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Peter Fuß Senior Advisory Partner Automotive April 28, 2014

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Presentation on theme: "Peter Fuß Senior Advisory Partner Automotive April 28, 2014"— Presentation transcript:

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

2 The state and outlook for the auto industry

3 LV sales growth in major markets
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 LV sales growth in major markets India (2.9) CAGR f China (21.3) Eastern Europe (1.9) Western Europe (12.8) Brazil (3.6) Russia (2.8) North America (18.4) CAGR Japan (5.2) 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 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 *Period under consideration for the growth forecast: Source: LMC Automotive (4Q13, 4Q10)

4 LV production growth in major markets
Over the next few years, Europe is estimated to witness higher production growth than in LV production growth in major markets CAGR f India (3.6) China (20.5) Russia (2.1) Eastern Europe (4.4) North America (16.2) Brazil (3.5) Western Europe (12.4) CAGR Japan (9.1) 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 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 Source: LMC Automotive (4Q13, 4Q10) *Period under consideration for the growth forecast:

5 The auto industry’s weight agenda

6 6%-8% 10% 50% 10-12% 2020 2013 vehicle weight fuel economy Plastics
CO2 emissions would have been 4 g/km lower 2020 2013 If car weight 2009 = 2011 vehicle weight 6%-8% 10% fuel economy Plastics 50% 10-12% of volume of weight

7 Industry participants consider several alternatives to achieve targets
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 Historic emission levels and future targets (in gCO2/km) for key markets 2010 2015F 2020F Source: International Council for Clean Transportation Industry participants consider several alternatives to achieve targets Vehicle design improvements Alternate powertrain Oil Efficient engine and power transmission Light-weighting

8 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 Evolution of average mass of new car registrations in Europe (kg) Source: European Aluminium Association, TRW and EY analysis After reaching a peak in 2011, OEM’s, suppliers and material suppliers have begun focusing energies on inverting the “weight spiral”

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

10 Plastic composites offer a significant opportunity for weight loss in new vehicle development
Long term weight reduction potential Engineering plastic demand in automotive Weight -50to75% vs. steel Source: BASF, BCG and EY analysis

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

12 Many thanks for your attention !
Peter Fuß Senior Advisory Partner Automotive GSA Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Mergenthalerallee 3 – 5 65760 Eschborn Germany Phone Mobile Fax 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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