Ifc jd power cologne global outlook 29 apr 10 10 04 26 ep
1. Financing the Automotive Sector in Emerging Markets …
… in an incredibly fast changing world !
JD Power Automotive Forecasting Global Outlook Conference
Köln – 29 Apr 2010
Emmanuel POULIQUEN
Principal Industry Specialist, Energy Efficient Machinery
2. How it was three years ago
2007 Light Vehicles Output
North European
Japan
American Cluster 10.4 M
Cluster 22 M China
15 M 8M Korea
3.6 M
India
2M ASEAN
2.3 M
Mercosur
3M
RSA
0.6 M
2
Page 2
3. 2017 Light Vehicles Output (JD Power Q1-2010)
North
European
American
Cluster
China Japan
4.9 M
Cluster 20.3 M
26.2 M
20.0 M Korea
1.6 M
India
4.0 M ASEAN
3.5 M
Mercosur
6.4 M
RSA
0.7 M
3
Page 3
4. How fast things go !
• JD Power Paris Round table – September 2006
“Is Asia a global threat ?”
“… The end of the Old Auto World ???”
“Leverage your continent”
• 2008-2009
Largest global financial crisis since the Great Depression
• GM & Chrysler saved from the grave – are they still Zombie ?
• US Market sales fall from 16.1 M in 2007 to 10.4 M Light Vehicles in
2009
While the developed countries car businesses collapse, governments
inject massive amounts of deficit financed cash to save (or resuscitate)
the Industry
Fearing to go below 6% GDP growth, China pumps money in its own
Industry … so much that 2009 becomes a boom year with sales of nearly
13M light Vehicles !
4
5. Well, you know …
• “… Chinese cars are not American cars ! (and even less
European or Japanese ones !)”
Crash test !
Emissions !
Quality !
Bells and whistles (?)
Efficiency (!?)
• “Anyway, China is still an emerging country for long and they
only make cheap cars for lower income people !”
• … but, well, perhaps we should pay attention a bit more ?
BYD ?
Tibet ?
Africa ?
5
8. The path to 50 M Chinese Cars per year
• How many cars per year in China in the end ?
• In 2010:
Japanese model: 128.3 M People – 60 M Car Parc – 5 M Light Vehicles Sold
Car Sales = Car Parc (U.S. model: Car Sales = Car Parc / 20)
12
China: 1 331.4 M People – 40 M Car Parc
• The Japanese model would give 622 M Car Parc in China 50 M Light
Vehicles Market (U.S. model: 30 M Light Vehicles Market)
• How long will the growth last ?
2003: 2.36 M Cars Sold 2010: 9.6 M Cars Sold CAGR = 22.1% !
At 22.1% growth per year, 50 M Cars yearly sales would be reached in less
than 9 years
… 600 M cars on the Chinese roads by the end of next decade ???
8
9. How fast ? The E-Bikes model
• 2009, China's output of electric bikes (E2W) reached 22.2 M
9
10. 201x – We were
warned !
A Chinese Tsunami ?
10
11. Not a Chinese Tsunami ! (but …)
• 中国 = Country in the Middle = Self Centric – and pragmatic !
• Not a Japanese or Korean export model
Largest internal market in history
No former American protectorate
• 1980-2000: Get hard currencies to pay for technology
Export whatever you can (From Barbie dolls to TV sets and PCs)
Import technology and business know-how
• 2000-2010: Prime the internal demand era
Grow the industry and expand technical know-how towards hi-tech
• 2011 and later: Internal demand attractiveness beats all markets
Similar to the U.S. from 1900 to 1929 … but 15 times larger
Exports still needed for offsetting raw materials/energy imports
Flows of exports accelerate with Africa and South-America in line with imports
Yuan becomes the reference trade currency for Africans … and others (?)
11
12. In the mean time …
• Confederate Europe expands its cluster to Middle east (500 M consumers
with Oil, Gas, Solar and Nuclear Energy)
North Africa and Turkey complement Eastern Europe as growth centers
Cluster stability around the Euro
Internal cluster industrial exchanges most important
• Astonished America is no more number one and must turn to frugality
The Illness:
• Hardest hit by inflation of oil and raw materials
• Hardest hit by the diminishing power of the Dollar
• Hardest hit by its national deficit
A Cure: Considers “the confederation of NAFTA” - Strengthened Cluster
• South-America (Brazil cluster) grows well and learns to love China
• Japan and Korea become China economic protectorates
• India continues a difficult adolescence and re-explores links with Russia
12
13. Cars: Enough oil for the world ?
Oil prices will skyrocket
China can’t afford a petrol/diesel engine model for long term growth
China will be THE driving market for EVs
13
14. Implications – Macro Level
• For China:
Control of strategic raw materials sources
• Oil ? Yes, but it’s not the long term solution
• Batteries: Lithium Tibet
• Grid electricity: Uranium Tibet
• Others: (Copper, Iron, Lead, Nickel, etc …) Africa, Latin America
“Thrifty” high-tech to save as much energy and material as possible
ICE cars Serial Hybrids, E-Cars – Top-Down and Bottom-Up
E-Bikes E-Micro-Cars (or “Segway-QiChe” ?)
• For developed countries:
Cars downsizing
Some hybrid
Europe, Japan used to smaller cars, dear oil, Nuclear energy Easier adaptation
North-America issues – Lobbies, Driving Distances, “Big and Plentiful” mentality
• For India and Russia:
India comes years after China “first come, first served” natural resources policy in
Africa and South America and could turn to Russia
14
15. Scenario for 2010-2030
• A decade of inflation worldwide (2010-2020)
• 2020: Yuan challenges the USD as the preferred currency for
commodities
• 1 USD = 1 EUR = 2 CNY ?
• Western countries and Japan GDP per head stagnant since 2010
• India “Small Car Hub” for Developed countries
• 2015-2030: Africa economy booming
• Global Industry Growth will stay dynamic – but driven essentially by
Emerged (China) or Emerging Markets
• Boom in Energy management, Electricity Grids, E-Cars supply Chain
• Wind+Solar+Atomkraft ? Ja Bitte ! (or we’ll all suffocate !)
15
16. What does this mean for the Car Industry ?
(… and how can my automotive business survive ?)
• Thrifty, Thrifty, Thrifty (even if you make Ferraris !)
Know your shop floor, look for Muda !
• Serial Hybrids or EVs (small ones preferred)
• Light weighting, compatible with EV architecture
Technology will evolve very fast BUT Quality will still stay paramount !
“Reserved for future use”
• Cluster organization
One Head Quarter in each cluster + Global R&D, Purchasing & Finance
coordination – Strong, empowered China HQ
Look for Low Cost should be next door ! (Logistics, Currency Zone)
Next door emerging market have still growth potential !
• … and integrate Chinese, Spanish/Portuguese, Arabic and Russian !
16
17. Finance: manage in a wild world
• Currency fluctuations (not-so-low cost sourcing)
• Market fluctuations
• Accelerate in emerging markets – with the right Banker
Bankers support (Knows east/west/south)
Hands on experience in your trade
Development AND investment banker
Present in all emerging countries
World class understanding of your industry
Long term view
• Promoting efficient products and processes
17
18. IFC: Our Reputation and Value (Who we are)
• IFC is the world’s largest multilateral private sector investor in the emerging markets
• AAA rating
• Profitable every year since it was established
• 2,600+ people in more than 100 offices worldwide
• In-house syndications department working with over 200 banks
• Global benchmarking - identifies and disseminates international best practice
• Advice on environmental and social issues
• Political risk mitigation
• IFC Performance Standards adopted through the Equator Principles
by over 50 global institutions.
18
19. IFC - Industry and Regional Experience
•100+ country and regional advisory services offices worldwide
•Almaty
•Tbilisi
•Mexico City
•Dakar
•Port-of-Spain
•Bogota •Nairobi
•Sao Paulo
•Buenos Aires
19
20. Investments by Industry, FY09
•Commitments for IFC’s Account: $10.5 Billion
• Private Equity and •Subnational
Investment Funds 3% Finance 3%
• Oil, Gas, Mining • Agribusiness
and Chemicals 7% 7%
• Infrastructure •Global Financial
14% Markets 45%
• Health and Education
2%
• Global Manufacturing and Services • Global Information
14% and Communication
• Low emissions Cars, EVs Technologies 5%
• Wind, Solar, Grids, EVs
• Low Emissions Machines/Plants
• Other …
20
21. IFC Strategic Priorities
• Strengthening the focus on frontier markets – IDA countries,
poorer regions of middle-income countries, conflict affected
and fragile states, and industries with the broadest potential
for development impact
• Building enduring partnerships with emerging market players
• Addressing climate change and ensuring environmental and
social sustainability
• Promoting private sector growth in infrastructure, health,
education, and the food supply chain
• Developing local financial markets
21
22. IFC’s Business (What we do)
Investment Services
• Loans and intermediary services
• Equity and quasi-equity
• Syndications
• Structured and securitized products
• Risk management products
• Trade finance
• Subnational finance
• Treasury operations
• CleanTech Venture Capital
22
23. IFC Offers to Clients (What we bring)
Unparalleled Expertise
• Knowledge of global industries and local markets
• Financial sector influence
• Long-term partnerships; countercyclical role
• Sustainable investments
• Leadership on corporate governance
• Value-adding expertise
23
24. How IFC differs from other Investors
• IFC can provide debt, equity, or a combination of both depending on the client’s needs
• IFC has a longer investment horizon (5-7 years) and is less cyclical than most financial investors
• With its equity investments, IFC can act as an “honest broker” in joint venture situations,
give additional comfort for minority shareholders, and be a catalyst for other investors.
• Leading multilateral source of development finance – IFC’s breadth of investment expertise
and years of experience in emerging markets add value to its clients
• IFC strong reputation adds credibility to investee companies that access international
capital markets
• Best practice know-how on corporate governance, environmental management, local communities,
and insurance requirements
24
25. Questions ?
Mr. Emmanuel POULIQUEN (普迈新)
Principal Industry Specialist
IFC - Global Manufacturing & Services – Energy Efficient Machinery
Financing production and deployment of equipment that
efficiently generate, store, transport or transform energy
http://www.ifc.org/ifcext/gms.nsf/Content/EEM_Overview
2121 Pennsylvania Ave., NW
Washington, DC 20433
Tel: +1 (202) 473-9114 Fax: +1 (202) 974-4394
Email: EPouliquen@ifc.org
25
27. Per-capita fossil-fuel CO2 emissions, 2005
•World emissions: 27 billion tons CO2
•AVERAGE TODAY
•1- •STABILIZATION
•Source: IEA WEO 2007
28. IFC Customer Profile: Multinationals, Regional and
Local
•What is important about IFC to a company, by size and location
What IFC brings to an investment Multinational Regional Local
Quality stamp of approval
Country risk mitigation
Exposure to country risk volatility
Good contacts/knowledge
Competitive cost
•Always
Long tenors
•Often
Access to local currency funding
•Sometimes
Complementary funding source
29. Sector: Energy Efficient Machinery
•Brazil •Brazil •Brazil, Mexico •Mexico
•Randon Group •FRAS-LE •Marcopolo •Forja Monterrey
•US$65 million •US$20 million •US$38 million •US$29 million
•Loan, Equity •Loan, Equity •Loan •Loan, Equity
•Mexico •Mexico •China
•Metalsa •Nemak •TBK China
•US$33 million •US$33 million •US$4 million
•Loan, Equity •Loan •Loan
•China •China
•Launch Tech •Nanjing Kumho
•US$8 million •US$102 million
•Equity •Loan, Equity
30. Sector: Energy Efficient Machinery
•India •India •India •India
•Apollo Tyres Ltd. •IAL •LGB •Tata Motors
•US$47 million •US$10 million •US$20 million •US$50 million
•Loan •Equity •Loan, Equity •Loan
•Indonesia •Czech Republic •Turkey
•PT Astra •Hayes Lemmertz •Standard Profil
Autokola
•US$104 million •US$38 million •US$52 million
•Loan, Equity •Loan •Loan, Equity
•Turkey •Egypt
•Uzel •Amreya
•US$35 million •US$5 million
•Loan •Loan