AN OVERVIEW OF CHINA AUTOMOTIVE MARKET. HCA Consulting China

Transcription

1 BUSINESS INTELLIGENCE SERVICES AN OVERVIEW OF CHINA AUTOMOTIVE MARKET First Quarter 2011 HCA Consulting China First Quarter 2011

2 Comments on Impact of Japan Earthquake China imported 253,000 cars from Japan in 2010, equivalent to about onethird of China imports. The March 11th earthquake has significantly impacted the importation of Japanese cars - particularly the high-end luxury cars in China - and a shortage is expected in the first half of The future supply will depend on how fast the Japanese companies can resume production in Japan. China imported USD 10bn of auto parts in 2010, with Japanese imports contributing to 40% of China s imported auto parts, the majority of them being core auto parts for Japanese auto-makers in China. As most companies place orders three to six months in advance, the shortage of auto parts from Japan will not be obvious in the first half of 2010, but the impact may show in the second half of 2010 to Japanese auto makers in China. Japanese auto-makers will experience strong pressure from European, the USA and Korean auto makers in China. 2

3 REVIEW OF CHINA AUTO INDUSTRY AUTO OEMs IN CHINA & COMPETITIVENESS AUTO IMPORTS & EXPORTS IN CHINA FORECASTING OF CHINA AUTO INDUSTRY NATIONAL POLICY ALTERNATION & E-CARS 3

4 CHAPTER 1 CHINA AUTOMOTIVE POPULATION CHINA AUTOMOTIVE PRODUCTION VOLUME DEFINITIONS OF VEHICLES 4

5 CHINA AUTO POPULATION Unit: millions Types of Vehicles Passenger service vehicles Goods service vehicles CAGR % % Others % Source: National Bureau of Statistics of China (NBSC) Currently, China is the second largest automotive population country, approximate 75 million in total, following the United States. At the current rate of automotive growth (20 million per year), it will take 8 years for China to become the largest automotive population country. The production volume of Chinese automotive industry and energy consumption both account for 22% of the world. 5

6 DEFINITIONS OF VEHICLES Passenger vehicles Commercial vehicles Types of vehicles Less than 9 seats Bus Truck Sedan MPV SUV Minibus Mini-truck LCV Light Midheavy Midheavy Light Comments Basic passenger cars Multiple purpose vehicle Sport utility vehicle displacement<1.0l, length 3.5m weight 1.8 tons; length 3.5m Any vehicles that can transport passengers but do not belong to sedan, MPV and SUV 7m length 10m; length 10m, 3.5m length 7m 6 tons weight 14 tons; weight 14 tons 1.8 tons weight 6 tons ISO3833 Revised Edition divided cars into only passenger vehicles and commercial vehicles. 6

7 MONTHLY CURVE OF CHINA AUTO PRODUCTION VOLUME, In 2010, Chinese auto market increased at an unexpected growth rate 32.4% and broke the historical record made by the United States. China has been considered as the worldwide largest automotive market with over 18 million production volumes. Over 70% of the Chinese automotive corporations achieved their production and sales target. Unit: millions China auto production includes passenger cars and commercial vehicles Source: 7

8 ANNUAL PRODUCTION OF CHINA AUTOMOBILES Passenger vehicles 123 Commerci al vehicles Production volumes CAGR Special Generalize d Bus Truck Sedan % MPV % SUV % Minibus % % Subtotal % % Light % Minitruck Midheavy Midheavy Unit: millions % Light % Subtotal % Sum of vehicles % Source: China Association of Automobile Manufacturers (CAAM) 8

9 ANNUAL AUTO PRODUCTION BY VOLUME Unit: millions Source: CAAM Chinese gross automotive output increase exponentially, achieving the peak of historical data in 2010, similar as passenger vehicles. The growth of commercial vehicles is weak. The average annual growth rate in the past five years ( ) is 24.3%; however, the growth rate in 2010 is slowing down slightly, compared with the rate of 2009, due to the governmental tightening policy. 9

10 ANNUAL AUTO PRODUCTION BY VEHICLE TYPES Unit: millions According to vehicle production by types, sedan, truck, mini-vehicles and SUV increased at faster rate than other types in the last two years; whilst MPV and bus/coach maintained a lower growth rate. Source: CAAM 10

11 CHAPTER 2 AUTOMOTIVE OEMs IN CHINA OEMs BY REGION ASSESSMENT OF of CHINA XXXX MARKET Assessment China Automotive Market MARKET SIZE OF SELFOWNED & JV BRANDS IN PASSENGER CARS MARKET COMPETITIVENESS ANALYSIS 11

12 AUTOMOTIVE OEMs IN CHINA Automotive OEMs in China Indigenous Group FAW Xiali Zotye Auto Chery Jiangling Geely Group Landwind FAW Haima Lifan FAW Car Brilliance Jinbei Southeast Motors BYD Hafei Motors DFM Fengxing Anhui Jianghuai Rongcheng HawTai Great Wall SAIC Motor Chongqing Changan Joint Venture Companies Beijing Hyundai GTMC Toyota Guangzhou Honda BBDC Shanghai GM DFM Yueda Kia Shanghai VW BMW Brilliance FAW-VW DFM Hongda DFM Nissan Changhe Suzuki Citroen SGMW Changan Suzuki GAIG Changfeng Tianjin FAW Toyota Zhengzhou Nissan Changan Ford DFM Peugeot 12

13 OEMs BY REGION Hafei Motor BBDC Beijing Hyundai BAM Great Wall ZXAUTO FAW Xiali FAW Toyota FAW Huali Hawtai Automobile FAW VW FAW Car BMW Brilliance Brilliance Jinbei Sichuan Toyota BYD Changan Suzuki Changan Ford Guizhou Yunque Zhengzhou Nissan DFM Honda DFM Nissan DFM Fengxing Citroen Jiangnan Auto Anhui Jianghuai Chery Changhe Suzuki Jiangling Landwind DFM Yueda Kia Nanjing Fiat Shanghai GM Shanghai VW SAIC Motor Geely Group Aux Auto Southeast Auto SGMW Guangzhou Honda Guangzhou Toyota DFM Ltd. FAW Haima 13

14 MARKET SHARE OF CHINA AUTO OUTPUT IN PASSENGER CARS Market size of self owned and JV brand in passenger cars market Unit: millions, Year 2010 Self owned % JV % Total Market: 11 mn Source: CAAM International OEMs holds majority of the Chinese auto market share, up to 66%, over 7 mn units in 2010, whilst indigenous OEMs only account for 34%, just under 4 mn units. 14

15 OUTPUT IN PASSENGER CARS MARKET Self-owned brand OEMs JV brand OEMs FAW Xiali BYD Beijing Hyundai DFM Hongda Chery Hawtai Guangzhou Honda GTMC Toyota Geely Group Zotye Auto Shanghai GM Changan Suzuki FAW Haima Lifan Shanghai VW Changhe Suzuki FAW Car DFM Fengxing Anhui Jianghuai FAW-VW SGMW SAIC Motor DFM Nissan GAIG Changfeng Unit: millions, Year: Great Wall Jiangling Auto Citroen BBDC Chongqing Changan Brilliance Jinbei Southeast Motors Tianjin FAW Toyota BMW Brilliance Hafei Motors DFM Yueda Kia Zhengzhou Nissan Changan Ford DFM Peugeot Source: CAAM 15

16 PASSENGER CARS MARKET - SHARE OF SELF-OWNED BRAND OEMs Brilliance Jinbei 6% Unit: millions, Year: 2010 Anhui Jianghuai 5% Rong cheng Hawtai 2% Zotye Auto 3% Lifan 2% FAW Haima 5% Others 16% DFM Fengxing1% SAIC Motor 4% Jiangling Landwind 0% Southeast Motors 3% Source: CAAM Hafei Motors 1% Local Chinese Auto OEMs - BYD, Chery and Geely Group are ranked top by production and sales volume amongst all indigenous OEMs in The characteristics of their automotive products are low displacement, low price and small size. 16

17 PASSENGER CARS MARKET - SHARE OF JV BRAND OEMs Tianjin FAW Toyota 7% Others 15% Unit: millions, Year: 2010 Source: CAAM DFM Hongda 4% GTMC Toyota 4% Changan Suzuki 3% Changhe Suzuki 1% SGMW 1% GAIG Changfeng 1% BBDC 1% BMW Brilliance 1% Zhengzhou Nissan 1% International automotive OEMs - Shanghai VW, Shanghai GM and Beijing Hyundai are ranked in the top three of all JV OEMs in terms of production and sales volume in Brand positioning is high-end, digitized, comfortable and powerful auto products. 17

18 COMPETITIVENESS ANALYSIS ASSESSMENT OF of CHINA XXXX MARKET Assessment China Automotive Market 18

19 CHAPTER 3 AUTO IMPORT VOLUME AUTO EXPORT VOLUME 2010 AUTO IMPORT CONDITION 2010 AUTO EXPORT CONDITION REASONS FOR AUTO EXPORT EXPANSION REASONS FOR AUTO EXPORT SLUGGISHNESS IMPORT FORECAST EXPORT FORECAST 19

20 AUTOMOTIVE IMPORT Source: CAAM Unit: millions CAGR Import volume % In 2010, the volume of automotive imports was over 836,000, this marked the highest imports expansion era Automotive Import Conditions: 1. China auto imports focus on grand luxurious sedans. The proportion of import sedans has a slight increase in 2010, e.g.mercedes Benz increased from1.3:1 to 2.6:1, BMW increased from 1:1 to 1.3:1. 2. SUV contributed to the increase of import cars, which accounted for 60%. 3. High-end products are mainly occupied by international automotive OEMs; however, low-end products market consists primarily of local OEMs. 4. The auto import market experienced high growth above expectation in 2010, but this level of growth may not be sustainable. 5. In the sales market of import cars, SUV maintained a solid market position; sedan increased faster than other types of vehicles; MPV sales volume was decreasing. Benz, BMW and Lexus ranked in the top three in terms of brand strength. 6. The export-oriented economy is driven by east China. Import volumes in both eastern and central China has been increasing. 20

21 AUTOMOTIVE IMPORT Reasons for import explosion 1. RMB exchange rate revaluation 2. WTO, customs cutting from 180% -220% to 25% 3. Cancellation of import license 4. Implementation of automatic import licensing 5. Pay off all customs when landing 6. Meet the requirement of engine displacement Imports forecast: (1) State Information Centre (SIC) claimed that the growth rate of import cars would be a little higher than the growth rate of domestic produced cars. (2) The market structure may alter in the following areas: - Import cars have the tendency of energy conservation, environmental protection and high technology, e.g. BMW, Benz. - SUV would maintain a higher market share. - A secondary and third market may develop fast because many imported cars network has extended to small-medium cities. (3) In summary, with regards to the auto import market, the growth rate will experience decline and the market structure is likely to change. 21

22 AUTOMOTIVE EXPORT IN CHINA Source: CAAM Unit: millions CAGR Export volume % China auto exports were sluggish; however, it has slightly improved from the 2008 financial crisis Automotive Exports Conditions (1) Auto exports are rebounding, but increase slow (2) Commercial vehicles rules in the automotive export market, e.g.trucks account for 59% whilst passenger cars only occupy 39% of gross export volumes Reasons for export sluggishness (1) Auto exports positioning: low-end products (2) Deficient overseas marketing network (3) Bad product quality (4) Imperfect after service system Exports forecast (1) Chinese automotive exports will recover slowly. RMB exchange rate fluctuation will put pressure on costs and weaken price competitiveness. (2) Passenger-car export market may be still sluggish as

23 CHAPTER 4 FORECASTING OF CHINA AUTOMOTIVE PRODUCTION REASONS FOR GROWTH IN COMMERCIAL VEHICLES REASONS FOR GROWTH IN PASSENGER CARS FORECASTING OF MARKET SIZE IN PASSENGER CARS 23

24 FORECAST OF CHINA AUTO PRODUCTION Unit: millions Source: State Information Centre(SIC) and CAAM Total vehicle production continues to grow at CAGR 10%. Passenger cars production growth rate has slowed down in 2011 to 14%, but will double by 2015 reaching growth of over 28%. Commercial vehicles is forecasted to grow at CAGR 9% till 2020, which is slightly lower than the rapid growth rate of 13% experienced in the last decade ( ). China auto industry structure is expected to reorganize and the growth rate of total vehicle may decrease to 10% approximately. 24

25 REASONS FOR GROWTH IN PASSENGER CAR SEGMENT 2011 is the first year of Twelfth Five-year Plan and the growth of GDP in China will remain at a high rate of 9.5%. Price keeps rising: CPI keeps rising, adjust from 3% to 5%. Seven new strategic industries are initiated: new energy, energy-saving and environmental protection, electric vehicles, advanced materials, advanced medicine, biologic breeding, and information industry. Motivation of independent growth is recovering: Business Climate Index and Entrepreneur Expectation Index are both increasing while a decreasing governmental investment is lower than current private investment. Strategy update: Improvement of new energy, energy-saving and reduced emission vehicles, promotion of automobile and auto parts exports, development of after-service system, encouragement of enterprise technical creation, support of self-owned brands Industry update including: industry structure update-optimize reorganization; techniques update-energy consumption, environmental protection, safety targets; profitability updaterely on brand premium, intellectual property, capital market, after service. Internationalization: improve worldwide auto research, development, manufacture and marketing Development of new energy vehicles in two stages: electric automobile; HEV(Hybrid Electric Vehicle). 25

26 REASONS FOR GROWTH IN COMMERCIAL VEHICLE SEGMENT Chinese GDP is expected to continue growth at approx. 9% every year. Main motivations: Industrialization and urbanization Heavy-load transportation which is determined by economic structure and resource distribution. Asymmetrical resource distribution cause higher heavy-load transportation, e.g. China. The share for the use of highway transportation keeps basically stable or a slight rising. Policies BELOW affect light or mini commercial vehicles seriously, but little influence on mid-heavy trucks. -Cancellation of the cutting of automotive purchasing tax for low engine displacement (2.5% back to 10%) -Cancellation of 10% government subsidy for purchasing auto in rural areas -Cancellation of automotive old for new government subsidy. 26

27 MARKET SIZE FORECAST - PASSENGER CAR SEGMENT 10.7 mn % 23.4mn Unit: millions % % % Source: CAAM Reasons for the growth in passenger car segment Policy promotion in scientific research; Encouragement of merger and reorganization; Promotion of self research and development of enterprises; Develop products with proprietary intellectual property rights, implement brand management strategy, establish Chinese well-known auto brands in

28 CHAPTER 5 National Policy Changes Investment Orientation ASSESSMENT OF of CHINA XXXX MARKET Assessment China Automotive Market Electrical cars in China 1. E-cars program 2. E-cars advantages 3. E-cars barriers 28

29 POLICY CHANGES IN CHINA AUTO INDUSTRY Automotive purchasing restricted in Beijing, causing self-owned brands dropping out from Beijing auto market (45%-30%) and negative impact on second-hand automotive industry. Cancellation of the cutting of automotive purchasing tax for low engine displacement (from 2.5% increasing back to 10%).This will decrease sales volume of low displacement cars directly, from 60% to 42% of market share. Cancellation of 10% government subsidy for purchasing auto in rural areas. Cancellation of automotive old for new government subsidy. Cancellation of government subsidy for energy-saving cars (3000 Yuan subsidy for 1.6L passenger cars). Energy-saving vehicles bonus policy is implemented. NDRC raised oil price from 0.23 to 0.26 Yuan per liter on 2010 Dec 22 (310 Yuan/ton for gasoline, 300 Yuan/ton for diesel) which may directly contribute to oil refining enterprises and alternative energy, indirectly increasing inflation and tightening policy. Four categories of ecological taxation are added: they are SO2, effluent, solid waste and CO2. Low-velocity vehicles are phased out, e.g. three-wheeled automobile and low-speed truck. 29

30 INVESTMENT ORIENTATION Low price and energy-saving cars New energy cars Custom-tailored cars, individuation Inexpensive minicar Second-hand cars (NOT in Beijing) Automotive parts industry Automotive digitization 30

31 E-CARS PROGRAM IN CHINA A periodicity target for China s long term plan is to become the world leader in both production and sales volume of E-cars in 2020 (Approx. 1 million production volumes per year). China will finally achieve the industrialization of Plug-in Hybrid Vehicle (PHV) and electrical vehicles while improving the research and development on Fuel Cell Vehicles (FCV). Chinese government will allocate 200bn Yuan (USD 29bn) to support the projects above. Audi will invest 9.5bn Euros (USD 13.5bn) to develop the electrical and hybrid vehicles. 31

32 ADVANTAGES FOR CHINA E-CARS INDUSTRY (1) Resource advantages: Core material of key E-cars components (lithium ion battery, permanent magnet motor) 3.8 million proven reserve lithium (global leader, distributed around Sichuan, Jiangxi, Xinjiang, Henan, Qinghai, Xizang) 58% of worldwide Rare Earth element (global leader), production volume account for 80% over the world, 1 st Rare Earth export country (2) Industrial advantages: Over 3000 manufacturing enterprises in producing electric bicycles and motor cars 50 million E-cars population (Largest light E-cars producing country and market); improved production system for dynamic battery and driving motor, to be set up rapidly. (3) Market advantages: China is in the initial stage of rapid urbanization and industrialization. There is imbalance in district economic development which results in income disparity between different regions. Hence there is a demand for a diverse range of automotive products to meet different demands in pricing and product variety. Chinese diverse market leads to consumption diversification and differentiation resulting in more opportunities to develop HEV and light E-cars (4) Infrastructure advantage of backwardness: Incomplete urban construction more space for setting up E-cars charging station 32

33 BARRIERS TO DEVELOP E-CARS (1) Limited battery-powered range: 100~300 km in very good condition (2) Extreme short service life of storage batteries: Short charged lifespan: only 300~400 times generally, 700~900 times for superior batteries, 4 years life (calculate in term of 200 charging times per year) Performance in different batteries: Lead-acid cells (low cost, abundant raw material, easy recycle, but short driving rage and service life, weak accelerating ability); nickel-cadmium battery (strong accelerating ability, long-life, but high cost, low recycle); sodium-sulfur battery (higher specific energy, providing longer driving range, but more strict working condition, easily corrupted and explosive material) (3) Restricted by the size and weight of storage batteries Current 550L EV battery crowding out much space of car boot (4) Expensive E-cars Complex technologies, high cost, and advanced materials Price of current storage battery: US dollars/kw h (unaffordable for households) (5) Heavy indirect pollution: Pollution from the process of mining, smelting and producing Lead (Pb) in lead-acid Batteries. 33

34 BUSINESS INTELLIGENCE SERVICES Contact HCA Beijing Dr. Hao Li Managing Director E. T Hong Kong Rebecca Howe Business Director E. T HCA Consulting China

35 BUSINESS INTELLIGENCE SERVICES Contact HCA China Consulting Beijing Dr. Hao Li Managing Director E. T Hong Kong Rebecca Howe Business Director E. T