2015-12 carmakers___world.pdf

Global Markets And Competition

Report code:

Analyst:

Publication date:

Market Analysis – 2015-2020 Trends –

Corporate Strategies

Carmakers - World

5XMTR03

Kathryn MCFARLAND

December 2015

z

The 5 phases of Xerfi Global’s

Global Markets And Competition reports

This is a collective report written

under the supervision of: Kathryn MCFARLAND

Other contributors include:

Alberto BALBONI

James BULLOCK

Mihai FRENT

Alessandro SCHILIRO

2 Carmakers – World – December 2015

1

2

3

4

5

Identification of the playing field At Xerfi Global, we believe that international classifications are not the only valid definition of a market. It

is the companies that make the sector and not vice-versa. During our first brainstorming session, we

strive to give a clear-cut definition of the scope of the report.

Identification of market leaders During the second phase, Xerfi Global’s analysts identify the players who will be studied in the report. Our

aim is not only to classify by total sales, but also to detect tomorrow’s movers and shakers, especially

those from emerging markets.

Identification of the main market indicators Using the best and most up to date international sources, Xerfi Global’s experts handpick the most

relevant indicators pertaining to both supply and demand.

Identification of corporate strategies During a further brainstorming session, the Xerfi Global team aims to decipher the main corporate

strategies and key future trends.

Identification of the key conclusions Thanks to a final brainstorming session, drawing on the knowledge of all the members of Xerfi Global, the

main conclusions are debated and ultimately summed up in no more than a dozen slides. Concision,

precision and accurate forecasts are our main aims.

Table of Contents

Carmakers – World – December 2015 3

0. Conclusions 4 1. Market Fundamentals 15

1.1. Overview 16

1.2. The industry 18

2. Market Environment and Prospects 27 2.1. Market Overview 28

2.2. Demand 46

2.3. Supply 51

2.4. International Trade 55

3. Corporate Strategies and Competition 60 3.1. Competitive Environment 61

3.2. Structure of Competition 75

3.3. Corporate Strategies 91

4. Case Studies 109

5. Company Profiles 116 5.1. Volkswagen Group 117

5.2. Toyota Motor 129

5.3. General Motors 140

5.4. Hyundai Motor Company 151

5.5. Nissan Motor 161

5.6. Renault Group 164

5.7. Ford 167

5.8. BMW 176

5.9. Honda 179

5.10. PSA 182

5.11. FCA 185

5.12. Tata 189

5.13. SAIC 192

5.14. Geely 195

5.15. Tesla 198

6. Statistical Appendix 201

7. Sources 212

8. Annexes 216

0. Conclusions


Key Trends 2015 – 2020

• Having reinvented itself after the global financial crisis and put into place deep structural changes that should have set the stage for more sustained growth, the current challenge facing the world automobile market is the volatility of demand combined with disruptive forces such as stricter regulations, changing technology and more sophisticated customer expectations.

• The uncertain future of emerging markets, particularly China, now the world’s biggest car market, which seems to be running out of steam, leaves question marks hanging over the future growth of the industry. Automotive sales are therefore expected to be slow-growing over the next five years, despite some revival of mature markets.

• At the same time, carmakers are coming under pressure to invest heavily in new technology. Environmental and safety regulations are becoming stricter and, in addition to this, customers are demanding more connectivity, automatism as well as alternative mobility services. Such regulations and requirements create technological challenges and require considerable investment and thus costs which carmakers have difficulty passing on to customers given the highly competitive nature of the industry.

• Cost pressures will mean that modular systems and high-volume global platform architectures will be the norm. A new wave of consolidation via alliances and mergers may also be on the horizon so as to take advantage of synergies and share the burden of investment.

• As a result of the increased technological content in the value of cars, highly-specialised suppliers will become valuable partners, and new entrants, in the form of technology companies, are bound to come onto the scene. Vehicles will eventually be perceived less as products and;

- firstly, more as part of a service as car-sharing and mobility options increase in popularity and,

- secondly, as platforms for connectivity technology, which in turn will prove to be a major source of added-value.

• The premium sector will continue to attract attention from carmakers thanks to its higher margins. At the other end of the spectrum, the small car segment will also continue to grow.

• Despite the pressure facing the industry, governments are unlikely to let the industry suffer given its economic weight and are likely to take measures to support the industry should it run into considerable trouble.


Globally, car sales are growing, but at a slower rate

Passenger car and commercial vehicle world production

unit: million vehicle units

Source: Xerfi Global with OICA, *Xerfi Global forecast

0

20

40

60

80

100

120

2015:

91.2m

units


2005:

66.7m

units

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Growth in passenger car and commercial vehicle world production


unit: annual growth in %

Carmakers’ profits are being squeezed in a highly-competitive environment

Aggregate profitability (operating margin) of analysed companies

unit: operating margin over net revenue; percentage change

Source: Xerfi Global with companies


2%

3%

4%

5%

6%

7%

8%

2010 2011 2012 2013 2014

3.3% -9.1%

16.8%

Intense competition means that the automobile industry reports relatively low profits, which

have hovered just over 5% on average over the last 5 years. Considerable investment in

globalisation as well as compliance with stringent fuel emission standards and fuel efficiency

requirements represent considerable structural costs for companies, weighing down on their

profits. From 2014, the deceleration in the Chinese market, in which companies have invested

heavily, has also led to a drop in profits for companies exposed to this market.

-2.8%

Regulations and innovation carry a heavy cost, weighing down on profit…

Regulations and innovation requirements that increase investment needs

Source: Xerfi Global with FCA


Environmental

regulations Safety regulations Connectivity

Stricter emission

regulations mean

carmakers must invest

in new powertrain

development as well as

weight-saving

technologies.

Stricter safety

regulations mean that

carmakers must

develop and fit state-

of-the art technologies.

Increased interest in

telematics, infotainment

and autonomy requires

considerable

investment.

Increased costs for carmakers that are difficult to pass on to end customers, given the highly

competitive nature of the business.

Customer expectations Regulations

… and to complicate matters, the world’s largest market, China, is slowing

Main markets according to new vehicle registration or sales

unit: million vehicle unit sales in 2014

Source: Xerfi Global with OICA


0 5 10 15 20 25

Italy

France

Russia

UK

India

Germany

Brazil

Japan

US

China

0%

10%

20%

30%

40%

50%

60%

Year-on-year growth in registration or sales of new vehicles in China

unit: %


China accounted for 26.6% of vehicle sales in 2014

making it, by far, the world’s largest market…

… but China is now running out of steam due to slower economic growth coupled

with anti-pollution and anti-corruption regulation putting

the brakes on demand.

Large, premium and geographically-balanced makers are best placed

Overview of factors allowing carmakers to remain profitable in the current market environment

Source: Xerfi Global


The currently difficult environment with

slowing demand and high-investment

requirements brings…

…a more pressing need to enter

into partnerships to share the

burden of investment

…a more pressing need to cut

costs and increase efficiency via

the use of platforms and

standardisation

…increased political involvement (which can however both favour or

penalise carmakers)

…increasingly fierce competition

for market share

…a greater interest in premium

cars, which generate higher

margins

THOSE BEST ABLE TO WEATHER THE STORM ARE CARMAKERS WITH:

• SUFFICIENT SCALE TO ACHIEVE HIGH-EFFICIENCY AND TO MAKE HEAVY INVESTMENT WORTHWHILE

• PREMIUM BRANDS

• A BALANCED GEOGRAPHIC PRESENCE WHICH CAN ADAPT TO VOLATILE REGIONAL MARKETS

Increased innovation will gradually shift general perceptions of cars

The traditional and possible future perceptions of vehicles



TRADITIONAL

PERCEPTION

OF VEHICLES

PERCEIVED AS A PRODUCT FOR TRANSPORTING INDIVIDUALS

PERCEIVED AS PART OF A SERVICE (CAR SHARING, MOBILITY

SERVICES COMBINED WITH PUBLIC TRANSPORT)

PERCEIVED AS A PLATFORM FOR

NEW TECHNOLOGY (I.E.

CONNECTIVITY, SELF-DRIVING

CARS ETC.) WHICH IS WHAT

PROVIDES THE ADDED VALUE

TIME

POSSIBLE

FUTURE

PERCEPTIONS

OF VEHICLES

Such a shift is to

change carmakers’

competitive

environment and

focuses considerably

Carmakers’ financials are moving at different speeds

Key performance indicators and main growth drivers of leading global carmakers

units: billion euros, compound annual growth rate (CAGR) of sales in percentage, operating profit as a percentage of sales


COMPANY 2014

SALES

2010-2014

SALES CAGR

2014

OPERATING

MARGIN

2010-14

AVERAGE

OPERATING

MARGIN

KEY GROWTH AND PROFITABILITY DRIVERS

Volkswagen 202.46 12.4% 6.3% 6.2%

•Volkswagen sold over 10m cars worldwide, spanning from passenger cars to heavy

commercial vehicles. On a geographical basis, revenue growth was chiefly fuelled by Asia-

Pacific and North America.

•Deliveries in all of its main brands have gone from strength to strength. However, the Audi

brand was the fastest growing, with the pace of volume sales rising 12.9% on annual average

over the 2010-2014 period.

Toyota Motor 194.01 9.4% 10.1% 6.4%

•Toyota has been reinforcing its manufacturing operations across the globe, with a focus on

key growth markets in Asia. Revenue in Asia (excluding Japan) has grown faster than in all

other regions (13.3% on average per year over 2010-2014).

•In 2014, North America outpaced Japan as Toyota’s largest regional market, with a 34.6%

slice of revenue (compared to 30.6% for Japan).

GM 116.57 3.6% 2.6% 4.2%

•The decrease in petrol prices over the past years has reignited demand for SUVs and pick-up

trucks in North America, giving GM a revenue boost.

•Additional tailwinds came from China where the group runs operations through a multitude

of joint ventures so as to develop vehicles that respond to the needs of Chinese drivers. GM

and it partners sold 3.5m cars in China in 2014 – second only to the Volkswagen group which

delivered 3.68m units.

Ford 107.71 2.8% 2.7% 4.9%

•Growth has been somewhat hampered due to a drop in market share in the US and sales in

Europe and South America combined with a weak presence in emerging markets as well as an

increase in the cost of goods that has not been transferred to customers. Ford also suffered

from considerable recall costs in 2014.

FCA 96.09 27.9% 3.5% 3.9%

•Sales have been following an upward trend in the last five years primarily due to Chrysler's

sales in the consolidated accounts. Fiat hit the jackpot with its acquisition of Chrysler, whose

strong sales in the US have helped it to weather the European slump. Profit slowed in 2013

and 2014, mainly due to costs related to purchasing shares of stock from the UAW Retiree

Medical Benefits Trust and higher recall costs.


With car mix skewed towards small cars, Hyundai is very cost-efficient…




COMPANY 2014

SALES

2010-

2014

SALES

CAGR

2014

OPERATING

MARGIN

2010-14

AVERAGE

OPERATING

MARGIN


Honda 94.63 10.5% 5.0% 5.4%

•Net sales picked up in 2012 after dropping to a low in fiscal 2011 due, firstly, to temporary supply

chain disruptions caused by the Great East Japan Earthquake and the floods in Thailand and,

secondly, sluggish economic conditions in Europe and the US and slowed growth in Asia. They have

followed an upward trend since then thanks to strong sales in Japan and the US, as has profit, with

the exception of a drop in operating profit in 2014 when teething problems at a new plant in Mexico

dented sales and profit in the US.

Nissan 80.76 6.7% 5.2% 5.5%

•In recent years, Nissan has enjoyed strong revenue growth in the US and China – they were the

group’s largest markets in 2014, accounting for 26.1% and 23.0% respectively of total sales volume.

•Over five years, Nissan has increased its global presence, encompassing a 6.2% share of the global

car market in 2014, compared to 5.8% in 2010.

SAIC 76.17 19.7% 2.4% 4.4%

•While sales have seen continued growth over the last five years, profit has been dropping since 2011

due to increasing competition from local rivals and a slowing Chinese economy and this has been

exacerbated in 2015 with its joint ventures with General Motors and Volkswagen having to cut car

prices to rev up sales amidst China’s huge economic deceleration.

Hyundai

Motor 63.64 7.4% 8.5% 9.4%

•Hyundai has recorded the highest profitability among leading car manufacturers – its production

facilities are located mainly in low-cost countries (China, India, the Czech Republic, Russia, Turkey and

Brazil) and its product mix includes largely small-sized vehicles.

PSA 53.61 -1.1% 1.8% 0.0%

•PSA makes around 70% of its sales on the European market, making it highly-exposed to the slump

in demand in this region. Sales therefore dropped in 2012 and the company haemorrhaged €3bn of

cash due to a high cost base with unused capacity. The subsequent return to profit is attributable to

the positive product and price mix resulting from the success of launches and from the pricing power

policy as well as reductions in fixed costs.

Renault 41.06 1.3% 3.9% 2.8%

•Renault’s entry level vehicles (Clio, Duster, Logan, Sandero…) continued to drive overall performance,

accounting for 42% of 2014 sales volume.

•The Renault group sold 2.71m vehicles in 2014. Dacia-branded cars drove volume sales, rising 10.4%

on annual average, since 2009.


… while BMW reaps the rewards of higher premium margins




COMPANY 2014

SALES

2010-

2014

SALES

CAGR

2014

OPERATING

MARGIN

2010-14

AVERAGE

OPERATING

MARGIN


TATA 34.89 19.5% 9.1% 8.9%

•Tata’s sales and profits have been constantly improving over the last five years, but this has been

primarily fuelled by British subsidiary Jaguar Land Rover while domestic business has been making

losses due to a slowdown in demand in the ailing Indian automotive industry coupled with increased

competition.

Kia Motors 33.58 7.1% 5.5% 6.9%

•The US and China have been the group’s largest markets in terms of volume, followed by South

Korea and Europe.

•Despite higher volume sales, the company recorded weaker performance in 2014, impacted by the

rise of the Korean Won and the fall of the Russian Rubble.

BMW 8.04 7.4% 11.0% 10.3%

•BMW focuses exclusively on premium automobiles under just three brands, generating strong

brand value. The Mini brand has allowed it to increase its market share in the expanding small car

market. It has offset dropping demand in Europe and the US by exporting to emerging markets. The

company enjoyed record sales in 2014 with strong demand from China, Britain and the US.

Geely 2.64 4.4% 4.0% 6.5%

•Geely had seen huge growth up until 2014. It should however be noted that this has not only been

fuelled by higher sales values and increased shares in operating subsidiaries but also thanks to

generous subsidies handed out by the Chinese government.

•Sales slowed sharply in 2014 due to deteriorating political and economic conditions in its major

export countries, meaning exports fell by 50%. In China, Geely’s sale also dropped by 16.8%. As a

result of this as well as due to an unrealised foreign-exchange loss at its Russian subsidiary, profit

also fell in 2014.

Tesla 2.39 128.8% -6.9% -18.1%

•Having only launched its first vehicles in 2008, and following a high-price, low-volume business

model, sales have only just taken off and profit margins are yet to become positive due, not only to

fledgling sales but the continued high amount of investment required to develop the supercharger

network, improve batteries and expand the distribution network.


1. Market

Fundamentals


1.1. Overview Key characteristics

Over one in four car sales is made in China



89.73

million

17.4%

42.1%

42.5%

China

… vehicles (car and commercial vehicles) were produced worldwide

in 2014. This represents a 2.8% increase on 2013.

… of the world’s population owns a vehicle.

… of vehicles were produced in Europe and North America, the

industry’s traditional industrial bases.

… of vehicles were sold in Europe and North America, the industry’s

traditional major markets.

… is now the world’s largest car market, accounting for 27% of

sales.

1.1. Overview Key characteristics

Conditions have pushed the industry to become increasingly efficient


Scope of the report

This report analyses the leading manufacturing companies in the automotive industry.

Some of these are very large groups with operations including motorbikes (BMW) or truck

and bus manufacturing (GM). However, the focus of this report is on the passenger car and

light commercial vehicle market.

The recession accelerated structural

change

Not only did the global financial crisis and recession shake up the industry through

numerous bailouts and acquisitions, but it also forced many carmakers to reinvent

themselves, rethink their organisation and take a careful look at their cost structure as well

as their strategy. They have also been pushed to raise standards of quality and productivity

while keeping down prices.

Slowing emerging markets hang

over the industry

Developing markets have proved to be very fertile ground for growth in the past few years

and thus creating scale in such markets has become a major focus for many major

carmakers. These markets (particularly China, the world’s largest vehicle market) are

however now showing signs of slowing meaning carmakers may need to redirect a

considerable part of their attention onto mature markets once again, where growth is less

about scale and more about on quality and innovation.

Platform sharing and

standardisation become key

As the industry faces increasing costs due to environmental and safety regulations and

competition becomes more heated, major carmakers are focusing on manufacturing a

larger volume of passenger cars on global platforms so as to achieve economies of scale

and cost-savings via standardisation.

High industry collaboration

A growing web of joint ventures, alliances and partnerships is seen in the industry and with

players from other industries as carmakers are more and more willing to share platforms,

resources and technology in order to decrease R&D and fixed costs, ensure their

geographical presence and obtain economies of scale.

1.2. The industry What are the main businesses?

Design, manufacturing, assembly and marketing are carmakers’ core activities

Simplified value chain of the automotive industry


FINANCING

ASSEMBLY

MARKETING

CAR PART MANUFACTURING

RESEARCH AND

DEVELOPMENT/DESIGN

NON-CORE

ACTIVITIES

Brand value and therefore marketing is of extreme

importance. Carmakers are among the world’s most valuable

brands.

Distribution to the final client through a dealer or possibly

directly in the case of fleet deliveries.

The carmaker then assemblies the parts. On rare occasions

this will be outsourced to suppliers (such as Magna).

Most carmakers offer lease and credit financing, which can

generate from around 5% to 15% of their revenue.

Innovation and improvements resulting from R&D are

applied to new and updated models.

DISTRIBUTION

Strategic parts (engines, transmission and body) tend to be

produced in-house while other components are outsourced

to suppliers.


CORE

ACTIVITIES

1.2. The industry Who are the suppliers?

Carmakers require a wide range of supplied components

Common automobile components with outsourcing and supplier concentration

Although carmakers tend to keep

strategic parts (engine, transmission

and body) manufacturing in-house,

they require suppliers for a myriad

of other parts.

There are several layers of actors in

the supply chain: tier 3 suppliers

who supply raw materials and

commodities, tier 2 suppliers who

produce subsystems, and tier 1

suppliers who produce whole

systems and sell directly to

carmakers.

The proportion of value added to

automobiles by suppliers has been

continuously increasing and

components sourced from suppliers

now account for around 80% of a

car’s component value.


Component Outsourcing Supplier

concentration

Glass parts ✚✚✚ ✚✚✚

Exhaust system ✚✚✚ ✚✚✚

Wheels and tyres ✚✚✚ ✚✚✚

Climate control/engine cooling ✚✚✚ ✚✚

Suspension ✚✚✚ ✚✚

Braking ✚✚✚ ✚✚

Steering ✚✚✚ ✚✚

Seatbelts ✚✚✚ ✚✚

Fuel systems ✚✚✚ ✚✚

Audio/telematics ✚✚✚ ✚✚

Interior parts ✚✚✚ ✚✚

Axles, driveshafts and components ✚✚ ✚

Electronics/Electrical ✚✚ ✚

Engine ✚ ✚

Transmission ✚ ✚

Body/structure ✚ ✚

Source: Xerfi Global with Bank of America Merrill Lynch, OESA

1.2. The industry Who are the clients?

Most cars are sold to retail customers through dealerships

Primary sales outlets of the automobile industry


The majority of cars pass through retail automobile dealers to be sold to individuals. Although manufacturers like Tesla have

been making waves with attempts to sell directly to retail consumers, dealers have put up a fight to ensure they are not

leapfrogged in the distribution chain and direct automobile sales are prohibited in many parts of the world through legislation

such as dealer franchise laws in the United States. Fleet sales are made through dealers or directly from the manufacturer.


Individual cars sold to clients through

car dealers

Fleets sold to

• companies

• governments

• rental agencies

• mobility schemes

Around

80% of

sales

Around

20% of

sales

1.2. The industry What are the main business segments?

Automotive companies primarily make cars and light vehicles

Main business segments of the automotive industry



AUTOMOTIVE COMPANIES

MOTORCYCLES

HEAVY

COMMERCIAL

VEHICLES (HCV),

BUSES

PASSENGER

VEHICLES

LIGHT COMMERCIAL

VEHICLES (LCV)

SCOPE OF THE REPORT

1.2. The industry What are the products?

There is a wide array of passenger car models

Passenger car euro market segments



A Mini cars Renault Twingo, Fiat 500

B Small cars Peugeot 208, VW Polo, Renault Clio

C Medium cars VW Golf, Peugeot 308

D Large cars BMW 3 series, VW Passat, Ford Mondeo

E Executive cars Mercedes E class

F Luxury cars Audi A8, BMW7 Series

S Sports coupés Audi R8 V10 plus

M Multi-purpose vehicles Renault Espace

J Sport utility vehicles (SUV) Honda CR-V

Segment Description Example

1.2. The industry Vehicle density

In developed countries, over half the population owns a vehicle

Vehicle density for selected countries and regions unit: car registrations per capita

Source: Xerfi Global with Statista, latest data


CIS, Turkey,

other Europe

25.3%

Africa

4.3%

Japan and South

Korea

54.4%

Central and

South

America

16.7%

EU and EFTA

56.4%

NAFTA

64.9%

Asia/

Oceania,

Middle

East

7.3%

1.2. The industry Who are the key players?

Top manufacturers are from developed markets

unit: number of vehicles produced


Global ranking of carmakers by 2014 production volume of passenger cars and light commercial vehicles


Ranking Company Country Passenger cars Light commercial

vehicles Total light vehicles

1 TOYOTA 8,788,018 1,405,072 10,193,090

2 VOLKSWAGEN 9,766,293 128,598 9,894,891

3 GM 6,643,030 2,951,895 9,594,925

4 HYUNDAI 7,628,779 280,684 7,909,463

5 FORD 3,230,842 2,643,854 5,874,696

6 NISSAN 4,279,030 796,992 5,076,022

7 FIAT 1,904,618 2,812,345 4,716,963

8 HONDA 4,478,123 35,646 4,513,769

9 SUZUKI 2,543,077 473,633 3,016,710

10 PSA 2,521,833 395,213 2,917,046

11 RENAULT 2,398,555 363,414 2,761,969


Leading automobile companies focus on different market tiers

Leaders’ market positioning, profitability and strategies



EMERGING MARKET MASS-MARKET PREMIUM

Leaders’ positioning

Profitability

Market tier

Principal market strategies

SCALE

DIFFERENCIATION

SALES AND TECHNOLOGY

TRANSFER THROUGH JOINT

VENTURES

BRAND VALUE

INNOVATION

The world’s top ten carmakers account for 73.4% of production, making the

industry fairly concentrated.


The top 10 automakers account for almost three-quarters of production

Production of top 10 carmakers and other carmakers in 2014 unit: % of vehicle units



Top 10 carmakers: 73.4%

Other carmakers 26.6%

2. Market Environment

and Prospects


2.1. Market Overview PESTEL analysis

Wealth is the main driver of car sales and politics protects it

PESTEL analysis of the automotive industry


POSITIVE NEGATIVE IMPACT

POLITICS

ECONOMY

SOCIETY

TECHNOLOGY

ENVIRONMENT

LEGISLATION

xxx

xxx

Urbanisation

Cars as a status symbol

Infrastructure improvement

Car dependency

Technological (connectivity, safety, fuel

efficiency) improvements to models allow for

increased sales opportunities

Eco-innovations open up new sales

opportunities

- +

- +

- +

- +

- +

- +

Protectionism impedes entry into new markets

Slowing emerging markets, which were

previously major growth markets

Improved public transport

Trend towards car-sharing

Changing social habits

Scandals and recalls lead to mistrust

The technological imperative will result in a

talent war

Strict regulations, such as on CO2 emissions,

increase R&D spending

Carmakers must keep up with gas emission

norms and safety standards

Government initiatives can encourage the

purchase of new vehicles – specifically eco-

vehicles

Governments protect the domestic industry

Recovering mature markets

Lower fuel prices encourage vehicle usage

2.1. Market Overview Key characteristics

Governments often step in when the economy lets the side down


Politics play a major role as the

industry is of strategic importance

The strategic importance of the automobile industry as a major source of direct and indirect

employment means it is rarely ignored by governments. Numerous examples of this were

seen during the recent financial crisis and subsequent recession, during which the American

government bailed out its car industry while EU states such as France, Spain, the UK and

Germany also set up initiatives to stir up demand to support national carmakers. This

protecting hand can also work against carmakers when it comes to expanding outside

national borders as tariffs, safety and environmental norms, certification and testing

requirements, luxury taxes, joint-venture or local part-sourcing regulations can be used and

abused to shield the domestic industry, blocking out outsiders.

Carmakers are also dependent on governments for alternative-fuel engine development,

whose success depends on the right recharging and refueling infrastructure, which can only

be established in collaboration with local and national authorities.

Economic prosperity is a major

growth driver

The car industry is cyclical in nature and depends on economic prosperity. Car sales have

globally recovered from the slump following the financial crisis. Improved finance conditions

are also helping to give sales a boost. Emerging markets have been an El Dorado for

carmakers over recent years although growth in the world’s hungriest car market, China,

seems to be slightly running out of steam. Nevertheless, mature market economies are

looking more positive, which indicates recovering demand for vehicles.

Mindsets regarding vehicles are

changing

Developed and developing world societies have different needs with regard to vehicles. In

the developed world, including countries with traditionally high car dependence such as the

US, Canada or Australia, the trend is moving towards smaller cars offering lower profitability

and even away from traditional individual car ownership and in the direction of car-sharing

and mobility solutions combining car usage with public transport. On emerging markets,

urbanisation and increasing wealth has allowed huge sales opportunities on all parts of the

spectrum (entry-, mid- and premium level). However, vehicle infrastructure development on

such markets cannot necessarily keep up with demand and public transport is liable to

improve, limiting sales growth.

High-profile vehicle recalls due to defects or events such as that of VW’s emissions scandal

can dent public confidence in the sector.

2.1. Market Overview Key characteristics

Environmental legislation is weighing increasingly heavily on the industry


Technology opens up new windows

for differentiation

Technological advances concerning energy efficiency, connectivity and safety allow

carmakers to tap into new market opportunities. The majority of carmakers are putting a

particular focus on alternative fuel hybrid and electric technologies. Connectivity is a

relatively new area of development and offers numerous ways of attracting new sales.

Carmakers are also starting to include vehicle-related technological services such as

mobility applications in their business, opening up an additional source of diversified

revenue.

Environment regulations put

considerable pressure on

carmakers…

Governments and supra-national authorities (such as the European Commission) are

pushing for cleaner transportation as vehicle emissions are responsible for a considerable

share of carbon emissions (12% in the case of Europe). This is a two-sided coin for

carmakers as it leaves them little choice but to invest considerably in research and

development to keep up with new standards but simultaneously opens up opportunities to

turn this to their advantage by offering new products liable to push consumers to upgrade

their vehicles. Consumers will be influenced by penalties and incentives such as low-

emission vehicle rebates, opening up new sales opportunities for carmakers.

… but also allows a window for

competitive advantages

The European Union has recently been trying to lower the level of CO2 emissions

European-made cars can emit. This has been met by strong lobbying by some

governments, such as that of Germany, fearful that its premium car industry would not be

able to adapt to such legislation in the given time period. Such a response demonstrates

not only protectionism but also that legislation can be a heavy burden for carmakers,

forcing them to rapidly adapt to increasingly stringent environmental and safety

regulations. The recent VM emissions scandal further shows to what extent carmakers are

prepared to go to so as to get around regulations. Nevertheless, those who manage to

stay ahead of the pack in terms of respecting regulations can benefit from a competitive

advantage in this regard.

2.1. Market Overview Focus on politics

Governments can ill afford carmakers’ collapse

unit: %

Source: Xerfi Global with ITC and Eurostat

Contributions of the automobile industry to Germany’s economy The automotive industry, a major employer with economic and political clout, has historically been close to governments’ hearts and thus susceptible to protectionism. The recent financial crisis saw governments come to the rescue in numerous countries. In countries such as Germany (where the car industry directly generates around 4.0% of the country’s GDP, 841,000 jobs and 11% of Germany’s exports) measures such as car-scrapping subsidies (admittedly not only limited to German brands) were put into place in the aftermath of the crisis to stimulate demand and the German government has equally lobbied against European emission regulations which would prejudice the industry. In the US, the Automotive Industry Financing Program (AIFP) was set up and invested $80bn to prevent the industry from collapsing, which would have threatened the overall US economy, leading to the loss of around one million US jobs and posing a risk to financial market stability.


…2% of its workforce

(841,000 jobs)

…4% of its GDP

…11% of Germany’s

exports

The automobile industry in Germany accounts for…


Protectionism measures have a flipside, blocking expansion

Governmental intervention measures that block carmakers’ international expansion


Government measures to protect domestic car industries of course have the downside of blocking out outsiders, thus limiting

international expansion. Car-making nations typically impose heavy tariffs on imports: the standard tariff for importing cars to

the US is 2.5% of their value while the European Union places a 10% charge on imported automobiles. Countries such as

China enforce considerable joint-venture requirements and local content rules to encourage carmakers to produce locally.

Emissions and safety requirements can also be used and distorted to prevent foreign cars from entering domestic markets.


TAFIFFS

JOINT-VENTURE REQUIREMENTS

LOCAL CONTENT RULES

VOLUNTARY EXPORT RESTRAINTS

EMISSIONS OR SAFETY REQUIREMENTS

INTERNATIONAL

EXPANSION


Government support is vital for alternative-fuel development…

Government measures that support alternative-fuel vehicle development


It is all very well for carmakers to develop vehicles with alternative-fuel engines, but such vehicles require infrastructure to recharge or refuel such as electric charging stations for electric vehicles or hydrogen sources for fuel-cell hybrid vehicles, without which vehicles cannot be commercialised successfully. Such infrastructure requires support from local, national and transnational authorities. Furthermore, given the high costs of research and development for such technology, carmakers also tend to require assistance at the beginning of the learning curve before reaching scale. Government legislation and initiatives (such as subsidies for eco-car purchases) can also determine whether demand is sufficient to warrant investment in alternative-fuel vehicles, particularly during periods of low petrol prices, as is currently the case.

Research and

development

support

Environmental legislation

(emission reduction

requirements)

Subsidies for eco-car

purchases

Sufficient

recharging and

refuelling

infrastructure


With government support,

alternative-fuel vehicles

become a viable and feasible

option for both

manufacturers and consumers

0

20

40

60

80

100

120

1995 2000 2005 2010 2014


… although lower petrol prices make the need less urgent

Average expenditure on vehicle ownership Spot price of Brent petrol

Source: Xerfi Global with U.S. Bureau of Labor Statistics, latest data Sources : INSEE via Feri, *Xerfi forecast

Gasoline and motor oil expenses make up about half the costs incurred by vehicle ownership. Petrol prices shot up until mid

2014, making consumers increasingly interested in more fuel-efficient cars or engines powered by alternatives to gasoline, but

have since been on a downward tumble. This means that fuel-alternative vehicles have lost some of their economic interest

for consumers. Nevertheless, pressure to turn away from fossil fuel continues to be exerted by authorities and governments

for environmental and political reasons.

unit: $US per barril unit: % of total expenses


46,4%

22,0%

17,1%

9,2% 5,3%

Gasoline and motor oilInsuranceMaintenance and repairsRental, leases, licence and other chargesFinancial charges

2.1. Market Overview Focus on economics

3,0%

3,5%

4,0%

4,5%

5,0%

5,5%

6,0%

6,5%

7,0%

7,5%

2008 2009 2010 2011 2012 2013 2014

As auto financing is common, sales are sensitive to credit conditions

unit: %

Source: Xerfi Global with the Board of Governors of the Federal Reserve System

Commercial bank 48-month new car interest rates in the USA

In most countries, a large part of

vehicle sales are financed. In the USA,

for example, this is true of around

90% of car sales.

When the financial crisis hit, lenders

limited credit, which had a knock-on

effect on automobile sales. With the

recovery, access to auto loans has

loosened and low post-crisis interest

rates have helped push up demand.

Friendlier financing conditions

typically affect carmakers in two ways

as not only do easier credit

conditions encourage sales but, what

is more, most carmakers also have a

finance segment, on which they

depend for additional, albeit

marginal, profits.


2.1. Market Overview Focus on environment

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

2010 2011 2012 2013 2014

Environmental legislation and fuel prices mean low-emission car growth

unit: number of new vehicle registrations

Source: Xerfi Global with AAA

Number of new ultra-low emission vehicle registrations per year in the UK

Environmental considerations weigh

heavily on the industry. National and

supra-national authorities (such as the

European Commission) are pushing for

cleaner vehicles and are taking action to

shape the behaviour of both

manufacturers and consumers in this

regard. Manufacturers are obligated to

reduce emission levels of their vehicles

to meet increasingly strict regulations by

improving efficiency of petrol and diesel

engines and developing alternatively-

fuelled cars such as petrol-electric

hybrids or all-electric vehicles.

Consumers are influenced by penalties

and incentives such as congestion

charges and low-emission vehicle

rebates and are equally attracted to

more fuel-efficient vehicles due to

typically high petrol prices (although this

is less the case at the time of

publication). Sales of low emission

vehicles (LEVs) are therefore on the rise.

It is estimated that, due to government

incentives and legislation and

subsequent growing customer demand,

up to a third of all cars purchased in

developed countries in 2018 will be

driven by alternatives to internal

combustion engines.



Environmental and safety regulations carry a heavy cost for carmakers…

Source: Xerfi Global with FCA

Regulations and requirements that increase investment needs

Environment regulations carry a

considerable cost for vehicle makers. For

instance, the National Automobile

Dealers Association estimates that the

U.S.’ Corporate average fuel economy

(CAFE) regulations, set to come into

force in 2016, are expected to add

around USD 1,000 to the production

costs of a vehicle, as manufacturers need

to revisit design concepts, re-tool

manufacturing processes and find new

suppliers. Such expenses are difficult to

pass onto buyers in the highly-

competitive environment and carmakers

must bare a considerable part of the

brunt of this themselves. The recent

scandal involving Volkswagen illustrates

to what lengths carmakers are prepared

to go to so as to achieve apparent

compliance.

The same goes for safety regulations

(such as mandatory requirements for

backup cameras etc.). Such requirements

also increase costs which can be difficult

to pass onto end users.

Connectivity features remain more a

customer requirement than a regulatory

requirement but also imply additional

investment for carmakers.


Environmental

regulations Safety regulations Connectivity

Stricter emission

regulations mean

carmakers must invest

in new powertrain

development as well as

weight-saving

technologies.

Stricter safety

regulations mean that

carmakers must

develop and fit state-

of-the art technologies.

Increased interest in

telematics, infotainment

and autonomy requires

considerable

investment.

Increased costs for carmakers that are difficult to pass on

to end customers, given the highly competitive nature of

the business.

Customer expectations Regulations


… but when it comes to the crunch, the industry remains fairly protected


Typical government position when it comes to choosing between economics and environment

It is true that environmental

regulations have become increasingly

strict (and burdensome) for

carmakers. However when it comes to

the crunch between choosing

between the environment and the

health of the automobile industry, it

is typically the economic benefits of

the automobile sector that are

favoured by governments over

environmental protection. Indeed, it

seems the aftermath of the

Volkswagen emission fraud scandal

may result in more leeway being

given to European carmakers with

regard to emission framework. This is

not the first time measures have been

watered down or delayed to protect

the interests of an industry that is a

major contributor to the economies

of car-making countries. Germany,

but also other countries, have

frequently lobbied European bodies

to fight for more longer deadlines or

more flexibility in emission

regulations.


ECONOMICS ENVIRONMENT

When governments see that strict regulation is liable to hurt their economies…

2.1. Market Overview Focus on society

Societal trends and attitudes towards cars vary from market to market

Societal trends and attitudes leading to variations in mature and developing markets


The dichotomy between mature and emerging market demand is considerable in the automobile industry. As the recession

slowly fades in developed markets, ageing consumers are increasingly interested in value-adding technological advances such

as connectivity, fuel efficiency and safety. Meanwhile, emerging markets do not accept that developed-market models are

simply relocated to their regions. Tastes are not the same and vehicles often double as status symbols to a greater extent than

in mature markets. More importance is thus given to brand value in countries such as China and luxury cars have a great

appeal for the emerging group of the newly rich throughout developing markets.


AUTOMAKERS MUST

ADAPT PRODUCTS TO

REGIONAL PSYCHES

ATTRACTED BY ADDED-VALUE

TECHNOLOGICAL FEATURES

YOUNG, GROWING POPULATION

COST AND ENVIRONMENTALLY

CONSCIENCE

AGEING POPULATION

NEW RICH

CARS ARE OFTEN STATUS

SYMBOLS

GREAT IMPORTANCE GIVEN TO

BRAND

ATTITUDES ALTERED BY THE

RECESSION

MATURE MARKETS DEVELOPING MARKETS

20

25

30

35

40

45

50

55

0 10000 20000 30000 40000 50000 60000 70000

2.1. Market Overview Focus on society

Emerging countries harbour a growing number of wealthy customers

units: horizontal axis = income per capita in dollars (purchasing power parity); vertical axis = index Gini (income

inequality, 0 represents total equality and 100 total inequality); size of bubbles proportional to population

Source: Xerfi Global with World Bank and CIA World Factbook data

Income per capita and income inequality (2014)

Income per capita and income

inequality can be used to measure

the market potential for high-end

products such as premium cars.

Per capita income is higher and more

equally distributed in developed

countries, making them important

markets for the premium segment in

spite of their smaller population size.

Meanwhile, some developing

economies such as Brazil, Russia and

China are characterised by lower per

capita income but higher inequalities

and large populations. Considering

the large populations in these

countries, higher inequalities also

imply a significant number of wealthy

consumers. Growing income levels in

these countries opens new doors for

automakers positioned on the

premium and luxury markets.


Singapore

United Arab

Emirates

Indonesia

Turkey

Poland

Denmark

Sweden

Switzerland

Netherlands

Income inequality

Income per capita

2.1. Market Overview Focus on technology

Innovation is a principal battleground to differentiate from competitors

Main focuses of innovation in the automobile industry and results



ALTERNATIVE-FUEL

ENGINES

HYBRIDS

(gasoline, biofuels,

diesels)

FUEL CELL HYBRID

(hydrogen)

ELECTRIC

(electricity)

INNOVATION IN THE AUTOMOBILE INDUSTRY

CONNECTIVITY

INFOTAINMENT

VEHICLE-TO-VEHICLE

COMMUNICATION

TELEMATICS

VEHICLE-TO-

INFRASTRUCTURE

COMMUNICATION

THE NEED TO INNOVATE TO KEEP

UP WITH COMPETITORS, WITH

CUSTOMER REQUIREMENTS AND

WITH LEGISLATION RESULTS IN

INCREASED INTRA- AND INTER-

INDUSTRY COLLABORATION TO

SHARE COSTS AND EXPERTISE

37,8%

23,2%

14,6%

10,7%

8,8%

4,9%

Safety Autonomous

Entertainment Mobility managementVehicle management Well-being

2016

market

value:

41.0bn

40,2%

32,3%

10,9%

6,2% 5,8%

4,6%

0,1%

Safety AutonomousEntertainment Well-beingVehicle management Mobility managementHome integration

2021

market

value:

122.7bn


The connectivity market is set to expand quickly, but not selling prices

Estimated value of connected car technologies 2016 Breakdown of value of connected car technologies 2021

Source: Xerfi Global with PWC Source: Xerfi Global with PWC

The market value of connected car technologies is expected to triple over the next 5 years, opening up opportunities for

differentiation and new digital revenue streams, and at the same time making higher investment of the essence. It remains to

be seen which pricing strategies carmakers will use for their connected car products and services. Options include flat fee

structures, a pay-per-use structure, or a mixed structure. In any event, it is however unlikely that selling prices can be pushed

up in line with investment, meaning that return on investment will be eroded.

unit: %

unit: %



Robotics and automation play a major role in car-making…

Robot density in automobile vs. general industry in selected countries (2013) unit: number of robots per 10,000 employees

Source: IFR

Robot and automation technology play a key role in automobile manufacturing, much more so than in other industries. Based

on 2013 data for several large economies, robot density in the automobile industry was on average 10 times higher than in the

general industry. Indeed, robot and automation technologies historically has often stemmed from research and development

initiatives by major carmakers or car parts suppliers, some of which still operate their own robot activities.

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

Japan Germany USA UK China Brazil India

Automobile General Industry



0 10 20 30 40 50 60 70

Pharmaceutical and cosmetics industry

Food and beverage industry

Rubber and plastics industry

Metal and machinery industry

Electical/electronics industry

Automotive industry

…and carmakers continue to automate production processes

unit: thousand units

Source: IFR

New installations of industrial robots worldwide by industry (2013)

Although the automotive industry

traditionally accounts for the highest

share of both worldwide sales and

operational stock of industrial robots,

the industry has been investing even

more heavily in further automation

since 2010, when carmakers

worldwide came under great financial

pressure following a costly

manufacturing model and collapsing

global car demand.

In 2013, more than 69,400 new

robots –i.e. 39% of worldwide units

sold during that year- were installed

in the global automotive industry, a

4% increase over 2012.



Technological advances are changing business models

The relationship between technology and business models

Source: Xerfi Global with FT and Morgan Stanley


Business model

Automated driver Cars owned by individuals allow automated

driving thanks to software

Fleets of fully autonomous vehicles rove 24 hours a day and are available at the touch of a

smartphone

Human driver

Individuals possess and drive their own cars Ride-sharing apps and mobility solutions reduce

the need for individual car ownership

Owned assets Shared assets

Tech

no

log

y

Traditional

Tra

dit

ion

al

New

New

0

10

20

30

40

50

60

70

80

90

100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*

-10%

-5%

0%

5%

10%

15%

20%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*

2.2. Demand Global car sales

Sales continue to expand, but at a slower rate

Registration or sales of new vehicles Growth in registration or sales of new vehicles

Source: Xerfi Global with OICA, *Xerfi Global forecast Source: Xerfi Global with OICA, *Xerfi Global forecast

Global vehicle sales declined considerably in 2008 and 2009 as the aftermath of the financial crisis hit with its spiral of higher unemployment, a drop in consumer confidence, high fuel prices and tightening credit conditions, bringing down demand in all main world markets. Sales have since followed an upward trend particularly thanks to emerging country growth, government initiatives to save the industry and stimulate growth, pent-up demand and friendlier credit conditions, reaching 14.3% growth in 2010. In 2015, purchases are gaining momentum in the NAFTA area and Western Europe but have been pulled down by considerable declines in South America, Eastern Europe and Russia and, most importantly, in China, which had previously driven a large part of growth. As a result, 2015 growth is expected to sit at just 1,0%.




2.2. Demand Regional car sales growth

-50% 0% 50%

Russia

Central*/South America

Africa

NAFTA

Europe

Asia/Oceania/Middle-East

Growth Q2 2014 – Q2 2015

Growth Q2 2012 – Q2 2015

Global markets are uneven and volatile with emerging markets now slowing

unit: % change

Source: Xerfi Global with OICA, *Excluding Mexico

Growth in vehicle sales by region

The automotive industry remains uneven

and volatile on a regional basis due to

economic and socio-economic trends

but also infrastructure development,

customer requirements and government

regulations.

While Asia/Oceania/Middle-East was

previously considered an El Dorado,

propelling industry growth in the last

few years (mainly due to China) this

growth has slowed considerably from Q2

2014 to Q2 2015. Other markets such as

Central/South America, Russia and

Africa, which had seemed full of promise

when these markets started to emerge,

have also been decelerating.

Europe, on the other hand, has seen

negative growth over the longer term,

causing manufacturers to close factories,

but has picked up over the last year as

consumers become somewhat more

optimist about the economy. It remains

to be seen however if Volkswagen’s

emissions scandal will temper growth.

The NAFTA zone saw growth of 3.8%

from Q2 2012 to Q2 2015, due to a

recovering economy and pent-up

demand, low interest rates and falling

petrol prices, but this growth has slowed

of late to 0% from Q2 2014 to Q2 2015.


International sanctions, low oil prices and devaluation have been depressing consumer

spending and consumer demand.

Consumer demand in Brazil has been hit by dropping commodity prices, higher taxes and interest rates as well as devaluation.

Indian demand remains strong (although for lower-cost cars) but China’s demand is

slowing due to reduced economic growth as well as anti-corruption and anti-pollution

laws.

As economic conditions begin to improve, Europe is slowly coming out of its slump.

The US’ economic recovery, low petrol prices and pent up demand led to a revival of the industry, but this has come to a standstill.

Africa remains a small market with potential.

2.2. Demand Market size by country

0 5 10 15 20 25

Italy

France

Russia

UK

India

Germany

Brazil

Japan

US

China

China is now, by far, the world’s largest car market by volume…

unit: million vehicle unit sales in 2014


Main markets according to new vehicle registration or sales

In 2009, thanks to increasing wealth,

a huge population and government

incentives, China overtook the US as

the biggest passenger vehicle market

in the world.

Other emerging countries such as

Brazil, India and Russia are also

among the major markets while the

traditional drivers of automotive

demand, the US, Japan and Germany,

are still huge and have been

recovering of late as emerging

market have been slowing.

The two top markets, China and the

US, together account for 45.7% of

demand for passenger cars, meaning

carmakers can ill afford to ignore

them.


China accounted for 26.6% of vehicle

sales in 2014

making it, by far, the

world’s largest

market.

0%

10%

20%

30%

40%

50%

60%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*

2.2. Demand Regional car sales growth

… but its growth is now stalling, weighing down on the industry

Year-on-year growth in registration or sales of new vehicles in China

unit: %


Demand for passenger cars shot up in China in past years, boosting the global industry thanks to its huge market size. However, China’s

hunger for motorised vehicles is now slowing, initially because the Chinese government removed previous stimulus incentives (and even

replaced them with measures such as imposed quotas on new car registrations in order to control traffic congestion and air pollution),

and, more recently, due to slower economic growth as well as corruption crack-downs. As China has been a major growth driver and a

focus of major carmakers’ growth plans, its drop in demand has put a considerable spanner in the works for companies highly exposed

to the Middle Kingdom and are typically cutting back production and having to deal with high inventories. This in turn leads to increased

competition and price pressure, squeezing margins.


Small

33,0%

Lower-

medium

35,0%

Upper-

medium

13,1%

Executive

10,9%

Other

7,9%

Small

41,7%

Lower-

medium

29,8%

Upper-

medium

16,5%

Executive

11,8%

Other

0,2%

2.2. Demand New passenger car registrations by segment

Consumers continue to favour small cars

New passenger car registrations by type in Western Europe

Source: Xerfi Global with ACEA Source: Xerfi Global with ACEA

With question marks hanging over petrol prices and general post-crisis belt-tightening, consumer are increasingly attracted to

small cars for their value: they are not only cheaper to buy but offer lower fuel consumption. Manufacturers are responding to

this trend by increasing the range, features and performance of compact cars. It is expected that, in the medium-to-long term,

demand will be bi-polar: customers will choose either smaller, fuel-efficient cars or will opt for luxury cars. The medium-size

segment will account for the smallest share of the market.

unit: % of new passenger cars in 2005 and 2014


2005 2014

0

10

20

30

40

50

60

70

80

90

100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*

2.3. Supply Global car sales

Global vehicle production growth slowed in 2015, but remained positive

Passenger car and commercial vehicle world production Growth in passenger car and commercial vehicle world production

Source: Xerfi Global with OICA, *Xerfi Global forecast Source: Xerfi Global with OICA, *Xerfi Global forecast

Sales declined sharply in 2009, reflecting the rapidly deteriorating economic conditions and high inventory levels in mature markets

(Japan, the US and Europe). The marked decline in sales led to excess capacity in plants around the world, particularly in North America

and Europe. To give but a few example, Honda went from 100% NAFTA capacity utilisation in 2008 to 48% in 2009 while GM saw its

NAFTA capacity utilisation go from 85% in 2008 to a pitiful 37% in 2009. Meanwhile, in Europe, France’s overall capacity utilisation went

from 72% in 2007 to 53% in 2009. Production levels made a significant comeback in 2010 (+25.2%) to cater for pent-up demand, only for

growth to then be somewhat hampered by natural events (Great East Japan Earthquake and flooding in Thailand) in 2011. Since 2012

however, production has been slowing, seeing only 2.8% growth in 2014, in line with lower demand.




2.3. Supply Location of production

0 2 4 6 8 10 12 14

Russia

UK

Thailand

France

Canada

Brazil

Spain

Mexico

India

South Korea

Germany

Japan

US

China

45.6 million vehicles were produced in the first half

of 2015.

China accounted

for 26.5% of these.

Over one in four vehicles is now produced in China

unit: million vehicles in the first half of 2015


Selected manufacturing countries of passenger and light commercial vehicles

China is not only the world’s biggest

car market in terms of demand, but is

also the world’s largest manufacturer

of automobiles.

Main Chinese carmakers such as

Geely or Chery and foreign joint

ventures (such as those with

Volkswagen, Honda or GM) have

been ramping up production in line

with booming demand. China thus

manufactured 26.5% of total world

production in the first half of 2015

and 26.4% in the whole of 2014.

Long-established production bases in

the USA and Japan accounted,

respectively, for 13.4% and 10.1% of

global production in the first half of

2015.

Emerging countries such as India,

Brazil, Mexico (thanks to its position

in NAFTA, making it a favoured low-

cost manufacturing base for the U.S.

market) and Thailand are also gaining

in manufacturing importance.


-20% -10% 0% 10% 20%

EU

Japan

USA

Thailand

Mexico

India

Indonesia

China

CAGR 2005-2014

-30% -20% -10% 0% 10% 20% 30% 40%

Indonesia

Japan

Thailand

China

USA

EU

India

Mexico

Q2 2014-Q2 2015

2.3. Supply Location of production

A small amount of production is returning to mature markets

Growth of vehicle production by country, 2005-2014

Growth of vehicle production by country, Q2 2015-Q2 2014



Over the last ten years, production has generally moved from traditional bases in Europe, North America and Japan to lower cost regions. The aim has been to move production closer to expanding demand so as to match production and sales footprints, thereby reducing currency exchange rate exposure and transportation costs but the shift has also been driven by lower labour costs, Within trade blocks, such as NAFTA, EU, ASEAN and Mercosur, production has tended to move to the “new Detroits”: lower-cost locations within each region. Nevertheless, this trend has been bucking of late as demand slows in low-cost regions and mature markets recover, meaning some production is being brought back to Europe and the US. Automatisation is further boosting this. In the US, increased production is additionally due to the shale gas revolution allowing lower fuel costs for manufacturing, making it an attractive industrial base once again.

unit: growth rate Q2-2014 Q2-2013

unit: compound annual growth rate 2005 - 2014


29,0%

20,0% 15,0%

9,0%

8,0%

8,0%

7,0%

2,0% 1,0% 1,0%

Steel Rubber

Fluids and lubricants Aluminium

Plastics and composites Other

Copper and brass Powder metal parts

Glass Iron

-0,5

-0,4

-0,3

-0,2

-0,1

0,0

0,1

0,2

0,3

0,4

0,5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E

2.3. Supply Raw material costs

Production costs are particularly exposed to steel prices

Total raw material cost in a typical US light vehicle

Change in price of hot-rolled coil

Source: Xerfi Global with OESA

Source: Xerfi Global with MEPS

The car industry uses a tremendous number of materials to build cars, including steel (29%), rubber (20%), aluminium (9%),

plastic (8%), petroleum products (15%), copper (7%), glass and others. On average, these variable costs make up about half of

most automakers’ total cost structure. As a result, automotive makers can be tremendously impacted by any hike in raw

material prices, particularly steel. As internationally traded raw materials and partially processed commodities such as

automotive steel can often be sourced at cheaper prices in low-cost markets, this has provided an added incentive to relocate

production to emerging market bases. However, steel prices have been falling over the last few years, reducing this pressure.

unit: annual change in USD per tonne unit: % share in total value of raw materials


2.4. International Trade Exports and imports

Trade is dominated by intra-European commerce

Main global flows of exports and imports of motor cars unit:% of total global export value

Source: Xerfi Global with Chelem, latest data


Asia

Oceania

6.1%

Europe/CIS

35.9%

NAFTA

11.6%

5.7%

1.9%

6.0%

7.3%

9.1%

1.4%

Central and

South

America

1.5%

0.9%

1.8%

0.6%

2.4. International Trade Global exports

100

150

200

250

300

350

400

450

500

550

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Global exports have recovered from the crisis and are increasing…

unit: billion euros

Source: Xerfi Global with ITC

Global car export value

Global car exports amounted to

€527.19bn in 2014, a ten-year high.

Exports have more than recovered

from the slump seen in 2009,

dragged down by low world demand

due to the financial crisis.

Nevertheless, the recovery in exports

should not be completed interpreted

as a return to “business as usual” as

figures may hide two increasingly

prevalent trends: firstly, exports are

less international and increasingly

intra-regional and, secondly, higher

value premium cars tend to be

exported more than low-value cars

(which are more readily produced on

local markets) thereby pushing up

export values.

In any event, the increasing export

value does indicate that the industry

is becoming more globalised with

carmakers expanding their offer

outside their national boundaries.


2.4. International Trade Intra-regional trade

…but trade is predominately intra-regional

Main intra-regional flows of exports and imports of motor cars

unit:% of total global export value

Source: Xerfi Global with the World Bank, latest data

As carmakers look to better balance production with local demand, they have shifted their production sites closer to potential

consumers. Overseas production bases are then used to supply regional demand and reduce not only transportation costs but

also taxes and tariffs if such regions are in trade zones. It is expected that inter-regional imports from outside trade zones will

decrease while intra-regional trade, from low-cost pockets to the rest of the trade zone will intensify. For example, Nissan and

Volkswagen have established plants in Mexico to supply the NAFTA area while Suzuki has set up manufacturing facilities in

Hungary, from where it will produce for the European market.


Asia

Oceania

6.1%

Europe/CIS

35.9% NAFTA

11.6%

0 50 100 150

France

Belgium

Spain

Mexico

UK

South Korea

Canada

USA

Japan

Germany

2.4. International Trade Largest exporting countries

Germany and Japan are the undisputed export champions

Largest car exporters in 2005 Largest car exporters in 2014

Source: Xerfi Global with ITC Source: Xerfi Global with ITC

Germany and Japan have had a long reign as leading automobile exporters. Not only have they stood at the top of the list for

the last decade but they are head and shoulders above the rest. The US overtook Canada in 2007 to become the world’s third

largest exporter. France has lost considerable ground over the last ten years, with much capacity being rationalised and

production being relocated to lower-cost neighbour Spain. Korea has seen its exports expand thanks to Hyundai’s growing

sales. Lower-cost countries within regional trade zones are often used as production bases and therefore register high exports.

Such is the case of Mexico, NAFTA’s lower-cost zone.

unit: billion euros

unit: billion euros


0 20 40 60 80

Mexico

Spain

UK

South Korea

Belgium

USA

France

Canada

Japan

Germany

0 20 40 60 80 100 120

Spain

Australia

Italy

Belgium

Canada

France

Germany

UK

China

USA

2.4. International Trade Largest importing countries

The USA is, clearly, the world’s largest car importer

Largest car importers in 2005 Largest car importers in 2014

Source: Xerfi Global with ITC Source: Xerfi Global with ITC

The USA has dominated car imports in volume for over a decade, with most of its imports coming from Canada, the European

Union, Japan and, to a lesser extent, Mexico and South Korea. China has shot up the ranks of importers, going from 18th place

in 2005 to second place in 2014 as a result of rocketing demand. Russia also moved up to 9th in 2012 as demand has

increased considerably without a corresponding increase in domestic production but has since dropped dramatically to 14th in

2015 due to both trade embargos as well as slowing demand due to economic difficulties.

unit: billion euros

unit: billion euros


0 20 40 60 80 100 120

Netherland

Australia

Belgium

Canada

Spain

France

Italy

Germany

UK

USA

3. Corporate Strategies

and Competition


3.1. Competitive Environment Driving forces of the industry

Carmakers are operating in an increasingly competitive environment

Competitive forces of the automobile industry



New entrants

++

Substitutes

+

Suppliers

++

Customers

++

How to read this chart:

The darker the shading, the

stronger the force

Rivalry

Governments

++

+++


3.1. Competitive Environment Competitive rivalry

Fierce rivalry to maintain market share and expand in growth regions

New entrants

++

Substitutes

+

Suppliers

++

Customers

++

Governments

++

+++

Rivalry

• The automobile market is no longer the playground of long-established Western manufacturers. The 1980s saw the arrival

on the world scene of Japanese carmakers such as Honda and Toyota, which have been growing their global market shares

ever since. In recent years, South Korean groups, namely Hyundai, have also been encroaching on markets previously

reserved for American and European firms.

• On a regional basis, the auto industry has traditionally seen oligopolies, but this is becoming less and less the case with

most carmakers endeavoring to expand their international footprint to ensure their presence in all regions.

• The race for new automotive technology, particularly for fuel-efficiency and alternative engines, is fierce and costly, putting

additional pressure on car companies to invest in areas which may take time to reap rewards. Furthermore, the increasing

role of infotainment and telematics systems makes innovation all the more important and rivalry to achieve a competitive

advantage is heated.

• Due to these factors, rivalry in the global automotive industry is intense and car sales generate fairly low returns because of

strong price competition.

3.1. Competitive Environment Consolidation

INDUSTRY CONSOLIDATION

ENTER NICHE MARKETS (I.E.

PREMIUM)

GAIN ACCESS TO EXPANDING

MARKETS AND INCREASE GLOBAL

FOOTPRINT

INCREASE SCALE AND REDUCE OPERATING

COSTS

Carmakers have consolidated considerably over past years


Factors that drive industry consolidation The global financial crisis spurred a wave of consolidation, creating a playing field in which the 10 top carmakers now account for over 73% of global production. However, even before the financial crisis, carmakers were no strangers to mergers and acquisitions, alliances, joint-ventures and partnerships. In an industry in which efficiency is paramount, such deals have always had the drawcard of achieving scale, streamlining distribution, boosting asset efficiency, rationalising capacity, sharing technology and possibly developing a dominant position in a niche market. As the industry becomes more global, carmakers also use collaboration and acquisitions to gain access to new markets to hedge their exposure to particular regions while gaining access to new sales and distribution channels. Consolidation in the automotive industry also results from market exit, which can be partial when a carmaker just pulls out from a particular region or segment it no longer considers viable.


3.1. Competitive Environment Customers

Carmakers must differentiate to stand out from the competition

Factors that obligate carmakers to differentiate and in what ways differentiation can be achieved



Vehicles are fairly

standardised Switching costs are low The offer is broad

Carmakers must differentiate what they offer from what their competitors offer

Products Services

Quality Dealerships/Network

Financing

Prices

Innovation

Design/Appeal/Brand image

Lower purchase price

Fuel economies

Lower maintenance costs Replacement parts/Warranties


3.1. Competitive Environment New entrants

Old players are invading others’ markets and new actors are emerging

New entrants

++

Substitutes

+

Suppliers

++

Customers

++

Governments

++

+++

Rivalry

• Barriers to entry into the industry are substantial. Start-up capital requirements are high, brand value a major factor for

sales and technology know-how and minimum economies of scales must be gained almost immediately to ensure

competiveness. The risk of new carmakers coming onto the scene is therefore low but cannot be ruled out, as illustrated by

all-electric vehicle maker Tesla Motors founded in 2003.

• Furthermore, the risk of existing players entering competitors’ territory is high. In the past, no one could have believed that

the Big Three’s (GM, Ford, Chrysler) domination would be challenged. However, the establishment of Honda’s first plant in

Ohio, US, marked the beginning of a new era in which the emergence of foreign competitors with the necessary capital and

technologies began to undermine the market share of US companies.

• Carmakers are overcoming entry barriers to foreign markets through mergers and acquisitions and strategic alliances and

partnerships, jeopardizing the traditional ranking of regional leaders to some extent. Of course, this works both ways, as

such collaboration is designed to also strengthen the position of both the local and foreign party.

• As automobile-specific technology develops and becomes a determining factor for demand and differentiation, new actors,

possessing specialist know-how, are coming onto the scene, increasing competition and accelerating the pace of change of

innovation. Companies providing connectivity and artificial intelligence now have considerable influence on carmakers. The

development of the Google driverless car is such an example of a company outside the traditional realm offering a service

that would add huge value to a vehicle, putting car manufacturers in danger of becoming mere providers of a support for

such technology.



As switching costs are low, customer loyalty is not a given

New entrants

++

Substitutes

+

Suppliers

++

Customers

++

Governments

++

+++

Rivalry

• Although price sensitive, private customers have relatively little buying power as they do not purchase major volumes.

Nonetheless, due to the fairly standardised nature of the industry and the low switching costs associated with choosing a

competitor’s models, as well as the option of hanging on to older vehicles instead of buying new, clients can significantly

influence pricing decisions. Furthermore, it seems that consumers are becoming less faithful to brands and seeing cars

more as commodities while, at the same time, becoming more demanding with regards the inclusion of equipment such as

infotainment and are expecting high-end features to be standard.

• In an attempt to gain client loyalty, carmakers try to differentiate through design and other functional innovations, as well

as offering a complementary range of services and warranties.

• Businesses and car rental companies purchase large volumes, and thus have a certain degree of bargaining power.

• Information about specifications, prices, quality and performance are increasingly accessible for customers, giving them

increased bargaining power. Meanwhile, automakers are also collecting more customer and car data via telematics and

sensors, but much of this information is yet to be put to use.


The Internet allows carmakers to reach clients directly, but only to an extent

Traditional distribution chain vs. emerging distribution chain


The automotive distribution model has been traditionally dominated by a unavoidable relationship with dealerships. Indeed, laws in the

US and elsewhere protect dealerships’ exclusive right to sell new cars. With the emergence of the Internet, however, automobile

manufacturers have begun setting up virtual showrooms and redefining, without fully circumventing, the role of dealerships. The

advantages of the Internet are particularly relevant in the information phase (comparison of different vehicles, quotations) as well as for

vehicle customisation selection and financing administration. Given the high cost of vehicles and the customer’s typical desire to test

before purchasing, as well as inventory issues, the dealership still serves a purpose as a physical point of sale. Carmakers who have tried

to go beyond this point to skip dealers have met strong resistance.


Manufacturer Customer Dealer

Manufacturer Customer

Dealer

Internet

Direct sales to customer is made

difficult due to legislation and

logistics

TRADITIONAL DISTRIBUTION CHAIN

EMERGING DISTRIBUTION CHAIN


3.1. Competitive Environment Substitutes

The risk of substitutes depends on available public and shared transport

New entrants

++

Substitutes

+

Suppliers

++

Customers

++

Governments

++

+++

Rivalry

• Alternative means of transportation such as public transport or bicycles as well as car-sharing can be considered substitutes

to the individual purchase of vehicles.

• The threat of alternatives varies from region to region depending on the travel distances involved and the availability of

public transport. In regions where public transport is not highly developed and distances are long, the switching costs

associated with using a different mode of transportation are high in terms of independence, convenience, and utility (such

as luggage capacity).

• Conversely, in urban areas with high population densities, more alternatives are available (mass transit, bicycles, etc.) and

are often preferred by consumers and supported by government initiatives. Car-sharing, such as the autolib’ electric car-

sharing service in Paris, or car-pooling are also increasing in popularity. Such alternatives shift the perception of the car from

being a product purchased by individuals to a service available on demand.

• Volatile oil and high ownership prices have a considerable influence on consumers' decisions to seek alternatives.

3.1. Competitive Environment Substitutes

As vehicle density increases, alternatives to car ownership are sought

Trends leading to alternatives to individual car ownership


As an economy matures, car sales tend to expand as a result of increasing wealth and urbanisation. However, as vehicle

density subsequently increases, a lack of infrastructure (road and car parks) as well as the increasing expense of owning a car

(insurance, petrol, storage, road tolls) mean that private car ownership can quickly become a burden. For these reasons, there

is an increasing trend towards car-sharing and intelligent mobility concepts which provide users with the option of combining

several means of transport to best reach their destination. In turn, car sales are reduced while new doors open into the world

of mobility, which is being explored by carmakers like Daimler in high-density markets such as European cities.


As economies develop, increasing population +

increasing wealth +

increasing urbanisation

push up car sales

Vehicle infrastructure (roads and

parking spaces) does not always keep

up with growing vehicle density and

public transport tends to be favoured

by governments

Individual car ownership

becomes a burden due to the

expense and inconvenience

INCREASING DEMAND SATURATION POINT REDUCING DEMAND WITH MORE INTEREST

IN ALTERNATIVES

Consumers seek alternatives to

car ownership such as car-sharing

and mobility solutions

VEHICLE DENSITY


3.1. Competitive Environment Suppliers

Automakers rely heavily on suppliers, particularly if they are specialised

New entrants

++

Substitutes

+

Suppliers

++

Customers

++

Governments

++

+++

Rivalry

• There are several layers of actors in the supply chain: tier 3 suppliers who supply raw materials and commodities, tier 2

suppliers who produce subsystems, and tier 1 suppliers who produce whole systems and sell directly to carmakers.

• The more specialised and strategic the supplier, the more the balance of power tips in its favour. In the case of less-

specialised suppliers, carmakers can pick and choose their suppliers and switch from one to the other with little difficultly.

With the automobile industry being more consolidated than the car part industry, many suppliers rely on just a few

automakers to buy the bulk of their products and are greatly impacted if the automaker decides to switch.

• The relationship between carmakers and their suppliers, previously more in carmakers’ favour, has changed significantly

over the past decade. Suppliers that originally provided ready-made parts have moved towards greater customisation,

tailoring products to the needs of specific companies while shifting towards the supply of complete functions (systems or

modules) rather than individual components and the share of value that suppliers provide is on the up. The relationship is

set to change again in the near future, as the increasing standardisation and globalisation seen in the car-making industry

will call for international mega-suppliers, pushing out small, regional suppliers.

• Tech giants, such as Apple or Google, are becoming valuable suppliers (as well as potential competitors) as more

technology is incorporated into cars. Carmakers must ensure that such suppliers do not end up completely controlling in-

car operating systems and value and profits fall into their hands, leaving carmakers to simply provide the “packaging” for

the operating system as has been seen in the PC and handset industries.


The outsourcing of R&D to suppliers make them valuable partners…

unit: R&D over revenue

Source: Xerfi Global with company’s annual reports

2014 R&D ratio of selected carmakers and suppliers

Carmakers have long been

outsourcing innovation to their

suppliers so as to reduce the burden

of investment. While carmakers

Hyundai and Toyota spent just 2.4%

and 3.7%, respectively, of revenues on

R&D in 2014, suppliers Valeo and

Denso spent 8.9% and 9.2%,

respectively, over the same period.

It is therefore increasingly common

for suppliers to invest more heavily in

research and development than

carmakers themselves, putting

innovation, technology, engineering

and thus bargaining power into their

hands.


3.7%

8.9%

2.4%

9.2%

CARMAKERS’ R&D RATIO

SUPPLIERS’ R&D RATIO


… who are now gaining an innovative and value-added edge over carmakers

Automotive suppliers’ proportion of value added to worldwide automobile manufacture unit: %

Source: Xerfi Global and Thomson Reuters via Statista

The proportion of value added provided by automobile suppliers has shot up – going from 56% in 1985 to around 82% in 2015. Carmakers are therefore assuming more of a role as assemblers and less as manufacturers and have a huge dependence on the expertise of their suppliers. This shift in power has been exacerbated by the fact that as automobile manufacturers have expanded abroad over the last decade, they have encouraged suppliers to expand with them. This means that suppliers are now more international and, additionally, more concentrated, leading to the formation of mega-suppliers, which can exert considerable power over their clients.

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

1985 1990 1995 2000 2005 2010 2015



3.1. Competitive Environment Governments

The industry is large enough to attract considerable government attention

New entrants

++

Substitutes

+

Suppliers

++

Customers

++

Governments

++

+++

Rivalry

• The automotive industry is large enough and vital enough in terms of employment to attract considerable attention from

governments.

• Given the stakes involved in terms of employment, such attention is usually to carmakers’ benefit. The bail-outs of

automobile makers during the financial crisis and industry-specific initiatives, such as the car scrappage schemes to

encourage demand, demonstrate that governments are prepared to prop up the car-making industry.

• Nevertheless, governments can wield control over carmakers, particularly when it comes to supporting their own national

industries in the face of foreign competition. The best example of this is China, where the government’s action

determines not only its domestic state-owned industry but also the room to manoeuvre that foreign carmakers have.

Most other countries apply heavy tariffs to foreign cars, thus discouraging sales for non-local cars.

• Government regulations, such as emissions and fuel economy regulations as well as compulsory safety equipment, are

becoming stricter and more expensive to comply with, meaning manufacturers must sell greater volumes to amortise

increasing costs. Nevertheless, it is also true that when it comes to the crunch and governments must choose between

protecting the industry and protecting the health of the environment, it is the industry which typically comes out on top.

Lobbying by government to delay or water down environmental regulations concerning automobiles is not uncommon.

3.1. Competitive Environment Governments

The Chinese government continues to have long arm in the industry

Source: Xerfi Global with business press

Action taken by the Chinese government The Chinese government has

traditionally had a long arm in the

automobile business, and in the past

has, for example, banned most official

foreign-brand fleet purchases and

has forced overseas makers to

develop indigenous brands with

joint-venture partners. Faced with a

current slump in what has become a

pillar business that is “too big to fail”,

it is making moves to avoid a

downward spiral, bringing down an

industry that contributes directly and

indirectly to China’s GDP, tax income

and employment.

In late 2015 measures have been

taken to cut purchase tax on smaller

engine vehicles and to reduce

controls and restrictions on new

energy vehicles so as to boost

greener vehicle production and

consumption while relieving China’s

energy and environmental pressure.

This measure regarding smaller

engine cars was previously taken in

2009, so as to boost car sales during

the global recession.


The Chinese car market is

slowing as economic growth

drops

It is estimated that this move

will boost passenger-vehicle

sales by around 3 million units

a year

The Chinese government

considers the industry too big

to fail and intervenes

The purchase tax for

cars with engines 1.6

litres or less is cut to

5% in October 2015

and measures are

taken to reduce

controls on new

energy vehicles.

3.2. Structure of Competition Aggregate net sales

500

600

700

800

900

1 000

1 100

1 200

1 300

2010 2011 2012 2013 2014

12.3%

10.9%

9.2%

4.5%

Carmakers’ sales continue to expand, albeit to a lessor degree

unit: billion euros


Aggregate consolidated net sales of analysed companies

The industry has been enjoying

relatively strong growth over the last

five years. This has mostly been

driven by very dynamic emerging

markets and, to a lesser degree, by

improving demand in mature

economies, where governmental

incentives to spur motor vehicle

purchases (such as old car scrappage

schemes) contributed greatly to the

industry’s recovery after the world

financial crisis.

In the last two years, growth has

continued, but at a slowing pace as

pent-up demand is fulfilled,

government initiatives come to an

end and frantic growth has slowed in

China. The drop in sales in Russia and

South America has also also taken its

toll on global sales.


0 2 000 000 4 000 000 6 000 000 8 000 000 10 000 000

Tesla

Tata

Geely

SAIC

BMW

Renault

PSA

Honda

Fiat-Chrysler

Nissan

Ford

Hyundai

General Motors

Volkswagen

Toyota

Cars LCV

3.2. Structure of Competition Ranking by production volume

Toyota manufactures the highest number of vehicles…

Ranking of analysed groups by production volume (2014) unit: vehicle units

Source: Xerfi Global with OICA and companies


0 50 100 150 200 250

Tesla

Geely

BMW

Kia Motors

TATA

Renault

PSA

Hyundai Motor

SAIC

Nissan

Honda

FCA

Ford

GM

Toyota Motor

Volkswagen

3.2. Structure of Competition Ranking by net sales

… but Volkswagen leads the pack in terms of sales revenue

Ranking of analysed groups by consolidated net sales (2014) unit: billion euros



2%

3%

4%

5%

6%

7%

8%

9%

2010 2011 2012 2013 2014

Intense competition means that the automobile industry reports relatively low profits, which

have hovered just over 5% on average over the last 5 years. Considerable investment in

globalisation as well as compliance with stringent fuel emission standards and fuel efficiency

requirements represent considerable structural costs for companies, weighing down on their

profits. From 2014, the deceleration in the Chinese market, in which companies have invested

heavily, has also led to a drop in profits for companies exposed to this market.

3.2. Structure of Competition Aggregate operating margin

Carmakers’ profits have hovered slightly above 5%

Aggregate profitability (operating margin) of analysed companies

unit: operating margin over net revenue; percentage change



3.3% -9.1%

16.8%

-2.8%

-20% -15% -10% -5% 0% 5% 10% 15%

Tesla

PSA

Renault

FCA

GM

SAIC

Ford

Honda

Nissan

Volkswagen

Toyota Motor

Geely

Kia Motors

TATA

Hyundai Motor

BMW

2010-14 average operating margin 2014 operating margin

3.2. Structure of Competition Profitability

Premium maker BMW has proven the most profitable

Ranking of analysed groups by EBITDA margin unit: EBITDA over net revenue



3.2. Structure of Competition Geographical footprint

Despite globalisation efforts, home markets remain the biggest

unit: + = 10% of total sales; red boxes indicate where domestic markets are the major market

Source: Xerfi Global with companies. Data is approximate as regional reporting differ s between companies

Sales by region of major carmakers (2014)


Company Home

market North America Europe Asia-Pacific Latin America

Africa/Middle

East/Other

TOYOTA ✚✚✚ ✚ ✚✚✚✚✚

NISSAN ✚✚✚ ✚ ✚✚✚✚

HONDA ✚✚✚✚✚ ✚ ✚✚✚✚

HYUNDAI ✚✚✚ ✚✚ ✚✚✚✚✚

TATA ✚ ✚✚ ✚✚✚✚✚

SAIC ✚✚✚✚✚✚✚✚✚✚

GEELY ✚ ✚✚✚✚✚✚✚✚

G.M. ✚✚✚✚✚✚ ✚✚ ✚ ✚

FORD ✚✚✚✚✚✚ ✚✚ ✚✚

TESLA ✚✚✚✚✚✚ ✚✚ ✚✚

BMW ✚✚ ✚✚✚✚✚ ✚✚

VOLKSWAGEN ✚ ✚✚✚✚✚✚ ✚✚ ✚

PSA ✚ ✚✚✚✚✚✚✚ ✚✚

RENAULT ✚ ✚✚✚✚✚✚ ✚ ✚

FCA ✚✚✚✚✚✚ ✚✚ ✚ ✚

3.2. Structure of Competition Capex

0% 5% 10% 15% 20% 25% 30% 35%

SAIC

Hyundai

Ford

Nissan

General Motors

Volkswagen

PSA

Renault

BMW

Geely

FCA

Tata Motors

Toyota

Honda

Tesla

2010-14 average capex ratio 2014 capex ratio

Tesla must invest heavily due to the nature of its business

unit: capex over net revenue


Ranking of analysed companies by capex ratio

Tesla far outspends rival automakers, partly because it is a relatively recent addition to the car-making family and thus is spending heavily to expand production capacity, develop new models and its store and service network, and partly because, as an electric car company, it must additionally invest heavily in its supercharger network and its Gigafactory battery plant. In the case of the other carmakers, the vast majority of the industry’s capital investment in recent years has been dedicated to shifting operations overseas, mainly by building new manufacturing facilities in markets with high demand, or by acquiring stakes in competitors and setting up joint ventures with local companies. Capex is also often spent on streamlining and modernising production facilities, as well as the launching of new products. Honda has had the second highest capex ratio among competitors over the last 5 years during which capex went towards the introduction of new models as well as the upgrade of production and R&D facilities.


3.2. Structure of Competition Performance analysis

Volkswagen steers the industry, outpacing perennial leaders Toyota & GM

Key performance indicators and main growth drivers of leading global carmakers units: billion euros, compound annual growth rate (CAGR) of sales in percentage, operating profit as a percentage of sales



COMPANY 2014 SALES 2010-2014

SALES CAGR

2014

OPERATING

MARGIN

2010-14

AVERAGE

OPERATING

MARGIN


Volkswagen 202.46 12.4% 6.3% 6.2%

•Volkswagen sold over 10m cars worldwide, spanning from passenger cars

to heavy commercial vehicles. On a geographical basis, revenue growth

was chiefly fuelled by Asia-Pacific and North America.

•Deliveries in all of its main brands have gone from strength to strength.

However, the Audi brand was the fastest growing, with the pace of volume

sales rising 12.9% on annual average over the 2010-2014 period.

Toyota Motor 194.01 9.4% 10.1% 6.4%

•Toyota has been reinforcing its manufacturing operations across the

globe, with a focus on key growth markets in Asia. Revenue in Asia

(excluding Japan) has grown faster than in all other regions (13.3% on

average per year over 2010-2014).

•In 2014, North America outpaced Japan as Toyota’s largest regional

market, with a 34.6% slice of revenue (compared to 30.6% for Japan).

GM 116.57 3.6% 2.6% 4.2%

•The decrease in petrol prices over the past years has reignited demand

for SUVs and pick-up trucks in North America, giving GM a revenue boost.

•Additional tailwinds came from China where the group runs operations

through a multitude of joint ventures so as to develop vehicles that

respond to the needs of Chinese drivers. GM and it partners sold 3.5m

cars in China in 2014 – second only to the Volkswagen group which

delivered 3.68m units.


Recall costs can severally affect margins, such as those of Ford…




COMPANY 2014

SALES

2010-2014

SALES

CAGR

2014

OPERATING

MARGIN

2010-14 AVERAGE

OPERATING

MARGIN


Ford 107.71 2.8% 2.7% 4.9%

•Growth has been somewhat hampered due to a loss in US market share, a drop in

sales in Europe and South America combined with a weak presence in emerging

markets as well as an increase in the cost of goods that has not been transferred to

customers. Ford also suffered from considerable recall costs in 2014.

FCA 96.09 27.9% 3.5% 3.9%

•Sales have been following an upward trend in the last five years primarily due to

Chrysler's sales in the consolidated accounts. Fiat hit the jackpot with its acquisition

of Chrysler, whose strong sales in the US have helped it to weather the European

slump. Profit slowed in 2013 and 2014, mainly due to costs related to purchasing

shares of stock from the UAW Retiree Medical Benefits Trust and higher recall costs.

Honda 94.63 10.5% 5.0% 5.4%

•Net sales picked up in 2012 after dropping to a low in fiscal 2011 due, firstly, to

temporary supply chain disruptions caused by the Great East Japan Earthquake and

the floods in Thailand and, secondly, sluggish economic conditions in Europe and

the US and slowed growth in Asia. They have followed an upward trend since then

thanks to strong sales in Japan and the US, as has profit, with the exception of a

drop in operating profit in 2014 when teething problems at a new plant in Mexico

dented sales and profit in the US.

Nissan 80.76 6.7% 5.2% 5.5%

•In recent years, Nissan has enjoyed strong revenue growth in the US and China –

they were the group’s largest markets in 2014, accounting for 26.1% and 23.0%

respectively of total sales volume.

•Over five years, Nissan has increased its global presence, encompassing a 6.2%

share of the global car market in 2014, compared to 5.8% in 2010.


With car mix skewed towards small cars, Hyundai is very cost-efficient…



COMPANY 2014

SALES

2010-

2014

SALES

CAGR

2014

OPERATING

MARGIN

2010-14

AVERAGE

OPERATING

MARGIN


SAIC 76.17 19.7% 2.4% 4.4%

•While sales have seen continued growth over the last five years, profit has been dropping

since 2011 due to increasing competition from local rivals and a slowing Chinese economy

and this has been exacerbated in 2015 with its joint ventures with General Motors and

Volkswagen having to cut car prices to rev up sales amidst China’s huge economic

deceleration.

Hyundai

Motor 63.64 7.4% 8.5% 9.4%

•Hyundai has recorded the highest profitability among leading car manufacturers – its

production facilities are located mainly in low-cost countries (China, India, the Czech

Republic, Russia, Turkey and Brazil) and its product mix includes largely small-sized vehicles.

PSA 53.61 -1.1% 1.8% 0.0%

•PSA makes around 70% of its sales on the European market, making it highly exposed to

the slump in demand in this troubled region. Sales therefore dropped in 2012 and the

company haemorrhaged €3bn of cash due to a high cost base with unused capacity. The

subsequent return to profit is attributable to the positive product and price mix resulting

from the success of launches and from the pricing power policy as well as reductions in fixed

costs.

Renault 41.06 1.3% 3.9% 2.8%

•Renault’s entry level vehicles (Clio, Duster, Logan, Sandero…) continued to drive overall

performance, accounting for 42% of 2014 sales volume.

•The Renault group sold 2.71m vehicles in 2014. Dacia-branded cars drove volume sales,

rising 10.4% on annual average, since 2009.

TATA 34.89 19.5% 9.1% 8.9%

•Tata’s sales and profits have been constantly improving over the last five years, but this has

been primarily fuelled by British subsidiary Jaguar Land Rover while domestic business has

been making losses due to a slowdown in demand in the ailing Indian automotive industry

but coupled with increased competition.



… while Tesla is still far off from being a profit-generating business



COMPANY 2014

SALES

2010-

2014

SALES

CAGR

2014

OPERATING

MARGIN

2010-14

AVERAGE

OPERATING

MARGIN


Kia Motors 33.58 7.1% 5.5% 6.9%

•The US and China have been the group’s largest markets in terms of volume, followed by

South Korea and Europe.

•Despite higher volume sales, the company recorded weaker performance in 2014,

impacted by the rise of the Korean Won and the fall of the Russian Rubble.

BMW 8.04 7.4% 11.0% 10.3%

•BMW focuses exclusively on premium automobiles under just three brands, generating

strong brand value. The Mini brand has allowed it to increase its market share in the

expanding small car market. It has offset dropping demand in Europe and the US by

exporting to emerging markets. The company enjoyed record sales in 2014 with strong

demand from China, Britain and the US.

Geely 2.64 4.4% 4.0% 6.5%

•Geely had seen huge growth up until 2014. It should however be noted that this has not

only been fuelled by higher sales values and increased shares in operating subsidiaries

but also thanks to generous subsidies handed out by the Chinese government.

•Sales slowed sharply in 2014 due to deteriorating political and economic conditions in its

major export countries, meaning exports fell by 50%. In China, Geely’s sale also dropped

by 16.8%. As a result of this as well as due to an unrealised foreign-exchange loss at its

Russian subsidiary, profit also fell in 2014.

Tesla 2.39 128.8% -6.9% -18.1%

•Having only launched its first vehicles in 2008, and following a high-price, low-volume

business model, sales have only just taken off and profit margins are yet to become

positive due, not only to fledgling sales but the continued high amount of investment

required to develop the supercharger network, improve batteries and expand the

distribution network.


3.2. Structure of Competition SWOT analysis

Leaders are struggling to restore trust after a web of recalls and legal issues

SWOT analysis of leading global carmakers



COMPANY STRENGTHS WEAKNESSES AND RISKS MAIN STRATEGIC PRIORITIES

Volkswagen

• Presence in all categories of vehicles:

from compact cars to buses

• Balanced price mix spanning from

mass-market brands to premium and

luxury brands

• Geographically balanced footprint

• Reputation tarnished over the “defeat

device” software installed on its diesel

vehicles

• The “defeat device” issue entails legal

actions against the company and the

recall of millions of vehicles and several

billion euros in refitting costs and fines

• Sustained investment in production

capacity in the US, Russia, and China

• Stronger commitment to electro-

mobility: 20 additional EV and plug-in

hybrid models by 2020

• Advancing connectivity and automated

driving technologies

Toyota Motor

• Steadily improving profitability and

financial situation; revenue growth

• Global footprint

• Diversified product portfolio

encompassing from compact cars to

trucks and buses; strong performance of

Lexus, its premium brand

• Ongoing legal proceeding concerning

vehicle safety could impact brand image

and therefore sales, in addition to

profitability due to the cost of recalls

• Lower car deliveries in 2014 (-1.6%

year on year)

• Upgrade production capacities at

regional hubs, particularly in North

America

• Towards new models of mobility with

the launch of Mirai, a mass-marketable

fuel cell vehicle

• New partnerships to “make better cars”

GM

• Leadership in the US, strong presence

in China

• Increasing scale of its financial arm

• Stronger reputation and sales

performance of its luxury brand

(Cadillac)

• Revenue performance greatly reliant

on the US and China

• Fines and penalties related to

“willfully and knowingly” concealing

evidence over faulty ignition switches

installed in a series of cars

• Gradually declining profitability since

2011

• Focus on the US with new SUV and

pick-up launches

• Develop Cadillac brand by establishing

a dedicated business unit

• Enhance the local web of

manufacturing partnerships in China

• Cease unprofitable operations

(development of Opel brand in Russia…)


Rationalisation of platforms is a common theme





Ford

• A strong market presence across the

globe (second largest market share in

the US car market)

• It has undergone huge structural

reorganisation to improve efficiency

• The number of platforms it uses has

been rationalised, allowing cost benefits

• Its operating margin continues to

drop

• Share in the US vehicle market

dropped in 2014, to which it is highly

exposed

• Free cash flow has been negative in

the last 2 years

• Drop in unit sales of late in countries

such as Russia, India, Australia, Turkey

and the Middle East and Africa

• Rationalising its brand portfolio and

refining its global product line-up.

• Investing in safety and smart

technology

• Continued platform consolidation to

deliver customer-focused programmes

rapidly and efficiently across global

markets.

FCA

• An extensive brand portfolio, from

small cars to premium vehicles

• A strong position on both the North

American and European markets

• A smaller scale of operations than

competitors

• Overcapacity in Europe

• Expansion in the premium segment so

as to benefit from higher margins in a bi-

polar market and make good use of

European overcapacity

• Expanding sales in key global markets,

including through localised production

• Rationalising vehicle platforms and

standardising components

Honda

• Diversified portfolio (motorcycles and

engines with a high motorcycle market

share in Asia)

• Strong brand value

• Robust production and sales network

• A leader in hydrogen fuel-cell

technology

• Strong growth in sales since 2011

• High exposure to Asia

• Most of its profits are generated

outside Japan, leading to foreign

currency exchange risks

• Honda has suffered in the past from

anti-Japanese sentiment in China, the

most promising car market

• Reorganising regional divisions so they

are able to respond to local market

demands and particularities faster

• Expanding fuel-cell products


Emerging markets in the slow lane hamper profits…




Nissan

• Being part of the Renault-Nissan

Alliance has resulted in cost synergies;

further benefits are expected from

strengthened ties with Daimler

• Strong presence in China and the

US

• A new wave of product recalls over faulty

parts in the US and Canada in January 2015

(nearly 800,000 vehicles concerned)

• Expansion in China and other growth

markets

• Increase production in Japan

• Enhance collaboration with Daimler

SAIC

• Benefits from government support

and procurement

• Holds the highest market share in

China, the world’s biggest auto market

• Attracts joint venture propositions

from foreign companies allowing

technology transfer and scale

• Sales have been increasing steadily

over the last 5 years

• China’s entry into the WTO has reduced

room for manoeuvring in terms of

government support

• Its own brands lack value, being

considered bottom of the range both in

China and abroad

• Profit has been falling since 2011

• Highly exposed to China, which is losing

steam

• Developing new energy technology

• Continuing joint ventures to expand

expertise and scale and to enter foreign

markets

Hyundai

Motor

• Sustained volume growth

• Production facilities are mainly

located in countries with low wages

• Slowdown in revenue growth; declining

profitability and financial returns

• Product mix tilted to small vehicles

• Negative free cash flow in 2013-14

• Boost manufacturing capacity, particularly

in China

• Upgrade and expansion of product range

• Building a stronger brand image

PSA

• Strong brand value in Europe

• Strong brand focus: just two

brands, one (Citroën) positioned

slightly higher than the other

(Peugeot)

• Increased international expansion

(particularly in China) over the last few

years

• Poor sales and profitability over the last 5

years

• Still highly dependant on Europe

• Overcapacity woes

• High labour costs as a high level of

production is in Europe

• Maintaining distinct and complementary

brands

• Product plan aligned with market demand

• Entering new growth countries such as

Africa and the Mediterranean basin

• Modernising plants

• Strengthening industrial and commercial

partnership with Dongfeng


… but companies continue to aim for internationalisation





Renault

• Leadership in entry level cars in

Europe

• Strong web of partnerships in electro-

mobility

• Margins have been structurally low

• Sales stagnation over the past years

• Despite continued success in entry

vehicle ranges, the group has a weak

presence in other price categories

• Continued global expansion of entry

vehicle ranges

• Improve financials

• Lead in the zero-emission mobility area

TATA

• Flourishing sales in the premium

segment through its subsidiary Jaguar

Land Rover

• High market share in India and a

strong position in the bus and truck

market worldwide

• Sales are geographically balanced

• Steadily increasing net sales and

EBITDA

• Low levels of research and

development

• Highly dependant on Jaguar Land

Rover to keep financials out of the red

• Poor marketing on the Indian market

• Little investment made in Jaguar

• Expanding international business,

including via the expansion of its

manufacturing footprint.

• Cutting sales and production targets for

China

Kia Motors

• Access to financial resources as part

of the Hyundai Motor Group

• Growing number of car deliveries in

overseas markets

• Weak performance in South Korea

• Declining operating margin in recent

years

• Enhance production bases with new

investments in Mexico

• Diversify portfolio of environmentally

friendly cars following the launch of the

Soul EV in 2014


Specialised Tesla and premium BMW enjoy niche markets





BMW

• Strong position on the premium

market

• Rationalised brand structure

• Net sales and operating margin have

been on an upward trend over the last 5

years

• Highly exposed to Europe

• Highly exposed to the premium

market

• Recent product recalls

• Unfunded pension obligations

• Expanding its global production

network

• Pushing ahead with connectivity

innovation

• Expanding range of mobility services

Geely

• Benefits from government support

and high subsidies

• Through the acquisition of Volvo,

Geely can absorb Volvo’s patented

technology and expertise

• High level of exports from a low-cost

base

• Weak brand influence

• Business culture differences between

Geely and Volvo

• Home brands have less prestige on

the Chinese market

• Falling sales and profit in 2014 in line

with a weakening Chinese market

• Still highly exposed to China

• Geely has abandoned its low-cost

strategy for an international strategy

and is attempting to enter into foreign

markets and its relocating production

to these markets

• Focus on new energy vehicles

• Focus on a single brand

• Developing modular architecture and

standardised components

Tesla

• Specialised position on a niche

(electric car and battery products)

market

• Control over sales and service centres

as they are company-owned

• Strong brand value

• Strong innovation

• The company is yet to generate profit

• Sales remain small-scale and capital

expenditure high

• Opposition from car lobbies and

distributors regarding non-franchised

retail stores

• Expanding its network of Tesla stores

• Developing charging network

• Creation of a gigafactory to reduce

battery unit costs

3.3. Corporate Strategies Overview of main strategies

Carmakers’ key focuses include efficiency, a global presence and innovation

Overview of carmakers’ main strategies



CARMAKERS’

KEY FOCUSES

GLOBAL MARKETING

POSITIONING

Mobility Fuel-alternative engines

EFFICIENCY AND COST-

CUTTING

Connectivity/Autonomy

The use of platforms, which are being increasingly rationalised and shared, and standardisation of parts allow increased

efficiency with reduced cost.

With emerging markets losing speed and mature markets seeing some improvements, carmakers must ensure they are in the right place at the

right time.

Car manufacturers, often in collaboration with car rental companies, are entering the car-

sharing market via specific-use vehicles, multi-model mobility solutions or new Uber-style business models. Such moves allow a new

window for sales but also for data collection and hardware and software testing.

Despite petrol prices falling of late, the race to develop fuel-alternative engines remains on due to environmental regulations as well as

uncertainty regarding the future development of fossil fuel prices.

The global market for connectivity is expected to expand considerably with connected services

and apps becoming standard. Carmakers are thus recognising they need to shift from being

mere providers of hardware to providers of software-based connectivity solutions. Part of this software will help cars to become more

autonomous.

INNOVATION

3.3. Corporate Strategies Overview of main strategies

Intra and inter-industry collaboration are used to achieve objectives

Examples of intra and inter-industry collaboration in the automobile industry

Source: Company reports and business reports


GLOBAL MARKETING POSITIONING

EFFICIENCY AND COST-CUTTING

INNOVATION

Audi, BMW and Daimler acquire HERE, Nokia Corporation’s mapping and location services business. This move comes as the three carmakers intend to develop cloud-based maps and other mobility services for the automotive industry.

Audi is working with Baidu and Huawei to enhance car connectivity features in China. Audi has teamed up with Huawei Technologies to develop “an Asia-specific LTE module”. Audi’s partnership with Baidu involves iOS- and Android-based platform integration between Audi cars and Baidu CarLife, a service similar to Android Auto and Apple CarPlay.

Toyota, Nissan, Honda and Mitsubishi launch Nippon Charge Service, a joint venture that will see the development of charging stations for electric-powered vehicles (including plug-in hybrids) across Japan.

SAIC-GM-Wuling, the joint venture between GM, SAIC and Wuling Motors in China, are setting up manufacturing operations in Indonesia. Plans are to produce Wuling-branded vehicles at a facility that will be built close to the capital city.

Nissan and Daimler are building joint facility in Aguascalientes. The plant will produce jointly developed Infiniti- and Mercedes-Benz-branded premium compact vehicles starting in 2017-18.

PSA and Bolloré Group sign a strategic cooperation agreement on developing shared mobility solutions, including car-sharing schemes using conventional and electric vehicles.

The PSA/Dongfeng joint venture sign an agreement with the city of Chengdu for the construction of its fourth production facility in China. It should be completed by 2016.

Panasonic and Tesla sign an agreement for cooperation on the construction of a large-scale battery manufacturing “Gigafactory” plant in the US.

Nissan will start production of its NP300 Frontier pick-up at Renault´s facility in Córdoba, Argentina – where a common platform will also produce a pick-up truck for Renault and another for Mercedes.

3.3. Corporate Strategies Product quality

The mantra of quantity over quality is increasingly seen in the business

Carmakers’ aims when focussing on quality


The financial crisis has changed the mindset of both manufacturers and consumers. Manufacturers have come to realise that, particularly on saturated markets, the easiest way to generate profit margins is no longer hungrily through volume, but with a greater focus on product quality and cost efficiency, even at the risk of losing market share. This is all the more true as regional markets become increasingly erratic. At the same time, customers are more value-orientated. As a result, manufacturers are focusing on luring in customers through improved design, reducing recalls and, therefore, increasing customer satisfaction and brand image. With such an approach, carmakers are aiming for a greater degree of stability, so as to better manage capacity and costs.


A FOCUS

ON

QUALITY

Increased customer

satisfaction

Reduced recalls and

warranty claims

Boosted brand image Improved cosmetic and

technical design

3.3. Corporate Strategies Global platforms

A move towards global platform architecture for cost and time savings

Advantages and disadvantages of the use of global platforms


With cost pressures coming from regulations and heated competition, manufacturers are looking to reduce costs and cater to consumer preferences for more segmented vehicles by using platforms and modularisation, improving product commonality. Carmakers must ensure that the number of units produced per platform remains as high as possible so as to benefit from economies of scale and cost-efficiency. Major players are therefore rationalising their range of platforms at a global level and are simultaneously looking to diversify the models each platform produces. Furthermore, carmakers are increasingly turning to platform-sharing with competitors. This trend allows huge cost and time savings but also imposes the task of finding ways to differentiate between models built on a common platform so that sales are not cannibalised, offsetting the advantages of platform sharing. Manufacturing risk is also concentrated, meaning that recall numbers will be magnified in the event of a defect.


ADVANTAGES DISADVANTAGES

3.3. Corporate Strategies Standardisation

Component standardisation is liable to change the supplier structure

Rationale behind and results of standardisation


So as to cut costs and thereby increase margins, carmakers are turning to common component-based production models.

With such standardised models, the range of different components is reduced. The benefits are manifold for both the

manufacturer and end user; the cost and time spent on vehicle production can be lowered, inventory management

streamlined and vehicle maintenance costs brought down. Risk of supply chain disruption is also reduced as the standardised

parts are easier to come by than specialised parts. This approach has knock-on effects for suppliers. Only the largest of

suppliers can produce the high volumes required, pushing smaller, more specialised suppliers out of the supply chain.


STANDARDISATION

REDUCED MAINTENANCE

COSTS FOR END USERS

REDUCE RISK OF SUPPLY

CHAIN DISRUPTION

REDUCE COSTS AND TIME

TO MARKET

STREAMLINE INVENTORY

MANAGEMENT

SMALL, SPECIALISED

SUPPLIERS PUSHED OUT

OF SUPPLY CHAIN

MEGA-SUPPLIERS

FAVOURED TO PRODUCE

HIGH VOLUMES

0

5

10

15

20

25

2004 2009 2014

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

2004 2009 2014

3.3. Corporate Strategies Global platforms

Carmakers are reducing the number of platforms and increasing scale…

Average number of platforms per carmaker Average number of car bodies per platform

Source: FCA (average across top 10 global OEMs, platforms that produce at least

2,000 cars a year)

Source: FCA (data from FCA, Ford, GM, Honda, Hyundai, PSA, Renault/Nissan,

Suzuki, Toyota, VW)

Carmakers are consolidating the number of platforms they manufacture on. Ford, for example, had 27 global platforms in

2007, 12 in 2015 and plans to reduce this to 12 in 2016, with an eventual target of 8. This is in line with the general industry

trend: while the industry average was 22 in 2004 and 21 in 2009, it became 18 in 2014. The number of different car bodies

produced on a platform is simultaneously increasing, reaching 3.3 in 2014. Volkswagen is taking this a step further with its

MQB system, which is a modular architecture system that will underpin its Audi, VW, Skoda and Seat models and should

eventually replace its previous array of platforms.

unit: number unit: number


3.3. Corporate Strategies Multi-brand strategy

… while retaining a multi-branding strategy

Volkswagen s car brand family and their positioning

Source: Xerfi Global with Volkswagen investor presentations; literally meaning * Out of love for cars; ** Ahead through technology

Volkswagen sells its cars under numerous brands: Volkswagen, Audi, Skoda, SEAT, Bentley, Lamborghini, Bugatti, Scania and Porsche. In this way, it hedges its bets by covering a wide range of niches and customer segments and enjoys scale benefits. So as to avoid cannibalisation it attempts to differentiate among its huge portfolio of brands by focusing on transmitting clear brand values and a different personality to each brand. The group sells cars that have a high degree of standardisation at totally different prices, due to its ability to differentiate them through design and successful brand management. For instance, the group’s most sold brands (Audi, Skoda, Seat and Volkswagen) are manufactured on the same platform and have a fairly high degree of internal part standardisation.


RATIONAL

VALUE PRESTIGE

EMOTIONAL The ultimate

sports car

Auto Emoción The Sporting

Grand Toure

Simply Clever

Aus Liebe zum

Automobil*

Vorsprung durch

Technik**

High degree of

part

standardisation

and platform

sharing

3.3. Corporate Strategies Focus on the premium market

Premium cars enjoy better margins and thus attract attention

units: billion euros; operating margin over net revenue; net profit over total shareholders’ equity


Toyota and BMW’s 2013 and 2014 net profit, average 2010-2014 operating margin and ROE margin

Carmakers that generate a large part

of their revenue from premium sales

have higher profit margins. Toyota

may be head and shoulders above

BMW in terms of sales volume and it

generated a particularly high net

profit in 2014 but is very much

behind when it comes to operating

profit and return on equity as,

although volumes are lower, profit

margins per unit are much higher.

Furthermore, premium carmakers

earn extra revenue from their

financing department, which has

comparatively low costs.

It is therefore only natural that

numerous traditionally mass-market

carmakers are making moves to enter

the premium sector in an attempt to

benefit from its higher margins.

Hyundai for example is focusing on

boosting profit margins by launching

a standalone luxury brand (Genesis)

under which it plans to have a full

line-up of six products with four new

models by 2020.


5.6% 10.3%

Toyota BMW2013 2014 2014 2013

8.0% 15.8%

Net profit

Operating margin

ROE margin

Vehicle

connectivity

3.3. Corporate Strategies Connectivity

Growing connectivity technology opens up a new source for added value

Applications and advantages of vehicle connectivity


Vehicle connectivity hardware, software and protocols are constantly being applied to new fields so as to provide users with infotainment (information and entertainment) systems, telematics (for vehicle health information, trip tracking and geofencing), vehicle-to-vehicle communication (for road safety), vehicle-to-infrastructure and in-vehicle Wi-Fi for portal access, among other things. Such technology is typically accessed via in-built hardware and/or smartphones. It is estimated that around 20% of vehicles sold in 2015 include embedded connectivity and the global market volume is expected to double from 2015 to 2020, opening up a new source for added value for carmakers. Connectivity can also encourage customer loyalty as switching costs can be incurred when changing from one maker’s system to the other’s and, additionally, allows customer data collection. Furthermore, connectivity allows extra revenue to be generated through in-car advertising.


Road

safety

Entertainment

Information

Communication

Customer

loyalty

Revenue-

generating

add-ons

3.3. Corporate Strategies Electronics and software

35%

Electronics and software are becoming a major battleground

unit: %

Source: Xerfi Global with PWC

The share of electronics and software in automobiles and contribution to innovation Electronic and safety systems that

allow improvements in quality and

safety are being targeted by

carmakers (and their suppliers alike)

so as to differentiate their products,

develop a closer relationship with

customers (via data collection) and

increase margins. Software

breakthroughs are becoming vital,

perhaps more so than progress in

hardware.

As a result, the contribution of

electronics and software content in

vehicles is on the up. It is estimated

that is amounted to less than 20% a

decade ago and now is as much as

35%. Furthermore, electronic system

make up over 90% of innovations and

new features.

Telematics, such as automatic parallel

parking, lane-keeping assistance or

sensors allow carmakers to interact

with consumers (such as providing

maintenance alerts) as well as

allowing tie-ins with third-parties

such as insurers (by offering

discounts for customers who drive

safely).


90%

The current cost of electronics and software content in automobiles.

The contribution of electronic systems to

automobile innovations and new features.

3.3. Corporate Strategies Product lifecycle management

Rapidly evolving technology shortens car lifecycles

The lifecycle of vehicles


Like all products, vehicles go through a lifecycle. After their initial launch, sales then grow until reaching a peak, after which

they drop. A few decades ago, car models tended to last around 8-9 years. With rapidly evolving technology, this is no longer

the case. Vehicle lifecycles now last around 2-3 years before being considered obsolete. At this stage, carmakers have the

option of launching a redesigned model. At present, carmakers are generally focusing on bringing out updated models with

improved fuel efficiency or with hybrid engines. As software becomes more vital, the pace of change in products and feature is

likely to accelerate further.

Sales


With rapidly evolving

technology, the vehicle lifecycle

is shortening

Time

Launch of new

model

Sales grow

Sales peak

Launch of updated

model

3.3. Corporate Strategies Car-sharing

0

5 000

10 000

15 000

20 000

25 000

30 000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Most carmakers have got on the car-sharing bandwagon

unit: number of vehicles

Source: Xerfi Global with the Transportation Sustainability Research Centre

Number of shared vehicles in the Americas The global car-sharing market is expected to grow at around 30% per year to reach a value of $6 billion by 2020 and major carmakers are making moves to enter the market. Toyota has developed Ha:Mo, a local transport system with the use of personal vehicles and public transportation. BMW has also partnered with rental car company Sixt SE to develop DriveNow, a car-sharing joint venture that allows vehicles to be picked up and left within a designated area. GM has also introduced a peer-to-peer sharing service called CarUnity through its Opel brand in Europe and has set up a service at a Shanghai university as part of multi-model campus transport. Car-sharing allows a new outlet for sales, but volumes are, by nature, smaller than they would traditionally be in the case of individual ownership. However, car-sharing projects allow carmakers to gather consumer data, test hardware and software systems, expose their brand and gain insight into user experiences, thus offering advantages outside pure sales numbers.


Increasing car-sharing offers carmakers…

…an additional sales outlet

…an opportunity to gather consumer data

…an opportunity to test hardware and software

…an opportunity to gain insight into user experiences

…brand exposure

-10

10

30

50

70

90

110

130

150

2010 2011 2012 2013 2014

Mainstream OEMs Premium OEMs

The industry’s capex and research and development requirements continue to increase,

particularly due to environmental and safety requirements, as well as customer expectations

regarding connectivity, which need to be met to ensure a competitive advantage.

3.3. Corporate Strategies Capital investment and R&D spending

Regulations and innovation are pushing up the need for investment…

Aggregate capex and R&D spending of top carmakers* unit: billion euros

Source: Xerfi Global with FCA; (*FCA, Ford, General Motors, Honda, Hyundai, Kia, Nissan, PSA, Renault, Toyota, Volkswagen, BMW, Daimler)


40%

35%

15%

5% 5%

Vehicle R&D Vehicle tooling

Powertrain R&D Powertrain tooling

Other

3.3. Corporate Strategies Mergers and acquisitions

… suggesting that a new wave of alliances and mergers may be on the horizon

Average vehicle development costs Types of potential alliances and cooperation between carmakers

Source: FCA Source: Xerfi Global with business press

Given the increasing costs required to comply with stricter environmental and safety requirements as well as greater customer

demands which are pushing up required research and development and capex, it is highly likely that carmaker will increasingly

share the burden of investment via alliances, co-operation, and mergers and acquisitions with competitors but also with

suppliers and tech new entrants. The sharing of research and development (which makes up a huge 40% of vehicle

development costs) as well as tooling investments and plant utilisation and other synergies would allow large cost savings to

be made, thus generating higher margins.

unit: %


One-off industrial co-operation

Long-term industrial co-operation

Cross-shareholding

Mergers and acquisitions

- INTEG

RA

TIO

N +

3.3. Corporate Strategies Alternative engine development

Alternative engine development remains a major focus

Types of alternative-fuel engines


Volatile petrol prices and environmental concerns have been spurring interest in alternative fuels for some time and all major carmakers

have found themselves caught up in the technological race to create vehicles with alternative-fuel engines. The challenge lies in creating

engines with vastly different powertrains and operating methods that are affordable yet have sufficient battery life. With currently

existing technology, electric vehicles are more suitable for short-distance mobility needs, which corresponds to urban area profiles, while

hybrids can be used for longer-distance travel. Currently low petrol prices takes some of the heat off the race but the uncertainty over

how long prices will stay low will last means alternative-fuel vehicles remain a priority. GM, for example, announced in October 2015 that

it would partner with LG to develop a battery for its planned Chevrolet Bolt electric car, despite falling petrol prices.


ALTERNATIVE-FUEL ENGINES

HYBRIDS

(gasoline, biofuels,

diesels)

FUEL CELL HYBRID

(hydrogen) ELECTRIC

(electricity)

Shorter driving distance Longer driving distance

3.3. Corporate Strategies Expansion on emerging markets

Carmakers have generally been heavily investing in emerging markets

Benefits of emerging market presence for production and sales


Carmakers have been attracted by the huge growth markets available in emerging countries and have been establishing operations in

such countries, rather than relying purely on exporting, over the last few years. Being on site offers numerous advantages. Production is

typically cheaper due to lower labour costs and products can be more easily adapted to local tastes. Producing locally is also often a

condition of joint-venture agreements with local manufacturers, who in turn help with market access. Unit prices are also brought down

as tariffs and transport costs are done away with and, furthermore, products can be put on the market more quickly. Foreign production

sites can then be used to export regionally, which is particularly attractive in free-trade zones. Nevertheless, as emerging markets are

now slowing, it remains to be seen whether carmakers have overinvested.


PRODUCTION SALES OVERLAP

LOWER-COST LABOUR

LOCAL MARKET PRODUCT

ADAPTATION

REDUCED IMPORT AND

TRANSPORT COSTS AND TIME

ACCESS TO HUGE GROWTH

MARKETS REGIONAL

EXPORTS (i.e. cars

manufactured in

China can be

exported to other

parts of Asia) CONDITION OF JOINT-VENTURE

AGREEMENTS

SALES MADE EASIER THROUGH

JOINT-VENTURES

3.3. Corporate Strategies Regional market volatility

Carmakers must face (particularly emerging) market volatility…

units: change in %

Source: GM’s annual reports

Sales volume performance by region

A few short years ago, emerging

markets, particularly China, were

considered the El Dorado of the

automobile industry and carmakers

were rushing to use partnerships, JVs

and production relocation to ensure

their production and sales presence

in these growth areas. While there are

still sales to be made in such markets

due to fundamentals such as

population and low vehicle

penetration, an economic slowdown,

particularly in China (with knock-on

effects for other countries) has taken

the wind out of the sails of carmakers

highly exposed to these regions,

leading to overcapacity.

It is now mature markets that are

seeing more growth potential with

Europe and the US expected to

continue their recovery, yet this

growth is unlikely to suffice to fill the

already existing overcapacity. Other

pockets of growth may include

countries such as Iran, Saudi Arabia

or Turkey but it remains to be seen if

these markets will also prove erratic.


-20% -15% -10% -5% 0% 5% 10%

GM South America

GM Europe

GM North America

GM International Operations

2013-2014 2012-2013

GM has invested heavily in South America, but slowing

growth in Brazil and weakening South American

currencies have slowed sales.

GM International Operations sales dropped slightly in 2014 and given

China’s slowdown, the group may have to brace

itself for further deceleration in the near

future.

3.3. Corporate Strategies Adjusting to slowing emerging markets

… and are therefore readjusting their position, while keeping their options open


Measures being taken by carmakers in slowing emerging markets Faced with slowing demand in markets

in which they have heavily invested, such

as China, Brazil or Russia, carmakers have

been taking various measures. These

include putting the brakes on planned

capacity expansion, reining in existing

capacity and reducing costs by cutting

factory shifts and bonuses and

attempting to safeguard margins by

selling more higher-end cars.

In China, in which the majority of

carmakers have invested heavily,

carmakers have been cutting their

official selling prices or offering

discounts. Despite suspicions of price-

fixing (meaning that Chinese customers

are paying a premium), carmakers

indicate that reducing prices will weigh

heavily on their margins. Thus, carmakers

are attempting to balance margins by

seeking out ways to reduce costs by

taking an array of measures. Toyota for

example is planning on building a new

production line using the Toyota New

Global Architecture, which should allow

savings of up to 20%. Nissan and Honda

are also planning to achieve cost

reductions by updating plants,

improving architecture, modularising

production platforms and sharing spare

parts.


Faced with slowing

demand on certain

emerging markets,

carmakers are…

Stopping capacity

expansion and

employing less

existing capacity

or refining it (via

platforms)

Reducing staff

costs by cutting

salaries, bonuses

and shifts

Reducing car sales

prices to boost

demand

Despite the reduced

growth in certain

emerging markets,

they continue to

expand (albeit at a

slower rate) and

their often huge

populations with low

vehicle penetration

continue to make

them key markets

for carmakers. Thus,

previous strategies

to ensure they are

present on such

markets are not

being stopped

completely, but

rather adapted. Attempting to sell

more high-end

cars with higher

margins

4. Case Studies


The case of VW’s emissions scandal

VW’s emissions scandal reflects the pressure of the operating environment


Factors potentially leading to the VW emission scandal and the consequences Volkswagen’s diesel emissions scandal that began in late 2015 perhaps reflects the general market situation. Carmakers are currently facing numerous challenges: stricter environmental regulations, a more competitive environment (due to more globalised rivals as well as slowing markets such as that of China) and high investment requirements in areas such as connectivity and driverless driving in order to prevent this area being dominated by high-tech companies. Volkswagen’s actions to get around environmental regulations reflects what lengths carmakers will go to so as to conserve market share in such an environment. It remains to be seen what the full cost will be in terms of fines and other compulsory payments such as class action law suit settlements. It is likely that the company will need to engage in efficiency improvements and investments cuts to help pay for incurred costs. In addition, the reputational damage for both the company and German-made cars in general is more difficult to measure.


Stricter environmental regulation

Tarnished reputation for the company and

German industry

More competitive market place

High connectivity/autonomy

investment requirements

Fines and class action law suit settlements

Cost and investment cuts

Volkswagen is found to be

using software to falsify diesel

emission data during testing

Hyundai’s entry into the premium market

100

150

200

250

300

350

400

2010 2011 2012 2013 2014

Hyundai enters the premium market in an attempt to reverse its profit slide

unit: billion euros

Source: Xerfi Global with Bain & Company: Fondazione Altagamma via Statista

Global luxury car market size

With the premium market offering

good growth prospects as well as

higher profit margins, it is hardly

surprising that mass-market

carmakers are edging into the

premium market. Numerous

carmakers have been making

strategic acquisitions or are

revamping and revitalising their own

premium brands so as to benefit

from the perks of the premium

market. Hyundai is the latest to get

on board. It has been suffering from

falling profits over the last few years

with foreign competitors making the

Korean market more difficile and the

strong Korean won undermining

overseas sales. To escape this

downward slide, it has made the

move to launch a new global luxury

standalone car brand called Genesis.

The rebranding sees Hyundai’s

current Genesis line-up break off and

form its own entity. Hyundai is set to

launch six new Genesis models by

2020 to compete in the same bracket

as Toyota’s Lexus or Nissan’s Infiniti.


Hyundai’s consolidated operating income and margin

4%

5%

6%

7%

8%

9%

10%

11%

2

3

4

5

6

7

10 11 12 13 14

units: billion euros; %

Given its falling profits, Hyundai is looking to the premium-car market to boost its margins.

The acquisition of Nokia Here by Daimler, BMW and VW

German carmakers’ acquisition of Nokia Here is both offensive and defensive

The rationale behind the purchase of Nokia Here by Volkswagen, Daimler and BMW


Volkswagen’s Audi, Daimler’s Mercedes-Benz and BMW have responded to the threat of competition from big tech in the era

of connected and automated car by purchasing Nokia Here, a digital mapping business. The €2.8bn deal gives the carmakers

access to highly-accurate maps that allow personalised location-based services for connected cars and driver-assistance

systems. It is also a defensive move, preventing such information from being monopolised by tech companies.

It remains to be seen whether such acquisitions will allow carmakers to compete with Silicon Valley players as continued

investment to develop such systems is, of course, required.


An offensive move: to reinforce their position in the

connected and driverless car market

A defensive move: to prevent the technology from being sold to big tech competitors, allowing

them to monopolise such data and leave carmakers out in the cold

€2.8bn

Nokia’s digital

mapping business

The forays of Chinese companies abroad

Chinese companies make forays abroad as the domestic market slows

Examples of actions taken by Chinese carmakers to expand outside of China



…Chinese

automakers

are making

forays abroad

In 2015, Geely announced it hopes to break into Europe and the

US markets in the new few years with a small crossover car, which

is likely to be an alternative-fuel model.

SAIC, together with its partners GM and Wuling Motors are

setting up a manufacturing facility in Jakarta, Indonesia. Low-

cost minivans will be produced and sold in Indonesia, which

remains a high-potential market.

As the Chinese

market slows…

0,0

2,0

4,0

2010 2011 2012 2013 2014

-150%

-100%

-50%

0%

2010 2011 2012 2013 2014

Tesla’s innovative business model and results

Tesla’s young and alternative business continues to require high investment

Tesla’s net revenue, capital expenditure and operating margin

Source: Xerfi Global with companies, *for first three quarters

unit: billion euros; operating profit over net revenue


NET REVENUE

OPERATING MARGIN

Affordable electric vehicles

Car considered an appliance

with upgradable software

and battery

Innovation and design

Tesla’s business model

Direct sales to

customers/Showrooming

6.7% from

regulatory

credits

Tesla’s car sales are expanding, but not all its sales are

related to its vehicles. Its 100% electric vehicle range

means it earns a large number of regulatory credits such

as zero emission vehicle, greenhouse gas emission and

corporate average fuel economy credits, which it can then

sell to other automobile manufacturers. Such sales

generated almost 7% of net revenue in 2014. Credits are

location-specific as they depend on local authorities (such

as the State of California) so this income could be lost

with international expansion.

Tesla’s youth and the fact that its business model requires

the set-up of a charger network and battery development as

well as production capacity expansion means that capital

expenditure together with research and development

continue to grow and Tesla is yet to achieve a positive

operating margin.

0,0

0,5

1,0

2010 2011 2012 2013 2014

CAPITAL EXPENDITURE

0

10

20

30

40

What Tata has gained from acquiring Jaguar Land Rover

Jaguar Land Rover is what is holding Tata together

Net revenue and profit before taxes with and without JLR

Source: Xerfi Global with companies, FY 2014

unit: billion euros


-1

0

1

2

3

4

NET REVENUE

PROFIT BEFORE TAXES

WITH JLR WITHOUT JLR

In the face of Tata Motors’ sliding

domestic Indian sales, the company is

able to hold its head above water

thanks to its Jaguar Land Rover (JLR)

unit, purchased from Ford in 2008.

In addition to revenue synergies,

increased international presence and

distribution and access to technology,

the acquisition also has more specific

benefits including greater scale for

Tata’s steel business and offshore

income, making borrowing in dollars

a viable option and preferable to high

rupee financing rates.

Jaguar Land Rover’s sales generated 83.06% of Tata Motor’s revenue in 2015.

Without Jaguar Land Rover’s contribution, Tata

Motors would be unprofitable in 2014.

5. Company Profiles


5.1. Volkswagen Group Presentation

Fiscal year ended December 31, 2014

Headquarters Wolfsburg, Germany

2014 key figures (consolidated) • Founded in 1937, Volkswagen is the world’s leading carmaker by sales value and volume. The group engages primarily in the development, production and marketing of passenger cars, light commercial vehicles, trucks, buses and motorcycles.

• 11 brands operate under the umbrella of the group, including Volkswagen, Audi, Seat, Skoda, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Scania, and Man.

• In recent times, the group has been rocked by a serious scandal which risks causing severe damage to its brand image and incurring huge costs. In September 2015, it emerged that Volkswagen cheated emissions tests by fitting a “defeat device” software on its diesel vehicles. That meant the cars would initiate emissions control systems during testing, but, when not being tested they could discharge nitrogen oxides far above the permitted level.

Revenue by region (2014)

Net sales €202.46bn

Operating margin 6.3%

Net margin 5.5%

Capex ratio 5.9%

R&D ratio 5.7%

Units sold 10.22m

Staff 583,000

Germany 19.4%

Europe & Other Regions 41.2%

North America 13.6%

South America 6.8%

Asia-Pacific 18.8%


VOLKSWAGEN GROUP 2014 net consolidated revenue: €202.46 billion

Passenger Cars

74.6% of revenue

Commercial Vehicles

12.4% of revenue

Financial Services

11.2% of revenue

Power Engineering

1.8% of revenue

5.1. Volkswagen Group Description of business

SEGMENT % OF SALES OPERATING

MARGIN DESCRIPTION

PASSENGER CARS 74.6% 7.7%

Covers the development of vehicles as well as parts and components.

Main brands: Volkswagen, Audi, Ducati, Skoda, Seat, Bentley,

Porsche…

COMMERCIAL VEHICLES 12.4% 3.6%

Development, production and marketing of light commercial

vehicles, trucks and buses, as well as associated components and

services under the Volkswagen, Scania and Man brands.

POWER ENGINEERING 1.8% 1.2%

Development and manufacturing of large diesel engines, turbo

compressors, industrial turbines, propulsion components, and testing

systems, among others.

FINANCIAL SERVICES 11.2% 8.5%

Provides financing for dealers and customers.

Includes banking and insurance activities, and fleet management

offerings.


5.1. Volkswagen Group Corporate strategy and recent events

SUSTAINED GROWTH ACROSS THE BOARD

In 2014, Volkswagen sold over 10m cars worldwide, spanning from passenger cars to heavy commercial vehicles. All of its main

passenger car brands enjoyed record sales: the Volkswagen brand sold 6.12m vehicles, Audi 1.74m, Porsche 189,800, Skoda

1.04m, and Seat 390,500 units. In China, the group sold 3.68m vehicles, an all-time high. So as to bolster future growth,

Volkswagen has continued to make investments in production capacities in the US, Russia and China. In 2015, the group is set to

introduce 60 new vehicles in the Chinese market, 15 of which are going to manufactured “in China, for China.”

July 2014

In a €2bn investment, Volkswagen announces two new car facilities in China (Qingdao and Tianjin).

Volkswagen Group is to manufacture the new Volkswagen midsize SUV in the Chattanooga plant, Tennessee, the

USA. This entails a €432m-expansion investment at the facility.

April 2015 Volkswagen launches the new Golf Alltrack together with four new models in the Beetle line-up -two coupés and

two cabriolets – designed for the US market.

May 2015

Volkswagen Group begins operations at its new Shanghai-Volkswagen (SVW) facility located in Changsha, southern

China. The site, whose yearly output amounts to 300,000 units, will manufacture the Volkswagen New Lavida, as well

as other Volkswagen and Skoda brands.

August 2015

Volkswagen Group China consolidates its market leadership in the country. Combined sales of Volkswagen Group

China and Shanghai Volkswagen and FAW-Volkswagen, its two Chinese joint ventures, totaled 1,743,000 units in the

first half of 2015.

September 2015

Volkswagen begins operations at its new engine facility in Kaluga, Russia. The engines produced will be fitted on

Volkswagen Polo and Skoda Rapid models manufactured at the Kaluga facility, as well as on the Volkswagen Jetta,

Skoda Octavia and Yeti, manufactured in partnership with GAZ at the Nizhny Novgorod facility.

SEAT has earmarked €3.3bn in R&D and capital investment for the development and marketing of four new models,

including the brand’s first compact SUV, over the next two years. SEAT is Spain’s largest car maker, encompassing

roughly 1% of Spain’s GDP and 4% of Catalonia’s GDP.

Volkswagen is unveiling its new Tiguan SUV at The International Motor Show in Frankfurt. The new line-up will

include four versions: the sporty Tiguan R-Line, the classic on-road, the off-road version and the Tiguan GTE – a

plug-in hybrid concept car. The previous version of the Tiguan was sold in over 2.64 million units.



STRONGER COMMITMENT TO ELECTRO-MOBILITY: 20 ADDITIONAL MODELS BY 2020

Over 2015-2019, the Volkswagen Group will devote €85.6bn for product development and global growth. Two-thirds of the

amount are scheduled to go into developing more environmentally-friendly vehicles, with 20 new electric cars and plug-in

hybrids to be launched by 2020. Recently introduced or announced models include the Porsche Mission E, the Audi e-tron

quattro, and the Volkswagen Tiguan GTE.

February 2014 Volkswagen is launching the e-Golf, a fully-electric vehicle, with a range of up to 190km. Priced starting from

€34,000, the model is Volkswagen’s second electric vehicle launched over the past six months.

April 2015 Audi to launch production of the A6 L e-tron in China. The plug-in hybrid model was designed specifically for the

Chinese market. The first A6 L e-tron is slated for production in early 2016.

June 2015

Volkswagen Group is teaming up with China-based SAIC Motor Corporation for future development and

production of electric vehicles at the Chinese joint venture SVW in Anting. In the coming four years, Volkswagen

intends to start manufacturing a total of 15 plug-in hybrid and fully electric vehicle models in China. The project is

part of a wider investment plan of Volkswagen group in China: by 2019, Volkswagen Group and its Chinese joint

ventures will disburse €22bn to expand/upgrade production capacity in China.

August 2015 Audi is teaming up with Samsung SDI and LG Chem to jointly work on battery-cell technology for the development

of its first battery-electric Audi SUV.

September 2015

Audi is introducing its new Audi e-tron quattro – a concept all-electric vehicle, at The International Motor Show in

Frankfurt. Audi aims to launch an all-electric, luxury sport SUV car in 2018.

Volkswagen is unveiling its new Tiguan GTE – a concept plug-in hybrid car not yet marketed, at The International

Motor Show in Frankfurt.



ADVANCING CONNECTIVITY AND AUTOMATED DRIVING TECHNOLOGIES

The world has been transitioning to a digital era, with the Internet of Things emerging as the next major technology trend. This

broader movement includes the automotive industry: today, cars can be connected to smart devices such as smartphones. In

the future, cars will be equipped with an increasing number of automated driving technologies. Volkswagen has been actively

developing next-generation solutions, which are currently being installed on its high-end brands, as part of its efforts to

transform its vehicles into “smartphones on wheels”.

July 2014

Volkswagen Group is acquiring BlackBerry's European research and development centre in Bochum, Germany, and

transforming it into the Volkswagen Infotainment GmbH, as part of its strategy to enhance its car connectivity

expertise.

January 2015 Audi launches the new Q7 vehicle, the first “in the world” to feature a wide-ranging selection of driving assistance

technologies, such as the “adaptive cruise control with traffic jam assistant”.

April 2015

Audi is joining hands with DHL Parcel and Amazon Prime to deliver parcels directly to a car trunk based on keyless

access to a car’s baggage compartment.

Porsche launches the Porsche Car Connect, enabling Apple Watch users to control and monitor a series of car

functions over any distance.

May 2015

Audi acquires an interest stake in Cubic Telecom, an Ireland-based machine-to-machine technology group, in a

move to increase its expertise in the area of infotainment and connectivity.

Audi is working with Baidu and Huawei to enhance car connectivity features in China. Audi has teamed up with

Huawei Technologies to develop “an Asia-specific LTE module”. Audi’s partnership with Baidu involves iOS- and

Android-based platform integration between Audi cars and Baidu CarLife, a service similar to Android Auto and

Apple CarPlay.

July 2015

Volkswagen Group, together with six national and international partners under the umbrella of the EU-wide “V-

charge” project, are aiming to advance research in the are of autonomous driving. The V-Charge trial vehicle is

based on a Volkswagen e Golf1 model.

August 2015

Audi, BMW and Daimler to acquire HERE, Nokia Corporation’s mapping and location services business. This move

comes as the three carmakers intend to develop cloud-based maps and other mobility services for the automotive

industry.

Audi will participate in the "Cooperative Highly-Automated Driving" project funded by the German Federal Ministry

of Economics and Energy. The initiative aims to develop next-generation piloted driving technologies that Audi will

include in its future Audi A8 series.

Skoda launches the SmartGate in-car networking system compatible with Android, iOS and Windows platforms,

allowing users to access vehicle information (distance travelled, vehicle performance information…) on their

smartphones.



CONTINUED DEVELOPMENT OF PREMIUM & LUXURY RANGES

The Volkswagen group comprises a diversified portfolio of passenger cars, spanning all price categories, from entry level to

premium and luxury. While the bulk of revenue and volume continued to be generated by its Volkswagen-branded cars, the

company has seen solid performance in its premium and luxury operations, driven by new model launches and sustained

industrial investment. Recent models introduced comprise the fifth-generation Macan, new Cayenne and Panamera variants for

Porsche; the Flying Spur V8, the Continental GT V8 S, and the Mulsanne Speed for Bentley; the Huracán for Lamborghini, etc.

February 2014 Porsche starts operations at its new facility in Leipzig. Total investment amounted to €500m. The facility will

manufacture the new Porsche Macan.

May 2014 Audi is launching 10 new ultra–fuel-efficient, low-emission models in the Audi A3, A4, A5, A6 and A7 series. hereby,

the brand’s ultra product range has 22 models.

December 2014

Bentley is funnelling €60m to expand its headquarters in Crewe, the UK. The project involves the construction of a

new R&D facility to hasten development and marketing of the “world's first ultra-luxury SUV” slated for serial

production in 2016. In addition, Bentley has earmarked a total of €1bn for product and facility development over

the next three years.

Audi plans to make investments of over €24bn over the 2015-2019 period. Main initiatives include the development

of new models and technologies (70% of the total amount) as well as enhancing production facilities in Germany.

May 2015

Automobili Lamborghini, a subsidiary of the Volkswagen group, introduces a first SUV to its luxury vehicle line-up.

Annual output of the new model is set to reach 3,000 units, targeting markets such as the USA, China, the Middle

East, the UK, Germany and Russia.


5.1. Volkswagen Group Financial indicators

Consolidated net sales

Number of vehicles sold

Consolidated operating income and margin

R&D expenses and ratio

Consolidated sales, net of returns

and discounts. Growth in

consolidated sales is typically due

to an increase in sales volume or

an increase in unit prices.

Conversely, a decrease in

consolidated sales typically

reflects a drop in sales volume or

a drop in unit prices.

Operating margin is the ratio

between operating income and

net sales and measures

profitability (the relationship

between revenue and costs). An

increase can reflect revenue

growing faster than costs.

Conversely, a decrease can reflect

revenue falling further than costs.

Number of vehicles sold, and

annual change in percentage.

R&D expenses are associated

with the research and

development process of creating

new products or services. R&D is

often used as a proxy for

innovation.

R&D ratio is the percentage ratio

between R&D expenses and net

sales.


-10%

0%

10%

20%

30%

40%

0

50

100

150

200

250

09 10 11 12 13 14

1%

2%

3%

4%

5%

6%

7%

8%

0

2

4

6

8

10

12

14

09 10 11 12 13 14

units: billion euros; change in %

Source: company information


units: billion euros; % share

units: million of cars; change in %

0%

4%

8%

12%

16%

20%

24%

0

2

4

6

8

10

12

09 10 11 12 13 14

3,0%

3,5%

4,0%

4,5%

5,0%

5,5%

6,0%

0

2

4

6

8

10

12

09 10 11 12 13 14


Sales by region Sales performance by region

Revenue breakdown by

operating segment, expressed as

a percentage.

Annual sales change by


a percentage.

Revenue breakdown by regional

market, expressed as a

percentage.

Annual change of revenues by

regional market, expressed as a

percentage.


39,37

19,4%

83,49

41,2%

27,62

13,6%

13,87

6,8%

38,11

18,8%

Germany

Europe & Other Regions

North America

South America

Asia-Pacific


units: change in %

units: billion euros; % of revenue

-20,7%

-10%-5% 0% 5% 10%

Germany

Europe & Other

Regions

North America

South America

Asia-Pacific

2013-2014 2012-2013

Sales by segment Sales performance by segment

150,6

8

74,6%

25,00

12,4%

3,73

1,8% 22,59

11,2%

Passenger Cars

Commercial Vehicles

Power Engineering

Financial Services

units: change in %


28,1%

-10% 0% 10% 20%

Passenger Cars

Commercial

Vehicles

Power

Engineering

Financial

Services

2013-2014 2012-2013


Profitability ratios

Solvency ratios

Liquidity ratios

Free cash flow and capital expenditure

Return-on-equity (ROE) is the

percentage ratio between net

income and total equity.

Return-on-assets is the


income and total assets. Both

ratios measure the efficiency at

which the company uses its

equity and assets to generate

profits.

Current ratio (current assets

divided by current liabilities)

indicates whether the company

has enough resources to pay its

short term debt (12 months).

Quick ratio (current assets net

from inventories, divided by

current liabilities) measures the

company’s immediate capacity to

repay its short term debt.

Debt-to-equity is the ratio

between total liabilities and total

equity and reflects the company’s

relative amount of debt. Interest

coverage (EBITDA divided by net

interest expenses) reflects the

company's debt burden, i.e. its

ability to pay interest on

outstanding debt. The lower this

ratio, the more the company is

burdened by interest expenses.

Capex ratio is the percentage

ratio between capital

expenditures and net sales. Free

cash flow (cash from operating

activities minus capital

expenditures) reflects the

company‘s capacity to generate

cash net of capital investments.


0%

1%

2%

3%

4%

5%

6%

7%

8%

0%

5%

10%

15%

20%

25%

30%

09 10 11 12 13 14

ROE ROA

0,6

0,7

0,8

0,9

1,0

1,1

1,2

09 10 11 12 13 14

Quick ratio Current ratio

0

2

4

6

8

10

12

1,5

2,0

2,5

3,0

3,5

4,0

4,5

09 10 11 12 13 14

Debt-to-equity Interest coverage

3,5%

4,0%

4,5%

5,0%

5,5%

6,0%

6,5%

-4

-2

0

2

4

6

8

09 10 11 12 13 14

FCF Capex ratio



units: %

5.1. Volkswagen Group Statistical tables


Year Consolidated net

sales Annual % change

Consolidated

operating income

Consolidated

operating margin Net income Net margin

2009 105.19 -7.6% 1.86 1.8% 0.91 0.9%

2010 126.88 20.6% 7.14 5.6% 7.23 5.7%

2011 159.34 25.6% 11.27 7.1% 15.80 9.9%

2012 192.68 20.9% 11.50 6.0% 21.88 11.4%

2013 197.01 2.2% 11.67 5.9% 9.15 4.6%

2014 202.46 2.8% 12.70 6.3% 11.07 5.5%

units: billion euros; % change; operating income and net income as % of sales

Year R&D expenses R&D ratio Number of vehicles sold Annual % change

2009 5.43 5.2% 6.31 0.6%

2010 6.87 5.4% 7.28 15.3%

2011 7.23 4.5% 8.36 14.9%

2012 8.85 4.6% 9.35 11.8%

2013 10.19 5.2% 9.73 4.1%

2014 11.55 5.7% 10.22 5.0%

units: billion euros; % share; % change



Segment 2014 sales % of total

sales

Segment

margin (%) 2013 sales 2013 % share

2013-2014

change 2012 sales

2012-2013

change

Passenger Cars 150.68 74.6% 7.7% 146.63 74.6% 2.8% 148.16 -1.0%

Commercial

Vehicles 25.00 12.4% 3.6% 25.96 13.2% -3.7% 20.26 28.1%

Power

Engineering 3.73 1.8% 1.2% 3.85 2.0% -3.1% 4.22 -8.9%

Financial

Services 22.59 11.2% 8.5% 20.09 10.2% 12.4% 18.15 10.7%

units: billion euros; % share; % change; operating income as % of sales

Region 2014 sales % of total

sales 2013 sales 2013 % share

2013-2014

change 2012 sales

2012-2013

change

Germany 39.37 19.4% 37.71 19.1% 4.4% 37.73 -0.1%

Europe & Other Regions 83.49 41.2% 79.35 40.3% 5.2% 77.65 2.2%

North America 27.62 13.6% 27.43 13.9% 0.7% 25.05 9.5%

South America 13.87 6.8% 17.50 8.9% -20.7% 18.31 -4.5%

Asia-Pacific 38.11 18.8% 35.02 17.8% 8.8% 33.94 3.2%




Year Total assets Total liabilities Total equity Debt ratio ROE ROA Interest

expenses

Interest

coverage ratio

2009 177.18 161.96 37.43 4.33 2.4% 0.5% 1.15 1.62

2010 199.39 128.47 48.71 2.64 14.8% 3.6% 1.15 6.19

2011 253.77 246.29 63.35 3.89 24.9% 6.2% 1.15 9.84

2012 309.52 171.77 82.00 2.09 26.7% 7.1% 1.40 8.22

2013 324.33 234.30 90.04 2.60 10.2% 2.8% 1.51 7.71

2014 351.21 261.02 90.19 2.89 12.3% 3.2% 1.45 8.74

units: billion euros; percentage, ratio

Year Current assets Current

liabilities Quick ratio Current ratio

Operating

cash flow

Capital

expenditure Capex ratio Free cash flow

2009 77.78 69.53 0.92 1.12 12.74 5.78 5.5% 6.96

2010 85.94 76.90 0.89 1.12 11.46 5.66 4.5% 5.80

2011 105.64 101.24 0.77 1.04 8.50 7.93 5.0% 0.57

2012 113.06 105.53 0.80 1.07 7.21 10.27 5.3% - 3.06

2013 122.19 118.63 0.79 1.03 12.60 11.39 5.8% 1.21

2014 131.10 130.71 0.76 1.00 10.78 12.01 5.9% - 1.23


5.2. Toyota Motor Presentation

Fiscal year ended March 31, 2015

Headquarters Toyota City, Aichi prefecture, Japan

2014 key figures (consolidated) • Toyota’s roots can be traced back to 1933 when it started operations as the

automobile subsidiary of Toyota Industries Corporation. Today, Toyota is

the world’s second largest by sales value and third largest by volume, with

8.97 units sold in the last fiscal year (compared to 10.22m for the

Volkswagen group and 9.93 for GM).

• The company manufactures and markets from sub-compact and luxury

cars, to sport utility vehicles, trucks and buses under the Toyota, Lexus,

Daihatsu and Hino brands.

• Toyota introduced the world’s first mass-produced hybrid car, the Toyota

Prius. Over the past three years, the group has continued to diversify its

line-up of eco-friendly hybrid vehicles. Moreover, in December 2014,

Toyota began mass-production and sales of Mirai, its first fuel-cell car.




Net margin 8.0%

Capex ratio 12.3%

R&D ratio 3.7%

Vehicles sold 8.97 million

Staff 344,109

Japan 30.6%

North America 34.6%

Europe 9.9%

Asia 16.6%

Other 8.2%


TOYOTA MOTOR 2014 net consolidated revenue: €194.01 billion

Automotive

89.6% of revenue

Financial Services

5.9% of revenue

All other

4.5% of revenue

5.2. Toyota Motor Description of business


MARGIN DESCRIPTION

AUTOMOTIVE 89.6% 9.3%

Toyota designs, produces and markets a wide range of vehicles:

subcompact (Yaris, Aygo…),

compact (Corolla…),

mini (Daihatsu-branded),

mid-sized (Camry, Reiz for the Chinese market, Avensis…),

luxury (Lexus),

sports (Scion, the Lexus RC),

sport utility vehicles (Sequoia, 4Runner, RAV4, Highlander, FJ Cruiser,

Land Cruiser…),

pickup trucks (Tacoma, Tundra…),

minivans (Alphard, Vellfire),

as well as trucks and buses under the Hino brand.

FINANCIAL SERVICIES 5.9% 21.8%

Provision of financing to dealers and their customers for car

purchasing or leasing.

ALL OTHER 4.5% 5.2%

Comprises design and manufacture of prefabricated housing, the

operation of a Japanese website for automobile information

(GAZOO.com), and marketing of telecom services for KDDI (au

brand) in Japan.


5.2. Toyota Motor Corporate strategy and recent events

UPGRADE PRODUCTION CAPACITIES AT REGIONAL HUBS

Toyota has been reinforcing its manufacturing operations across the globe, with a focus on key growth markets in Asia. In a move to

enhance its product line-up, Toyota is carrying out expansion investments at facilities in Indonesia, Russia, Brazil and, last but not least,

China. This follows recently completed upgrading works in India, Egypt, etc. Toyota has sought to establish production facilities in each of

its key regions, in order to cater to regional needs. For instance, in 2014, 74.4% of the total number of cars sold in North America were

manufactured in North America. Nonetheless, Japan continued to account for the highest share of production, with 4,125,000 out of the

8,929,887 units produced in the fiscal year ending March 31, 2015.

February 2014

Toyota has started construction of its new powertrain facility located in Karawang, Indonesia. The facility will have a

yearly output of 216,000 units, half of which are destined for export markets.

Toyota will export the Agya-based compact car model produced by Daihatsu, a Toyota subsidiary, in Indonesia to

the Philippines. The model will be marketed under the Toyota brand.

December 2014

Toyota will cease production at the Altona Plant in Australia and use the facility as a sales and distribution centre

starting in 2018.

Toyota is planning to double production capacity at its facility in Saint Petersburg, Russia to 100,000 vehicles by the

end of 2015. At present, the facility manufactures the Camry model for the Russian, Belarus and Kazakh markets.

The plant will accommodate production of Toyota RAV4 in 2016.

January 2015 Toyota to boost production of its Etios model at the Sorocaba Plant in São Paulo, Brazil, from 74,000 to 108,000

units by the start of 2016.

April 2015

Toyota is investing €100m in a new production line at its GAC Toyota Motor joint venture facility in Guangzhou,

China, which manufactures models such as the Highlander, Camry (including hybrid), Camry Classical, Levin, Yaris L,

and E'z. This will boost capacity by approximately 100,000 units.

August 2015

Toyota is adding a new production line at its Tianjin Faw Toyota Motor joint venture facility in Tianjin, China, which

manufactures models such as the Crown, Reiz, Corolla, Corolla EX, and Vios. This will boost capacity by

approximately 100,000 units. However, overall capacity at the plant will remain stable, as the group plans to retire

an out-dated line of production by the end of 2017.



TOWARDS NEW MODELS OF MOBILITY

Since the 2011 launch of the Toyota Prius hybrid model, Toyota has emerged as a leading manufacturer of eco-friendly

automobiles. The company continued to enrich its portfolio of hybrids with the introduction of next generation Voxy HV/Noah

HV in January 2014, the Esquire HV in September 2014, and the Alphard and Vellfire in January 2015. At the same time, the

group’s decade-long efforts to develop a mass-marketable fuel cell vehicle have culminated in the launch of the Mirai model

(Mirai translates into “future” in Japanese) at the end of 2014. The Mirai, priced at above €50,000, is expect to sell 700 units in

2015, and approximately 3,000 units in 2017.

May 2014 Toyota, Nissan, Honda and Mitsubishi launch Nippon Charge Service, a joint venture that will see the development

of charging stations for electric-powered vehicles (including plug-in hybrids) across Japan.

June 2014 Toyota’s i-Road and Coms ultra-compact electric cars will be accessible via a car-sharing project to be launched in

October 2014 by the City of Grenoble, France.

October 2014 Toyota is preparing to test joint vehicle charging infrastructure for both plug-in hybrid and electric vehicles. The

trials will take place in Aichi Prefecture during the November 2014-March 2015 period.

November 2014

Toyota expands its plug-in hybrid charging network to include stations managed by Nippon Charge Service.

Through the new fee-based service, Prius PHV owners will be able to access new charging stations across Japan.

Toyota launches the Mirai, the first mass marketed fuel cell car in the automotive industry. The Mirai can be

recharged in about five minutes and discharges only water vapour into the atmosphere.

January 2015 Toyota plans to increase production of Mirai-branded fuel cell vehicles to 700 units in 2015 and 2,000 in 2016 based

on current levels of demand.

February 2015 Based on i-Road, its three-wheeled electric vehicle, Toyota, in collaboration with the Times Car Plus car sharing

service, is testing a car sharing service in Tokyo.

July 2015 Toyota Motor, Nissan Motor, and Honda Motor to jointly participate in the development of refuelling stations for

fuel-cell vehicles in Japan.

August 2015 Toyota exceeds 8 million units in sales of hybrid vehicles. To date, the group’s hybrid line-up comprises over 30

models, including a plug-in hybrid. Recently launched models include the Lexus RC300h, the Sienta Hybrid, etc.



BOOST DEVELOPMENT IN NORTH AMERICA

North America is Toyota’s largest regional market, encompassing a 34.6% slice of revenue (compared to 30.6% for Japan).

Toyota models such as Corolla, Highlander, Tacoma, and, Tundra, as well as the Lexus RX350 have been in high demand in recent

years. In order to enhance operations in the region, the group is seeking to consolidate its North American production in Mexico

and the south of the US. Toyota is establishing a new R&D facility in Michigan, the USA, and investing in a new, regional

headquarters in Texas. Other upgrades have been completed at its Mississippi factory (which produces Corollas for export to

Latin America and the Caribbean), Indiana, and Alabama. Most importantly, Toyota is bringing Lexus production to the US, for

the first time in history: a €300m investment project will see the Lexus ES350 manufactured at the Georgetown, Kentucky facility.

January 2015 Toyota is on track to launch the first ever Lexus production line in the US. A €300m investment project will see the

Lexus ES350 manufactured at the Georgetown, Kentucky facility whose annual output will reach 50,000 units.

April 2015

Toyota will build a new factory in Guanajuato, Mexico. The group aims to shift Corolla production from Ontario,

Canada, to the new facility in Mexico by 2019. This is part of Toyota’s efforts to consolidate North American

production in Mexico and the south of the US.

June 2015

Toyota to expand its R&D centre located in Michigan, the USA. The €126m project includes the addition of a vehicle

development facility and a supplier centre facility. In addition, Toyota will boost capacity of its engine development

centre.

Toyota announces plans to build its new North America headquarters in Plano, Texas, the USA. This is part of the

group’s strategy to strengthen its operations in North America.


NEW PARTNERSHIPS TO “MAKE BETTER CARS”

The automotive industry has seen increased consolidation over the past decade. Despite ever fiercer competition in the sector,

companies are tying an increasing number of partnerships in order to achieve economies of scale and cut product development

costs. Toyota has also been riding these trends. For instance, it has recently announced a collaboration agreement with Mazda

for the joint development of environmental and safety technologies, and with Ford for in-vehicle “infotainement” technologies.

June 2014 Toyota Motor and Panasonic are collaborating for the development of technologies that connect cars to home

appliances. The two companies will develop new applications to control home appliances remotely from a vehicle.

May 2015

Toyota Motor and Mazda Motor sign an agreement which sets the basis for future joint development of vehicle

“products and technologies”. The two companies will pool their respective strengths in environmental and safety

technologies.

June 2015 Toyota Motor is teaming up with Ford Motor to advance the development of SmartDeviceLink technologies, in-car

telematics, for Toyota- and Lexus-branded vehicles.

5.2. Toyota Motor Financial indicators






























innovation.



sales.


-10%

-5%

0%

5%

10%

15%

20%

25%

0

50

100

150

200

250

09 10 11 12 13 14

0%

2%

4%

6%

8%

10%

12%

0

5

10

15

20

25

09 10 11 12 13 14





units: million cars; change in %

-5%

0%

5%

10%

15%

20%

25%

2

4

6

8

10

09 10 11 12 13 14

2%

3%

4%

5%

0

2

4

6

8

09 10 11 12 13 14





a percentage.



a percentage.



percentage.



percentage.


59,40

30,6%

67,18

34,6%

19,17

9,9%

32,28

16,6%

15,98

8,2%

Japan North America

Europe Asia

Other*

Source: company information; *“Other” consists of Central and South America, Oceania, Africa and the Middle East.

units: change in %


-10% 0% 10% 20% 30%

Japan

North America

Europe

Asia

Other*

2013-2014 2012-2013


178,53

89,6%

11,83

5,9%

8,95

4,5%

Automotive

Financial Services

All Other

units: change in %


0% 10% 20% 30%

Automotive

Financial

Services

All Other

2013-2014 2012-2013



Solvency ratios

Liquidity ratios




income and total equity. Return-

on-assets is the percentage ratio

between net income and total

assets. Both ratios measure the

efficiency at which the company

uses its equity and assets to

generate profits.































0%

1%

2%

3%

4%

5%

0%

2%

4%

6%

8%

10%

12%

14%

09 10 11 12 13 14

ROE ROA

0,6

0,8

1,0

1,2

1,4

09 10 11 12 13 14


0

20

40

60

80

100

120

140

1,4

1,6

1,8

2,0

09 10 11 12 13 14


4%

8%

12%

16%

-2

0

2

4

6

8

10

09 10 11 12 13 14

FCF Capex ratio



units: %

5.2. Toyota Motor Statistical tables




Consolidated

operating income

Consolidated


2009 135.00 -7.7% 1.05 0.8% 1.49 1.1%

2010 135.30 0.2% 3.34 2.5% 2.91 2.1%

2011 132.38 -2.2% 2.53 1.9% 2.02 1.5%

2012 157.18 18.7% 9.41 6.0% 6.85 4.4%

2013 183.02 16.4% 16.33 8.9% 12.99 7.1%

2014 194.01 6.0% 19.59 10.1% 15.48 8.0%



2009 5.17 3.8% 7.24 n/a

2010 5.20 3.8% 7.30 0.9%

2011 5.56 4.2% 7.34 0.5%

2012 5.75 3.7% 8.87 20.8%

2013 6.49 3.5% 9.11 2.8%

2014 7.16 3.7% 8.97 -1.6%

units: billion euros; % share; million units; % change




sales

Segment


2013-2014

change 2012 sales

2012-2013

change

Automotive 178.53 89.6% 9.3% 169.41 90.2% 5.4% 145.46 16.5%

Financial

Services 11.83 5.9% 21.8% 10.12 5.4% 16.9% 8.34 21.4%

All Other 8.95 4.5% 5.2% 8.20 4.4% 9.1% 7.60 8.0%


Region 2014 sales % of total

sales

Region


2013-2014

change 2012 sales

2012-2013

change

Japan 59.40 30.6% 18.8% 60.79 33.2% -2.3% 56.35 7.9%

North America 67.18 34.6% 6.2% 56.55 30.9% 18.8% 43.94 28.7%

Europe 19.17 9.9% 3.0% 18.62 10.2% 2.9% 14.27 30.5%

Asia 32.28 16.6% 9.3% 31.88 17.4% 1.2% 28.91 10.3%

Other* 15.98 8.2% 5.0% 15.18 8.3% 5.3% 13.71 10.7%





expenses

Interest

coverage ratio

2009 216.20 138.33 73.80 1.87 2.0% 0.7% 0.24 4.42

2010 212.41 138.81 73.60 1.89 4.0% 1.4% 0.21 15.97

2011 218.35 143.19 75.16 1.91 2.7% 0.9% 0.16 15.51

2012 252.77 166.23 86.54 1.92 7.9% 2.7% 0.16 57.51

2013 295.19 192.11 103.07 1.86 12.6% 4.4% 0.14 116.77

2014 336.81 220.42 119.59 1.84 12.9% 4.6% 0.16 120.26




Operating

cash flow

Capital


2009 93.13 76.12 1.09 1.22 18.23 10.24 7.6% 7.99

2010 84.27 76.87 0.98 1.10 14.42 12.05 8.9% 2.37

2011 87.77 83.93 0.91 1.05 10.35 10.91 8.2% - 0.57

2012 98.20 91.98 0.93 1.07 17.46 14.06 8.9% 3.40

2013 111.97 104.58 0.94 1.07 25.97 19.08 10.4% 6.89

2014 127.77 117.05 0.96 1.09 26.26 23.92 12.3% 2.34


5.3. General Motors Presentation


Headquarters Detroit, Michigan, the USA

2014 key figures (consolidated) • Established in 1908, GM is America’s leading carmaker and a global player in the

automotive industry. The group operates under the following business units: GM North America, GM Europe, GM International Operations, GM South America and GM Financial.

• GM sold 9.93 million cars in 2014, primarily under the Buick, Cadillac, Chevrolet and GMC brands. Secondary brands are Holden, Opel and Vauxhall in Europe; Baojun and Wuling in China. In light of growing demand for its luxury models in the US and China over the past few years, GM established Cadillac as an individual business unit within the group in September 2014.

• Amidst growing sales momentum, GM’s reputation has been tarnished as the US Department of Justice accused the group of “wilfully and knowingly” concealing evidence over a faulty ignition switch which prevented the airbags from deploying in a car crash, resulting in over 100 deaths and 1,000 injuries. GM has settled the case in September 2015, accepting to pay a penalty of about €600m, and to be placed under monitoring.

Sales volume by region (2014)



Net margin 1.8%

Capex ratio 4.5%

R&D ratio 4.7%

Unit sales 9.93 million

Staff 216,000

GMNA 34.4%

GME 12.7%

GMIO 44.1%

GMSA 8.8%


GENERAL MOTORS 2014 net consolidated revenue: €116.57 billion

GMNA

65.0% of

revenue

GME

14.3% of

revenue

GMIO

9.2% of revenue

GM Financial

3.1% of revenue

GMSA

8.4% of revenue

5.3. General Motors Description of business


MARGIN DESCRIPTION

GMNA 65.0% 6.5%

GM North America designs, develops and produces vehicles under the

Buick, Cadillac, Chevrolet and GMC brands, particularly in the SUV and

pick-up truck categories.

Deliveries in North America amounted to 3,413,00 units in 2014 - a

16.9% share of the market.

GME 14.3% -6.2%

GM Europe designs, develops and produces vehicles under the Opel and

Vauxhall brands. It operates primarily in Germany, the UK and Russia.

Deliveries in Europe amounted to 1,256,000 units in 2014 - a 6.7% share

of the market.

GMIO 9.2% 8.5%

GM International Operations covers activities in Asia, Africa and the

Middle East.

In China, GM operates under a series of 11 joint ventures with local

companies producing models branded Baojun, Jiefang and Wuling.

Deliveries in Asia/Pacific, Middle East and Africa amounted to 4,378,000

units in 2014 - a 10.2% share of the market.

In China, GM sold 3,540,000 units in 2014, with a 14.8% market share.

GMSA 8.4% -1.4%

GM South America comprises activities in Brazil, Venezuela, etc.

Deliveries amounted to 878,000 units in 2014 (out of which 579,000 in

Brazil) - a 16.6% share of the market.

GM FINANCIAL 3.1% 16.5%

GM Financial operates through Ally Financial and other entities,

providing consumer loans and leases. Activities span North America,

Europe, Latin America and China.


5.3. General Motors Corporate strategy and recent events

FOCUS ON THE US: NEW SUV AND PICK-UP LAUNCHES; BOOST CADILLAC GROWTH

In recent years, GM’s performance in the US has reached historical highs on the back on new product launches, particularly in

mid-sized and large pick-ups and SUVs (Chevrolet Colorado, GMC Canyon…) as well as in its luxury line-up (Cadillac Escalade…).

GM foresees growing demand in coming years, with the overall market expected to exceed 17m units in sales, a level unseen

since 2001. Demand for small SUVs has been particularly buoyant in the US, and GM has positioned itself to grow in the

category with the recent launch of its Chevrolet Trax. In addition, building on strong performance in its luxury portfolio, GM has

established Cadillac as a separate business unit in 2014 in a move to bolster the brand’s development across the globe (five new

models are slated to be launched in North America in 2015, nine in China over the next five years, operations are set to

commence in Russia in coming years, etc.)

April 2014 GM unveils the Chevrolet Trax, a new vehicle in the small-SUV category, to be marketed globally.

August 2014

GM inaugurates in Phoenix its fourth Information Technology Innovation Center in the US.

GM introduces the latest model in its Chevrolet Volt electric vehicle line-up. GM’s Volt has recorded stronger sales,

especially from non-GM customers. The company claims that seven of 10 new Volt buyers in 2013 did not

previously own a GM car - the majority of these customers traded in Toyota Priuses.

September 2014 Cadillac is established as an individual business unit within the GM group.

March 2015

Cadillac lifts the lid on the CT6, a premium luxury sedan and the eighth of a series of new vehicles meant to enhance

the Cadillac portfolio. By 2020, GM will have spent a total of €15bn for product development and marketing, in an

effort to position the brand as the “ultimate expression of comfort, luxury and connectivity”.

GM launches the 2016 GMC Terrain and Terrain Denali, new models in its line-up of compact SUV vehicles, at the

New York International Auto Show.

May 2015

GM to allocate €0.9bn in order to upgrade its full-size truck facility in Fort Wayne, Indiana, the USA. The initiative is

part of GM’s efforts to upgrade manufacturing in the US, with nearly €4bn in investment to be disbursed over the

next three years.

September 2015

GM reaches a settlement with US authorities over a faulty ignition switch which prevented the airbags from

deploying in a car crash, which resulted in over 100 deaths and 1,000 injuries. GM was charged with “wilfully and

knowingly” concealing evidence about the switches which were fitted on-board approximately 2.6m compact cars

produced over the 2002-2007 period. GM will pay a penalty of about €600m, and will be placed under the

supervision of an independent observer.



ENHANCE THE LOCAL WEB OF MANUFACTURING AND SERVICE PARTNERSHIPS IN CHINA

China has been one the group’s key strategic markets, with local operations conducted through a multitude of joint ventures in

order to develop vehicles that respond to the needs of Chinese drivers. GM and its partners sold 3,540,000 cars in China in 2014

(whereas GM’s sales in the US reached 2,935,000 units): 1,710,025 units via Shanghai GM, 1,787,931 units via SAIC-GM-Wuling

and 41,702 units via FAW-GM. Best-selling GM models were Buick (Excelle, Regal, Encore, the recently launched Envision…) which

totalled 919,518 units, Chevrolet (Cruze, Sail, Malibu…) with 717,007 units, and Cadillac (XTS, SRX….) whose sales volume rose

50% year-on-year to 73,500 units in 2014. Local brands such as Baojun and Wuling recorded sales of 1,608,571 units in 2014.

May 2014 Shanghai GM inaugurates the Buick aftersales store on Tmall.com. The latter is the online retail platform of Alibaba

Group, a leading Chinese e-commerce company.

July 2014 SAIC-GM-Wuling lays the foundation stone for its new R&D facility in Liuzhou, Guangxi. With this move, GM aims to

bolster development of new cars tailored to the taste of the Chinese customer.

October 2014 Shanghai GM will be “the first automaker in China” to install embedded 4G LTE services on-board its cars. Starting in

2015, the joint venture’s vehicles will feature the OnStar 4G LTE, GM’s high-speed connectivity technology.

December 2014 The SAIC-GM-Wuling team starts operations at its new facility in Chongqing. A project to add capacity - “the

second phase of production” - is in early stages.

April 2015 GM and SAIC set up the SAIC Motor Insurance Sales joint venture to provide insurance services for Buick, Cadillac

and Chevrolet customers in China.

July 2015

SAIC-GM-Wuling introduces the Baojun 560, the first SUV in the Baojun line-up, designed specifically for the

Chinese market. SAIC-GM-Wuling started marketing Baojun-branded vehicles in 2010. The Baojun family includes a

630 sedan, Le Chi mini-car, the 610 hatchback and the 730 MPV.

SAIC GM to start exports of Chevrolet Sail 3, third-generation Chevrolet Sail cars produced in China, to Chile and

Peru. SAIC GM hopes to start exports to other markets in South America, as well as to Africa and Asia.

August 2015

SAIC-GM-Wuling launches the Wuling Hong Guang S1 MPV, the third-generation model in Hong Guang product

line-up.

GM’s SAIC-GM-Wuling joint venture in China delivers the first Baojun 560 SUV off the new production line at its

Baojun plant in Liuzhou, Guangxi. Total capacity added at the facility amounts to “400,000 vehicles, 400,000 engines

and 200,000 new energy vehicles” – a 1bn-euro investment.



INVEST IN OTHER KEY MARKETS, CEASE UNPROFITABLE OPERATIONS

GM has continued to fine-tune its manufacturing footprint in recent years, responding to evolving demand trends in specific

regions and countries. At one end of the spectrum, the group announced the withdrawal of Opel from Russia and plans to stop

the development of the brand in China in March 2015. At the other end of the spectrum, GM has boosted investment in

manufacturing facilities and product development in Brazil, Indonesia, India, etc. The group will tap growing demand in the

premium category in Russia, by converting its existing Opel facility in St. Petersburg to develop and manufacture Cadillac

models.

March 2014

GM to pour €245m into capacity expansion at its Ruesselsheim plant in Germany. The facility will hence

accommodate production of new Opel models, including one model that will be rebranded Buick for sales in the US

market.

August 2014 GM intends to invest over €2bn in Brazil over the 2014-2018 period. The budget is earmarked chiefly for new vehicle

development, particularly of the Chevrolet brand.

September 2014 GM’s first Chevrolet for export to Chile rolls off production line at the Talegaon plant in Pune, India. GM’s facilities in

India - Talegaon and Halol – have an annual output of 280,000 vehicles.

February 2015

SAIC-GM-Wuling, the joint venture between GM, SAIC and Wuling Motors in China, will set up manufacturing

operations in Indonesia. Plans are to produce Wuling-branded vehicles at a facility that will be built close to the

capital city.

March 2015

GM’s Opel brand will withdraw from the Russian market by the end of the year as part of the group’s effort to focus

on the premium segment. GM’s will halt operations at its St. Petersburg facility as it prepares the ground for the

development and production of its Cadillac brand in Russia.


5.3. General Motors Financial indicators






























innovation.



sales.


0%

5%

10%

15%

20%

25%

30%

35%

90

95

100

105

110

115

120

10 11 12 13 14

0%

1%

2%

3%

4%

5%

6%

7%

0

2

4

6

8

10 11 12 13 14





units: million units; change in %

0%

10%

20%

30%

40%

6

7

8

9

10

10 11 12 13 14

3%

4%

5%

6%

4

5

6

7

10 11 12 13 14


Sales volume by region Sales volume performance by region



a percentage.



a percentage.

Sales volume breakdown by


percentage.

Annual change of sales volume

by regional market, expressed as

a percentage.


,3,41

34,4%

,1,26

12,7%

,4,38

44,1%

,0,88

8,8%

GMNA GME GMIO GMSA


units: change in %

units: million units; % of total units sold

-20% -10% 0% 10%

GMNA

GME

GMIO

GMSA

2013-2014 2012-2013


75,66

65,0%

16,62

14,3%

10,76

9,2%

9,80

8,4%

3,63

3,1%

GMNA GME

GMIO GMSA

GM Financial

units: change in %


-50% 0% 50% 100%

GMNA

GME

GMIO

GMSA

GM Financial

2013-2014 2012-2013



Solvency ratios

Liquidity ratios










generate profits.































0%

1%

2%

3%

4%

5%

6%

0%

5%

10%

15%

20%

25%

10 11 12 13 14

ROE ROA

0,6

0,8

1,0

1,2

1,4

10 11 12 13 14


0

2

4

6

8

10

12

14

0

1

2

3

4

5

10 11 12 13 14


0%

1%

2%

3%

4%

5%

6%

0

1

2

3

4

10 11 12 13 14

FCF Capex ratio



units: %

5.3. General Motors Statistical tables




Consolidated

operating income

Consolidated


2010 101.37 29.6% 4.86 4.8% 3.49 3.4%

2011 112.35 10.8% 6.94 6.2% 5.67 5.0%

2012 113.83 1.3% 4.59 4.0% 3.63 3.2%

2013 116.20 2.1% 3.99 3.4% 2.82 2.4%

2014 116.57 0.3% 3.00 2.6% 2.10 1.8%


Year R&D expenses R&D ratio Advertising expenses Advertising ratio

2010 5.20 5.1% 3.18 3.1%

2011 6.07 5.4% 3.35 3.0%

2012 5.53 4.9% 4.04 3.5%

2013 5.38 4.6% 4.11 3.5%

2014 5.53 4.7% 3.89 3.3%

units: billion euros; % of sales




sales

Segment


2013-2014

change 2012 sales

2012-2013

change

GMNA 75.66 65.0% 6.5% 71.09 61.2% 6.4% 67.22 5.8%

GME 16.62 14.3% -6.2% 16.42 14.1% 1.2% 17.24 -4.7%

GMIO 10.76 9.2% 8.5% 13.76 11.9% -21.8% 15.39 -10.6%

GMSA 9.80 8.4% -1.4% 12.32 10.6% -20.4% 12.48 -1.3%

GM Financial 3.63 3.1% 16.5% 2.50 2.2% 45.2% 1.47 70.5%


Sales volume 2014 % of total 2013 2013 % share 2013-2014 change 2012 2012-2013 change

GMNA 3.41 34.4% 3.23 33.3% 5.5% 3.02 7.1%

GME 1.26 12.7% 1.39 14.3% -9.8% 1.47 -5.2%

GMIO 4.38 44.1% 4.06 41.7% 7.9% 3.76 8.1%

GMSA 0.88 8.8% 1.04 10.7% -15.3% 1.05 -1.3%

units: million euros; % share; % change




expenses

Interest

coverage ratio

2010 103.84 76.79 27.05 2.84 12.9% 3.4% 0.85 5.73

2011 108.11 79.61 28.50 2.79 19.9% 5.2% 0.56 12.48

2012 111.71 84.61 27.10 3.12 13.4% 3.3% 0.58 7.95

2013 124.36 92.51 31.85 2.90 8.8% 2.3% 0.78 5.08

2014 132.83 106.32 26.51 4.01 7.9% 1.6% 1.37 2.20




Operating

cash flow

Capital


2010 39.66 35.25 0.87 1.13 5.07 3.14 3.1% 1.93

2011 48.54 39.79 0.95 1.22 6.10 4.67 4.2% 1.44

2012 52.33 40.36 1.02 1.30 7.93 6.03 5.3% 1.90

2013 60.93 46.66 1.08 1.31 9.44 5.66 4.9% 3.79

2014 62.55 49.12 1.07 1.27 7.52 5.30 4.5% 2.22


5.4. Hyundai Motor Company Presentation


Headquarters Seoul, South Korea

2014 key figures (consolidated) • Established in 1967, Hyundai Motor Company is South Korea’s leading carmaker, and has a

strong presence in Asia and Europe. Along with Kia Motors Corporation, Hyundai Motor

Company is part of the Hyundai Motor group, a leading Korean chaebol (conglomerate)

with operations in finance, steel, construction, among other things. Hyundai Motor

Company holds a 33.88% stake in Kia Motors as of December 2013.

• Hyundai Motor Company’s production facilities are concentrated in South Korea and China,

which accounted for 60% of output in 2014. Hyundai also manufactures cars in India, the

US, the Czech Republic, Russia, Turkey and Brazil. In 2014, Hyundai sold nearly 5m cars, of

which 58.6% in the small passenger car category. Its affiliate, Kia, sold another 1.4m cars,

generating revenue of nearly €13bn.

• Hyundai has seen tremendous sales expansion over the 2009-2011 period, by far

outperforming the industry. However, in recent years, its pace of growth has slowed down

considerably on the back of weak GDP growth and contracting car demand in emerging

markets. This was exacerbated by a shift in demand towards SUVs and bigger-sized cars,

which account for a relatively small slice of its production mix.




Net margin 8.6%

Capex ratio 3.8%

R&D ratio 2.4%

Vehicles sold 4,836,000 units

Staff 64,956 employees

Korea 44.7%

N. America 30.0%

Asia 6.9%

Europe 15.6%

Others 2.8%


HYUNDAI MOTOR COMPANY 2014 net consolidated revenue: €63.64 billion

Vehicle

81.0% of revenue

Others

6.9% of revenue

Finance

12.1% of revenue

5.4. Hyundai Motor Company Description of business


MARGIN DESCRIPTION

VEHICLE 81.0% 8.0%

Comprises the developing, manufacturing and sale of:

passenger cars (Equus, i20, i30, i40, Genesis, Azera, Elantra, Sonata,

Sonata Hybrid, Accent…),

SUVs (Tucson, Santa Fe…),

MPVs (H-1, H350),

buses (Universe, Unicity, Aerotown…)

and trucks (Xcient).

FINANCE 12.1% 9.9% Provides financing for car purchasing, and also covers credit card

processing, among others.

OTHERS 6.9% 3.1% Comprises R&D, powertrain manufacturing and other activities

outside the scope of manufacturing and finance.


5.4. Hyundai Motor Company Corporate strategy and recent events

BOOST MANUFACTURING CAPACITY, PARTICULARLY IN CHINA

In recent years, Hyundai has kept boosting manufacturing capacity on the back of new product development (for example, the

group has recently launched its first MPV in Europe) and surging demand. In conjunction with Beijing Automotive Industry,

Hyundai has recently begun the construction of its fourth and fifth plants in China, with each facility scheduled to have an initial

capacity of 300,000 vehicles per year. Other manufacturing investments meant to accommodate commercial vehicle production

have been carried out at facilities in Turkey and South Korea.

October 2014 Hyundai Assan Otomotiv Sanayi, a Hyundai joint venture, rolls out the first New Generation i20 model off its

production line in Turkey. The car is designed in Europe for European markets.

February 2015

Hyundai earmarks a budget of €1.5bn to develop its range of commercial vehicles, with €1.2bn slated for new

product development and €300m for bolstering production capacity (to 100,000 units per annum) of its Jeon-ju

facility in Korea.

April 2015

Hyundai lays the foundation stone for its operations in Changzhou, Hebei Province, China. This will be the group’s

fourth facility in China and will have an initial output of 200,000 units per year. A second stage of construction will

see the plant reach total annual capacity of 300,000 units in 2018.

May 2015

Hyundai enters the multi-purpose light commercial vehicle category with the introduction of the H350 model for

the European market. The H350 will be manufactured by Hyundai’s partner, Karsan Automotive, at a facility in Bursa,

Turkey.

June 2015

Hyundai starts construction of its fifth facility in China. Located in Chongqing, China, the plant – to be jointly run by

Hyundai Motor and the Beijing Automotive Group - has a capacity of 300,000 units per year and entails €800m in

investment.


5.4. Hyundai Motor Company Corporate strategy and recent events

NEW PRODUCT DEVELOPMENT

Hyundai’s vehicle portfolio is comprised mostly of models in the small and mid-size segments (small passenger cars, compact

SUVs, and sedans). Among its best-selling cars are the i30, the Veloster, and the Elantra. Over 2014-2015, the group has

continued to upgrade its existing models and expand in new market categories (entered the sub-compact SUV segment in India,

and launched a premium sedan model). Recent introductions include the Tucson sport utility vehicle, including a fuel-cell

powered version; the Elantra compact sedan, the Sonata sedan; and, the Genesis luxury sedan.

May 2014 Hyundai to market the Tucson fuel cell vehicle in the US market. The model will be available under leasing: with a

monthly fee of about €400, the customer is granted unlimited hydrogen refuelling and maintenance services.

January 2015 Hyundai launches the new Sonata plug-in-hybrid, the group’s first model in the plug-in hybrid electric vehicle

category. The car will be built in Korea and will be sold in selected markets worldwide.

July 2015 Hyundai introduces Creta, its first car in the sub-compact SUV segment, in India. The model will be marketed

globally in coming months.

September 2015

Hyundai unveils the next generation of its Elantra compact sedan model. The group hopes to sell 110,000 units in

Korea and 590,000 abroad in 2016.

At the Frankfurt Motor Show, Hyundai lifts the lid on its “Vision G” Coupe, a new luxury concept that will be the

starting point for the development of a premium line-up of cars.


BUILDING A STRONGER BRAND IDENTITY

So as to bolster its global expansion strategy, Hyundai has sought to strengthen its brand image and to raise public awareness

through sponsorship agreements. Hyundai has been an official partner of the UEFA competitions, and recently (June 2015)

replaced GM as the official automotive sponsor of the National Football League. Moreover, in May 2014 Hyundai Motor

introduced a new showroom concept in a move to enhance brand awareness. Dubbed “Hyundai Motorstudio”, the non-sale

showroom was initially launched in Seoul, with new ones scheduled to open in major urban areas worldwide.

May 2014 Hyundai unveils the first “Hyundai Motorstudio” in Gangnam, a business district in Seoul. The flagship showroom

will seek to promote the group’s “brand direction and aspirations”.

November 2014 Hyundai unveils its largest dealership in Europe to date. Located in Frankfurt, the new sales location, along with an

additional 200 redesigned stores, will showcase the group’s brand identity.

January 2015 Hyundai inaugurates in Moscow, Russia, the first “Hyundai Motorstudio” located outside of its home market. The

opening of the non-sale showroom is designed to raise brand awareness.

5.4. Hyundai Motor Company Financial indicators






























innovation.



sales.


0,0%

2,5%

5,0%

7,5%

10,0%

12,5%

15,0%

17,5%

0

10

20

30

40

50

60

70

10 11 12 13 14

4%

5%

6%

7%

8%

9%

10%

11%

0

1

2

3

4

5

6

7

10 11 12 13 14





units: million cars; change in %

0%

2%

4%

6%

8%

10%

12%

0

1

2

3

4

5

6

10 11 12 13 14

1,8%

1,9%

2,0%

2,1%

2,2%

2,3%

2,4%

2,5%

2,6%

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

1,6

10 11 12 13 14





a percentage.



a percentage.



percentage.



percentage.


28,45

44,7%

19,12

30,0%

4,40

6,9%

9,91

15,6%

1,76

2,8%

Korea N. America

Asia Europe

Others


units: change in %


475,6%

-10% -5% 0% 5% 10%

Korea

N. America

Asia

Europe

Others

2013-2014 2012-2013


51,55

81,0%

7,68

12,1%

4,40

6,9%

Vehicle Finance Others

units: change in %


14,2%

30,7%

8,9%

0% 10% 20% 30% 40%

Vehicle

Finance

Others

2013-2014 2012-2013



Solvency ratios

Liquidity ratios










generate profits.































2%

3%

4%

5%

6%

7%

8%

10%

12%

14%

16%

18%

20%

22%

10 11 12 13 14

ROE ROA

1,0

1,2

1,4

1,6

1,8

2,0

10 11 12 13 14


2,0

3,0

4,0

5,0

6,0

0,0

0,5

1,0

1,5

2,0

10 11 12 13 14


3,0%

3,2%

3,4%

3,6%

3,8%

-2,0

-1,0

0,0

1,0

2,0

10 11 12 13 14

FCF Capex ratio



units: %

5.4. Hyundai Motor Company Statistical tables




Consolidated

operating income

Consolidated


2010 47.76 n/a 4.22 8.8% 4.28 9.0%

2011 55.47 16.1% 5.72 10.3% 5.78 10.4%

2012 60.22 8.6% 6.02 10.0% 6.46 10.7%

2013 62.25 3.4% 5.93 9.5% 6.41 10.3%

2014 63.64 2.2% 5.38 8.5% 5.45 8.6%



2010 0.99 2.1% 3.70 n/a

2011 1.03 1.9% 4.10 10.8%

2012 1.16 1.9% 4.39 7.1%

2013 1.32 2.1% 4.62 5.2%

2014 1.52 2.4% 4.84 4.6%

units: billion euros; % change; % share




sales

Segment


2013-2014

change 2012 sales

2012-2013

change

Vehicle 51.55 81.0% 8.0% 51.00 81.9% 1.1% 50.84 0.3%

Finance 7.68 12.1% 9.9% 7.05 11.3% 8.9% 6.18 14.2%

Others 4.40 6.9% 3.1% 4.19 6.7% 5.1% 3.21 30.7%


Region 2014 sales % of total sales 2013 sales 2013 % share 2013-2014 change 2012 sales 2012-2013 change

Korea 28.45 44.7% 27.64 44.4% 2.9% 27.56 0.3%

N. America 19.12 30.0% 18.29 29.4% 4.6% 17.62 3.8%

Asia 4.40 6.9% 4.59 7.4% -4.2% 4.88 -5.9%

Europe 9.91 15.6% 10.04 16.1% -1.2% 9.87 1.6%

Others 1.76 2.8% 1.70 2.7% 3.6% 0.30 475.6%





expenses

Interest

coverage ratio

2010 67.53 44.08 23.45 1.88 18.2% 6.3% 1.26 3.35

2011 78.06 49.30 28.75 1.71 20.1% 7.4% 1.23 4.66

2012 86.65 52.49 34.16 1.54 18.9% 7.5% 1.18 5.08

2013 95.13 54.78 40.34 1.36 15.9% 6.7% 1.03 5.76

2014 104.97 60.32 44.65 1.35 12.2% 5.2% 0.99 5.42




Operating

cash flow

Capital


2010 31.03 22.42 1.21 1.38 3.12 1.46 3.1% 1.66

2011 34.88 23.64 1.29 1.48 2.95 2.07 3.7% 0.88

2012 39.10 23.41 1.56 1.67 3.81 2.14 3.6% 1.67

2013 41.96 22.76 1.62 1.84 0.86 2.26 3.6% - 1.40

2014 46.36 25.08 1.64 1.85 1.51 2.39 3.8% - 0.88


5.5. Nissan Motor Presentation


Strategic focuses NISSAN MOTOR

2014 net consolidated revenues: €80.76 billion

Automobiles

93.1% of

revenue


• Founded in 1933, Nissan is Japan’s second-largest carmaker by sales volume. In

1999, Nissan and Renault signed a global partnership leading to the creation of the

Renault-Nissan Alliance - the world’s fourth biggest carmaker, with combined sales

of 8.5m units during 2014. While the two groups share expertise on four key areas

(engineering, manufacturing and supply chain, purchasing and human resources),

the Renault and Nissan groups are managed independently.

• With 5.32m units sold in FY2014, Nissan markets over 60 car models worldwide

under the Nissan, Infiniti and Datsun trademarks. The US and China were the

group’s largest markets, accounting for 26.1% and 23.0% respectively of total sales

volume in the last fiscal year.

Headquarters: Yokohama, Japan

Expansion in China and other growth markets

In recent years, Nissan has enjoyed strong revenue

growth in the US and China. In coming years, Nissan is

aiming to build on demand momentum by launching

a series of models designed specifically to appeal to

drivers in these markets. For instance, in April 2015,

the group introduced the Lannia, the Murano Hybrid,

the GT-R Nismo and 370Z Nismo, tailored to the

specificities of the Chinese market.

On the other hand, Nissan is seeking to start

production of its NP300 Frontier pick-up at Renault´s

facility in Córdoba, Argentina – where a common

platform will also produce a pick-up truck for Renault

and another for Mercedes.

Increase production in Japan

Following a broader reshoring-of-production move by

Japanese companies, including Toyota, Nissan stated

its intention to boost domestic car production to

above 1m units per year in 2016-17. In 2016, Nissan

will begin production of its Rogue SUV (X-Trail in

Japan) at its Kyushu plant, with an aim to export it to

North America.

Steering closer to Daimler

The Renault-Nissan Alliance has recently cemented its

2010 partnership with Daimler. Building on Nissan’s

Aguascalientes facility in Mexico, Daimler will boost its

production output in North America. Moreover,

Nissan and Mercedes will start to collaborate on part

and vehicle development, with plans to jointly design

models under the Infiniti and Mercedes-Benz brands.

Recent events

• April 2015: Nissan lifts the lid on Lannia, a mid-size sedan exclusively designed to

suit the needs of “the youth generation in China”.

• September 2015: Nissan and Daimler start construction of their joint facility in

Aguascalientes. The plant will produce jointly developed Infiniti- and Mercedes-

Benz-branded premium compact vehicles starting in 2017-18. By 2020, capacity will

reach 230,000 units a year.

• September 2015: At 2015 Frankfurt Motor Show, Nissan’s premium brand, Infiniti,

unveils the Q30, its first model in the premium compact category.

Sales financing

6.9% of revenue

5.5. Nissan Motor Financial indicators

Consolidated net sales Consolidated operating income and margin




















-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

0

10

20

30

40

50

60

70

80

90

09 10 11 12 13 14

0%

10%

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

09 10 11 12 13 14


Source: company information; *Oceania, Middle East, Central and South America excluding Mexico and South Africa


Sales by region



percentage.

15,43

19,1%

37,17

46,0%

12,12

15,0%

7,88

9,8%

8,16

10,1%

Japan

North America

Europe

Asia

Other overseas countries*




a percentage.

Sales by segment

75,22

93,1%

5,55

6,9%

Automobile Sales Financing


5.5. Nissan Motor Statistical tables




Consolidated

operating income

Consolidated


2009 53.37 -10.9% 2.21 4.1% 0.30 0.6%

2010 62.29 16.7% 3.82 6.1% 2.27 3.6%

2011 66.80 7.2% 3.88 5.8% 2.42 3.6%

2012 62.03 -7.1% 3.72 6.0% 2.42 3.9%

2013 74.43 20.0% 3.54 4.8% 2.76 3.7%

2014 80.76 8.5% 4.19 5.2% 3.25 4.0%


Region 2014 sales 2014 % share 2013 sales 2013 % share 2013-2014

change 2012 sales

2012-2013

change

Japan 15.43 19.1% 16.67 22.4% -7.4% 15.29 9.0%

North America 37.17 46.0% 31.87 42.8% 16.6% 24.51 30.0%

Europe 12.12 15.0% 11.79 15.8% 2.8% 9.85 19.6%

Asia 7.88 9.8% 7.07 9.5% 11.4% 5.97 18.5%

Other overseas countries* 8.16 10.1% 7.03 9.4% 16.1% 6.42 9.6%


*Oceania, Middle East, Central and South America excluding Mexico and South Africa

Segment 2014 sales 2014 % share Segment


2013-2014

change 2012 sales

2012-2013

change

Automobile 75.22 93.1% 3.5% 69.76 93.7% 7.8% 58.37 19.5%

Sales Financing 5.55 6.9% 25.0% 4.66 6.3% 18.9% 3.67 27.2%

units: billion euros; % change; operating income as % of sales

5.6. Renault Group Presentation


Strategic focuses RENAULT GROUP


Automobile

94.7% of

revenue


• Founded in 1898, Renault is a leading carmaker in Europe. It sells cars under the Renault, Dacia and Samsung trademarks. In 2014, the group’s sales amounted to 2.7m units: the Duster, the new Logan and the new Sandero-badged Dacia in Europe and the Mediterranean Basin and Renault elsewhere– as well as the Renault Clio IV and Captur were its best-selling models.

• In 1999, Nissan and Renault signed a global partnership leading to the creation of the Renault-Nissan Alliance -the world’s fourth biggest carmaker, with combined sales of 8.5m units during 2014. While the two groups share expertise on four key areas (engineering, manufacturing and supply chain, purchasing and human resources), the Renault and Nissan groups are managed independently.

Headquarters: Paris, France

Continued global expansion of entry vehicle ranges

Renault, a leading carmaker in Europe (10% market

share) is particularly known for its entry level vehicles

(Clio, Duster, Sandero…) which accounted for 42% of

2014 sales volume. Sales of Dacia-branded cars have

risen over 10% on annual average, since 2009

(compared to 2.6% for Renault brands). In the coming

years, the group aims to increase manufacturing

footprint for entry vehicles in emerging countries, with

investments carried out in Brazil, Russia, Turkey, China

(ongoing construction of a plant in Wuhan with

Dongfeng Motor) and Argentina. In Malaysia, the

group will produce its entry-level sedan (Fluence) by

teaming up with Tan Chong Motors.

Improve financials

With the launch of new vehicles (Espace, Kadjar,

Captur…) in higher-tier segments Renault hopes to

elevate its brand image and continue to improve its

operating margin from 3.9% in 2014 to over 5% by

2017.

Lead in the zero-emission mobility area

In June 2015, the Renault-Nissan Alliance, sold its

250,000th electric vehicle, a white Renault ZOE. With

electric cars such as Nissan LEAF, Nissan e-NV200 van,

Renault Kangoo Z.E van, SM3 Z.E. and Twizy, the

Renault-Nissan alliance, currently generating half of

total electric vehicles sales across the globe, has

sought to establish itself as a leader in zero-emission

mobility. In a recent deal, Renault has teamed up with

Vincent Bolloré to begin manufacturing the Bluecar

electric vehicle, used in Paris’ Autolib urban car hiring

scheme. Bluecar production will hence shift from Italy

to Renault’s Dieppe facility.

Recent events

• June 2014: By acquiring 67.1% of the holding company that controls AvtoVAZ,

Renault and Nissan get a controlling stake (50.1%) in Russia’s AvtoVAZ.

• September 2014: Renault’s Sandouville plant (France) will make a new LCV – based

upon the same platform as Renault’s New Trafic – for Fiat, starting in 2016.

• October 2014: Dacia, Renault's low-cost brand selling in Europe and the

Mediterranean rim, records cumulative sales of 3m units since 2004.

• November 2014: Renault starts operations at its Oued Tlelat car manufacturing

plant in Algeria. Production capacity installed amounts to 25,000 units per year.

• March 2015: Renault to start manufacturing Logan and Sandero models at its Santa

Isabela facility in Argentina.

Sales financing

5.3% of revenue

5.6. Renault Group Financial indicators





















-15%

-10%

-5%

0%

5%

10%

15%

20%

10

15

20

25

30

35

40

45

09 10 11 12 13 14

-5%

0%

5%

-0,5

0,0

0,5

1,0

1,5

2,0

09 10 11 12 13 14




Sales volume by region

Sales volume breakdown by


percentage.

577,60

21,3%

887,01

32,7% 389,70

14,4%

416,93

15,4%

308,01

11,4%

133,17

4,9%

France

Europe (outside France)

Eurasia

Americas

Africa, Middle East, India

Asia-Pacific

units: thousand units; % of total



a percentage.

Sales by segment

38,87

94,7%

2,18

5,3%

Automobile Sales financing


5.6. Renault Group Statistical tables




Consolidated

operating income

Consolidated


2009 33.71 -10.8% -0.40 -1.2% -3.13 -9.3%

2010 38.97 15.6% 1.10 2.8% 3.42 8.8%

2011 42.63 9.4% 1.09 2.6% 2.14 5.0%

2012 40.72 -4.5% 0.73 1.8% 1.74 4.3%

2013 40.93 0.5% 1.24 3.0% 0.70 1.7%

2014 41.06 0.3% 1.61 3.9% 2.00 4.9%


Region volume 2014 2014 % share

France 577.60 21.3%

Europe (outside France) 887.01 32.7%

Eurasia 389.70 14.4%

Americas 416.93 15.4%

Africa, Middle East, India 308.01 11.4%

Asia-Pacific 133.17 4.9%

units: thousand units; % share

Segment 2014 sales 2014 % share Segment


2013-2014

change 2012 sales

2012-2013

change

Automobile 38.87 94.7% 2.2% 38.78 94.7% 0.3% 39.16 -1.0%

Sales financing 2.18 5.3% 34.4% 2.16 5.3% 1.1% 1.56 37.9%

units: billion euros; % change; operating income as % of sales

5.7. Ford Presentation


Headquarters Dearborn, Michigan

2014 key figures (consolidated)

• Ford Motor Company was founded in 1903 by Henry Ford. The company

specialises in passenger vehicles, light commercial vehicles, SUVs, trucks,

hybrids and electric vehicles (EVs). Ford is also involved in finance with its Ford

Credit business.

• Unlike domestic competitors, Ford did not go under Chapter 11 reorganisation

as a result of a huge restructuring programme that cut excess manufacturing

capacity and reduced brands. After many years of diversification and

development of several brands, Ford Motor is currently focusing on its core

Ford brand and revitalising that of Lincoln. The majority of its stake in Mazda

was sold and Volvo and Jaguar Land Rover are no longer part of the company’s

portfolio. The company has 62 plants worldwide.




Net margin 2.2%

Capex ratio 5.2%

R&D ratio 4.8%

Staff 187,000 employees

United States 57.4%

United Kingdom 8.1%

Canada 6.5%

Germany 5.2%

Others 22.7%


Ford Motor Company 2014 net consolidated revenue: €107.71 billion

Automotive

94.2% of revenue

Financial Services

5.8% of revenue


5.7. Ford Description of business

SEGMENT % OF

SALES

OPERATING

MARGIN DESCRIPTION

AUTOMOTIVE: 94.2% 3.9% Development, production, distribution and service of:

Ford North America 57.2% 8.4% Ford and Lincoln brand vehicles and related service

parts and accessories in the United States, Canada and Mexico.

Ford South America 6.1% -13.2% Ford brand vehicles and related service parts and

accessories in South America.

Ford Europe 19.7% -3.6% Ford brand vehicles, components, and related service

parts and accessories in Europe, Turkey and Russia.

Ford Middle East & Africa 3.1% -0.5% Ford and Lincoln vehicles, service parts and accessories

in the Middle East and Africa.

Ford Asia Pacific 7.4% 5.5% Ford and Lincoln vehicles and related service parts and

accessories in the Asia Pacific region.

FINANCIAL SERVICES 5.8% -

Includes Ford Credit (vehicle-related financing, leasing, and insurance) and Other Financial Services (holding

companies, real estate, and the financing and leasing of some Volvo vehicles in Europe).

5.7. Ford Corporate strategy and recent events

CONCENTRATING ON KEY BRANDS AND FINE-TUNING THE GLOBAL PRODUCT LINE-UP

Ford has been rationalising its brand portfolio in order to fully devote its resources to further growing its core Ford and Lincoln brands as

part of its One Ford plan. Over the last few years, the company has therefore eliminated a number of brands from its portfolio through the

sale of Volvo, Aston Martin and Jaguar Land Rover, phased out production of the Mercury brand and reduced its share in Mazda. At the

same time, it is refining its global product line-up. It launched 24 all-new or significantly refreshed products globally, including the all-new

F-150, Mustan, Escort, Ka, Transit and Lincoln MKC. 15 new global products are expected to be launched in 2015. With these products, Ford

aims to serve customers in all markets with a range of small, medium and large cars, utilities and trucks.

September 2015 Ford issues five safety recalls and one safety compliance recall in North America.

Strong demand for new products boosts Ford’s August U.S. sales to their best levels in 9 years. Furthermore, Ford brand

SUV’s saw the best sales in 12 years.

Carmakers – World – December 2015

UPPING IN-CAR SMART AND SAFE TECHNOLOGY

Ford is investing aggressively in a broad array of technologies that enhance vehicle connectivity to improve safety and integration with

devices such as smartphones. The company leverages this technology on global platforms. In the near-term, Ford is researching technology

to locate open parking spaces in crowded cities; make car-sharing easier; move vehicles across cities with remote control; use vehicles and

bicycles to gather information about traffic and parking conditions; and help make healthcare more accessible in rural areas. In the mid-

term, it is targeting additional semi-autonomous driving technologies and the emergence of integrated networks. In the long-term, it

believes that the landscape could look radically different and that connected traffic networks and smart vehicles capable of automated

navigation are likely to bring about new business models and contribute to improved personal mobility.

September 2015

Ford enhances its SYNC Applink™ for app developers with new capabilities and tools for in-car experience innovation.

SYNC AppLink™ enables the use of voice-control smartphone apps from the driver’s seat, and it allows for phone apps to

appear on the SYNC screen as they appear on the phone.

New Ford smartwatch apps allow electric vehicle owners to check their battery charge status, unlock their doors and

monitor their driving score (petrol use, trip miles and braking and driving efficiency).

Ford announces it will launch innovative new adaptive steering technology in 2016 which will allow improved steering at

any speed.

169

TECHNOLOGY IMPROVEMENTS FOR BOTH PRODUCTION AND PRODUCTS

Ford is seeking to develop standardised flexible production facilities to increase efficiency while allowing the company to adapt to new

trends in market demand. It is reducing the number of platforms its vehicles are produced on and ensuring that these platforms can be

used to produce lighter, fuel-efficient vehicles with different engine models: hybrid, plug-in hybrid and pure battery. Ford has gone from

using 27 platforms in 2007 to 12 currently. It is aiming to employ just 9 by 2016 and eventually hopes to reduce this further to reach 8. It

aims to reinvest the savings resulting from its platform consolidation back into production development to introduce more products at a

faster product cadence. Indeed, new product launches can help to drive revenue and profit growth: over 50% of Ford’s global volume in

2015 will be from vehicles launched in 2014 and 2015.

5.7. Ford Financial indicators


US market share





















Share of the US vehicle market.






innovation.



sales.


-5,0%

-2,5%

0,0%

2,5%

5,0%

7,5%

10,0%

12,5%

85

90

95

100

105

110

115

10 11 12 13 14

0%

1%

2%

3%

4%

5%

6%

7%

8%

0

1

2

3

4

5

6

7

10 11 12 13 14





units: %

14% 15% 16%

2012

2013

2014

1,8%

1,9%

2,0%

2,1%

2,2%

2,3%

2,4%

2,5%

2,6%

0,0

1,0

2,0

3,0

4,0

5,0

6,0

10 11 12 13 14





a percentage.



a percentage.



percentage.



percentage.


61,8

57,4%

8,78

8,2%

7,03

6,5% 5,6

5,2%

24,5

22,7%

United States United Kingdom

Canada Germany

Others


units: change in %


-20% -10% 0% 10%

United States

United

Kingdom

Canada

Germany

Others

2013-2014 2012-2013


101,51

94,2%

6,2

5,8%

Automotive Sector

Financial Services Sector

units: change in %


-5% 0% 5% 10% 15%

Automotive

Sector

Financial

Services Sector

2013-2014 2012-2013



Solvency ratios

Liquidity ratios










generate profits.































0%

2%

4%

6%

8%

10%

12%

-1200%

-1000%

-800%

-600%

-400%

-200%

0%

200%

400%

10 11 12 13 14

ROE ROA

1,0

1,2

1,4

1,6

1,8

2,0

2,2

2,4

2,6

10 11 12 13 14


0,0

5,0

10,0

15,0

20,0

25,0

-300,0

-250,0

-200,0

-150,0

-100,0

-50,0

0,0

50,0

10 11 12 13 14


3,0%

3,2%

3,4%

3,6%

3,8%

-2,0

-1,0

0,0

1,0

2,0

10 11 12 13 14

FCF Capex ratio



units: %

5.7. Ford Statistical tables




Consolidated

operating income

Consolidated


2010 96.38 - 6.56 6.8% 4.91 5.1%

2011 101.87 5.7% 6.23 6.1% 15.11 14.8%

2012 99.85 -2.0% 4.72 4.7% 4.24 4.2%

2013 109.84 10.0% 4.98 4.5% 5.35 4.9%

2014 107.71 -1.9% 2.92 2.7% 2.38 2.2%


Year R&D expenses R&D ratio

2010 3.74 3.9%

2011 3.96 3.9%

2012 4.11 4.1%

2013 4.78 4.4%

2014 5.16 4.8%


Year US market share

2012 15.2%

2013 15.7%

2014 14.7%

units: % share



Segment 2014 sales % of total sales 2013 sales 2013 % share 2013-2014 change 2012 sales 2012-2013 change

Automotive Sector 101.51 94.2% 104.19 94.2% -2.6% 94.62 10.1%

Financial Services

Sector 6.20 5.8% 5.64 5.8% 9.9% 5.75 -1.8%


Region 2014 sales % of total sales 2013 sales 2013 % share 2013-2014 change 2012 sales 2012-2013 change

United States 61.80 57.4% 63.89 58.2% -3.3% 57.13 11.8%

United Kingdom 8.78 8.1% 7.50 6.8% 17.0% 6.89 8.9%

Canada 7.03 6.5% 7.27 6.6% -3.3% 7.12 2.2%

Germany 5.60 5.2% 6.43 5.9% -12.9% 6.19 3.9%

Others 24.50 22.7% 24.74 22.5% -1.0% 23.04 7.4%





expenses

Interest

coverage ratio

2010 123.12 123.60 -0.50 -245.66 -974.9% 4.0% 1.52 3.23

2011 133.33 122.07 11.23 10.86 134.5% 11.3% 0.77 19.55

2012 141.60 129.41 11.92 10.85 35.5% 3.0% 0.53 7.95

2013 151.03 131.04 19.72 6.64 27.1% 3.5% 0.62 8.63

2014 155.89 137.07 18.54 7.39 12.8% 1.5% 0.82 2.89




Operating

cash flow

Capital


2010 88.92 36.54 2.31 2.43 8.58 3.06 3.2% 5.52

2011 89.87 37.65 2.27 2.39 7.31 3.21 3.2% 4.11

2012 93.58 54.89 1.60 1.70 6.76 4.10 4.1% 2.66

2013 98.37 55.42 1.67 1.78 7.81 4.93 4.5% 2.88

2014 98.56 57.67 1.61 1.71 10.85 5.58 5.2% 5.27


5.8. BMW Presentation


Strategic focuses Bayerische Motoren Werke GmbH


Automotive

74.2% of revenue


• Bayerische Motoren Werke GmbH came into being in 1917. Today, it is one of Germany’s largest industrial companies, and a leading global premium car and motorcycle manufacturer, with three main brands: BMW, MINI and Rolls-Royce. It also manufactured motorcycles under the Husqvarna brand until the sale of the unit in 2013. In addition to its manufacturing activities, the group also offers a range of financial services.

• The BMW Group is present around the world with its 30 production and assembly plants in 14 countries as well as a research and development network spread over 12 locations in 5 countries. The Group intends to remain focused on the premium segments of the automotive industry. It had a workforce of 116,324 employees at the end of 2014.

Headquarters: Munich, Germany

Strategic expansion of global production

BMW has been expanding its global production

network. In 2014, it started production in Brazil at

its Araquari plant and is preparing to open a new

plant in Mexico with a capacity of up to 150,000

units in 2019. It is also stepping up local

production in Shenyang, China, which is set to

build six BMW models specifically for the Chinese

market.

Getting on the connectivity bandwagon

BMW believes that the digital, connected world is

a particularly important area for premium

manufacturers when it comes to differentiation

and growth. It is thus pushing ahead with its

strategy of developing forward-looking

technologies, including in the field of

digitalisation and is boosting its ranks of

engineers as a result.

Appealing to younger clients with mobility

BMW is selectively expanding its range of

mobility services. It has added London, Vienna,

Copenhagen and Seattle to its DriveNow (car-

sharing) service in 2014 and 2015. Its acquisition,

together with AUDI and Daimler, of Nokia’s HERE

should allow it to gain a strong basis for the next

generation of mobility and location-based

services.

Recent events

• October 2014: the first car rolled off the assembly line of BMW’s new plant

in Araquari, Brazil.

• August 2015: 400 BMW i3s are commissioned for DriveNow car-sharing in

Copenhagen. The all-electric fleet is also interconnected with public

transport.

• August 2015: BMW, together with AUDI and Daimler agree with Nokia to

acquire its mapping and location services business HERE.

Financial services

23.7% of revenue BMW Motorbikes

2.1% of revenue

5.8. BMW Financial indicators





















-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

1

2

3

4

5

6

7

8

9

2010 2011 2012 2013 2014

0%

2%

4%

6%

8%

10%

12%

0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

1,0

2010 2011 2012 2013 2014

units: million euros; change in %


units: million euros; % of revenue

Sales by region



percentage.

1,3;

16%

2,46;

30% 1,5;

19%

1,37;

17%

0,3;

4%

1,11;

14%

GermanyRest of EuropeChinaUnited StatesRest of the AmericasOther


Revenue breakdown by segment,

expressed as a percentage.

Sales by segment

5,97

74,2%

1,91

23,7%

0,17

2,1%

Automobiles

Financial Services

BMW Motorcycles

units: million euros

5.8. BMW Statistical tables


Year Consolidated

net sales

Annual %

change

Consolidated

operating

income

Consolidated

operating

margin

Net income Net margin Capex Capex margin

2010 6.05 - 0.52 8.5% 0.32 5.3% 0.33 5.4%

2011 6.88 13.8% 0.79 11.4% 0.49 7.1% 0.37 5.3%

2012 7.68 11.7% 0.80 10.4% 0.51 6.6% 0.52 6.8%

2013 7.61 -1.0% 0.77 10.1% 0.53 7.0% 0.67 8.8%

2014 8.04 5.7% 0.88 11.0% 0.58 7.2% 0.61 7.6%

units: billion euros; % change; operating income and net income as % of sales, capital expenditure and capital expenditure as % of sales

Segment 2014 sales 2014 % share 2013 sales 2013 % share 2013-2014 change 2012 sales 2012-2013 change

Automobiles 5.97 74.2% 5.63 74.2% 6.0% 5.75 -2.1%

Financial Services 1.91 23.7% 1.83 23.7% 4.4% 1.79 2.3%

BMW Motorcycles 0.17 2.1% 0.15 2.1% 11.8% 0.15 1.2%


Region 2014 sales 2014 % share 2013 sales 2013 % share 2013-2014 change 2012 sales 2012-2013 change

Germany 1.30 16.2% 1.18 15.5% 10.1% 1.22 -3.2%

Rest of Europe 2.46 30.6% 2.26 29.7% 9.2% 2.30 -1.8%

China 1.50 18.7% 1.53 20.2% -2.3% 1.44 6.2%

United States 1.37 17.0% 1.27 16.7% 7.7% 1.34 -5.6%

Rest of the

Americas 0.30 3.7% 0.31 4.1% -4.6% 0.28 9.9%

Other 1.11 13.9% 1.06 13.9% 5.5% 1.10 -3.7%


5.9. Honda Presentation


Strategic focuses Honda


Automotive

Business

72.1% of

revenue


• Honda, founded in 1948, designs, manufactures and markets a wide range

of products, from small engines and scooters to specialty sports cars.

• It operates through the divisions Automobiles, Motorcycles, Financial

Services, and Power Products and Other. The Automobiles division deals

with car making and related parts. The Motorcycles division handles all-

terrain vehicles and motorcycle business. The Financial Services division

provides financial and insurance services. The Power Products and Other

division offers power engine articles.

Headquarters: Tokyo, Japan

Adapting its six-region structure

Honda has been operating on a six-region

structure in which each organisation is

autonomous. Each region has its own production

capacity and sales, development and purchasing

functions. However, some regions have not seen

the sales growth expected and production has

exceeded demand, having a negative impact on

cost structure. Therefore, Honda is aiming to

promote complementary relationships between

each of the regions to increase flexibility.

Honing technologies to introduce new products

Honda aims to continuously develop new

products to ensure it continues to attract

customers. For example, in autumn 2015 it is set

to introduce the all-new Civic, which is to be built

on a new platform and equipped with a new

downsized turbo engine. In the area of next-

generation energy technology, it is aiming to

begin sales of the successor to FCX Clarity in

Japan at the beginning of 2016. This fuel-cell

vehicle will usher in the next generation of

mobility. Its advancements in fuel-cell vehicles

are primarily thanks to its partnership with GM,

which started in 2013 and has allowed the

companies to slash the size, weight and cost of

the fuel cell stack.

Recent events

• March 2015: Honda announces it will expand motorcycle and automobile

production capacity in India in line with expected future growth in the

country.

• July 2015: Honda announces that it has begun local production of its

Accord sedan in Nigeria, where the automobile market is expected to

expand in the future.

• July 2015: Honda, together with Toyota and Nissan agree on key details

regarding a new joint support project for the development of hydrogen

station infrastructure in Japan.

Financial

services

11.7% of

revenue

Motorcycle

business

13.9% of

revenue

Power

Products

and Other

2.4% of

revenue

5.9. Honda Financial indicators





















-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

0

10

20

30

40

50

60

70

80

90

100

2010 2011 2012 2013 2014

0%

1%

2%

3%

4%

5%

6%

7%

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

2010 2011 2012 2013 2014




Sales by region



percentage.

15,18;

16%

48,78;

52%

19,29;

20%

6,72;

7%

4,66;

5%

Japan North America

Asia Other Region

Europe




Sales by segment

68,18

72,1%

13,11

13,9%

11,04

11,7%

2,29

2,4%

Automobile Business

Motorcycle Business

Financial Services Business

Power Product & Other Businesses


5.9. Honda Statistical tables


Year Consolidated

net sales

Annual %

change

Consolidated

operating

income

Consolidated

operating

margin


2010 63.45 - 4.05 6.4% 3.79 6.0% 7.93 12.5%

2011 56.43 -11.1% 1.64 2.9% 1.50 2.7% 7.67 13.6%

2012 70.13 24.3% 3.87 5.5% 2.61 3.7% 10.08 14.4%

2013 88.79 26.6% 5.85 6.6% 4.44 5.0% 6.58 7.4%

2014 94.63 6.6% 4.76 5.0% 3.62 3.8% 6.27 6.6%



Automobile

Business 68.18 72.1% 65.15 72.1% 4.7% 54.74 19.0%

Motorcycle

Business 13.11 13.9% 11.81 13.9% 11.0% 9.51 24.2%

Financial Services

Business 11.04 11.7% 4.96 11.7% 122.8% 3.89 27.3%

Power Product &

Other Businesses 2.29 2.4% 2.16 2.4% 6.0% 1.99 8.4%



Japan 15.18 16.0% 15.74 18.7% -3.6% 13.67 15.1%

North America 48.78 51.5% 39.73 47.3% 22.8% 32.75 21.3%

Asia 19.29 20.4% 16.61 19.8% 16.1% 13.68 21.5%

Other Region 6.72 7.1% 7.19 8.6% -6.5% 6.23 15.5%

Europe 4.66 4.9% 4.80 5.7% -3.0% 3.81 26.0%


5.10. PSA Presentation


Strategic focuses PSA Peugeot Citroën


Automotive

66.4% of revenue


• Peugeot SA was founded in 1896 and in 1976 it merged with Citroën SA to create PSA Peugeot Citroën (PSA). The Peugeot and Citroën brands share common technology, development and assembling assets while retaining separate sales and marketing structures. The company manufactures and distributes automotive vehicles and replacement parts, and also offers financial services. • The company has a long history on its domestic market in Europe and was slow to enter markets abroad. However, in 2014, China became the group’s largest national market.

Headquarters: Paris, France

Implementing its Back in the Race plan

The “Back in the Race” plan was launched in 2014

and is four-pronged: 1) maintaining DS, Peugeot

and Citroën as three distinct and complementary

brands, stepping up the development of DS as a

premium brand.; 2) a focused, targeted global

product plan more aligned with market demand;

3) accelerating growth in China, returning to

profit in Latin America and Russia and entering

new growth countries such as Africa and the

Mediterranean basin; and 4) modernising plants

and reducing costs and inventory.

Strengthening the partnership with Dongfeng

As part of its efforts to reinforce its presence in

China, PSA is strengthening its industrial and

commercial partnership with Dongfeng. It aims

to lift its JV production capacity to over one

million units a year in 2016 and triple its volumes

to 1.5 million vehicles per annum by the early

2020s. It also hopes to create a new joint R&D

centre and establish a new joint venture for

expansion in the rest of Asia and possibly in

other emerging markets.

Recent events

• July 2014: The PSA/Dongfeng joint venture sign an agreement with the city

of Chengdu for the construction of its fourth production facility in China. It

should be completed by 2016.

• June 2015: PSA and Bolloré Group sign a strategic cooperation agreement

on developing shared mobility solutions, including car-sharing schemes

using conventional and electric vehicles.

• June 2015: PSA announces it will set up a new assembly plant in Morocco

as part of plans to cut production costs and reduce its dependence on

European markets. Production will be of small and subcompact lower-cost

vehicles destined for Africa and the Middle East and will start in 2019.

Automotive

equipment

31.2% of revenue

Finance

companies

2.5% of revenue

5.10. PSA Financial indicators





















-8%

-6%

-4%

-2%

0%

2%

4%

6%

50,00

51,00

52,00

53,00

54,00

55,00

56,00

57,00

58,00

59,00

20102011201220132014

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

-5,0

-4,0

-3,0

-2,0

-1,0

0,0

1,0

2,0

3,0

20102011201220132014




Sales by region



percentage.

70,0%

7,4%

7,4%

7,1% 4,4%

2,1% 1,6%

Europe North America

Latin America China & South-Asia

Middle East & Africa India Pacific

Eurasia




Sales by segment

36,08

66,4%

16,93

31,1%

1,34

2,5%

Automotive

Automotive Equipment

Finance Companies


5.10. PSA Statistical tables


Year Consolidated

net sales

Annual %

change

Consolidated

operating

income

Consolidated

operating

margin


2010 56.06 - 1.80 3.2% 1.13 2.0% 2.89 5.2%

2011 58.51 4.4% 1.09 1.9% 0.44 0.7% 3.63 6.2%

2012 55.45 -5.2% -4.55 -8.2% -5.81 -10.5% 3.73 6.7%

2013 53.08 -4.3% 0.77 1.4% - 2.67 -5.0% 2.49 4.7%

2014 53.61 1.0% 0.95 1.8% -0.97 -1.8% 2.43 4.5%


Segment* 2014 sales 2014 % share 2013 sales 2013 % share 2013-2014 change 2012 sales 2012-2013 change

Automotive 36.08 67.3% 36.46 67.3% -1.0% 38.30 -4.8%

Automotive

Equipment 16.93 31.6% 16.07 31.6% 5.4% 15.46 3.9%

Finance

Companies 1.34 2.5% 1.46 2.5% -8.4% 1.59 -7.8%

units: billion euros; % share; % change, *before reconciliation

Region 2014 sales 2014 % share

Europe 37.53 70.0%

North America 3.98 7.4%

Latin America 3.95 7.4%

China & South-Asia 3.83 7.1%

Middle East & Africa 2.37 4.4%

India Pacific 1.10 2.1%

Eurasia 0.86 1.6%

units: billion euros; % share; % change. As regions were redefined in 2014, a comparison cannot be made with previous years

5.11. FCA Presentation


Strategic focuses Fiat Chrysler Automobiles


NAFTA

54.3% of

revenue


• Fiat Chrysler Automobiles was established in 2014 by merging Fiat S.p.A.

into a new Netherlands-based holding company with headquarters in

London, UK. It operates through two main subsidiaries: FCA Italy (previously

Fiat Group Automobiles and FCA US (previously Chrysler LLC). Its brands

include Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Lancia as well as Ferrari and

Maserati.

• The People’s Bank of China owns 2% of Fiat Chrysler, making the Chinese

central bank one of the group’s key investors

Headquarters: London, UK

Premium and luxury brand strategy

FCA has a wide spectrum of brands, including

those positioned at the premium (Jeep, Alfa

Romeo) and luxury (Maserati, Ferrari) end. The

group has decided to shift a significant part of its

portfolio towards the higher profit margins

offered by premium sales. It plans on

redeploying overcapacity in Europe and in the

EMEA for the worldwide production of premium

vehicles. It has recently expanded in the luxury

end through the introduction of new Maserati

models and is also currently expanding its range

of Alfa Romeos.

Expanding international business

FCA plans to expand sales in key markets

throughout the world by continuing efforts to

localise production of Fiat brand vehicles

through JVs in China and India and sales of Jeep

vehicles in LATAM and APAC by localising

production through new facilities in Brazil.

Localised production allows local demand to be

addressed without transportation costs and

import duties.

Continuing convergence of platforms

The company continues to rationalise its vehicle

architecture and standardise components with

the aim of increasing sales volumes and

profitability as well as facilitating speed to

market, quality improvement and manufacturing

flexibility.

Recent events

• January 2014: the company acquires the remaining 41.5% in FCA US that it

did not already own. In 2009 Fiat formed an alliance with Chrysler, a U.S.

automaker founded in 1925, in which Fiat took a majority interest, saving it

from bankruptcy.

• August 2015: the companies announces an Alfa Romeo SUV will go into

production by the middle of 2016 as part of its expansion of its luxury

range.

• September 2015: FCA will shift a considerable amount of its car production

to Mexico while keeping more profitable pickups and crossovers in the U.S.

EMEA

18.1% of

revenue

LATAM

8.9% of

revenue

APAC

6.5% of

revenue

Componen

ts

6.3% of

revenue

Maserati

2.9% of

revenue

Ferrari

2.6% of

revenue

Other

0.4% of

revenue

5.11. FCA Financial indicators





















0%

10%

20%

30%

40%

50%

60%

70%

0

20

40

60

80

100

120

2010 2011 2012 2013 2014

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

4,0%

4,5%

5,0%

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

2010 2011 2012 2013 2014




Sales by region



percentage. 56,8%

8,8%

7,8%

7,3%

6,6%

5,1% 3,6%

2,0% 1,9%

North America Other Countries

Brazil Italy

China Other

Germany United Kingdom




Sales by segment

54,3%

18,1%

8,9%

6,5%

6,3% 2,9%

2,6%

NAFTA EMEA

LATAM APAC

Components Maserati

Ferrari Other Activities


5.11. FCA Statistical tables


Year Consolidated

net sales

Annual %

change

Consolidated

operating

income

Consolidated

operating

margin


2010 35.88 - 1.11 3.1% 0.09 0.2% 2.86 8.0%

2011 59.56 66.0% 2.45 4.1% 1.33 2.2% 5.53 9.3%

2012 83.96 41.0% 3.70 4.4% 0.04 0.1% 7.53 9.0%

2013 86.82 3.4% 3.35 3.9% 0.90 1.0% 7.44 8.6%

2014 96.09 10.7% 3.40 3.5% 0.57 0.6% 8.12 8.5%



Italy 7.05 7.3% 6.94 7.3% 1.7% 7.28 -4.6%

North America 54.60 56.8% 47.55 56.8% 14.8% 45.17 5.3%

Other Countries 8.42 8.8% 9.27 8.8% -9.2% 10.22 -9.3%

Brazil 7.51 7.8% 8.43 7.8% -10.9% 9.83 -14.3%

China 6.34 6.6% 4.44 5.1% 42.8% 2.70 64.6%

Germany 3.46 3.6% 3.05 3.5% 13.3% 3.17 -3.6%

United Kingdom 1.93 2.0% 1.45 1.7% 32.6% 1.43 1.7%

France 1.84 1.9% 1.96 2.3% -6.1% 2.06 -4.8%

Other 4.94 5.1% 3.72 4.3% 32.8% 2.11 76.5%


5.11. FCA Statistical tables



NAFTA 52.18 54.3% 45.60 52.5% 14.4% 43.49 51.8%

EMEA 17.43 18.1% 16.78 19.3% 3.9% 17.26 20.6%

LATAM 8.53 8.9% 9.87 11.4% -13.6% 10.97 13.1%

APAC 6.25 6.5% 4.62 5.3% 35.3% 3.13 3.7%

Components 6.06 6.3% 5.69 6.5% 6.6% 5.69 6.8%

Maserati 2.76 2.9% - - - - 0.0%

Ferrari 2.50 2.6% - - - - 0.0%

Other Activities 0.38 0.4% 4.25 4.9% -91.0% 3.42 4.1%


5.12. Tata Presentation


Strategic focuses Tata Motors Group


Automotive

99.5% of revenue


• Tata Motors Group, founded in 1945, specialises in the manufacturing and

distribution of passenger and commercial vehicles. Its division Tata Motors

Limited operates mainly in India. Via subsidiaries and associate companies,

Tata Motors has operations in the UK, South Korea, Thailand, South Africa

and Indonesia.

• Its subsidiary Jaguar Land Rover, acquired in 2008, focuses on the global

premium market.

• It also has an industrial joint venture with Fiat in India.

Headquarters: Mumbai, India

Implementing its Horizonext plan

Tata Motors announced Horizonext in 2013. It is

a customer-focussed strategy with four prongs:

enriched customer purchase experiences, quality

services, world-class manufacturing practices and

new, modified and refreshed products to

improve revenue and ensure a competitive

pipeline for the future. As part of this it has

launched ConnectNext, a vehicle connectivity

service.

Expanding international business

Tata Motors seeks to continue entering new

markets and, in recent years, has grown its

market share in markets such as Kenya, Nigeria,

Tanzania, Congo and Senegal as well as Australia

and is focused on increasing its presence in

Southeast Asia and Latin America. It is also

considering expanding its global manufacturing

footprint to take advantage of import duty

differentials and local sourcing.

Cutting sales and production targets for China

Faced with high inventories in a slowing Chinese

market, Tata Motors has cut prices, sales and

production targets at its Chinese Jaguar Land

Rover arm. It is also lowering the price of some

of its models on the Chinese market. JLR’s sales

in China fell by a third during the second quarter

of 2015 after having fallen by 20% in fiscal 2014.

Recent events

• January 2015: The Bolt premium hatchback was launched. It is a key

product under the Horizonext turnaround strategy.

• May 2015: GenX-Nano range was launched in May 2015 with technological

advancements and design engineering.

• September 2015: Tata announces it will open a vehicle assembly plant in

Nigeria.

Other operations

0.5% of revenue

5.12. Tata Financial indicators





















0%

5%

10%

15%

20%

25%

30%

35%

0

5

10

15

20

25

30

35

40

2010 2011 2012 2013 2014

8%

8%

9%

9%

9%

9%

9%

10%

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

2010 2011 2012 2013 2014




Sales by region



percentage.

4,77

13,6%

10,19

29,0%

7,03

20,0%

4,7

13,4%

4,25

12,1%

4,21

12,0%

India China

Rest of World United Kingdom

Rest of Europe United States




Sales by segment

34,98

99,5%

0,18

0,5%

Automotive Other


5.12. Tata Statistical tables


Year Consolidated

net sales

Annual %

change

Consolidated

operating

income

Consolidated

operating

margin


2010 17.09 - 1.52 8.9% 1.24 7.3% 1.09 6.4%

2011 22.06 29.1% 2.07 9.4% 1.81 8.2% 1.86 8.4%

2012 25.11 13.8% 2.17 8.7% 1.32 5.3% 2.51 10.0%

2013 30.86 22.9% 2.67 8.7% 1.87 6.1% 3.61 11.7%

2014 34.89 13.0% 3.19 9.1% 1.87 5.4% 4.23 12.1%



Automotive 34.98 99.5% 30.99 99.5% 12.9% 25.11 23.4%

Other 0.18 0.5% 0.17 0.5% 6.5% 0.30 -45.0%



India 4.77 13.6% 4.61 14.8% 3.5% 5.99 -23.1%

China 10.19 29.0% 8.82 28.3% 15.6% 5.98 47.5%

Rest of World 7.03 20.0% 6.31 20.2% 11.5% 4.79 31.8%

United Kingdom 4.70 13.4% 3.92 12.6% 19.9% 2.99 31.0%

Rest of Europe 4.25 12.1% 3.92 12.6% 8.6% 2.98 31.5%

United States 4.21 12.0% 3.58 11.5% 17.6% 2.53 41.3%


5.13. SAIC Presentation


Strategic focuses SAIC Motor Corp


Vehicles and parts

99.5% of revenue


• SAIC Motor Corp. Ltd., formally known as Shanghai Automotive Co., is a Chinese state-owned automotive manufacturing company founded in 1997. Its business activities include the sale of passenger and commercial vehicles, and components such as engine, transmission, power train, chassis, exterior trim and also offers automotive trade services such as auto financing business.

• In 2014, SAIC was the largest producer in China, manufacturing over 4.5 million vehicles. SAIC Motor sells vehicles under its own brands, Roewe and MG, as well as under joint venture brands.

Headquarters: Shanghai, China

Continuing joint ventures…

SAIC has a large number of joint ventures

including with General Motors and Volkswagen

as well as a three-way joint venture SAIC-GM-

Wuling.

Chinese consumers continue to favour foreign-

branded cars over local brands and joint venture

with mature-market companies help to get

around this. Furthermore, such partnerships have

allowed the company to achieve scale quickly

and have opened up doors to technological

expertise as well as management experience.

…to move expand abroad…

With growth slowing in China’s car market,

Chinese automakers are eyeing export

opportunities but also overseas manufacturing

facilities. The joint venture SAIC-GM-Wuling

announced in 2015 that it would build a factory

in Indonesia to manufacture vehicles and

Indonesia and other Southeast Asian markets.

.. and to invest in green vehicles

China’s national fuel economy standards are set

to become increasingly strict and carmakers are

therefore under pressure to build cleaner cars.

The SAIC-GM-Wuling joint venture is thus

planning to open a factory dedicated to green

cars in China with an annual capacity to build

200,000 electric or highly-electrified cars.

Recent events

• February 2015: SAIC-GM-Wuling announce they will establish a new plant

in Indonesia.

• March 2015: SAIC and Alibaba initiate a fund for developing connected

cars.

• July 2015: SAIC and GM announce they will invest around €4.5 billion over

the next few years to develop a new family of small Chevrolet vehicles

aimed at emerging markets. The cars should go on sale in 2019 in countries

such as India, China, Brazil and Mexico.

Financing

0.5% of revenue

5.13. SAIC Financial indicators





















0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0

10

20

30

40

50

60

70

80

2010 2011 2012 2013 2014

0%

1%

2%

3%

4%

5%

6%

7%

8%

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

2010 2011 2012 2013 2014




Sales by region



percentage.

76,34

99,8%

0,14

0,2%

China Other




Sales by segment

76,08

99,5%

0,4

0,5%

Vehicles and Parts

Financial


5.13. SAIC Statistical tables


Year Consolidated

net sales

Annual %

change

Consolidated

operating

income

Consolidated

operating

margin


2010 37.08 - 2.42 6.5% 1.67 4.5% 0.87 2.4%

2011 51.67 39.3% 3.57 6.9% 2.45 4.8% 1.96 3.8%

2012 57.63 11.5% 3.07 5.3% 2.52 4.4% 1.94 3.4%

2013 68.42 18.7% 2.01 2.9% 3.01 4.4% 1.90 2.8%

2014 76.17 11.3% 1.82 2.4% 3.40 4.5% 1.74 2.3%



Vehicles and Parts 76.08 99.5% 68.39 99.5% 11.2% 58.08 17.7%

Financial 0.40 0.5% 0.30 0.5% 33.6% 0.31 -3.4%



China 76.34 99.8% 68.55 99.8% 11.4% 58.29 17.6%

Other 0.14 0.2% 0.13 0.2% 1.8% 0.10 29.6%


5.14. Geely Presentation


Strategic focuses Geely Automobile Holdings Ltd


Automotive & Related Parts

100% of revenue


• Geely Automobile Holdings Ltd. (Geely) is a private Chinese automotive

manufacturing company engaged in the production of automobiles,

motorcycles, engines and transmissions. Geely bought Volvo in 2010 from

Ford and has owned the British taxi maker The London Taxi Company since

2012.

• Having followed a multi-brand strategy, the Emgrand, Englon and Gleagle

names were phased out in 2014 in efforts to reduce sprawl.

Headquarters: Binjiang District, Hangzhou, China

Standardisation and modulation

Particularly via its Volvo activity, Geely is

developing new modular architecture and a set

of components for future C-segment cars. The

modular architecture and set of components will

not only deliver world-class product technologies

and attributes but also considerable cost saving

in terms of development, testing and sourcing,

leading to significant economies of scale.

Expansion at home and abroad

The group is looking to achieve economies of

scale through expansion of sales volume and

production capacity by broadening its product

range and geographical presence in both

Chinese and international markets. As part of

this, the group has been investing in the

localisation of production in its major export

markets.

Investing in new energy vehicles

In view of increasing demand for new energy

vehicles and the Chinese government’s

promotion of this initiative, the company intends

to continue investing in its own research as well

as working in partnerships and strategic alliances

with international players to benefit from

technology and knowledge transfers. The group

is also leveraging Volvo’s hybrid electric vehicles

to achieve a gradual transition from hybrid to

pure electric technology.

Recent events

• September 2014: Geely announces that it has inked a deal with Apple to

integrate CarPlay into an upcoming compact SUV model, making it the first

Chinese automaker to support the infotainment system.

• December 2014: The company replaces its Emgrand, Gleagle and Englon

brands and will market all brands under the single “Geely” brand.

• April 2015: Geely is set to begin producing a small crossover utility vehicle

in 2016 on a common platform jointly developed with Volvo.

5.14. Geely Financial indicators





















-30%

-20%

-10%

0%

10%

20%

30%

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

2010 2011 2012 2013 2014

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0,0

0,1

0,1

0,2

0,2

0,3

0,3

2010 2011 2012 2013 2014




Sales by region



percentage.

2,13

81,3%

0,23

8,8%

0,08

3,1%

0,07

2,7%

0,04

1,5%

0,04

1,5%

0,03

1,1%

China

Europe

Africa

Middle East

Other Countries

Korea

Central & South America


Capital expenditure (capex).

Capital expenditure

0,21

0,22

0,23

0,24

0,25

0,26

0,27

0,28

2010 2011 2012 2013 2014


5.14. Geely Statistical tables


Year Consolidated

net sales

Annual %

change

Consolidated

operating

income

Consolidated

operating

margin


2010 2.22 - 0.15 6.6% 0.15 6.8% 0.23 10.3%

2011 2.43 9.4% 0.16 6.5% 0.18 7.4% 0.26 10.5%

2012 2.92 19.9% 0.20 6.8% 0.24 8.3% 0.23 7.8%

2013 3.49 19.6% 0.28 8.0% 0.32 9.3% 0.25 7.0%

2014 2.64 -24.5% 0.11 4.0% 0.17 6.6% 0.27 10.1%



China 2.13 81.2% 2.68 76.5% -20.5% 2.28 17.2%

Europe 0.23 8.9% 0.37 10.7% -37.7% 0.21 78.0%

Africa 0.08 3.0% 0.06 1.8% 26.1% 0.03 146.1%

Middle East 0.07 2.6% 0.22 6.4% -69.0% 0.24 -7.8%

Other Countries 0.04 1.6% 0.04 1.1% 5.4% 0.03 28.6%

Korea 0.04 1.4% 0.07 2.1% -50.3% 0.08 -11.4%

Central & South

America 0.03 1.2% 0.05 1.3% -31.2% 0.04 30.3%


5.15. Tesla Presentation


Strategic focuses Tesla Motors


Design, development, manufacturing and sales of electric vehicles

and electric powertrain components

100% of revenue


• Tesla Motors is a U.S. automotive and energy storage company founded in 2003. It designs, manufactures and sells electric cars, electric vehicle powertrain components and battery products. Its products include electric vehicles such as the Model S, Model X, and the Tesla Roadster.

• Tesla has established its own network of sales and service centres and Supercharger stations globally to accelerate the widespread adoption of electric vehicles. It is currently producing and selling its second vehicle: the Model S sedan. It commenced deliveries of Model S in June 2012 and as of December 2014 it had delivered almost 57,000 Model S vehicles worldwide.

Headquarters: Palo Alto, California

Expanding its unique distribution strategy

Unlike legacy automakers, Tesla does not have a

dealer network but uses company-owned stores

and an online sales model. It plans on expanding

its network of Tesla stores worldwide to support

the roll out of its cars.

Development of a charging network

Tesla’s electric cars cannot take off if there is not

a sufficient charging network. Tesla is therefore

growing its supercharger stations. At the end of

the 2014 financial year, Tesla had 380

Supercharger stations open in North America,

Europe, and Asia. Access to the Supercharger

network is available free of charge to owners of

Model S vehicles with the 85 kWh battery pack

options and when purchased as an upfront

option for 60 kWh. It are planning to

methodically expand the Supercharger network

over the next few years in the United States,

Europe and Asia.

Reducing battery costs

So as to reduce unit costs of its batteries and

thus make electric cars more affordable, Tesla is

investing in building a “Gigafactory”, with which

it aims to reduce unit costs by 30%. It plans to

use the battery packs manufactured at the

Gigafactory for its vehicles, as well as for

stationary storage applications.

Recent events

• January 2014: Tesla expands its supercharger (electric vehicle charger)

network in Europe to connect the Netherlands, Germany, Switzerland and

Austria. Supercharger stations are placed along well-travelled highways.

• July 2014: Panasonic and Tesla sign an agreement for cooperation on the

construction of a large-scale battery manufacturing “Gigafactory” plant in

the US.

• September 2015: The Tesla Model X, its first SUV model, is revealed. After

an initial launch in the United States, Model X will be sold in all the markets

where Model S is available including in Asia and Europe.

5.15. Tesla Financial indicators





















0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

0,0

0,5

1,0

1,5

2,0

2,5

3,0

2010 2011 2012 2013 2014

-140%

-120%

-100%

-80%

-60%

-40%

-20%

0%

20%

-0,4

-0,3

-0,3

-0,2

-0,2

-0,1

-0,1

0,0

20102011201220132014




Sales by region



percentage. 1,1

45,8%

0,36

15,0%

0,31

12,9%

0,63

26,3%

United States China

Norway Other


Capital expenditure (capex).

Capital expenditure

0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

2010 2011 2012 2013 2014


5.15. Tesla Statistical tables




Consolidated

operating income

Consolidated


2010 0.09 - -0.11 -125.8% -0.12 -132.2%

2011 0.15 74.9% -0.19 -123.1% -0.19 -124.6%

2012 0.31 102.3% -0.29 -95.4% - 0.30 -95.9%

2013 1.51 387.2% -0.05 -3.0% -0.06 -3.7%

2014 2.39 58.8% -0.16 -6.9% - 0.22 -9.2%


Year Capex Capex ratio R&D R&D ratio

2010 0.08 90.3% 0.07 79.7%

2011 0.15 96.9% 0.16 102.3%

2012 0.18 57.9% 0.20 66.3%

2013 0.20 13.1% 0.17 11.5%

2014 0.73 30.3% 0.35 14.8%



United States 1.10 46.0% 1.11 73.5% -0.5% 0.26 328.9%

China 0.36 14.9% - 0.0% - - -

Norway 0.31 12.9% 0.16 10.8% 89.9% - -

Other 0.63 26.2% 0.24 15.8% 164.0% 0.05 395.1%


6. Statistical Appendix



Vehicle sales

Registration or sales of new vehicles unit(s): millions, %

Year Volume Growth

2005 65.9 -

2006 68.4 3.7%

2007 71.6 4.7%

2008 68.3 -4.5%

2009 65.6 -4.0%

2010 75.0 14.3%

2011 78.2 4.3%

2012 82.2 5.1%

2013 85.6 4.2%

2014 88.2 3.0%

2015* 89.1 1.0%


Growth in vehicle sales by region unit: % change

Region Growth Q2 2012 –

Q2 2015 Growth Q2 2014-

Q2 2015

Russia -43.5% -38.0%

Central*/South

America -21.6% -16.0%

Africa 2.3% -4.0%

NAFTA 3.8% 0.0%

Europe -1.1% 2.0%

Asia/Oceania/

Middle-East 16.6% 2.0%



Vehicle sales by manufacturer in 2014

Vehicle sales by manufacturer in 2014 unit: number of vehicle units

Year Passenger Cars Light commercial vehicles Total light vehicles

TOYOTA 8,788,018 1,405,072 10,193,090

VOLKSWAGEN 9,766,293 128,598 9,894,891

GM 6,643,030 2,951,895 9,594,925

HYUNDAI 7,628,779 280,684 7,909,463

FORD 3,230,842 2,643,854 5,874,696

NISSAN 4,279,030 796,992 5,076,022

FIAT 1,904,618 2,812,345 4,716,963

HONDA 4,478,123 35,646 4,513,769

SUZUKI 2,543,077 473,633 3,016,710

PSA 2,521,833 395,213 2,917,046

RENAULT 2,398,555 363,414 2,761,969



Sales of low-emission vehicles and car sales by country

Number of new ultra-low emission vehicle registrations

per year in the UK unit: vehicle units

Year Vehicles

2010 1,300

2011 2,100

2012 3,500

2013 4,400

2014 15,900

Source: Xerfi Global with AAA

New vehicle registrations or sales in 2014 unit: number of units

Country/Region

Italy 1,492,642

France 2,210,927

Russia 2,545,666

UK 2,843,025

India 3,176,763

Germany 3,356,718

Brazil 3,498,012

Japan 5,562,887

US 16,841,973

China 23,491,893



Vehicle sales in China and new car interest rates

Year-on-year growth in registration or sales of new

vehicles in China unit: %

Year Growth

2006 30.3%

2007 21.7%

2008 7.3%

2009 52.9%

2010 33.2%

2011 5.2%

2012 7.1%

2013 15.7%

2014 9.9%

2015* 1.00%


Commercial bank 48-month new car interest rates in the

USA unit: %

Year Rate

2008 7.02%

2009 6.72%

2010 6.21%

2011 5.73%

2012 4.88%

2013 4.43%

2014 4.24%

Source: Xerfi Global with the Board of Governors of the Federal Reserve System


Vehicle production

Production of selected countries of

passenger and light commercial

vehicles in the first half of 2015 unit: million vehicle units

Country/Region Volume

Russia 0.73

UK 0.84

Thailand 0.94

France 1.04

Canada 1.10

Brazil 1.28

Spain 1.46

Mexico 1.81

India 2.05

South Korea 2.32

Germany 3.08

Japan 4.65

US 6.12

China 12.10


World production of passenger

cars and light commercial vehicles unit: million vehicle units

Year Volume Growth

2005 66.7 4.20%

2006 69.2 4.10%

2007 73.3 6.80%

2008 70.7 -3.60%

2009 61.8 -12.40%

2010 77.7 26.60%

2011 79.9 3.20%

2012 84.2 6.60%

2013 87.7 4.00%

2014 89.7 2.80%

2015* 91.2 0.50%


Growth of vehicle production by country unit: compound annual growth rate 2002 – 2012

Country/Region

CAGR

2005-

2014

Q2

2014-

Q2

2015

EU -5.7% 5.00%

Japan -1.1% -8.20%

USA -0.3% 3.00%

Thailand 5.9% -1.80%

Mexico 8.1% 8.60%

India 10.0% 7.20%

Indonesia 11.3% -14.50%

China 17.2% 2.60%

Source: Xerfi Global with

OICA


Vehicle exports

Biggest car exporters 2005 unit: billion euros

Country/Region Value

Germany 87.27

Japan 64.05

Canada 29.95

France 27.21

USA 25.11

Belgium 23.18

South Korea 21.89

UK 19.52

Spain 19.34

Mexico 10.76 Source: Xerfi Global with ITC

Global car export value unit: billion euros

Year Value

2005 391.19

2006 425.96

2007 454.70

2008 432.82

2009 312.03

2010 418.94

2011 457.42

2012 500.40

2013 506.67

2014 527.19 Source: Xerfi Global with ITC

Biggest car exporters 2014 unit: billion euros


Germany 120.41

Japan 66.70

USA 46.40

Canada 33.76

South Korea 33.72

UK 31.87

Mexico 24.37

Spain 24.02

Belgium 22.79

France 14.44 Source: Xerfi Global with ITC


Vehicle imports

Biggest car importers 2005 unit: billion euros


USA 100.85

UK 32.03

Germany 29.46

Italy 24.55

France 21.34

Spain 18.49

Canada 16.12

Belgium 15.90

Australia 7.45

Netherland 6.89


Biggest car importers 2014 unit: billion euros


USA 116.16

China 44.93

UK 34.86

Germany 34.71

France 23.30

Canada 20.31

Belgium 20.27

Italy 17.12

Australia 11.92

Spain 11.26



Production volume by group

Analysed groups production volume 2014 unit: million vehicle units

Year Volume

Toyota 10193090

Volkswagen 9894891

General Motors 9594925

Hyundai 7909463

Ford 5874696

Nissan 5076022

Fiat-Chrysler 4716963

Honda 4513769

PSA 2917046

Renault 2761969

BMW 2165566

SAIC 2034924

Geely 890652

Tata 625646

Tesla 31655



Net sales by group

Ranking of analysed groups by consolidated net sales (2014) unit: billion euros

Year Value

Volkswagen 202.46

Toyota Motor 194.01

GM 116.57

Ford 107.71

FCA 96.09

Honda 94.63

Nissan 80.76

SAIC 76.17

Hyundai Motor 63.64

PSA 53.61

Renault 41.06

TATA 34.89

Kia Motors 33.58

BMW 8.04

Geely 2.64

Tesla 2.39



Aggregate net sales and operating margin

Aggregate consolidated net sales of analysed companies unit: billion euros

Year Value

2010 826.87

2011 928.54

2012 1029.69

2013 1124.24

2014 1174.66


Aggregate operating margin of analysed companies unit: billion euros

Year Change

2010 5.1%

2011 5.3%

2012 4.8%

2013 5.6%

2014 5.5%


7. Sources



Company websites

Toyota www.toyota.com

Volkswagen www.volkswagen.com

General Motors www.gm.com

Ford www.daimler.com

Honda www.honda.com

BMW www.bmw.com

Renault www.renault.com

Nissan www.nissan.com

Tesla www.teslamotors.com

FCA www.fcagroup.com

PSA www.psa.com

Hyundai www.hyundai.com

Tata Motors www.tatamotors.com

SAIC www.saicgroup.com

GEELY www.geely.com


International organisations

Eurostat Eurostat

www.ec.europa.eu/eurostat

Financial Times Financial Times

www.ft.com

OECD Organisation for Economic Co-operation and Development

www.oecd.org

World Bank World Bank www.worldbank.org

Intracen International Trade Centre

www.intracen.org

CHELEM Comptes Harmonisés sur les Echanges et L'Economie Mondiale

www.cepii.com


Industry bodies and consultancies

OESA Original Equipment Suppliers Association

www.oesa.org

OICA The International Organisation of Motor Vehicle Manufacturers

www.oica.net

8. Annexes



Fiscal periods and exchange rates

TOYOTA 2014 fiscal year ended 31 March 2015. Exchange rate: 1JPY= 0.0071EUR

GENERAL MOTORS 2014 fiscal year ended 31 December 2014. Exchange rate: 1USD = 0.7476EUR

VOLKSWAGEN 2014 fiscal year ended 31 December 2014. Exchange rate: 1EUR = 1EUR

FORD 2014 fiscal year ended 31 December 2014. Exchange rate: 1USD = 0.7476EUR

HYUNDAI 2014 fiscal year ended 31 December 2014. Exchange rate: 1KRW = 0.0007EUR

PSA 2014 fiscal year ended 31 December 2014. Exchange rate: 1EUR = 1EUR

BMW 2014 fiscal year ended 31 December 2014. Exchange rate: 1EUR = 1EUR

HONDA 2014 fiscal year ended 31 March 2015. Exchange rate: 1JPY= 0.0071EUR

FCA 2014 fiscal year ended 31 December 2014. Exchange rate: 1EUR = 1EUR

RENAULT 2014 fiscal year ended 31 December 2014. Exchange rate: 1EUR = 1EUR

TESLA 2014 fiscal year ended 31 December 2014. Exchange rate: 1USD = 0.7476EUR

NISSAN 2014 fiscal year ended 31 March 2015. Exchange rate: 1JPY= 0.0071EUR

TATA 2014 fiscal year ended 31 March 2015. Exchange rate: 1INR = 0.01338EUR

SAIC 2014 fiscal year ended 31 December 2014. Exchange rate: 1RMB = 0.1214EUR

GEELY 2014 fiscal year ended 31 December 2014. Exchange rate: 1RMB = 0.0964EUR


Statistical framework

Automobiles (3353) code of the ICB

classification

Automobile companies are classified under the 3353 code of the Industry

Classification Benchmark (ICB).

The Automobiles (3353) code refers to “Makers of motorcycles and passenger

vehicles, including cars, sport utility vehicles (SUVs) and light trucks. Excludes makers

of heavy trucks, which are classified under Commercial Vehicles & Trucks, and

makers of recreational vehicles (RVs and ATVs), which are classified under

Recreational Products”.


Glossary

CATEGORY ENGLISH FRENCH

ITEM DEFINITION ITEM DEFINITION

Basic financial

analysis

CAGR Acronym for Compound Annual Growth Rate. TCAM Acronyme de Taux de Croissance Annuel Moyen, ou CAGR

en anglais.

Capex

Short for "Capital Expenditure"), an item of the cash-flow

statement used as a proxy for investment in property, plant

and equipment (PPE). Generally entails physical assets used

to maintain or increase operation capacities.

CAPEX

Abréviation de "Capital Expenditure", un élément du tableau

de trésorerie mesurant l'investissement dans les

immobilisations corporelles. Il sert à évaluer l'effort consenti

pour maintenir ou développer les capacités de production.

Free

cash flow

The cash that a company is able to generate after subtracting

expenses needed to maintain its asset base.

Cash flow

disponible

Le Free Cash Flow, ou Cash Flow disponible en français,

correspond à la trésorerie générée par une entreprise après

déduction des dotations aux immobilisations.

Goodwill Goodwill is the difference between the purchase of the fair

value of assets and liabilities acquired by a company. Goodwill

Aussi appelé écart d'acquisition ou survaleur, le goodwill est

la différence entre le prix d'acquisition et la juste valeur

d'éléments du passif et de l'actif acquis par l'entreprise.

Gross profit

Gross profit is the result of the difference between total sales

and the cost of making products or providing services.

Payroll and interest costs as well as taxes are not taken into

account.

Marge brute

La marge brute correspond à la différence entre le chiffre

d'affaires et le coût de fabrication du produit ou de la

fourniture de services. Les salaires, les intérêts, les taxes, etc.

n'entrent pas dans le calcul de la marge brute.

Impairment

charge

Impairment charges occur when a company has found that

the value of its goodwill has been overestimated and needs

to be revised.

Perte de valeur Une perte de valeur se produit lorsqu'une entreprise est

amenée à revoir à la baisse la valeur de son goodwill.

Liabilities

Liabilities encompass all obligations arising from a

company's past operations and which will result in an

outflow of resources in the future. Liabilities are divided into

short term and long liabilities, and represent the debt a

company owes to its creditors.

Passif

Le passif comprend toutes les obligations contractées par

une entreprise dans l'exercice passé de ses activités et qui se

matérialiseront par des décaissements à terme. Le passif peut

être courant ou non-courant, et représente l'ensemble des

créances d'une entreprise.

Net debt Net debt is calculated by subtracting a company's cash from

its total debt. Endettement net

L'endettement net se calcule en déduisant le cash disponible

d'une entreprise du montant total de ses dettes.

Net profit/

net margin

Net profit refers to a company's total earnings. It is the result

of the difference between net sales and all operating and

non-operating expenses such as taxes, interests, depreciation

and amortisation expenditures.

Résultat net

Le résultat net est le bénéfice net d'une entreprise. Il

correspond à la différence entre le chiffre d'affaires et toutes

les dépenses opérationnelles et non-opérationnelles comme

les impôts, les intérêts, les charges de dépréciation et

d'amortissement.

Operating

profit/operating

margin

Operating profit refers to the earnings generated by the

normal business operations of a company. Operating profit is

the result of the difference between sales and total operating

expenses. Operating margin is expressed in % and is

computed by dividing operating profit by net sales.

Résultat

opérationnel/marg

e opérationnelle

Le résultat opérationnel désigne le bénéfice dégagé par une

entreprise grâce à l'exercice de ses activités traditionnelles. Le

résultat opérationnel est obtenu en déduisant les dépenses

d'exploitation du chiffre d'affaires. La marge opérationnelle,

exprimée en %, est obtenue en divisant le résultat

opérationnel par le chiffre d'affaires.


Glossary

CATEGORY ENGLISH FRENCH

ITEM DEFINITION ITEM DEFINITION

Basic financial

analysis

R&D expenditure

Expenses associated with the research and development

process of creating new products or services; it is often used

as a proxy for innovation.

Dépenses de R&D

Dépenses associées au processus de recherche et de

développement de nouveaux produits et de nouveaux

services. C'est un indicateur de la capacité d'innovation d'une

entreprise

Return on assets

Return on assets is calculated by dividing a company's net

income by its total assets. It measures the ability of the

company to generate profits from its assets.

Retour sur actif

Le retour sur actif est calculé en divisant le résultat net d'une

entreprise par le total de son actif. Il mesure la capacité d'une

entreprise à créer de la richesse à partir de ce dont elle

dispose.

Return on equity

Return on equity is calculated by dividing a company's net

income by its shareholder equity. It measures the ability of a

company to generate profits from its investment funds.

Retour sur fonds

propres

Le retour sur fonds propre est calculé en divisant le résultat

net d'une entreprise par le total de ses fonds propres. Il

mesure la capacité d'une entreprise à créer de la richesse à

partir des capitaux apportés par ses actionnaires.

Sales

Earnings made from the sales of goods and services,

excluding VAT and other taxes. Reflects, total volumes sold,

selling prices, exchange rates and product mixes.

Chiffre d'affaires

Le chiffre d'affaires correspond au total des ventes hors taxes

de biens et de services. Il est le reflet des volumes écoulés,

mais aussi du prix de vente moyen, des taux de change et

des variations du mix produit.

Working capital

Working capital is the difference between currents assets and

current liabilities. When positive, working capitals means a

company would able to pay its short term debt.

Fonds de

roulement

Le fonds de roulement est la différence avec l'actif courant et

le passif courant. Un fonds de roulement positif signale que

l'entreprise pourrait honorer ses créances à court terme avec

ses actifs à court terme.

Macroeconomic

concepts

Assets

Assets encompass all the economic resources owned by a

company. They are commonly divided into short term (cash,

trade receivables, etc.) and long term assets

Actif L'actif regroupe toutes les ressources économiques détenues

par une entreprise. I

BRICs

Acronym referring to Brazil, Russia, India and China, a group

of countries with similar characteristics in terms of economic

development. These countries report dynamic growth rates

across all major industries, and also enjoy a very large

population.

BRICs

Acronyme désignant le Brésil, la Russie, l'Inde et la Chine, un

groupe de pays présentant des similarités en termes de

développement économique. Ces pays affichent des taux de

croissance très dynamiques dans tous les principaux marchés,

Business climate

Business climate refers to the general economic sentiment. It

is measured by various indicators based on questionnaires

sent to survey participants from firms representative of the

economy.

Climat des affaires

Le climat des affaires désigne le sentiment économique

dominant. Il est mesuré par des indicateurs établis sur la base

de questionnaires envoyés à des professionnels représentatifs

des grands secteurs d'activité.

Consumer price

index

An indicator which measures changes in prices of consumers

goods and services bought by households.

Indice des prix à la

consommation

Un indicateur qui mesure les variations de prix pour les biens

et les services achetés par les ménages.

Consumer

sentiment

Consumer sentiment refers to the degree of optimism of

households as regards the state of the economy. Consumer

sentiment is often used as a proxy for future spending.

Moral des ménages

Le moral des ménages désigne la perception de la situation

économique qu'ont les ménages. Cet indicateur est souvent

utilisé pour évaluer les futures dépenses des ménages.

Consumer

spending

Spending by households on durable and nondurable

products or services. Often used as a proxy for short-term

demand in an economy.

Dépenses des

ménages

Dépenses des ménages en biens et services durables et non-

durables. Cet indicateur est souvent utilisé pour évaluer la

demande à court terme.

2015-12 carmakers___world.pdf

Documents

market environment

market overview

world automobile market

main market indicators

market analysis

market fundamentals

main corporate strategies

xerfi global team