IHS Markit | Automotive Insights

Two recent aftermarket conventions – Automechanika Frankfurt, and AAPEX in Las Vegas – highlighted key mobility, supply chain, and remanufacturing trends that will have significant impact on the industry moving forward. The existence of an electrified future also loomed large with attendees and providers. Join Kristen Balasia, VP of Advisory Services, Todd Campau, Research and Analysis Associate Director Global Insight, David Bellamy, Principal Research Analyst Comp Forecasting as they share their thoughts on this topic.

Aside from the supply shortage, one of the biggest buzzwords in the commercial vehicle industry over the past few years has revolved around electric vehicles (EVs). Everyone has an opinion on whether EVs are a fad or here to stay but what does the data say specifically about EVs in the commercial industry? Even through the supply issues of the past few years, there were more EVs registered commercially through August 2022 than all of 2021. Join Kristen Balasia, VP of Advisory Services, Mark Hazel, Associate Director of Commercial Vehicles, Andrej Divis, Executive Director of Global Truck Research, and James Martin, Consulting Services as they share their thoughts on this topic.

The reimagined 2022 Detroit Auto Show, also known as the North American International Auto Show, finished its media and industry days with limited automakers and brands participating after a three-year hiatus in the city. Those OEMs and brands who did participate – mostly the hometown automakers – most told a brand story that included both internal combustion engine (ICE) and electric vehicle (EV) solutions. While tomorrow's auto market seems to be rushing to be electric, today is in transition. The result is a more dynamic and diverse market than ever. Join Kristen Balasia, VP of Advisory Services, Mike Wall, Executive Director of Automotive Analysis, Stephanie Brinley, Associate Director Automotive Intelligence as they share their thoughts on this topic.

We are in year two of the great supply chain crisis. There are a handful of factors — from chip supply to impacts from climate and conflict — as to when "normal" production will return. Here is what we do know now: profit margins are near historic highs for OEMs while consumer loyalty scores are near historic lows. Listen to this podcast and learn important data signals for automotive marketers. Join Mike Wall, Executive Director of Automotive Analysis, Amber Daniel, Director of Product Strategy for Polk Automotive Solutions, and Cheryl Woodworth, Consulting Associate Director as they share their thoughts on this topic.

Navigating the opportunities within the comparatively nascent EV industry will see winners and losers emerge. But how real are the concerns around the battery upstream market and could this genuinely be the next automotive supply chain crisis? In what way can automakers achieve economies of scale while feasibly navigate fluctuating commodity prices to deliver competitively priced EV offerings? Join Kristen Balasia, VP, Advisory Services, Jay Hwang, Sr Technical Research Analyst and Anoop Desai, Consulting Director as they share their thoughts on this topic.

Although financial markets grab headlines when fear and volatility are highest, the same markets do also function rationally, and are a window into an ongoing re-evaluation of companies' prospects and risks. So, what can we learn from the state of the markets today? Join Kristen Balasia, VP, Advisory Services, Michael Robinet, Consulting Executive Director and Demian Flowers, Product Management Executive Director as they share their thoughts on what automakers could learn from capital markets.

The automotive electrification outlook is a component of many intertwined factors from vehicle technologies and infrastructure availability to consumer sentiments and OEM partnerships. Many propose this to be a “Chicken and Egg” paradox, though S&P Global believes the vehicle (demand side) and charging stations (supply side) can be, and will be, developed and deployed largely at the same time. While there will be momentary shifts toward an oversupply of vehicles or an excess demand for charging, in the long run an equilibrium will emerge in most markets globally. Listen in as Mark C. Boyadjis, Global Technology Lead, Consulting Services and Claudio Vittori, Associate Director, Supply Chain & Technology share their thoughts on this subject.

Kristen Balasia, Tom DeVleesschauwer and Mark Boyadjis talk about Pace of Change: Energy & mobility, climate and innovation. The global energy and mobility industry is at a critical inflection point. Meeting ambitious emissions targets while also delivering energy and mobility for a growing world economy will require new thinking, innovation and a transformation of a system that supports the $90 trillion world economy. Are our current systems ready for the transformation? What are the innovations necessary to support this new world and what can we do to get there?

Kristen Balasia, Treffen White and our special guest, Chris Potgieter from automotiveMastermind talk about EVs and the dealer of tomorrow. Nearly every major automaker in the United States has announced significant investment commitments to transition a substantial percentage of their product portfolio from internal combustion engines (ICEs) to EVs. But what will this transition mean for the average US franchised dealer? What changes will be required to the traditional sales process? Will service revenue be at risk?

Mike Wall, Vijay Subramanian and Suraj Ghosh discuss India's decarbonization goals and the market's EV challenges. The discussion looks at why India is so critical in the global efforts to decarbonize, how regulations align with India's long-term net zero goals, how OEMs are gearing up to achieve compliance in India, which leaders are emerging, how decarbonization goals play into companies' ESG goals, how India's goals align with other markets, and how likely India is to achieve these goals.

Kristen Balasia, Colin Bird Martinez and Mark Boyadjis talk about Consumer Electronics Show (CES) Recap 2022, which provided some foresight on where the mobility industry is headed next on a technical, theoretical, and commercial basis. The automotive industry theme for 2022 is electrification and all the subsequent impacts it has on product, services, digitalization, and distribution.

The IHS Markit team is joined by special guest Jon Morrison CEO of J&M Strategic Insights and former president of WABCO Americas as they discuss how technology and data are transforming the heavy-duty commercial vehicle industry.

Kristen Balasia, Mike Wall and Phil Amsrud talk about Automotive 2022 outlook, diving into possibilities of recovery and potential pandemic impacts, and what to expect in 2022 for light and electrical vehicles.

Kristen Balasia, Gregory Genette, James Martin and Mark Hazel talk about Light Commercial vehicles, and Medium / Heavy duty vehicles, specifically in the growth and evolution these segments are experiencing. Growth and transition are influenced by an increase in e-commerce combined with other factors favoring the introduction of electric commercial vehicles.

Kristen Balasia, Mark C. Boyadjis and Tawhid Khan talk about the major shift towards software-defined vehicles and bridging the union between the digital experience and automotive industry.

Kristen Balasia, Mike Wall and Bjoern Huetter talk about supply chain challenges and electrification trends, and review the rocky recovery as we progress through the second year of the pandemic.

Kristen Balasia, Amber Daniel and our special guest, Giancarlo Montenegro; Director of Social at Reunion Marketing talk about the changing consumers experience, specifically how much driving dealer actions and ad spent, and how to best engage the consumers in the tight market.

Kristen Balasia, Vijay Subramanian and James Martin talk about automotive electrification, regulation, and transportation decarbonization toward net-zero ambitions.

Kristen Balasia, Mark Fulthorpe and Phil Amsrud talk about the tight supply of semiconductors, and various disruptions to non-automotive markets which is also impacting the automotive sector.

Kristen Balasia, Thomas Libby, Ian McIlravey and our special guest Michelle Denogean; CMO at Roadster, talk about the changing retail model and consumer behaviors accelerated by COVID-19 lockdown.

Thomas Libby and Kristen Balasia talk about the importance of loyalty in the automotive industry.

Tim Armstrong, Tom De Vleesschauwer and Kristen Balasia talk about IHS Markit's CERAWeek which is widely considered to be the most prestigious annual gathering of the global energy community.

Bjoern Huetter, Ali Khalili and Kristen Balasia talk about 2020 year in review around the globe; an unprecedented year for the automotive industry.

Kristen Balasia, Mark Boyadjis and Brian Rhodes talk about the future of technology and CES 2021 virtual event roundup.

IHS Markit projects new light vehicle sales of 83.4 million units globally in 2021, up 9% from a 2020 projection of 76.5 million units, as industry demand levels emerge next year in the wake of recovery from the COVID-19 pandemic – especially in major markets. Looking at the U.S. auto demand environment, the sequential rise in sales levels from the April 2020 trough reflects that consumers that were willing, ready and able to purchase a new vehicle did so. While the pace of growth for auto sales flattened out after September, IHS Markit expects continued growth in auto demand levels in 2021, supported by sustained economic development from better-than-expected news on vaccines and likely economic stimulus. IHS Markit projects US sales volume to reach 16 million units in 2021, up an estimated 10% from the projected 2020 level of approximately 14.5 million units. The pace of sales is anticipated to be stronger in the second half of the year, following the expected widespread availability of the vaccine by summer. I’m Chris Hopson with an IHS Markit Minute.

Part suppliers have their hands full these days. After surviving more than two months of virtually no vehicle output earlier this spring – production in North America has been on a tear. Total North American output should reach 13 million light vehicles – a remarkable achievement. Consumers have re-engaged into the market - now finding that inventory of several popular vehicles to be slimmer than expected. One group feeling the pressure are parts suppliers - dealing with increasing COVID restrictions in many regions are thus having difficulties finding qualified labor to keep up with demand. Absenteeism and employee turnover are at heightened levels. These issues are not just in North America. Low inventories of microchips and semi-conductors from various locations in Asia are causing concern throughout the global industry. Just when the industry should be enjoying a volume revival – there is no rest for the weary. This has been Michael Robinet with an IHS Markit minute.

Electric vehicle production and platform announcements continue to pepper the landscape. EV development has been underway in earnest, and we are at the edges of an explosion in production as a result. IHS Markit forecasts EV global production could rise to 15% of total light-vehicle production in 2027, bringing a wave of new products. With this next phase of EV maturation, development has been focused on vehicles that consumers want. At the same time, publicly available charging and infrastructure networks are improving. The combination of products aligned with consumer uses and demand, more choice and better infrastructure are essential to consumer adoption. However, over the first three quarters of 2020, electric vehicle registrations accounted for only 1.58% of the US light-vehicle market, while the industry is ramping up to support a much higher share of market. Though growth in the coming years will be strong, we may also see near-term production increase faster than consumer demand. I’m Stephanie Brinley and this has been an IHS Markit Minute.

Kristen Balasia, Peter Nagle and Mark Fulthorpe talk about automotive 2021 outlook, diving into the positive influences and uncertainties, and what we can expect in 2021.

As the automotive industry looks to recover lost revenues from the global COVID-19 pandemic, the growing demand for high-tech, shared mobility solutions has become a focal point. Within major markets, IHS Markit forecasts a steady 18 percent compound annual growth rate on vehicle sales for mobility services use in the next 10 years, adding 2.6 million units by 2030. In contrast, vehicle sales for personal-use will see a net loss of 1 million units in the same timeframe. To take advantage of the shifting consumer demand, many automakers are partnering with ride-hailing companies to design and optimize a new type of vehicle for their services. Recently, Chinese carmaker, BYD launched the D1 to exclusively support DiDi’s ride-hailing operations in China, earning revenues based on vehicle usage, rather than unit sales. And BYD is not alone. Several other OEMs have launched similar endeavors, proving that the pandemic has forced OEMs to think differently about how vehicles are designed AND how revenues are earned. I’m Mark Boyadjis, with an IHS Markit Minute.

Kristen Balasia, Mike Wall and Sandra Zhou talk about China; the auto industry gets a lift from Chinese consumers and regulators driving growth even as a surge in COVID-19 cases in the US and Europe tempers demand elsewhere.

Investment in electric vehicle manufacturing has been in the news lately, with announcements from General Motors, Ford and FCA, as well as Volkswagen’s introduction of the ID.4 which will see production in the US. Daimler, BMW and Honda are also expected to add US EV production by the end of the decade. In 2026, IHS Markit forecasts that about 10% of US light-vehicle production will be electric vehicles, compared with just under 4% in 2019. With expectations for a Democratic president in the White House in January, vehicle emissions regulations may shift to more aggressive targets. Though the government has regulatory and incentive levers which could speed consumer adoption, the trajectory toward EVs is already set, relative to most automaker strategy and long-term investment plans. The increased manufacturing is bringing more models to market, delivering more consumer choice. Increased choice and availability will be as critical to increasing consumer adoption as incentives or regulations. I’m Stephanie Brinley and this has been an IHS Markit Minute.

There is a clear focus on new revenue sources in the automotive industry, as mobility, electrification, autonomy, and connectivity continue to democratize for a post-COVID world. Connected services are one way automakers can grow revenues, yet many still see it as a cost, not a profit center. In many cases, automakers see paltry renewal rates from 15-30% post trial, which is neither sustainable nor profitable. In a recent IHS Markit study, six premium brands in the US market were evaluated and indexed, investigating the intersection of consumer opinions and competitive metrics on connected features. Tesla and Cadillac indexed above the average, whereas BMW, Audi, Mercedes and Genesis indexed below. These results illustrate that the top two brands have a deeper integration of connected services across their organizations that drive higher customer satisfaction and revenues. As the industry works to recover the sales and revenue levels it enjoyed before the pandemic, those with a structural focus on connected services will find a competitive advantage amongst the market. I’m Mark Boyadjis, with an IHS Markit Minute.

October is National Cybersecurity Awareness Month! Connected cars provide ample motivation to implement cybersecurity measures. But the expansion of automated driving gives further reason for safeguarding the vehicle. IHS Markit forecasts that more than half of all new vehicle sales globally in 2022 will have some automated vehicle control feature. In recognition of these growing risks, automakers are responding with best practices in cybersecurity, and regulators across regions are taking action as well. Japan will be first to adopt new cybersecurity requirements for all new vehicles sold after January 2021. The European Union will do the same in July 2022, alongside the adoption of new requirements for active safety and automated driving. We estimate that solutions to manage cybersecurity threats will produce annual revenues of more than 400 million US dollars globally in 2022. I’m Jeremy Carlson with an IHS Markit Minute.

A Closer Look at One SUV Category The sub-compact SUV category is one of the smaller SUV segments, based on market share, but it has contributed to the remarkable success of SUVs in general. Sub-compact SUVs’ share of the U.S. market has grown from 3.4% at the start of 2016 to 4.6% now, and while this may not seem like much, it’s a 34 percent increase – which ranks second among all mainstream SUV segments. Also, sub-compact SUVs continue to act as a “feeder” segment to both compact and midsize SUV categories, with 24% and 8% of consumers moving up to these two segments, respectively. In fact, households with a sub-compact SUV in their garage move up to a compact SUV more often than they move to any segment other than their own. Lastly, households with a sub-compact SUV in the garage are exceptionally brand loyal; their brand loyalty of 55% in the first seven months of 2020 is higher than overall industry-wide brand loyalty and second among all mainstream SUV categories. I’m Tom Libby with an IHS Markit Minute.

Melanie Erff, Mike Wall and Tanja Linken talk about how the COVID-19 pandemic has impacted the global automotive retail with respect to challenges faced by dealerships and customers' expectation in their purchase process and future interactions.

The automotive industry has been working at a fever pitch since late May when we emerged from the COVID-19 driven output closures. The combination of depleted vehicle inventories and a strong sales pace has equated to the industry’s inability to return to normal inventory levels until early next year. Even with a 2-month break, we will still build approximately 13 million light vehicles in North America for 2020. Outside of these short-term market disruptions, smarter suppliers are still looking past next quarter to the future. Our industry is in the midst of significant structural shifts surrounding vehicle electrification, autonomous driving system content and a changing vehicle value equation. If you are a supplier, strategic questions surround your future risk profile, financial performance and how these changes impact future competitiveness. Does one benefit from these shifts, suffer a declining market or in some cases – are you agnostic? Whatever the perspective, these shifting industry dynamics call for a Supplier Strategy Reset. This has been Michael Robinet with an IHS Markit Minute.

A recent analysis of IHS Markit new light vehicle registrations through July this year finds sport utilities account for 50% of all new vehicle registrations, up from 31% ten years ago. If today’s mix continues for the remainder of this year, it would mark the first time in recent history that one body style has captured half of the U.S. new vehicle industry. Market share for mainstream pickups has also grown, driven in part by intense competition among the domestic manufacturers that dominate this space. Through July, pickups account for 19.9% of all new vehicle registrations in the US, outpacing sedans for the first time in recent history. With SUV/CUVs and pickups now accounting for more than two thirds of all U.S. new vehicle registrations, manufacturers need to ensure that their product portfolios align with this new paradigm. I’m Tom Libby with an IHS Markit Minute.

So you’re looking to purchase a new car in the state of California in 2035? Well, you can have any powertrain you want, as long as it’s electric! California Governor Gavin Newson signed an executive order setting a goal of requiring all new passenger cars and trucks sold in the state to be zero-emission vehicles, which are battery electric or fuel cell, by 2035. Now all of this comes as California remains locked in a legal battle with the Trump administration. The state is suing over to reinstate a waiver that allows it to set its own fuel economy standards that are separate from the federal government’s. If Donald Trump is re-elected, we expect the battle to be decided in the courts. But if Joe Biden is elected, we expect California to have its waiver reinstated. So you may be asking, “Can automakers just choose not to sell cars in California if it does not want to invest in an entire fleet of electric vehicles just to fill a dealership?” Sure, but California is the biggest light vehicle market in the United States, representing 11% of total US sales last year. That really makes it a state that can’t be ignored by the automotive companies. I’m Devin Lindsay, with the IHS Markit Minute.

US-based NVIDIA announces intent to acquire UK-based Arm for $40B. You may not know Arm by name, but the company’s intellectual property is shipped in tens of billions of integrated circuits every year. In automotive, four out of every five processors in infotainment and driver assistance are based on Arm architectures—including those from NVIDIA. Both Arm and NVIDIA have long lists of ecosystem partners and a growing footprint in Autonomous Driving. But the combination of Arm expertise in scalable CPU design, plus NVIDIA expertise in GPUs and software, could create a one-stop-shop for anyone looking for automotive processors. The open nature of Arm architectures gives freedom to automotive engineers to develop and deploy scalable solutions from today’s driver assistance to tomorrow’s autonomous mobility… pending regulatory approvals, of course. I’m Jeremy Carlson with an IHS Markit Minute.

Kristen Balasia, Anoop Desai and Thomas Libby talk about how the COVID-19 pandemic has impacted global emissions and fuel regulations, and how regional markets and manufacturers respond to this.

North American auto production is expected to drop to 12.9 million units in 2020. However, the need to replenish inventories and more robust pace of sales is indicating the recovery is stronger than expected. IHS Markit expects North American production will reach 15.2 million units in 2021.

Michael Robinet discusses recent automaker partnerships including two by GM with Honda and Nikola; FCA with PSA; and Ford's alignment with VW.

In this podcast, Stephanie Brinley discusses Jeep's reentry into the full-size SUV segment. On September 3, 2020, Jeep will reveal the new Wagoneer and Grand Wagoneer via virtual events amid the COVID-19 pandemic. The full-size SUV segment has relatively few players. In 2019, this segment accounted for 2.4% of total US light vehicle sales.

US sales figures from July reflect sustained retail sales levels. The outlook for second half of year remains opaque but shows people are willing, able and ready to entertain a new car purchase. IHS Markit upgrades its outlook to 13.6 million units for the full year.

Kristen Balasia, Joseph Kyriakoza and Melanie Erff talk about the accelerated change of automotive retail due to the COVID-19 pandemic impact.

Todd Campau discusses the average age of vehicles in the United States. With nearly 280 million vehicles on the road the average age is approaching 12 years. 25% of these vehicles are 16 years of age or older. The average age of vehicles is expected to increase further due to COVID-19 work from home policies and the reduced number of vehicle miles traveled which extends a vehicle's life.

With 2.5 months of lost output and revenue, strategy is front and center for the North America auto industry.

Changing consumer preferences in the US with Stephanie Brinley.

New registrations this year in the US are down 35% from a year ago and are vastly different from last year.

Kristen Balasia, Mike Wall and Tom Libby talks about the automotive recovery from Covid-19.

As suppliers brace for potential after effects of COVID-19, Michael Robinet looks at today's challenges and compares them with the recession of 2008/9