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  • 1. Volkswagen in ChinaDr. Joerg MullExecutive Vice President, FinanceVolkswagen Group China
  • 2. Volkswagen in ChinaEconomic IndicatorsCurrent China Automotive MarketVolkswagen Group China Sales-Performance ReviewProductsCapacity and InvestmentFinancial ResultsMarket & Volkswagen Group Outlook
  • 3. Volkswagen Group in China 2010 Volkswagen’s operations in China History FAW-Volkswagen • 1984: Shanghai Volkswagen Automotive Co. (SVW) as a joint venture between Volkswagen China Changchun Volkswagen FAW Platform Volkswagen and Shanghai Automotive Investment Company Industrial Corporation (or SAIC) was Audi China Volkswagen FAW Engine founded. Production milestone in Dalian Volkswagen Finance November 2010 – 6 million cars. Beijing Volkswagen Automatic (China) Co., Ltd. Transmission Volkswagen Beijing Centre • Volkswagen was the automotive pioneer Shanghai Volkswagen in the modern Chinese market. VW Import Co. Ltd. Nanjing Sitech Chengdu Shanghai Shanghai Volkswagen • 1990: FAW-Volkswagen Automotive Co. Ltd. was set-up as our second joint FAW-Volkswagen Volkswagen Transmission venture in China. Production milestone in Shanghai Volkswagen November 2010 – 4 million cars. Powertrain VW HK Co. Ltd. • 2004: Volkswagen China Investment Company was founded to co-ordinate and manage all Volkswagen activities in China. • Total Investments 1984-2010: € 9.5bn • Deliveries to Customers 2010: 1,923m units • Today: Volkswagen is represented by 16 • Employees 2010 : ~41,000 companies in China.Source: Volkswagen Group China 3
  • 4. Successful partnership with FAW and SAIC 1990 Foundation 1984 FAW: 60%, VW AG: 30%, Audi AG: 10% Share SAIC Motor: 50%, VW AG: 50% 853,582 Deliveries 2010 991,807 No. 3 Sales Ranking No. 2 ~15,590 Employees1 ~22,050 Jetta Sagitar Audi A6L Passat New LY Touran Lavida Fabia New Bora Magotan Audi A4L Polo HB Polo NB Cross Polo Octavia Golf A6 CC Audi Q5 Santana Santana Vista Tiguan LWB SuperbSource: Volkswagen Group China1 without VICO and VGC 4
  • 5. Deliveries of Volkswagen in China 2010 (‘000 Units) Import FBU Locally Produced Volkswagen 43,6 FAW-VW 658,7 194,9 Audi 33,0 Lamborghini, Bentley 1,1 SVW 811,3 180,5 Total Deliveries Region China 1,923Source: Volkswagen Group China 5
  • 6. Volkswagen in ChinaEconomic IndicatorsCurrent China Automotive MarketVolkswagen Group China Sales-Performance ReviewProductsCapacity and InvestmentFinancial ResultsMarket & Volkswagen Group Outlook
  • 7. The economy of China is on a track towards normalization Economic Indicators 2008 2009 2010 2011 E GDP [growth rate] 9.6% 9.2% 10.3% 9.4% Consumption (public + private) 21.6% 15.5% 18.4% 17.5% Inflation [CPI] 5.9% -0.7% 3.3% 5.0% Investment [growth rate] 26.1% 30.5% 23.8% 21.0% Key Interest Rate 1.80% 1.80% 2.25% 3.0% Export [growth rate] 17.2% -16.0% 31.3% 17.0% Import [growth rate] 18.5% -11.2% 38.7% 19.0% Foreign Direct Investment [$ bn] 92.4 90.0 105.7 100.0 Exchange rate as of the end of the report period [RMB/USD] 6.83 6.83 6.78 6.56 Exchange rate as of the end of the report period [RMB/EUR] 9.66 9.80 8.97 9.20Source: Deutsche Bank 7
  • 8. 2010 GDP reached a 10.3% growth year on year, and the economy is now in a path of stable growth 2008 2009 2010 Q1 2011 Cumulative Annual Growth Cumulative Annual Growth Cumulative Annual Growth 9.6% 9.2% 10.3% 11.9% 10.6% 10.7% 10.1% 10.3% 9.0% 8.9% 9.6% 9.8% 9.7% 7.9% 6.8% 6.1% Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11Source: The National Bureau of Statistics China 8
  • 9. Volkswagen in ChinaEconomic IndicatorsCurrent China Automotive MarketVolkswagen Group China Sales-Performance ReviewProductsCapacity and InvestmentFinancial ResultsMarket & Volkswagen Group Outlook
  • 10. After strong booming in past two years, passenger car market growth in China is excepted to stabilize in 2011 Total Passenger Car Market – China (incl. HK) ‘000 Units +35% +54% 11,457 8,482 CAGR +19% 5,503 3,071 2,266 (Q1) 2003 2008 2009 2010 2011ESource: CKD – CPCA; FBU - Registration 10
  • 11. The passenger car market is estimated to maintain a positive trend in 2011, with a stable quarterly growth rate China Total Market (incl. HK) – CY2011 vs. CY2010 Growth Rate 2011 vs. 2010 Full Year +10% Q1 +15% Q2 +15% Q3 +10% Q4 -1% 1,300 ‘000 Units 1,200 1,255 1,088 1,100 1,000 900 800 CY 2010 Actual: 11.428 million units CY2011 Forecast Most 700 728 Likely Scenario: > 12 million units 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSource: CPCA; Volkswagen Group China 11
  • 12. The average industrial stock level by end of March 2011 increased significantly to 1.9 Current stock level (in month) of major OEMs (>1.5) (1.2~1.5) (<1.2) Volkswagen Group 1.9 1.2 1.0 0.8 0.5 Comp. Comp. Comp. Industry Comp. Comp. Comp. Comp. Comp. Comp. Comp. Comp. Comp. Skoda SVW Comp. Comp. Comp. Audi FAW-VW 1 2 3 Average 4 5 6 7 8 9 10 11 12 VW 13 14 15 VWSource: CPCA, Volkswagen Group China 12
  • 13. Volkswagen in ChinaEconomic IndicatorsCurrent China Automotive MarketVolkswagen Group China Sales-Performance ReviewProductsCapacity and InvestmentFinancial ResultsMarket & Volkswagen Group Outlook
  • 14. Volkswagen Group is performing better than the World Car Market World Car Market: +8.1% Volkswagen Group: +14.0% Growth rate in key regions (Jan-Mar 2011 vs. Jan-Mar 2010) North America Western Europe Central & Eastern Europe Car Market Volkswagen Car Market Volkswagen Car Market Volkswagen Group Group Group +43.3% +32.1% -2.5% +6.5% +17.8% +17.9% South America Rest of World Asia Pacific incl. China Car Market Volkswagen Car Market Volkswagen Car Market Volkswagen Group Group Group +43.0% +2.9% +22.9% +9.3% +11.6% +5.6%Source: Volkswagen Group China 14
  • 15. Volkswagen Group is aiming for a new height in China market as a strategic target in near future Market ‘000 Units Growth 1,923 1,400 1,024 910 711 548 (Q1) 2006 2007 2008 2009 2010 2011ESource: Volkswagen Group China 15
  • 16. In Q1 2011, Volkswagen Group maintained its Number 1 position by market share in China Mainland Market Share Overview by Group YTD MS % YTD MS % Ranking Group 2010 Jan-Mar 11 Volkswagen Group 1 Volkswagen Group 16.8% 17.9% 2 GM Group 9.4% 10.5% 3 Hyundai Group 8.8% 8.0% 4 Toyota Group 6.6% 6.0% 5 Nissan Group 5.8% 5.4% 6 Honda Group 5.7% 5.0% 7 BYD Group 4.2% 3.6% 8 Geely Group 2.9% 3.4% 9 Chery Group 4.5% 3.1% 10 PSA Group 3.3% 3.0% Others 32.0% 34.1%Source: CPCA excl. LCVs; Volkswagen Group China 16
  • 17. The latest models have dramatically improved Volkswagen brand image in the past few years Sales of Shanghai Volkswagen Sales of FAW-Volkswagen + Sagitar +Touran +Lavida + Passat LY + Tiguan + Passat +New Bora +Golf A6 +CC +Magotan (New) + Magotan (New) 55% 56% 60% 60% 72% 67% 73% 78%Santana Jetta 2007 2008 2009 2010 Medium Term 2007 2008 2009 2010 Medium Term Old models New modelsSource: Volkswagen Group China 17
  • 18. Although with limited high-end models, Volkswagen import business in China is challenging ever ambitious targets Business Startup Infrastructure Setup Accelerate Growth Target Ranking in Network, Training, Process, etc. Individual, Motorsports, Bluemotion Volkswagen Worldwide 2004 2005 2006 2007 2008 2009 2010 2011 Medium Term 16,000 Phaeton Phaeton No.11 No. (Q1 2011) 40,325 Touareg Touareg No.11 No. 20,162 11,108 5,015 7,850 645 2,026 New Beetle No. 2 New Beetle No.2 Sales volume as today’s: India Ukraine Hungary Czech Poland Turkey Russia Spain Scirocco Scirocco No. 2 No.2Source: Volkswagen Group 18
  • 19. Volkswagen Group is striving for leading position in the Hong Kong market Market Share Overview YTD MS % YTD MS % Volkswagen Group Hong Kong Ranking Brand 2010 Jan-Feb 11 Volkswagen Group 1 Volkswagen Group 23% 23% 2 Toyota Group 24% 23% 3 BMW Group 17% 19% 4 Mercedes Benz 14% 17% 5 Nissan 6% 6% 6 Honda Group 9% 5% 7 Mazda 3% 3% 8 Volvo-Cars 1% 2% 9 Mitsubishi 1% 1% 10 Subaru 1% 1% Others 1% 1%Source: MTA; Volkswagen HongKongNot for release, publication or distribution in the United States, Australia, Canada or Japan 19
  • 20. Audi brand maintained the 1st place in China Premium Passenger Car market Market Leader in China Premium Rapid Growth of Audi Brand Passenger Car Market In Units In Units +43.4% 40,765 228,000 +29% 31,516 34,539 159,000 +69% 20,424 119,600 102,000 26,852 81,700 +78% 15,095 9,227 +24% 7,448 2011 Jan-Feb 2010 Jan-Feb 2006 2007 2008 2009 2010 Remarks: In Q1 2011, Audi delivered 63,432 vehiclesSource: Manufacturers exchange data; Volkswagen Group China 20
  • 21. Skoda Brand is growing fast with average annual growth rate of 87% in 2007 - 2010 Skoda Brand Competitiveness Skoda Brand Growing Fast In Units In Units 34,943 +47.3% +31% Superb/ 26,674 Octavia/ 180,515 Fabia 28,470 Mondeo/ -9% 31,403 Focus NB/ 122,556 New Fiesta HB 13,650 +81% 407/ 7,545 408/307 NB/ 59,284 207 HB 28,280 27,325 -13% Mazda 6/ 32,476 Mazda 3 NB/ Mazda 2 HB 2011 Jan-Feb 2010 Jan-Feb 2007 2008 2009 2010 Remarks: In Q1 2011, Skoda delivered 54,400 vehiclesSource: CPCA; Volkswagen Group China 21
  • 22. SEAT will be introduced to China and delivery “ENJOYNEERING” toChinese customers Dynamic Sporty Exciting Modern Tech Young Spirited Passionate Urban Progressive Design Driven Detail IndividualIbiza CUPRA Tempered Dealer Network Planning 20 15 Initial Stage Medium Term Leon CUPRA R 22
  • 23. The ambition of Bentley business in China is to become the No.1 worldwide Top 5 Country Sales in 2010 815 1,429 976 815 421 407 286 230 258 123 142 2006 2007 2008 2009 2010 Q1 2011Source: Volkswagen Group 23
  • 24. Lamborghini achieved 23% market share* in mainland China in 2010 - the highest market share in the world 206 Top 3 Country Sales in 2010 290 206 80 72 60 102 28 8 2006 2007 2008 2009 2010 Q1 2011 *: Market share of ESS segmentSource: Volkswagen Group China 24
  • 25. Bugatti will drive the sales to a new era through newly developed direct sales channel ` ` ` Direct Sales Dealer Showroom “One Face” Aftersales ` ` ` AutoShow Bugatti Tours in China Media/VIP EventSource: Volkswagen Group China 25
  • 26. Establishment of Group Import Company is under planning to maximize synergy among Group Brands Group Import Company Group Brands Brand Operations Pre-Sales Sales After Sales After Sales Support Market & Network Analysis Used Car & Fleet Sales Training Group Functions Finance IT HR Legal Vehicle logistics Back OfficeSource: Volkswagen Group China 26
  • 27. Volkswagen in ChinaEconomic IndicatorsCurrent China Automotive MarketVolkswagen Group China Sales-Performance ReviewProductsCapacity and InvestmentFinancial ResultsMarket & Volkswagen Group Outlook
  • 28. Volkswagen Group plans to introduce new products continuously tomeet the high expectations of Chinese customers +6 +8 2010 2011 2012 2013 +7 +8 Golf GTI VW CC Tiguan LWB Polo G HB Octavia FL Jetta A2 FL Touran FL 28
  • 29. Volkswagen design with Asian culture elementsDesign applications of local Chinese products – New passat 29
  • 30. VolkswagenTiguan LWB 30
  • 31. Volkswagen in ChinaEconomic IndicatorsCurrent China Automotive MarketVolkswagen Group China Sales-Performance ReviewProductsCapacity and InvestmentFinancial ResultsMarket & Volkswagen Group Outlook
  • 32. Vehicle manufacturing companies of Volkswagen Group in China 2010 (‘000 Units) Production Unit: ‘000 FAW-VW Changchun Volkswagen brand 672.4 Audi brand 209.5 Beijing Total 881.9 Yizheng SVW Nanjing Shanghai Volkswagen brand 834.6 Chengdu Skoda brand 197.1 Total 1031.7 Foshan existing vehicle plant Total Region China 1,913.6 new vehicle plant/ expanding capacitySource: Volkswagen Group China 32
  • 33. Component manufacturing companies of the Volkswagen Group in China FAW-VW Engine EA113, EA111; Transmission MQ250, 02K VW/FAW 40/60 VWPF (VW FAW Platform) Platform parts VW/FAW 60/40 Changchun VWED (VW FAW Engine Dalian) Engine EA888 VW/FAW 60/40 VWATD (Volkswagen Automatic Transmission Dalian) Dalian Transmission DQ200 VW 100 Shanghai Volkswagen Engine EA113, EA827, EA888 Shanghai VW/SAIC 50/50 VWPT (Shanghai Volkswagen Powertrain) Engine EA111 VW/SAIC 60/40 VWTS (Volkswagen Transmission Shanghai) Transmission MQ200 VW/SAIC/FAW 60/20/20 Sitech-Dongchang Automotive Seating Seats; Seat Components component plant Sitech/Dongchang/Etern 60/20/20Source: Volkswagen Group China 33
  • 34. Volkswagen Group China capacity increase (‘000 Units) 2 additional plants + significant increase in 2 existing plants Upward flexibility 250 wd ~35% More working days (wd) 500 Further capacity optimization 250 wd 1.400 2010 Mid-termSource: Volkswagen Group China 34
  • 35. The investment strategy of Volkswagen Group China is self-funded from the Joint Ventures Total Investments FAW-VW 2010-2012 € 6.0bn Changchun 2011-2015 € 10.6bn North Beijing Yizheng SVW East “Go West Strategy” FAW-VW Nanjing Shanghai Chengdu FAW-VW Foshan existing vehicle plant new vehicle plant/ expanding capacity “Go South Strategy”Source: Volkswagen Group China 35
  • 36. Volkswagen in ChinaEconomic IndicatorsCurrent China Automotive MarketVolkswagen Group China Sales-Performance ReviewProductsCapacity and InvestmentFinancial ResultsMarket & Volkswagen Group Outlook
  • 37. Volkswagen Group China – Achievements Q1 2008 2009 2010 2011 Deliveries to Customers (’000 Units) 1,024 1,400 1,923 549 1 Production (100%) (’000 Units) 975 1,387 1,914 n/a 1 Operating profit (quotal) (€ m) 395 831 1,907 557 1 SVW Group / FAW-VW GroupSource: Volkswagen Group China 37
  • 38. Volkswagen in ChinaEconomic IndicatorsCurrent China Automotive MarketVolkswagen Group China Sales-Performance ReviewProductsCapacity and InvestmentFinancial ResultsMarket & Volkswagen Group Outlook
  • 39. We are well positioned to reach our strategic goal of achievingsustainable profitable growth Medium-term Group Medium-term China targets targets Group no. of units sold 8.0 million (incl. Scania) China no. of units sold 2.0 million+ Automotive EBIT 5%+ margin Automotive EBIT Automotive capex/ margin 6%+ c.6% sales 1 Financial Services 15% Pre-tax RoE China RoI 20%+ Financial Services c.55% Cost-income ratio 2010-2012 Investments € 6.0 billion Credit rating Maintain A 2011-2015 € 10.6 billionNote: Porsche AG not incl.1 Normalized RoE based on 8% equity ratio 39
  • 40. Mega and midsized cities will be the engine of GDP growth Distribution by city size % of GDP City Level 2005 2020 (Population) 821 cities 872 cities 2005 2020 Mega 3 13 25 3 8 (10M+) 5 Big 6 21 12 (5-10M) 11 10 4 Mid-sized 60 64 114 29 34 (1.5-5.0M) 54 Small 117 171 252 20 19 (0.5-1.5M) 130 5 Big town 442 (<0.5M) 572 488 17 9 46 New cities Remarks: 8 mega cities in 2010 (Shanghai, Beijing, Chongqing, Shenzhen, Tianjin, Wuhan, Chengdu, Guangzhou)Source: McKinsey Insights China
  • 41. Total Passenger Car Market in China will develop further in the future Total Passenger Car Market Forecast – China (incl. HK) Average Annual ‘000 Units Growth Rate >7% >8% 20,000 >9% 15,000 >12,000 11,457 2010 2011E 2013E 2018ESource: Volkswagen Group China 41
  • 42. Volkswagen Group China is on the track to contribute to worldwide Mach 18 Strategy Volkswagen Group World Wide 10 Mio. Volkswagen Group China 7.1 Mio. 6.3 Mio. 6.2 Mio. Market Growth 1.9 Mio. 1.4 Mio. 1.0 Mio. 2008 2009 2010 2018Source: Volkswagen Group 42
  • 43. Volkswagen Group China plans to double the number of dealerships to ensure penetration and competitiveness >100% >2,500 >400 >500 1,305 190 170 >1,600 945 2010 medium-termSource: Volkswagen Group China 43
  • 44. Our Vision With 30 years of development and partnership, Volkswagen Group China is driving China’s sustainable future through innovation, performance and responsibility 44
  • 45. Volkswagen in ChinaDr. Joerg MullExecutive Vice President, FinanceVolkswagen Group China
  • 46. 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. 46

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