations in Mexico, by source (incl. first-time registrations of used trucks)
95%
2009 (NAFTA relaxes used-import rules)
Established brands Mainland China OEMs Used-truck imports
IHS Markit MHCV forecast overview for AMDA March 11, 2021
32
87%
2019
Established brands Mainland China OEMs Used-truck imports
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Mexico: Used-truck imports by yearImports of used trucks >5T GVW (includes some Class 3, in addition to Class 4-8) *
33
0
5
10
15
20
25
30
35
40
45
50
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Tho
usands
MX used-truck imports
IHS Markit MHCV forecast overview for AMDA March 11, 2021
* Source: IHS Markit Global Trade Atlas (GTA). NB: US export statistics suggest a much lower figure for 2013.
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Mexico: Used trucks boosted age of Class 4-8 parc initially; age falling againAge profile estimates for medium- and heavy-commercial-vehicle truck parc (VIO)
34
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2016 2017 2018 2019
Mexico:Registered Class 4-8 trucks by calendar year and according to estimated age
>=14 years 11-13 years 6-10 years 0-5 years
IHS Markit MHCV forecast overview for AMDA March 11, 2021
* Source: IHS Markit
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35
“Showroom” transition in Mexico: Following new emissions regulations,
established brands have updated their offerings
IHS Markit MHCV forecast overview for AMDA March 11, 2021
Freightliner Columbia + Cascadia Classic
•Then… •…and now
Freightliner new Cascadia + Cascadia Classic
International Prostar International LT
Mack Vision (CH) Mack Anthem
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Mexico: Trend toward greater market opening seen continuingClass 4-8 truck sales by source country, incl. known and estimated (2020)
0%3%0%1%
3%3%
82%
1%
7%
0%
Sum of CY 2020
Austria
Brazil
Germany
India
Japan
Mainland China
Mexico
Netherlands
United States
Unknown
36
IHS Markit MHCV forecast overview for AMDA March 11, 2021
* Source: IHS Markit
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Mexico: Focus on medium & heavy-duty truck imports from Mainland %share of new-truck market seen reaching ~8%, exceeding pre-pandemic ~6%
37
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
0.0
0.5
1.0
1.5
2.0
2.5
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Thousands
Selected brands’ actual and forecast truck imports from Mainland China to Mexico (not all brands shown in units)
CNHTC Foton Jianghuai Shacman Chinese brand share percentage
IHS Markit MHCV forecast overview for AMDA March 11, 2021
%sh
are
of n
ew
-truck m
ark
et
* Source: Forecasts by IHS Markit
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Mexico: Other issues
• US Stimulus 3.0 (impact on Mexico)
• Supply vs. Demand
• Chips
• Regulation (T-MEC/USMCA & emissions)
• Technology
IHS Markit MHCV forecast overview for AMDA March 11, 2021
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Conclusion
39
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Summary
• A top global truck market, Mexico is expected to return to growth and approach (and possibly exceed) prior records this decade
• Post-COVID recovery may be slower than elsewhere in region, but US stimulus represents an upside, through various channels
• There is a chance neighboring US could see new-truck sales possibly snap back to near 2019 levels
• The years 2021-22, in particular, could see even stronger new-truck sales than expected
• In addition to economic factors, other influences shaping Mexico’s truck market include competition from used trucks and new players
following an import-based strategy, and these influences are expected to continue as T-MEX/USMCA enters into force
40
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Questions?
41
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IHS Markit MHCV forecast overview for AMDA March 11, 2021