NA Engine Forecast Rel 4Q2017

North America
Engine Forecast
Forecast horizon 2016-24
Fourth quarter 2017
Published October 2017 | Automotive

Contacts
Economics Devin Lindsay
Principal Analyst, North American Powertrain Forecasting
Nigel Griffiths +1 248 465 2811
Chief Automotive Economist devin.lindsay@ihsmarkit.com
+44 203 159 3464
nigel.griffiths@ihsmarkit.com Mike Fiske
Senior Analyst, North American Powertrain Forecasting
Peter Nagle +1 248 728 8431
Senior Automotive Economist mike.fiske@ihsmarkit.com
+1 248 465 2823
peter.nagle@ihsmarkit.com Joe Greenwell
Senior Analyst, North American Powertrain Forecasting
Global +1 248 665 6198
joe.greenwell@ihsmarkit.com
Andrew Fulbrook
Director, Global Powertrain Forecasting Sergey Shpunt
+44 (0) 203 159 3455 Senior Analyst, North American Powertrain Forecasting
andrew.fulbrook@ihsmarkit.com +1 248 728 7844
sergey.shpunt@ihsmarkit.com
Atsushi Ishii
Senior Manager, Global Powertrain Forecasting General Contact Information
+81 3 6262 1717 +1 800 IHS-CARE (+1 800 447-2273)
atsushi.ishii@ihsmarkit.com CustomerCare@ihsmarkit.com
North America Powertrain Forecasts
Paul Lacy
Research and Analysis Associate Directorr, Americas
Powertrain Forecasting
+1 248 465 2809
paul.lacy@ihsmarkit.com
Table of Contents
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IHS Markit | Regional Overview
Introduction The purpose of a forecast is to support the decision-

making process. Detailed regional economic and sales
The Light Vehicle Engine Service is designed to analysis that offers a clear understanding of consumer
complement the corresponding IHS Automotive Light dynamics and trends drives the IHS Automotive global
Vehicle Production Forecast Service. It covers all forecast. IHS Automotive exhaustively examines all
engines for passenger cars and light-duty trucks, up to facets of the vehicle manufacturing environment. These
6.0 metric tons gross vehicle weight. The Light Vehicle facets include competitive positioning, manufacturing
Engine Forecast Service provides analysis and evaluation strategies, consumer and demographic trends, export
of engine programs by engine platform and engine potential, and global product interaction. By its very
manufacturer. nature, a forecast reflects conclusions given an economic
and industry assumption set at a point in time. There are
Providing complete technical and geographic coverage, thousands of factors that are researched, synthesized,
our Light Vehicle Engine Forecasts are powerful tools and analyzed to arrive at the current forecast including
for analyzing production by platform, model, plant, and numerous sources of industry intelligence that are
vehicle installation. Specifically, they include: tapped to provide the most accurate depiction of the
market at the release of this forecast version.
• Standard forecast over an 8-year horizon (current plus 7)
A significant feature and differentiator of IHS
• 10 years of historical data Automotive services is our client support. It is critical
you have the opportunity to understand the rationale
• Written engine/transmission platform/program behind the forecasts, inquire about latest developments,
analysis or simply delve deeper into issues pertinent to your
business. Forecasting is a dynamic process and IHS
• Global coverage across 50-plus countries Automotive’s client support ensures that you have
confidence and understanding of the forecasts that are
• Model cycle plan start/end of production timing driving your business decisions. You may contact any
IHS office around the world and our staff will assist you.
• Over 40 engine and transmission technical attributes
The IHS AutoInsight Web site is a powerful online
• Monthly forecast updates forecast analysis tool provided as part of the Vehicle,
Powertrain, and Component Forecast Services. This
• Detailed forecasts of engine and transmission easy-to-use interface provides full access to purchased
production services, so subscribers can easily access, manipulate,
and download our latest forecast analysis, volumes, and
• Optional 12-year extension module available data in the forms they need.
IHS Automotive Light Vehicle Engine and Transmission

Forecasts are updated monthly.
www.ihs.com/automotive
automotive.ihs.com
4Q 2017 1 Confidential. © 2017 IHS Markit™. All rights reserved

Canada economic analysis along with solid fundamentals, lifted our industrial
production forecast again this year to 5.7%.
Forecast highlights
• The Bank of Canada increased the overnight rate to
• Second-quarter real GDP growth of 4.5% quarter on 1.00% in September. Another rate hike is anticipated
quarter (q/q) annualized was significantly stronger in January 2018, which allows a little more time for
than expected. Domestic demand is robust as the Bank of Canada to analyze the economy’s reaction
household spending is unwavering. Economic growth in a higher interest rate environment. A narrowing of
for 2017 was revised up to 3.1% and 2018 growth is the negative Canada/US interest rate gap will support
revised down to 2.2%. the loonie during the near term.
• On an industry basis, demand for output is

concentrated in the goods-producing industries.
This, coupled with upwardly revised historical data,
Canada light vehicle sales

3.0 3.0%
Unit Sales (in Millions)
Global Market Sales Share

2.0 2.0%
1.0 1.0%
0.0 0.0%
2016
2017
2018
2019
2020
2021
2022
2023
2024
Source: IHS Markit © 2017 IHS Markit
Near-term outlook • The solid increases in total compensation support the

anticipated increase in future household spending,
The Canadian economy is set to expand at a healthy especially if job creation does not stall. It should be
pace during the near term. noted recent increases in net employment are all due
to bumps in self-employment, not expanding public
• Canadian real GDP growth advanced at a solid 4.5% or private payrolls. Regardless, consumer confidence
quarter-on-quarter (q/q) annualized pace in the second continues to climb as households are more optimistic
quarter. Even though there has not been a sharp regarding the economy. Household income will
drop-off in leading indicator performance, we expect expand at a decent pace this year, at 3.9%, supporting
the economy will continue to perform well, but not spending that is set to advance 3.4% this year. For
as strong, in the near term. Household spending will 2018, we expect consumer spending will slow to 2.1%
be the largest contributor to growth in 2017 and 2018 with slightly slower job creation.
(2.0 and 1.2 percentage points, respectively) with
more consistent growth starting in 2019. Thanks to • Fixed investment spending lost some ground in
the federal government’s infrastructure spending the second quarter as slumps in residential building
plan, total government spending will add to economic weighed on it. However, nonresidential investment
growth, topping out its contribution in 2018 at 0.5 spending continues to trend higher as business
percentage point. Private investment will also help confidence measures remain relatively high. Sluggish
growth around 0.3 to 0.4 percentage point in the near commodity price movements are limiting the
term. However, the trade sector will be somewhat uptick in spending, especially in energy-intensive
tepid as net exports will subtract 0.3 percentage point provinces. Plus, there is an uncertainty related to
from growth in 2017, but reverse course and add 0.2 the proposed changes to US tax policies. Therefore,
percentage point to growth in 2018. Combined, the we project business nonresidential investment to
Canadian economy will advance 3.1% in 2017 and 2.2% edge up only 1.2% in 2017. Nonresidential investment
in 2018. construction will decline 1.2%, and investment in
Confidential. © 2017 IHS Markit™. All rights reserved 2 4Q 2017
machinery and equipment will climb 4.7%. Expanding economy is strengthening, and excess capacity is
corporate profits should help support future being absorbed.
investment intentions.
• Looking ahead, given the Canadian economy will
• Although net exports contributed to real GDP growth continue to perform well, we expect the next rate hike
in the second quarter, robust domestic demand is to come in January 2018, and the overnight interest
supporting our trade outlook where real import rate will hit 1.25%, which would be the highest
growth will surpass real export growth. Higher import rate since January 2009. The bank will continue to
price pressures resulted in Canada’s merchandise gradually raise interest rates in 2018 and 2019 when
and current-account trade deficits to widen. The the overnight interest rate will reach 3.0% by the end
slight appreciation in the Canadian dollar will also of 2019.
dampen Canada’s price competitiveness, but not to
a significant degree. A solid US economic expansion • Inflation has started to slowly come up from the
should boost exports in the next few years. bottom of the Bank of Canada’s target range now that
food prices have stopped falling. The recent hurricane-
• Natural resource production is the biggest addition induced run-up in gasoline prices will add to price
to industrial production growth this year. As energy pressures in the near term. However, the relatively
and metal prices strengthen, the risks are tilted low Canadian dollar’s positive impact on prices is
towards the upside in terms of expanded capacity and diminishing. We project the inflation rate will average
output growth. 1.6% in 2017 and slightly accelerate to 1.9% in 2018.
As the Bank of Canada continues to tighten • The Canadian dollar is gaining support from higher
monetary policy, the Canadian dollar gains support. interest rates in Canada. We forecast the Canadian
dollar will remain relatively stable by the end of the
• After releasing the second-quarter real GDP, the year at CAD1.24/USD1.00 in the fourth quarter. By
Bank of Canada raised the overnight interest rate mid-2018, the loonie will end the third quarter at
from 0.75% to 1.00% as expected. The ongoing reason CAD1.27/USD1.00. By mid-2019, the loonie will end
supporting the second rate hike is that the Canadian the third quarter at CAD1.25/USD1.00.
Canada economic snapshot

GDP at GDP at GDP per GDP per
2007 2010 Capita at Capita at Unemploy- Consumer
Prices in Prices in Share of Share of 2007 2010 ment rate Prices
Can$ % US$ % World Population % World Prices in % Prices in % % of Labor Annual
Billions Change Billions Change GDP in Millions Change Population Can$ Change US$ Change Force Change %
2005 1502.3 3.2% 1524.6 3.2% 2.62% 32.20 1.0% 0.49% 46,652 2.2% 47,344 2.2% 6.8% 2.2%
2006 1541.7 2.6% 1564.6 2.6% 2.58% 32.53 1.0% 0.49% 47,396 1.6% 48,099 1.6% 6.3% 2.0%
2007 1573.5 2.1% 1596.9 2.1% 2.53% 32.85 1.0% 0.49% 47,904 1.1% 48,615 1.1% 6.0% 2.1%
2008 1589.3 1.0% 1612.8 1.0% 2.51% 33.20 1.1% 0.49% 47,872 -0.1% 48,582 -0.1% 6.2% 2.4%
2009 1542.4 -2.9% 1565.3 -2.9% 2.48% 33.58 1.2% 0.49% 45,931 -4.1% 46,612 -4.1% 8.4% 0.3%
2010 1590.0 3.1% 1613.5 3.1% 2.45% 33.96 1.1% 0.49% 46,820 1.9% 47,515 1.9% 8.0% 1.8%
2011 1639.9 3.1% 1664.2 3.1% 2.45% 34.30 1.0% 0.49% 47,807 2.1% 48,517 2.1% 7.5% 2.9%
2012 1668.5 1.7% 1693.3 1.7% 2.43% 34.70 1.2% 0.49% 48,088 0.6% 48,801 0.6% 7.3% 1.5%
2013 1709.8 2.5% 1735.2 2.5% 2.43% 35.10 1.2% 0.49% 48,714 1.3% 49,436 1.3% 7.1% 0.9%
2014 1753.7 2.6% 1779.7 2.6% 2.42% 35.49 1.1% 0.49% 49,417 1.4% 50,151 1.4% 6.9% 1.9%
2015 1770.2 0.9% 1796.5 0.9% 2.38% 35.80 0.9% 0.49% 49,441 0.0% 50,174 0.0% 6.9% 1.1%
2016 1796.2 1.5% 1822.8 1.5% 2.36% 36.21 1.1% 0.49% 49,611 0.3% 50,347 0.3% 7.0% 1.4%
2017 1851.9 3.1% 1879.3 3.1% 2.36% 36.64 1.2% 0.49% 50,545 1.9% 51,294 1.9% 6.5% 1.7%
2018 1893.6 2.3% 1921.7 2.3% 2.34% 37.06 1.2% 0.49% 51,094 1.1% 51,852 1.1% 6.5% 1.9%
2019 1936.1 2.2% 1964.8 2.2% 2.33% 37.47 1.1% 0.49% 51,670 1.1% 52,436 1.1% 6.4% 2.0%
2020 1976.3 2.1% 2005.6 2.1% 2.31% 37.89 1.1% 0.49% 52,165 1.0% 52,939 1.0% 6.4% 2.0%
2021 2017.3 2.1% 2047.2 2.1% 2.28% 38.30 1.1% 0.49% 52,669 1.0% 53,450 1.0% 6.4% 2.0%
2022 2058.3 2.0% 2088.8 2.0% 2.26% 38.71 1.1% 0.49% 53,165 0.9% 53,953 0.9% 6.4% 2.0%
2023 2099.6 2.0% 2130.7 2.0% 2.24% 39.13 1.1% 0.49% 53,652 0.9% 54,448 0.9% 6.4% 2.0%
2024 2140.5 1.9% 2172.2 1.9% 2.22% 39.54 1.0% 0.49% 54,132 0.9% 54,935 0.9% 6.4% 2.0%

Canada GDP Canada foreign trade

3.5 7.0
3.0 6.0
5.0
Y/Y % Change
Y/Y % Change
2.5
4.0
2.0
3.0
1.5 2.0
1.0 1.0
0.0
0.5
-1.0
0.0 -2.0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Canada Industrial Countries Imports Exports

Source: IHS Markit © 2017 IHS Markit Source: IHS Markit © 2017 IHS Markit
Canada exchange rates Canada consumer price index

1.35 1.50 2.5
1.30
1.48
2.0
1.25
Y/Y % Change
1.46
1.20
Can$/US$
1.5
Can$/Euro
1.15 1.44
1.10 1.0
1.42
1.05
0.5
1.40
1.00
0.95 1.38 0.0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Can$/US$ (l.) Can$/Euro (r.) Canada Industrial Countries

Canada
Spain
Czech labor
Republic
labor labor Canada interest
7.1 1.8 4.0
7.0 1.6 3.5
6.9 1.4 3.0
6.8
Percentage
1.2
Y/Y % Change
6.7 2.5
Percentage
1.0
6.6 2.0
0.8
6.5 1.5
0.6
6.4
1.0
6.3 0.4
6.2 0.2 0.5
6.1 0.0 0.0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Unemployment Rate (l.) Employment (r.) Policy Rate Long-Term Rate


Mexico economic analysis Agreement (NAFTA) renegotiations. Thus, it is less

likely there will be trade disruptions that would
Forecast highlights damage Mexico’s all-important export-manufacturing
industry. Still, negotiations will bring volatility to the
• Mexico’s economic outlook remains clouded by tight foreign exchange market.
fiscal and monetary policies as the government needs
to reduce the fiscal deficit and the central bank fights • Tighter monetary policy (higher interest rates) as well
relatively high inflation. Mexico’s economic outlook as central bank intervention in the form of auctions
for the remainder of 2017 and 2018 shows modest of hedging instruments will continue to support the
growth (2.3–2.4% per year). Mexican peso.
• US authorities have shown a less aggressive stance • Our September forecast does not yet incorporate
regarding the upcoming North American Free Trade possible impacts of recent earthquakes.
Mexico light vehicle sales
2.0 2.0%
Global Market Sales Share

Unit Slaes (in Millions)
1.5 1.5%
1.0 1.0%
0.5 0.5%
0.0 0.0%
2016
2017
2018
2019
2020
2021
2022
2023
2024
Near-term outlook to compensate for lower revenue, authorities

significantly cut public investment (mostly on
Tight fiscal and monetary policies will continue infrastructure), and this will continue during the
to constrain growth in the near term. The remainder of 2017 and in 2018 as the government is
renegotiation of the North America Free Trade committed to reducing the fiscal gap.
Agreement (NAFTA) will bring volatility to markets.
• Total investment was almost flat during 2016 (up 0.1%)
• The outlook for the Mexican remains clouded by as growth in private investment barely compensated
tight fiscal and monetary policies as the government for the decline in public investment, but this may not
needs to reduce the fiscal deficit and the central happen again in 2017—business sentiment has been
bank fights relatively high inflation. On a positive on a downward trend for several quarters and while it
note, US authorities have shown a less aggressive has partially recovered in the second quarter. In terms
stance regarding NAFTA renegotiations, so now of levels, it remains poor. The uncertainty regarding
it is less likely there will be trade disruptions that future policy will make some firms postpone their
would have damaged Mexico’s all-important export investment plans, and they may even cancel some
manufacturing industry. of them if the United States imposes taxes or tariffs
on Mexican exports. Foreign direct investment into
• GDP grew 2.3% in 2016, down from 2.6% in 2015; Mexico is the most sensible variable in this regard.
these are, certainly, modest rates for an emerging In the first half of 2017, investment declined, and the
economy. A big constraint to growth has been the outlook was not promising.
decline in public investment, and the outlook does not
look promising. • IHS Markit assesses that private consumption, which
has driven growth in recent quarters, will not grow
• The government still needs to fix public finances very fast; relatively high inflation is hurting the
after they were shocked by the collapse of oil prices purchasing power of salaries, and credit will not grow
in late 2014. In the past, one-third of government’s as before as financial institutions implement tighter
revenue used to come from the oil sector; in order credit standards.
• Trade negotiations between Mexico and the United • Earlier this year, several factors have contributed
States started on 16 August, but IHS Markit does not to the faster pace of price increases, including the
expect any material changes in regulations/laws pass-through of the depreciation of the Mexican peso,
before the first quarter of 2019; in our forecast, we higher prices of agricultural products, the increase
anticipate the automotive industry will continue in minimum wages, and higher gasoline prices. The
to push growth in the remainder of 2017 and in impact of these shocks will progressively fade away,
early 2018. and inflation in Mexico will return to the targeted
band in the second half of 2018.
The central bank stops tightening cycle, despite
high inflation. There are no further rate cuts on • As of 26 September, the US dollar was selling for
the horizon. MXN17.94 and has fluctuated in the 17.50–18.00
range for the past three months. This was driven
• Annual inflation was 6.7% in August, the highest partly by the central bank’s intervention, which
rate in almost 16 years. Monthly inflation amounted started a foreign exchange hedge program in March
to 0.5% in August, driven by higher prices in the 2017, offering insurance against foreign exchange
all-important food category. Prices of agricultural risks that settles in the local currency, so the bank
products went up 4.5%. will not use international reserves. The peso also
appreciated because of a less aggressive stance by US
• In August, core inflation—excludes items with volatile trade negotiators. We assess that at current levels—
prices such as some energy-related and agricultural MXN17.00–18.00/USD1.00—the Mexican peso may
products items—amounted to 0.25%. In the 12-month find a comfortable zone. However, we foresee lots of
period ended in August, core inflation amounted to volatility once the actual measures/trade restrictions
5.0%, while noncore inflation was 12.0%. While there of the Trump administration become known. In this
is a big difference between the two measures, both of context, the exchange rate may again surpass the
them are well above the central bank’s target of 3% +/- MXN19/USD1 mark in the last quarter of 2017.
1 percentage point.
Mexico economic snapshot

2008 2010 Capita at Capita at Unemploy- Consumer
Prices in Prices in Share of Share of 2008 2010 ment rate Prices
Peso % US$ % World Population % World Prices in % Prices in % % of Labor Annual
Billions Change Billions Change GDP in Millions Change Population Pesos Change US$ Change Force Change %

6RXUFH,+60DUNLW ,+60DUNLW

Mexico GDP Mexico foreign trade

3.0 12.0
2.5 10.0
Y/Y % Change
Y/Y % Change
2.0 8.0
1.5 6.0
1.0 4.0
0.5 2.0
0.0 0.0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Mexico Industrial Countries Imports Exports

Mexico exchange rates Mexico consumer price index

25.0 35.0 7.0
30.0 6.0
20.0
Y/Y % Change
25.0 5.0
15.0
Pesos/Euro
Pesos/US$
20.0 4.0
10.0 15.0 3.0
10.0 2.0
5.0
5.0 1.0
0.0 0.0 0.0

2014 2016 2018 2020 2022 2024 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Pesos/US$ (l.) Pesos/Euro (r.) Mexico Industrial Countries

Mexicolabor
Spain
Czech Republic
labor labor Mexico interest
6.0 3.0 8.0
7.0
5.0 2.5
6.0
Percentage
4.0 2.0
5.0
Y/Y % Change
Percentage
3.0 1.5 4.0
3.0
2.0 1.0
2.0
1.0 0.5
1.0
0.0 0.0 0.0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Unemployment Rate (l.) Employment (r.) Policy Rate Short-Term Rate


United States economic analysis • Based on annual averages, we forecast real GDP
growth of 2.2% this year, 2.4% in 2018, and 2.2%
Forecast highlights in both 2019 and 2020. The slowdown reflects the
economy’s proximity to potential output as the
• We estimate that hurricanes Harvey and Irma will decade ends.
subtract 1.2 percentage points from third-quarter
growth and boost fourth-quarter growth by 0.9 • Despite short-term disruptions from hurricanes,
percentage point. Given our third-quarter estimate consumer spending will remain an engine of US
of 2.4% real GDP growth, this would put the no- economic growth, supported by momentum for
hurricane counterfactual growth rate at 3.6%, employment, real disposable income, and household
supporting our view that the US economy is benefiting asset values—even in the absence of tax cuts.
from solid pre-hurricane momentum.
United States light vehicle sales
25.0 20.0%
Global Maket Sales Share

20.0
Unit Sales (in Millions)
15.0
10.0%
10.0
5.0
0.0 0.0%
2016
2017
2018
2019
2020
2021
2022
2023
2024
Near-term outlook accounts for the downward revision in the 2018

spending outlook, compared with IHS Markit’s
Current quarter and one quarter ahead. September forecast.
• Real GDP growth is projected to pick up from an • After declines in the second and third quarters,
estimated 2.4% annual rate in the third quarter to residential construction will stabilize in late 2017 and
2.9% in the fourth quarter before settling back to resume growth in early 2018. Increasing demand from
2.2% in the first quarter of 2018. We estimate that young adults, limited supplies of homes for sale, and
recovery from hurricanes Harvey and Irma will boost rising prices should lead to more construction activity,
fourth-quarter growth by 0.9 percentage point. The along with repair and reconstruction of storm-
potential for storms to distort near-term data was damaged homes in Texas and Florida.
seen in the September employment report, which
showed establishment employment falling 33,000. We • After slowing in the third quarter—when commercial
estimate that hurricane impacts reduced this number and manufacturing building construction retreated—
by about 250,000 and a sharp reversal of weather- real business fixed investment growth is expected to
related effects will push the gain in establishment get back on track in the fourth quarter, rising at a 5.0%
employment up to nearly 400,000 in October. annual rate. Expanding global markets, low financing
costs, and an improving regulatory climate will
• Consumer spending growth will remain the principal sustain overall growth. Real government purchases
driving force in the US economic expansion. will continue to stagnate, with modest growth in state
Household finances continue to improve, supported and local spending offset by cuts in federal purchases.
by gains in employment, real incomes, stock prices, Both exports and imports are projected to post real
and home values. Real consumption is projected growth rates around the 4–6% range in late 2017
to increase at annual rates of 3.0% in the fourth and early 2018, reflecting healthy expansions in the
quarter and 2.4% in the first quarter of 2018. Removal domestic and global economies.
of income tax cuts from the baseline forecast

Consumer spending, income, and confidence. good, but not great, year. Although there will be some
spending payback from hurricane-related losses, it
• The third estimate of second-quarter real consumer will be skewed more toward necessary home repairs.
spending growth maintained the second estimate’s We expect overall holiday sales to grow at 3.5% y/y,
3.3% annual rate; consumption of services was slightly slightly weaker than last year. We define holiday retail
stronger, but was offset by weaker spending on durable sales as not-seasonally-adjusted retail sales excluding
and nondurable goods. Our forecast for third-quarter auto dealerships, gasoline stations, and restaurants for
real spending growth has been marked down 0.6 November and December. Online sales are expected
percentage point to 1.9%, thanks in part to the effects to rise 12.1% y/y, the fourth straight year of double-
of hurricanes Harvey and Irma. As the disrupted digit growth.
regions recover, we expect a rebound from deferred
consumption and the replacement of damaged goods; • Consumer spending continues to be supported by
our fourth-quarter forecast of real consumer spending solid pre-hurricane momentum for employment, real
growth has been bumped up 0.2 percentage point to a disposable income, and household asset values. Our
3.0% rate. US forecast no longer assumes federal personal income
and corporate tax cuts. As a result, expected real
• Recent news on the consumer markets front has consumer spending growth has been reduced from
been mixed, with noticeable hurricane impacts on 2.8% to 2.5% in 2018, and from 2.6% to 2.3%in 2019;
gasoline prices, light-vehicle unit sales, and restaurant real disposable income growth has been reduced from
employment. Holiday retail sales are on track to have a 3.5% to 2.5% in 2018, and from 3.2% to 3.0% in 2019.
United States economic snapshot

2010 Current Capita at Capita at Unemploy- Consumer
Prices in Prices in Share of Share of 2010 Current ment Rate Prices
US$ % US$ % World Population % World Prices in % Prices in % % of Labor Annual
Billions Change Billions Change GDP in Millions Change Population US$ Change US$ Change Force Change %

6RXUFH,+60DUNLW ,+60DUNLW

United States GDP United States foreign trade

3.5 6.0
3.0 5.0
Y/Y % Change
Y/Y % Change
2.5 4.0
2.0 3.0
1.5 2.0
1.0 1.0
0.5 0.0
0.0 -1.0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
United States Industrial Countries Imports Exports

United States exchange rates United States consumer price index

130.0 1.35 3.0
1.30
120.0 2.5
1.25
Y/Y % Change
110.0 2.0
1.20
US$/Euro
US$/Yen
100.0 1.15 1.5
1.10
90.0 1.0
1.05
80.0 0.5
1.00
70.0 0.95 0.0

2014 2016 2018 2020 2022 2024 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
US$/Yen (l.) US$/Euro (r.) United States Industrial Countries

Unitedlabor
Spain
Czech Republic
States labor
labor United States interest
7.0 2.0 4.5
1.8 4.0
6.0
1.6 3.5
5.0 1.4
Percentage
3.0
1.2
Y/Y % Change
Percentage
4.0 2.5
1.0
3.0 2.0
0.8
1.5
2.0 0.6
0.4 1.0
1.0
0.2 0.5
0.0 0.0 0.0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Unemployment Rate (l.) Employment (r.) Policy Rate Long-Term Rate


North America production analysis for vehicle production. GM’s Ingersoll plant produces the
Chevrolet Equinox and previously produced the GMC
Short-term production analysis Terrain that has since been resourced to Mexico and a
point of union contention.
Production in North America continues to be under
pressure from slowing light vehicle demand as For more than 10 years, the Ingersoll plant was
automakers struggle to balance sales and financial operating on three shifts, and for the past five years
targets that is resulting in a rebalancing of vehicle has been operating continuous weekend overtime to
production to improve inventory levels and align with meet demand for the strong-selling CUVs. With this
demand while balancing incentives and fleet activities most recent redesign of the Equinox and Terrain, GM
for optimal results. Weaker production results couple expanded production by adding Equinox production
with reduced scheduling results in the 2017 outlook at its Ramos Arizpe and San Luis Potosi plants in
being reduced by 87,000 units to 17.19 million units. Mexico with the Terrain being completely resourced
Production is revised higher in 2018 on a stronger to San Luis Potosi. Global platforms and flexible
outlook for General Motors (GM), increasing 114,400 manufacturing allowed GM to make the moves while
units, as its production scheduling is justified by a also improving export planning for the models to
strong presence, notably on the truck side, in hurricane- meet strong global demand for CUVs. While the strike
ravaged markets in Texas and Florida. Production is then has been settled, Canada still faces many hurdles to
expected to decline in 2019 by 141,500 units to total maintain let alone improve its presence in the global
17.42 million units on the retiming of several all-new automotive community.
vehicles to launch that year.
Following strong success coming out of the Great
Production at GM’s Ingersoll, Canada, plant was idled Recession, Hyundai made significant gains in the US
starting 17 September owing to a strike by Unifor, market with highly stylized vehicle designs with a
Canada’s largest private-sector union that resulted in strong value. As gas prices collapsed in 2015, Hyundai
an estimated loss of more than 18,000 units during the was left unprepared for the rapid shift to CUVs. With
course of the four-week long strike with that ended a North America production footprint skewed toward
on 16 October. The strike was the first at a Canadian cars, Hyundai has since resorted to increasing incentives
auto assembly plant in 21 years and highlights the and fleets sales that only hurt resale values and
long-term challenges Canada has in retaining an auto profitability rather than reducing vehicle output.
manufacturing base amid tougher global competition
North American short-term production

20.0
18.0
16.0
14.0
Production (Millions)
12.0
10.0
8.0
6.0
4.0
2.0
15.3 15.1 12.6 8.6 11.9 13.1 15.4 16.2 17.0 17.5 17.8 17.2 17.5 17.4
0.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Amid tumultuous leadership changes at its US a modest expansion at Montgomery a new possibility.
operations, Hyundai is finally acknowledging these With weaker demand for cars, Hyundai could resource
detrimental practices and is planning on reducing all Santa Few production into the plant while also
Elantra and Sonata production at its Montgomery, having enough capacity to produce the all-new
Alabama, plant. Conversely, sister company Kia has been Santa Cruz pickup truck. While the forecast reflects
far better at managing the decline in car demand and localization of the Hyundai Tucson as part of the new
has been reviewing product changes at its West Point, Montgomery #2 plant, it is Kia that is reviewing adding
Georgia, plant to produce more CUVs. An expansion of Sportage production at its West Point plant in 2019
Hyundai’s Montgomery plant to produce CUVs remains following the launch of the all-new full-size Telluride
tentative with little to no movement since discussions CUV as Kia move more quickly to shift their production
of an expansion emerged several years ago. mix to CUVs.
Typically aggressive, Hyundai has been cautious to

expand its manufacturing base in North America with

Long-term production analysis would complement BEV production at its Orion plant
and leverage the nearby Brownstown Battery plant.
Amid weakening demand in the United States and The Detroit-Hamtramck plant has capacity to produce
the accelerated shift from cars to CUVs by consumers, 230,000 units and is among the most flexible GM plants
automakers are working to adjust their North American that produces four vehicles across three platforms while
production footprints toward increasing utility and incorporating alternative propulsion installations.
truck production. While automakers reduce shifts and
add downtime in the short term, many automakers The Lordstown plant needs new or addition product to
will be forced to re-evaluate their production footprint justify keeping the plant operating and has capacity to
and capacity. produce 300,000 units. Shifting the Chevrolet Cruze
out of the plant and installing the Equinox from Canada
General Motors (GM) stands out with capacity could be one long-term solution with a more aggressive
utilization at its Detroit-Hamtramck, Lansing move being retooling the plant for production of GM’s
Grand River, and Lordstown plants falling far below next-generation midsize trucks; the Chevrolet Colorado
sustainable, let alone profitable, levels. A common and GMC Canyon along with an all-new SUV. The
theme with each plant is that they all produce cars that Colorado and Canyon are produced at Wentzville, where
have quickly fallen out of favor with consumers. Amid the plant production is far above the capabilities the
the Unifor-GM strike in Canada, we imagined a scenario plant was designed to handle. With upward of 300,000
where GM could shift production of the Chevrolet units needed to support production of three vehicles,
Equinox from the Ingersoll, Ontario, plant to Detroit- GM effectively need a new plant.
Hamtramck or Lordstown. This scenario may still
play out in the long term as GM reviews its long-term Ford is already undertaking such a scenario with
capacity positioning in North America. the retooling of the Michigan Assembly plant from
unibody production of the Ford Focus and C-Max to
While the forecast reflects GM having to close the body-on-frame build of the Ranger and Bronco trucks.
Detroit-Hamtramck plant, the facility could come Ford initially planned to resource Focus production to
into play as part of a shifting of production such as the Mexico, but has since decided to shift sourcing to China
Equinox or as part of its broader battery electric vehicle where it has excess capacity. The move will also bolster
(BEV) and hydrogen fuel cell electric vehicle (HFCEV) Ford’s profitability by shifting the lower margin, lower
strategy where it plans to launch at least 20 new all- demand Focus to the margin rich trucks. GM Lordstown
electric vehicles by 2023. The Detroit-Hamtramck is plant has a history of producing unibody and body-on-
the only remaining GM facility within the Detroit city frame vehicles, and such flexibility would allow GM to
limits, and if repurposed for BEV and HFCEV production
North American long-term production
20 20%
18
16 3.5 15%
3.2 4.2 4.3
4.2
14 2.9
2.4
Y-O-Y % Change
2.4 2.0 2.0

Output (millions)
12 1.9 10%
2.5
10
8 5%
12.0 11.2
6 11.4 11.8 11.5
10.1
4 0%
0 -5%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Mexico Canada US Change

shift production between varying vehicle types more strategy could come into play at the plant that could
quickly based on market demand. produce a range of new Cadillac BEVs from cars to CUVs.
As part of the electrification strategy, some existing
GM’s Lansing Grand River plant is home to today’s GM nameplates will be leveraged with one more
Cadillac ATS and CTS along with the Chevrolet Camaro radical scenario involving the next-generation Camaro
and has capacity to produce 220,000 units. As a rear- becoming a dedicated BEV.
wheel-drive, performance homeroom, the plant
unfortunately has a diminishing place in GM’s footprint. Change is occurring with the North American capacity
Car demand, while declining, is not completely footprint, with the shift in vehicle mix between cars
disappearing and core luxury sedans remain necessary. and trucks following the investment super-cycle in new
The Lansing Grand River is expected to remain a capacity in North America that has slowed sharply in
Cadillac homeroom and produce the CT4 and CT5 recent years.
replacements for the ATS and CTS. GM’s electrification

Global topline volume
22.3
21.5
20.6
33.5
30.7
20.7
20.3 20.5 28.3
2024
2020
2017
2017
2020
2024
2024
2020
2017
6.9 6.4 6.3
2024
2020
2017
5.9 6.6
4.7
2024
2020
2017
6.2 12.7
5.3
4.4 10.2
8.5
2024
2020
2017
2024
2020
2017
Note: Volume in millions
© 2017 IHS Markit. All rights reserved. Provided “as is,” without any warranty. This map is not to be reproduced or disseminated and is not to be used nor cited as evidence in
connection with any territorial claim. IHS is impartial and not an authority on international boundaries which might be subject to unresolved claims by multiple jurisdictions.
Global light vehicle sales demand largely reflecting policy concerns for the Trump
administration, hurricane replacement demand likely
Topline volume analysis provides some respite for the coming few months.
The halo slipped for Western Europe in September,
• World real GDP growth is expected to pick up from with demand down 2.5%, probably reflecting some
2.5% in 2016 to 3.1% in 2017 and 3.2% in 2018. In wait-and-see reactions to new German and UK diesel
2018, downward revisions to outlooks for the United scrappage programs.
States and India are only partially offset by an upward
revision to the Eurozone forecast. In September, • Total 2017 global light vehicle sales are expected to
the JPMorgan Global All-Industry Output Index post 94.1 million units, up 2.0% compared with 2016, a
(compiled by IHS Markit) held steady at 54.0, signaling mild upgrade to our forecast and a further new record
further solid growth in manufacturing and services. for global auto demand. China continues to provide
Hurricanes Harvey and Irma disrupted US economic the heavy lifting for global sales growth, with our 2017
activity in late August and September, but rebuilding Chinese forecast set at 27.85 million units, up 1.0%.
activity will boost real GDP growth in the fourth We believe China will experience some lingering tax
quarter. The price of Dated Brent is projected to payback effects for 2018, but demand will still grow
average USD55 per barrel in 2017, USD52 per barrel in to almost 28 million units, up 0.5%. For the United
2018, and USD58 per barrel in 2019. States, demand is falling back but should feel some
replacement impact from Hurricanes Harvey and
• Recently, almost all forecast revisions have been Irma—2017 demand is set at 17.08 million units, down
upward—a pleasant change from the past few years— 2.7%. Western Europe continues to recover, especially
and 2017 appears on track for record auto sales. For helped by an ongoing release of pent-up demand, and
September 2017, global demand posted 8.49 million should close out 2017 with 2.8% growth. We have seen
units, up 3.3%, despite one fewer selling day in some a scramble for OEM diesel incentives in key markets,
regions. Chinese demand is holding up better than especially Germany and the United Kingdom,
expected, and 2017 should be another growth year which should generate mild pulled-forward demand.
for the world’s number-one light vehicle market. Russia and Brazil are both “turning the corner” in
While US auto demand is probably losing momentum,

2017, although we remain cautious on the path to Starting in June 2017, IHS Markit standard auto
full recovery. market forecasts and methodology now reflect new
mobility considerations for the United States, China,
• Until the end of the forecast horizon in 2022, global Europe, and India. We define the overall changes to
light vehicle sales are expected to increase at a the forecasts as nonlinear, with substantial variation
compound annual growth rate of 2.0% and approach across markets. Forecast impacts are generally
104 million units. Key markets in Greater China quite small in the short term but increase over the
and South Asia are expected to outperform this outbound forecast—especially into the very long term
market average, whereas ongoing recovery in parts of beyond 2030.
Europe and North America will help provide welcome
support to volume in the more mature Triad markets.
Global
Region Market 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Europe
Central Europe 1,167,702 1,348,217 1,512,591 1,588,294 1,610,109 1,634,091 1,660,079 1,700,984 1,735,162 1,771,934
East Europe 2,826,031 2,611,945 2,762,852 3,132,365 3,549,881 3,839,623 4,005,135 4,172,003 4,459,195 4,611,152
West Europe 14,900,400 15,862,372 16,313,917 16,439,459 16,286,717 16,066,452 15,914,164 15,909,462 15,910,933 15,908,824
Europe Total 18,894,133 19,822,534 20,589,360 21,160,118 21,446,707 21,540,166 21,579,378 21,782,449 22,105,290 22,291,910
Greater China
China 24,500,046 27,604,031 27,896,225 28,028,807 29,160,053 30,226,792 30,957,992 31,718,415 32,373,770 32,969,422
Taiwan 409,793 428,445 431,563 433,359 441,035 456,972 456,836 447,154 479,421 484,989
Greater China Total 24,909,839 28,032,476 28,327,788 28,462,166 29,601,088 30,683,764 31,414,828 32,165,569 32,853,191 33,454,411
Japan/Korea
Japan 4,945,069 4,848,274 5,142,439 5,014,604 4,855,869 4,648,728 4,629,596 4,594,092 4,565,498 4,527,769
South Korea 1,804,484 1,785,926 1,771,635 1,748,727 1,762,452 1,760,056 1,742,285 1,726,819 1,745,108 1,758,641
Japan/Korea Total 6,749,553 6,634,200 6,914,074 6,763,331 6,618,321 6,408,784 6,371,881 6,320,911 6,310,606 6,286,410
Middle East/Africa
Africa 1,730,938 1,393,453 1,302,531 1,443,063 1,650,539 1,845,686 2,018,127 2,136,831 2,182,471 2,233,934
Middle East 2,881,357 3,058,083 3,065,942 3,219,845 3,420,318 3,664,633 3,809,380 3,900,567 3,902,911 3,962,026
Rest of World 335,052 320,125 335,013 337,603 341,072 344,927 349,410 353,953 358,555 363,214
Middle East/Africa Total 4,947,347 4,771,661 4,703,486 5,000,511 5,411,929 5,855,246 6,176,917 6,391,351 6,443,937 6,559,174
North America
NAFTA 20,724,802 21,084,294 20,678,385 20,514,238 20,413,029 20,284,018 20,203,425 20,081,153 20,389,035 20,509,945
North America Total 20,724,802 21,084,294 20,678,385 20,514,238 20,413,029 20,284,018 20,203,425 20,081,153 20,389,035 20,509,945
South America
Andean 816,970 805,133 880,085 924,201 965,752 1,008,993 1,053,139 1,097,791 1,146,593 1,200,713
Central America 387,970 378,714 389,094 409,409 425,337 450,489 460,841 471,610 486,792 500,006
Mercosul 3,186,568 2,729,713 3,108,975 3,384,031 3,623,471 3,840,724 4,018,169 4,199,945 4,381,471 4,525,967
South America Total 4,391,508 3,913,560 4,378,154 4,717,641 5,014,560 5,300,206 5,532,149 5,769,346 6,014,856 6,226,686
South Asia
ASEAN 2,968,711 3,040,024 3,213,415 3,451,807 3,614,471 3,767,183 3,911,274 4,065,855 4,221,317 4,376,464
Indian Subcontinent 3,377,998 3,617,102 3,949,576 4,354,683 4,761,790 5,138,795 5,535,514 6,001,912 6,509,013 7,032,403
Oceania 1,269,021 1,304,134 1,319,221 1,287,387 1,311,922 1,311,828 1,338,137 1,320,330 1,294,541 1,309,758
South Asia Total 7,615,730 7,961,260 8,482,212 9,093,877 9,688,183 10,217,806 10,784,925 11,388,097 12,024,871 12,718,625
Total Global Volume 88,232,912 92,219,985 94,073,459 95,711,882 98,193,817 100,289,990 102,063,503 103,898,876 106,141,786 108,047,161
Total Change % 2.0% 4.5% 2.0% 1.7% 2.6% 2.1% 1.8% 1.8% 2.2% 1.8%

Global Production Matrix

Global light vehicle regional sales sourcing by Production Region
production region Year EU GC JK MEA NA SA SEA
2011 88.1% 0.2% 7.1% 0.5% 1.8% 0.2% 1.5%
OEM-finished vehicle logistics are a vital part of a Europe (EU) 2017 87.2% 0.1% 6.4% 2.4% 2.1% 0.0% 1.3%
true global auto industry. Their significance in the 2024 86.0% 0.5% 5.9% 2.6% 3.6% 0.0% 0.8%
transformation of the auto industry has increased 2011 2.7% 94.5% 2.0% 0.0% 0.8% 0.0% 0.0%
steadily and will continue to do so throughout our Greater China (GC) 2017 2.3% 95.1% 1.4% 0.0% 1.2% 0.0% 0.1%
forecast period. Logistics companies, suppliers, and 2024 2.4% 95.6% 1.2% 0.0% 0.8% 0.0% 0.0%
competitors need to monitor trends, developments, 2011 4.2% 0.0% 93.8% 0.4% 0.5% 0.0% 1.1%
and each other. The global production footprint will Japan/Korea (JK) 2017 6.1% 0.0% 91.8% 0.3% 1.2% 0.0% 0.5%
determine competitive advantages, especially in volume 2024 7.5% 0.0% 90.2% 0.4% 1.6% 0.0% 0.3%
Sales Region
2011 10.6% 1.2% 19.2% 39.9% 4.5% 0.2% 7.6%
segments as winners and losers are decided. In times
Middle East/ Africa (MEA) 2017 11.4% 2.6% 18.8% 37.6% 4.3% 0.0% 8.0%
when quality and safety standards are nearly on a par
2024 12.0% 3.1% 16.3% 37.0% 6.2% 0.0% 7.5%
within the core competition, the margin take per
2011 6.3% 0.0% 16.1% 0.4% 76.6% 0.4% 0.2%
vehicle becomes a key factor to success. High quality out
North America (NA) 2017 7.2% 0.3% 13.6% 0.2% 76.5% 0.8% 1.4%
of low-cost markets, in particular for the volume brands, 2024 8.7% 2.1% 12.2% 0.0% 74.3% 1.0% 1.7%
will be an important aspect to achieving success in this 2011 2.8% 2.4% 10.0% 0.0% 6.7% 72.2% 1.6%
increasingly competitive environment. South America (SA) 2017 3.4% 2.7% 5.5% 0.1% 6.8% 70.8% 2.8%
2024 3.2% 2.4% 4.9% 0.2% 6.7% 72.8% 2.9%
The global automotive production footprint can also 2011 3.3% 0.2% 8.1% 0.3% 0.5% 0.1% 87.5%
expose vulnerabilities. The 2011 crises in Japan and South Asia (SEA) 2017 3.7% 0.2% 8.6% 0.4% 0.8% 0.1% 86.3%
Thailand reflect just how interconnected the auto 2024 2.8% 0.2% 5.5% 0.3% 1.4% 0.1% 89.7%
industry has become, especially in the area of engine,
transmission, and specialized component sourcing.
Although we continue to see short-term shifts in fully
assembled vehicle transport, these kind of events In a similar vein, political events have the power to
continue to help shape investments in global logistics. quickly force the evolution of new and revised business
Multiplant sourcing for key margin-driving vehicles plans. Mexico was fast developing as a go-to destination
and their components will likely be the consequence. of future production activities and was set to emerge
More recent concerns about the shape and future format as an important regional (and even global) hub for
for existing trading blocs, notably the North American production. The emergence of US president Donald
Free Trade Agreement (NAFTA) and the European Trump has seemingly thwarted long-planned auto
Union, only add to the complexity of forecasting future investment into Mexico, with Ford, General Motors
production patterns. (GM), Fiat Chrysler Automobiles (FCA), and other OEMs
swiftly announcing North American auto investments
Several factors determine production sourcing for structured around the United States rather than
vehicles sold within a region, including currency shifts, Mexico. As always, the devil is in the details, with some
the competitiveness of domestic capacity, the formation of these initiatives not really “new news,” whereas
of high-volume scale within a growing region, and the others include already-announced investment plans
reduction or escalation of tariff and nontariff barriers and dollars. US trade policy decisions are still a work in
that shield a country or region from global market progress, and we will continue to update our forecasts as
forces. Regions like Europe will see only minor growth the fog lifts.
in sourcing outside the region. However, we see ongoing
shifts within Europe, especially a shift of sourcing from Import activities from the Japan/Korea region will grow
Western Europe to lower-cost Central and Eastern significantly through the forecast period, showing the
Europe. Brexit and the expected trade negotiations largest shift outside of Europe, with the bulk of this
have the potential to significantly hurt production, activity benefiting the Hyundai and Kia brands (unless
investment, and interregional vehicle flows—we plan militant Korean labor unions derail current plans). GM’s
to adapt our forecasts accordingly as Brexit-related announcement concerning the cessation of Chevrolet
decisions emerge. June 2017 saw the beginnings of the sales in much of Europe by the end of 2016 has already
UK-EU negotiations, but it is early, and, so far, there are trimmed GM’s Korean activities and could contribute to
virtually no signposts to help guide the future UK-EU pressure for Korean plant closures. The recent PSA-Opel
trading relationship. deal and other mega-deals such as Nissan-Mitsubishi

and Toyota-Suzuki similarly create further uncertainty volume for 2017 is projected to moderate to 20.7
for sourcing arrangements. South Asia will continue million units owing to a year-on-year (y/y) volume
to build its position as the export hub of the future. In declines in the United States and Mexico.
particular, Japanese OEMs will continue to investigate
future activities in the Association of Southeast Asian • IHS Markit projects that the weather events of late
Nations (ASEAN), especially in Thailand and Indonesia, August and early September in the United States will
and India will increase its significance as a low-cost affect demand levels in the short term. September
sourcing base in the next few years. sales results reflected an immediate impact, as the
selling rate for the month was more than 18 million
Time will tell whether large-scale vehicle exports from units and the replacement of vehicles in the affected
China will emerge as a major competitive force. To date, areas should help boost demand levels in fourth-
progress has been limited, with most foreign OEMs quarter 2017. Overall, IHS Markit projects North
preferring to use Chinese-installed capacity to first American light vehicle sales to sink slightly in 2017 to
serve the burgeoning Chinese market. In the future, 20.7 million units, followed by 20.5 million units in
this may change, since OEMs may shift to exporting 2018 and 20.4 million units in 2019.
models solely sourced in Chinese plants. For Chinese
OEMs, exports represent an area of significant interest, • Through September 2017, regional growth was
especially as a volume release valve if the Chinese spurred by the continuing demand momentum in
market begins to cool in the upcoming years. For now, Canada. Canadian demand led the region in growth
much of the initial export flow was to markets in South during the period, up 5.5%, while light vehicle sales
Asia (especially Vietnam), South America, the Middle in Mexico and the United States are down 1.8%. In
East (especially Iran), and Africa (especially Algeria). To September 2017, regional demand was up 5.0% owing
make serious inroads to North America, Europe, and to the bounce back of sales in the United States after
other more mature markets, Chinese OEMs need to Hurricanes Harvey and Irma hurt August demand
raise their game, including considering localized vehicle levels. Continued momentum in Canada, up 7.7% for
build. Indications are they are up for this challenge, the month, also contributed to the positive demand
especially with nods to changes to future auto company levels in September. Meanwhile, auto sales in Mexico
ownership rules from the Chinese Third Plenum. The dropped 11.5%, the fifth time in the past six months
creation of joint-venture brands between foreign and that demand has decline in y/y comparisons.
domestic Chinese companies has so far proved lackluster
in terms of global market impact. With slowing growth • In the United States, YTD 2017 volume was down
momentum in China, we are already seeing some signs 1.8%, or approximately 240,000 units, compared with
of interest in overseas production investment from key 2016. Sales in the first quarter paced at a seasonally
Chinese OEMs, notably in India and Iran. adjusted annual rate (SAAR) of 17.1 million units, but
from April through July, the sales pace averaged a more
moderate 16.7 million units. August and September
Regional analysis results reflected the weather related impacts, as
• Regional sales in North America improved August sales suffered from the effects of Hurricane
approximately 1.8%, or more than 380,000 units, Harvey, while September demand jumped back
in 2016, pushing regional sales to 21.1 million units. immediately. Through September 2017, the SAAR has
Regional sales throughout the year were supported averaged 17.0 million units, below the 17.4-million-
by Mexico’s breakneck growth pace, and a strong unit pace of the first three quarters of 2016. Based off
December volume push in the United States helped hurricane replacement demand, sustained incentive
lift 2016 sales above the year-earlier level. As we levels, and automaker need to correct inventory levels
began 2017, we expected regional light demand to be by year-end, we expect a continued rebound from
more moderate than it has realized since the recovery the sales pace in the first half of the year in the final
from the Great Recession. Looking over the year-to- quarter of 2017. Although overall light vehicle demand
date (YTD) results through September, light vehicle does seem to be stuck in neutral, and our forecast
demand in North America has been hurt by the for full-year 2017 volume is 17.1 million units with
decline in sales in the United States and Mexico, while expectations for 2018 lowered to 16.9 million units.
sales in Canada have sustained modest momentum.
We continue to expect the emerging trend of strong • Light vehicle demand in Canada set a volume record
light truck demand to be sustained within the in 2016, with sales of 1.93 million units for the year.
marketplace, but overall regional light vehicle demand The market momentum has been sustained in 2017,

with volume up 5.5% to 1.59 million units through remained relatively steady in 2017, y/y growth levels
September 2017; the light truck market continues have moderated from the strong results of the past
to motivate demand gains. Following a weak April three years, punctuated by a 2.6% volume decline in
result, Canadian light vehicle sales have grown for the second quarter, a 7.3% decline in July, and a 6.5%
five consecutive months as September demand was drop in August. There are some concerns the growing
up 7.7%. The auto demand results continue to reflect uncertainties surrounding the US administration’s
the dynamic trend of light trucks that has been the policies and their effects on Mexico are taking a toll
most prevalent within the region, with light truck on consumers, but the threat of Mexican auto demand
sales up 13.0% for the month, while passenger car sales falling precipitously is slim, especially if the flow of
were down 2.5%. As long as there is not a hard landing used imported cars continues to moderate. We expect
from the housing and credit markets, we anticipate volume of 1.58 million units for 2017, with sales
light vehicle demand momentum should be sustained projected to rise to 1.80 million units by 2024.
in 2017; new registrations are projected to reach 2.03
million units and demand in 2018 is expected to • Overall, light vehicle sales in North America have
remain in line with the current sales levels. grown steadily since 2009; recovering more than 8.4
million units through 2016 as regional growth reached
• Amid a growing economy, rising consumer confidence, 1.8% in 2016 on volume of 21.1 million units. Regional
improved credit availability, and a reduced flow of used light vehicle demand volume for 2017 is projected to
imported vehicles, Mexican vehicle sales in 2016 grew moderate to 20.6 million units, since we expect a y/y
considerably, up 18.6%. Although the pace of sales has volume declines in the United States and Mexico.
North America
Sales by Country
Market Country 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 CAGR
NAFTA
Canada 1,899,325 1,932,055 2,025,176 2,026,131 1,998,140 1,965,774 1,971,602 1,977,389 1,986,565 2,001,771 0%
Mexico 1,351,812 1,601,208 1,575,959 1,615,999 1,650,015 1,679,886 1,710,018 1,740,400 1,770,651 1,800,580 2%
United States 17,473,665 17,551,031 17,077,250 16,872,108 16,764,874 16,638,358 16,521,805 16,363,364 16,631,819 16,707,594 0%
NAFTA Total 20,724,802 21,084,294 20,678,385 20,514,238 20,413,029 20,284,018 20,203,425 20,081,153 20,389,035 20,509,945 0%
Change % 6.4% 1.7% -1.9% -0.8% -0.5% -0.6% -0.4% -0.6% 1.5% 0.6%
Commodities overview • Our Eurozone real GDP growth forecast for 2017
remains at 2.2%. The medium-term assessment is
• World real GDP growth is expected to pick up from healthy, but calls for a gentle slowdown in growth to
2.5% in 2016 to 3.1% this year and 3.2% in 2018. In 2.0% in 2018 (revised up 0.1 percentage point) and 1.7%
2018, downward revisions to outlooks for the United in 2019 (unchanged).
States and India are offset by upward revisions to the
Eurozone and several emerging market forecasts. • Real GDP growth in China is projected to increase
6.8% this year, 6.5% in 2018, and 6.2% in 2019. This
• US real GDP growth is projected to be 2.2% this forecast is unchanged. China’s economy still has major
year, 2.4% in 2018, and 2.2% in 2019. Our US forecast unresolved structural problems that could drag down
no longer assumes federal tax cuts or additional economic growth. Even during the current period of
infrastructure spending. Nor does it include any relatively stable growth, latent downward pressure on
significant changes to healthcare or trade policies, the renminbi persists, with capital outflows exceeding
(i.e., all fiscal policy assumptions reflect current law). inflows. Pursuing a weak renminbi policy to stimulate
This change cuts 0.4 percentage point from real GDP exports would thus run the risk of raising depreciation
growth in 2018. An alternative simulation will be expectations and causing capital exodus—a replay of
produced to assess proposed personal and corporate 2015 and 2016.
tax reforms.

IHS Markit Commodity Price Forecast, October 2017

Forecast Change*
2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2018 2019
IHS Markit Material Price Index, 2002:1=1.00 2.957 2.671 2.769 2.841 2.727 2.648 2.636 2.671 2.745
Energy Prices
Natural Gas, Henry Hub, dollars/MMBtu 2.99 3.04 2.90 3.01 3.16 3.03 3.05 3.18 3.40
Crude Oil, WTI, dollars/barrel 51.95 48.30 47.05 48.28 42.53 45.32 49.11 51.12 53.62
Crude Oil, Brent, dollars/barrel 54.67 50.94 52.13 54.06 47.34 50.02 53.95 55.97 58.31
Diesel Fuel, Pump Price, cents/gallon 256.73 254.26 260.19 269.82 236.28 249.66 269.27 279.36 291.05
Chemicals, IHS Chemicals Prices (Cents/pound)

Ethylene 33.1 31.9 31.9 36.4 35.2 34.7 34.8 35.3 35.8
High Density Polyethylene, Blow Molding 71.3 73.0 74.7 81.5 76.3 71.0 69.0 67.0 66.0
Low Density Polyethylene 79.3 81.0 82.7 89.5 84.3 79.0 77.0 75.0 74.0
Linear Low Density Polyethylene 72.3 74.0 75.7 82.5 77.3 72.0 70.0 68.0 67.0
Propylene 47.2 41.0 41.7 48.8 50.2 40.8 34.8 38.3 39.0
Polypropylene 73.2 67.0 68.2 77.2 79.2 69.8 64.2 70.0 71.0
Benzene, cents/gallon 310.0 269.5 255.0 264.8 264.7 262.3 265.3 257.0 267.0
Styrene 85.6 84.4 85.1 77.4 71.9 69.2 66.3 65.7 65.5
Polystyrene, General Purpose 107.1 107.5 103.8 106.3 104.7 103.3 102.3 101.3 101.0
PVC 65.3 68.0 68.0 72.3 73.6 75.1 75.2 75.4 75.6
Steel, Spot Prices (Dollars/short ton)

Iron Ore, dollars/metric ton 87 61 70 66 63 60 59 59 64
# 1 Busheling Scrap, dollars/long ton 328 358 369 340 301 272 262 264 278
Shredded Scrap, dollars/long ton 307 296 292 270 265 251 242 243 255
Heavy Melt Scrap, dollars/long ton 288 269 277 245 239 226 218 218 230
Hot-rolled Coil 638 635 621 586 575 571 581 574 575
Cold-rolled Coil 847 838 816 780 768 750 720 705 700
Galvanized Sheet 949 943 917 881 870 837 803 782 776
Plate, Cut to Length US, $/short ton 688 741 734 685 686 635 632 640 654
Merchant Bar 630 658 658 658 650 619 613 617 621
Special Quality Bar 957 1,052 1,089 1,116 1,075 1,018 944 943 955
Rebar 547 534 540 551 538 536 527 527 542
Wire Rod 528 567 579 592 563 546 536 536 553
Structurals 725 733 730 730 700 697 687 687 704
Stainless Sheet, grade 304 2,392 2,331 2,118 2,467 2,496 2,474 2,487 2,525 2,625
Nonferrous Metals, LME Prices, $/metric ton

Aluminum 1,849 1,910 2,011 2,128 2,170 2,026 2,067 2,148 2,132
Copper 5,833 5,663 6,346 6,484 6,380 6,251 6,173 6,190 6,222
Nickel 10,278 9,249 10,523 11,350 11,998 11,841 12,156 12,677 13,550
Zinc 2,781 2,598 2,938 3,192 2,930 2,742 2,662 2,566 2,549
Tin 20,015 19,967 20,412 20,649 20,721 20,530 20,699 20,750 20,516
Lead 2,278 2,164 2,315 2,496 2,239 2,204 2,177 2,184 2,172
Stainless Steel and Ferro-alloys, $/lb

Stainless Sheet, grade 304, dollars/short ton 2,392 2,331 2,118 2,467 2,496 2,474 2,487 2,525 2,625
Nickel, dollars/metric ton 10,278 9,248 10,523 11,350 11,998 11,841 12,156 12,677 13,550
Molybdic Oxide 7.79 8.29 8.03 8.36 8.80 8.97 8.89 8.89 9.04
Ferrochrome, high carbon 1.416 1.429 1.392 1.425 1.400 1.380 1.365 1.359 1.362
Cobalt 20.50 27.67 29.78 28.35 25.57 24.20 22.96 22.37 22.41
Precious Metals (Dollars/troy ounce)

Gold 1,219 1,258 1,268 1,268 1,221 1,199 1,186 1,177 1,178
Silver 17.45 17.19 16.65 16.89 16.43 15.84 15.73 15.18 15.03
Palladium 766 819 895 920 880 830 785 748 705
Platinum 980 940 958 948 980 1,048 1,055 1,062 1,078
*Up and down arrows signal whether the price forecast is more than 5% higher or lower than the September forecast.
Source: IHS Markit Ξ 2017 IHS Markit

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2023
2024
'LVSODFHPHQW Global vs Regional
Displacement
7KH1RUWK$PHULFDQUHJLRQLVDERXWOLWHUVDERYHWKHJOREDODYHUDJH
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7KLV WUHQG LV VORZO\ UHYHUVLQJ DV 2(0V DQG FRQVXPHUV PDNH PRUH IXHO
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FRQVFLRXVFKRLFHVRZLQJWRLQFUHDVHGIXHOHFRQRP\VWDQGDUGV 2.0
North America
1.5
Global
1.0
0.5
0.0
2017
2018
2019
2020
2021
2022
2023
2024
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1RUWK $PHULFD LV LQFUHDVLQJ DOXPLQXP EORFN XVDJH LQ WKH IXWXUH RZLQJ WR
100.0%
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TXLFNHUSDFHWKDQWKHUHVWRIWKHZRUOGEHFDXVHRI1RUWK$PHULFD
VUHOLDQFHRQ
JDVROLQHHQJLQHV(XURSHDQGLHVHOHQJLQHVDQGGHYHORSLQJPDUNHWVDUHXVLQJ 80.0%
LURQEORFNVIRUGXUDELOLW\DQGFRVWUHDVRQV
Market Share
60.0% NA Alum
Global Alum
Global Iron
NA Iron
40.0% NA CGI
5HJLRQDO2YHUYLHZ
Global CGI
Global Alum/Magnesium
NA Alum/Magnesium
20.0%
0.0%
2017
2018
2019
2020
2021
2022
2023
2024
7RUTXH'HQVLW\ Global vs Regional
Torque Density
7KH ODFN RI GLHVHO HQJLQHV DFFRXQWV IRU PRVW RI WKH UHJLRQ
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160.0
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140.0
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Weighted Average
100.0
80.0
Global
North America
60.0
40.0
20.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
&\OLQGHUV Global vs Regional
Cylinders
7KH1RUWK$PHULFDQUHJLRQLVDERXWRQHDQGDKDOIF\OLQGHUVDERYHWKHJOREDO
6.0
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WXUERFKDUJHUV WR UHSODFH F\OLQGHU HQJLQHV ZLWK F\OLQGHU HQJLQHV DQG WR
Number of Cylinders
Weighted Average
UHSODFH F\OLQGHU HQJLQHV ZLWK F\OLQGHU HQJLQHV 7KLV HIIRUW KDV VWDUWHG WR 4.0
NHHSXSZLWKFRQVXPHUGHPDQGVIRUSRZHUDQGIXWXUH&$)(UHTXLUHPHQWVIRU
2(0V
North America
Global
2.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
&RS\ULJKW,+6,QF
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Aspiration
1RUWK $PHULFDQ WXUER JURZWK LV DSSURDFKLQJ WKH JOREDO DYHUDJH 7KLV LV
80.0%
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JDVROLQH HQJLQHV ZKLOH WKH JOREDO SURGXFWLRQ ILJXUH LQFOXGHV WXUERFKDUJHG
GLHVHOVWKDWDFFRXQWIRURYHUKDOIRIDOOHQJLQHVSURGXFHGLQ(XURSH
60.0%
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Market Share
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40.0% North America Turbo
North America Natural
Global Natural
5HJLRQDO2YHUYLHZ
North America Super

Global Super
20.0%
0.0%
2017
2018
2019
2020
2021
2022
2023
2024
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Hybrid Usage
1RUWK $PHULFDQ 2(0V DUH DGRSWLQJ YDULRXV IRUPV RI K\EULGL]DWLRQ WR PHHW
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Market Share
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Global Hybrid-Full
PRUHSHRSOH3+(9VDQGIXOOK\EULGVFDQRIIHUVLJQLILFDQWLPSURYHPHQWVLQIXHO
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2017
2018
2019
2020
2021
2022
2023
2024
RIIHUJDVROLQHIUHHRZQHUVKLSDQGPD\EHRSWLPDOIRUFRQVXPHUVZLWKVKRUWHU
PRUHGHILQHGFRPPXWHVDQGIXHOFHOOYHKLFOHVRIIHUWKHWUDGLWLRQDOUHILOOLQJWLPH
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Market Share
VWDQGDUGSRUWIXHOLQMHFWLRQ 60%
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20%
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2017
2018
2019
2020
2021
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2023
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Market Share
60%
Global
40% North America
5HJLRQDO2YHUYLHZ
20%
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2017
2018
2019
2020
2021
2022
2023
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Engine Production
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Fuel Type
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100%
80%
Market Share
60% Cummins Diesel
North America Gas
40% Cummins Gas
20%
0%
2017
2018
2019
2020
2021
2022
2023
2024
&XPPLQV
3RZHU'HQVLW\ OEM vs Regional
Power Density
%HLQJDKHDY\GXW\GLHVHOHQJLQHVXSSOLHUPHDQV&XPPLQV
SRZHUGHQVLW\LV 80.0
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60.0
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40.0
North America
Cummins
20.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
'LVSODFHPHQW OEM vs Regional
Displacement
&XUUHQWO\&XPPLQVRQO\SURGXFHVD/HQJLQHIRU&KU\VOHU:HDUHSURMHFWLQJ 8.0
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6.0
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Displacement
4.0
Cummins
North America
2.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
(QJLQH%ORFN OEM vs Regional

Engine Block
7KH/HQJLQHKDVDQLURQEORFN7KHQH[WJHQHUDWLRQ9$1*8$5'9ZDV 100.0%
GHVLJQHGZLWKDFRPSDFWHGJUDSKLWHLURQ&*,EORFNRYHUDQLURQEORFNWRVDYH
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HQJLQHVDQGHYHQVRPHJDVROLQHHQJLQHV 80.0%
Market Share
Cummins Iron
60.0%
North America Alum
North America Iron
North America CGI
40.0% Cummins CGI
Cummins Alum
Cummins Alum/Magnesium
North America Alum/Magnesium
20.0%
0.0%
2017
2018
2019
2020
2021
2022
2023
2024
&RS\ULJKW,+6,QF
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7RUTXH'HQVLW\ OEM vs Regional

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150.0
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100.0
Cummins
North America
50.0
&XPPLQV
0.0
2017
2018
2019
2020
2021
2022
2023
2024
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Cylinders
7KHH[LVWLQJ&XPPLQV,6%XVHGLQWKHKHDY\GXW\'RGJH5DPSLFNXSVLVD 8.0
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6.0
Number of Cylinders
Weighted Average
4.0
Cummins
North America
2.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
$VSLUDWLRQ OEM vs Regional
Aspiration
&XPPLQVHQJLQHVDUHDOOWXUERFKDUJHGOLNHPRVWPRGHUQGD\GLHVHOHQJLQHV 120.0%
100.0%
80.0%
Market Share
Cummins Turbo
North America Super
40.0% Cummins Natural
Cummins Super
20.0%
0.0%
2017
2018
2019
2020
2021
2022
2023
2024
&RS\ULJKW,+6,QF
&XPPLQV$QDO\VLV
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Hybrid Usage
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Market Share
6.0%
North America Hybrid-Full
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4.0% Cummins Hybrid-Full
Cummins Hybrid-Mild
2.0%
0.0%
2017
2018
2019
2020
2021
2022
2023
2024
&XPPLQV
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60%
North America
40% Cummins
20%
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2017
2018
2019
2020
2021
2022
2023
2024
9DULDEOH9DOYH7LPLQJ OEM vs Regional
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Market Share
60%
North America
40%
20%
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2017
2018
2019
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Dearborn, MI, USA
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40% Ford Diesel
20%
0%
2017
2018
2019
2020
2021
2022
2023
2024
Power Density
$V)RUGEHJLQVWRUDPSXSLWV(FR%RRVWWXUERFKDUJHGHQJLQHVLWZLOOEHJLQWRVHH 80.0
DQLQFUHDVHLQSRZHUGHQVLW\DVWKHVPDOOHUHQJLQHVKDYHDPXFKKLJKHUSRZHU
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Weighted Average
SODWIRUP
40.0
Ford
North America
20.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
Displacement
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VDYHUDJHHQJLQHVL]HLVEHJLQQLQJWR 4.0
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Displacement
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Ford
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1.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024

Engine Block
$VWUXFNYROXPHGHFOLQHVDQG)RUGFRQWLQXHVODXQFKLQJLWVQHZ/&2<27( 100.0%
HQJLQHZLWKDOXPLQXPEORFNVIRUWKH0XVWDQJDQGHYHQWXDOO\WKH)LURQ
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Market Share
North America Alum

60.0%
Ford Alum
Ford CGI
North America Iron
Ford Iron
Ford Alum/Magnesium
20.0%
0.0%
2017
2018
2019
2020
2021
2022
2023
2024
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Weighted Average
100.0
Ford
North America
50.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
Cylinders
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Weighted Average
4.0
Ford
North America
2.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
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Ford Turbo
Ford Natural
North America Super
Ford Super
20.0%
0.0%
2017
2018
2019
2020
2021
2022
2023
2024
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2018
2019
2020
2021
2022
2023
2024
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60%
Ford
40% North America
20%
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2017
2018
2019
2020
2021
2022
2023
2024
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60%
North America
40% Ford
20%
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2017
2018
2019
2020
2021
2022
2023
2024
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North America Gas
General Motors Gas
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3.0
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Displacement
2.0
General Motors
North America
1.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024

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60.0%
North America Alum
General Motors Iron
North America Iron
General Motors Alum/Magnesium
General Motors CGI
20.0%
0.0%
2017
2018
2019
2020
2021
2022
2023
2024

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120.0

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100.0
80.0
General Motors
60.0
North America
40.0
20.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
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6.0
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Weighted Average
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4.0
General Motors
North America
2.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
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General Motors Natural
North America Super
General Motors Super
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0.0%
2017
2018
2019
2020
2021
2022
2023
2024

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General Motors Hybrid-Mild
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2018
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2020
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2022
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2024
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2017
2018
2019
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100%
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60% Honda Gas
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20%
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2018
2019
2020
2021
2022
2023
2024
Power Density
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60.0
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40.0 North America
20.0
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2018
2019
2020
2021
2022
2023
2024
Displacement
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2.5
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2.0
North America
1.5
Honda
1.0
0.5
0.0
2017
2018
2019
2020
2021
2022
2023
2024

Engine Block
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100.0%
80.0%
Market Share
Honda Alum
North America Alum
60.0% North America Iron
North America CGI
Honda Alum/Magnesium
40.0% Honda CGI
Honda Iron
20.0%
0.0%
2017
2018
2019
2020
2021
2022
2023
2024

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Weighted Average
100.0
80.0
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North America
60.0
40.0
20.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
Cylinders
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Number of Cylinders
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4.0
North America
Honda
2.0
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2017
2018
2019
2020
2021
2022
2023
2024
Aspiration
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60.0%
SODWIRUP
Market Share
Honda Turbo
Honda Natural
North America Super
Honda Super
20.0%
0.0%
2017
2018
2019
2020
2021
2022
2023
2024

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2.0
North America
1.5
Hyundai
1.0
0.5
0.0
2017
2018
2019
2020
2021
2022
2023
2024

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North America Alum
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40.0% Hyundai CGI
Hyundai Iron
20.0%
0.0%
2017
2018
2019
2020
2021
2022
2023
2024

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100.0
80.0
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60.0
Hyundai
40.0
20.0
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2017
2018
2019
2020
2021
2022
2023
2024
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Weighted Average
4.0
North America
Hyundai
2.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
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Hyundai Natural
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North America Super
Hyundai Super
20.0%
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2017
2018
2019
2020
2021
2022
2023
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YHKLFOHV3+(9VDQGWKLVPD\MXVWLI\ORFDOL]HGSURGXFWLRQLQWKH8QLWHG6WDWHV 8.0%
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6.0%
Hyundai Hybrid-Full
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Hyundai Hybrid-Mild
2.0%
0.0%
2017
2018
2019
2020
2021
2022
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2024
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Hyundai
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20%
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2017
2018
2019
2020
2021
2022
2023
2024
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2017
2018
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60% Renault/Nissan Gas
North America Gas
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20%
0%
2017
2018
2019
2020
2021
2022
2023
2024
Power Density
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North America
Renault/Nissan
20.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
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2.5
Displacement
2.0
North America
1.5
Renault/Nissan
1.0
0.5
0.0
2017
2018
2019
2020
2021
2022
2023
2024

Engine Block
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60.0%
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20.0%
0.0%
2017
2018
2019
2020
2021
2022
2023
2024

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60.0
Renault/Nissan
40.0
20.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
Cylinders
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North America
Renault/Nissan
2.0
0.0
2017
2018
2019
2020
2021
2022
2023
2024
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North America Turbo
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Renault/Nissan Super
North America Super
20.0%
0.0%
2017
2018
2019
2020
2021
2022
2023
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2018
2019
2020
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60%
North America
40% Renault/Nissan
20%
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2017
2018
2019
2020
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2024
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20%
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7R\RWDRQO\SURGXFHVJDVROLQHHQJLQHVLQ1RUWK$PHULFD 120%
100%
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60% Toyota Gas
North America Gas
40% Toyota Diesel
20%
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2017
2018
2019
2020
2021
2022
2023
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60.0
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40.0
North America
Toyota
20.0
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2017
2018
2019
2020
2021
2022
2023
2024
Displacement
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1.5
Toyota
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2017
2018
2019
2020
2021
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Toyota Iron
20.0%
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2017
2018
2019
2020
2021
2022
2023
2024

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80.0
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60.0
Toyota
40.0
20.0
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2017
2018
2019
2020
2021
2022
2023
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Weighted Average
4.0
North America
Toyota
2.0
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2017
2018
2019
2020
2021
2022
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2024
Aspiration
7R\RWDKDVEHHQVORZHUWRXWLOL]HWXUERFKDUJHGHQJLQHVWKDQVRPHRILWV 120.0%
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Toyota Natural
Toyota Turbo
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Toyota Super
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2017
2018
2019
2020
2021
2022
2023
2024

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2018
2019
2020
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60%
Toyota
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20%
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2017
2018
2019
2020
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2024
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2018
2019
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2021
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Volkswagen
40.0 North America
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2018
2019
2020
2021
2022
2023
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2017
2018
2019
2020
2021
2022
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Volkswagen CGI
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2017
2018
2019
2020
2021
2022
2023
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North America
50.0
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2018
2019
2020
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4.0
North America
Volkswagen
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2018
2019
2020
2021
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2018
2019
2020
2021
2022
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2018
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60%
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NA Engine Forecast Rel 4Q2017

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North America

Published October 2017 | Automotive

Introduction The purpose of a forecast is to support the decision-

IHS Automotive Light Vehicle Engine and Transmission

4Q 2017 1 Confidential. © 2017 IHS Markit™. All rights reserved

• On an industry basis, demand for output is

Canada light vehicle sales

Global Market Sales Share

Near-term outlook • The solid increases in total compensation support the

Canada economic snapshot

4Q 2017 3 Confidential. © 2017 IHS Markit™. All rights reserved

Canada GDP Canada foreign trade

Canada Industrial Countries Imports Exports

Canada exchange rates Canada consumer price index

0.95 1.38 0.0

Can$/US$ (l.) Can$/Euro (r.) Canada Industrial Countries

6.2 0.2 0.5

6.1 0.0 0.0

Unemployment Rate (l.) Employment (r.) Policy Rate Long-Term Rate

Confidential. © 2017 IHS Markit™. All rights reserved 4 4Q 2017

Mexico economic analysis Agreement (NAFTA) renegotiations. Thus, it is less

Mexico light vehicle sales

Global Market Sales Share

Near-term outlook to compensate for lower revenue, authorities

Mexico economic snapshot

Confidential. © 2017 IHS Markit™. All rights reserved 6 4Q 2017

Mexico GDP Mexico foreign trade

Mexico Industrial Countries Imports Exports

Mexico exchange rates Mexico consumer price index

10.0 15.0 3.0

0.0 0.0 0.0

Pesos/US$ (l.) Pesos/Euro (r.) Mexico Industrial Countries

3.0 1.5 4.0

0.0 0.0 0.0

Unemployment Rate (l.) Employment (r.) Policy Rate Short-Term Rate

4Q 2017 7 Confidential. © 2017 IHS Markit™. All rights reserved

United States light vehicle sales

Global Maket Sales Share

Near-term outlook accounts for the downward revision in the 2018

Confidential. © 2017 IHS Markit™. All rights reserved 8 4Q 2017

United States economic snapshot

4Q 2017 9 Confidential. © 2017 IHS Markit™. All rights reserved

United States GDP United States foreign trade

United States Industrial Countries Imports Exports

United States exchange rates United States consumer price index

100.0 1.15 1.5

70.0 0.95 0.0

US$/Yen (l.) US$/Euro (r.) United States Industrial Countries

Unemployment Rate (l.) Employment (r.) Policy Rate Long-Term Rate

Confidential. © 2017 IHS Markit™. All rights reserved 10 4Q 2017

North American short-term production

Source: IHS Markit © 2017 IHS Markit

4Q 2017 11 Confidential. © 2017 IHS Markit™. All rights reserved

Typically aggressive, Hyundai has been cautious to

Confidential. © 2017 IHS Markit™. All rights reserved 12 4Q 2017

North American long-term production

2.4 2.0 2.0

4Q 2017 13 Confidential. © 2017 IHS Markit™. All rights reserved

Confidential. © 2017 IHS Markit™. All rights reserved 14 4Q 2017

Global topline volume

4Q 2017 15 Confidential. © 2017 IHS Markit™. All rights reserved

Confidential. © 2017 IHS Markit™. All rights reserved 16 4Q 2017

Global Production Matrix

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