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m mmm mm ^ -' -t;~' ~ 'x-^ wmmmmm LTM5967 Rip 7as.t "*** "fa eAnr tare "THE rOTURI AUTOMOTIVE BATTERY MARKET" Talk by Dr. T. J. Port, President AABM Btfort the Load Industries Association Chicago, Illinois, April tt, IMS The A--oclatloe ot American Battery Manufacturers appreciates the levitation yon customarily and courteously extend to Its President to talk to you t tha ")l~* for automotive storage batteries. Tha fact that I have aakad Mr. Robert Oattar to read this abort paper for me should not be Interpreted as of regard for tbs Bead In&istrles Aaaoolatioo or tbe honor Implicit ta being invited to address yoa. I should very much like to be with you today and to do this personally. However, for tbe aecood consecutive year tbe person who sets the date for your milting and tbe person who sets the date for ESB'a Spring Management Conference seem to see eye-to-eye on what is really the one best week in all the year to bold a meeting. This meaaa I must resolve the * between what would be my &ty and pleasure as President of AABM and what is my duty (and pleasure) as aa employee of ESB; this choice is simplified somewhat by tbe difference la pay aealaa for the two Jobs. Mr. Zlegfeld knew in advance that my soceptanoe was contingent igson having someooe else present tbe material for me. Mr. Getter is Director of Purchases and Distribution in the Automotive Division of ESB and Is regularly involved and deeply interested in forecasting techniques and their application to foresoetag battery demands by type, month, aad location. In approaching this subject matter we will first examine tbe recast historical data VI 'Pnwnjs ly^m.oii^mmin ip|i wmmm. mmm***am ""fr m LI A 1596 8 T^TiillrMi|-lil1i '>^l i^nriri8 " mi mil i i Hi IIII ior the replacement battery market and attempt to oorrelate factory shipments with an appropriately defined ooacept of vehicle population. Saoondly, by leaning heavily on profeaaiooal forecasters and the oplnlooa expressed by bualneea leader* la the automotive Induetry, we will try to look ahead at aew vehicle production and future vehicle population. The third step will be to Integrate theae foreoaata with the relatlcnahlp dlaoaaaad is the firat etep to yield eeparate foreoaata lor replaoemeat batterlaa aad original OQtfipBMttt Nttflifti My approach to thia subject will be eomewhat differeot from that need fay othera who have apckea to you the subject la years peat. One departure from peat practice will be to deeaaphaalae the effort usually devoted to making a preolae foreeaat of how many automotive batterlee will ha *>|rr*<l thta year and to aubetUute for title (at loaat la terms of emphaais) aa admittedly laaa aoourale look at what la likely to ooourta the next five years. We probebty ahoaM not have to Justify doing thia, beyond remarking that It ought to be an lataraatlag exercise and that even a eomewhat Inaocurate forecast that far Into the future Is better than none at all. Many of our business decisions, especially In the areas ef finance and facilities, are secaaeerily made with assumptions (either stated or imitated) aa to what the demand for our product will ha five year* fames. A aeoond departure from past praotics will be, la looking at the replaoemeat battery market, to discard the calendar year as the statistical unit. The calendar year begins and ends very Inappropriately right la the middle of the peek retail selling aa Vi JJIJIII , JUWPJ "*PPW ism ins i--i iiiiappmpiiiepe myppjWSsi-tas.iiiiime i* , ) ifui w i i j mg* fn tifBltePff1 wlV ifhT...i.w LIA15969 mi ttrtPr iWrtni -I ( lor automotive batteries. Data for say calendar year ar* subject to variation ta taro different viator* -- variation* aa to whether tt>o busiaeaa-producfag stoma ooour early or late, particularly ia the Boat populous regions nf tin rmwatij A* period Hank 1 to February tS la at laaat a non natural and a Bora kg*otl year, not subject to this importaat variation; all tee Importaat atom* ia on* viator fall la on* yaar** data. Inomination of tli* Hlstorioal data above da, wbaa raoaot ia tala fashion, ta* data ar*. ia foot. muck smoother thaa oaloodar-year data; trial* arv such more clear-cat. It follova that ta* probable aoouraey of astnipolatioan iato the tutor* la laaprovad. la a tew moo eats va will taka a look at the hlstorioal data on automotive battery ahlpmenta, recast in this fashion. Ia so doing v* vlll vast to relate thaa* raptae data to tha number of vehicles they serve, and that latter coMgt (the --t*" of vehicles they serve) ia a little hard to della*. Certainly It Is not logical to rotate replacement battery shipments to vtaicla registrations as of the and of ta* year, because, except to a very minor degree, automobiles built ia the last oouple of jeers ar* not potential customer* far new replacement batteries today. Thera la eon* aider-able room, both for honest argument aad for a lot of mathematical analysis, as to what la the on# boot way to calculate the actual vehicle pnpuletina that should be logically rotated to replacement battery sales March-through-fabruary. A fairly good choloe would seem to bo to remove ta* growth ia registration* far tbs on* yaar and two months praoodlng ta* atari of ta* battery yaar. la other words, rotate tao replacement battery sales from Maroh 1, 1M4 to February it, 1PM to the reported vehicle registrations aa of Deonsbar 91, HU, wmw H pwuj n '"i m w ft*" P9K9 mmmmm linf1)giii8Sira^iiii:^'TifiriirarfiariMiriirtiglr1iii""r'aff-iiir'Ji"Tiirfflii>r'iiri-- - yr -- -- ,r - I mil lr n tUm,<+M i i i m x . . ,n 4 . ii li ililt ii^ n a . M i. lita a I f ljf o it illi 0 h ttw iiia i ........ >1.11 m i l U f c O i t M t t t 4- h tha light of how long batteries last to an automobile, it may i m at first blush to more backward only 14 months to gat a vthlcl* population to ralata to battery aalea. Actually wa ara stretching backward farther than It first appear*. Of all the aaw oara added to total registrations during IMS, half of then ara ate Booth* old or older o q Daoambar 31. Also, of all the replacement to bo ahlpped from factories fa the year starting March 1, IMS, the average will probably be acme eight or nine month* la the future when the winter Beacon atrikaa. Thirdly, an additional three to four mootha alapeea (oa average) batwem the date a betozy shipment occur* and the date the retail aale oooura. Cooslderti* these three factors, it seems fairly logical to look for a relationship between vehicle population ea December 31 and the factory shipments In the year beginning 14 months later. Regardless of the logic or the Uck of it, a more relevant point it whether the aamap* tlon lead* empirically to a good correlation. This you will be able to )odg* for yoarsaif bafewmemmts. U this approach works out (l.a. if there really is good correlation between vehlda population so defined and the number of replacement batteries shipped from factorise during the natural battery year beginning 14 mootha later), then we will have a useful tool for short-term battery forecasting aa well. After all, those vehicles 90 moadw I old, or older, era out there -- they ara out there numbering la the tens of aitil Inna --' and every single day those batteries get one single day older. For a fallow who *a)oya making and selling good replacement batteries, that's a comforting hfwi The Brat slide show* replacement battery shipments, back to 1052, oonvartad to this r t mmymmm*mwh n ij i*. .mmm".U . M- J>iUHP ! ' \ 'rr ` fclMiarfMUlfcMtM i*lfcilil<ar>l jiwrfua LIA1597 1 -7 lilli}<J,~" ,:t lur n it * '**fi1tifce(itlreliriti'ifirtSfiiietfiiiilifiiii -fl tf'--- natural battery year. It also has a lisa depleting total vehloie rsflatrattons for tbs and of each calendar year, offset la tbs manner Just described. The upper Male shows the years for foe vehicle population curve. Tbs raw data are not very smooth and foe expected loflcal relationship Is not vary apparsat. However, for foe aeoond slide we have calculated and plotted foe ratio betwem foe replacement battery shipments for tbs natural year to the vehicle pwpiiHt one year and two months sarlter. Hera are some very interesting relationships! The ratios for the years IMS forot^h 1956 are almost wV^aeal, one replacement battery chipped for every 0.654 vehicles registered as of that earlier date. The correlation is extremely aoourate. Also Interesting la foe fact that foe ratios for the year 1M7 through 1964 also vary accurately fit a straight horizontal line, hpt at a lower level. Durhq; this period ana replacement battery was shipped for every 0.400 vehicles registered as of foe earlier Each group of points fits e horizontal line so precisely that we cannot help but feel i that there is considerable validity in treating foe data this way. We cannot avoid trying to explain why the sudden change oocurred la 1M7. Any explanation 1 might attempt would be very speculative but here, at least, are acme oommeets. The data tall us that beginning In 1M7 batteries did not have to be replaced ea often as In prior yean. Why 7 Wa would have to seek the underlying reasons for j mj turns ui.u;. imuHAJ! ,u,'rP ..r^hrT'.Tir--^ r? IP'WI! ' ; ' - sv* ' ' * > HUB ... .. * L IA15972 . ... - this la eometulng dene to the batteries and/or to the can back around 19M and IMS. Witt hindsight it ia not hard to find speculative theories because at that time a lot of changes were occuring in the industry. Just to list a few -- cbaige Iron vott to U roll systems ~ change to lower snttmony grid alloys -- rapid shift from wet i charge to dry charge -- change from wood sepanton to synthetic separators. Thass an all valid and logical reasons for explaining the else and direction of tfaa charge but they hardly explain die suddenness of the change. However, part of the raddeonees * i is explained by the unusually large growth in registration is 19$5, the reoord new ear year. This helps to sharpen the break that oooun in the data in the 1S67 battery year. So it appean that maybe wa an on a new plateau for the ratio of replacement batter- iee cold to the else of the vehicle population. But are we? What about the futureT Ton don't want Just hindsight -- you want a little Insight and foresight. The moet significant new factor present today is the substitution of elternaton for die generator. There ia no question but that this Improves toe environment ia which toe battery must function, particularly those batteries subjected to a lot of atop-end- go slow apeed driving. Also, soma batteries have always been replaced somewhat earlier than they Deeded to be, simply because they wen discharged. This will happen lees frequently with alternators. Again, it ia speculative to aay quantitatively how much avenge battery life will be extended when the Urge bulk of our oar population to equipped with alternators -- and 1 have no actual data that ara in any sense definitive. Moreover, we cannot duck the issue and still make a (-year forecast, la making a no- data Judgment, we must bear in mind that a lot of other advene factors affecting j jjppipf1 .--pp minim mi >.  iturntmupiusin p;{Wiui|J'HBi*,-?\"1 " .,' > .'Wff m*k LIA15973 -T- buttery life are still at work, rack aa overcharge oocdltlona, high "m*** tempera tures la crowded engine oompertmenta, vibration, improperly aet voltage regulators, neglect, and Jus* plain time Itself, Inexorably taking Its toll on some very highly reactive, finely divided chemical agents imbedded in the battery plates. 1 will place my bet on 10% aa being very adequate for measuring the effective Improvement In battery life in the average passenger car, due to alternators. In the terms weed in the seooud slide, this la tantamount to saying that in 1969, about 0.36 batteries will be shipped per vehicle. We needed to settle on some such number la order to make die 1969 forecast of replacement battery shipments. Of course, we also need to forecast future vehicle registrations and this la the subject matter of the third slide. The historical data need no particular comment; the estimates of the future are a composite of many different forecasters. This slide Includes projections of all the components that affect total vehicle regis trations, such ms new car production, truck and bus protection, exports. Imports, and vehicle ecrappage rates. All of the forecasters I have been exposed to seem to agree substantially upon how many new care and trucks will be built during these ooming five years. The net result of all this is a projection that in 1967, whloh you will remember is the basis for our 1969 battery year forecast, cur total vehlels registra tions will be somewhere around 96 million vehicles. The fourth slide is similar to the first, except that it now includes also projections into 1969. Replacement batteries are mathematically arrived at by using ratio figures from slide X, that gradually change from the 0.400 of recent yean to 0.360 Is 1666, mi ..mm.mtowwwpwtowpa im uiMi jwiiysjuiw eafiwpwqsiu vg,"'VWv ilffr r "rftnriiita< iriMiftiirirri LI A15974 *4 \..v .->.-j -~ - i.'s-ytev* - - applied against anticipated vehicle population in the future. The original equipment battery projeetlona are drawn directly from the data on the third elide for new domeetlo car production and new trade and bus profomtton. The curve for total battery production la, of oourme, the earn cl OX and replacement, plus the small amount of export, the conehision works out to a probable battery production of about 40 million units in 1909 vs. about 39 winioi nails in 1964. (foe cannot help wondering bow accurate this is. Tbs business cycle does not seem to affect replacement battery ealee very much (remember the enrtavl slide) but It certainly affects new oar and new truck sales -- and lew pecpla would be ao foolhardy as to ssy now whether 1969 will be s boom year or a recession year. On the f of accuracy, foe beet I oould hope for would be aooeptaaoe of this number as s reasonable estimate ol foe probable level ol battery production live years hence. A raige of pte- and-minua 6% la shown for all the forecasts; foe probability that foe actual figures will fall within this range is probably quite high. ................ So much lor batteries, which are deer to my heart! But your prime interest is lend consumption -- end this is also affected by another factor, foe --* of lead used per battery. Battery manufacturers will oontinue to use lead more effectively; witness the one-pleoe oover battery, now being built in large volume. Of greater importance, though, is foe else of foe battery required to erank foe engines and to support thn aooeesory load now including more and more air ooadUtanem. The currant trend is strongly toward bigger engines and, therefore, bigger batteries in original equipment. Much of foe magic in foe compact ear seems to have disappeared - 6MUWipihlBWpPWlP^ UJBf), JJ.^ .ii-1^ ii yimiJ 1, liJUWPUjwgpWB' ii mi >1*11 mi i u i iii-^aii'ii'iIVr iiiii'ifTifi' irhiiiiMf t anai ' h'ntriMj-'irilnfff^iir LIA1597 6 HI ... m m uy_i i \ i.hi m" h .....m n 'IIIJ |M "! ii 1 1 "u n mu p p i^ y ^ p iiw p w ^ w ii^ TABLE #1 RELATIONSHIP BETWEEN TOTAL VERKLE REGISTRATIONS AND REPLACEMENT BATTERY SHIPMENTS Total Vehicle Registrations Battery Vehicle Yeor Registratloe (A) Million* Bsttuy Year Battery (B) Shipments Batteries lo Redstrettow 1060 1061 1061 1061 1064 1065 1064 1*57 1054 1060 1060 1041 1062 1063 1964 1965 1964 1067 (A) (B) 40.S 51.0 63.1 64.1 64.6 62.0 66.1 67.2 60.2 71.6 73.0 75.0 70.0 1062 1063 1964 1966 1064 1657 1064 1969 1040 1941 1042 1043 1964 22.2 24.1 23.4 24.0 26.2 25.2 25.0 24.6 27.9 20.9 31.2 30.2 20.6 eel. .461-v .464? .443 V Avene* .464 .401--v .307 ) .204 / .406 ( .404 > .422 \ .396 \ .273 *06/ Average .400 62.7 est. 64.3 not. 69.0 not. 03.0 not. 04.4 not. 1966 1064 1047 1068 1049 22.4 ant. 33.1 net. 33.0 est. 34.2 set. 34.7 est. .392 sot. .284 set. .276 set. .248 esc .240 *08. Souroe: D.8. Bureau of Public Rondo Souroe: The Association of Americas Battery Msanfaotarere, Soe Chert I sad 0 Tjy-MC 4/12/66 ., ill. .i i.i|i,iiiLi)wj^4!iWuip|jiiyi!iwi,wi^ui ... r jpmip L IA15977 CHAtTT |-T*s Vss;s; Ites&rwtfcm - Its^&esrt into,- f -'-aite 8e?es HK m tr ma m i 0 * ^wrwyyw ^miin'.1^ i.! ~ '"*""*ip;j.-v ;WJWMW:yw--*yw"-* fjHJr 4. * 'igi*wwy^ ? 99V - -* -- .- ................. LIA15978 . ... CS&KT H --fbt? - f --r , ; n ^ --* *T < * i IT.' 1 ! : 1 ( 1 .J < ' .: i i 1 fi 1 ;; M .. 1! ! I l !J 1;?v y - -- - tt*AT V #tSvr-t , 9f\- v *' . -..-V* % 1 .- > i _______ _____________- _ ^rJfTT-1 m----- 7 ,_..i ; ' . f~- : -pp-4--r--- - i 1 *jn--h_i 1i_. J'*!_.m.:L~_-_PijiL_-.iilr_iL_ii|i!_..ir._Lrii--i_J__L_p_--iru_,,4r7J_J_t__--1 LA_1!_L._TjLL-_iT1_i_1 1 I 1- j j i 4 j i i ~rr ii TT~ j L-1 -L-J ji ] { j ! r--~nii--~ --'1 T--i . Ji | j ii i i --~~ |t i |! -- \ -- - 1 --ij--; f 1 1 f -1 r~~ rr j~ J | _L| iiI_ tsa iw w t ns *tv m is* na sa at* tsa iM as ae na mrm rm - -rr^*r *i , j (*~t |i ,,.. . :.^f~. . - --*j*y.**?% LIA15979 ____1____ 1 ;# Dom--M Vehicle Can Yew (-000) - IKS 4.1*4 > IKS 6,706 1K4 5,600 1K5 7, US | UH 6,646 1K7 6,718 lKI 4.111 IKS 6,344 1960 6,106 1961 6,566 196S 6,555 1963 7,133 1964 P) 7,664 TA]BLEW VEHICLE REGISTRAT10H TRENDS IWmw M* Trade ft Bua (-000) mm+m% <69 K-a-% MM Vehicle Meet Import! Registrations (-000) (-000) r-1^ fi} Total (B) Total Vehicle Vehicle Reglatratlona Scrappece Exports (as of Deo. *1) (-000) (-000) (Million) 811 930 6K 966 891 650 711 920 919 910 1,057 1,226 1,411 14 4,970 31 6,K9 36 6,364 59 8,127 11* *.*4* 271 6,640 469 6.K2 719 6,963 495 7,620 *M 6,774 3K 8,008 442 8,601 485 9,460 2,767 4,064 4,353 4.391 4,948 4,268 4.177 5,339 4.794 6,019 4,806 P) 6,101 p) 6.931 P) M/A 289 386 389 371 136 270 *67 32* K9 *31 266 3 63.* 66.* *6.6 62.1 65.S 67.1 68.3 71.6 7S.9 75.6 79.0 *1.7 64.3 a Forecast* 1965 1966 1K7 1968 1969 7,910 7,655 8,000 8, IK 8,415 1,400 1,315 1,375 1,440 1,4K 615 9,8*5 640 9,610 665 9,940 690 10,225 615 10,525 6,230 6,370 6,660 6.760 6,660 *60 355 360 365 *70 *0.9 K.O K.4 99.6 103.6 (A) Source: U.8. Department of Commerce <B> Source: Automotive Iwhistrlea March 1964 <c) Source: Automobile Manufacturere Aaeeeiattoa P) Estimated FJP:MC 4/12/65 rim, i/jMWggjjgwp^^^ iMChutn wmpi) wmw  w- - ->-- BU&C ,-w tegafttfiK Tigris. i r 4 < TABUS fill BATTERY SHIPMENT FORECAST! R TM ToUl Vehicles Registrations Vehicle Year (Million) 1M0 1161 195* 1963 1964 1968 1964 1967 1968 1968 1960 1961 1963 49.3(A) 61.8 63.3 66.3 66.6 63.6 68.3 67.3 66.3 71.8 73.9 78.6 79.0 forecasts Battery Year 1953 1983 1954 1988 1956 1957 1958 1959 1960 1961 1963 1963 1964 SAX Replacement Shipments (Million) 33.3(A) 34.1 13.6 36.0 36.3 38.3 38.9 36.8 37.9 28.9 31.3 30.3 29.8 X 1 B iI O.I. Shipments (Million) Export Shipments (Million) 8.8(A) 7.3 6.6 9.3 6.9 7.3 8.1 6.7 7.9 6.7 8.2 9.1 9.3 .4(A) .4 .4 .4 .3 .3 .2 .2 .2 .3 .3 .2 s1 Total Battery Shipments ! r" E* (Million) t 28.1(A) 31.8 30.6 38.6 t y:. 33.6 33.7 31.3 t 33.4 36.0 y 35.6 39.7 39.8 * 39.0 ! n*- 1963 1964 1968 1966 1967 63.7 86.3 89.9 93.0 96.4 1965 1966 1967 1968 1969 32.4(B) 33.1 33.8 34.2 34.7 (A) (B) Nate: 1980 - 1963 Actual 1964 Estimated Computed from Ratios (Table 1) Upper and Lower Range *81 9.7 9.3 9.7 10.0 10.3 .2 tbpjic 4/13/66 W 4 See Chart IV .V 42.3 142.6 43.7 44.4 45.3 p r i' fFk ' L i> . Err mmmrnm LIA15982 HW 5 jt* wnw^- . V ' - V*v_V g_ U3 1 U h~ KWjsi >mm it ~ trs rr~ ua its itu i?,, f-rsE i:: 15w> i*7 dzxazr' ~~-;~jTi-mtt e i- Htr^^rrriTl nr" rlink TStsj Etii'tj.Tirsr i K 'rn.? !--rH-tT i I j 1 I M i. an 3ffi . :--:.-:J.!tiTTU.: .l . J.. I,,; i 1 0