Outlook for the Auto Industry Economic Outlook Symposium Federal - - PDF document

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Outlook for the Auto Industry Economic Outlook Symposium Federal - - PDF document

Aug 16, 2022 178 likes •547 views

Outlook for the Auto Industry Economic Outlook Symposium Federal Reserve June 1, 2007 Auto Industry Leading Indicators Ability To Buy May 06 May 07 Disposable Income Green Green Household Debt Green Red Yield Curve Yellow Red

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SLIDE 1

Outlook for the Auto Industry

Federal Reserve Economic Outlook Symposium June 1, 2007

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SLIDE 2

DC Economic & Market Intelligence

Ability To Buy

May ‘06 May ‘07 Disposable Income Green Green Household Debt Green Red Yield Curve Yellow Red Inflation Yellow Yellow Composite Green Red Auto Industry Leading Indicators

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SLIDE 3

DC Economic & Market Intelligence

10.5% 11.0% 11.5% 12.0% 12.5% 13.0% 13.5% 14.0% 14.5% 15.0% 15.5% 16.0% '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07

% of Disposable Personal Income

15.3% 15.4% Mar

Installment, Mortgage & Auto Leases

Consumer Debt Payments

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SLIDE 4

DC Economic & Market Intelligence

  • 4
  • 2

2 4 6 8 10 12 14 16 18 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08

% Change Yr/Yr

6.3% 2.6% Apr 14.8%

All Items, Not Seasonally Adjusted

Consumer Prices

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SLIDE 5

DC Economic & Market Intelligence

2 4 6 8 10 12 14 16 18 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08

5.6%

% Change Yr/Yr

2.3% Apr 13.6%

All Items Less Food & Energy, NSA

Consumer Prices: Core Inflation

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SLIDE 6

DC Economic & Market Intelligence

Willingness to Buy

May ’06 May ‘07 Consumer Attitudes Yellow Yellow Unemployment Claims Green Green Workweek Green Green Stock Market Green Green Composite Green Green Auto Industry Leading Indicators

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SLIDE 7

DC Economic & Market Intelligence

40 60 80 100 120 140 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06

Index 58.1 98.5 May * 128.4

* Preliminary

Consumer Attitudes

Average of U of M & Conference Board

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SLIDE 8

DC Economic & Market Intelligence

70 80 90 100 110 120 130 140 150 160 170 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06

165 119 127 May * 104 Bad Good 164

* Preliminary Index

Buying Conditions for Vehicles

Source: Reuters/University of Michigan

During Next 12 Months

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SLIDE 9

Housing and the Sub Prime Market

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SLIDE 10

DC Economic & Market Intelligence

New Home Sales

Thousands

Source: Census

200 400 600 800 1000 1200 1400 1600 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07

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SLIDE 11

DC Economic & Market Intelligence

Existing Home Sales

Source: National Association of Realtors

Million Units SAAR

4.5 5.0 5.5 6.0 6.5 7.0 7.5 '99 '00 '01 '02 '03 '04 '05 '06 '07

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SLIDE 12

DC Economic & Market Intelligence

At End of Month, SA

U.S. Economy Buying Conditions

Good Time/Bad Time to Buy, Index

Thousands

New Homes for Sale

Source: National Association of Home Builders

100 150 200 250 300 350 400 450 500 550 600 '83 '84 '86 '88 '90 '92 '94 '95 '97 '99 '01 '03 '05

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SLIDE 13

DC Economic & Market Intelligence

NSA

Existing Homes for Sale

Source: National Association of Realtors

Thousands

1000 1500 2000 2500 3000 3500 4000 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07

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SLIDE 14

DC Economic & Market Intelligence

Housing Starts

Source: Census

New Housing Units

Thousands

500 1000 1500 2000 2500 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07

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SLIDE 15

DC Economic & Market Intelligence

Median New Home Prices

Yearly % Change, 12 Month Moving Average

Source: National Association of Realtors

  • 8
  • 6
  • 4
  • 2

2 4 6 8 10 12 14 16 18 20 '70 '75 '80 '85 '90 '95 '00 '05

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SLIDE 16

DC Economic & Market Intelligence

Median Existing Home Prices

Yearly % Change, 12 Month Moving Average

Source: National Association of Realtors

  • 4
  • 2

2 4 6 8 10 12 14 16 18 '70 '74 '78 '82 '86 '90 '94 '98 '02 '06

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SLIDE 17

DC Economic & Market Intelligence

U.S. Household Net Worth

5 10 15 20 25 30 35 40 45 50 55 60 '73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05

Equity in Real Estate Trillions of 2000 $

55.6 9.3

Source: Flow of Funds

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SLIDE 18

DC Economic & Market Intelligence

Index

111.9 Apr

U.S. Housing Affordability Index

Existing Homes

70 90 110 130 150 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07

103.8

Source: National Association of Realtors

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SLIDE 19

DC Economic & Market Intelligence

20 40 60 80 100 120 140 160 180 200 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06

175 102 136 May * 106 Bad Good 175 116

* Preliminary

During Next 12 Months

Index

Buying Conditions for Houses

Source: Reuters/University of Michigan

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SLIDE 20

DC Economic & Market Intelligence

Mortgage Delinquencies

2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07

Prime Loans Sub-Prime Loans

Percent

Total Loans with Installments Past Due, SA

Source: Mortgage Bankers Association

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SLIDE 21

DC Economic & Market Intelligence

Subprime Foreclosures

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07

% Units

Source: Mortgage Bankers Association

Started During Quarter, SA

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SLIDE 22

The Effect of Gas Prices

  • n Auto Sales
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SLIDE 23

DC Economic & Market Intelligence

West Texas Intermediate 2004 2005 2006 Actual $ 41 $ 56 $ 66

Dollars/Barrel

Oil Prices

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SLIDE 24

DC Economic & Market Intelligence

3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% '59 '62 '65 '68 '71 '74 '77 '80 '83 '86 '89 '92 '95 '98 '01 '04 '07

5.7% Mar

% of Disposable Income

Consumer Spending

Energy Goods & Services

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SLIDE 25

DC Economic & Market Intelligence

Cost Per Mile Driven*

2 4 6 8 10 12 14 16 18 20 '75 '78 '81 '84 '87 '90 '93 '96 '99 '02 '05 '08

Cents

Trucks Cars

* EPA Combined Weighting

U.S. Auto Industry New Light Vehicles

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SLIDE 26

DC Economic & Market Intelligence

1980 2001 2002 2003 2004 2005* 2006 4th 22nd 19th 13th 11th 9th 4th Ranking

* Pre-Katrina/Rita

Importance of Fuel Economy in Vehicle Buying Decisions

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SLIDE 27

DC Economic & Market Intelligence

  • 2.5%
  • 1.5%
  • 0.5%

0.5% 1.5% 2.5% 3.5% 4.5% '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07

  • 1.0%

Apr

Monthly Data % Change Year/Year

New Vehicle Consumer Prices

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SLIDE 28

DC Economic & Market Intelligence

Analysts Average EIA DaimlerChrysler 2004 2005 2006 2007 Actual Forecast * $ 41 $ 56 $ 66 $ 63 64 63

* April/May ‘07 Analysts: PIRA, Global Insight, MacroAdvisors

West Texas Intermediate, Dollars/Barrel

Current Oil Price Forecasts

2008 $ 63 64 60

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SLIDE 29

DC Economic & Market Intelligence

Annual Average: DCX: $2.56/gal CG: $2.91/gal assumption for 2007 planning volumes EIA: $2.66/gal GI: $2.48/gal* GI High: $2.84/gal* assumes $75/bbl to $77.50/bbl oil through end of year PIRA: $2.52/gal 150 200 250 300 350 Jan- 07 Feb- 07 Mar- 07 Apr- 07 May- 07 Jun- 07 Jul-07 Aug- 07 Sep- 07 Oct- 07 Nov- 07 Dec- 07

DCX CG EIA GI GI High PIRA

* Derived from wholesale forecast

2007 Gasoline Price Forecast Comparison, Retail Prices All Grades

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SLIDE 30

DC Economic & Market Intelligence

Gasoline Scenarios, Calendar Year

Total Vehicle Sales

2007 2008 2007 2008 $3.50 3.30 16.8 17.0 $2.54 2.46 17.2 17.4 Gasoline $/Gallon $3.00 2.85 17.0 17.2 Million Units Chrysler Forecast

Every 10 Cent increase in gasoline price equates to 40,000 fewer vehicle sales.

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SLIDE 31

DC Economic & Market Intelligence

Light Vehicles, Million Units

  • U. S. Auto Industry Sales

U.S. Canada Mexico Total NAFTA 2007 17.0 1.6 1.2 19.8 2005 17.4 1.6 1.2 20.2 2008 17.2 1.6 1.2 20.0 Actual Forecast 2006 17.1 1.7 1.2 19.9

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SLIDE 32

DC Economic & Market Intelligence

U.S. Auto Industry Sales Forecasts

  • 220
  • 140
  • 60

20 100 180 260

Mid-Size SUV Compact Car Luxury Full Size Car Sport Tourer Std Full Size Car Large Pickup Minivan & MPV Full Size SUV Small Car Mid Size Pickup Compact SUV Small SUV Std Mid Size Car + 10% + 88% + 20% + 6% + 12%

  • 1%

0%

  • 5%
  • 8%
  • 13%
  • 7%
  • 14%
  • 11%

April 2007 Forecast H/(L) June 2006

Million Units

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SLIDE 33

DC Economic & Market Intelligence

U.S. Industry Car/Truck Mix

30.0 35.0 40.0 45.0 50.0 55.0 60.0 2004 2005 2006 2007 2008

C ar T ruck

% of Total Industry

Actual Forecast

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SLIDE 34

DC Economic & Market Intelligence

Stock (000s) Days Supply Chrysler Group General Motors Ford Motor Co. 483 1,028 566 60 80 63

Stock and Days Supply

  • U. S. Auto Industry Sales

Source: SIR, April 2007

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SLIDE 35

DC Economic & Market Intelligence

Light Vehicle Production

Industry, NAFTA 2005 2006 2007 2008

(in 000)

’06/’05 ’07/’06 ’08/’07 % Change Yr/Yr 3,965 4,129 3,823 3,987 4,138 4,114 4,028 4,108 3,731 3,399 3,636 3,847 3,919 3,609 3,758 3,883 15,753 15,252 15,245 15,825 Q1 Q2 Q3 Q4 Total + 4.1%

  • 7.4%

+ 4.3%

  • 0.6%
  • 2.1%

+ 2.0%

  • 8.9%

+ 7.0% + 5.8%

  • 7.9%

+ 4.1% + 3.3%

  • 3.2%

0.0% + 3.8%

Source: Wards Automotive, April 2007

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SLIDE 36

DC Economic & Market Intelligence

Conclusions

  • The U.S. economy has slowed following interest rate increases by the

Federal Reserve of 425 basis points in two years.

  • Higher rates clearly have contributed to the popping of the housing

bubble.

  • The subprime meltdown appears to have caused another down leg in
  • housing. The housing drag will end this year unless regulators
  • verreact.
  • Households appear to be in pretty good shape in spite of worrying

debt levels.

  • Most analysts think seasonal peak in gas prices is now.
  • Our current planning assumptions include $3.00 + gas through the

summer.

  • The death of trucks and especially SUV’s has been greatly

exaggerated.