Market Research Report : Automotive market in china 2015 - Sample

Automotive Market – China

February 2015

2

SAMPLE Executive Summary

Drivers & Challenges

Competition

Automotive market in China witnessed a sale of x mn units in 20-- and will grow at a CAGR of y% to reach z mn

units in 20--e

In 2013, 22.1 mn automobile units were produced in China

Government initiatives and growing demand for electric vehicles and luxury cars are driving market in China

Drivers:

- Huge population and low penetration

- Rising middle class and increasing income

- Growing luxury car market

- Growing used car market

- Improved public transport infrastructure

- Availability of low-cost skilled labor

- Auto dealers to open more outlets

Trends

China promotes alternative energy vehicles

The era of Internet, social media and digital

marketing

Increasing demand for fuel efficient cars

Challenges:

- Unstable market position of each

manufacturer

- Restrictions imposed on car ownership

- Reduced prices led by intensified competition

- High dependency on depleting oil reserves

Stylish and dynamic products with improved

technology and apps

Increasing focus and investments in R&D

Targeting the Tier 2,3,4 and 5 cities

Major Players

Player 1 Player 2 Player 3

Player 4 Player 5 Player 6

Market

AUTOMOTIVE MARKET IN CHINA 2015.PPT

3 AUTOMOTIVE MARKET IN CHINA 2015.PPT

•Macroeconomic Indicators

•Introduction

•Market Overview

•Export-Import

•Value Chain

•Direct Investment Scenario

•Drivers and Challenges

•Trends

•Government Initiatives

•Competitive Landscape

•Supplier Scenario

•Mergers and Acquisitions

•Strategic Recommendations

•Appendix

4

SAMPLE


Macroeconomic Indicators (1/3)

Current Account Balance

Exchange Rate: Half Yearly

0

USD bn

2015e

f

2014e

e

2013e

d

2012

c

2011

b

2010

a

5/1/14 4/1/14

6.08

3/1/14 2/1/14 1/1/14

USD/INR

e3

e1

e2 d3

d1

d2

c3

c1

c2

b3

b1

b2

a3

a1 a2

Period Low Period Average Period High

5

SAMPLE


Chinese Automotive Industry

Motorcycles Four Wheelers

Multi Utility Vehicles

Commercial Vehicles

Passenger Cars

Passenger Carriers

Goods Carrier

Passenger Carriers

Goods Carrier

Mini vans, Small, Medium Cars

Luxury Cars

Also comprises of EV and used

Cars market

Two Wheelers Three Wheelers

Chinese automotive industry – Overview

Includes EV segment

Note: EV stands for electric vehicles

6

SAMPLE


Passenger Car Manufacturing Hubs of China

Car Manufacturing Bases

Many foreign auto makers have entered into Joint Ventures with domestic companies for the production and sale

of luxury cars in China

Text

Car Manufacturing Base

Note: The list of manufacturing base is not extensive nor have all the cities with manufacturing plants been highlighted on the map

Major passenger car manufacturing hubs are located in the Eastern coast

7

SAMPLE


Automobile sales in China has grown consistently although global crisis deterred its pace recently

• Automotive industry has become a leading industry

in China's national economy and is playing a guiding

and supporting role in the overall national economic

situation

• China surpassed Japan to become the world's No. 2

vehicle market in 2006 and passed the United States

to be the biggest in 2009

• The year 2013, saw the Chinese automotive industry

booming with its production and sales reaching to x

and y units respectively, with an increase of a% and

b% year on year, up m percentage points and n

percentage points from the previous year

• Both the sales and production exceeded x mn, setting

another world record

• In 20--, December was the highest, reaching a units;

while February was the lowest, with only b units

Automotive Market – Overview Automobile Sales – Market Size & Growth

Automobile Market (Sales)

0

mn units X%

2014*

e

2013

d

2012

c

2011

b

2010

a

0

a

b

20--

i

20--*

g

mn units

g

20--

f

e

20--

d

c

20--

h

Segment 2

Segment 1

8

SAMPLE


Automobile market has various sub-segments and includes different types of products

Automobile Market (Production) Automobile Market – Overview & Segment

0

mn units

20--* e x5 y5

20-- d x4 y4

20-- c x3 y3

20-- b x2 y2

20-- a x1 y1

Segment 1 Segment 2

Sedan • Basic passenger cars

MPV • Multipurpose vehicle

SUV • Sport utility vehicle

Minibus • displacement<1.0L, length≤3.5m

Mini-truck • weight≤1.8 tons; length≤3.5m

LCV • Any vehicles that can transport passengers but

do not belong to sedan, MPV and SUV

Types of Commercial Vehicles : Bus & Trucks respectively

Mid heavy • 7m≤length≤10m; length≥10m

Light • 3.5m≤length≤7m

Mid heavy • 6 tons≤weight≤14 tons; weight≥14 tons

Light • 1.8 tons≤ weight≤6 tons

Types of Passenger Vehicles (Less than 9 seats)

9

SAMPLE


Motorcycle Market – Overview & Segment

Motorcycle

Two-wheeler

Three-wheeler

0

10

20

30

2013

b a

2012

b a

Segmnet 2 Segment 1 mn units

Motorcycle Market China (Production and Sales)

Though the production and sales of motorcycles have declined, the increase in exports show a positive…

10

SAMPLE


0

mn units

y1

x1

Period 2

b

y2

x2

Period 1

a

Segment 2 Segment 1

Motorcycle Market (Production) Motorcycle Market (Sales)

0

mn units +3%

20--

b

20--

a

Motorcycle Exports in China

… trend, specially the three wheeler segment

0

mn units

Period 2

b

y2

x2

Period 1

a

y1

x1

Segment 2 Segment 1

11

SAMPLE


Four-wheeler Vehicles

Used Car Market

Electronic Vehicle Market Luxury Car Market

Four-wheeler vehicles segments – Summary

12

SAMPLE


• Used car market in China has witnessed a rapid growth in China as compared to the new car market in the last two years

• Growing at about a CAGR of x %, the used car market has surpassed the growth of new cars market • The market is still in its initial stages and is expected to outgrow the sales of new cars in terms of volume by

2020 • In 2012, for every 3 new cars sold, one used car was sold

Used Car Market – Overview

In 2012, a third of people planning to buy a car said they would consider a second-hand

car

To further drive the sales of used car, Alibaba is planning to launch a platform for used cars

Growth Potential

China’s used car market has witnessed a dramatic growth affecting the entire automotive industry

The used car market comprises passenger vehicles including the premium cars Some dealers are also involved with the sale of used commercial vehicles including utility vehicles and trucks Both the segments are witnessing a positive growth in the Chinese market

Used Cars – Segments

13

SAMPLE


Used Car Sales – Market Size & Growth (Volume)

0

mn units

a

d

20--e

c

20--e

b

20--

X%

20--e

f

20--e

e

20--e

Used Car Sales – Market Size & Growth (Value)

Used car segment is expected to constitute a major chunk of the market both in terms of value and volume by 2020

0

a

20--

b

e

20--e

f

c

20--e

d

20--e 20--e

X%

USD bn

20--e

14

SAMPLE


Drivers

• Purchasing pattern of the consumers is changing and more than 50% of the Chinese consumers replace their cars every 3 years

• Fast changing demand of the wealthy Chinese is another factor for the growth of the used car market, as sometimes cars which have barely been used enter the market and attract consumers

• Change in the attitude of people and cheaper prices is further leading to the growth of the used car market

Challenges

Drivers

Challenges

• Trust issues, opaque pricing and lack of integrity are some of the major challenges faced by the market

• Extremely fragmented market with no price uniformity is another reason why the market is lagging behind that of the US

• Lack of a criteria based on which the used cars can be evaluated, as well as absence of proper polices and regulations acts a another hindrance for the market

Used Sedans and SUV’s are the most popular choice of the consumers

In spite of its drawbacks, China’s used car market will outgrow the new car market in the coming decade

15

SAMPLE


Trends observed in the used car market

• Purchase of second-hand cars online is a trend which is being observed in China • Online purchase of second –hand cars has gained popularity in China with the number reaching as high as 82,070

units • Provision of warranty and after sale services is another trend currently being observed in the used car industry in

China • Demand for second-hand premium cars is increasing as most of the cars that enter the used car segment have not

been used much

• Opportunity for growth in this sector is huge as currently used vehicles make up only 19.1% of total car sales volume in China, compared to 72.4% in the US

• Guangdong, Shandong, Sichuan, Beijing, Shanghai are the main car trade areas in China

• Government has introduced and is further planning to launch strong policies and regulations to support the used car market in China

With the new trends observed in the market transaction volume of used cars will further accelerate the market

16

SAMPLE Pure-electric car models sold in China


Note: The table is not exhaustive

Maker Model Battery Type Range Top Speed Market Release

Beijing Auto (BAIC

C30 EV Lithium Ion 200 160 N.A.

Beijing Auto (BAIC

E150 EV Lithium Ion 140 125 H1 2013

BMW Brilliance 1E Lithium iron phosphate

150 130 Mar, 2014

BYD e6 LiFePO4 330 160 Limited Release

in 2010

BYD-Daimler DENZA EV LFP 253 150 Apr, 2014

17

SAMPLE


Country-wise Imports (20--)

Source: International Trade Centre;

Chinese automobile market for cars is dependent on imports though…

Car Imports (HS Code 8703) China Car Imports (Value terms)

0

b

20--

a

20--

e

20--

d

20--

c

20--

USD mn

X3% X4%

X2% X1%

X5%

Region 1

Region 2

Region 3

Region 4

Region 5

HS Code

HS Code Description Imports

2013

870323 Automobiles with reciprocating piston engine displacing > 1500 cc to 3000 cc

a

870324 Automobiles with reciprocating piston engine displacing > 3000 cc

b

870333 Automobiles with diesel engine displacing more than 2500 cc

c

870322 Automobiles with reciprocating piston engine displacing > 1000 cc to 1500 cc

d

870332 Automobiles with diesel engine displacing more than 1500 cc to 2500 cc

e

870321 Automobiles with reciprocating piston engine displacing not more than 1000 cc

f

870310 Snowmobiles, golf cars and similar vehicles

g

870390 Automobiles nes including gas turbine powered

h

870331 Automobiles with diesel engine displacing not more than 1500 cc

i

Note: Import value in USD thousand

18

SAMPLE


OEM’s DEALERS

CUSTOMERS

SERVICE PROVIDERS

FIRST TIER SUPPLIERS

SECOND TIER SUPPLIERS

THIRD TIER SUPPLIERS

ALLIED COMPONENTS

Automotive industry – Value chain

19

SAMPLE Direct Investments Scenario – Summary


• The section highlights investments made by major domestic companies between the year 2010 to 2013 • The list of investments comprise both current and pending investments • CD stands for Consumer Discretionary

Note:

• The section summarizes the total number of investments made by the company across industry sectors, so far

Total Investments – Sector-wise

• The section summarizes the total number of Consumer Discretionary investments made by the company across various geographic regions, so far

CD Investments –Geography-wise

• The section summarizes the total number of Consumer Discretionary investments made by the company across Consumer Discretionary sub-segments, so far

CD Investments – Segment-wise

20

SAMPLE Direct Investments – Player 1


A%

D%

C%

B%

Total Investments – Sector-wise CD Investments – Geography-wise

Sector 4

Sector 3

Sector 2

Sector 1

CD Investments – Segment-wise

100% 90% 80% 70% 0% 60% 50% 40% 30% 20% 10%

X% Y%

Y%

X%

Region 1

Region 2

Segment 2

Segment 1

Investment Snapshot

• Maximum number of investments were seen in the sector 1 followed by sector 2

A total of 3 investments were made in the sector 2

• Maximum number of investments were seen in the region 1

• In terms of the sector 2investments, the company invested mostly in segment 1

• ‘Segment 1’ includes Automobiles segment only


Drivers & Challenges – Summary

Drivers

Huge population and low penetration

Rising middle class and increasing income

Growing luxury car market

Growing used car market

Auto dealers to open more outlets

Improved public transport infrastructure

Availability of low-cost skilled labor

Challenges

Unstable market position of each manufacturer

Restrictions imposed on car ownership

Reduced prices led by intensified competition

High dependency on depleting oil reserves

22

SAMPLE Increasing population and unsaturated market implies ample opportunities for growth

• China has been the world’s most populous country and makes up one-fifth of the world’s

population

• Ever increasing population base of China acts as a driver for the growing demand of automobile

in the country

• Currently China is lagging behind the US and Japan in terms of the number of cars owned and

has immense scope for growth

Country Cars per 1000 people

U.S. x

Japan y

China z


Huge population and low penetration Impact

0

mn X%

20--

d

20--

c

20--

b

20--

a

Total Population

23

SAMPLE


Unstable market position of each manufacturer Impact

• Competition is heating up in China’s automotive market

• Continued rapid growth of the Chinese market has attracted a vast number of new companies

wishing to enter the market, and there are now more than 100 manufacturers participating

Furthermore, there is no single manufacturer seen as a dominant leader in the Chinese market

• Market positions of participating companies are relatively vulnerable

Only companies that can adapt to changes in the market are able to sustain in the market, irrespective of

past performance or brand power

To gain an edge over the rivals, the ability to perform low cost manufacturing has now become a crucial issue

for car manufacturers

• The government’s effort to consolidate the industry has not been a huge success so far, and the

industry still remains fragmented with many players operating in the market

Intensified competition in automotive market leads to uncertainty of performance

24

SAMPLE Trends - Summary


`


The era of internet, social media and digital marketing

Increasing focus and investment in R&D

Key Trends

Targeting the Tier 2, 3, 4 and 5 cities

Stylish and dynamic products with improved technology and apps

Increasing demand for fuel efficient cars

25

SAMPLE


China is capitalizing on the major opportunities in the electric vehicles market


China is swiftly becoming an EV

powerhouse

• China's electric vehicles (EV) market has been growing at a tremendous pace due to strong

support from the Chinese government

• Chinese government plans to produce and sale cumulatively 500,000 EV and PHV by 2015

• The FAW Group launched nine new green vehicles in 2014 and has announced its plans to spend

USD 1.52 bn on developing 16 environment-friendly passenger and business models by 2015

• Finnish battery maker European Batteries Oy will build an EV battery production center in

Tianjin, China. The new production center will be built in the Binhai New Area of Tianjin and

invest around USD 318 mn in the manufacture of lithium-ion batteries for hybrid and electric

vehicles

Companies Q1 2014 Sales

BYD Qin (PHEV) a

Chery QQ EV (Pure-electric) b

BYD e6 (Pure-electric) c

JAC iEV (J3 EV) (Pure-electric) d

Zotye Zhidou E20 (Pure-electric) e

26

SAMPLE


After the onset of the global financial crisis in late 2008, the Chinese authorities moved quickly to…

Support Programs of the Government 2009-10(1/2)

• State Council reduced the vehicle purchase tax to 5% for consumers who purchase passenger cars with

displacement of 1.6L and below from Jan 20, 2009 to Dec 31, 2009

• Such tax reduction policy greatly boosted the confidence of the automobile industry, as well as consumers'

enthusiasm in purchasing cars, which has facilitated the cultivation of automobile consumption market

• According to China Association of Automobile Manufacturers (CAAM), for the first eight months of 2009,

• China's automobile production volume and sales volume reached 8.25 mn and 8.33 mn respectively, representing Y-o-Y rise of 26%

and 29% respectively

• Specifically, passenger cars with displacement of 1.6L and below witnessed a 55% increase in sales volume, and their market share

increased to 68.55%, representing a Y-o-Y rise of 7.8%

• Small vehicle sales were 7.2 mn in 2009, 53% of total sales

• According to the preliminary statistics from provinces, municipalities, autonomous regions and cities specifically

designated in the State plan, Vehicle purchase tax to the amount of USD 1.67 bn had been exempted by the end

of Aug 2009

• Sales tax rate on cars with engine capacity of 1.6 liters and below was set at 7.5% from Jan 1 2010, but market

watchers said that the figure is still considered a cut because it is reduced from the original 10%

Tax Reduction

27

SAMPLE


• China’s auto industry is dominated by Joint Ventures between global automakers and China’s State Owned Enterprises (SOEs) • Recently independent Chinese automakers including Chery and Geely have entered into joint ventures with foreign car makers • Foreign automakers can have a maximum share of 50% under the current regulations imposed by the government • Each foreign automaker can partner with two local groups for a joint venture • Strict regulations were laid down by the government in respect to these joint venture where the majority stake would remain with the Chinese partner

AIM

Aim of the government to promote the joint ventures was to allow foreign automakers to enter the market, at the same time facilitating the transfer of technical know-how and skilled resources

Foreign automakers readily entered into these joint ventures as it would not only help them to foray into the biggest market for their automobiles, but at the same time enable them to reap the benefits of low

labor cost and earn huge profits in an economy where people were fascinated with foreign cars

Benefits for the Foreign automakers

Joint venture scenario in China (1/3)

28

SAMPLE Porter’s Five Forces Analysis

Competitive Rivalry • Text

Bargaining Power of Buyers • Text

Threat of New Entrants • Text

Impact High

Impact High

Impact Medium

Bargaining Power of Suppliers • Text

Impact Medium to High

Threat of Substitutes • Text

Impact Low


29

SAMPLE Competitive Benchmarking (1/4)

Public Trading Comparables (FY 2013)

BYD Company Ltd. DongFeng Motor

Group Company Ltd. SAIC Motor

Corporation Ltd.

Market Capitalization (USD mn)

Share Price (USD)

EV/EBITDA (x)

EV/Revenue (x)

PE Ratio

Note: Major 3 Public companies based on the Market Capitalization; Market Capitalization, Share Price and PE ratio is as of 24/09/2014


30

SAMPLE Key Ratios of Major 3 Companies – Operational Basis (FY 2013) (1/3)

Competitive Benchmarking (2/4)

0

-10

a2

Player 1

%

Player 3

c3 b3

a3

Player 2

c2

-b2

c1 b1

a1

Net Margin Gross Margin Operating Margin

• Text


31

SAMPLE Public: Domestic Company – BYD Company Ltd. (1/4)

Key People

Products and Services

Company Information Locations – China

Corporate Address No.abc, z Road,, Shenzhen, 518118, P.R.China

Tel No. xxx

Fax No. xxx

Website www.byd.com.cn

Year of Incorporation xxx

Ticker Symbol xxx

Stock Exchange Stock Exchange of Hong Kong (SEHK)

Name Designation

Person 1 Text

Person 2 Text

Person 3 Text

Person 4 Text

Headquarters

Category Products/Services

Automobile Text

Shenzhen

Note: List of products is not exhaustive


32

SAMPLE Financial Snapshot Key Ratios

Financial Summary

• The company earned a net profit of USD xx mn in FY 20--, as compared to a net profit of USD xx mn in FY 20--

• The company reported total Income of USD xx mn in FY 20--, registering an increase of xx % over FY 20--

• The company earned an operating margin of xx% in FY 20-- an increase of xx percentage points over FY 20--

• The company reported debt to equity ratio of xx in FY 20--, an increase of xx % over FY 20--

Key Financial Performance Indicators

Net Profit/Loss Total Income

0

200

400

0

Profit USD mn

Total Income USD mn

a1 c1

a

20--

b1

d b

20-- 20--

c

20--

d1

Indicators Value (24/09/2014) Market Capitalization (USD) xx

Total Enterprise Value (USD) xx

EPS (USD) xx

PE Ratio (Absolute) xx

Particulars y-o-y change

(20--) 20-- 20-- 20-- 20--

Profitability Ratios

Operating Margin

Net Margin

Profit Before Tax Margin

Return on Equity

Return on Capital Employed

Return on Working Capital

Return on Assets

Return on Fixed Assets

Cost Ratios Operating costs (% of Sales)

Administration costs (% of Sales)

Interest costs (% of Sales)

Liquidity Ratios Current Ratio

Cash Ratio

Leverage Ratios Debt to Equity Ratio

Debt to Capital Ratio

Interest Coverage Ratio

Efficiency Ratios Fixed Asset Turnover

Asset Turnover

Current Asset Turnover

Working Capital Turnover

Capital Employed Turnover

Public: Domestic Company – Player 1(2/4)

Improved Decline


33

SAMPLE

12%14%12%10%

-50%

0% D2%

D1%

20--

c

20--

d

C4%

B2%

B1%

20--

a

C3%

C2%

C1%

20--

b

B3% A3%

A2%

A1%

Segment 4

Segment 2

Segment 3

Segment 1

Key Business Segments Key Geographic Segments

Key Recent Developments

Description News

Overview Text

Latest Developments Text

Partnership Text

Public: Domestic Company Player 1 (3/4)


0% Z%

20--

Y% Y%

x

20--

Z%

x

Region 2 Region 1

34

SAMPLE

• Text • Text

• Text

• Text

T O

W S Strength Weakness

Opportunity Threat

Public: Domestic Company – Player 1(4/4)


35

SAMPLE Private: Domestic Company – Player 2(1/3)

Key People

Products and Services

Company Information Locations – China

Corporae Address No. a xyz Area (BDA), Beijing, 100176,China

Tel No. xxx

Fax No. xxx

Website www.bbac.com.cn

Year of Incorporation xxx

Name Designation

Person 1 Text

Person 2 Text

Person 3 Text

Person 4 Text

Headquarters

Category Products/Services

Automobiles Text

Beijing

Note: List of products is not exhaustive


36

SAMPLE Key Recent Developments

Description News

Overview • Text

Latest Developments • Text

Private: Domestic Company – Player 2(2/3)


37

SAMPLE

• Text • Text

• Text

• Text

T O

W S Strength Weakness

Opportunity Threat

Private: Domestic Company – Player 2(3/3)


38

SAMPLE


Supplier Customer Primary Industry Business Description

Supplier Scenario – (1/20)

39

SAMPLE Mergers & Acquisitions (2011-2014) – (1/6)

Announced Date Closed Date Target Buyer/Investors Sellers Size (USD mn)


40

SAMPLE

Expand Research and Product Development

Strategy Adoption Area

Brand Building

Regional Growth Government Focus

Strategic Recommendations (1/3)

• Text

• Text

• Text

• Investment in automotive R&D to built alternate fuel cars, electronic vehicles and cars with better technology is the need of the hour



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Market Research Report : Automotive market in china 2015 - Sample

Automotive

Transcript of Market Research Report : Automotive market in china 2015 - Sample