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Slide 1: U.S. Market Size & Trends in the U.S. Automobile Industry By Dr. Timothy G. Nash Provost and COO Northwood University Michigan Campus
Slide 2: The World is Flat 1. Global Economic freedom is at an all time high… 2. Global Competition has increased the demand for skilled human capital and natural resources (thus wages and costs are higher). 3. Communication costs less and is better than ever… 4. Business barriers to entry of all kinds are declining in today’s global economy… 5. It is more difficult to monitor the flow of people, goods and services, information, etc. Source: The World is Flat by Thomas L. Friedman
Slide 3: Key Economic Data Data Economic Area World GDP GDP GDP Purchas- Exchange (real) ing Power Growth Rate Rate (2006) (2006) (2006) $65 trillion $47 trillion 4.3% Unemployment & Underemploy ment Rate (2006) 30% (comb) 4-12% unemployment in dev. co. GDP per Capita (2006) $10,000 Inflation Rate (2006) Gross Dom. Investment (2006) NA Public Debt % GDP (2006) 1-4% developing co., 5-60% developing co. NA U.S.A. EU (25 Coun.) $12.98 trillion $12.82 trillion $1.75 trillion $1.62 trillion $4.04 trillion $10,000 trillion $13.22 trillion $13.62 trillion $733 billion $620 billion $796 billion $2.51 trillion 3.5% 2.8% 4.6% 8.8% $43,500 $29,300 3.7% 2.2% 16.6% 20.4% 64.7% NA Russia Brazil India China 6.6% 3.1% 8.5% 10.5% 6.6% 9.6% 7.8% 4.4% urban 20% est. overall $12,100 9.8% 4.2% 5.3% 1.5% 17.5% 19.8% 24.8% 44.3% 15.6% 50.2% 82% 22.1% $8,600 $3,700 $7,600
Slide 4: Employment by Sector 100% 80% 60% 40% 20% 0% China India U.S. Services Industry Agriculture
Slide 5: A More Educated America
Slide 6: Education Pays Huge Lifetime Dividends
Slide 7: Major expenses for the average dealership in 2005 Payroll Advertising Rent and equivalent $2,400,000 $360,225 $318,000 Source: NADA Industry Analysis Division
Slide 8: Average Dealership Profile 2005 Total Dealership Sales Total Dealership Gross As % of Total Sales $32,318,461 $4,307,479 13.3% % Change 2004-2005 -2.1% -1.3% Total Dealership Expense As % of Total Sales $3,776,446 11.7% -0.7% Net Profit Before Taxes As % of Total Sales $531,033 1.6% -5.1% Net Pretax Profit in Constant 1982 Dollars New Vehicle Department Sales As % of Total Sales $288,605 $19,469,000 60.2% -5.1.% -3.2% Used Vehicle Department Sales As % of Total Sales $9,067,128 28.1% -0.6% Service and Parts Sales As % of Total Sales $3,782,334 11.7% -0.5% New Vehicle Average Selling Price $28,381 $14,923 $2,258,753 1.1% 4.7% -1.9% Source: NADA Industry Analysis Division Average Net Worth (as of 12/31) Used Vehicle Average Selling Price
Slide 9: Expectations for Dealership Profits Percent of dealers expecting profit to: Increase April 1993 April 1994 April 1995 April 1996 April 1997 April 1998 April 1999 April 2000 April 2001 March 2002 March 2003 March 2004 March 2005 March 2006 54.8% 67.8 32.2 54.1 42.4 41.9 56.5 49.0 31.5 53.2 13.5 7.8 9.4 15.9 Not Change 38.8% 29.1 46.1 35.0 44.0 43.3 37.8 39.9 40.7 36.7 46.2 31.7 39.6 41.4 Decline 6.5% 3.1 21.6 11.0 13.6 14.8 5.7 11.1 27.8 10.1 40.2 60.4 51.1 42.7 Index Value 158 180 112 154 135 134 164 149 107 153 133 163 151 134 Source: NADA Industry Analysis Division
Slide 10: New Car Dealerships As of January 1 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 24,725 24,825 25,150 25,025 25,000 24,825 24,200 23,500 22,950 22,850 22,800 22,750 22,700 22,600 22,400 22,250 22,150 21,800 21,725 21,650 21,640 21,495 Source: NADA Industry Analysis Division
Slide 11: New Vehicle Sales By Month 2005 2005 SAAR* 2004 2004 SAAR* % Change Actual 16,945,000 (in millions) 16.9 Actual 16,866,500 (in millions) 16.9 2004-2005 0.5% Full Year Source: NADA Industry Analysis Division
Slide 12: New Vehicle Sales and Market Share By Manufacturer Year 1995 DaimlerChrysler 2,164,300 14.70% 1996 2,450,800 16.23% 1997 2,303,800 15.23% 1998 2,510,000 16.15% 1999 2,638,600 15.62% 2000 2,522,700 14.54% 2001 2,273,200 13.28% 2002 2,205,450 13.11% 2003 2,127,450 12.79% Ford 3,801,000 25.81% 3,843,400 25.46% 3,807,100 25.16% 3,860,200 24.84% 4,115,600 24.36% 4,147,700 23.91% 3,915,500 22.87% 3,576,250 21.27% 3,437,700 20.67% General Motors 4,841,600 32.87% 4,743,600 31.42% 4,734,100 31.29% 4,570,100 29.41% 4,974,600 29.44% 4,911,700 28.31% 4,852,500 28.34% 4,815,150 28.63% 4,716,050 28.35% Toyota 1,083,400 7.36% 1,159,700 7.68% 1,230,100 8.13% 1,361,000 8.76% 1,475,400 8.73% 1,619,200 9.33% 1,741,300 10.17% 1,756,150 10.44% 1,866,300 11.22% Honda 794,600 5.40% 843,900 5.59% 940,400 6.22% 1,009,600 6.50% 1,076,900 6.37% 1,158,900 6.68% 1,207,600 7.05% 1,247,850 7.42% 1,349,850 8.11% Nissan 770,300 5.23% 749,800 4.97% 728,400 4.81% 621,600 4.00% 677,900 4.01% 752,800 4.34% 703,700 4.11% 739,850 4.40% 794,800 4.78% Volkswagen 106,600 0.72% 163,300 1.08% 172,000 1.14% 267,200 1.72% 381,500 2.26% 435,900 2.51% 438,900 2.56% 423,850 2.52% 389,100 2.34% Other Imports 1,166,300 7.92% 1,142,700 7.57% 1,214,400 8.03% 1,342,300 8.64% 1,555,300 9.21% 1,800,800 10.38% 1,989,200 11.62% 2,052,950 12.21% 1,953,450 11.74% 16,634,700 16,817,500 17,121,900 17,349,700 16,895,800 15,541,900 15,130,200 15,097,200 Total 14,728,000 2004 2,206,000 13.08% 3,271,100 19.39% 4,657,400 27.61% 2,060,050 12.21% 1,394,400 8.27% 855,000 5.07 334,050 1.98% 2,088,500 12.38% 16,866,500 2005 2,304,900 13.60% 3,106,900 18.34% 4,456,800 26.30% 2,260,300 13.34% 1,462,500 8.63% 1,076,900 6.36% 307,250 1.81% 1,969,450 11.62% 16,945,000 Source: NADA Industry Analysis Division Average 2,337,018 3,716,586 4,752,145 1,601,173 1,135,136 770,095 310,877 1,661,395 16,284,400
Slide 13: Dealerships’ total service and parts sales In billions of dollars: Amount 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Source: NADA Industry Analysis Division % Change 2.6% 7.4% 3.6% 1.0% 6.5% 9.1% 8.5% 3.8% 2.7% 0.2% -0.4% $56.57 $60.76 $62.93 $63.56 $67.66 $73.83 $80.10 $83.11 $85.35 $85.48 $85.16
Slide 14: Estimated number of new-car dealership employees in 2005 Source: NADA Industry Analysis Division Total of all Dealers Total U.S.: 1,138,000 Average number per Dealership 53 Average Weekly Earnings Per Dealership Employee: $870
Slide 15: Total of all Dealerships 2005 Annual Payroll Average per DealershipDealerships By State of New Car ($ billions) ($ millions) Source: NADA Industry Analysis Division Total of all Dealerships ($ billions) $0.15 Average per Dealership ($ millions) Alabama $0.60 $1.87 Montana $1.13 Alaska 0.11 2.73 Nebraska 0.27 1.26 Arizona 1.33 5.22 Nevada 0.57 5.07 Arkansas 0.34 1.26 New Hampshire 0.33 1.92 California 7.03 4.24 New Jersey 1.76 2.91 Colorado 0.86 3.05 New Mexico 0.30 2.22 Connecticut 0.79 2.37 New York 2.43 2.04 Delaware 0.18 2.87 North Carolina 1.44 2.05 D.C. 0.00 1.47 North Dakota 0.12 1.16 Florida 3.58 3.74 Ohio 1.79 1.81 Georgia 1.56 2.53 Oklahoma 0.68 2.29 Hawaii 0.24 3.39 Oregon 0.62 2.26 Idaho 0.23 1.84 Pennsylvania 2.18 1.78 Illinois 2.06 2.06 Rhode Island 0.16 2.30
Slide 16: Vehicles in Operation - Scrappage by Year Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2005 2006 Total Vehicles in Use 193,440,393 198,293,459 201,070,397 205,042,639 209,509,161 213,299,313 216,682,936 221,027,121 225,882,103 231,398,281 238,697,097 New-Vehicle Registration 15,058,699 15,663,707 15,285,529 15,637,540 16,130,124 18,088,911 17,505,343 17,639,934 16,939,662 17,419,471 16,690,280 Scrappage 10,332,303 10,810,641 12,508,591 11,665,298 11,663,602 14,298,759 14,121,720 13,295,749 12,084,680 11,903,293 9,988,864 Scrappage as a % of Registrations 68.6 69.0 81.8 74.6 72.3 79.0 80.7 75.4 71.3 68.3 59.8 Source: The Polk Co.
Slide 17: Comerica New Vehicle Affordability Index Avg. Finance Rate (%) Avg. Length Loan (months) 52.8 52.5 51.9 53.5 52.9 54.3 55.7 56.7 55.1 56.8 57.4 51.1 53.9 57.3 58.9 57.3 59.1 61.1 63.0 62.5 59.7 60.2 60.9 61.3 59.3 59.5 Avg. Consumer Expenditure* ($) 22,121 22,262 22,357 22,437 22,038 22,403 22,084 23,000 22,872 23,434 23,584 22,675 25,250 25,527 24,537 24,936 25,486 25,733 26,949 27,139 26,909 27,126 25,529 25,988 26,054 26,315 Median Family Income ($) 54,423 55,054 55,759 56,618 57,796 58,987 59,777 60,763 61,626 61,100 61,503 61,504 62,833 63,625 64,185 64,185 66,264 66,906 64,663 65,982 68,469 69,,582 68,380 70,205 70,275 70,974 70,690 Avg. weeks of Median Family Income to Buy Car* 24.6 24.5 24.4 24.3 23.3 22.9 23.1 23.2 26.3 26.5 26.5 23.8 25.5 26.1 24.4 25.0 24.6 24.1 24.8 25.1 24.6 24.6 25.3 25.0 24.8 24.7 1999Q1 1999Q2 1999Q3 1999Q4 2000Q1 2000Q2 2000Q3 2000Q4 2001Q1 2001Q2 2001Q3 2001Q4 2002Q1 2002Q2 2002Q3 2002Q4 2003Q1 2003Q2 2003Q3 2003Q4 2004Q1 2004Q2 2004Q3 2004Q4 2005Q1 2005Q2 2005Q3 7.38 7.43 7.45 7.96 7.98 7.82 8.34 7.75 8.13 7.58 7.16 5.42 6.41 6.86 4.34 4.44 3.65 2.61 3.55 3.80 3.24 3.65 5.54 5.01 4.86 5.18 5.80 60.2 28,105 Source: Comerica Bank (compiled from Commerce Department and Federal Reserve data * With Possible Rebates
Slide 18: Wired Dealerships in 2005 “98% of all U.S. Automobile Dealerships have web pages and use the internet to influence dealership traffic and/or sales.” Source: Wards Automotive
Slide 20: Motor Vehicle Sales in China 2005 Select Manufacturers Numbers GM-Shanghai GM-SAIC/Wuling-Trucks GM-SAIC/Wuling-Buses GM-TOTAL VW-First Auto Works VW-Shanghai VW-Total Honda-Guangzhou Hyundai-Beijing Cherry Toyota-FAW Toyota-Total Ford FAW-XIALI 179 200 665 277 287 564 256 234 190 Percent 11.2 9.5 4.3 3.9 3.2 3.0 3.4 180 3.0 Source: NISSAN* NADA Industry Analysis Division 166 2.8
Slide 21: Details of U.S. Automotive Trade (All totals in billions of dollars) Trading Partners Exports Canada – Vehicles - Auto Parts Mexico – Vehicles -Auto Parts NAFTA Totals: -Vehicles -Auto Parts European Union – Vehicles -Auto Parts Japan – Vehicles -Auto Parts Korea – Vehicles -Auto Parts China – Vehicles -Auto Parts World – Vehicles -Auto Parts 18.4 29.9 4.1 11.3 22.5 41.2 6.1 4.6 0.5 1.5 0.1 0.5 0.1 Imports 46.5 19.2 19.1 21.4 65.6 40.6 31.0 10.9 32.9 15.4 10.0 1.9 0.1 Source: U.S. International Trade Commission 2004 0.6 34.6 52.6 3.8 141.8 80.4