Ifc jd power cologne global outlook 29 apr 10 10 04 26 ep


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Ifc jd power cologne global outlook 29 apr 10 10 04 26 ep

  1. 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. 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 2Page 2
  3. 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 3Page 3
  4. 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. 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
  6. 6. China emerging country for long … 6
  7. 7. … but should not we look a bit closer ? 7
  8. 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. 9. How fast ? The E-Bikes model• 2009, Chinas output of electric bikes (E2W) reached 22.2 M 9
  10. 10. 201x – We were warned !A Chinese Tsunami ? 10
  11. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 25. Questions ? Mr. Emmanuel POULIQUEN (普迈新) Principal Industry SpecialistIFC - 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
  26. 26. Appendixes 26
  27. 27. Per-capita fossil-fuel CO2 emissions, 2005 •World emissions: 27 billion tons CO2 •AVERAGE TODAY •1- •STABILIZATION•Source: IEA WEO 2007
  28. 28. IFC Customer Profile: Multinationals, Regional and Local•What is important about IFC to a company, by size and locationWhat IFC brings to an investment Multinational Regional LocalQuality stamp of approvalCountry risk mitigationExposure to country risk volatilityGood contacts/knowledgeCompetitive cost •AlwaysLong tenors •OftenAccess to local currency funding •SometimesComplementary funding source
  29. 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. 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