Market Research Report : Automotive market in china 2015 - Sample

Automotive Market – China
February 2015

2
SAMPLEExecutive 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

3AUTOMOTIVE 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
5/1/144/1/14
6.08
3/1/142/1/141/1/14
USD/INR
e3
e1
e2d3
d1
d2
c3
c1
c2
b3
b1
b2
a3
a1
a2
Period LowPeriod 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 1Segment 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
ba
2012
ba
Segmnet 2Segment 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 2Segment 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 2Segment 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--e20--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
SAMPLEPure-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
engine displacing > 3000 cc
b
870333
Automobiles with diesel engine displacing
more than 2500 cc
c
870322
engine displacing > 1000 cc to 1500 cc
d
870332
more than 1500 cc to 2500 cc
e
870321
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
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
SAMPLEDirect 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
SAMPLEDirect 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
SAMPLEIncreasing 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
SAMPLETrends - Summary
`
China promotes alternative energy vehicles
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 promotes alternative energy vehicles
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
SAMPLEPorter’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
SAMPLECompetitive 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
SAMPLEKey Ratios of Major 3 Companies – Operational Basis (FY 2013) (1/3)
Competitive Benchmarking (2/4)
0
-10
a2
Player 1
%
Player 3
c3b3
a3
Player 2
c2
-b2
c1b1
a1
Net MarginGross Margin Operating Margin
• Text

31
SAMPLEPublic: 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
SAMPLEFinancial 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/LossTotal Income
0
200
400
0
Profit
USD mn
Total Income
USD mn
a1 c1
a
20--
b1
db
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 2Region 1

34
SAMPLE
• Text • Text
• Text• Text
TO
WS
Strength Weakness
Opportunity Threat
Public: Domestic Company – Player 1(4/4)

35
SAMPLEPrivate: 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
TO
WS
Strength Weakness
Opportunity Threat
Private: Domestic Company – Player 2(3/3)

38
SAMPLE
Supplier Customer Primary Industry Business Description
Supplier Scenario – (1/20)

39
SAMPLEMergers & 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 GrowthGovernment 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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