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GLOBAL INSIGHT AUTOMOTIVE SEMINAR
13-14 SEPTEMBER 2007 • FRANKFURT
Can the German Automotive Industry Lead Again?
Christoph StürmerDirector Product Development
Copyright © 2007 Global Insight, Inc. 2
• Bad News:– Sluggish Domestic Sales– Corporate Unrest– Regulatory Pressures
• Good News: – Booming Domestic Production – Aggressive International Growth– New Cooperative Spirit
• Conclusions
Structure of Presentation
Copyright © 2007 Global Insight, Inc. 3
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SAARSAAR Trend
Sluggish Domestic Sales
Current SAAR rate has recovered to 3.28 million units – but trend remains fixed at 3.14 million
Current SAAR rate has recovered to 3.28 million units – but trend remains fixed at 3.14 million
VAT increase
Copyright © 2007 Global Insight, Inc. 4
Private New Registrations Breaking Off
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PRIVATE AUTO RETAIL BUSINESS RENTAL FLEETS VEHICLE PRODUCTION OTHERS
VAT increase
Copyright © 2007 Global Insight, Inc. 5
2007 Sales Forecast Now Adjusted to 3.21 Million
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CARS Growth
Year-on-year sales change for 2007 now forecast at -7% due to very high Q4 comparison base
Year-on-year sales change for 2007 now forecast at -7% due to very high Q4 comparison base
Copyright © 2007 Global Insight, Inc. 6
Corporate Unrest at Key Manufacturers
• New management at Volkswagen– The Audi way introduced in Wolfsburg– Dissolution of brand groups and repositioning of VW – Increasing influence of Porsche
• Unravelling of Daimler and Chrysler: – Re-evaluation of long-term platform strategy– Re-adjustment of management structures
• New management at BMW– Re-evaluation of business model– Increasing financial pressures
• New supplier giant– Continental taking over VDO from Siemens– Threat or opportunity for OEM clients?
Copyright © 2007 Global Insight, Inc. 7
CO2 Reduction Remains Complex Political Issue
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Benzin
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Total emissions
172.5 g/ km
Gasoline
Total
Source: KBA
Urgency of issue is underlined by immediate impact on German car sales
Urgency of issue is underlined by immediate impact on German car sales
Copyright © 2007 Global Insight, Inc. 8
German Brands Dominate the Domestic Market
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Sales Shares
Copyright © 2007 Global Insight, Inc. 9
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German Brands Battle for First Place in West Europe
Sales Shares
Copyright © 2007 Global Insight, Inc. 10
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CARS Growth
2007 Production Forecast Points to Historical High
Production Units
Full-year production forecast now at +4.5% due to weakness of domestic marketFull-year production forecast now at +4.5% due to weakness of domestic market
Copyright © 2007 Global Insight, Inc. 11
Among the Top-Ten Brand Origins, Germany Will Keep Its Global Position
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Copyright © 2007 Global Insight, Inc. 12
German Brands Look Well-Prepared to Defend Their Global Competitive Position
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Production Shares, World
Copyright © 2007 Global Insight, Inc. 13
The Segment Profile of German Brands Has Become Increasingly Diverse and Will Continue
Production Units, German Brands, World
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SUV-E
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Copyright © 2007 Global Insight, Inc. 14
Still, the Global Market Share Will Just Remain Flat
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Total Production Global Share
Production Units, German Brands, World
Copyright © 2007 Global Insight, Inc. 15
The Proverbial “S-Class Segment” Will See Some Infringement From Japanese and U.S. Brands
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Copyright © 2007 Global Insight, Inc. 16
In Spite of Rising Competition, the E1 Segment Offers Additional Potential for German Brands
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Production Units, German Brands, World
Copyright © 2007 Global Insight, Inc. 17
The C2 Segment Offers Premium Capabilities in a Subcompact Package – Brand Strength Is Key
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Production Units, German Brands, World
Copyright © 2007 Global Insight, Inc. 18
In the D2 Segment, High-Tech Appeal Combines with Sporty Driving – German Engineering Reigns
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D2 Global Share
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Copyright © 2007 Global Insight, Inc. 19
Although Late to Start, German Brands Were Quick to Understand the Compact MPV Concept
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Production Units, German Brands, World
Copyright © 2007 Global Insight, Inc. 20
While Frequently Overlooked, the MVAN Sector Accounts for Stable and Profitable Volume
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MVAN Global Share
Production Units, German Brands, World
Copyright © 2007 Global Insight, Inc. 21
Entering a Mature Market, German Brands Established a Stronghold in Upscale SUV
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SUV-E Global Share
Production Units, German Brands, World
Copyright © 2007 Global Insight, Inc. 22
In the “Golf Segment” Both Structural and Competitive Factors Work Against German OEMs
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C1 Global Share
Production Units, German Brands, World
Copyright © 2007 Global Insight, Inc. 23
Segment Analyis - Conclusions
• In the largest production segments, German Brands are not the largest manufacturers– possible competitive risk
• The segments with the highest German brand shares are rather small, but offer high product prices– possible imitation risk
• With their German-based brands alone, German manufacturers run the risk of limiting their growth potential – International acquisitions become a strategic necessity
• New segments tend to be small, so they are a natural habitat forGerman OEMs– New inventions or entry into new segments only make sense when
market leadership is achievable
Copyright © 2007 Global Insight, Inc. 24
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ITA
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DEU
DEUShare
Within the Premium Market, German Brands Will Defend Their Top Spot, but Lose on ShareProduction Units
Copyright © 2007 Global Insight, Inc. 25
Increasingly, the German Automotive Industry Is Acting As a Unified Entity
• New role of VDA vs OEMs– Integration of political and technical action
• Coordinated financial action: – Bail-out of Peguform– Support of BBS – Joint venture fund to support defaulting suppliers
• Understanding of Cluster Strength: – Joint promotion of engineering jobs– Recommendation towards German buyer of VDO– Careful moves towards increased technical cooperation:
• Bluetec (o.k, was cancelled afterwards)• Hybrid drivetrain, Bio-Fuels• Mercedes-Benz and BMW – “Brothers in Fate”
Copyright © 2007 Global Insight, Inc. 26
Can the German Car Industry Lead Again?
• In Global Terms – NO: – Not the largest companies, markets, output, growth.... – But that would assume an Auto Industry in which everybody
competes with everybody about everything– Largest segments are not the ones with the largest German brand
shares
• In Specific Terms – YES: – Largest producer of Premium Vehicles– Dominating role in Home Market, and leading within Europe– Largest future increase of production efficiency – Increasing integration with world-leading supplier base– Largest spender on auto-specific R&D
GLOBAL INSIGHT AUTOMOTIVE SEMINAR
13-14 SEPTEMBER 2007 • FRANKFURT
Thank You
Christoph StürmerDirector Product Development
E-mail: [email protected]