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The Steel Consumption in the Automotive Industry in Europe 2 nd Metal Expert Europe Steel Trade Conference Peter Fuß Senior Advisory Partner Automotive.

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Presentation on theme: "The Steel Consumption in the Automotive Industry in Europe 2 nd Metal Expert Europe Steel Trade Conference Peter Fuß Senior Advisory Partner Automotive."— Presentation transcript:

1 The Steel Consumption in the Automotive Industry in Europe 2 nd Metal Expert Europe Steel Trade Conference Peter Fuß Senior Advisory Partner Automotive April 28, 2014

2 Page 2Steel Consumption in the Automotive Industry in Europe The state and outlook for the auto industry

3 Page 3Steel Consumption in the Automotive Industry in Europe Markets offering growth over the next few years*: ► US: growth anticipated in the near term; SUVs and pickup trucks outpacing the overall market growth ► Brazil, China and India: short-term slowdown in growth (restrictions on car sales in China and return of IPI tax in Brazil in 2014); however, medium-term growth story still intact; SUVs (especially in the interior regions and lower tier cities) to witness uptake in China ► Russia: Considerable sales decline, nevertheless, SUVs, both economical and premium models, witnessing considerable growth ; rising middle class and low car density to drive growth in the long term LV sales growth in major markets Source: LMC Automotive (4Q13, 4Q10) Within Europe, Eastern Europe LV sales expected to recover and grow faster than Western Europe, while Global LV sales growth is estimated to be driven by BRICS market Note: Size of the bubble indicates LV sales during 2013, sales in million units have also been mentioned in parenthesis after the name of country CAGR f CAGR Eastern Europe (1.9) Western Europe (12.8) Japan (5.2) North America (18.4) China (21.3) India (2.9) Brazil (3.6) Russia (2.8) *Period under consideration for the growth forecast:

4 Page 4Steel Consumption in the Automotive Industry in Europe LV production growth in major markets Over the next few years, Europe is estimated to witness higher production growth than in Markets offering growth over the next few years*: ► Brazil, Russia: For Brazil, production of SUVs and A segment (Basic) cars, while for Russia production of Pick- up and C segment (Compact) cars to witness highest growth ► China, India: production of SUVs and large-plus cars to witness highest growth ► North America: production of G segment (sports) cars and vans to grow at a CAGR of 137% and 17%, respectively *Period under consideration for the growth forecast: Note: Size of the bubble indicates LV production during 2013, production in million units have also been mentioned in parenthesis after the name of country CAGR f CAGR Eastern Europe (4.4) Western Europe (12.4) Japan (9.1) North America (16.2) China (20.5) India (3.6) Brazil (3.5) Russia (2.1) Source: LMC Automotive (4Q13, 4Q10)

5 Page 5Steel Consumption in the Automotive Industry in Europe The auto industry’s weight agenda

6 vehicle weight fuel economy If car weight 2009 = 2011 CO2 emissions would have been 4 g/km lower 6%-8% 10% Plastics of volume 50% of weight 10-12%

7 Page 7Steel Consumption in the Automotive Industry in Europe Owing to growing concerns of environmental stability, stringent emission norms are being implemented; industry participants look to re-invent product and manufacturing to meet the targets F2020F Industry participants consider several alternatives to achieve targets Source: International Council for Clean Transportation Alternate powertrain Light-weighting Vehicle design improvements Efficient engine and power transmission Oil Historic emission levels and future targets (in gCO 2 /km) for key markets

8 Page 8Steel Consumption in the Automotive Industry in Europe Added safety and comfort equipment led to the rise in weight of vehicles till 2011; with an aim to achieve emission targets, industry participants adopt light weighting measures After reaching a peak in 2011, OEM’s, suppliers and material suppliers have begun focusing energies on inverting the “weight spiral” Source: European Aluminium Association, TRW and EY analysis Evolution of average mass of new car registrations in Europe (kg)

9 Page 9Steel Consumption in the Automotive Industry in Europe Explore usage of light-weight alternate materials to meet stringent emission norms Reduction in weight Rise in cost Comparison of traditional steel with alternate materials *AHSS: Advanced High-strength steel; **Plastic composites include Fiber Reinforced Plastics, Thermoplastic etc. 2017F 2010 EU: Automotive materials breakdown based on volumes (2010, 2017F) Source: Frost & Sullivan, ICIS Source: US Department of Energy

10 Page 10Steel Consumption in the Automotive Industry in Europe Plastic composites offer a significant opportunity for weight loss in new vehicle development Long term weight reduction potentialEngineering plastic demand in automotive Source: BASF, BCG and EY analysis Weight -50to75% vs. steel

11 Page 11Steel Consumption in the Automotive Industry in Europe Industry participants come together and adopt myriad of light weighting strategies… Efficient manufacturing processes Module downsizing Use of low-density, high-strength materials Vehicle manufacturers Component suppliers Material suppliers Light-weighting strategies

12 Page 12Steel Consumption in the Automotive Industry in Europe Many thanks for your attention ! Phone Mobile Fax Peter Fuß Senior Advisory Partner Automotive GSA Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Mergenthalerallee 3 – Eschborn Germany EY- wir bewegen nachhaltig ®

13 EY | Assurance | Tax | Transactions | Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. How EY’s Global Automotive Center can help your business The global recession reset the automotive sector landscape. As the sector recovers, automotive companies across the value chain must focus on profitable and sustainable growth, financial and operational stability, investments in new technologies and seizing opportunities in high-growth markets. If you lead an automotive business, you need to anticipate trends, identify implications and make informed decisions that support your business goals. Our Global Automotive Center enables our worldwide network of more than 7,000 sector-focused assurance, tax, transaction and advisory professionals to share powerful insights and deep sector knowledge with businesses like yours. These insights, combined with our technical experience in every major global automotive market, will help you to accelerate strategies and improve performance. Whichever segment of the automotive sector you are in — from component suppliers to commercial or light vehicle manufacturers or retailers — we can provide the insights you need to succeed. © 2014 EYGM Limited. All Rights Reserved. EYG no. XXXXXX CSG/GSC2014/ ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com/automotive


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