Volkswagen Group China

Volkswagen Group China
Dr. Jörg Mull, Executive Vice President, Finance
BoAML China Autos Investor Fieldtrip
Beijing, May 16th, 2013
Content
Our Momentum in China
Outlook Market Development
Investments Volkswagen Group China
Driven by Design and Technology
Financial results, challenges and opportunities
2
Introduction of Volkswagen Group China (VGC)
Volkswagen production facilities in China
FAW-Volkswagen
(Volkswagen, Audi)
Changchun
Volkswagen China
Investment Company
Chengdu
FAW-Volkswagen
Volkswagen
FAW Platform
Beijing
Volkswagen FAW Platform
Dalian
Yizheng
Nanjing
Shanghai
Car production plants
Component plants
Headquarter Volkswagen Group China
Total investments 1985-2012
Planned Investments 2013-2015
Employees 2012
Volkswagen FAW Engine
Volkswagen Automatic
Transmission
Shanghai Volkswagen
Shanghai Volkswagen
(Volkswagen, ŠKODA)
Volkswagen Transmission
Shanghai Volkswagen
Powertrain
€ 15.7 Billion
€ 9.8 Billion
74,500
History
1985: Founding of Shanghai
Volkswagen Automotive Co. (SVW)
as joint venture with Shanghai
Automotive Industrial Corporation
(SAIC). 9 million vehicles produced
as of April 2013.
1991: Founding of FAW-Volkswagen
Automotive Co. Ltd. (FAW-VW) as
second joint venture with First
Automotive Work (FAW). 7 million
vehicles produced as of February
2013.
2004: Founding of Volkswagen Group
China for coordination and
management of activities of
Volkswagen Group within China.
Today: 23 Volkswagen companies
and subsidiaries respectively (incl.
finance and sales but excl. retail
companies).
3
Volkswagen as a pioneer in China
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1985
2011
4
Successful partnership with FAW and SAIC
Foundation
1991
Foundation
1985
Share
FAW 60%, VW AG 30%, AUDI AG 10%
Share
SAIC Motor 50%, VW AG 50%
Deliveries 2012 1,319,000 units
Deliveries 2012 1,304,000 units
Sagitar
Magotan
New Bora
CC
Golf
Audi A6L
Audi Q3
Audi Q5
Škoda
Audi
Audi A4L
Volkswagen
Volkswagen
Jetta
Lavida
Santana
Passat
Polo
Touran
Tiguan
Fabia
Rapid
Octavia
Superb
5
Deliveries of Volkswagen in China from January to March 2013
Import FBU*)
(‘000 Units)
Locally Produced
(‘000 Units)
VW, VWN
20.3
Audi
FAW-VW
261.8
85.2
SVW
316.7
57.4
17.6
Porsche
8.8
Other Brands
1.1
Ʃ 47.8
Ʃ 721.1
Total Deliveries Region China 768,9
* incl. Hongkong; Source: Volkswagen Group China
6
Deliveries to customers by brand from January – March 2013*
+21%
(‘000 Units)
800
700
769
634
598
600
500
The overall sales
performance is significantly
better than 2012 !
+24%
483
400
2013 Jan-Mar
300
200
100
0
* Figures including Porsche AG as from 1 August 2012
2012 Jan-Mar
+16%
-2%
89
103
59
58
0
9
7
In Jan-Mar 2013, the Volkswagen Group maintained its Number 1
position by market share in China Mainland*
Others
(i.e. local
brands)
Volkswagen
20%
21%
32%
10% Hyundai
PSA 3%
3%
Ford
3%
4%
Honda
4%
BYD Great
Wall
10%
5%
4%
Nissan
Toyota
* Figures including Porsche AG as from 1 August 2012
GM
Rank
Brand/Group
Trends of
Changes of
market share market share
(YTD)
(YTD)
1
Volkswagen Group
+ 0.6%
2
Hyundai Group
+ 1.5%
3
GM Group
- 0.5%
4
Nissan Group
- 0.9%
5
Toyota Group
- 1.4%
6
Great Wall
+ 1.0%
7
BYD
+ 0.0%
8
Honda Group
- 1.0%
9
Ford
+ 1.3%
PSA Group
+ 0.2%
Others
- 1.0%
10
8
Content
Our Momentum in China
Outlook Market Development
Investments Volkswagen Group China
Driven by Design and Technology
Financial results, challenges and opportunities
9
Q1 2013 GDP reached 7.7% growth year on year, and the economy is now
on a path of stable growth
2010
2011
2012
2013
(forecast)
CAGR
10.3%
CAGR
9.2%
CAGR
7.7%
CAGR
8.2%
11.9%
10.3%
9.6%
9.8%
9.7%
9.5%
9.1%
8.9%
8.1%
Q1/10
Q2/10
Q3/10
Q4/10
Q1/11
Source: Deutsche Bank, last update April 2013
Q2/11
Q3/11
Q4/11
Q1/12
7.6%
7.4%
Q2/12
Q3/12
7.9%
7.7%
7.9%
Q4/12
Q1/13
Q2/13E
8.4%
8.5%
Q3/13E
Q4/13E
10
After a strong boom in the past years, passenger car market growth in
China is stabilizing and will develop further in the future
CAGR 6-8%*
Total Passenger Car Market –
China (incl. HK)
>20.000
(‘000 Units)
+9%
+35%
+8%
11.457
13.537
+6-8%
12.388
+54%
8.482
CAGR +19%
5.503
2.266
2003
2008
2009
2010
* Estimate
Data Source: Volkswagen Group China / IHS Global Insight
2011
2012
2013E
2015E
2020E
11
Current 5-year-plan: New growth model with focus on domestic market
Past:
Now:
Focus on export and quantitative growth
Focus on domestic market and qualitative growth
11th 5-year-plan 2006-2010
Multi-National-Companies and infrastructure
projects as growth generator
Big growth in manufacturing trade
Jobs in cities to keep unemployment low
Internationally comparable price stability and welladjusted foreign trade balance
12th 5-year-plan 2011-2015
Domestic consumption as growth accelerator
Megacities as growth generator
Focus on environmental protection and energy
efficiency
Encouragement of Chinese innovations
Social stability due to balanced allocation of
prosperity
Selective policies for foreign investment as well as
globalization of Chinese companies
12
Mega and small cities will be the engine of GDP growth
Distribution by city size
City Level
(Urban Population)
2012
832 cities
Mega (10M+)
7
Big (5-10M)
9
Mid-sized (1.5-5.0M)
Small (0.5-1.5M)
Big town (<0.5M)
% of GDP
2020
865 cities
7
3
6
5
56
61
29
253
282
2020
10
22
27
11
11
12
26
26
27
26
13
10
85
335
82
391
473
2012
33
424
New cities
Source: McKinsey Insights China – Macroeconomic model updated April 2012
13
GDP Growth development is expected to differentiate more strongly
between the various Chinese regions
Chinese GDP growth per Province
Guizhou
GDP Growth
2013E (in %)
14
Total GDP 2012
(Trillion RMB)
0.68
Shaanxi
12.5
1.45
Gansu
12
0.57
Jilin
12
1.19
Inner Mongolia
12
1.60
Ningxia
12
0.23
Qinghai
12
0.19
Tianjin
12
1.29
Tibet
12
0.07
Province
Heilongjiang
Jilin
Inner Mongolia
Liaoning
Xinjiang
Beijing
Hebei
Ningxia
Qinghai
Shanxi
Gansu
Shaanxi
Tibet
Sichuan
Tianjin
Shandong
Henan Jiangsu
Hubei
Shanghai
Anhui
Chongqing
Zhejiang
Hunan Jiangxi
Guizhou
Fujian
GDP Growth 2013E
12-15%
Yunnan
Guangxi Guangdong
10-12%
7-10%
Hainan
Data Source: Provincial Government Report / Regional Government Media
Yunnan
12
1.03
Chongqing
12
1.15
Fujian
11
1.97
Guangxi
11
1.30
Heilongjiang
11
1.37
Sichuan
11
2.38
Xinjiang
11
0.75
Anhui
10
1.72
Hainan
10
0.29
Henan
10
2.98
Hubei
10
2.23
Hunan
10
2.22
Jiangsu
10
5.41
Jiangxi
10
1.29
Shanxi
10
1.21
Liaoning
9.5
2.48
Shandong
9.5
5.00
Hebei
9
2.66
Beijing
8
1.78
Guangdong
8
5.71
Zhejiang
8
3.46
Shanghai
7.5
2.01
14
Content
Our Momentum in China
Outlook Market Development
Investments Volkswagen Group China
Driven by Design and Technology
Financial results, challenges and opportunities
15
Go West and Go South Strategy for further growth
Changchun
Urumqi
Beijing
“Go West Strategy”
Chengdu
Yizheng
Shanghai
Nanjing
Changsha
Ningbo
“Go South Strategy”
Foshan
Existing vehicle production site
New vehicle production site
16
Capacity expansion plans – on the way to 4 million units in 2018
Standard capacity of 250 working days
4 million units
Changsha
Urumqi
Ningbo
Urumqi
Ningbo
2.6 m
Yizheng
Nanjing
SVW
Yizheng
Nanjing
Upward
flexibility
Yizheng
Nanjing
Shanghai
Shanghai
Shanghai
Foshan
Foshan
Chengdu
Chengdu
FAW-VW
Chengdu
2012
Production
Changchun
Changchun
Changchun
2012
Capacity
2015
Capacity
2018
Capacity
Capacity expansion plans are based on certain assumptions for the development of unit sales growth, upward
flexibility (e.g. additional working days) and downward flexibility (e.g. postponement of expansion steps) are given.
17
Implementation of MQB*) toolkit in Chinese production network
Changchun
Urumqi
Beijing
Chengdu
Nanjing
Changsha
Yizheng
Shanghai
Ningbo
Foshan
MQB provides
substantial
efficiency gains
Reduction of unit costs
Lower one-off expenditure
Less engineered hours per
vehicle
Significant weight and
emission reduction
Toolkit affords
Flexibility in length, height,
width
Significant economies of
scale
Golf
A3
Octavia
Opportunity for low volume
niche models
Alternative powertrain
concepts
*) MQB:
Existing production site
New production site
MQB production site
Modularer Querbaukasten / modular transversal toolkit
Start: 2013
18
Further strengthening of partnerships with SAIC and FAW
SAIC
Signing ceremony April 23rd, 2012
in Wolfsburg
Agreement about Urumqi plant
FAW
Signing ceremony April 23rd, 2012
in Wolfsburg
Intention to extend JV contract with FAW
19
Volkswagen Group China: Planned product portfolio in 2015 with more
than 90 models
Commercial
Vehicles
CKD >30
Note: number of product models
FBU
>60
>90
20
Significant growth of dealer networks planned*)
>3,000
2,054
*) Map includes only Volkswagen, Audi and Škoda dealers; discrepancies may occur due to reporting backlog
21
Content
Our Momentum in China
Outlook Market Development
Investments Volkswagen Group China
Driven by Design and Technology
Financial results, challenges and opportunities
22
Volkswagen Passat – Special design elements for Chinese customers
Radiator grill
Tail lamps
Speaker covering
Wheel program
Passat USA
Passat China
23
Latest powertrain and vehicle technologies of the Volkswagen Group for
China
Powertrain Technologies




TSI®
Downsizing
DSG®
Optimized Automatic-Gearbox
Vehicle Technologies





Weight Reduction
Optimized Aerodynamics
Reduced electric power consumption
Start-Stop
…
 E-Mobility
24
Optimization of resource consumption in production process
– Example Chengdu –
Factories
Press Shop
Body Shop
Paint Shop
Infrastructure
Less:
Energy
CO2
Water
Waste
25
Content
Our Momentum in China
Outlook Market Development
Investments Volkswagen Group China
Driven by Design and Technology
Financial results, challenges and opportunities
26
Volkswagen Group China reported another strong operating result for
the business year 2012
Deliveries to Customers
Production (100%)1)
2009
2010
2011
2012
Q1/2013
(’000 Units)
1,400
1,923
2,259
2,813
769
(’000 Units)
1,387
1,914
2,202
2,643
733
(€ m)
831
1,907
2,616
3,678
1,156
1) SVW Group/FAW-VW Group
Operating profit (quotal)
27
Challenges in a regulatory environment
Risk of restrictive policies for new car sales in
developed Eastern Megacities
Demanding requirements for fleet consumption
Quota
240k cars/year
Beijing
Shanghai
< 120k cars/year
(not fixed)
Guangzhou
120k cars/year
Additional megacities like Hangzhou, Shenzhen, Xi'An et al.
are expected to introduce similar restriction measures
Details for Phase IV still under review
28
Volkswagen Group China has relevant strategies in place
Future growth prospects also coming from less
developed regions and Tier 2-3 cities
Different measures in place to realize the ambitious
fleet consumption targets
Engine and
transmission
technology
Recuperation
TSI
Start-Stop
Downsizing
Optimal ATM
Dual clutch
transmission
“Go West Strategy”
Vehicle
measures
Weight reduction
Aerodynamic optimization
Reduction of electric
consumption
“Go South Strategy”
Hybrid EVs
E-Traction
BEVs
Plug-in hybrid EVs

Production and Dealer network extension will support
Growth in Western and Southern provinces

New technologies and products will help to achieve targets
29
Additional business opportunities
Financial Services expects increase
in retail finance share2)
Growing Chinese used car market
Total Used Car Market forecast1)
2012
2018
20.0
million units
+30% p.a.
2.4
2010
2012
2014E
2016E
2018E
Roll out and Implementation of the
successful Volkswagen Group used
car brand “Das WeltAuto” in the
Chinese dealer network
1) Source:
China Automotive Dealer Association
cash buyer dominance
stronger finance demand
expected
Volkswagen Financial Services also aims to establish
- Mobility packages
- Long Term Rental & Fleet Business
- Insurance Related & After Sales Services
2) Based
on the total passenger car sales in the market China
30
Volkswagen Group China is well positioned to maintain its number one
position in the market and seize additional opportunities in the future
Volkswagen Group China
3,5
3
Delivered vehicles in
million units
2,5
2
1,5
1
0,5
0
31
Disclaimer
This presentation contains forward-looking statements and information on the business development of
the Volkswagen Group. These statements may be spoken or written and can be recognized by terms such
as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will” or words with
similar meaning. These statements are based on assumptions relating to the development of the
economies of individual countries, and in particular of the automotive industry, which we have made on
the basis of the information available to us and which we consider to be realistic at the time of going to
press. The estimates given involve a degree of risk, and the actual developments may differ from those
forecast.
Consequently, any unexpected fall in demand or economic stagnation in our key sales markets, such as in
Western Europe (and especially Germany) or in the USA, Brazil or China, will have a corresponding impact
on the development of our business. The same applies in the event of a significant shift in current
exchange rates relative to the US dollar, sterling, yen, Brazilian real, Chinese renminbi and Czech koruna.
If any of these or other risks occur, or if the assumptions underlying any of these statements prove
incorrect, the actual results may significantly differ from those expressed or implied by such statements.
We do not update forward-looking statements retrospectively. Such statements are valid on the date of
publication and can be superceded.
This information does not constitute an offer to exchange or sell or an offer to exchange or buy any
securities.
32
Industrial stock level by end of March 2013 remained at 1.8
Current stock level (in months) of major OEMs
(>1.5)
4.3
(3.3)
(1.3~1.5)
(<1.3)
4.0
(2.6)
3.2
(2.6)
1.9
1.8
1.7
1.7
1.7
1.6
(1.6) (1.8)
(1.6) (1.7) (1.4) (1.3)
1.6
1.6
1.6
(1.6) (1.3) (1.5)
1.5 1.4
(1.2) (1.2)
1.3
1.3 1.2
(1.1) (1.2) (1.1)
Comp. Comp. Comp. Comp. Industry Comp. Comp. Comp. Comp. Comp. Skoda Comp. Comp.FAW-VW SVW
1
2
3
4
5
6
7
8
9
10
11
VW
VW
Source: CPCA, / VGC stock figures based on internal report.
1.1
1.1
1.1
(1.1) (1.0) (1.1)
Audi Comp. Comp. Comp. Comp.
12
13
14
15
Volkswagen Group
(x.x) stock level by end of December 2012
*Stock level =month-end stock / average 3 month AaK.
All brands refer to CKD only
33