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CURRENT ENVIRONMENT
Corporate actions pick up
Mergers and acquisitions (M&A) activity saw a sizeable jump in the auto manufacturing industry and the
auto retail market in the first 10 months of 2014.
Following Fiat SpAs complete takeover of Chrysler Group LLCs after buying the 41% stake for $2.9
billion in January 2014, the combined companyFiat Chrysler Automobiles NV (FCA)went public on
October 13, forming the seventh-largest automaker in the world.
Another M&A activity is ZF Friedrichshafen AGs buyout of TRW Automotive Holdings Corp. for $13.5
billion. The deal was announced on September 15, 2014 and is expected to be completed in the first half of
2015. While TRW Automotive will operate as a separate business division, the combined company will
bring together complementary product offerings and leading technology positions that will better position
the company in different markets and high-growth areas. ZF Friedrichshafen estimated that the merger will
result in a business that will more than double sales in the US and China. The transaction creates the second
largest auto parts supplier in the world.
We think the consolidation phase in the industry will continue in 2015, as companies want to have access to
different segments, markets, and technologies.
Dealership M&A
US auto retailers, though benefiting from improving domestic sales, are queuing up to acquire dealerships
overseas. They believe that international markets will play a crucial role by providing potential growth even
amid cyclicality of the domestic market.
In October, Lithia Motors, Inc. completed its acquisition of DCH Auto Group Inc. for $362.5 million,
which is expected to result in a $2.3-billion increase in annual revenue to Lithia. The deal diversifies the
combined companys brand portfolio, reducing reliance on any one brand. For example, prior to the
acquisition, Lithia had focused mainly on domestic brands and was heavily dependent on Chrysler vehicle
growth, but the combined company can now expand to imported and luxury brands. There are two growth
paths in store for the companyLithia will be focusing on exclusive franchises in medium markets, while
DCH will be focusing on extra-large and mega markets. The combination develops a metro market strategy
for Lithia.
Meanwhile, Warren Buffets investment company, Berkshire Hathaway Inc., announced in October that it is
entering the auto business through its decision to acquire Van Tuyl Group, the largest privately owned auto
dealership in the US, with almost $8 billion in revenues. After the anticipated acquisition closes in the first
quarter of 2015, Van Tuyl Group will be renamed Berkshire Hathaway Automotive. While the terms of the
acquisition are undisclosed, the move shows Buffets confidence in car retailing, which is noteworthy as he
is one of the most influential businessmen and investors in the world. Buffet has mentioned that he may buy
more dealerships. We think this acquisition could stimulate other dealership M&A activity, as Buffets
interest in dealerships indicate their value in the automotive industry.
Identifying growth opportunities in dealerships, Asbury Automotive Group Inc. announced in October 2014
that it aims to buy stores that will add $500 million in annual revenue over the next 18 months. At the end
of October 2014, the company announced the acquisition of two unidentified dealerships that are expected
to contribute $250 million in revenue. These transactions are expected to close by the end of 2014 or early
in 2015.
There has also been movement toward international expansion among publicly traded auto dealers. For
example, Group 1 Automotive is expanding its international presence. The company acquired UAB Motors
Participacoes SA, a Brazilian automotive retailer, in 2013. Group 1 obtained full ownership of 18
INDUSTRY SURVEYS
dealerships representing 22 franchises in the deal, which was worth about $146 million. In the same month,
it also acquired four Ford dealerships from Inchcape Retail Ltd in the UK.
Penske Automotive Group Inc. has been very active on the acquisition trail. The company acquired 13
franchises in the UK that were formerly part of the Isaac Agnew dealership group in January 2012. Further,
in March 2012, the company established a joint venture with Andrea Mantellini, which operates a
BMW/MINI dealer group in Bologna, Italy; the joint venture acquired the Mariani BMW/MINI dealership
in Monza, Italy. Penske acquired Western Star Trucks Australia Pty. Ltd. from Transpacific Industries
Group Ltd. for about $200 million in August 2013. Western Star is a distributor of commercial vehicles,
related spare parts, and aftermarket support across Australia, New Zealand, and parts of Southeast Asia.
Ford launches aluminum-bodied F-150
The Ford F-150 was the best-selling vehicle in the US for the past 32 years. Despite the success of this
vehicle, Ford has decided to take it a notch higher, and is scheduled to begin production of its redesigned,
all-aluminum body F-150, which is expected to be launched onto the market in December 2014.
While aluminum is as strong as steel, it is lighter, and hence increases fuel efficiency as well as towing and
payload capacities, and improves power-to-weight ratio for faster acceleration. The use of aluminum also
makes the F-150 stronger, considering that this material is more resistant to dents and dings than steel.
Switching to an aluminum body adds $395 to the price. Consumers and investors will be on the lookout,
even though there has been some controversy about how the F-150s all-aluminum body will stand up to the
abuse that pickup trucks often endure.
Good news for used car buyers
A key indicator in the US automobile industry, the Manheim Used Vehicle Value Index, has been on a
downward trend since reaching a price peak in May 2014, showing year-on-year declines in August and
September of 0.4% and 1.1%, respectively. In 2013, the Mainheim Used Vehicle Value Index averaged
121.4, down 1.8% from the 2012 average. However, year to date through October, the index averaged
123.1, up 1.6% from the year-ago period. We still think the prices of used cars will continue to decline,
despite the moderate increase in October.
The decline in prices provides an opportunity for car shoppers, especially for those who otherwise could not
afford to buy a used car in the wake of the recession. However, the used car price trend may be a threat to
new-car sales, as some car shoppers may forgo buying a new car, and may have a renewed interest in
owning used vehicles.
INDUSTRY SURVEYS
10.5
9.9
0.6
6.9
2.7
3.6
0.6
31.6
41.8
10.8
2.5
0.4
9.3
1.8
0.3
16.6
26.6
3.2
7.9
5.3
2.6
5.3
2.3
70.7
29.3
100.0
11.0
10.5
0.6
7.3
2.4
4.3
0.6
32.4
41.3
11.0
2.2
0.3
9.5
1.7
0.1
16.6
26.3
3.3
7.8
5.1
2.8
4.8
2.4
71.1
28.9
100.0
11.2
10.6
0.6
7.5
2.5
4.4
0.6
32.9
41.2
10.9
2.2
0.3
9.3
1.7
0.1
16.7
25.9
3.0
7.8
5.2
2.6
4.8
2.4
72.1
27.2
100.0
10.7
10.1
0.6
6.4
2.0
3.7
0.6
31.3
43.0
11.0
2.3
0.4
10.7
1.8
0.0
16.8
25.6
3.2
7.4
5.6
2.8
4.2
2.5
72.7
27.3
100.0
690.9
613.2
4,149.4
3,038.5
112.4
574.5
128.3
4.2
128.7
109.9
36.6
478.5
301.2
0.0
889.1
275.2
6,057.4
1,130.5
7,187.9
21.7
14.1
5.7
0.0
1.9
20.1
15.9
8.1
7.7
57.7
42.3
1.6
8.9
1.8
0.0
2.4
1.3
0.4
6.5
2.8
0.1
12.3
4.2
85.3
14.7
100.0
21.6
13.8
5.7
0.0
2.2
20.1
15.6
7.7
7.9
57.3
42.7
1.6
8.7
1.6
0.0
1.8
1.5
0.5
6.6
3.7
0.0
12.3
4.1
84.3
15.7
100.0
21.9
14.1
5.7
0.0
2.2
20.2
15.4
7.5
7.9
57.5
42.5
1.6
8.8
1.6
0.0
1.9
1.5
0.5
6.7
3.7
0.0
12.2
4.1
84.5
15.5
100.0
21.0
13.2
5.6
0.0
2.2
18.5
18.1
9.6
8.5
57.7
42.3
1.6
8.0
1.8
0.1
1.8
1.5
0.5
6.7
4.2
0.0
12.4
3.8
84.3
15.7
100.0
100.0
100.0
100.0
100.0
100.0
TOTAL MOTOR VEHICLE SALES 11,255.8 12,098.2 10,142.8 10,752.5
Note: Totals may not add due to rounding. Included in Other Foreign Manufacturers.
Source: Ward's Automotive Reports.
100.0
100.0
100.0
JAPANESE MANUFACTURERS
Honda Motor
Mazda
Mitsubishi
Nissan
Subaru
Suzuki
Toyota
OTHER FOREIGN MANUFACTURERS
BMW
Hyundai
Kia
Mercedes/Daimler
Volksw agen
Others
Total domestic-built
Total imported
Total car sales
LIG HT TRUCKS
US MANUFACTURERS
General Motors
Chevrolet
GMC/Pontiac
Saturn
Other divisions
Ford Motor Co.
Fiat Chrysler
Chrysler/Jeep
Dodge/Ram
Total Big Three
FOREIGN MANUFACTURERS
Daimler/Mercedes
Honda
Hyundai
Isuzu
Kia
Mazda
Mitsubishi
Nissan
Subaru
Suzuki
Toyota
Others
Total domestic-built
Total imported
Total light truck sales
Total domestic-built cars & trucks
760.6
719.1
41.6
498.1
196.2
258.1
43.8
2,289.6
3,025.9
784.2
182.8
31.4
677.0
133.1
18.4
1,198.9
1,928.2
231.3
574.9
384.1
187.8
385.4
164.8
5,118.3
2,125.3
7,243.7
836.4
793.3
43.2
551.1
180.2
327.7
43.2
2,454.5
3,134.9
833.0
165.9
25.0
720.1
127.7
4.5
1,258.7
1,996.5
248.7
589.9
389.5
215.5
367.4
185.7
5,396.1
2,189.8
7,585.9
715.9
680.3
35.7
479.4
159.9
283.0
36.4
2,103.5
2,632.6
698.3
139.9
19.6
596.1
108.5
4.5
1,065.9
1,653.7
193.6
495.8
334.8
167.2
309.2
153.0
4,606.2
1,738.7
6,389.9
689.0
652.9
36.1
411.5
131.3
240.9
39.2
2,022.6
2,776.5
707.3
149.8
28.0
687.9
117.3
0.0
1,086.2
1,655.5
203.4
479.3
361.1
178.2
273.4
160.2
4,695.1
1,759.5
6,454.6
1,564.9
1,014.2
413.9
0.0
136.8
1,444.9
1,143.4
585.9
557.5
4,153.1
3,045.0
117.6
638.5
128.1
2.6
173.5
94.2
26.3
464.7
203.4
6.9
883.6
305.5
6,137.4
1,060.7
7,198.2
612.7
625.6
4,556.4
3,389.4
128.5
692.3
130.9
3.4
145.7
118.1
37.3
528.3
297.0
1.5
977.3
329.2
6,702.2
1,243.6
7,945.7
493.0
516.1
3,767.7
2,782.5
102.6
575.3
106.0
2.7
121.3
100.3
30.2
436.1
239.4
1.5
801.3
265.9
5,536.6
1,013.6
6,550.2
INDUSTRY SURVEYS
Pickups picking up
US pickup sales gained momentum throughout 2014, and we expect further growth in 2015. The Detroit
Threethe three biggest US automakers, which are based in Detroit, Michiganreported combined yearover-year double-digit sales gains in 2013, mainly due to the rising demand for pickup trucks. Year to date
through October, the Detroit Three reported growth of 5.2%, which can largely be attributed to a 0.6%
drop in Ford sales, a 3.9% sales growth of GM vehicles, and the double-digit growth of Fiat Chrysler
vehicles at 15.3%.
According to WardsAuto, year to date through October, sales of large pickup trucks rose 5.4%, year over
year. Chrysler Group LLC sales of Ram pickup trucks rose 22.9%, while Fords F-series truck sales declined
0.5%, as buyers wait for the 2015 F-150. Sales of GMs Silverado and GMC Sierra climbed 6.4% and
9.0%, respectively. In 2013, sales of large pickup trucks rose 10% on a year-on-year basis. Year to date
through October, truck sales grew 9.8%.
We think that economic growth and steady gasoline prices will support expansion in the highly profitable
light truck segment. Furthermore, new and refreshed pickup truckswhether available or soon-to-be for
saleshould boost overall truck sales, especially when improving construction, housing, and contractor
activities are ongoing.
According to the US Census Bureau, housing starts reached a seasonally adjusted annual rate (SAAR) of
nearly 9,839,000 units in year to date through October, up 9.1% from 9,017,000 in the same period in
2013. As of October, Standard & Poors Economics (which operates separately from S&P Capital IQ)
forecast housing starts to reach 1.02 million in 2014 and 1.28 million in 2015, both up from the 930,000
units in 2013.
Detroit Three market share relatively stable in 2014
According to WardsAuto, US sales in light vehicles reached 13.6 million units year to date through October,
which is a 5.4% increase from the year-ago period. Of these units sold, GM contributed 2.3 million units
with a 3.9% sales increase. Fords sales dropped 0.8% to 2.0 million units, and Fiat Chrysler increased
15.3% to 1.5 million units.
The market share of the Detroit Three in the light truck category is up to 57.7%, year to date through
October, from 57.5% recorded a year ago. The slow market share growth can be attributed to a decline in
GMs and Fords market share, from 21.9% and 21.0% as of October to 20.2% and 18.5%, respectively.
China to remain the worlds largest vehicle market
Sales of new vehicles in China reached a record 21.98 million units in 2013, according to WardsAuto. This
made China the first country to exceed 20 million deliveries in a year. The huge market also overtook the
20-million benchmark in auto production, with 22.12 million units manufactured in 2013. Year to date
through October, Chinas vehicle sales grew 8.1%, reaching 19.2 million sales, according to LMC. China
had a 28.2% share in global vehicle sales as of October, outperforming the US, which had a 17.5% share.
In 2009, China overcame the US decades-long run as sales champ, years earlier than we had expected.
China remains an under-penetrated market and S&P thinks that the country is likely to continue to lead in
the future, given its large population. In our view, this development represents a shift in the center of the
automotive world from Detroit to Asia. We expect more and more automotive trends and technologies to
originate in Asia, as that market grows even larger in size and importance. Asia and other emerging markets
already account for the majority of new vehicle growth. Nevertheless, the US and Europe will remain
important and competitive markets for automotive products.
both revenue and profits over the next few years. In 2013, wholesale volume was up 30% to 935,813
vehicles, while revenue rose 17%, compared with 2012.
Ford is a late entrant in the Chinese market compared with its peers. It primarily concentrates its operations
in the US and Europe and has a small market share in Chinaaround 5%, versus nearly 15% each for
Volkswagen and GM. Ford began producing cars in a Chinese joint venture in 2003, four years after GM and
18 years after Volkswagen (Forbes, March 19, 2014). To make up for its late entry, the company plans to
increase its market share to 6% by 2015 through expanding its production capacity, marketing and
distribution network, and introducing new products.
Global sales forecast
In 2015, the rising prosperity in emerging markets, led by China, is expected to drive global demand
growth, and European demand is expected to rise slightly, partly offset by declines in some emerging
markets. S&P thinks that higher volume in the US and abroad will help increase corporate profit and cash
flow, but this could be partly offset by difficulties coming from intense competition in Europe. Overall, we
expect auto sales to increase in 2015, helped in part by rising wealth, pent-up demand, and the improved
availability of credit.
Europe stabilizing
In the third quarter of 2014, Eurozone gross domestic product (GDP) rose only 1.0%, slightly higher than
the previous quarters 0.9% growth. Europe has pressured GM and Ford in the troubled regions, but we
think the European demand should rise slightly, partly offset by declines in some emerging markets.
According to Ford, the industrys SAAR of vehicles was 14.5 million units in the third quarter of 2014, for
the 20 European markets it tracks.
Ford Europes sales grew 7.8% year to date through September, on a year-on-year basis. The companys
European market share increased to 8.1%, up from 2013. In addition, Fords European operations reported
a pre-tax loss of $619 million, year to date through September, an improvement over the $913 million loss
of a year earlier, and revenues of $22.7 billion, up from $20.3 billion in 2013.
GM Europe reported an operating loss before income taxes of $976 million year to date through September,
versus a $504 million loss in the prior-year period. Overall, GM Europes total net sales and revenue in the
first nine months of 2014 reached $16.8 billion, up 3.5% from $16.3 billion in the same period in 2013.
INDUSTRY SURVEYS
ride control and exhaust systems for original equipment manufacturers (OEMs) and the aftermarket, is
expected to see continued growth in its partnerships with OEMs in North America and Europe. Most of the
companys cost cutting has been aimed at shifting manufacturing overseas. We expect Tennecos revenue to
advance about 9% in 2014 to $8.7 billion and a further 10% increase in 2015.
INDUSTRY SURVEYS
troubled region, but the companies have shown progress, and we see slightly higher volume sales there after
years of declines. Russia and parts of South America still look likely to be challenged areas.
We estimate US light vehicle sales in 2014 rising 5.5% to 16.4 million units, and reaching 16.8 million in
2015. In 2014, we expect gains in most other regions too, including emerging markets led by China, leading
to a global demand growth and slight rise in European demand. However, this is also partly offset by
declines in some emerging markets.
We think higher volume in the US and abroad versus 2013 will help corporate profits and cash flows.
European difficulties, including competitive pressures, should be partly offsetting factors. Positive factors we
see in the US include pent-up demand and widely available access to consumer credit. The average vehicle is
now more than 11 years old, an industry record. We think lower gasoline prices are a positive for sales.
We also think recently lower gasoline prices and economic growth will support expansion in the highly profitable
light truck segment. Also, new and refreshed pickup trucksavailable and soon-to-be for salecombined
with improved construction, as well as housing and contractor activity, should boost overall truck sales.
Luxury vehicle sales in the US, which were also restrained by economic weakness, should show improvement,
in our view, as wealthy consumers become more confident. Luxury sales should be strong in China.
We think GMs and Chryslers respective bankruptcy filings allowed the automakers to shed billions of dollars
in liabilities and lower their operating costs. Overall, we see this makes the companies more cost-competitive
and focused, but they still face competitive challenges. Chrysler has merged with Fiat SpA of Italy.
As for the auto parts and equipment sub-industry, our outlook is also positive, reflecting our expectations
for rising demand and volume in the US and abroad, including China. Many auto parts suppliers are
increasing their revenues generated outside the US. Emerging markets are becoming more attractive to
manufacturers of auto parts due to lower labor costs for manufacturing and engineering and/or due to
growing demand in local and regional markets. Over time, we expect some domestic parts suppliers to
increase penetration of import brands, which are shifting more of their production to the US.
We think the worst has passed for Europe, but it will likely remain relatively weak during 2015. We expect
profits should benefit from higher global vehicle production and higher production in Asia, despite a likely
decline in Japan. Lastly, we expect improved market demand for US automotive replacement parts in 2014
and 2015.
Year to date through November 11, 2014, the S&P Automobile Manufacturers Index was down 10.8%
while the S&P Auto Parts & Equipment Index rose moderately to 1.8%, versus the 9.8% gain for the S&P
1500 Index. In 2013, the Automobile Manufacturers Index and Auto Parts & Equipment Index surged
27.8% and 62.4%, respectively, compared with a 30.1% gain for the S&P 1500.
INDUSTRY SURVEYS
INDUSTRY PROFILE
Competition in overdrive
Based on dollar value, the US is the worlds largest consumer market for light vehicles, a category that
comprises passenger cars and light trucks. According to the National Automobile Dealers Associations
NADA Data 2014, revenues (including sales of new and used vehicles, as well as service and other items)
for dealers in the US
US MOTOR VEHICLE SALES & PRODUCTION
totaled $730 billion in
(In thousands)
2013, up 8.8% from in the
- - - - - - - - - - - - - - - - - - SALES* - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - PRODUCTION - - - - - - - - - - - - - - previous year.
MED. &
TOTAL
MED. &
TOTAL
PASSENGER
LIGHT
CARS
TRUCKS
YEAR
MOTOR
PASSENGER
LIGHT
TRUCKS VEHICLES
HEAVY
CARS
TRUCKS
HEAVY
MOTOR
TRUCKS VEHICLES
2014
6,455
7,188
335
13,977
3,606
6,055
246
9,908
Table
US MOTOR
2013
6,390
6,550
288 B18:
13,228
3,709
5,455
214
9,378
2013
7,586
7,946
352
15,884
6,446
251
11,066
VEHICLE
SALES & 4,369
2012
7,244
7,198
346
14,788
4,109
5,959
268
10,336
PRODUCTION
2011
6,089
6,645
306
13,041
2,978
5,441
243
8,662
2010
5,635
5,919
218
11,772
2,732
4,866
146
7,744
2009
5,401
5,001
200
10,601
2,196
3,382
132
5,710
2008
6,813
6,381
298
13,493
3,731
4,671
225
8,627
2007
7,618
8,471
371
16,460
3,867
6,549
279
10,695
2006
7,821
8,684
545
17,049
4,312
6,431
462
11,205
2005
7,667
9,281
497
17,444
4,266
7,203
422
11,891
2004
7,506
9,361
432
17,299
4,166
7,373
386
11,924
2003
7,610
9,029
328
16,967
4,453
7,319
268
12,040
NOTE: Totals may not add due to rounding. *Total US sales, including foreign models produced both
inside and outside the United States, as w ell as domestic models produced in Canada and Mexico.
Foreign and domestic models produced inside the United States. Data through October.
Source: Ward's Automotive Reports.
- - - - - - - - - - - - - - - OCTOBER - - - - - - - - - - - - - - -
Domestic
Import
TRUCKS
% OF
UNITS
% OF
7,586
49.2
6,390
48.3
5,396
35.0
4,606
34.8
2,190
14.2
1,784
13.5
7,848
50.8
6,838
51.7
Table B12: US RETAIL
7,496
48.6
6,550
49.5
MOTOR
5,165SALES
33.5 OF 4,636
35.0
BY 12.9
2,077VEHICLES,
13.5
1,708
CLASS
254WEIGHT
1.6
207
1.6
167
1.1
138
1.0
119
0.8
98
0.7
48
0.3
40
0.3
185
1.2
151
1.1
UNITS
(THOUS.)
6,455
4,695
1,759
7,522
7,188
5,126
1,851
211
154
109
45
180
% OF
TOTAL
46.2
33.6
12.6
53.8
51.4
36.7
13.2
1.5
1.1
0.8
0.3
1.3
10
INDUSTRY SURVEYS
Participants in the medium- and heavy-duty commercial truck markets include Daimler AG, Freightliner Corp.
(a subsidiary of Daimler that makes Freightliner brand trucks), Volvo Trucks North America Inc., PACCAR
Inc., Navistar International Transportation Corp., and Mack Trucks Inc. (acquired by Volvo in 2001).
TRUCKS
General Motors
1,249 1,045 1,032
17.6
17.2
17.2
2,036
Ford Motor
952
923
781
13.4
15.2
13.1
2,032
Fiat Chrysler
641
546
446
9.1
9.0
7.4
1,868
Total Big Three
2,841 2,514 2,259
40.1
41.4
37.7
5,936
Auto Alliance
117
...
...
1.7
...
...
...
BMW
...
...
...
...
...
...
297
Table
Honda Motor
949
815
811
13.4 B01:
13.4 NORTH
13.5
832
Hyundai
399
348
337
5.6
5.7
5.6
...
AMERICAN
MOTOR
Isuzu
...
...
...
...
...
...
4
VEHICLE
Kia
134
114
122
1.9
1.9
2.0
236
PRODUCTION
Mazda
...
...
77
...
Mercedes
...
...
22
...
...
0.4
186
Mitsubishi
...
...
...
...
...
...
67
Nissan
1,038
884
977
14.7
14.5
16.3
433
Subaru
138
119
128
1.9
2.0
2.1
128
Tesla
...
20
27
...
0.3
0.5
Toyota
815
690
719
11.5
11.4
12.0
945
Volksw agen
652
570
509
9.2
9.4
8.5
...
Others
...
...
...
...
...
...
328
Total transplants 4,243 3,560 3,728
59.9
58.6
62.3
3,458
Grand total
7,084 6,074 5,987
100.0 100.0 100.0
9,394
Note: Totals may not add due to rounding. *Data through October.
Source: Ward's Automotive Reports.
1,726
1,723
1,539
4,987
...
255
708
...
4
203
...
159
57
362
109
1,835
1,742
1,921
5,498
...
295
724
...
5
196
...
160
59
513
113
21.7
21.6
19.9
63.2
...
3.2
8.9
...
0.0
2.5
...
2.0
0.7
4.6
1.4
21.8
21.7
19.4
62.9
...
3.2
8.9
...
0.0
2.6
...
2.0
0.7
4.6
1.4
21.0
19.9
22.0
62.8
...
3.4
8.3
...
0.1
2.2
...
1.8
0.7
5.9
1.3
810
...
278
2,946
7,933
861
...
324
3,250
8,748
10.1
...
3.5
36.8
100.0
10.2
...
3.5
37.1
100.0
9.8
...
3.7
37.2
100.0
INDUSTRY SURVEYS
11
Original equipment manufacturers (OEM). These manufacturers produce parts and components that
automakers use in the assembly of new vehicles. Thousands of OEMs are independent firms; among the
largest independents are Dana Holding Corp., Delphi Automotive PLC, Goodyear Tire & Rubber Co.,
Johnson Controls Inc., Magna International Inc., Superior Industries International Inc., Tenneco Inc., TRW
Automotive Holdings, and Visteon Corp. Other OEMs are subsidiaries of large diversified companies, such
as AlliedSignal Inc., Eaton Corp., General Electric Co., 3M Co., PPG Industries, Textron Inc., and United
Technologies Corp.
Replacement parts manufacturing. Participants in the replacement market, also known as the aftermarket,
produce parts and components to replace or supplement parts that were included in a vehicles original
assembly. Among the fields important players are Meritor Inc., Cooper Tire & Rubber Co., Dana Holding
Corp., and Federal-Mogul Corp. As in the original equipment segment, aftermarket parts suppliers and
distributors may be independent companies or subsidiaries of larger companies. Some firms, like Dana,
participate in both the original equipment and replacement sectors.
Replacement parts distribution. Companies in this category distribute automotive accessories and parts,
such as air filters, light bulbs, and fuses, which replace or supplement original vehicle parts. Sales are
primarily to automotive parts retail stores and fleet owners.
Genuine Parts Co. (GPC) is by far the largest independent distributor of auto parts, and its largest division
is The Automotive Parts Group. The Group operates four Balkamp distribution centers, six Rayloc facilities,
12 Johnson industries facilities, and 58 distribution centers associated with the National Automotive Parts
Association (NAPA), a leading US franchiser of auto/parts accessories stores and distribution centers. GPC
also operates 900 co-owned NAPA auto parts stores, and its major products include access to more than
300,000 items such as heavy-duty parts, farm and marine supplies, and refinishing supplies. The company
serves approximately 5,800 NAPA auto parts stores in the US, according to GPCs 2013 annual report.
Rubber fabricating. Rubber fabricators manufacture the tires, belts, hoses, and other rubber products
used in vehicles. Approximately 60% of rubber production for the auto industry is tire-related.
About half of worldwide tire production is estimated to come from three companies: Compagnie Gnrale
des tablissements Michelin (France), Goodyear Tire & Rubber (US), and Bridgestone/Firestone Inc.
(Japan). Foreign-based tire manufacturers now own a substantial portion of US domestic capacity. Only
two publicly traded US tire companies remain: Cooper and Goodyear.
In January 2014, the Modern Tire Dealer reported that 298 million tires (for both original equipment and
replacement) were shipped in 2013 (latest available), more than the 284 million tires in 2012. Of these
shipments, 245.6 million tires were for replacement, up from 236.3 million tires in 2012. S&P thinks
economic growth should cause industry tire sales to improve in the remainder of 2014 and into 2015,
primarily driven by new vehicle production and better results in 2013 due to an improving global economy.
INDUSTRY TRENDS
In the luxury automobile market trend, new buyers take center stage. According to a report published by
the National Automobile Dealers Association (NADA) in its April 2014 NADA Market Review: Shifting
Luxury Vehicle Preferences, luxury sales, which includes luxury cars and utility vehicles, soared to more
than 62% between 2009 and 2013, and climbed to 12.8% of the total market in 2013. Year to date
through September, luxury car sales increased 5.9%, according to WardsAuto.
NADA also reported that luxury car share went up 0.4 percentage points in 2013 as automakers
successfully competed to attract new buyers entering the market. Among luxury utility vehicles, the
consumer preferences for the crossover utility vehicle (CUV) increased 0.9 percentage points, while the sport
utility vehicles (SUVs) consumer preference points were down 0.3 percentage points. Buyers appear to be
leaning more toward the lower, lighter, and economical CUVs than the roomy, fuel-thirsty SUVs. However,
12
INDUSTRY SURVEYS
according to WardsAuto data, there was a shift to SUVs in the first nine months of 2014sales of luxury
SUVs (16.9%) outperformed luxury CUVs (10.7%), thanks to lower gas prices.
NADAs April 2014 report also highlighted that the luxury compact car segment has retained about 49% of
its perceived valuemore than the luxury midsize and large-car segments. Thus, luxury compact cars,
which cost less than the midsized and large cars, are becoming more popular due to their superior value
retention. In fact, the new lower-luxury cars market share is 5%, substantially higher than the 3% share of
the other luxury car segments. Since retention value for luxury compact cars is high, used cars in this
segment are in high demand. Similarly, the luxury compact utility vehicle and the luxury large SUVs have
retained their value at 60%. Buyers, who are becoming more value conscious, prefer the cost-effective and
better-value luxury CUVs to the more expensive SUVs.
Luxury compact utilities volume was 70,000 in 2013 and this is forecast to climb 51% by 2015, according
to NADA, resulting in lower prices expected for used luxury CUVs in 2014 and 2015. On the other hand,
luxury large SUVs are forecast to increase by only 17% by 2015, which shows declining consumer demand
for these vehicles since 2013. Despite this small rise in supply, prices in this segment are expected to decline,
partly because of steep depreciation curves.
Other industry trends include the increasing prevalence of smaller-sized cars, particularly in the developing
world; improved repayment rates on vehicle loans; rising vehicle rental revenues; and the growing
phenomenon of car sharing.
Exogenous factors are also having an impact on the industry. Higher oil prices, as well as expectations that
any lull in these prices is only temporary, are spurring demand for smaller, more fuel-efficient gasolinepowered vehicles, and encouraging investment in alternative fuel technologies. In addition, efforts to reduce
US energy dependence and the negative impact of fossil fuels are forces driving regulatory demands for
higher fuel efficiency.
Notwithstanding these cost pressures, consumers still want vehicles that are safe and fun. Demand for the
latest technologyincluding entertainment systems and communications devicescontinues to drive
growth in automotive electronics. In addition, demand for safety continues to increase. We note that greater
use of safety equipment has helped reduce vehicle fatality rates in the US.
Economically expanding emerging markets are becoming a key source of growth for todays global auto
industry. Companies in developing markets are looking for opportunities in the US, while US manufacturers
are looking to expand sales and production in other areas. In the US, challenges from import brands mean
that the top US automakers, Detroit ThreeGeneral Motors Co. (GM), Ford Motor Co., and Chrysler
(now Fiat Chrysler Automobiles) have long seen reduced share in their domestic market. At the same time,
growth in global demand means that the US market is accounting for a shrinking share of worldwide industry
volume. For US auto parts companies, automaker demand for larger global suppliers has contributed to
industry consolidation, as has profit margin pressure from rapidly rising costs.
13
14
INDUSTRY SURVEYS
ELECTRONICS IN VEHICLES
There is undoubtedly an increasing use of electronics in vehicles, from power windows to power sockets.
The advancement of technology has allowed automakers to add more features to their vehicles. For
example, starting in June 2014 with Chevrolet Malibu, GM is offering OnStar 4G Long Term Evolution (LTE)
capability over a range of its vehicles. OnStar with 4G LTE brings a built-in Wi-Fi hotspot into and around the
vehicle that can be paired with a laptop, smartphone, videogame console, and other electronic gadgets.
One use of electronics that is particularly worth noting is the development of self-driving cars. Automakers
and technology companies are in a race to introduce the first self-driving car. Interestingly, Google Inc. has
been developing self-driving cars and aims to introduce this technology to the market by 2017. GM also
plans to introduce a self-driving Cadillac model in 2017, according to a Bloomberg article published in
September. Not to be outdone, Huawei Technologies is currently designing self-driving cars that will be
connected to the Internet, which the company expects to be commercially available by 2020.
While the production of self-driving vehicles may be costly, experts at the Los Angeles Auto Show in
November 2014 highlighted that self-driving vehicles may reduce accidents, which together with increased
productivity, would increase cost savings. In November 2013, Morgan Stanley reported that autonomous
cars could contribute $1.3 trillion in annual savings to the US economy, due to reduction in fuel
consumption and accidents, and $507 billion in productivity gains, as people could work while commuting.
15
Based on LMC Automotive data, year to date through September, South Americas sales dropped 13.9%. In
addition, Argentina and Brazil saw a 12.7% sales decline year to date through October.
Overall, LMC data shows that the global industry rose 3.1% year to date through October, thanks to
continuing sales growth in North America; US and Canada rose 5.5% and 5.8%, respectively.
INDUSTRY SURVEYS
that Nissan, Honda, Mazda, and Volkswagen would invest a total of $6 billion in Mexican plants in 2014.
Mexico stands to benefit from its geographical position, lower wages, and free trade agreements (NAFTA),
pushing up its share of production in North America.
INDUSTRY SURVEYS
17
represent a 19% increase compared with 2012 sales. Sixty-five of these groups added at least one dealership
last year, and only 15 of the 125 groups had a reduced net in their rooftop total.
INDUSTRY SURVEYS
in the number of vehicles in service. In 2013, the average monthly revenue per rental unit was down 1% to
$1,048 from the previous year, despite a 5% increase in the average fleet.
Another trend in the vehicle rental market is the rise of car-sharing/hourly rental car companies, versus the
traditional rent-by-the-day or longer services. Car sharing refers to vehicles that are owned by an organization
or firm and shared by several members each day. Alternatively, one can look at it as ande hourly car rental
program. The leader of this trend is Zipcar, the worlds largest car-sharing company, with some 10,000
vehicles and 792,000 members. Zipcar, which went public in April 2011, was purchased by Avis Budget
Group Inc. in March 2013. In July 2013, Avis also acquired Payless Car Rental, which contributed $44
million to its 2013 revenue.
Hertz offers a car-sharing program called Hertz on Demand, (formerly called Connect by Hertz,) and
in Munich, Germany, BMW offers the BMW on Demand program to offer car-sharing options by the
hour to compete with the likes of Zipcar. Frost & Sullivan, a business research and consulting firm, has
projected that by 2016, revenue from car-sharing services could reach $3.3 billion in North America and
$3.2 billion in Europe, up from $253 million and $270 million, respectively, in 2009. In an April 2011
filing with the US Securities and Exchange Commission ahead of its going public, Zipcar said that, based
upon its own study, it believes that the Frost & Sullivan market forecasts are more likely achievable by 2020.
Enterprise Holdings, which owns the Enterprise, Alamo, and National car rental companies, seeks to become a
bigger player in the car-sharing industry. In May 2013, it purchased IGO CarSharing, a nonprofit local carsharing service in Chicago, adding to its existing presence in cities such as New York and Philadelphia.
REGULATORY CROSSCURRENTS
Automakers are often caught between conflicting regulatory requirements and market demands. They must
comply with government regulations regarding safety, fuel consumption, and pollution control, each of which
typically has repercussions on the vehicles performance in other areas. For instance, the most effective way to
improve a cars fuel economy is to lighten its weight; doing so, however, increases its vulnerability in collisions,
making the job of designing a safe vehicle more challenging. Meanwhile, pollution regulations, which are
periodically tightened, require emissions equipment that hurts fuel economy.
Compliance with government rules can also clash with consumer demand. For much of the past decade,
consumers clamored for SUVs and for larger and more powerful engines. These desires have been in direct
conflict with the governments goal of reducing fuel consumption, because large-engine cars and SUVs consume
more fuel than smaller vehicles. The need to satisfy opposing regulatory and consumer demands has generally
driven vehicle costs up, forcing automakers to turn to ever-more complex solutions.
Rear-view mirrors
In February 2008, the Kids Transportation Safety Act of 2007 (KTSA) was enacted. Under the law, the
NHTSA was asked to revise the federal standard to expand the field of view so that drivers can detect
objects directly behind vehicles. In December 2010, the NHTSA issued a Notice of Proposed Rulemaking
(NPRM), requiring all new vehicles, including buses and trucks, weighing under 10,000 pounds to have
backup camera-based systems by September 2014. In March 2014, the NHTSA issued a final rule requiring
this rear visibility technology, which should meet requirements such as image size, linger time, response time
and durability, to reduce injuries and fatalities from backover incidents. Of the 210 fatalities and 15,000
injuries every year due to backover crashes, 31% are children under 5 years old and 76% are adults 70
years old and above.
Large truck standards
In October 2010, the US Environmental Protection Agency (EPA) and the Department of Transportations
NHTSA announced a program to reduce greenhouse gas (GHG) emissions and improve fuel efficiency of
medium- and heavy-duty vehicles, such as the largest pickup trucks and vans, semi-trucks, and all types and
sizes of work trucks and buses in between. These vehicles make up the transportation segments second
largest contributor to oil consumption and GHG emissions.
INDUSTRY SURVEYS
19
The agencies had each proposed complementary standards under their respective authorities covering model
years 20142018, which together would form a comprehensive Heavy-Duty National Program. The EPA
and NHTSA proposed, respectively, carbon dioxide (CO2) emission standards and fuel consumption
standards, tailored to each of three main regulatory categories: combination tractors; heavy-duty pickup
trucks and vans; and vocational vehicles. The EPA is also
proposing standards for air conditioning-related
AVERAGE AGE OF US LIGHT VEHICLES
(In years, for years ending June 30)
emissions of hydrofluorocarbons (HFCs) from pickups,
vans and tractors, as well as nitrous oxide (N2O) and
12
methane (CH4) standards applicable to all heavy-duty
11
engines, pickups, and vans.
10
9
AGING VEHICLES
INDUSTRY SURVEYS
Demand in developing markets, including the BRIC economies (Brazil, Russia, India, and China), has
outstripped that of the worlds mature markets (North America, Europe, and Japan). According to J.D. Power,
developed markets share of global vehicle sales fell to a minority position (49%) in 2011, faster than
previously expected. Developing markets accounted for 51% in 2011, a proportion expected to rise to 58% by
2015. However, due to weakness in Brazil and Russia, the BRIC countries share of global light vehicle sales
was down to 36%in 2012 and 37% in 2013, while the developing markets stand at a 44% market share both
in 2012 and 2013.
21
11
21
10
19
17
15
9
8
7
13
11
5
1982 1986 1990 1994 1998 2002 2006 2010 2014*
Average weeks of income required to buy a new car (left scale)
Passenger car sales (in millions, right scale)
INDUSTRY SURVEYS
insulating themselves from currency fluctuations. During the past decade, foreign companies share of US
production has accelerated as domestic brands share of vehicle sales declined and they closed plants, while
foreign manufacturers gained market share and opened plants. After a decade of relative stability, when
foreign share rose only from 23.5% to 25.0% between 1992 and 2002, non-US share surged to nearly 45%
of production in 2009.
As of 2013, there were six Japanese companies, three German companies, and two Korean companies
operating US plants, as more companies opened US plants in the 2000s. Volkswagen AG opened a plant in
May 2011, after a gap of 25 years. Sales of the Korean brands rose rapidly in the past years. However,
Hyundais market share in the US dropped from 4.9% in 2012 to 4.6% in 2013, while Kias market share
dropped from 3.8% in 2012 to 3.4% in 2013. Meanwhile, Volkswagens share in the US fell from 3.0% in
2012 to 2.6% in 2013. Year to date through October, Kias market share increased 3.6% (from 3.5%),
whereas Hyundai and Volkswagen declined 4.4% (from 4.6%) and 2.2% (from 2.6%), respectively.
23
Reducing the number of labor hours required for the final assembly stage has been a high priority for
automakers. Greater proportions of components are being made at parts facilities and delivered to the
assembly plants on a just-in-time basis. For example, virtually all seating today is produced off-site.
Automakers send daily or even hourly orders for specific seats, which are then produced and delivered.
Years ago, seats were produced at the assembly plant as needed from an inventory of seating parts,
components, and other materials.
Close ties with dealers
Finished vehicles are sold to franchised dealerships, which are independent businesses. Automakers record
these sales (net of expected marketing costs) when the vehicles are shipped to the dealers. They work closely
and share many costs with dealers in developing national, regional, and local marketing plans. On occasion,
they offer discounts to dealers, but usually incentives are offered directly to retail customers. In addition,
automakers financing divisions sometimes offer deals to consumers that may be better than those available
from other sources, such as banks and credit unions. For example, a manufacturers in-house finance unit
might offer consumers 0% financing on auto purchases to stimulate sales of that automakers vehicles.
As independent businesses, dealers assume the risk of reselling the vehicles they buy. Today, dealers are
often well-capitalized firms and may operate multiple franchises in order to protect themselves from sales
swings in individual brands and models. While automakers offer guidance in making marketing and pricing
decisions, dealers are free to set vehicle prices, and they may or may not offer customers the discounts that
automakers provide.
Matching production to inventories
Car dealers usually aim to stock a 60-day supply of vehicles in inventory. When the daily sales rate is rising
dealers increase their inventories so that they will not lose sales due to a lack of supply.
Changes in dealer inventory levels have a ripple effect on auto production. For example, in late 2009, with
low vehicle inventories due to prior production cuts and increased sales stemming from the cash-for-clunkers
program, automakers were raising production and inventories to meet demand. Vehicle production in the
US rose 71% in the first half of 2010 to help fill inventories in anticipation of higher demand.
Role of the Internet on research and sales
The growing use of the Internet has changed the way consumers make their buying decisions. There is no
dearth of research material and reviews available on the Internet, which helps consumers select the best
option that matches their need at the best possible price from a wide range of alternatives. The Internet also
serves best those consumers who find the overall buying experience, such as dealing with a car salesperson,
tedious and are willing to opt for an alternative that can expedite the process.
Several sites are dedicated to consumer auto research, including Edmunds and True Car, which cater to the
growing demand for research for car-buying decisions. These sites provide pricing information, vehicle
inventory availability, comparison tools, discounts, and other information for new and used cars. True Car
facilitates car selling through its dealer network and assures its users of the savings on their purchases. Other
websites, such as consumerautomativeresearch.com, releases reports for extended warranties and repairs.
To respond to this emerging trend, some dealerships have given their salespeople iPads, containing such
useful information ranging from all the details of each vehicle model to comparison information. Other
interactive features in iPads include video demos of the features, which are primarily used to enhance the
customers engagement level in the buying process. In this way, sales personnel have all the information
readily available for consumers and can help reduce the waiting time at dealers stores.
INDUSTRY SURVEYS
General Motors (GM). GMs capital investments peaked in 1985 and 1986, when spending on product
redesign and plant construction and modernization for the two years totaled $22.8 billion. For 1991 through
1994, its average annual global expenditures dipped to about $5.4 billion. By 2001, as the company invested
in new plants and machinery upgrades in the US and Europe, it increased its capital expenditures to $8.1
billion. This increase is even more astounding because it excludes outlays from GMs Hughes Defense
Operations, which was divested, and the Delphi Automotive parts business, which was spun off. (GM sold the
remaining parts of Hughes Electronics in 2003.) In both 2007 and 2008, GMs worldwide capital
expenditures totaled $7.5 billiona commitment that reflected the companys global product programs, as
well as its power train (engines and transmissions) and tooling requirements. This total, while substantial, is
still lower than the mid-1980s peak, both in absolute dollars and as a percentage of sales. For 2013, GM spent
$9.8 billion. Year to date through October, GMs capital expenditure reached $5.1 billion, down from $5.8
billion in the year-ago period. S&P Capital IQ (S&P) expects GM to spend $7.3 billion in 2014including
$1.1 billion for restructuring expenses and $1.3 billion for recallsand $7.8 billion in 2015.
Ford. Up from an average of $3.5 billion in the early to mid-1980s, Fords annual capital expenditures
generally exceeded $7 billion worldwide during the early part of the last decade, as the company spent
heavily to update its vehicles and power trains. Outlays subsequently declined, however, totaling $6.5
billion in 2008, $4.5 billion in 2009, and $3.9 billion in 2010. In 2012, expenditures went up to $5.5
billion and in 2013, capital spending was $6.6 billion. Year to date through September, Fords capital
expenditure stood at $5.3 billion, up from $4.7 billion in the year-ago period. This capital spending was
intended to support the companys product development, growth, restructuring, and infrastructure
investments. We expect a rebound to about $7.2 billion in 2014 and $7.5 billion in 2015.
Toyota. Although Toyota is not a Detroit Three member, it is the largest vehicle seller and manufacturer
in the world. In addition, it has a growing sales and production presence in the US. For the fiscal year ended
March 31, 2014, the company had worldwide automotive capital outlays of 2.7 trillion ($26.2 billion),
from 854 billion spent in the fiscal year ended March 31, 2013 ($8 billion). We project capital expenditure
of about 1.0 trillion (about $8.6 billion at December exchange rates) for the fiscal year ending March 31,
2015, rising in the next fiscal year to nearly 1.3 trillion ($10.5 billion).
3D PRINTING
3D printing, also known as additive manufacturing, uses a 3D printer to make a three-dimensional solid
object from computer-aided design (CAD) or animation modeling software. 3D printing makes use of the
additive process whereby material is added layer by layer to create objects of any shape. Anyone with access
to a 3D printer and the design file (software) can create virtually any object in a matter of minutes. This
technology has already made inroads in the automobile sector for developing prototypes, thereby reducing
lead times, costs, and even eliminating the need for certain tools.
With 3D printing, manufacturers are able to create scale models for testing new designs before they are
mass-produced. In October 2013, Stratasys Ltd., a manufacturer of 3D printers, announced that Robert
Seuffer, GmbH & Co. KG, a German supplier of auto parts, had incorporated Stratasys 3D printing in its
manufacturing process and, as a result, had reduced the time needed to produce injection-molded samples
by 97% and related costs by 98%.
25
performances in the early 1990s, the Detroit Three took extensive actions to improve their designs and
streamline their manufacturing processes. As a result, product quality and design are becoming less of an
issue in differentiating foreign and domestic manufacturers.
The selling process
The battle for sales takes place mainly on the dealership floor, where price and service are the primary
weapons. Although price competition is generally intense, dealers have flexibility to raise or lower prices in
response to consumer interest in a given vehicle model. Today, many products sell within a tight price
range. In such a market, dealers are differentiated by their customer service. Service quality must be honed
day in and day out; any gains in this area can only be achieved over a long period. Any advantage can
quickly be lost if poor service generates unfavorable publicity.
Pricing factors
Several factors can force retail auto prices to rise. Over time, consumers come to expect as standard
equipment features once offered as optional. New safety or emissions-control items may be required to
comply with government regulations. Prices may also rise as consumer demand for a model increases.
Competitive pressures can result in lower prices. Lower automobile prices, however, can be supported
through higher unit production volume, cost savings on parts and labor, and improved manufacturing
efficiencies. When costs are reduced through innovation, savings can be shared between manufacturer,
supplier and consumer; therefore, profits can still rise. However, when prices are reduced solely to stimulate
demand and there are no offsetting cost savings, profitability often declines.
When sales lag, automakers use numerous tactics to stimulate demand, including discounts and cash
rebates. Dealers canand often dogive their own discounts in addition to those offered by manufacturers.
An auto companys captive finance subsidiary can spur sales by offering car buyers financing at lower
interest rates than those available elsewhere. Alternatively, manufacturers may eliminate options on a
particular model to offer buyers a low-priced alternative.
Costs for rebates and other marketing tactics, such as cash back, discounted financing, and employeediscount-for-all-buyers, rose since the end of 1996 through 2008. This trend, however, has flattened and has
even declined.
Demand factors
The economic environment naturally affects demand for automobiles. Cars are a major purchase for most
families, and consumers need to feel comfortable before they spend so much of their hard-earned money.
During periods of sustained economic growth and plentiful employment, sales typically rise as customers
feel flush and confident enough to buy new vehicles. Conversely, when the economy weakens and jobs are
hard to come by, consumers are more likely to delay the purchase of new vehicles.
Other factors affecting new-car sales include cost of ownership to drive, changes in style, engineering,
safety, and quality (which hasten the obsolescence of existing models), and the cost and availability of
gasoline and insurance. Safety has captured vehicle buyers attention and has become a pervasive theme in
automakers ad campaigns. In response to consumer demand for safer vehicles, automakers have made wide
use of components such as airbags and antilock brake systems.
INDUSTRY SURVEYS
A dependent relationship
Parts suppliers are an important part of the vehicle manufacturing process. Automakers such as GM and
Ford design and market vehicles, but they outsource production of the vehicle parts to relatively large parts
manufacturers called Tier 1 (T1) suppliers. T1 suppliers, in turn, subcontract production of some parts
among thousands of smaller manufacturers called Tier 2 (T2) and Tier 3 (T3) suppliers. If T2 and T3
suppliers run into financial difficulties, they can create costly problems for the automobile and T1 parts
makers by interrupting the production of vehicles. Therefore, when suppliers farther down the supply chain
have financial or manufacturing difficulties, carmakers and T1 suppliers may help in order to maintain
timely parts production.
The cost of supplier distress can absorb more than just cash; it also can demand management time and
attention. In addition to providing loans and making higher than contractually required payments for parts,
some T1 companies, such as Delphi Automotive LLP, have committed staff to help the smaller companies
with purchasing and manufacturing.
Original and replacement parts
Original parts suppliers (OES) and replacement parts makers alike tend to specialize in items that require a
high degree of skill and efficiency to manufacture. Their ability to spread outlays for research, product
development, and tools and dies over several contracts gives them an important cost advantage over
automakers parts divisions. In addition, new equipment and aftermarket parts suppliers are less likely to be
unionized and are thus more likely to have lower labor costs than auto manufacturers that run unionized
plants. While they are similar in some respects, original equipment suppliers and replacement parts makers
diverge in others, as outlined below. Original equipment suppliers often also supply replacement parts, as
they already have the production lines for the parts.
Original equipment sales. For original parts makers, equipment sales depend on the number, size, and
complexity of cars and trucks produced in a given year. Another variable is the percentage of any given part
that automakers produce captively.
The equipment made by new parts supplies usually is sold directly to auto manufacturers. However, some
of it is distributed as replacement parts to the aftermarket, which comprises new-car dealers, a few major
parts distributors, thousands of smaller jobbers, and other local firms.
For many large manufacturers of auto parts, the backbone of the business is original equipment sales. The
US markets trend line allows OES to leverage their expertise across models and customers and into the
aftermarket. Original equipment is a cyclical business, however, and changes in the economic environment
can cause sales to fluctuate considerably from year to year. The sales volume increase we forecast for 2014
(to about 16.4 million units) should show operating leverage working for manufacturers as production rises.
Replacement parts sales. Sales of replacement parts have traditionally been more stable than original
equipment sales, because the number of cars on the road, especially older models, had been in a generally
long-term uptrend. Variables affecting replacement part demand include the quality of original equipment
(longer-lasting, higher-quality equipment reduces demand for replacement parts) and the number and age of
cars on the road. Replacement parts are distributed to the aftermarket via car dealers, gas stations, parts
distributors, small jobbers, and other local firms. Although this increases opportunities for aftermarket
vendors, unit sales of replacement parts have declined, largely because of the improved quality of the
original equipment.
The integral role of the OES in auto production
In the past, OES sold their products to vehicle manufacturers largely by signing annual contracts that
covered one model year. The contracts were generally elastic with respect to price and volume deliveries.
Today, however, manufacturers normally award contracts for the life of a vehicle model, provided the
supplier agrees to specific targets for productivity increases that offset price inflation for the manufacturer
and can also lower per-unit prices. Automakers share with suppliers part of the savings that they help to
achieve, in order to encourage and reward their loyalty to corporate goals.
INDUSTRY SURVEYS
27
Original equipment parts suppliers thus play a large role in production programs and bear greater
responsibility for the programs outcomes. While automakers give parts makers specific goals for cost,
quality, performance, timing, and product features, they leave them to their own devices to find the
appropriate solutions. Given just-in-time inventory pressures, suppliers often locate their facilities near the
automakers production sites or risk losing business. Companies that meet the automakers needs can expect
to receive long-term contracts and expand their businesses.
Parts makers help automakers by enabling them to accelerate the introduction of new-car lines, by sharing
the high cost of developing new models, and by adding new technology, such as Sync by Microsoft Corp. (a
hands-free in-vehicle communications and entertainment system) for Ford vehicles. Microsoft, of course, is
not your traditional auto parts suppliers, but the logic still works for traditional suppliers that are able to
help automakers with developing technology. In addition, key suppliers are now involved in the earlier
design phases of new products or processes, helping to reduce component costs.
INDUSTRY SURVEYS
weakness, but aided by the cash-for-clunkers program, the August 2009 SAAR surged to 14.1 million (the
sales pace eased in September 2009, however). In October 2014, the sales pace was 16.4 million units
(SAAR), which was the seventh month in 2014 in which sales fell within the 16.016.9 million range.
Monthly sales reports. Companies typically report their unadjusted (and sometimes adjusted) monthly
vehicle sales volumes one to three days after the end of each month. These data give the analyst a good
sense of how individual companies are performing and are the timeliest indicators of overall industry sales
trends. Comparing one companys report with those of other companies provides a snapshot of whats hot
and whats not, and whos gaining share and whos losing it. These numbers, though interesting, have their
limits. Individual monthly sales reports, seen in isolation and without seasonal adjustments, may not give a
full picture of what is occurring in the industry. However, each months numbers can be compared with
year-earlier levels and with preceding months to get a broader view of industry trends.
Detailed monthly sales reports, broken down by brand, are available from Wards Automotive Reports (see
this Surveys Industry References section). In addition, monthly sales by company are usually available in
The Wall Street Journal.
Days supply of inventory. This statistic is calculated by dividing the number of units in inventory
(including those in transit) by average daily sales to determine how long sales can continue out of present
stock. It can be calculated for a single model, a particular automaker, or the entire industry. US automakers
often disclose inventory data; some may also calculate days supply. Analysts and other observers take the
individual company data and
VEHICLE SCRAPPAGE
perform industry-wide analyses.
(In thousands of vehicles, except as noted)
TOTAL
VEHICLES
NEW
REGIS-
SCRAPPAGE
SCRAPPAGE AS % OF
AS % OF NEW - - ALL VEHICLES IN USE - - - -
Scrap rates. This eagerly awaited statistic, released annually in April, records the number of vehicles
scrapped or sent to a junkyard in a 12-month period (July 1 to June 30). An increase in scrapped vehicles is
generally believed to precede a rise in demand for motor vehicles. The number of vehicles scrapped in 2013
was significantly less than in previous years with just over 11.5 million vehicles scrapped during a 12-month
period analyzed by IHS Automotive, while a record 14 million vehicles were scrapped in 2012.
Consumer confidence. One of the most widely followed consumer confidence surveys is conducted by the
Conference Board, a private research organization that polls 5,000 representative US households to gauge
consumer sentiment. This qualitative measure of consumer attitudes is expressed as an index, with 1985 used
as a base year (1985=100). The index is compiled from monthly surveys that tally responses to a series of
questions. It has two components: the present situation index, which measures consumers feelings about
their current economic situation, and the expectations index, which tracks their feelings about the future.
INDUSTRY SURVEYS
29
A high level of consumer confidence generally signals that people feel good about the economy, their job
prospects, and their future earnings ability. Rising index levels indicate that consumers expect further
economic growth in the months ahead, which generally bodes well for automotive sales. Conversely, when
people feel concerned about their jobs, the economy, or their cost of living, their confidence level declines.
In October 2014, the Conference Boards index stood at 93.4, up from 89.0 in the previous month, still well
below the 95.6 reported in October 2007; the record low of 25.3 was reached in February 2009. According
to the Conference Board, Consumer confidence deteriorated considerably as the federal government
shutdown and debt-ceiling crisis took a particularly large toll on consumers expectations.
INDUSTRY SURVEYS
Production is strongest from February through June. It slows in July and August, when shutdowns for
annual model changeovers coincide with workers summer vacations. December is also a weak month for
production, as holiday vacation shutdowns usually last one or two weeks. These two vacation periods are
also a popular time for automakers to rebalance their inventories: shutdowns are frequently extended on a
plant-by-plant basis to correct excessive inventories for any particular models.
The cyclical pattern is evident in long-term sales trends. In the past two decades, annual US vehicle sales
have ranged from a low of 12.5 million units in 1991 to a record 17.8 million units in 2000 and back down
to 10.4 million in 2009. Such wide divergences in annual sales have occurred repeatedly over the past four
decades. We now expect several years of increases, after the recent lows.
Model changeovers
The analyst should examine an automakers plans for model changeovers. Annual model changes do not
usually cause severe disruptions in automakers operations, because a two- to four-week changeover period
is normally scheduled during the summer. However, a major model redesign, which puts billions of dollars
in expenditures at stake, can severely disrupt production, sales, and liquidity.
Major changeovers frequently require extensive plant renovations and slow start-ups as equipment is proven
and debugged. Significant glitches often occur in new equipment or production processes. These problems
may slow the start-up and saddle an automaker with low production levels for an extended period. Such
events can have a severe impact on the automakers cash flow, and seriously distort its balance sheet and
income statements for several quarters.
Qualitative factors regarding model changeovers must be taken into account. An analyst should attempt to
gauge the prospects of new or modified products. Are the features and styling attractive to consumers? Is
the price perceived to be a good value? What sales volume and margins are expected for the vehicle? Is the
product in a moneymaking segmenta profitable truck or SUVor is it a money-losing sedan? Is the
segment growing or shrinking? If the answers are favorable, then the company may have a hit on its hands.
31
shipments, or it may be selling more of its cheaper models. A sharp rise in revenues per vehicle could
indicate that an automaker has seen a shift in production volume to models that are more expensive.
Financing revenues. Automakers receive revenues from the dealer inventories and retail customer sales
that they finance. In addition to generating revenues, financing is an important sales tool: automakers use
their financing divisions to support various marketing initiatives. These include encouraging dealers to keep
larger inventories on hand (by offering a favorable interest rate on inventory purchases) and subsidizing
customers vehicle purchases (via rebates, below-market interest rates, and the like). US automakers also
generate revenues by offering a variety of services, including insurance and extended service contracts.
An automakers financing revenues may rise or fall with the general level of interest rates without
dramatically affecting income from financing operations. This is because the automaker earns a markup on
the interest it pays to borrow funds. Auto loans are usually made for a period of 24 to 48 months.
Automakers attempt to match their borrowings with loan maturities to minimize their exposure to interest
rate fluctuations. The low interest rates of the past several years aided finance operations.
Gross margins
Gross margins in the automobile industry fluctuate greatly with production volume because many of the
costs related to vehicle production are fixed. Even labor costs had become largely fixed because of union
contracts, which restricted layoffs or required automakers to pay certain laid-off workers benefits worth up
to 95% of their take-home pay. This policy has changed, largely due to the industrys latest financial crisis
and government intervention.
Therefore, automakers must sustain relatively high production levels to break even. Once the break-even
point has been passed and fixed costs are spread over more units, however, the automaker can earn
substantial profits. For each additional unit of production beyond the break-even point, variable profit for
high-end vehicles can exceed $10,000 per unit.
Even so, it is rare for an automakers gross margin to exceed 25% of its revenues. By the time the company
has deducted marketing, selling, general, and administrative costs, its average return on sales (i.e., net
income from operations as a percentage of revenues) may be as little as 5% over the automotive cycle,
which may run more than four years. Over the past two decades, US automakers return on sales has often
been even lower due to strenuous competition.
Marketing costs
Marketing costs tend to rise and fall with the underlying level of demand for motor vehicles. Normally,
automakers devote about 10% of sales revenue to marketing costs (which may include financial incentives).
When attempting to stimulate demand, however, they may spend 14% or more. Nevertheless, when it is
clear that demand is declining severely due to recession, automakers may have to face reality and curtail
advertising and marketing expenditures.
INDUSTRY SURVEYS
VALUATION MEASURES
Valuation measures are used to determine how much a company or its stock is worth. A common
measurement is a multiple of projected earnings. Keep in mind that valuations depend on various factors,
including overall investor sentiment, industry conditions, the level of interest rates, and the extent to which
future earnings seem predictable. As is the case with other measures, valuations of a particular company
should be compared with those of similar companies in the same industry.
Price/earnings (P/E) ratio. When valuing a companys stock, a good place to start is the basic investment
ratio of stock price to earnings per share, called the price/earnings ratio. This ratio (or multiple) is useful in
judging a companys performance relative to firms in the same industry, as well as in other industries.
Historically, automotive P/Es expanded during recessions or times of economic weakness that would lead to
lower profits. During flusher times, P/E ratios will often contract. The reason for this counterintuitive action
reflects the cyclical nature of the industry: when profits are rising, the multiple contracts in anticipation of
the inevitable decrease in profits; when profits are falling, the multiple increases.
Price/sales. At times, companies may not have forward earnings to apply P/E multiples to. In such cases,
other metrics might come into play, such as price to cash flow or enterprise value to EBITDA ratios. However,
in extreme circumstances (such as seen in 2009), these numbers many not be meaningful, and the analyst has
to rely on price-to-sales ratios or discounting to future years expected profits.
INDUSTRY SURVEYS
33
GLOSSARY
AccessoriesComfort, convenience, and safety products not essential to the performance of a vehicle, such as audio, security
products, floor mats, and covers.
AftermarketReplacement or add-on purchases for a product after its original sale. The automotive aftermarket includes
replacement parts, accessories, lubricants, fuel, appearance products, and repairs.
AxleA shaft on which the wheels revolve.
Block exemptionA network of distribution agreements that makes penetration of the market difficult for other players is
forbidden under European antitrust law, unless the industry is granted what is referred to as a block exemption. The exemption is
a set of provisions designed by the European Commission establishing competitive procedures for an industry that does not meet
antitrust standards. The auto industry has a block exemption, which was recently revised.
Captive importCar or truck made overseas with a domestic nameplate.
CFCsChlorofluorocarbons; used in motor vehicle air conditioning units.
ChangeoverThe task of assigning a production machine to perform a different operation, such as changing a press tool or jig,
but could also mean changing the color of paint in a paint plant or loading a new part program into a lathe.
Diesel engineAn internal combustion engine that uses diesel oil for fuel. Rather than using a traditional ignition system, it
functions by injecting diesel oil into the cylinders when the piston has compressed the air to make it hot enough to ignite the
diesel fuel without a spark.
DrivelineAll the individual components beyond the engine up to the wheels, including the clutch and drive shaft, but not the
engine or transmission.
Fuel injectionUsing pressure to deliver fuel into an engines combustion chamber.
General service partsSpark plugs and electrical parts (tune-up kits, wiring, switches); filters (oil, air, and gas); batteries;
belts and hoses; engine accessories (speed control, carburetors, oil and water pumps, alternators).
Gross vehicle weight (GVW)The weight of a vehicle, including passengers, options, and all cargo.
Heavy partsChassis (shock absorbers, mufflers and exhaust system products, struts); drive train (U-joints, transmission parts,
clutches); brake parts (brake pads, rotors, discs); crash parts (body repair kits, fenders and bumpers, fiberglass panels, glass).
High performanceProducts that enhance the speed and handling of a motor vehicle.
HybridA vehicle utilizing two distinct but interdependent forms of propulsion, usually a gasoline engine coupled with an
electric motor.
Just-in-sequenceA further refinement of just-in-time, in which parts are delivered not only at the right time and in the right
quantity, but are synchronized to the customers schedules so that they match the customers own product flow, completely
eliminating stock held next to the assembly track. Just-in-sequence delivery requires effective systems for sharing information
between customer and supplier, and a high degree of integration between the two operations.
Just-in-time (JIT)A system based on frequent, small deliveries of parts to maintain minimum on-site inventory.
New DomesticsA reference to foreign-owned automakers with manufacturing plants in North America, typically referring to
Asia-based companies.
PlatformMechanical underpinnings of a vehicle.
34
INDUSTRY SURVEYS
PowertrainAn engine and transmission combination, which sometimes includes the drive shaft and drive axle.
Six SigmaA process improvement methodology based on statistical analysis of the production process. Sigma is the symbol
for standard deviation (SD) and Six Sigma refers to the condition where control limits are at least six standard deviations apart
(i.e., plus or minus three SD from the mean). This equates to a 3.4 parts-per-million defect rate. Six Sigma philosophy focuses on
a quantitative analysis of defects and identification of the opportunity for defects to occur, in processes as well as products.
Specialty repairEstablishment specializing in one facet of automotive repair (i.e., transmission, ignition, exhaust). The
outlets specialty accounts for more than 50% of total sales receipts.
StampingA sheet-metal part created by pressing rolled sheet metal between metal dies.
Tier 1 (T1) suppliersAutomotive parts manufacturers that supply final equipment directly to automakers (OEMs or original
equipment manufacturers). Increasingly, Tier 1 suppliers are becoming systems integrators or producers of major
subassemblies and modular components that can be installed into a vehicle as a unit, such as a complete chassis.
Tier 2 (T2) suppliersManufacturers that produce components for Tier 1 suppliers.
Tier 3 (T3) suppliersManufacturers that supply raw materials used in the production of components.
Tire dealerAn automotive store that generates at least 50% of its sales from tires.
TransplantCar or truck with a foreign nameplate made within a country where it will be distributed.
Truck weightsLight trucks are less than 10,000 pounds gross vehicle weight (GVW). Medium-duty trucks weigh 10,000 to
33,000 pounds. Heavy-duty trucks exceed 33,000 pounds.
TurbochargingA way to generate increased power and lower emissions by sending exhaust gases through a turbine, which
drives a pump, forcing more air into the engine cylinders.
Upside down tradeThis occurs when what a buyer owes on a trade-in vehicle exceeds its current value.
INDUSTRY SURVEYS
35
INDUSTRY REFERENCES
PERIODICALS
Automotive Industries
http://www.ai-online.com
Monthly; covers the automotive industry, targeting those in
automotive engineering, design, manufacturing, and
purchasing.
Automotive News
http://www.autonews.com
Weekly; covers the automotive industry.
Car and Driver
http://www.caranddriver.com
Monthly; covers the auto industry from an
enthusiast/consumer angle.
Motor Trend
http://www.motortrend.com
Monthly; covers the auto industry from an
enthusiast/consumer angle.
Rubber World
http://www.rubberworld.com
Monthly; covers the tire and rubber industry.
Wards Automotive Reports
Wards AutoWorld
Wards Automotive Yearbook
http://wardsauto.com
Weekly, monthly, and annual publications, respectively,
that provide information on the auto industry; the weekly
includes the latest production and sales statistics.
TRADE ORGANIZATIONS
The Alliance of Automobile Manufacturers
http://www.autoalliance.org
Trade association comprising twelve car and light truck
manufacturers; advocates for the auto industry on public
policy matters.
36
INDUSTRY SURVEYS
Com pany
Yr. End
2013
2012
AUTOMOBILE MANUFACTURERS
F
[] FORD MOTOR CO
GM
[] GENERAL MOTORS CO
THO
THOR INDUSTRIES INC
WGO
WINNEBAGO INDUSTRIES
DEC 146,917.0
134,252.0
DEC 155,427.0
152,256.0
JUL
3,241.8 A,C
3,084.7
AUG
803.2
581.7
DEC
DEC
DEC
DEC
DEC
7,436.6
16,463.0
664.5 A
1,015.6
1,171.9 A
JCI
SMP
SUP
SEP
DEC
DEC
MOTORCYCLE MANUFACTURERS
HOG
[] HARLEY-DAVIDSON INC
DEC
DEC
2011
2010
128,954.0
135,592.0 A
2,276.6
449.5
7,183.2
15,519.0
570.4 D
901.1 A
1,099.6
7,114.7 A
16,041.0
529.3
681.2 A
1,023.8
5,652.8 A
13,817.0
455.7
572.8 A
816.3
3,962
11,755 A,C
377
398 A
545
5,264
18,060
342
511 A
624
42,730.0
983.7 A
789.6
41,955.0
948.9 A
821.5
40,833.0
874.6 A
822.2
34,305.0
810.9
719.5
28,497
735
419
38,062
775
755
5,899.9 F
5,580.5 F
5,311.7 F
19,540.0
20,992.0
22,767.0
4,859.3 F
18,832.0
2,375.4
13,013.9 A
104,906.0
30,837.0 A
102,268.2
2,212.8
1,893.2
12,458.9 A
11,207.6 A
96,445.8
107,985.3
28,748.0 A,C 24,102.0 A
114,173.4
106,006.4
TEN
TM
7,363.0
234,327.0
7,205.0
225,502.0
DEC
7,964.0
# MAR 249,484.0
5,937.0
229,503.0
118,308
104,589
1,522
212
2008
136,264.0
150,276.0
2,755.5 A
496.4
CAGR (%)
2009
4,782 D,F
16,301
1,923 A
10,058 A
91,854
17,367 A
80,485
4,649
202,901
146,277
148,979
2,641
604
5,971 F
19,488
2,089
11,015 A
100,971
23,704 A
85,093
5,916 A
208,995
2003
164,196
182,005
1,571
845
2012
2011
2010
2009
(1)
(2)
8
(1)
0
1
4
6
9
2
5
38
89
85
206
95
82
84
196
69
83
83
175
59
79
74
145
53
72
57
97
25
3,069
28,096
222
353 A
469
9
(5)
12
11
10
7
(2)
14
15
13
4
6
16
13
7
242
59
299
288
250
234
55
257
255
234
232
57
238
193
218
184
49
205
162
174
129
42
170
113
116
22,646
679 A
840
7
4
(1)
2
5
1
2
4
(4)
189
145
94
185
140
98
180
129
98
151
119
86
126
108
50
4,904 F
(0)
120
114
108
99
98
15,119 C
(7)
129
139
151
125
108
1,464
8,449
78,351
15,345 A,C
70,087
5
5
4
9
4
3
5
3
8
4
4
8
10
13
(0)
168
167
147
227
145
162
154
134
201
146
151
147
123
187
163
129
133
138
157
151
131
119
117
113
115
8
4
6
4
8
6
211
152
196
143
191
138
158
140
123
124
3,766
163,637
D
D,F
A
D
2013
Note: Data as originally reported. CAGR-Compound annual grow th rate. S&P 1500 index group. []Company included in the S&P 500. Company included in the S&P MidCap 400. Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
**Not calculated; data for base year or end year not available. A - This year's data reflect an acquisition or merger. B - This year's data reflect a major merger resulting in the formation of a new company. C - This year's data reflect an accounting change.
D - Data exclude discontinued operations. E - Includes excise taxes. F - Includes other (nonoperating) income. G - Includes sale of leased depts. H - Some or all data are not available, due to a fiscal year change.
INDUSTRY SURVEYS
37
Net Income
Million $
Ticker
Com pany
Yr. End
2013
2012
2011
2010
CAGR (%)
2009
2008
2003
10-Yr.
5-Yr.
1-Yr.
2013
2012
2011
2010
2009
22.8
6.4
6.8
(4.1)
NM
NM
10.3
62.9
26.3
(13.6)
24.6
(28.9)
777
187
193
66
615
216
155
92
2,195
321
135
24
712
216
140
21
294
3,663
22
(162)
174.9
(56.0)
13.3
19.4
106.8
13.6
NM
19.9
10.0
7.6
NM
(16.9)
35.7
33.8
29.1
24.6
12.5
23.4
34.2
32.2
357
NM
616
259
209
286
NM
499
193
158
315
NM
400
155
154
216
NM
347
145
129
15
NM
199
(124)
61
(49)
2,637
(128)
AUTOMOBILE MANUFACTURERS
F
[] FORD MOTOR CO
GM
[] GENERAL MOTORS CO
THO
THOR INDUSTRIES INC
WGO WINNEBAGO INDUSTRIES
DEC
DEC
JUL
AUG
7,155.0
5,346.0
151.7
32.0
5,665.0
6,188.0
121.7
45.0
20,213.0
9,190.0
106.3
11.8
6,561.0
6,172.0
110.1
10.2
2,712.0
104,821.0
17.1
(78.8)
(14,681.0)
(30,860.0)
92.7
2.8
DEC
DEC
DEC
DEC
DEC
624.3
1,212.0
81.9
50.1
222.9
500.9
1,077.0
66.4
37.3
168.6
550.1
1,145.0
53.3
30.1
164.7
377.4
631.0
46.1
28.0
137.7
27.0
9,344.0
26.5
(24.1)
64.6
(35.6)
3,056.0
17.8
11.7
62.1
JCI
SMP
SUP
SEP
DEC
DEC
1,178.0
53.0
22.8
1,226.0
43.0
30.9
1,624.0
64.3
67.2
1,491.0
24.7
51.6
(338.0)
5.9
(94.1)
979.0
(21.1)
(26.1)
682.9
0.2
73.7
5.6
NM
(11.1)
3.8
NM
NM
(3.9)
23.4
(26.1)
172
NM
31
180
NM
42
238
NM
91
218
NM
70
MOTORCYCLE MANUFACTURERS
HOG
[] HARLEY-DAVIDSON INC
DEC
734.0
623.9
548.1
259.7
70.6
654.7
760.9
(0.4)
2.3
17.6
96
82
72
34
DEC
629.0
212.0
343.0
(216.0)
(375.0)
(77.0)
(802.1)
NM
NM
196.7
NM
NM
NM
NM
NM
96.8
565.1
2,566.2
1,018.0
4,143.1
65.9
475.5
6,453.5
973.0
3,857.2
42.3
399.6
2,873.7
(493.0)
453.9
95.5
475.4
1,381.8
71.0
(2,357.1)
19.8
353.6
4,457.1
589.0
4,751.6
19.5
6.8
2.3
10.2
(2.3)
4.4
7.6
32.2
85.5
NM
8.6
5.7
43.0
8.9
3.9
596
194
125
265
80
549
183
87
243
77
488
160
58
173
87
332
134
145
165
81
213
113
64
(84)
10
TEN
TM
157.0
3,441.0
39.0
4,932.0
(73.0)
2,243.0
(415.0)
(4,448.0)
27.0
10,995.0
21.1
4.9
(33.5)
73.3
678
161
1,019
93
581
31
144
45
(270)
20
TENNECO INC
TOYOTA MOTOR CORP -ADR
DEC
# MAR
183.0
17,704.0
275.0
10,218.0
921.0
2,862.0
78.6
48.7
NM
NM
Note: Data as originally reported. CAGR-Compound annual grow th rate. S&P 1500 index group. []Company included in the S&P 500. Company included in the S&P MidCap 400. Company included in the S&P SmallCap 600.
#Of the follow ing calendar year. **Not calculated; data for base year or end year not available.
38
INDUSTRY SURVEYS
Com pany
Yr. End
2013
2012
2011
2010
2009
2013
2012
2011
2010
2009
2013
2012
2011
2010
2009
AUTOMOBILE MANUFACTURERS
F
[] FORD MOTOR CO
GM
[] GENERAL MOTORS CO
THO
THOR INDUSTRIES INC
WGO WINNEBAGO INDUSTRIES
DEC
DEC
JUL
AUG
4.9
3.4
4.7
4.0
4.2
4.1
3.9
7.7
14.8
6.1
3.9
2.4
5.1
4.6
4.8
2.3
2.3
100.2
1.1
NM
3.6
2.4
11.8
10.7
3.1
3.6
10.0
17.1
11.8
5.9
9.8
5.1
3.6
3.4
11.5
4.6
1.3
92.1
1.8
NM
33.8
11.5
17.4
20.3
36.6
19.9
14.4
35.5
281.6
31.1
14.2
11.5
NA
19.8
16.2
10.8
NA
NA
2.4
NM
DEC
DEC
DEC
DEC
DEC
8.4
7.4
12.3
4.9
19.0
7.0
6.9
11.6
4.1
15.3
7.7
7.1
10.1
4.4
16.1
6.7
4.6
10.1
4.9
16.9
0.7
79.5
7.0
NM
11.9
9.4
11.4
17.5
12.1
14.7
8.1
11.2
17.0
10.3
13.8
9.6
11.3
15.2
9.1
15.1
7.3
5.9
15.9
9.4
15.1
0.6
90.7
10.6
NM
8.2
18.8
46.1
21.9
16.8
18.2
18.3
53.4
20.4
13.3
15.7
23.7
31.2
18.4
11.5
17.1
17.0
11.9
19.3
11.5
16.9
1.3
NA
13.1
NM
9.0
JCI
SMP
SUP
SEP
DEC
DEC
2.8
5.4
2.9
2.9
4.5
3.8
4.0
7.4
8.2
4.3
3.0
7.2
NM
0.8
NM
3.8
8.9
3.6
4.0
7.6
5.2
5.9
12.3
11.5
6.0
5.1
9.3
NM
1.1
NM
9.9
16.1
4.8
10.9
14.8
6.7
15.4
26.7
15.4
15.5
12.2
13.1
NM
3.3
NM
MOTORCYCLE MANUFACTURERS
HOG
[] HARLEY-DAVIDSON INC
DEC
12.4
11.2
10.3
5.3
1.5
7.9
6.6
5.7
2.8
0.8
26.4
25.1
23.7
12.0
3.3
DEC
3.2
1.0
1.5
NM
NM
3.5
1.1
1.9
NM
NM
123.0
307.6
71.9
NM
NM
4.6
5.0
3.7
4.6
3.6
4.4
4.5
2.7
3.5
3.6
3.5
4.2
6.0
4.0
3.6
2.2
4.0
3.1
NM
0.6
11.7
9.5
3.8
8.9
2.7
11.6
10.2
2.7
9.0
2.7
10.7
10.0
1.8
7.1
3.1
7.7
9.1
4.9
7.4
3.2
5.3
8.2
2.4
NM
0.4
16.5
21.6
10.0
16.4
9.2
16.7
22.4
7.3
16.3
9.3
16.3
20.3
4.8
12.5
11.2
12.4
17.6
12.9
12.6
11.9
8.4
16.2
6.6
NM
1.6
TEN
TM
3.7
4.4
2.2
1.5
0.7
2.1
NM
1.1
4.9
4.5
7.9
2.7
4.8
0.9
1.3
1.4
NM
0.7
53.9
13.1
223.6
8.0
NA
2.7
NA
4.2
NA
2.1
TENNECO INC
TOYOTA MOTOR CORP -ADR
DEC
# MAR
2.3
7.1
Note: Data as originally reported. S&P 1500 index group. []Company included in the S&P 500. Company included in the S&P MidCap 400. Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
INDUSTRY SURVEYS
39
Current Ratio
Ticker
Com pany
Debt as a % of
Net Working Capital
Yr. End
2013
2012
2011
2010
2009
2013
2012
2011
2010
2009
2013
2012
2011
2010
2009
AUTOMOBILE MANUFACTURERS
F
[] FORD MOTOR CO
GM
[] GENERAL MOTORS CO
THO
THOR INDUSTRIES INC
WGO WINNEBAGO INDUSTRIES
DEC
DEC
JUL
AUG
NA
1.3
2.3
3.2
NA
1.3
2.2
3.1
NA
NA
2.2
3.2
NA
NA
2.3
2.8
NA
1.1
3.3
2.6
73.7
34.1
0.0
0.0
79.8
22.2
0.0
0.0
79.0
16.8
0.0
0.0
99.3
14.9
0.0
0.0
106.5
16.1
0.0
0.0
NA
115.4
0.0
0.0
NA
65.8
0.0
0.0
NA
NA
0.0
0.0
NA
NA
0.0
0.0
NA
81.7
0.0
0.0
DEC
DEC
DEC
DEC
DEC
1.7
1.5
4.7
1.9
5.0
1.5
1.4
5.8
2.2
8.5
1.1
1.5
7.0
2.7
7.5
1.5
2.1
5.5
3.2
9.1
1.5
2.0
6.7
4.2
8.6
21.9
43.4
0.0
0.0
16.2
20.6
47.9
0.0
0.0
0.0
23.1
52.3
0.0
0.0
0.0
30.7
1.2
0.0
0.0
0.0
25.4
1.8
0.1
0.0
0.0
86.9
126.5
0.0
0.0
55.2
94.7
148.2
0.0
0.0
0.0
323.3
111.6
0.0
0.0
0.0
157.6
1.8
0.0
0.0
0.0
152.9
2.8
0.2
0.0
0.0
JCI
SMP
SUP
SEP
DEC
DEC
1.1
2.0
3.9
1.2
1.9
6.1
1.1
1.8
5.9
1.1
1.8
5.4
1.1
1.8
4.6
26.7
0.0
0.0
30.9
0.0
0.0
28.5
0.1
0.0
20.4
0.1
0.0
25.2
8.5
0.0
288.4
0.0
0.0
292.7
0.0
0.0
367.6
0.1
0.0
357.4
0.2
0.0
285.4
11.2
0.0
MOTORCYCLE MANUFACTURERS
HOG
[] HARLEY-DAVIDSON INC
DEC
1.6
2.7
1.7
2.0
1.9
52.8
63.1
61.4
67.2
66.1
231.0
171.5
208.5
220.2
198.4
DEC
1.7
1.6
1.7
1.5
1.8
73.8
84.4
77.9
77.9
75.9
170.3
153.9
123.3
157.7
133.6
2.9
1.9
1.3
1.4
1.7
2.9
2.5
1.3
1.4
1.6
2.3
2.2
1.3
1.5
1.4
3.4
2.9
1.3
1.5
1.4
0.0
12.7
32.8
1.0
42.3
0.0
7.7
32.4
1.2
41.6
0.0
15.2
31.2
0.6
40.7
0.0
8.2
29.3
0.6
38.5
12.9
16.0
32.8
1.5
43.1
0.0
24.5
305.1
3.9
105.9
0.0
10.7
221.0
4.6
100.6
0.0
18.1
192.8
1.9
101.3
0.0
10.2
182.1
1.8
108.4
20.3
19.1
193.6
5.7
138.4
TEN
TM
1.3
1.1
1.3
1.0
1.2
1.1
1.2
1.2
67.9
34.4
78.7
35.2
94.8
34.5
94.8
36.7
95.7
38.6
225.4
824.2
224.6
841.1
283.1
NM
360.2
620.9
596.4
293.9
TENNECO INC
TOYOTA MOTOR CORP -ADR
DEC
# MAR
1.2
1.1
Note: Data as originally reported. S&P 1500 index group. []Company included in the S&P 500. Company included in the S&P MidCap 400. Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
40
INDUSTRY SURVEYS
Com pany
Yr. End
2013
2012
2011
2010
2009
2013
2012
2011
2010
2009
2013
2012
2011
2010
2009
AUTOMOBILE MANUFACTURERS
F
[] FORD MOTOR CO
GM
[] GENERAL MOTORS CO
THO
THOR INDUSTRIES INC
WGO WINNEBAGO INDUSTRIES
DEC
DEC
JUL
AUG
10 - 7
15 - 10
21 - 12
28 - 15
9- 6
9- 6
20 - 12
11 - 5
4- 2
8- 4
20 - 9
40 - 15
9- 5
12 - 0
18 - 10
50 - 23
11 - 2
0- 0
NM- 31
NM- NM
22
0
78
0
14
0
27
0
0
0
21
0
0
0
38
0
0
0
90
NM
2.2
0.0
3.7
0.0
1.5
0.0
1.3
0.0
0.0
0.0
1.0
0.0
0.0
0.0
2.1
0.0
0.0
0.0
0.8
0.7
DEC
DEC
DEC
DEC
DEC
21 15 25 25 22 -
20 11 19 21 27 -
14
7
10
15
12
16 - 11
7- 6
14 - 9
20 - 13
30 - 19
22 NA 19 22 31 -
10
NA
6
14
17
NM- 64
0- 0
12 - 4
NM- NM
39 - 15
9
17
0
93
35
0
0
82
120
43
0
NA
0
0
41
0
NA
0
118
44
52
NA
0
NM
94
0.4
1.1
0.0
3.7
1.6
0.0
0.0
4.2
5.9
1.6
0.0
NA
0.0
0.0
1.3
0.0
NA
0.0
5.3
1.4
0.3
NA
0.0
0.0
2.4
JCI
SMP
SUP
SEP
DEC
DEC
30 - 18
17 - 9
27 - 20
20 - 13
14 - 6
18 - 14
18 - 10
7- 4
11 - 6
18 - 12
13 - 6
11 - 7
NM- NM
51 - 4
NM- NM
44
19
24
40
19
113
27
10
19
23
18
33
NM
0
NM
1.5
1.1
0.9
2.0
1.4
6.3
1.5
1.3
1.8
1.3
1.4
2.9
1.8
0.0
3.8
MOTORCYCLE MANUFACTURERS
HOG
[] HARLEY-DAVIDSON INC
DEC
21 - 15
20 - 14
20 - 13
33 - 19
NM- 27
25
23
20
36
133
1.7 -
1.2
1.6 -
1.1
1.5 -
1.0
1.9 -
1.1
5.0 -
1.3
DEC
10 -
21 - 12
14 -
NM- NM
NM- NM
NM
NM
0.4 -
0.2
0.0 -
0.0
0.0 -
0.0
0.0 -
0.0
0.0 -
0.0
16 - 11
17 - 13
31 - 19
15 - 7
11 - 8
21 - 14
17 - 12
11 - 8
13 - 6
11 - 7
24 16 22 NM80 -
15
10
13
NM
25
31
49
26
19
33
31
47
40
18
32
31
50
54
23
26
38
54
18
10
13
60
64
27
NM
0
1.6
2.5
1.9
1.4
2.5
1.8
3.0
2.2
2.2
2.6
1.9
2.9
1.7
1.6
2.3
1.8
3.2
1.6
0.8
1.2
2.5
4.0
1.2
0.3
0.0
TEN
TM
18 - 9
43 - 28
67 - 26
29 - 21
NM- NM
61 - 40
0
29
0
31
0
58
0
39
NM
71
0.0 3.5 -
0.0
2.4
0.0 3.0 -
0.0
2.1
0.0 2.1 -
0.0
1.4
0.0 1.8 -
0.0
1.3
0.0 1.8 -
0.0
1.2
TENNECO INC
TOYOTA MOTOR CORP -ADR
DEC
# MAR
13
10
15
15
12
19 - 11
12 - 8
9- 5
14 - 10
Note: Data as originally reported. S&P 1500 index group. []Company included in the S&P 500. Company included in the S&P MidCap 400. Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
INDUSTRY SURVEYS
41
Com pany
Yr. End
2013
2012
2011
2010
2013
2012
2011
2010
2009
3.93
(7.22)
8.36
3.67
(0.20)
(11.91)
9.44
3.35
(2.38)
(47.94)
9.79
3.17
AUTOMOBILE MANUFACTURERS
F
[] FORD MOTOR CO
GM
[] GENERAL MOTORS CO
THO
THOR INDUSTRIES INC
WGO WINNEBAGO INDUSTRIES
DEC
DEC
JUL
AUG
1.82
2.71
2.86
1.14
1.48
3.10
2.26
1.54
5.33
4.94
1.92
0.41
1.90
0.91
3.11 253.49
2.08
0.31
0.35
(2.71)
6.67
21.51
10.47
6.08
DEC
DEC
DEC
DEC
DEC
2.73
3.90
2.25
2.15
1.55
2.22
3.34
1.84
1.66
1.18
2.52
3.49
1.49
1.35
1.16
1.65
1.92
1.30
1.27
0.99
0.12
28.47
0.75
(1.10)
0.47
9.63
5.52
10.52
9.95
4.49
JCI
SMP
SUP
SEP
DEC
DEC
1.72
2.31
0.83
1.80
1.88
1.13
2.40
2.82
2.48
2.22
1.10
1.93
(0.57)
0.31
(3.53)
6.90
12.05
17.79
5.31
10.31
17.11
4.53
9.38
16.95
4.20
8.71
15.40
MOTORCYCLE MANUFACTURERS
HOG
[] HARLEY-DAVIDSON INC
DEC
3.30
2.75
2.35
1.11
0.30
13.54
11.18
10.37
DEC
2.44
0.75
1.32
(0.89)
(1.55)
1.21
(3.81)
2.28
3.61
1.42
4.26
1.98
1.56
3.01
3.57
4.23
1.85
1.00
2.51
1.58
(2.20)
0.22
13.32
13.39
31.83
36.16
19.69
TEN
TM
2.62
2.19
0.65
3.15
(1.50)
1.43
4.58
88.65
TENNECO INC
TOYOTA MOTOR CORP -ADR
DEC 3.03
# MAR 11.17
4.58
6.45
4.04
12.49
9.29
4.98
2012
2011
2010
2009
12.10
26.19
34.51
16.72
8.82
18.72
26.27
7.36
18.97 - 9.05
39.48 - 19.00
39.12 - 17.62
16.60 - 6.02
17.42 - 9.75
36.98 - 0.15
36.85 - 20.74
17.43 - 8.10
1.50
0.06
9.54
3.14
35.22
37.24
32.70
33.01
18.11
30.08
21.76
18.05
24.24
14.38
27.30
19.22
13.28
17.49
21.84
36.72 - 16.72
NA NA
24.66 - 7.44
28.10 - 17.89
30.36 - 16.54
7.31
0.03
3.06
5.40
7.01
2.77
8.05
14.00
51.90 - 30.30
39.99 - 21.35
22.09 - 17.01
23.37
11.94
15.50
42.92 - 24.29
20.87 - 10.25
26.34 - 14.17
40.15 - 25.56
14.25 - 7.00
21.96 - 12.55
8.35
1.36
8.19
9.24
8.86
69.75 - 48.40
54.32 -
37.84
46.88 - 31.50
36.13 - 21.26
30.00 -
7.99
(2.30)
(0.82)
(0.56)
24.00 - 11.83
15.80 -
9.23
18.83 -
8.53
16.39 -
9.10
18.84 -
3.17
12.01
16.15
29.62
33.30
18.31
10.96
16.08
29.57
29.78
17.54
9.57
16.39
29.75
28.21
16.23
8.26
15.42
25.47
27.55
13.47
40.39
64.43
35.15
50.77
16.67
34.44
55.58
28.50
33.32
16.45
24.50
46.10
27.52
30.03
16.24
21.06
36.94
28.33
25.58
13.49
23.95 - 14.63
39.82 - 24.93
34.52 - 20.28
25.98 - 9.81
17.69 - 5.59
1.34
81.46
(2.71)
80.85
(2.07)
79.63
(2.35)
70.74
57.85 - 34.26
134.94 - 93.20
40.69 93.36 -
24.35
67.27
46.81 - 22.47
93.90 - 60.37
43.71 - 17.17
91.97 - 67.56
19.78 - 0.67
87.67 - 56.79
7.33
3.39
8.40
8.54
7.83 J
4.42
3.33
8.04
8.03
7.13 J
4.35
NA
6.61
8.11
6.28 J
4.17
NA
5.34
9.33
5.32 J
Note: Data as originally reported. S&P 1500 index group. []Company included in the S&P 500. Company included in the S&P MidCap 400. Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
J-This amount includes intangibles that cannot be identified.
The analysis and opinion set forth in this publication are provided by S&P Capital IQ Equity Research and are prepared separately from any other analytic activity of Standard & Poors.
In this regard, S&P Capital IQ Equity Research has no access to nonpublic information received by other units of Standard & Poors.
The accuracy and completeness of information obtained from third-party sources, and the opinions based on such information, are not guaranteed.
42
INDUSTRY SURVEYS
General Disclaimers
S&P Capital IQs Industry Surveys Reports (the Industry Surveys) have
been prepared and issued by S&P Capital IQ and/or one of its affiliates. In
the United States and United Kingdom, the Industry Surveys are prepared
and issued by Standard & Poors Financial Services LLC; in Hong Kong,
by Standard & Poors Investment Advisory Services (HK) Limited, which
is regulated by the Hong Kong Securities Futures Commission; in
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