Study says global car industry hit bottom in Q1, auto electronics recovery begins
JULY 17, 2009--The downturn in the car electronics market hit bottom in the first quarter, paving the way for a return to annual growth in 2010, according to iSuppli (www.isuppli.com).
"After a dismal 2008 and first quarter, auto sales recently have performed more strongly than expected in some regions, mostly due to government-sponsored incentives," says Egil Juliussen, principal analyst and fellow, automotive, for iSuppli. "While 2009 will still be weak, the second half of the year will bring a significant improvement in auto sales compared to the first. This will lead to an annual sales increase in 2010 for auto electronics categories including audio head units, navigation, Advanced Driver Assist Systems (ADAS), embedded telematics and Bluetooth."
A major culprit in the global car downturn has been the US auto market, which continues to struggle. US sales of cars and light trucks suffered an 18% decline in 2008 and fell by an even worse 35% in 1H09. Despite these statistics, total 2009 US auto sales are forecasted to decline by a relatively mild 17%.
One major factor leading to improved auto market conditions in the United States is the end of the uncertainty surrounding the bankruptcies of General Motors and Chrysler.
"Both General Motors and Chrysler emerged from their restructurings unbelievably quickly, lifting a major cloud from the US auto industry," Juliussen says.
Furthermore, the United States government now is offering a "cash-for-clunkers" program that gives consumers incentives to trade in old cars for new models. This is expected to boost US auto sales by 250,000 in 2009. The total could be even higher if the program's $1 billion budget is increased.
"The cash-for-clunkers program also is serving to spur more consumer visits to car dealerships," Juliussen notes. "This rise in consumer traffic is likely to have an even more positive impact on car sales than the incentives themselves."
A final reason for the improved results is strictly statistical: Year-to-year comparisons with 2008 will become much more favorable in the second half, since auto sales plunged in late 2008.
Figure 1 (above) presents a forecast of the US auto electronics industry through the year 2014. The figure shows relative yearly sales for several electronics categories compared to 2008 auto sales, which are normalized to 100. The base figure for 2008 auto sales is 13.3 million units. By using this format, unit sales for each automotive electronics category can easily be compared to auto sales and production.
At a value of 83, 2009 US auto sales are set to decline by a total of 17% from 2008. Auto sales are projected to increase slowly in 2010 to reach 15.5 million units in 2014. While this represents an improvement from 2009, 2014 sales will still be below the 2007 total.
US auto production lags far behind its sales since a large portion of cars sold in the US are manufactured in Canada, Mexico, Europe, and Asia.
Figure 1 also shows relative sales of head-unit, in-vehicle navigation, ADAS, embedded telematics, and Bluetooth-based hands-free interface (HFI) electronics. The sales pattern is similar for each category, with a decline in 2009 and growth in the following years. Only Bluetooth HFI systems are set to enjoy a sales increase in 2009 due to the success of Ford Sync and similar systems.
Figure 2 (below) shows the same trends on a worldwide basis. The base number of 100 again represents worldwide sales for 2008, which amounted to 66 million units.
Worldwide auto sales are forecasted to decline by 12% in 2009, but will increase in 2010 and will top 73 million units in 2014, up 11% from 2008. Worldwide auto production will decline by 25% in 2009 due to excessive inventory levels at the end of 2008 and lower 2009 sales. The production declines hit bottom in 1Q09.
The sales pattern is similar for each category with a decline in 2009 and growth in the following years. ADAS will achieve a slight sales increase in 2009. ADAS consist of five segments: ultrasonic and camera park assist, adaptive cruise control, lane departure warning, and blind-spot detection systems. Bluetooth HFI systems also will enjoy a sales increase in 2009 due to higher availability of such systems in every region.
"The automotive electronics market is seeing the light at the end of the tunnel, but there are a few caution signs," Juliussen warns. "The incentive-driven sales surges in some countries could mean that the light at the end of tunnel is actually the headlights of a semi-truck, one that may slam head-on into 2010 auto sales. Germany's incentive-based sales are not sustainable. China's sales jump is also large, but since most of the sales are to new buyers, the impact may be much milder."
-- Posted by Vision Systems Design, www.vision-systems.com