Read AEB%20Brussels_Nov08.pdf text version

Automotive Industry in Russia

Challenges and opportunities November 2008

With thanks to Martin Jahn, Vice-chairman of Automobile Manufacturers Committee, Association of European Business in RF. General Manager of «Volkswagen Group RUS» and to Yvan Bonchev, Chairman of Automobile Manufacturers Component Committee, Association of European Business in RF, Associate Director - E&Y.

New passenger cars market development 2004-2008F

Sales forecast of new PC in 2008 = 2,75 Mio. units (new PC without LCV)

Market booming since 2005 with clear trend of replacing the true domestics by foreign brands Decrease of growth rate in 2nd HY '08 due to crisis, as result ~18% growth in 2008 (full year) is expected

Origin segments development* (vol.)

3.000 Im ported foreign brands New dom estics 2.500 True dom estics

Origin segments development* (%)

100% 90% 80% Im ported foreign brands

+18%

2.750

22% 10%

29% 41% 50% 11% 15% 19% 51%

2.332

+38%

1.400

70% 60% 50%

2.000

New domestics True domestics

+29% 1.693

1.500

1.162

1.268

275

+3%

1.310

384 140

678 650

40%

441

68% 60% 44% 31%

1.000

128

263

30% 20%

24%

500

865

786

752

729

700

10% 0%

25%

0 2004 2005 2006 2007 2008F

2004

2005

2006

2007

2008F

* Retail sales of new passenger cars without LCV, «grey» and used car import according to AEB statistics Source: AEB\ AUTOSTAT \ Forecast VGR

Production of foreign brands in Russia 2004-2012

Local production is the main success factor for foreign brands in Russia

Customs preferences for OEMs, acting under decree #166 let minimize import tariff on components Regions create attractive investment climate for foreign OEM's

Local production of foreign brands

1.800

(`000 units)

Economic highlights 2004-07 Growth of GDP and incomes of population Strong domestic economic trend High profitability in most spheres Good investment climate in some regions Increasing level of rule of law Tax system becomes more transparent Good perspectives for the future

1.600 1.400 1.200 1.000 800 600 400 277 200 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 459 845 1.145 1.645

128

Source: AUTOSTAT 07\08

157

637

1.405

Overview production facilities of foreign brands

Expected production volume by 2012: 1,7 Mio. units with total investments > 5 Bio. $

Factory

Avtotor

City

Kaliningrad

Brands

Kia, BMW, Hummer, Chevrolet, Chinese*

Start

Investments, Mio. $ innitial total

production 2007 tsd. units

production 2012 tsd.units

1994 1999 2002 2001 1997 2003 2006 .. 2008 2007 2008 2009 2010 2010 2009

250 230 230 338 270 90 180 180 180 115 450 200 243 400 120

250 380 330 338 320 90 180 180 220 300 1.200 200 400 400 120

106 70 70 55 80 50 21 0 0 6 2 0 0 0 0 1

130 160 150 60 155 120 90 50 100 180 140 80 60 80 30 60

Avtoframos Ford GM vtoVaz agz Izhvto Sollers Sollers Toyota GM Volkswagen Nissan PSA-Mitsubishi Hyundai Suzuki Others**

Moscow Vsevolozhsk Togliatti aganrog Izhevsk Nab. Chelni Elabuga St. Pete St. Pete Kaluga St. Pete Kaluga St.Pete St.Pete

Renault Ford Chevrolet Hyundai Kia Sssang Yong, Fiat Fiat Toyota Chevrolet, Opel Volkswagen, Skoda Nissan Mitsubish, Peugeot Hyundai Suzuki

Total

* Production of Chinese brands is suspended ** incl..Amur, Derweys, Daimler-Chrysler GAZ, ZAZ Ukr Avto

3.138

4.908

459

1.645

Source: UTOSTAT Status 07\ 2008

Supplier Presence in Russia

Kaliningrad

Asahi Glass Company Benteler Faurecia Johnson Controls Magna Nokian Tires Stadco Tenneco Automotive ThyssenKrupp Toyota Boshoku

IHI Lear Corporation

Michelin

Glaverbel Pilkington

Bosal Faurecia Siemens VDO Automotive Sitech Cummins Daido Metal Magna Magneti Marelli Knorr-Bremse Sigit Stadco Weigl ZF

Lear Corporation Faurecia Ficosa International Glaverbel Magna Magneti Marelli ThyssenKrupp RAD

Ryazan

Magneti Marelli

Delphi Federal Mogul Hayes Lemmerz HCC Johnson Controls Magna Tenneco Automotive

Siemens VDO Automotive

/Tschistopol

Bosch Automotive

*This list is not exhaustive

Disturbing factors of Russian automotive market development

Factors

1) Old car park ( av. age 12 years)

Needed measures

Creating car utilization mechanisms , toughening of ecological norms, progressive taxation for old cars Creating premises for building civilized second hand car market as a tool of new cars sales via cancellation of double VAT for used cars Risk not to fulfill commitments of automotive producers on localization necessary for further retail price decrease Review of customs duties for import or measures to improve quality of local made steel State and regional educational programs for industry staff State programs of road construction- and infrastructure development

2) Double VAT for used cars 3) Weak competitiveness of local components suppliers 4) Poor quality of local body steel 5) Lack of qualified personnel in the industry 6) Weak road- and logistic infrastructure 7) Rising operational costs ( transport, logistics, real estate price, office rent etc) 8) Complicated bureaucratic procedures

Creating conditions for "healthy" competition in the infrastructural sphere Contacts with state authorities, primarily with customs, in order to simplify procedures for loyal market operators

In September the Russian market has shown almost the same figures as in August. Growth vs. September 2007 is only 11%

2007 300

( `000 units )

2008

YTD key figures

( `000 units )

270 250 202 200 161 150

+39% +58%

-3%

237

+17%

+34%

+14%

263

-4%

251

+1%

+22%

254

-12%

Import Segment:

224

0%

+11%

225

+35%

+30%

+28%

+4%

+26%

199

202

196

209

216

YTD '08 = 1.571 YTD '07 = 1.124 Growth = 40%

203

177

True domestics: YTD '08 = 514 YTD '07 = 521 Growth = -1% Total Market: YTD '08 = 2.085 YTD '07 = 1.646 Growth = 27%

100

116

129

50

0 Jan

Source: AEB

Feb

March

Apr

May

Jun

Jul

Aug

Sept

Liquidity crisis ­ the main risk for automotive market

Summary World's financial crisis and withdrawal of foreign investments provoked liquidity problems in Russian financial system; Commercial banks toughened credit policy towards private customers and auto dealers and as a result decrease of consumer activity and liquidity problems \ over stock at auto dealers; Before crisis about 50% of car sales done with use of credit, average credit amount = 17 500 $; Mostly with use of credit are being bought low cost foreign brands and they suffered in August and September more than others; Government support supposed to facilitate liquidity problems, but it will push inflation and interest rates higher; Customers are losing confidence and wait for the situation to be clearer and for significant discounts

( `000 units )

Share of sales with financing

sales (tsd. units) thereof w ith credit

3.500 3.150 3.000

2.500

2.421

2.000

1.772 1.600 1.446 1.284 1.099 1.150

1.500

1.000 750 500 500 170 0 350

51% 47%

15%

2003

27%

2004

35%

2005

42%

2006

2007

2008F

Inclusive LCV Source: AUTOSTAT, Market of automotive financing 08\2008

Automotive Industry in Russia

QUESTIONS?

Information

Notes

9 pages

Find more like this

Report File (DMCA)

Our content is added by our users. We aim to remove reported files within 1 working day. Please use this link to notify us:

Report this file as copyright or inappropriate

1197430


You might also be interested in

BETA
Bidvest Prod Brochure 2010 - Lo-Res.pdf
332_entire_cover_3names_ChinaIPRs_rev.pdf
Microsoft Word - 2011 Road Ahead Part Part One FINAL.doc
Microsoft Word - Auto Industry Analysis Team A - Final.doc
Manheim 2011 Used Car Market Report