SIAM 50 th Annual Convention Evolving market dynamics -

Transcription

1 GLOBAL AUTOMOTIVE SIAM 50 th Annual Convention Evolving market dynamics - Dieter Becker Global Head of Automotive KPMG New Delhi 26 th August 2010

2 Dieter Becker is responsible within KPMG Managing Partner Global Chair of KPMG Automotive (also EMA and ELLP) Head of Consumer and Industrial Markets KPMG ELLP Head of Advisory Switzerland (Global) Lead Partner for GM Europe, Tognum, Novartis has profound background and experience Prior to joining KPMG in October 2002, Dieter was the Value Based Management Partner for Andersen Management Consulting and was responsible for the German value based management practice. Dieter has more than 17 years international experience in the automotive and manufacturing industry, working with a range of different clients on projects covering finance and controlling, sales and marketing, manufacturing, product development and HR. He has been very instrumental in developing industry positions on several emerging issues that impact the automotive and manufacturing industry, e.g. studies like product diversity, Brand and consolidation, location management and R&D controlling, and has consequently pushed forward the product development. He has conducted several projects, e.g. the implementation of value based management at different groups, contract database development, several MIS and Balanced Scorecard projects. Dieter Becker acts as specialist in all types of performance advice, e.g. value based management, reporting and planning, research and development, fast close, process optimizations. 1

3 Agenda Challenges and trends of the global automotive industry Development of the Western and Indian automotive industry Convergences within the automotive industry KPMG experience 2

4 The automotive industry is under a considerable strain which leads to changes in the whole industry Credit Meltdown Credit market disappearance Dependency of car sales on credit OEM & supplier refinancing Global Recession Wealth destruction Confidence hit Unemployment rates Household financials Slowing growth in emerging markets Automotive Industry Globalization OEM global presence Global sourcing OEM interdependencies Foreign investments Oil price fluctuations CO2 targets Customer beliefs Need for innovation Budget pressure Green Source: Cisco IBSG Auto Analysis 3

5 Full-Hybrid ICE Electric motor Micro -Hybrid ICE Start-Stop Electric Vehicle EV Plug In Hybrid ICE Electric Motor Mild-Hybrid ICE Electric motor EV mit REX Electric motor ICE with generator Fuel Cell Pure EV EV Optimized platform Light weight Thermal insulation Battery change Ni-Metal Battery Inverter 1. Generation E-Motor Electric Power Steering Electric oil pump Start Stop Automatic Li-Ion Battery E- Brake Assistant Electric break E-Steering Electric Axle Next Generation - Battery - Inverter - E - Motor E - Hub Global market developments will influence the whole automotive industry in different fields Volume Overcapacity will be a common problem in the future, even in the BRICS Overcapacity in the TRIAD will remain significantly high North America is seen as most overbuilt (over 80% see an overcapacity) BUT is also expected to show best progress in terms of dealing with overcapacity Expected overcapacity in the BRICS China India Brazil Russia Now 23% 24% 31% 33% 43% 13% 31% 28% 6% 7% 3% 7% 2% 6% 1-2 years 3-5 years 23% 28% 43% 30% 7% 12% Region A shift in customers demand from west to east is expected Forecasts for auto industry revenues Growth expectations largely geared to Asia Eastern Europe shows second biggest increase Biggest declines seen in North America and Japan 6-10 years > 10 years Source: KPMG, Global Auto Executive Survey 2010 Source: KPMG, Global Auto Executive Survey 2010 Asia excl. Japan 6% 16% 76% Central & South America 18% 42% 36% Eastern Europe & Russia 24% 24% 19% 28% 47% Western Europe 50% 53% 25% Middle East & Africa Japan 27% 32% 47% 45% 20% 19% 22% Decline Stable Increase North America Segment Downsizing has already started today and will increase in the future In total new passenger car registrations in Western Europe dropped by 7% between 2007 and 2009, whereas small cars are becoming more popular Number of new passenger car registrations in Western Europe % Low er medium % Upper Medium % Executive + 12% Small Technology New requirements drive complexity in all processes High technological variety leads to Source: Prof. Burkhard Göschel (European Manufacturing Executive Roundtable 2010) Parallel existing systems and the question: How to handle this complexity? Will the customer pay for it? How does it fit to the downsizing process of vehicles? Who should carry all the investments? How to bring this complexity into the market? 4

6 Agenda Challenges and trends of the global automotive industry Development of the Western and Indian automotive industry Convergences within the automotive industry KPMG experience 5

7 The development of the automobile has proceeded different steps in each country Comparison between the Western and Asian development of mobility 90 years Forecast years Forecast The development of the Asian automobile industry started 50 years later than the development in the Western world Investments of the government in infrastructure and the entrance of western companies will even accelerate mobilization in Asia It can be assumed that the further development of mobilization in India and China will skip some steps of the Western development The local players have already adopted latest developments and are catching up with the newest available technologies (e.g. e- mobility, Tata s Nano EV concept car ) 6

8 Development of the Western automotive industry (e.g. in Germany and UK) Consolidation Process - Number of OEMs is decreasing 25 Within the European automotive industry there are only 6 OEMs left compared to more than 70 back in the 50s Standalone manufacturers Major part of German consolidation process took place after World War II De-industrialization as a major driver of consolidation process in the British automotive industry Mature markets and a lack of governmental support activities led to a natural consolidation process Strong decline of international competitiveness due to strong influence of trade union and Shop Steward system Only companies with a strong international orientation survived 0 50s 60s 70s 80s 90s 2000 UK Germany 7

9 Development of the Indian automotive industry Deconsolidation Process - Number of OEMs is increasing Heavy Regulation Partial Liberalization Liberalization Globalization Closed market Sellers market long waiting period Growth of market limited by supply Outdated models High duties & sales taxes Telco Players Modernization programme for the automotive industry Promotion of exports by the government JV between Suzuki (Japans) and Government of India to form Maruti Udyog Automatic approval for Foreign direct investment (FDI) up to 51% equity Telco Players De-licensing of all automotive sectors Market entry of major global OEMs (GM, Ford, Honda, etc) Imports allowed from April 2001; alignment of duty on components and parts to Association of Southeast Asian Nations level Removal of export commitment clause for all companies Implementation of VAT Automatic approval for FDI up to 100% equity Boom in auto financing Foreign OEMs consistently increase their production capacities in India In the last three years large number of M&A deals; inbound as well as outbound deals India to become a hub for small and mid-size cars Production volume

10 Comparison between Indian and Western mobilisation status Europe has a saturated market, automobile industry expect the biggest growth potential in the emerging markets India is seen as a growing market. Western companies are also trying to participate in this growth Growth perspective Europe: Over 60% of produced cars were exported in 2009 in Germany. India: India's major export markets are Asia and Africa but as output quality improves gain are being made in Europe. Germany: > 3 Mio in 2009 India: 300 k In 2009 Europe: Economic growth 1.4 % India: Economic growth 8.4 % Export rates passenger cars Europe: long experience in R&D India: Know How in the field of two-wheels and small cars Europe: First hybrid vehicles are already driving on European streets. Western OEMs focus strongly on cooperations with electric companies. India: High import tariffs (110%) in India restrict the potential growth of hybrids. Common technology for example the Nano with a 35 PS two-cylinder non-opposed petrol engine. Europe has an excellent road network including gas stations and capabilities for future plug-in systems. India s infrastructure has to be improved dramatically, for example a truck needs 5 days just to drive the 1500 km from Mumbai to Delhi. However, missing infrastructure offers the possibility to establish new urbanisation and mobility concepts. Europe: 124 km/100 km2 India: 50 km/100 km2 Infrastructure Technology Europe: Half of the population has a car the market is nearly saturated already. India: Only 1% of 1000 citizens has a car. Even a bike is not affordable for everyone. Penetration rate Germany: 500 cars per 1000 citizen India: 10 cars per 1000 citizen Customer demand Europe: Car as status symbol is decreasing India: Step from two-wheel to four-wheel Europe: Recognition of the car as a status symbol is decreasing cheap, easy and fast transportation is requested. Only high differentiation characteristics increase the value of the car as a status symbol. India: The ascent from two-wheel to four-wheel represents social advancement. The car itself is a differentiation factor. Western India 9

11 Characteristics that will influence the future market development in the Western region Overcapacity will be a dominant issue in the years to come, especially in the TRIAD Market entrance of Indian and Chinese automobile manufacturers will force consolidation process of Western automotive industry Tier one suppliers will increasingly get in the role of contract manufacturers Alliances between manufacturers of premium and small cars are the new business model for premium manufacturers, e.g. Daimler/ Renault The future focus of automobile manufacturers will be on their positioning as a mobility provider as well as their successful brand management The role of the car is changing: a shift from status symbol to commodity The development of electro mobility will lead to market entrance of power supply companies (e.g. in the field of smart grid) Electrification will change the structure of automotive industry and manufacturers will have to change their business model, e.g. Apple Standardized technology but unique applications will be the characteristics of the vehicle of the future OEMs and suppliers have to face massive investments that arise from variety of new technologies 10

12 Characteristics that will influence the future market development in India Increasing consumer demand and low penetration rate of vehicles will continuously increase the sales of cars, overcapacity is not expected to be a serious issue within 6 to 10 years Growth in incomes and entry of major global luxury car manufacturers is driving growth in the luxury segment Investments of USD 750 billion in the development of India s infrastructure until 2015 will improve the usage of cars Alliances between Western OEMs and Indian national companies like Maruti Suzuki are the leading market players Fuel-efficient small cars will dominate volumes in India Ultra-low-cost-cars priced at $ like Tata s Nano, are a first step to raise the affordability for a four-wheeler To position India as a global export nation the government has established incentives programs like the Focus market scheme and the Focus product scheme India is a leading small car exporter and the adoption of actual emission standards (EU IV) could enhance volumes in the Western countries Policy initiatives for competitiveness and development of technology will be taken Urbanization of the cities and a increasing number of cars could lead to complete new mobility concepts (e.g. mobility trading, streets with induction loops for e-cars) India's high acceptance for financing models (60-70% of car purchases and 50% of two-wheeler sales are credit financed) raises the attraction of western auto banks - new financing and leasing models could be the results Supplier business in India is characterized by a large number of small companies, consolidation in this area is expected 11

13 Agenda Challenges and trends of the global automotive industry Development of the Western and Indian automotive industry Convergences within the automotive industry KPMG experience 12

14 In the future the automotive industry will not only be characterized by origin OEMs Convergences within the automotive industry Entirely new players will enter the automotive industry Brand relevant OEM Vehicle concepts Brand specific design Brand specific services Non-OEM business Information Systems and Connectivity by new players (Google, TomTom...) take down-stream values Supplier of components, systems, vehicle structure standardization, scale effects Energy supply grid provides direct contact to the end customer 13

15 Convergences are already recognizable today E-mobility Convergence between OEMs and power supplier Car sharing (e.g. Deutsche Bahn) Convergence between OEMs and mobility provider RWE concept E-Car electricity contract Home charging station Universal network of charging stations across Germany book open drive Provided by FIAT Electric car: Micro-Vett 500 E Micro-Vett Fiorino Mobility provider offers cars, technique and logistic Customers can use cars 24 hours a day on a hourly to monthly base All kinds of vehicles are available from sports cars to Minivans Customers profit from high flexibility and low overhead costs 14

16 Apple as prototype for a new automotive business model? How the Apple model can influence the automotive industry Apple inspiration for the automobile industry? Mini is using some of them Aluminum Casing Patent Apple Operating System Standard Components Roof Personalisation Community Peugeot Diesel Engine Size differentiator FOCUS Speed differentiator No true differentiator Product differentiator FOCUS Community Differentiator No true differentiator Source: Cisco IBSG Auto Analysis 15

17 Agenda Challenges and trends of the global automotive industry Development of the Western and Indian automotive industry Convergences within the automotive industry KPMG experience 16

18 KPMG the global professional services firm 1993: 20 People 2 Partners 2010: People 200+ Partners & Directors 9 Offices Fastest growing BIG 4 firm in India and one of the fastest growing firms in the KPMG world CHANDIGARH NEW DELHI Respected Brand backed by investment in risk management, people agenda, and training rigor Strong and integrated Advisory practice including IT Advisory, E- Governance, Accounting Advisory Services, Governance, Risk and Compliance Services, Financial Risk Management & Corporate Finance KOLKATA Dedicated and pure play Business Performance Services practice with over 250 consultants advising on Strategy, Operations, People and Change MUMBAI PUNE HYDERABAD Largest Forensic practice in the country Strong US GAAP and Transaction Services practice BANGALORE CHENNAI KOCHI 17

19 Dedicated automotive practice which has the rich experience of working with most key OEMs, tier I and Tier II auto component manufacturers in India 18

20 Current KPMG Studies Global Automotive Executive Survey 2010 The Rough Road Continues Through The Storm Automotive Dealerships in China Accelerating Performance The Transformation of the Automotive Industry: The Environmental Regulation Effect Alternative Fuels: Investment Outlook for the Automotive Industry 2009 Brand and Ownership Concentration in the European Automotive Industry Multi-Channel Sales Approach for Premium Autos - Raising Cost Effectiveness in Marketing and Sales 19