China: The second home market of the Volkswagen Group

Transcription

1 China: The second home market of the Volkswagen Group Carsten Isensee Executive Vice President Finance, Volkswagen Group China HSBC Roadshow, Hongkong, November 2014

2 Business overview and sales performance Market development Investments Volkswagen Group China Our products Emerging business fields and financial results 2

3 Volkswagen Group China (VGC) at a glance Volkswagen production facilities in China Facts 2014 Shanghai Volkswagen Urumqi FAW-Volkswagen Volkswagen FAW Platform Volkswagen China Investment Company Chengdu Car production plants Component plants Headquarters Volkswagen Group China Volkswagen FAW Engine Beijing Dalian Yizheng Nanjing Changzhou Shanghai Ningbo Foshan Tianjin FAW-Volkswagen Volkswagen FAW Platform Changchun FAW-Volkswagen (Volkswagen, Audi) Volkswagen FAW Platform Volkswagen Automatic Transmission Dalian Volkswagen FAW Engine Volkswagen Automatic Transmission Tianjin Shanghai Volkswagen MAN Diesel & Turbo Shanghai Volkswagen (Volkswagen, ŠKODA) Shanghai Volkswagen Volkswagen Transmission Shanghai Volkswagen Powertrain Volkswagen Group ventured into China more than 30 years ago Over 20 million cars delivered to Chinese customers since market entry 89,000 employees work for the Volkswagen Group in China Another 360,000 employees work within our dealer network Volkswagen Group China is represented by more than 40 entities in China People are the center of Volkswagen Group China s strategy Ren Wei Ben. 3

4 Deliveries to customers Volkswagen Group in China (January October 2014) Import FBU ( 000 units) Volkswagen Group: 184 FAW-VW Locally produced ( 000 units) 1,433 SVW 1,409 Ʃ 2,842 Total deliveries region China 3,026 1) 1) incl. Hong Kong, excl. Scania, and Ducati. All figures shown are rounded. 4

5 Deliveries to customers by brand (January October 2014) `000 units 3, % 2,652 3, % January October 2013 January October ,500 2,000 2,018 2,296 With a solid sales performance year-to-date all brands contributed to the strong growth of Volkswagen Group China 1,500 1, % % % 36 1) incl. Hong Kong, excl. Scania, and Ducati. 5

6 Volkswagen Group No. 1 in the Chinese passenger vehicle market Passenger vehicle market China (January - October 2014 y-t-d) Others (i.e. local brands) 30% 21% Volkswagen Group Rank Brand/Group Delta of market share (y-t-d) 10% Comp.1 1 Volkswagen Group + 0.3% 2 Competitor 1-0.3% 10% 3 Competitor 2-0.1% 5% 5% Comp.2 4 Competitor 3 +/- 0.0% Comp.4 Comp.3 5 Competitor 4-0.6% 6

7 6 out of the Top 10 selling vehicles are Volkswagen brand models Deliveries to customers (January October 2014) 1 Lavida 311,295 vehicles 5 Jetta 247,297 vehicles 2 Santana 266,138 vehicles 9 Tiguan 197,954 vehicles 4 Sagitar 250,184 vehicles 10 New Bora 192,076 vehicles Source: CPCA 7

8 Audi in China Enhancing leadership in the premium segment Flexible capacity expansion, adjusted to market demand Leading the premium SUV market in China Annual production capacity, vehicles up to 700,000 SUV share of the premium market Comparison of growth rates 100, ,000 Production 400,000 Production SUV 18% 82% 38% 62% 40% 35% 30% 25% 20% 15% +22% +30% +36% Pioneering the compact segment with three locally produced models 2008 Jan-Sep % 5% 0% Jan-Sep 2014 Premium Market SUV Premium Market Audi SUV Audi Q3 Segment leader 50% market share (Jan-Jul 2014) Audi A3 Sedan 1st local premium compact sedan launched early September 2014 Audi A3 Sportback 1st local premium compact hatchback launched in March

9 China has become the most important sales market for ŠKODA Further volume expansion of ŠKODA within the next years Developing the model range in China Annual deliveries to customers > 500,000 Spaceback 226,971 Rapid Rapid 27,000 Yeti Yeti Others % ŠKODA Top 5 markets 1991 vs % Czech Republic 5% 9% 6% 8% UK Slovak Republic Poland Germany Others Czech Republic 37% 6% 7% 10% Germany UK 25% 15% China Russia Import Local Production Octavia Octavia Octavia Octavia Octavia Octavia Octavia Octavia 2007 Fabia Fabia Fabia Fabia Fabia Fabia Fabia Current Models Superb Superb Superb Superb Superb Superb New Models Superb Combi Yeti Superb Combi Yeti 9

10 Porsche is gaining substantial momentum in China Deliveries to customers (in units) +15% 31,205 37,425 2,603 1,418 24,340 1, ,738 2, ,148 7,726 26,666 19,959 13, Cayenne Panamera 911 Boxster/Cayman Dealerships (number of dealers) CAGR SUV Sports Car Macan launch in China: Q Increasing model variety and improving customer experience Flagship Sports Car Initiative China Porsche Experience Center Shanghai CAGR +16% Focus 2014: Pro-active sports car market development and exploitation with 911 and Boxster/Cayman

11 Business overview and sales performance Market development Investments Volkswagen Group China Our products Emerging business fields and financial results 11

12 China continues to offer substantial growth potential Real GDP growth in % Bubble size: real GDP 2013 data unless otherwise stated India China Brazil China 2020 Russia China 2030 Japan Germany USA Real GDP per capita in `000 USD PPP Source: IHS Economics 12

13 Continued positive economic development and the increase in household income drives private consumption on a solid growth path in USD bn % 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Private Consumption, China (left scale) Private Consumption Growth Rate, China (right scale) Source: IHS Economics 13

14 Traffic restrictions reduce local deliveries, however, rumors on future restrictions lead to front loading of car sales Cities with either restriction policy in place or rumors on future restrictions Deliveries in cities with or without restrictions 1) Cities restricted Cities with restriction rumors Beijing (2011) Tianjin(2014) Dalian Shijiazhuang Qingdao Lanzhou Nanjing Shanghai (1994) Xi an Zhengzhou Suzhou Chengdu Chongqing Wuhan Hangzhou (2014) Ningbo Dongguan Foshan Shenzhen Guangzhou (2012) in 000 units 11,297 2,376 2,376 1,246 7,675 7, % 12,699 3,111 1,042 8,546 w/ Rumors (15 cities) Restricted (6 cities) Not restricted (326 cities) Growth (y-o-y) 30.9% -16.3% 11.3% Guiyang (2011) Remark: Restricted cities include Beijing, Shanghai, Guangzhou, Tianjin, Hangzhou, Guiyang; 15 cities w/ rumors include Chengdu, Chongqing, Dalian, Dongguan, Foshan, Lanzhou, Nanjing, Ningbo, Qingdao, Shenzhen, Shijiazhuang, Suzhou, Wuhan, Xi an, Zhengzhou Jan - Sep 2013 Jan - Sep ) converted to deliveries to customers from registration data Source: Registration data, CPCA 14

15 Less developed cities provide new opportunities Level I cities Level II cities Share of total market ᴓ cars/1,000 inhabitants Number of cities Average # of inhabitants (m) ᴓ cars/1,000 inhabitants Number of cities Average # of inhabitants (m) ᴓ Beijing Shanghai Guangzhou 119 Dalian Xi an Changsha Level III cities Level IV cities Level V cities Shantou Hengshui Jingdezhen 62 Guyuan Yaan Zigong Haibei Jinchang Turpan Level III, IV and V cities Level I and II cities Level I share 41% 2014e Level III share Level V share 59% 2014e 37% 2015e 63% 2015e Level II share 35% 2016e 65% 2016e 34% 2017e Level IV share 66% 2017e 33% 2018e 67% 2018e 15

16 China will invest further in the construction of road infrastructure Length of national roads in China ( 000 km) National Road Network Construction Plan National expressways National ordinary roads 265 Urgent need to expand the current road network: % % more than 900 counties 1) in China are not connected to the national road network more than 18 cities with >200,000 population and 29 regional administrative centers are not connected to expressways The Central Government Plan: By 2030, all cities above 200,000 inhabitants will be connected to the national expressway network, and all counties will be connected to the national ordinary road network Source: National Road Network Construction Plan ( ) 1) There are 2,856 counties in China 16

17 Southern and Western regions show above average growth supporting our Go South and Go West Strategy Regional share of total market sales (Q vs. Q in %) Western region 21% 22% Q Q Xinjiang Tibet Qinghai Sichuan Yunnan Gansu Ningxia Inner Mongolia Beijing Tianjin Hebei Shaanxi Chongqing Guizhou Guangxi Shanxi Henan Hubei Hunan Jiangxi Fujian Guangdong Shandong Anhui Liaoning Jiangsu Zhejiang Heilongjiang Northern region Eastern region Southern region Jilin Shanghai 35% Q % Q % Q % Q % Q % Q Hainan Source: Registration data 17

18 How big will the Chinese passenger vehicle market be in 2020? in m vehicles Forecast 10% growth in 2014e: ~ 17.5 m vehicles Scenario CAGR 10% 32 m vehicles p.a : 15.9 m vehicles Scenario CAGR 5% 25 m vehicles p.a Source: Volkswagen Group China scenario calculation 18

19 Business overview and sales performance Market development Investments Volkswagen Group China Our products Emerging business fields and financial results 19

20 Investment program and core projects Scenario CAGR 5%: >20 m passenger vehicles Vehicle plants Total investment of 18.2 bn 1) in Component plants Products Assuming a 5% CAGR and a 20% market share of VGC the additional annual sales volume 1 m 200,000 would imply a need of 2 new factories every 3 years New plant Changsha (SVW) Capacity increase Foshan (FAW-VW) Chengdu (FAW-VW) Capacity increase Changchun Chengdu Tianjin Dalian CO 2 measures for plants and products PHEV products MQB products Total market Volkswagen Group China 1) Status as per press release 22 November

21 Go West and Go South strategies are core drivers for future growth Urumqi Changchun Go West Strategy Beijing Tianjin Qingdao Chengdu Yizheng Nanjing Shanghai Go South Strategy Changsha Ningbo Foshan Existing vehicle production site Planned vehicle production site 21

22 Capacity expansion plans on the way to 4 million units in 2018 (Standard capacity of 250 working days) 4 million units m Upward flexibility Urumqi Ningbo Yizheng Nanjing Shanghai Foshan Chengdu Changsha Urumqi Ningbo Yizheng Nanjing Shanghai Foshan Chengdu Changsha Urumqi Ningbo Yizheng Nanjing Shanghai Foshan Chengdu SVW FAW-VW Changchun Changchun Changchun 2013 Production 2013 Capacity 2015 Capacity 2018 Capacity 1) Capacity expansion plans are based on the expected growth in unit sales, upward flexibility (e.g. additional working days) and downward flexibility (e.g. postponement of expansion steps). 1) As per 12/2013; the new vehicle plants planned in Qingdao and Tianjin are not included in the chart (planned start of production in 2017/18) 22

23 Implementation of the MQB toolkit in the Chinese production network Urumqi Beijing Changchun MQB & MLB share of Volkswagen Group production Chengdu Tianjing Qingdao Yizheng Nanjing Shanghai Changsha Ningbo Foshan Existing production site MQB production site by 2016 Planned MQB production site MQB MLB MQB volume China Golf A3 SB A3 Octavia Lamando Implementation of MQB in the Chinese production network will significantly reduce investments for new models 23

24 Significant growth of dealer networks planned 1) 31 Xinjiang 6 Tibet [as of H1 2014] 45 Heilongjiang 41 Jilin Gansu Inner Mongolia Liaoning 28 Beijing Tianjin Qinghai Ningxia 71 Hebei 216 Shanxi Shandong Shaanxi Henan 72 Jiangsu Sichuan Shanghai Hubei Anhui 91 Chongqing Zhejiang 34 Hunan Guizhou Jiangxi Fujian Yunnan Guangxi Guangdong Hainan 2, ,593 ~2,750 >3, e 2018e 1) Map includes only Volkswagen, Audi and ŠKODA dealers; discrepancies may occur due to reporting backlog 24

25 Business overview and sales performance Market development Investments Volkswagen Group China Our products Emerging business fields and financial results 25

26 Broad local product portfolio at FAW-Volkswagen and SVW New Bora Sagitar Magotan Jetta Gran Lavida Santana Passat Tiguan Volkswagen CC Golf Volkswagen Polo Touran Lavida Lamando A4L A6L Q3 Q5 Yeti Fabia Superb Octavia Audi A3 SB A3 ŠKODA Rapid Rapid SB Note: Status as per July

27 Model launches in 2014: Continuously strong product momentum New locally produced models New import models e-up! Golf Variant Scirocco T5 Caravelle A3 A3 Sportback SVW Polo Rapid Spaceback S3 RS7 A8L S8 A8 Hybrid Cross Polo Octavia Macan Cayenne Cayenne GTS Cayman GTS Boxster GTS 918 Spyder FAW-VW Flying Spur V8 Continental GT V8S Cont. GT Conv. V8S Huracán A3 Sportback A3 27

28 Significant extension of product portfolio planned: More than 100 models by : CKD 22 FBU e: CKD >35 FBU>65 >100 Note: number of models including derivatives 28

29 SUVs are already the second largest body type in the Chinese market and the growth is expected to continue body type market share % Notchback Hatchback MPV SUV Others 63, , , ,3 12, , , , , e 2020e 2024e Source: Volkswagen Group China, % share of body type in total passenger car market 29

30 Volkswagen China Product solutions to match our customers needs China special detail solutions Passat USA Passat China China specific wheelbase extensions, trim and colors A6 Europe Yeti Europe A6 L China Yeti China China exclusive spare wheel 30

31 Toolkits support the localisation of of our products Platform Extended Wheel Base Lamando Exterior Interior Chrome Leather Wood Lighting Color 31

32 Legal requirements of average fuel consumption targets for fleets in China l/100 km l 164g CO 2 /km 120g CO 2 /km 4.8l 1) 5.0l g CO 2 /km 3.8l 1) The Chinese target is challenging due to the low proportion of diesel cars in China of only ~1% customers preference for larger vehicles Published data Assumptions of the Volkswagen Group 1) Committed EU targets of the Volkswagen Group 32

33 Volkswagen Group China to actively engage in the New Energy Vehicle market with locally produced cars as well as the localization of technology Timing Introduction Porsche Panamera S E-Hybrid Volkswagen e-up! Audi A6 e-tron Porsche 918 Spyder Audi A3 e-tron e-golf Golf GTE Phase Development Import Local production Localization of New Electric Vehicle technology 33

34 Expansion of Research & Development know-how in China ~ 2,700 engineers in R&D in China Design Engine development Body development Electric & Electronics development Prototype workshops Vehicle testing facilities 3D development environments 34

35 Business overview and sales performance Market development Investments Volkswagen Group China Our products Emerging business fields and financial results 35

36 Car park development of Volkswagen Group China shows substantial opportunities for growth in the service and spare parts businesses Car park of Volkswagen Group China brands Age segmentation of car park 2014 in m units > years 20% 8-10 years 10% >10-15 years 5% 1-2 years 39% 3-4 years 26% Age segmentation of car park years 19% >10-15 years 11% 1-2 years 22% Car park covers all Volkswagen Group brands (only luxury car park does not use scrapping rate) Definition: Car park 2014 is car park as at 31 Dec years 27% 3-4 years 21% Car park will grow approx. 2 times by 2018 and 3 times by 2023 compared to

37 Development of pre-owned car dealer business Total pre-owned car market forecast 1) Group pre-owned car dealer roll-out in m units Pre-Owned Commercial Vehicles Pre-Owned Passenger Cars in `000 units e 2015e 2016e 2017e 2018e 2019e 2020e e e e e Volkswagen + ŠKODA (Das WeltAuto) Audi (refined recomm.) Porsche (approved pre-owned) Bentley (Bentley pre-owned) Qualitative and quantitative roll-out of group pre-owned car dealers 37

38 Volkswagen Financial Services is further growing its business Gaining share in an expanding retail financing market Volkswagen Finance (China) retail finance penetration in the Volkswagen Group China network (% of deliveries to customers) / e Strong retail finance development New retail finance contracts (number of units) 390,000 Cash Finance Cash Finance Cash Finance 90% 73% 67% 227,000 10% 27% 33% 149,000 8% 16% 18% 78,000 2% 11% 15% VW FS Others VW FS Others VW FS Others e Financial Services China: Strategic growth dimensions Leasing / Credits Fleet Management Used Cars New Mobility After Sales / Insurance 38

39 Another strong operating result from January to September Q1-Q Deliveries to Customers ( 000 Units) 1,923 2,259 2,815 3,271 2,719 Production (100%) 1) ( 000 Units) 1,914 2,202 2,643 3,135 2,615 1) SVW Group / FAW-VW Group Operating profit (100%) ( m) 4,389 6,134 8,424 9,569 9,061 Operating profit (proportionate) ( m) 1,907 2,616 3,678 4,296 3,920 39

40 Chinese Joint Ventures generate substantial, self-funded growth and at the same time sustainably rising dividends Total amount of dividends paid out to Joint Venture partners (in bn) Total amount of dividend Chinese Joint Ventures thereof paid to Volkswagen Group

41 Volkswagen Group China is well positioned to maintain its number one position in the market and seize additional opportunities in the future in m units