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© 2018 LMC Automotive Limited, All Rights Reserved. Arthur Maher, Director of Research October 2018 European Trade Flows : Planning for the Unexpected
© 2018 LMC Automotive Limited, All Rights Reserved.
Arthur Maher, Director of ResearchOctober 2018
European Trade Flows : Planning for the Unexpected
© 2018 LMC Automotive Limited, All Rights Reserved.
3,500
4,000
4,500
5,000
5,500
6,000
6,500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
European Sales-Production Dynamics
Lehman Bro’sScrapping Inc’t
Sovereign Debt CrisisRenewed Eurozone Crisis
Euro’ Prodn Global Sales Euro’ Built LVs
BREXIT ?
US Tariffs
Turkey Crisis
000s
© 2018 LMC Automotive Limited, All Rights Reserved.
Presentation Outline Global Shocks have, over time….
Increased in severity
Increased in frequency
How do we plan for such shocks ?
Have Good, Clear and Concise data
Today I’m going to discuss our new European Trade Flow database which traces Model Line sales (past, current and future) back to the originating plant.
The main area I will discuss today is BREXIT
© 2018 LMC Automotive Limited, All Rights Reserved.
BREXIT: UK-EU Two-way LV Trade (‘000)
400450500550600650700750800
2017 2018 2019
2017
UK exports 710k
UK imports 1,910k
Total 2,620k
Hard Brexit Threat
2019 Q1
UK market weakens further.
‘Hard border’ threat from Q2
Contingency stocks rise Q1?
Too High? Too High?
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European Days Supply Rebound in Q2…Again in 2019?
Days Benchmark
Days Supply WLTPContingency plans prompt stock cover from 2019 Q1.
+200k (?) boost Days supply to 63 days.
Which OEMs/Plants Exposed?
UK‐EU disruption
‐1.7 mn!
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UK Exports to EU 27 : 2017 UK Plant
Models
(Source: Compass, ELVTFF.)
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UK PlantUK Exports to EU 27 : 2018
(Source: Compass, ELVTFF.)
© 2018 LMC Automotive Limited, All Rights Reserved.
EU 27 Exports to UK : 2017Source Country Destination : UK
(Source: SMMT, Compass, ELVTFF.)
© 2018 LMC Automotive Limited, All Rights Reserved.
EU 27 Exports to UK : 2018Source Country Destination : UK
(Source: Compass, ELVTFF.)
© 2018 LMC Automotive Limited, All Rights Reserved.
…drilling down to German Exports to the UK : 2017
(Source: Compass, ELVTFF.)
Opening up German Plants
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…again German Exports to the UK : 2018
(Source: Compass, ELVTFF.)
© 2018 LMC Automotive Limited, All Rights Reserved.
….and now BMW German Exports to UK 2018 : 147KPlant Destination
(Source: Compass, ELVTFF.)
Dual Sourcing
ModelModel
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….and now BMW German Exports to UK 2018 : 130KPlant Destination
(Source: Compass, ELVTFF.)
ModelModel
© 2018 LMC Automotive Limited, All Rights Reserved.
05
101520253035
Share of EU Production allocated for Export to UK : 2017
Core Model :Fiesta Corsa Focus Sprinter Kuga 3/4 Series Sportage
German Plants !EU Average of Plants Trading with the UK
© 2018 LMC Automotive Limited, All Rights Reserved.
Share of UK Production allocated for Export to EU 27 : 2017
020406080
UK Average of Plants Trading with EU 27
Core Model :Auris Astra Vivaro Qashqai RR Mini Civic XE LR
© 2018 LMC Automotive Limited, All Rights Reserved.
Highlights : Brexit Risk
‘18-’22 UK LV Sales lower by 1mn vs base
Pre-Brexit view: prevailing EU/world trade arrangements
Base forecast : transitional arrangement delivering new UK-EU FTA
Hard Brexit: UK follows WTO rules 04/2019
UK LV Sales Scenarios
© 2018 LMC Automotive Limited, All Rights Reserved.
Highlights: Brexit Risk
Impact on rest of EU LV production: 310K
In the ‘Hard Brexit’ scenario, German LV production is 125K lower than in our ‘Pre-Brexit vote’ view
Impact on UK LV production: 50K
Total 2020 ‘Hard Brexit’ UK market scenario is 450K lower than our Pre‐Brexit vote view
Locations of Production Volume Loss, 2020‘Hard Brexit’ Scenario:
© 2018 LMC Automotive Limited, All Rights Reserved.
Summary Shocks have increased in intensity and frequency.
Planning requires :-
Understanding your ‘base case’ and thus exposure to risk
Tracking the evolution of events down to plant specifics
Scenario planning a useful tool!
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