Analyst Notes

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Quarterly Forecast Update - Assembly and sales remain out of equilibrium - 19 July 2010
Residual effects of widespread industry crisis in 2009 have altered the traditional relationship between light vehicle assembly and sales in 2010. As auto industry recoveries take different shapes in mature and emerging markets, regional responses to the downturn are creating highly variable assembly and sales figures that are likely masking underlying dynamics.

The Rollercoaster Continues in Europe - 14 June 2010
With European scrappage schemes largely ended and economies recovering, the outlook for EU new car demand was starting to stabilise and improve. However, additional uncertainty has now been added to the mix. Mounting government debt and budget deficits in many countries has forced the imposition of tough austerity measures that could derail economic recovery and ultimately undermine vehicle demand.

Japan: Recalculating the automotive equation - 10 May 2010
The global economic crisis of 2009 exposed the growing structural vulnerability of the Japanese automotive industry. Overseas assembly transfers, a declining domestic market, and export reductions have created vast amounts of excess capacity similar in magnitude to the mid 1990s. However, without the widespread risk of OEM insolvency that characterised the bygone era, capacity cuts may prove untenable in today's environment.

Quarterly Forecast Update : Sailing a steadier course - 19 April 2010
While it has not been a case of "business as usual" in the first quarter of 2010, it was a case of "business as expected". Thus far, none of the major automotive markets have sprung any surprises sufficient to derail prior assumptions. Moving into Q2, the focus will shift to the strength and sustainability of the economic recovery as stimuli are scaled back or removed.

East Europe: Kick-starting the Russian market - 08 March 2010
Until recently, Russia was viewed by most auto industry observers as the next big market in Europe - possibly even bigger than Germany. Although it is true that Russia has strong potential for growth, the financial crisis has underlined many structural weaknesses that will likely impact the future trajectory of the market.

North America: Embracing the New Paradigm - 08 February 2010
The current inflection point in North America presents an historic, once-in-a-generation chance to allow economic fundamentals to drive volume, rather than relying on an array of demand stimulants. With the economy slowly improving and many major restructuring initiatives complete, the auto industry appears ready for methodical, market-derived growth.

Quarterly Forecast Update: 2010: The dawn of a new automotive decade - 11 January 2010
At the start of 2009, many feared a total automotive meltdown as global economies stalled and the financial system faced collapse. However, various forms of government intervention engineered a relatively soft-landing for the industry given the turbulence. In the case of China, the auto sector not only averted crisis, but posted extraordinary growth.

The Curious Case of the Super Premium Segment - 14 December 2009
The 2009 Frankfurt Motor Show was one of remarkable contrast. Alongside mainstream products and environmentally-focused electric vehicles, were a noticeable number of low-volume, high-priced luxury and sports cars - which begs the question: why, in the midst of a severe global recession and environmental push, are OEMs launching such vehicles?

Next Generation Brazil: Setting the world's stage - 18 November 2009
The Brazilian automotive industry has been tirelessly compared with Russia, India, and China in terms of its vast emerging market potential, but several important structural, social, and economic conditions that previously impeded Brazil's highly anticipated growth trajectory may be on the verge of momentous change.

Electric Vehicle Outlook: Charging up - 19 October 2009
Electric vehicles (EVs) continue to dominate auto headlines with flashy vehicle introductions, government financial support, and strategic partnerships announced between automakers and battery suppliers. Identifying the key drivers behind this trend will provide a clearer understanding of the potential impact EVs can have in a rapidly evolving marketplace.

Quarterly Forecast Update: China's Great Leap Forward - 12 October 2009
Although the 2009 outlook for established regions of North America and the European Union is stabilising, China's remarkable advancement in a downturn has prompted an upward revision to the AUTOFACTS global assembly topline. Looking into 2010, uncertainty around the strength of economic fundamentals and the scope of government influence will persist.

EU: Sales Gap Bridged or Impending Hangover? - 14 September 2009
Following France's lead, all major European countries introduced scrappage incentive schemes in 2009. Unexpectedly enthusiastic participation has created dramatic sales growth in what could have been a highly depressed environment, leading to the premature exhaustion of funding and real concern over the negative implications for demand in 2010.

China's Light Vehicle Market - 24 August 2009
Bold actions recently taken by the Chinese Government not only reversed the declining trend in domestic automotive sales, but may eventually help China challenge the US as the world's largest automotive market. However, near-term sales acceleration may ultimately delay longer-term government consolidation efforts within the nation's highly fragmented industry.

Quarterly Forecast Update: The visible hand - 09 July 2009
Direct government action is pervasive in the automotive industry in 2009. Tax changes and incentives have been used in markets the world over, while in the US the government has taken a direct hand in the restructuring of two key players. Adam Smith's invisible hand that promotes the wealth of all nations has been replaced by market intervention, perhaps forestalling the sector's needed deeper and wider restructuring.

US Fuel Efficiency Update: Overview and Implications - 22 May 2009
President Barack Obama recently announced a new federal fuel economy standard of 35.5 mpg by 2016, effectively ending an ongoing dispute regarding whether states should be allowed to establish and enforce individual emission standards. However, many challenges remain in aligning the interests of the government, automakers, suppliers, and consumers.

China Automotive Update: A crisis is a terrible thing to waste - 17 April 2009
Governments and automakers around the globe have entered crisis mode as the auto industry works to avert collapse. However, the Chinese government views this crisis as an opportunity to address long standing structural concerns such as a high level of market fragmentation, excess capacity, and the lack of environmentally-friendly and safe products.

Quarterly Forecast Update: Global crisis yields mixed results and responses - 03 April 2009
Our forecast for 2009 global light vehicle output now stands at 54.9 million units - the lowest year since 2001. But whereas in 2001 the BRIC countries accounted for only 5.1 million units (9% of the total), in 2009 they represent 13.8 million (25%), indicating that it is established industry players that are suffering the greatest pain.

Automotive M&A Insights: Volume Slowed, Value Crashed - 27 March 2009
The 2008 automotive deal market realised a significant reduction in the total disclosed transacted value of $31.6 billion, down from $57.1 billion in 2007. However, the number of transactions was greater than 500 for the seventh consecutive year.

North America: Domestic Dealer Distress - 17 March 2009
Imperiled automotive dealers are attempting to endure the devastation of prolonged credit shortages, a consumer confidence contagion, and damaging uncertainties surrounding a domestic auto industry contemplating its mortality. Dealer consolidation was once a key automaker restructuring priority, but accelerated dealer distress may alter the equation.

Global Supplier Outlook: Exposures Reveal Supplier Duress - 23 February 2009
During an industry downturn, all links in the automotive value chain become vulnerable. The supply sector, having just emerged from a period of inflated commodity prices, is now being impacted most severely by declining volumes, difficulties in obtaining credit, the risk of business failures of their own suppliers and liquidity concerns of their largest customers.

Quarterly Forecast Update: Global Update - 09 January 2009
The automotive sector is troubled more than most in difficult economic times - a new vehicle is the ultimate discretionary purchase and the second largest purchase a household makes following their home and consumers are deferring purchases until confidence is restored. In addition, the absence of available credit is now severely hindering affordability and involuntarily forcing consumers out of the market globally. After a very dispiriting end to 2008, many markets and automakers are expected to continue enduring a tumultuous path in 2009. We set out below our viewpoint and forecast of developments in light vehicle production within each of the world's key regions and markets.