1. WardsAuto North American Barometer (Short-Term Outlook: Q2 2016-Q3 2016)

2. WardsAuto 6-Month North American Outlook
(Q2/Q Industry Forecasts)
Sales-N.America
(Yr/Yr % Change)

3. North American Industry Sales Outlook
The 12-month trailing total continues hitting record heights
Year-to-date sales through September projected at 4% above same-period 2015
Sales of domestically produced vehicles increase 3.6% YTD through September
Entire year forecast at 21.2 million, up from 2015’s record 20.6 million

4. North American Production Outlook Production Capacity Utilization
Q1 production stronger than expected.
Increased demand for imported CUVs and a flat Y/Y outlook for cars still somewhat muting production growth relative to sales gains
Fewer exports to South America and Europe also a capping output
Capacity still tight for plants building CUVs and pickups; several plants building cars have excess
Production Capacity Utilization

5. U.S. Sales Outlook
March forecast at a 17.3 million-unit seasonally adjusted annual rate, or about 1.67 million units.
March 2016 more selling days than usual, making SAAR factors tougher
Q1 estimated at 17.4 million SAAR, but expected to surge in Q2 and Q3

6. What’s Driving U.S. Demand in 2016
Economic growth in general: more jobs, including more youth entering workforce
U.S. to large extent immune from slowdowns in other countries
Pent-up demand from the recession
Low interest rates allowing longer finance contracts, increased leasing
Fleet volume up (some talk of upping deliveries to rentals)
Off-lease volume
Gradually rising incentives with more room to increase
Low fuel prices
Strong used-vehicle prices

7. Strong Connection with Incentives and ‘New’ Vehicle Share
Market Penetration of New/Redesigned Vehicles vs. Incentive Activity
Incentive data is average incentives as a percent of average transaction prices. Incentive data: TrueCar

8. U.S. Sales Starts for New and Redesigned Vehicles

9. U.S. Sales Starts for New and Redesigned Vehicles
(continued)

10. Feb. 29 Inventory and YTD Sales vs. Year-Ago
U.S. Inventory - Cars
Feb. 29 Inventory and YTD Sales vs. Year-Ago
Even with total car inventory 5.5% below year-ago heading into March, it is still too high. There will be more production slowdowns and reductions in import shipments to keep inventory in line with flat declining volume

11. Feb. 29 Inventory and YTD Sales vs. Year-Ago
U.S. Inventory - Trucks
Feb. 29 Inventory and YTD Sales vs. Year-Ago
Even with inventory 17% above year-ago, could use some more for several CUVs and some SUVs, vans and pickups

12. Canada Sales Outlook Volume continues to surprise on the upside
But believe there will be some flattening in y/y comparisons, and eventually declines
However, entire year forecast for another record
Units in thousands

13. Mexico Sales Outlook
Sales set more records in 2016 – y/y gains start to narrow only because going against huge y/y increases in 2015
Economic growth expected to continue mostly in line with the U.S.

14. General Motors Outlook
North America Sales
Production
Market Share
Capacity Utilization

15. Ford Outlook
North America Sales
Market Share

16. Toyota Outlook
North America Sales
Production
Market Share

17. Fiat-Chrysler Outlook
North America Sales
Market Share
Capacity Utilization

18. Honda Outlook
North America Sales
Market Share

19. Nissan Outlook
North America Sales
Market Share

20. Rest of Industry Outlook
North America Sales
Market Share

21. Is 2016 the Peak Year in the Current Cycle?
Sales forecast to hit their rolling 12-month peak in Q3 this year since bottoming out in 2009
Annual volume in millions
After seven straight increases, light-vehicle sales forecast to drop to a still-strong 17.2 million in 2017

22. Peak Year? – Historical Trends Point Higher

23. Peak Year?
Millions
New-vehicle sales per household have been trending down over time, but not bounced back so much since recession
Household Data through 2015 from U.S. Census Bureau; projections by WardsAuto.
The rise in the vehicle population per licensed driver likely indicates a lot of replacement ahead – or a lucrative used-vehicle market, especially with 3 million-plus leases entering the population annually, which could put downward pressure on new vehicles
Note: Parc is vehicle population. Parc Data through 2014 based on R.L. Polk data. Licensed Drivers through 2014: U.S. Department of Transportation. Projections by WardsAuto.

24. Could Next Year be Better?
POSITIVES:
Full employment in 2016 could mean positive carryover effects in 2017, such as increased households and household wealth, disposable income, more need for reliable transportation
Pullback in expected number of interest rate increases puts off the point of negative impact
Relatively low fuel prices expected for several years
Other indicators such as housing and construction expected to continue trending up next year
NEGATIVES:
Seven straight year-over-year increases (through 2016) unprecedented – can industry handle an eighth?
Estimated pent-up demand from the recession will be satiated by end of 2016
Geo-political issues
Potential fallout from interesting U.S. presidential race
U.S. not totally immune to economic slowdowns outside its borders
According to Experian, delinquencies in subprime rising
Strong used-vehicle stock, with in-flux of high-quality off-lease vehicles, could swing demand away from new
ULTIMATELY: Probably depend on how automakers react to a slowdown. Industry usually does not let go right away when demand shows signs of going into cyclical decline

25. Senior Industry Analyst, WardsAuto
Thank You,
Haig Stoddard
Senior Industry Analyst, WardsAuto

26. Next Event: Tuesday, June 21
The Townsend Hotel

28. Global production by country, plant, program, nameplate
VEHICLE FORECAST
Global production by country, plant, program, nameplate
Eight-year planning window, all updated monthly
Medium and heavy duty truck volumes included for N.A.
Talk with Lisa Williamson to learn more

29. FORECASTING TOOLS
Powerful database and reporting tools to customize your output
Presentation-ready reports and filter options
Weekly, monthly and quarterly deliverables for additional detail and perspective
Talk with Lisa Williamson to learn more

30. POWERTRAIN FORECAST
Realistic picture of powertrain volumes, updated monthly
Engine, transmission, hybrid & electric
Eight-year forecast, updated monthly
Talk with Lisa Williamson to learn more

31. All current and future product plans with SOP and EOP, updated monthly
PRODUCT CYCLES
All current and future product plans with SOP and EOP, updated monthly
By Manufacturer, Brand, Platform, Program, Nameplate, Plant, Average Lifetime Volume
Talk with Lisa Williamson to learn more

32. GREEN POWERTRAIN STRATEGIES REPORT
Green vehicle and powertrain technology product plans by OEM and segment
US Light Vehicle Sales forecast by segment, powertrain technology and OEM
Analysis of underlying assumptions, relative strengths, and the potential risks of each OEM’s green strategy
Talk with Lisa Williamson to learn more

33. Talk with us today to learn how
WardsAuto can help you
Lisa Williamson
Nakia Elsaidi