The Future of Fuel-Saving Technology and the Automotive Business

Koichi Sugimoto 　Senior Analyst - Auto

Global Equities & Commodity DerivativesEquity ResearchBNP Paribas Securities Limited

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Contents

Fuel consumption is one of the most important aspects for the auto industry in terms of both CSR and sustainable growth

Fuel-saving technology has been the major product differentiator for auto companies, and also a flagship marketing project to increase brand awareness in developed countries.

Historically there have been cases where fuel-saving technology has impacted the mainstream business due to the cost of investments made.

Also, fuel-saving technology is expected to become more diversified based on territory or type of car, and business owners will face pressure to make efficient investments into fuel consumption R&D.

In 2012, Japanese makers are planning to introduce flagship electric cars which could become a mainstream market trend for the next 10 years. We should pay close attention to this development, and to its impact on consumers and their businesses.

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Cars ： Life without cars is impossible for most of us

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Negatives of cars ：① Accidents ②Congestion ③Pollution

146

95

0

20

40

60

80

100

120

140

160

2009 2020

(g/km)

27.6

34.1

54.5

0

10

20

30

40

50

60

2011MY 2016MY 2025MY

(mile/gallon)

*

16.3 16.8

20.3

0

5

10

15

20

25

2009 Results 2015 2020（Avg byVehicleType）

(km/L)

*

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Fuel consumption policies – getting tighter

24%

(CO2)* Goal

Source: BNP Paribas

-

0.5

1.0

1.5

2.0

2.5

1970 1975 1980 1985 1990 1995 2000 2005 2010 2030

（billion vehicles）

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Growth in emerging markets – global vehicle ownership

Source: Automobile Association, BNP Paribas

Emerging

Developed

Germany

Italy

FranceEngland

Spain

HollandBelgiumAustralia

SwedenPoland

Switzerland

Turkey

Russia

US

Canada

MexicoArgentinaBrazil

J apan

China

Korea

India

Thailand

Indonesia

Australia

South Africa

0

100

200

300

400

500

600

700

800

900

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000

（Number of vehicle holdings per 1000 of the population）

（per capita GDP, US Dollars、 ）

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Vehicle ownership by country – Four-wheel

Souce: MLIT, Ward‘s, World Bank

UK

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Profit breakdown of major Japanese auto makers （ Q3 ‘11 ）

Source: BNP Paribas

168241

425215

196

358

186 100

113

129

-315

-400

-200

0

200

400

600

800

1,000

Toyota Honda Nissan

（China Joint Ventures）

Finance *

Emerging Countries

Developped Countries

（Toyota Lexus-384）

(billion JPY）

Net operating profit (adjusted)（Sales profit %）ChinaRef：Net operating profit(consolidated)

6987.7

140570

5376.1

180537

5823.0

180468

（two-wheels 145）

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Plug-in Hybrid Premium ： Target USD2,500

Source ： American Energy Department （ Survey by Michigan University in 2008 ）

- 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0

$2500 expensive, Fuel efficiency 75% improvement

$5,000 expensive, Fuel-efficiency 75% improvement

$10,000 expensive,Fuel-efficiency 75% improvement

Consider buying although priceand fuel consumption is unknown

Consumer Survey of Plug-in Hybrid Vehicles

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Auto demand structure in 20xx ： EVs establish new market?

Early 2000s 20xx

Two-wheel

HEVCNG Cars

LPG Cars

Gasoline

Diesel

ATV

Two-wheel

New Gen Small

Diesel

Mild HEV/i-stop

Strong HEV

Plugin HEV

Lux EV Gas Cars(incl. FCE

V ）

EV

Source: BNP Paribas

- 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0

Global Average

Sweden

Switzerland

Israel

US

Holland

Japan

2010 US & J apan753,000 Vehicles

ToyotaHondaOther

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Hybrid （ HEV ） Market ： Unbalanced players and market

HEV market share

Source: Marklines

HEV market share

12

Hybrid （ HEV ） / Electric vehicle （ EV ） demand forecast 2020

EV/PEV 23%

HEV 30-40%

EV/PEV 20-30%FC Car

3%

Clean Diesel5-10%

EV10%

EV3%

HEV 23%

Mitsubishi

Nissan Toyota

METI Goal

GlobalDemand Global

Demand

DomesticDemand

Total production

Source: Corporate info, METI, BNP Paribas

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Cost Structure: Gasoline vs EV

Gasoline

EV

R&D Procurement Powertrain Press Weld Paint Assy Marketing Retail Repair

R&DProcurement

Batterymoter

Press Weld Paint Assy Marketing Retail

Repair

4-5% 45% 15% 10% 15% 9% 2-3%

?% ?% 50%? ?%

出所： BNP パリバ証券

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Eco-cars in production and planned – Japanese automakers

  2009 2010 2011 2012

Toyota ☆☆☆☆ ☆☆ ☆☆☆ ☆★ Prius C 、 Prius PHEV ★★ RAV4 EV 、 iQ EV

Honda ☆ ☆☆ ☆☆☆ ☆☆ Accord HEV/PHEV ★　　 EV

Nissan 

☆★   ☆★ HEV/EV

  Leaf production increase

Mitsubishi ★   ★★ ★　　 RVR PHEV

Daihatsu     ＊  

Matsuda     ＊  

Toyota （ 2009 ）： Lexus RX450h 、 Prius （ 3rd gen ）、 Lexus HS250 、 SAI 、（ 2010 年）： Auris HEV （ Europe ）、 Lexus CT200hToyota （ 2011 ）： Prius α 、 Camri HEV 、 Alphard ・ Velfire HEVHonda ： Insite （ 2009 ）、 CR-Z （ 2010 ）、 Fit HEV （ 2010 ）、 Fit Shuttle HEV （ 2011 ）、 Civic HEV （ 2011 ）、 Freed HEV （ 2011 ）

Nissan ：（ 2010 ） Fuga HEV 、 LeafMitsubishi ：（ 2009 ） i-MiEV 、（ 2011 年） , value model of i-MiFV （ 10.5kwh battery ）、 Mini Cab MiEVMatsuda ： Sky Active （ GDI ） , Demio based products Daihatsu ：「 JC08 mode 30km/litre 」 e:S（☆） HEV 、 Hybrids 　（★） EV 、 Electric Cars ・ PHEV 、 Plug-in Hybrids （＊） Other eco-cars

Source ： BNP Parbas

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