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 Beijing, 14 April 2015

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 22 million cars delivered to Chinese customers since market entry Around 90,000 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 Jan.-Feb Import FBU ( 000 units) Volkswagen Group: 25 FAW-VW Locally produced ( 000 units) 262 SVW 297 Ʃ 559 Total deliveries region China Jan.-Feb ) 1) incl. Hong Kong, excl. Ducati. All figures shown are rounded. 4

5 Deliveries to customers by brand Jan.-Feb `000 units % 583 Jan.-Feb Jan.-Feb % % % % 9 1) incl. Hong Kong, excl. Ducati. 5

7 Chinese government reacts with pro-growth policies on economic slowdown Indicator Proxy Dec Jan Feb Trend Key points Economic growth Three major demands Price & Money GDP (%) 7.3 Industrial Value Added (%) Electricity Output (%) Retail Sales (%) Fixed Asset Investment (%) Export (%) CPI (%) M2(%) China s economy is facing a further downward trend as both demand and supply declined in the first 2 months: Demand: Sluggish domestic demand, as indicated by investment and consumption slip and import plunge, will lead to further economic slowdown. Supply: Overcapacity issues in the up and mid-stream industries led to production slump, as shown by the record low PPI reading. Money: The interest rate and RRR cuts since Feb failed to inject liquidity into real economy; funds available for business investment and production were seriously inadequate. According to 2015 Government Work Report delivered by Premier Li Keqiang at National People s Congress, the GDP GR in 2015 is expected to reach around 7.0%, CPI at around 3.0%, M2 GR at around 12.0%, investment GR at around 15%, retail sales at around 13% and import & export at around 6%. Under the great pressure of economic slowdown, the pro-growth policies will be focused on monetary easing, housing market and infrastructure construction. Source: NBS,PBOC 7

8 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) in 000 units 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 (2015) 15,904 3,400 2,376 2,376 1,246 1,738 7,675 10, % 17,829 3,111 4,341 1,042 1,458 8,546 12,030 w/ Rumors (15 cities) Restricted (6 cities) Not restricted (326 cities) Growth (y-o-y) 27.7% -16.1% 11.7% Source: Registration data, CPCA Guiyang (2011) Guangzhou (2012) ) converted to deliveries to customers from registration data; cities w/ rumors 2013/2014 include Chengdu, Chongqing, Dalian, Dongguan, Foshan, Lanzhou, Nanjing, Ningbo, Qingdao, Shijiazhuang, Suzhou, Wuhan, Xi an, Zhengzhou and Shenzhen 8

9 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 9

10 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 10

11 Southern and Western regions show above average growth supporting our Go South and Go West Strategy Regional share of total market sales (2013 vs in %) 22% 20% Western region 21% 22% Xinjiang Tibet Qinghai Northern region Inner Mongolia Beijing Liaoning Tianjin Hebei Ningxia Shanxi Shandong Eastern region Heilongjiang Jilin Gansu Jiangsu Shaanxi Henan Shanghai Hubei Anhui Sichuan Chongqing Zhejiang Guizhou Hunan Jiangxi Fujian Southern region Yunnan Guangxi Guangdong 34% % % % Hainan Source: Registration data 11

12 How big will the Chinese passenger vehicle market be in 2020? in m vehicles Forecast 32 m vehicles p.a : 17.9 m vehicles Scenario CAGR 10% : 15.9 m vehicles Scenario CAGR 5% 24 m vehicles p.a Source: Volkswagen Group China scenario calculation 12

14 Investment program and core projects Scenario CAGR 5%: 20 m passenger vehicles Vehicle plants Total investment of 22.0 bn 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 plants Changsha (SVW) Tianjin (FAW-VW) Qingdao (FAW-VW) Capacity increase Foshan (FAW-VW) Chengdu (FAW-VW) Ningbo (SVW) Yizheng (SVW) New plants Changchun (FAW-VW) Qingdao (FAW-VW) Yizheng (VWPT) Capacity increase Changchun (VWED) Tianjin (VWATJ) New models NEV products 1) MQB products Mobile Online Services Total market Volkswagen Group China CO 2 measures for plants and products 1) PHEVs and BEVs 14

15 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 15

16 Capacity expansion plans on the way to over 5 million units in 2019 (Standard capacity of 250 working days) 5 million units SVW FAW-VW 3,528 * SVW ** SVW SVW FAW-VW FAW-VW FAW-VW Production 2014 Capacity 2014 Capacity 2016 Capacity 2019 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). *New plant Changsha + Expansion steps in Chengdu, Ningbo, Foshan **New plant Tianjin, Qingdao + Expansion steps in Ningbo, Foshan, Yizheng a.o. 16

17 Implementation of the MQB toolkit in the Chinese production network Urumqi Beijing Changchun MQB & MLB share of Volkswagen Group production Chengdu Tianjin 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 17

18 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 >3,600 2,654 2, ,593 1, e 1) Map includes only Volkswagen, Audi and ŠKODA dealers; discrepancies may occur due to reporting backlog 18

20 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

21 Significant extension of product portfolio planned: More than 190 models by : CKD 30 FBU e: CKD >45 FBU>145 >190 Note: updated counting method, number of models including derivatives 21

22 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 22

23 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 23

24 Toolkits support the localization of our products Platform Extended Wheel Base Lamando Exterior Chrome Interior Leather Wood Lighting Color 24

25 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 1) Committed EU targets of the Volkswagen Group 25

26 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 26

27 Expansion of Research & Development know-how in China Approx. 2,700 engineers in R&D in China About 90% are Chinese employees Design Powertrain development Body development Electric & Electronics development 3D CA-X development environment Prototype workshops Vehicle and components testing facilities 27

29 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

30 Development of pre-owned car dealer business Total pre-owned car market forecast Group pre-owned car dealer roll-out in m units Pre-Owned Commercial Vehicles Pre-Owned Passenger Cars e 2015e 2016e 2017e 2018e 2019e 2020e Volkswagen + ŠKODA (Das Welt Auto) Audi (refined recomm.) Porsche (approved pre-owned) Bentley (Bentley pre-owned) Qualitative and quantitative roll-out of group pre-owned car dealers 30

31 Chinese Joint Ventures with strong financial performance in ) (January to December 2014 vs. 2013, in million) FAW-Volkswagen Automotive Company (40%) Shanghai-Volkswagen Automotive Company (50%) SAIC-Volkswagen Sales Company (30%) + 14% + 13% 37,500 42,812 4, % 4,714-9% + 11% 23,142 20,897 2, % 3, % 23,882 26,959 1,533 1,400 1,057 1, % % Sales revenue 2) Post-tax profit Dividends received 3) Sales revenue Post-tax profit Dividends received 3) Sales revenue Post-tax profit Dividends received 3) 1) Financial data on a 100% basis, Volkswagen Group equity interest in brackets; Shanghai-Volkswagen (SVW) sales revenue is mostly generated from its business with SAIC-Volkswagen, which sells passenger cars for SVW 2) Including sales revenue from sales of imported Audi models 3) Dividends received by the Volkswagen Group 31

32 Another strong operating result for the Volkswagen Group in China in Deliveries to Customers ( 000 Units) 1,923 2,259 2,815 3,271 3,675 Production (100%) 1) ( 000 Units) 1,914 2,202 2,643 3,135 3,528 1) SVW Group / FAW-VW Group Operating profit (100%) ( m) 4,389 6,134 8,424 9,569 12,077 Operating profit (proportionate) ( m) 1,907 2,616 3,678 4,296 5,182 32

33 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

34 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

35 China: The second home market of the Volkswagen Group Carsten Isensee Executive Vice President Finance, Volkswagen Group China Beijing, 14 April 2015