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U.S. Auto Industry
Chartbook
BBVA Research USA
Houston, TX Fourth Quarter 2013
Key messages
• Pent-up demand supports vehicle sales in the short-run
• Access to credit improves as banks ease standards
• Business demand benefits from the recovery of the housing market and the energy boom
• Exports are gaining momentum due to rapid growth in emerging markets
Key messages
• Excess inventory could lead to a period of strong discounts
• Slow personal income growth points to a gradual expansion of sales
• Asian brands continue to gain market share
• Population growth assures a sustained demand; the aging process is shifting preferences
4
Sales
5
DemandTotal light weight vehicle sales (SAAR, million units)
0
5
10
15
20
25
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Total Domestic Imported
Average 2001-2007: 16.7 millions
Average 2008-3Q13: 12.9 millions
Source: BBVA Research & Haver Analytics
6
DemandTotal light weight vehicle sales (SAAR, million units)
2.5
2.7
2.9
3.1
3.3
3.5
3.7
3.9
4.1
4.3
90
95
100
105
110
115
120
125
130
135
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Dollar index (left axis)
Imported vehicles (right axis)
Source: BBVA Research & Haver Analytics
7
DemandTotal vehicle sales (SAAR, million units)
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0
2
4
6
8
10
12
14
2001 2003 2005 2007 2009 2011 2013
Autos (left axis)
Light trucks (left axis)
Medium and heavy trucks (right axis)
Source: BBVA Research & Haver Analytics
8
DemandNew auto sales by sector (SAAR, million units)
0
1
2
3
4
5
6
7
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Business Consumer
Source: Haver Analytics
9
DemandPersonal consumer expenditures: quantity index (SA, 2009=100)
Source: Haver Analytics
80
90
100
110
120
130
140
150
160
2001 2003 2005 2007 2009 2011 2013
New autos
Net purchases of used autos
10
Demand
Source: Bloomberg
U.S. vehicle days to turn (segment average)
40
45
50
55
60
65
2010 2011 2012 2013
11
DemandMarket share by brand (%)
0
5
10
15
20
25
30
2Q13 2004
Source: Bloomberg
12
DemandQuarterly unit sales (year-over-year % change)
Source: Bloomberg
-20
-10
0
10
20
30
40
50
60
3Q13 2Q13
13
PricesConsumer price index: cars and trucks (year-over-year change)
-15%
-10%
-5%
0%
5%
10%
15%
20%
2007 2008 2009 2010 2011 2012 2013
New Used
Source: Haver Analytics
14
PricesAuto prices
24
25
26
27
28
29
30
31
32
33
95
100
105
110
115
120
125
130
2007 2008 2009 2010 2011 2012 2013
Manheim used vehicle value index (left axis)
True market value (avg. all segments, $ thous, right axis)
Source: Haver Analytics & Bloomberg
15
Financing conditions
2
3
4
5
6
7
8
9
2007 2008 2009 2010 2011 2012 2013
48-month new car loan
36-month used car loan
60-month new car
Car loan rates (%)
Source: Haver Analytics
16
Financing conditions
0
1
2
3
4
5
6
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Auto loan 90+ days delinquent (percent of balance)
Source: Haver Analytics
17
Financing conditions
10
12
14
16
18
20
22
24
26
28
2007 2008 2009 2010 2011 2012 2013
Leasing penetration rate, %
Source: Bloomberg
18
Financing conditions
40
50
60
70
80
90
100
110
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Newly originated installment auto loans ($ billion, eop, 4-qtr moving average)
Source: Haver Analytics
19
Financing conditions
0
5
10
15
20
25
30
35
Eased maximum maturity Eased spreads on loan rates Eased requireddownpayment
Eased required credit score Extent to which loans aregranted to some customers
that do not meet crefitscoring thresholds
3Q13 3Q12
Terms and conditions on auto loans, percentage of respondents (%)
Source: Federal Reserve Senior Loan Officer Opinion Survey
20
International trade
0
20
40
60
80
100
120
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Exports Imports
Exports and imports of autos (SAAR, $ billion, chained 2009 dollars)
Source: Haver Analytics
21
Gasoline
1.5
2.0
2.5
3.0
3.5
4.0
2007 2008 2009 2010 2011 2012 2013
Spot price ($/gallon)
Source: Haver Analytics
22
Gasoline
2.45
2.50
2.55
2.60
2.65
2.70
2.75
2.80
2.85
2.90
1-month ahead 3-months ahead 6-months ahead
Future prices ($/gallon)
Source: Bloomberg
23
Consumers
24
Consumers
40
50
60
70
80
90
100
2010 2011 2012 2013
Current economic conditions
Consumer expectations
Consumer sentiment index
Source: Haver Analytics
25
Consumers
10.0
10.5
11.0
11.5
12.0
2010 2011 2012 2013
Plan to buy a car within 6 months, % of respondents
Source: Haver Analytics
26
Consumers
-6%
-4%
-2%
0%
2%
4%
6%
Real disposable personal income
Employment growth
Average RDPI growth 2001-2006 = 3.2%Average RDPI growth 2010-2Q13 = 1.7%
Employment and real disposable personal income growth (yoy change)
Source: BBVA Research and Haver Analytics
27
Household equity
-15%
-10%
-5%
0%
5%
10%
15%
0
20
40
60
80
100
120
140
160
00 01 02 03 04 05 06 07 08 09 10 11 12 13
Owners equity in real estate (NSA, Bil $, left axis)
FHFA house price index (yoy change, right axis)
Household equity and home prices
Source: Haver Analytics
28
Savings and deleverage
0
1
2
3
4
5
6
7
8
6
7
8
9
10
11
12
13
14
15
16
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Debt service ratio (right axis)
Personal savings (left axis)
12 per. Mov. Avg. (Personal savings (left axis))
Debt-to-income ratio and savings rate
Source: Haver Analytics
29
Production
30
Production
0
1
2
3
4
5
6
0
20
40
60
80
100
120
140
160
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Industrial production index: autos (2007=100, left axis)
BEA auto production estimate (SAAR, million.units, right axis)
Auto production
Source: Haver Analytics
31
Capacity utilization
20
30
40
50
60
70
80
90
100
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Industrial production: automobile and light duty motor vehicles (SA, % of capacity)
Source: Haver Analytics
2Q13: 75.5%
2001-2007: 79.1%
32
Investment
0
20
40
60
80
100
120
140
160
180
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Autos & equipment
Light trucks including utility vehicles
Private fixed investment: autos & equipment (billions of chained 2009 dollars)
Source: Haver Analytics
33
Structural
34
FundamentalsVehicle registrationsMillions
Mean age of passenger cars in operationYears
7
8
9
10
11
12
95
96 97
98
99
00 01
02
03
04
05
06
07
08
09 10 11 12
2012: 11.3
180
190
200
210
220
230
240
250
260
95
96 97
98
99
00 01
02
03
04
05
06
07
08
09 10 11
2011: 245
Source: Haver Analytics
35
Demographics
0
50
100
150
200
250
300
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
204
0
204
2
204
4
204
6
204
8
2050
2052
2054
2056
2058
206
0
65 years and over
15-44 years
Population projections by age (millions)
Source: Haver Analytics
36
Demographics
Les than 19 yearsold
20-29 30-39 40-49 50-59 60-69 70 and more0%
5%
10%
15%
20%
25%
2001 2011
U.S. licensed drivers by age
Source: Haver Analytics
37
Electric cars
0
2
4
6
8
10
12
New U.S. plug-in vehicle sales (thousands)
Source: Electric Drive Transportation Association
38
Forecasts
39
Forecasts
Average 2012 2013 2014 2015
Auto sales (millions units) 14.4 15.6 16.3 16.7
GDP growth(% change) 2.8 1.6 2.3 2.5
Unemployment rate (%) 8.1 7.5 7.0 6.4
Fed funds(%) 0.14 0.19 0.25 0.33
3-year Treasuries(%) 0.38 0.62 1.07 1.78
Source: BBVA Research
U.S. Auto Industry
Chartbook
BBVA Research USA
Houston, TX Fourth Quarter 2013