1. prof. dr. vahland
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BILD
Volkswagen in China Prof. Dr. h.c. Winfried Vahland
Executive Vice President of Volkswagen AG President and CEO of Volkswagen Group China
PLACEHOLDER FOR PICTURE
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Volkswagen in China
Recent Developments
Strategy 2018
South China Strategy
Volkswagen Group China – Investor Conference 2010 in Beijing
3
First contact with China in 1978
4
Why did Volkswagen decide to come to China?
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Putting China on four wheels
6
Volkswagen Group China is committed to Educational Programs such as Road Safety and Environmental Protection
7
Volkswagen China Investment Company
Beijing
Volkswagen TransmissionShanghai VolkswagenPowertrain
Volkswagen Finance(China) Co., Ltd.
Shanghai
FAW-Volkswagen
Dalian Volkswagen FAW Engine
Changchun Volkswagen FAW Platform
Chengdu
Nanjing
Volkswagen Automatic Transmission
FAW-Volkswagen
Shanghai Volkswagen
Shanghai Volkswagen
VW HK Co. Ltd.
Sitech
Audi China
Volkswagen Beijing Centre
VW Import Co. Ltd.
Volkswagen’s operations in China
• Total Investments 1984-2009: € 7.8bn (2010-2012: € 6.0bn)• Turnover 2009: € 20bn• Deliveries to Customers 2009: 1.400m units• Employees 2009: 43,100
History
• 1984: Shanghai Volkswagen Automotive Co. (SVW) as a joint venture between Volkswagen and Shanghai Automotive Industrial Corporation (or SAIC) was founded. Production milestone in October 2009 – 5,000,000 cars.
• Volkswagen was the automotive pioneer in the modern Chinese market.
• 1990: FAW-Volkswagen Automotive Co. Ltd. was set-up as our second joint venture in China. Production milestone in August 2009 – 3,000,000 cars.
• 2004: Volkswagen China Investment Company was founded to co-ordinate and manage all Volkswagen activities in China.
• Today: Volkswagen is represented by 16 companies in China
Volkswagen Group in China 2009
Source: Volkswagen Group China
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Jetta Sagitar Audi A6L
MagotanNew Bora Audi A4L
Golf A6 Audi Q5CC
Polo Jinqing Polo Jinqu
Passat New LY
Santana
Touran
Santana Vista
Cross Polo
Lavida
Octavia
Fabia
SuperbTiguan LWB
FoundationShare
DeliveriesSales Ranking
Employees
1984SAIC Motor: 50%, VW AG: 50%
690,616No. 1
19,100
1990FAW: 60%, VW AG: 30%, Audi AG: 10%
670,037No. 3
21,300
Successful Partnership with FAW and SAIC
Source: Volkswagen Group China
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Volkswagen
Lamborghini, Bentley
Audi
Local CKD Sales
Import FBU Sales
122.6
527.7 142.4
568.1
FAW-VW
SVW
22.2
16.6
0.6
Total Sales Region China 1,400.0
Sales of Volkswagen in China 2009 (‘000 Units)
Source: Volkswagen Group China
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FAW-VW Volkswagen brand 527.7 Audi brand 142.3 Total 670.0
SVW Volkswagen brand 585.1 Skoda brand 131.8 Total 716.9
Total Region China 1,386.9
Chengdu
NanjingShanghai
Beijing
Changchun
vehicle plant
Vehicle Manufacturing Companies of Volkswagen in China 2009 (‘000 Units)
Source: Volkswagen Group China
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Localization rate
>90%
~60%
>90%
Volkswagen and Audi Parts Export Program:
€ ~1bn
Purchasing Activities of Volkswagen in China
Source: Volkswagen Group China
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Shanghai
Changchun
component plant
Dalian
FAW-VW Engine EA113, EA111; Transmission MQ250, 02K VW/FAW 40/60
VWPF (VW FAW Platform) Platform parts VW/FAW 60/40
VWED (VW FAW Engine Dalian) Engine EA888 VW/FAW 60/40
VWATD (Volkswagen Automatic Transmission Dalian) Transmission DQ200 VW 100
Shanghai Volkswagen Engine EA113, EA827, EA888 VW/SAIC 50/50
VWPT (Shanghai Volkswagen Powertrain) Engine EA111 VW/SAIC 60/40
VWTS (Volkswagen Transmission Shanghai) Transmission MQ200 VW/SAIC/FAW 60/20/20
Sitech-Dongchang Automotive Seating Seats; Seat Components Sitech/Dongchang/Etern 60/20/20
Component Manufacturing Companies of Volkswagen in China
Source: Volkswagen Group China
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Volkswagen in China
Recent Developments
Strategy 2018
South China Strategy
Volkswagen Group China – Investor Conference 2010 in Beijing
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Successful Achievements of “Olympic Program” Targets 2005 – 2008
Branding/ Positioning Strongest brand portfolio in China
Products 12-14 new models by the end of 2008
Product Costs Competitive cost structure / competitive suppliers
Sales & Marketing Best in class dealer network and customer evaluation
Corporate Culture
Accelerating the decision process and localized lean management
Capacity, Struc-ture & Synergy 90% capacity utilization / synergies
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Worldwide Economic Crisis
Olympic program
Strategy 2018
2006 20112005 2008 2009 20122007 2010
2009–2010
Mid-term Challenges
Government support policy
DYnaMic 2010
Source: Volkswagen Group China, schematic development
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Deliveries to Customers 2005 – 2009
Source: Volkswagen Group China
Audi
VW
Skoda
2007 2008 2009 2010*2005 20060
500
1,000
‘000 Units
1,500
1 27 5912382 102 120159
629
781844
1,118
712
9101,024
1,400
159
512
572
≥ MarketGrowth
* expected
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China – strong GDP Growth and favorable Automotive Industry Policy
2007 2008
0.7
China
EU
2009
-4.2
0.7
2010 E
GDP growth in %Reduced purchasing tax rate 1
Further subsidy for people living in the countryside2
Higher subsidy for early scrapping3
Support for public new energy vehicles4
2.8
13.0
9.68.7
9.8
Source: Eurostat; Volkswagen Group China
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Deliveries to Customers Q1/2010
Volkswagen Group Volkswagen Audi Skoda Bentley/Lamborghini
284,146
457,259
235,772
362,874
29,01051,449 19,248 42,707 210 229
+60.9%
+53.9%
+77.3% +121.9% +9.0%
2010
2009
Source: Volkswagen Group China
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Volkswagen in China
Recent Developments
Strategy 2018
South China Strategy
Volkswagen Group China – Investor Conference 2010 in Beijing
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1m sales
Chinese Culture
Social Responsibility
1m sales
European Culture
Corporate Responsibility
Strategy 2018 (as of February 2009)
“The Whole Is More Than The Sum Of Its Parts.”
Aristotle
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Four Key Areas of Strategy 2018
Products and
Technology
Production and
Supply
Sales and
Customers
Responsibility and
Partnership
Strategy 2018
Joint Ventures As The Foundation
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Volkswagen Group China reduces Fuel Consumption further than Competitor (Base: 2005)
Main CompetitorVolkswagen Group China
Source: Volkswagen Group China own calculation
-20%
2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009
Flee
t fue
lcon
sum
ptio
n
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Volkswagen in China
Recent Developments
Strategy 2018
South China Strategy
Volkswagen Group China – Investor Conference 2010 in Beijing
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1m sales
European Culture
Corporate Responsibility
1m sales
Chinese Culture
Social Responsibility
Strategy 2018 and South China Strategy (as of November 2009)
South China Strategy
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Hong Kong is important to China, especially in the South
Hong Kong is:
Hong Kong
No. 1 FDI1 source of mainland
No. 3 export destination
No. 1 overseas tourist destination
No. 1 overseas media source
Trend-setter and similar consumer behavior with South China Mainland
1 FDI = Foreign Direct Investment
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South China Strategy: Target to achieve National Average Market Share in the near future
Volkswagen Group Sales (‘000 units)Volkswagen Group Market Share %
+40-50% >2.0 times
2009 Future 2009 Future
13.0
Average NationalMarket Share
251
>500
Source: Volkswagen Group China
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Volkswagen Group China is planning significant Volume Growth in the future (‘000 Units)
2018 (E)2010 (E)
≥ MarketGrowth
2005
571
2006
711
2007
910
2008
1,024
2009
1,400
Near Future
2,000
Source: Volkswagen Group China
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Volkswagen Group China Capacity Increase (‘000 Units)
Source: Volkswagen Group China
1,400
400More working days (wd)
Further capacity optimization
2010 Mid-term
Upwardflexibility
~30%
250 wd
4 additionalplants
250 wd
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Investment 2010 – 2012:
Published in 2009 €4.4bnRecently added €1.6bnNew investment total €6.0bn
Chengdu
NanjingShanghai
Beijing
Changchun
existing vehicle plant
Volkswagen Group – 4 new Vehicle Plants in China
Source: Volkswagen Group China
Guangdong
new vehicle plant
North
East
“Go South Strategy”
“Go West Strategy”+1 SVW plant (location tbd)
BILD
Volkswagen in China Prof. Dr. h.c. Winfried Vahland
Executive Vice President of Volkswagen AG President and CEO of Volkswagen Group China
PLACEHOLDER FOR PICTURE
31
Disclaimer
This presentation contains forward-looking statements and information on the business development of the Volkswagen Group. These statements may be spoken or written and can be recognized by terms such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will” or words with similar meaning. These statements are based on assumptions relating to the development of the economies of individual countries, and in particular of the automotive industry, which we have made on the basis of the information available to us and which we consider to be realistic at the time of going to press. The estimates given involve a degree of risk, and the actual developments may differ from those forecast.
Consequently, any unexpected fall in demand or economic stagnation in our key sales markets, such as in Western Europe (and especially Germany) or in the USA, Brazil or China, will have a corresponding impact on the development of our business. The same applies in the event of a significant shift in current exchange rates relative to the US dollar, sterling, yen, Brazilian real, Chinese renminbi and Czech koruna.
If any of these or other risks occur, or if the assumptions underlying any of these statements prove incorrect, the actual results may significantly differ from those expressed or implied by such statements.
We do not update forward-looking statements retrospectively. Such statements are valid on the date of publication and can be superceded.
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