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TRANSCRIPT
Volkswagen Group China- J.P. Morgan: China Conference 2012 -
Dr. Jörg MullBeijing, June 14th, 2012
Our Momentum in China
Outlook Market Development
Investments Volkswagen Group China
Technologies Volkswagen Group China
Brand Images Volkswagen Group China
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Content
Comeback of a world power
Rest ofthe world
Europe &N. America
India
China
Share world BIP(Year 1 – 2009; in %)
Year
Source: McKinsey
"For Chinese leadership, it is not surprising that China is on the verge of becoming a superpower, but rather that they have not been for the last 300 years" Henry Kissinger, former US Secretary of State
Fall of RomanEmpire
Mohammad‘sHegira
Marco Polo‘strips to Asia
Discovery ofAmerica
French and US Revolution
Oilcrisis
IndustrialRevolution
InternetRevolution
100
80
60
40
20
00 500 1000 1500 2009
Japan
3
Introduction of Volkswagen Group China (VGC)
Volkswagen production facilities in China History1985: Founding of Shanghai Volkswagen Automotive Co. (SVW) as joint venture with Shanghai Automotive Industrial Corporation (SAIC). 7.5 million vehicles as of February 2012.
1991: Founding of FAW-Volkswagen Automotive Co. Ltd. (FAW-VW) as second joint venture with First Automotive Work (FAW). 5.5 million vehicles as of February 2012.
2004: Founding of Volkswagen Group China for coordination and management of activities of Volkswagen Group within China.
Today: 17 Volkswagen companies and subsidiaries respectively (including finance and sales companies).
Total investments 1985-2011Employees 2011
12.4 Billion €48,058
Volkswagen Transmission
Shanghai VolkswagenPowertrain
FAW-Volkswagen(Volkswagen, Audi)
Volkswagen FAW Engine
Volkswagen FAW Platform
Shanghai Volkswagen
Shanghai Volkswagen(Volkswagen, ŠKODA)
Volkswagen AutomaticTransmission
Volkswagen China Investment Company
Beijing
Shanghai
DalianChangchun
Chengdu Nanjing
FAW-Volkswagen
Car production plants
Component plants
Headquarter Volkswagen Group China
4
First connections of Volkswagen with the Chinese automobile industry
5
Volkswagen as pioneer in China
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2012
1985 2011
1985 2011
6
Successful partnership with FAW and SAIC
Octavia RSFabia Scout SuperbOctaviaFabia
Polo HB
CrossPolo
Polo NB
Touran TiguanLavida
Santana Santana Vista
PassatCC
SagitarJetta Bora
Golf Golf GTI Magotan
A6LA4L Q5
1991
FAW 60%, VW AG 30%, AUDI AG 10%
993,000
1985
SAIC Motor 50%, VW AG 50%
1,141,000
Foundation
Share
Deliveries 2011
Foundation
Share
Deliveries 2011
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Deliveries to Customers (‘000 Units)New record 2011:
2.0 million vehicles
Volume doubled in the last 3 years
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 20120
400
800
1,200
2,000
2,4002,259
1,723
313220
1,600
Volkswagen GroupVolkswagenAudiŠKODA
2,259 thousand vehicles delivered to customers in 2011
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In Jan-May 2012, the Volkswagen Group maintained its Number 1 position by market share in China Mainland
Rank Brand/Group Trends ofmarket share
Changes ofmarket share
1 Volkswagen Group + 1.6%
2 GM Group - 0.3%
3 Hyundai Group + 0.4%
4 Toyota Group + 0.8%
5 Nissan Group + 0.2%
6 Honda Group 0.0%
7 BYD - 0.6%
8 PSA Group + 0.1%
9 Geely Group - 0.5%
10 Great Wall + 0.2%
Others - 1.8%
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cc
NissanToyota
GreatWallGeely
PSABYD
Honda
Hyundai
GM
VolkswagenOthers(i.e. localbrands) 20%
33%
3%3%
3%3%
4% 6%6%
9%
10%
VW, VWN
Lamborghini, Bentley, Seat
Audi
Locally Produced(‘000 Units)
Import FBU1)
(‘000 Units)
FAW-VW
SVW
Deliveries of Volkswagen in China January to May 2012
1) incl. Hongkong; Source: Volkswagen Group China
Ʃ 65.8 Ʃ 1,016.8
33.4
31.1
1.3
Total Deliveries Region China 1,082.6
10
354.9 129.5
100.6431.8
Volkswagen Group China – Achievements
Source: Volkswagen Group China
1) SVW Group/FAW-VW Group
Deliveries to Customers
Production (100%)1)
Operating profit (quotal)1)
(’000 Units)
(’000 Units)
(€ m)
1,024
975
395
2008
1,400
1,387
831
2009 2010
1,923
1,914
1,907
2011
2,259
2,202
2,616
Q1/2012
634
611
848
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Our Momentum in China
Outlook Market Development
Investments Volkswagen Group China
Technologies Volkswagen Group China
Brand Images Volkswagen Group China
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Content
Chinese automotive market as the biggest worldwide
China
JapanUSA
GermanySouth Korea
million vehicles
Source: IHS Global Insight, March 2012
0
5
10
15
20
25
2007 2008 2009 2010 2011 2012E 2013E 2014E
Production Volume of Passenger Cars and Commercial Vehicles 2007 – 2014E
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After a strong boom in the past two years, passenger car market growth in China is stabilizing
2003
1) Estimate; Data Source: CKD – CPCA; FBU - Registration
2011201020092008
2,266
5,503
8,482
11,457
Total Passenger Car Market –China (incl. HK)(‘000 Units)
12,386
2012E
5-10%1)
+9%+35%
+54%
CAGR +19%
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Total passenger car market in China will develop further in the future
Source: Volkswagen Group China / IHS Global Insight
2020E2011
12,386
>15,000
>20,000
>7%
2013E2012E
Average AnnualGrowth Rate
5-10%
>8%
Total Passenger Car Market –China (incl. HK)(‘000 Units)
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Source: Deutsche Bank, Last update May 2012
Q4/09
10.7%
Q3/09
8.9%7.9%
6.1%
Q2/09Q1/09 Q4/10Q3/10Q2/10Q1/10
11.9%
9.6%10.3% 9.8%
Q1/11
9.7% 9.5%
Q2/11
9.1%
Q3/11
8.9%
Q4/11 Q2/12E Q3/12E Q4/12EQ1/12
8.1%8.1% 8.7% 8.8%
2011 GDP reached a 9.2% growth year on year, and the economy is now in a path of stable growth
CAGR 9.2%
CAGR 8.5%
CAGR 10.3%
CAGR 9.2%
2011 2012(forecast)
20102009
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Current 5-year-plan: New growth model with focus on domestic market
11th 5-year-plan 2006-2010
12th 5-year-plan 2011-2015
Multi-National-Companies and infrastructure projects as growth generatorBig growth in manufacturing tradeJobs in cities to keep unemployment lowInternationally comparable price stability and well-adjusted foreign trade balance
Domestic consumption as growth acceleratorMegacities as growth generator Focus on environmental protection and energy efficiencyEncouragement of own innovationsSocial stability due to balanced allocation of prosperity Selective policies for foreign investment as well as globalization of Chinese companies
Up to now:Focus on export and quantitative growth
Now:Focus on domestic market and qualitative growth
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Mega and small cities will be the engine of GDP growth
Remark: 6 mega cities in 2010 (Shanghai, Beijing, Chongqing, Shenzhen, Tianjin, Guangzhou)Source: McKinsey Insights China – Macroeconomic model updated April 2012
Distribution by city size2005819 cities
2020865 cities
% of GDP2005 2020
City Level (Urban Population)
Big town (<0.5M)
Small (0.5-1.5M)
Mid-sized (1.5-5.0M)
Big (5-10M)
Mega (10M+)
New cities
3
7
5
6
52
33
169
166
378
46544
202
58
12
3
424
335
85
11
10 1313 2727
2222
2727
1515
1212
2626
1010
2323 2626
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Zhejiang
Heilongjiang
Jilin Liaoning
Hebei Tianjin
Shandong
Henan
Anhui Jiangsu
Jiangxi
Fujian
Guangdong
Hunan
Hubei
Hainan
Beijing
Shanghai
Inner Mongolia
Shanxi
Guangxi
Yunnan Guizhou
Sichuan
Shaanxi
Ningxia Gansu
Qinghai Tibet
Xinjiang
Chongqing
GDP Growth development is expected to differentiate more strongly between the various Chinese regions
Source: Provincial Government Report
Estimate of Chinese GDP 2012 per Province
Province ExpectedGrowth 2012
Total GDP 2011 (trillion RMB)
Inner Mongolia 15.0% 1.40Guizhou 14.0% 0.56
Chongqing 13.5% 1.00Shaanxi 13.0% 1.20Hainan 13.0% 0.25Anhui 12.6% 1.50
Sichuan 12.0% 2.00Heilongjiang 12.0% 1.10
Tianjin 12.0% 1.10Shanxi 12.0% 1.10
Jilin 12.0% 1.04Gansu 12.0% 0.52Ningxia 12.0% 0.21Qinghai 12.0% 0.16Yunnan 12.0% 0.88Liaoning 11.0% 2.20Hunan 11.0% 1.96Fujian 11.0% 1.75Guanxi 11.0% 1.20Xinjiang 11.0% 0.66
Tibet 11.0% 0.06Henan 10.0% 2.70Hubei 10.0% 1.80Jiangxi 10.0% 1.20
Shangdong 9.5% 4.54Hebei 9.0% 2.40
Guangdong 8.5% 5.30Zhejiang 8.5% 3.18Jiangsu 8%-10% 4.80
Shanghai 8.0% 1.92Beijing 8.0% 1.60
Expected GDP Growth 2012
12-15%
10-12%
8-10%
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Content
Our Momentum in China
Outlook Market Development
Investments Volkswagen Group China
Technologies Volkswagen Group China
Brand Images Volkswagen Group China
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Go West and Go South Strategy for further growth
Existing production siteNew production site
Urumqi
Chengdu
Changchun
Dalian
NanjingYizheng
Shanghai
NingboFoshan
Beijing
Planned investments 2012-201614.0 Billion €
“Go South Strategy”
“Go West Strategy”
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Further strengthening of partnerships with SAIC and FAW
SAIC FAW
Signing ceremony April 23rd, 2012 in WolfsburgAgreement about Urumqi plant
Signing ceremony April 23rd, 2012 in WolfsburgIntension to extend JV contract with FAW
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Volkswagen Group China: Planned product portfolio in 2015 with 75 models
Note: number of product models
Commercial Vehicles
CKD 32 FBU 43 75
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Content
Our Momentum in China
Outlook Market Development
Investments Volkswagen Group China
Technologies Volkswagen Group China
Brand Images Volkswagen Group China
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Volkswagen Passat – Special design elements for Chinese customers
Radiator grill Tail lamps Speaker covering Tire program
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Passat USA
Passat China
Latest TSI- and DSG-technologies of Volkswagen Group for China
2010
RecuperationStart-stop
Rolling friction
Fleet emissions
Future‘s technology
Optimized gearsNew enginegeneration
New TSI generation
Prototypes with innovative Technologies
e-Traction
[CO2/km] [Volume]
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NEVs for sustainable transportation
2012 2013 2014 2015 2016 2017 2018
PHEV series production
HEV Series production
BEV “From Demonstration to Mass Market”
Phase 1: Demonstration2010 to 2013/14
Phase 2: Start series production2014 to 2018
Field test> 100 vehiclesVarious models
SeriesRange 100-200 km> 10,000 vehicles2 models
Phase 3: Mass marketAfter 2018
Series, e-optimizedRange options> 100,000 vehicles
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Green factories for sustainable production (example Chengdu)
Press ShopPress Shop Body ShopBody Shop Paint ShopPaint Shop AssemblyAssembly
Permanent operation instead of switch on/ofOptimization of cuts100% recycling of metal waste
Spot welding instead of weld seamModern laser technologyHeat exchanger instead of airconditioning
Integration of filler characteristic into base coatDry cleaning process instead of venturiwashing process
Leak test with closed water circulationDrying with compressor instead of pressed airModern conveyor technique
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Content
Our Momentum in China
Outlook Market Development
Investments Volkswagen Group China
Technologies Volkswagen Group China
Brand Images Volkswagen Group China
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Introduction of new brand SEAT in Chinese market
SEAT‘s unique mix of creativity, design flair and dynamic driving pleasure combines with the highest standards of technology, engineering, quality and durability.We call it Enjoyneering.
James Muir,CEO of SEAT
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Awards for brands and products of Volkswagen Group China
Volkswagen Audi ŠKODA
• Annual Best Import Brand(Motor Trend)
• 2010-2011 Best Innovative Brand(General Assembly On China Brands and Communications 2011, Top Brands Contributors Awarding Ceremony)
• 2011 China Low-Carbon Emission Auto Brand –VW Touareg Hybrid(Xinhua Agency, International Herald Leader)
• „The Best Cars 2012“: 3 brand awards and3 model awards(Auto Motor Sport)
• 2012 Annual Luxury Car –Audi A8L(China Auto Pictorial)
• Most Popular Import –Audi A1(Car and Driver)
• The Best Branding of 2011 (China Times and Auto Business)
• The Champion of Joint Venture Brand(Lian Xin Tian Xia)
• Customer Loyalty & ŠKODA “Human Touch” (Auto Driving and Service, Sohu Auto, Business Unit, Shanghai Evening Post)
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Santana as a Heritage
250,000
200,000
150,000
200019951990
100,000
50,000
020102005
Deliveries toCustomers
ca. 10% of total group sales
ca. 75% of total group sales
ca. 95% of total group sales
Santana B2
Santana B2 Variant
Santana 2000/3000/Vista
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“People´s Car Project”: Brand digitization and customer interaction
INSPIREUsers get inspiration for own ideas and creations
CREATEUsers visualize und describe their ideas
BUILDUsers get updates about their ideas’ status, process and result
COMPETEUsers value ideas of other users
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Disclaimer
This presentation contains forward-looking statements and information on the business development of the Volkswagen Group. These statements may be spoken or written and can be recognized by terms such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will” or words with similar meaning. These statements are based on assumptions relating to the development of the economies of individual countries, and in particular of the automotive industry, which we have made on the basis of the information available to us and which we consider to be realistic at the time of going to press. The estimates given involve a degree of risk, and the actual developments may differ from those forecast.
Consequently, any unexpected fall in demand or economic stagnation in our key sales markets, such as in Western Europe (and especially Germany) or in the USA, Brazil or China, will have a corresponding impact on the development of our business. The same applies in the event of a significant shift in current exchange rates relative to the US dollar, sterling, yen, Brazilian real, Chinese renminbi and Czech koruna.
If any of these or other risks occur, or if the assumptions underlying any of these statements prove incorrect, the actual results may significantly differ from those expressed or implied by such statements.
We do not update forward-looking statements retrospectively. Such statements are valid on the date of publication and can be superceded.
This information does not constitute an offer to exchange or sell or an offer to exchange or buy any securities.
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