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Overseas Prospects for the Chinese Automotive Industry: Exports and New Opportunities Developing
for Overseas Operations
Lin HuaibinSenior Market Analyst
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Content
• Vehicle Export 2003–2008
• Export Destination and OEMs Export Performance
• Chinese OEMs Global Footprint
• Export Forecast 2009–2014
• Export Prospect in EU and the U.S.
• Mergers and Acquisitions
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
20052003 2004
2007
2006
2008
6%
12%
18%
36%31%
27%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
50
100
150
200
250
300
Thou
sand
s
PC Export Volume As of Total Vehicle Export
Passenger Car Export 2003–2008
NOTE: Number Including Honda Fit Export
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Passenger Car Export Destination by Region 2007–2011
13%
5%
57%
12%
13%
18%
3%
46%
17%
3%
10%
2%
21%
6%
38%
21%
3%
9%
2%
20%
7%
32%
28%
2%
6%
4%3%
6%
3%
27%
34%
7%
20%
0% 20% 40% 60% 80% 100%
Africa
Asia
East Europe
Middle East
North America
South America
West Europe
2007 2008 2009 2010 2011
NOTE: Chinese OEMs Only
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Passenger Car Export Destination by Country 2008–2011
3%2%
9%1%
17%
8%26%
3%8%
3%2%
11%3%
5%21%
11%9%
14%
2%21%
2%1%
12%2%
2%27%
7%8%
11%
1%27%
2%1%
12%2%
3%28%
9%8%
10%
1%25%
19%
3%
0% 20% 40% 60% 80% 100%
Chile
Colombia
Egypt
Malaysia
Mexico
Middle East
Russia
South Africa
Ukraine
Venezuela
Other
2008 2009 2010 2011
NOTE: Chinese OEMs Only
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Passenger Car Export Performance by OEMs’ Sales Volume 2007–2011
3 1
99
16 19
0 16 4
117
28 216 13 3
61
15 11 8 23 4
110
23 29
3 6413
181
57 54
6 10
0
20
40
60
80
100
120
140
160
180
200
BYD
CHAN
GAN
CHER
Y
GEEL
Y
GREA
TWAL
L
FAW
TIA
NJIN
ZHON
GHUA
Thou
sand
s Y2007 Y2008
Y2009 Y2010
Y2011
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Export Performance by OEMs’ Market Share 2007–2011
0% 10% 20% 30% 40% 50% 60% 70% 80%
BYD
CHANGAN
CHERY
GEELY
GREATWALL
ZHONGHUA
Y2007 Y2008 Y2009 Y2010 Y2011
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Export Performance by Model in 2007–2011
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
CHERY A-15
CHERYQQ3
GEELYFREE
CRUISER
CHERY A-5
CHERYQQ6
CHERYA1
GEELYKING
KONG
BYD F3
Y2007 Y2008 Y2009
From 2010
Sal
es U
nits
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Export Performance by FOB Pricing 2005–2007
0 2000 4000 6000 8000 10000
Russia
Ukraine
Venezuela
Syria
Algeria
Egypt
Chile
Colombia
Average
Unit:USD
Y2005 Y2006 Y2007
Average FOB Increased Partly due to USD Depreciation
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Footprint in Africa
• Chery production in Egypt began in 2006• Chery sales in Egypt were approximately 12,000 units in 2008• China Brilliance production in Egypt began in 2006• Lifan should commence production in Egypt and Ethiopia by Q4• Chinese OEMs sales in Egypt are expected to reach 36,500 units by 2011
• Chery production in Egypt began in 2006• Chery sales in Egypt were approximately 12,000 units in 2008• China Brilliance production in Egypt began in 2006• Lifan should commence production in Egypt and Ethiopia by Q4• Chinese OEMs sales in Egypt are expected to reach 36,500 units by 2011
• Chinese OEMs sales in South Africa were approximately 15,000 units in 2008 (Geelyaccountedfor 40%)• Chinese OEMs in South Africa expected to reach 25,500 units by 2011
• Chinese OEMs sales in South Africa were approximately 15,000 units in 2008 (Geelyaccountedfor 40%)• Chinese OEMs in South Africa expected to reach 25,500 units by 2011
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Footprint in Southeast Asia
20072009Vietnam
2008Thailand
20102010Taiwan
20072005Pakistan
20082009Malaysia
20092006Indonesia
• Chinese OEMs’ market share will remain modest due to political constraint (e.g. Malaysia) and local market structure(e.g. Thailand)• Chinese OEMs’ sales in ASEAN were around 4,600 units in 2008 but expected to reach 19,000 units by 2011
• Chinese OEMs’ market share will remain modest due to political constraint (e.g. Malaysia) and local market structure(e.g. Thailand)• Chinese OEMs’ sales in ASEAN were around 4,600 units in 2008 but expected to reach 19,000 units by 2011
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Footprint in Middle East
• CKD assembly of Cherybegan in Iran in Q3 2003• Production of Lifan 520 is scheduled for 2009 in Iran• Production of ChangAnBenben will begin in Iran in 2010• UAE is the largest market for Chinese OEMs in 2008, whose sales topped 15,000 units• Chinese OEMs sales in Middle East stood at 30,000 units and are expected to surpass 78,500 units by 2011
• CKD assembly of Cherybegan in Iran in Q3 2003• Production of Lifan 520 is scheduled for 2009 in Iran• Production of ChangAnBenben will begin in Iran in 2010• UAE is the largest market for Chinese OEMs in 2008, whose sales topped 15,000 units• Chinese OEMs sales in Middle East stood at 30,000 units and are expected to surpass 78,500 units by 2011
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Footprint in Europe
• Chery production in Russia and Ukraine began in 2006 but halted in late 2008• Geely production started in Russia in 2006 but stopped in 2008• Chery started assembling Tiggo in Italy via DR in 2007• Greatwall production in Russia and Ukraine started in 2007 but stopped in 2008• Greatwall will begin production in Bulgaria in 2009•Chinese OEMs export to East Europe currently is 80,000 units and could reach 88,000 units by 2011• Export to West Europe is around 3,000 units and could reach only around 7,500 units by 2011
• Chery production in Russia and Ukraine began in 2006 but halted in late 2008• Geely production started in Russia in 2006 but stopped in 2008• Chery started assembling Tiggo in Italy via DR in 2007• Greatwall production in Russia and Ukraine started in 2007 but stopped in 2008• Greatwall will begin production in Bulgaria in 2009•Chinese OEMs export to East Europe currently is 80,000 units and could reach 88,000 units by 2011• Export to West Europe is around 3,000 units and could reach only around 7,500 units by 2011
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Footprint in South America
• Chery production in Uruguay began in 2008 and vehicles are exported to Argentina• Chery production in Brazil could start in 2010• In 2008,Chinese OEMs sales in Chile, Colombia and Venezuela reached around 5,000 units, 5,720 units and 4,500 units respectively• Chinese OEMs sales could decline to 19,000 units by 2011
• Chery production in Uruguay began in 2008 and vehicles are exported to Argentina• Chery production in Brazil could start in 2010• In 2008,Chinese OEMs sales in Chile, Colombia and Venezuela reached around 5,000 units, 5,720 units and 4,500 units respectively• Chinese OEMs sales could decline to 19,000 units by 2011
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Footprint in North America (Mexico)
• There are uncertainties regarding ChangAn and FAW production plan in Mexico which was scheduled for 2010• Chery’s and Chrysler’s joint project to introduce Chery vehicles in Mexico failed in 2008• Chinese OEMS’ export to Mexico could stand around 6,000 units on assumption of CBU export
• There are uncertainties regarding ChangAn and FAW production plan in Mexico which was scheduled for 2010• Chery’s and Chrysler’s joint project to introduce Chery vehicles in Mexico failed in 2008• Chinese OEMS’ export to Mexico could stand around 6,000 units on assumption of CBU export
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Passage to the West: Rocky Road
Emission
EU: EUROV (2009)/EUROV+(2011)
U.S.: Tier II/California (ZEV)
Safety Warranty
EURONCAP/NHTSA/IIHS
Anti-Corrosion WarrantyPowertrain WarrantyEmission Warranty
Lack of Competitiveness in spite of Improving
Safety
No EUROIV Engine Available
No Anti-Corrosion Warranty
No Powertrain WarrantyNo Emission Warranty
After Sales Service Dealer Management System Brand BuildingPlus
Export to Western Europe and the U.S. Can Be Expected Only After 2013
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
2005 2006
Set Up Europe Design Center in Turin, Italy
CHAN’AN
Set Up Design Center in Tokyo,
Japan
JiangHuai JiangHuai
R&D: Eager to Catch Up
Set Up Europe Design Center in Turin, Italy
2007
Set Up Ricardo 2010 in the U.K. Set Up SAIC
MOTOR U.K. Technical
Center (Birmingham)
Chan’An BenBenROEWE 750
ROEWE 550
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
New Model Launches in China by Country of Origin in 2009
Models to be launched by Chinese OEMs are usually designed to meet EUROIV and the latest EU safety standards. By meeting these standards, market share of Chinese OEMs is growing, thereby helping to increase export volumes.
30
10
7
1
7
0
5
10
15
20
25
30
35
CHINA JAPAN EUROPE US KOREA
JAC B MPV
Chery A6CC
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Passenger Car Export Forecast
203
107
201
293
471
603
0
100
200
300
400
500
600
700
2008 2009 2010 2011 2012 2013
thou
sand
s
Note: Export Volume ex. Export from Global OEMs
By 2013, passenger car exports by Chinese OEMs will pass half a million units as more models with improving design and quality will be launched abroad
By 2013, passenger car exports by Chinese OEMs will pass half a million units as more models with improving design and quality will be launched abroad
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Global OEMs Export from China
• Honda exported approximately 45,000 units of Jazz to Europe in 2008 (CBU likely to decline in 2010 after the start of UK assembly)• GM exported around 20,000 units of Lova and Aveo to Eastern Europe and South America in 2008. GM plans to export its NGS model from China mainly to emerging markets in 2010. Exports to the U.S. planned in 2011.
• Honda exported approximately 45,000 units of Jazz to Europe in 2008 (CBU likely to decline in 2010 after the start of UK assembly)• GM exported around 20,000 units of Lova and Aveo to Eastern Europe and South America in 2008. GM plans to export its NGS model from China mainly to emerging markets in 2010. Exports to the U.S. planned in 2011.
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Mergers and Acquisitions
•To Buy?
•Or Not To Buy?
Chinese Brands Indicated in the potential M&A
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Mergers and Acquisitions
International Management Experience and Cultural Difference
Labor UnionProduct Integration
At this stage, Chinese OEMs have no adequate experience in handling these hurdles to avoid the failure of SAIC-Ssangyong Alliance
At this stage, Chinese OEMs have no adequate experience in handling these hurdles to avoid the failure of SAIC-Ssangyong Alliance
Brand Positioning
Copyright © 2009 IHS Global Insight. All Rights Reserved. GLOBAL AUTOMOTIVE CONFERENCE
Summary
• Emerging markets will remain the major export destination of Chinese OEMs for the next 5 years
• The dominance of Chery, Geely and Greatwall in the export market will be weakened as more Chinese OEMs will make inroads into overseasmarkets
• Although we will see more Chinese OEMs setting up plants overseas, market entry into the West will not be significant before 2013
• By 2013, passenger car export by Chinese OEMs will pass half a million units as models with improved design and quality will belaunched abroad
• There is uncertainty regarding whether China will become an increasingly important export base for Global OEMs due to GlobalOEMs’ capacity constraint and current foreign ownership restriction
• It is still premature for Chinese OEMs to acquire Global OEMs at this stage due to lack of expertise in managing large-scale international operations