Asia's automotive market updates and outlook
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Asia’s automotive market updates and outlook Dr. Marco H. Hecker | Chief Strategy Officer Deloitte China Automechanika, July 6th 2020
Global light vehicle sales headed for double-digit declines this year. Some Governments
have released major stimulus measures in an effort to boost vehicle demand.
Sales forecasts • Global light vehicle sales expected to be down by 22% in 2020
due to the spread of the COVID-19 virus, lockdown measures,
and a resulting slowdown in the global economy.
• Significantly higher decline than - 8% during 2008/09 fin. crisis
Global light vehicle sales
and growth (2019-2021F) Varying government stimulus packages :
Global sales % change •
Vehicle Units (Millions)
China: NEV subsidy; 0% NEV purchase tax are extended beyond
100 15% 2020; Delay of “China 6” until Jan 2021; lower auto finance
Annual % change
11.3% 10% down payment, lower interest rate as well as extended auto loan
90 5% terms; Encouragement to scrap 1 mil “China 3” (and older)
89.7 0% diesel trucks
80 -5%
-4.0% -10%
• Japan: USD1trn general stimulus- policies directed towards
78.0 businesses/ employment security. Earmarked $2.2 bn to help
70 -21.9% -15%
OEMs shift production from CN to stabilize supply chains
-20%
70.1
60 -25% • India: No direct Stimuli for Auto Sector. Gov. announced
2019 2020F 2021F packages for Micro, Small and Medium Enterprises. Tier2 and
some Tier 1 suppliers will benefit from the gov. soft loans. Also
EMI moratorium from March’20 till Aug’20 with “6 months
interest payment holiday”*)
Source: IHS Markit, Reuters *) interest will continue to accumulate
Copyright © 2020 Deloitte Development LLC. All rights reserved. Deloitte State of the Consumer Tracker 2
COVID-19 wreaks havoc on Asia’s automotive industry; the high uncertainty of
the pandemic signals demand will be slow to recover
2020 Monthly Vehicle1 Sales by Markets in k units Light Vehicles Sales Forecast (2018-2023) in mn units
-13%
Jan Feb Mar Apr May
27.1 24.8 25.9
China 1,927 2,070 2,194 21.5 23.4 24.7
1,430
310
2018 2019 2020E 2021E 2022E 2023E
-18%
581
Japan 360 430 5.2 5.1 4.2 4.5 4.6 4.6
270 218
2018 2019 2020E 2021E 2022E 2023E
India 338 310 278 -37%
156 4.0 3.5 3.1 3.4
2.7
0 2.2
2018 2019 2020E 2021E 2022E 2023E
AUS 56 62 61 -20%
27 42
1.1 1.0 0.8 0.9 0.9 1.0
2018 2019 2020E 2021E 2022E 2023E
349 338 292 -32%
SEA 134 154 3.4 3.4 3.0 3.3
2.3 2.7
Source: IHS Markit, Reuters *) interest will continue to accumulate. Note1: All types of vehicles;
IHS, CAAM, JAMA, FCAI, TAIA, TAIAI, MAA, LTA, VAMA, CAMPI, Deloitte research & analysis
2018 2019 2020E 2021E 2022E 2023E
Copyright © 2020 Deloitte Development LLC. All rights reserved. Deloitte State of the Consumer Tracker 3
Collective anxiety has started to ease in a majority of
global markets, but navigating the re-opening is critical. State of the Consumer Tracker
“I’m more anxious than I was last week” (Net Anxiety*)
India 31%
• Net consumer anxiety has receded across many
countries compared to the mid-April timeframe.
Chile* 20% One of the likely reasons is the cautious
Mexico* 5% reopening of economies .
Spain -2%
US -2%
• Some countries like India which have seen the
pandemic hit later than other countries continue
China -3% to show higher levels of net anxiety while
UK -4% countries that have relaxed their stay-at-home
Italy -5%
orders more widely have seen some reduction in
the overall level of consumer anxiety.
South Korea -5%
Poland* -5% • However, it remains to be seen whether this
Ireland* -7% trend will continue given a growing number of
Australia
medical officials pointing to the looming specter
-7%
of a second wave of virus.
France -11%
Canada -12%
Belgium* -13%
Japan -27%
Netherlands -30%
Germany -37%
-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%
Note: * Net anxiety = (% agree) – (% disagree); ** countries were not part of wave 1 fielding period.
Q3: To what extent do you agree or disagree with the following statements?
Copyright © 2020 Deloitte Development LLC. All rights reserved. Deloitte State of the Consumer Tracker 4Demand recovery in several markets may be stunted by
a consumer intention to keep existing vehicles longer. State of the Consumer Tracker
100%
90%
• Health concerns have largely
“I’m planning to keep my current vehicle longer kept consumers out of the
80% than I was originally expecting” (% agree) auto retail market for several
weeks.
70% =
• But, the prolonged global
economic shutdown is also
60% = starting to weigh on consumer
finances, causing many people
50%
to reconsider large purchases
going forward.
40%
30%
• At least half of the vehicle
owners in most countries are
planning to keep their current
20%
car longer than expected,
representing a significant
10%
challenge for automotive
manufacturers looking to
0%
IN CL PL CN MX IE ES KR JP AU IT FR US CA UK BE DE NL kickstart demand.
Wave 4 79% 64% 67% 61% 57% 56% 61% 55% 57% 56% 49% 48% 53% 44% 47% 39% 34%
• Also, when consumers return
Wave 5 82% 70% 65% 65% 63% 58% 56% 63% 48% 54% 56% 51% 47% 53% 45% 44% 40% 36% to the market, questions
Wave 6 76% 71% 68% 67% 62% 61% 60% 59% 55% 54% 53% 50% 50% 50% 49% 46% 45% 32% remain regarding the type of
vehicles people will buy (given
expected affordability
Note: Percentage of respondents who said “agree” or “strongly agree” have been added together. concerns).
Q3: To what extent do you agree or disagree with the following statements?
Copyright © 2020 Deloitte Development LLC. All rights reserved. Deloitte State of the Consumer Tracker 5Intent to delay vehicle maintenance is mixed as some
consumers divert spending to more immediate needs. State of the Consumer Tracker
100% • Along with concerns for their
long-term financial
90% “I’m putting off regular maintenance wellbeing, consumers are
80% for my vehicle” (% agree) also somewhat hesitant
regarding near-term
spending.
70%
60%
• Along with core questions
= around forward-looking
demand, this represents
50%
another key challenge facing
the automotive value chain,
40%
particularly dealers that rely
on their aftersales business
30%
for profitability.
20%
= • Having said that, there are
10% positive signals coming from
consumers in Europe,
0% Canada, Japan, and South
IN CN CL MX UK AU IT IE US ES FR CA DE KR PL BE NL JP Korea who are perhaps
Wave 4 63% 51% acknowledging the need to
42% 28% 32% 30% 33% 26% 30% 27% 28% 19% 20% 19% 18% 15% 12%
maintain their current vehicle
Wave 5 79% 43% 45% 41% 25% 30% 26% 29% 25% 28% 25% 26% 17% 22% 17% 17% 13% 13% (especially if they intend to
Wave 6 67% 50% 50% 41% 28% 28% 28% 27% 25% 25% 24% 23% 19% 18% 17% 17% 14% 12% keep it longer than
expected).
Note: Percentage of respondents who said “agree” or “strongly agree” have been added together.
Q3: To what extent do you agree or disagree with the following statements?
Copyright © 2020 Deloitte Development LLC. All rights reserved. Deloitte State of the Consumer Tracker 6Over the next 6 to 24 months, we can expect sectors to be impacted by COVID-19 and
experience the stages of the crisis cycle at different lengths and severity
Emerging perspectives on the Auto Sector in Asia Pacific
2020 2021
Apr May June Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June Jul Aug
CN Resp
Recover Thrive
ond
KR Resp
Recover Thrive
ond
AU Respond Recover Thrive
NZ Respond Recover Thrive
IN Respond Recover Thrive
JP Respond Recover Thrive
SEA – Respond Recover Thrive
VN
SEA-
Respond Recover Thrive
IND
SEA-
Respond Recover Thrive
MY
SEA- Respond Recover Thrive
TH
SEA- Respond Recover Thrive
SG
Copyright © 2020 Deloitte Development LLC. All rights reserved. Deloitte State of the Consumer Tracker 7Highly capital/ labor intensive businesses with highly complex& globalized supply
chains are hindering OEMs to transform fast.
Domains:
Sample actions to address the emerging issues
1. Crisis
Accelerate growth opportunity
Workforce & Transf response &
Restructuring & Integration
Cost Control ormat Scaling Digital integrated
Business Marketing &
performance Supply Chain & Financial Management ion infrastructure planning
Customer & eCommerce
Workforce safety, wellbeing, policies & 2. Workforce &
communications Accelerated Cloud talent
migration
Adjusting customer 3. Liquidity &
Enabling the experience in a
business
Virtual Workforce COVID-19 world Review& upgrade continuity
Tech & digital
roadmap 4. Customer
Rapid Cost &
Supply Chain
interactions &
Working Capital
Control Visibility service mgmt.
Structural cost
Agile analytics & 5. End-to-end
Rapid Supplier Risk review supply chain
decision support
Assessment & Mobilisation
6. Technology &
digital
Strategic & Capital
Workforce scenario enablement
modelling & redesign Portfolio Review
7. Strategic
response,
RESPOND RECOVER REINVENT to THRIVE
Actions to address immediate & Actions to enable organisational recovery & adjust to Actions to position the organisation for post crisis scenarios &
short-term challenges scenarios demand & the ‘new normal
policy
Copyright © 2020 Deloitte Development LLC. All rights reserved. Deloitte State of the Consumer Tracker 8Due to changing customer requirements, growing competition& increasing availability
of data, OEMs are re-evaluating their business models to drive long-term growth
Double-click on retail trends
Observation on trends Sample opportunities
• High discount leading to 0% RoS • Adopt agency-based direct sales model
Sales, channel,
• Online offline integration trend • Seamlessly integrate online and offline
format strategy
• Separation of sales and aftersales • Develop new and innovative formats
• No differentiating experience/ service • Engage customers effectively across lifecycle
Customer journey
• Dealer organization not customer-centric • Re-organize dealer to enable “one-face”
& process
• Unable to obtain customer data • Re-design sales process
• Optimization opportunities brought by online • Phase out underperforming dealers
Network
• Changing consumption pattern • Re-structure network based on intra-city geo-analytics
restructure
• Inefficient network and sociodemographic analysis
• Competition from IAM • Centralize B&P services to improve efficiency
Aftersales • Revenue impact caused by BEV • Offer simple aftersales services in city center
• New network requirements due to sales innovation • Crate aftersales packages to lock-in customers
• UC market to grow at CAGR of 20% • Expand trade-in volume
Used Car & fleet • UC penetration lower by ~2x vs. mature countries • Re-design dealer KPIs to encourage UC business
• Mobility segment to grow ~16% p.a • Tailor products and services for 2B customers
• Market downturn leads to intense risk level
Dealer risk • Design risk identification model and classification rules
• Decreasing dealer profitability
management • Develop response strategy and mechanism
• Inadequate protocols to manage dealer risks
Copyright © 2020 Deloitte Development LLC. All rights reserved. Deloitte State of the Consumer Tracker 9Different future scenarios, require the modelling of specific strategic option spaces for
all players in the automotive value chain
Deloitte Study- Future of
Automotive Sales &
Aftersales | Impact of
current trends on OEM
revenues and profits until
2035
We present a differentiated
perspective of future industry
effects based on two scenarios
of trend emergence.
Beyond that, we distinguish
between two degrees of future
OEM dominance over the
competitive landscape, resulting
in four possible future states in
2035.
Future of Automotive Sales and Aftersales | Impact of current industry trends on OEM revenues and profits until 2035 10For any questions, or if you would like Scan the QR code to visit the
the link to the interactive Consumer global automotive thought
Tracker Dashboard, leadership collection on
Deloitte Insights:
please reach out to me directly:
Marco H. Hecker
Chief Strategy Officer Deloitte China
mhecker@Deloitte.com.hk
+852 616 99901
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and
their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not
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