China - Inchcape
China - Inchcape
China - Inchcape
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Tan Suan Phon<br />
Managing Director<br />
<strong>Inchcape</strong> <strong>China</strong>
Market Overview<br />
Population<br />
1.34bn<br />
Language<br />
Mandarin<br />
Currency<br />
Chinese yuan<br />
(renminbi RMB) (¥)<br />
Capital City<br />
Beijing<br />
GDP<br />
US€5.9 trillion<br />
Source: IMF<br />
Since the introduction of market-based economic reforms in 1978, <strong>China</strong> has become the<br />
world's fastest growing major economy
Commercial Overview<br />
Fast growing<br />
economy<br />
Strong trade<br />
surplus but aiming<br />
at more domestic<br />
oriented<br />
Consistently<br />
medium low<br />
unemployment<br />
Strong<br />
manufacturing<br />
base<br />
Largest population<br />
base<br />
<strong>China</strong> is the major contributor to the<br />
recovery of world economy. Now the<br />
second largest economy in the world<br />
<strong>China</strong> is stimulating domestic demand<br />
to make the economy more domestic<br />
consumption-oriented instead of<br />
export-driven<br />
Unemployment is at government<br />
acceptable level<br />
Largest manufacturing base in the<br />
world, 20% of world output<br />
<strong>China</strong> is still the world’s largest country<br />
by population<br />
2005-2010 2010-2015<br />
GDP growth (CAGR) 21.1% 11.2%<br />
Population (CAGR) 0.5% 0.5%<br />
Unemployment rate ~4.0% ~4.0%<br />
Inflation ~6.0% ~6.0%<br />
Source: IMF
Automotive Overview<br />
Largest population<br />
base in the world<br />
1.34 bn<br />
Low level of car<br />
penetration<br />
<strong>China</strong>’s economy continues to grow<br />
GDP per capita 2008 - 2015<br />
000’ US dollars<br />
Source: IMF
<strong>China</strong>’s economy continues to grow<br />
Tier 1: above $60bn<br />
Tier 2: $30bn<br />
Tier 3a: $15bn income driven<br />
Tier 3b: $14-28bn population driven<br />
Tier 4: $10bn<br />
Tier 5: below $7bn
…and expected to be even larger in 2020<br />
Above $1,000bn<br />
Between $500bn - $1,000bn<br />
Between $100bn - $500bn<br />
Below $100bn<br />
<strong>China</strong> GDP in 2020 by provinces<br />
(projected): a union of secondtier<br />
developed and top-tier<br />
developing countries
<strong>China</strong> Car Market – Big and Growing<br />
2010<br />
1.9M<br />
2015 2.7M 55.4%<br />
2010<br />
17.0M<br />
2010<br />
2015<br />
10.4M<br />
11.6M 11%<br />
2010<br />
3.1M<br />
2015 3.6M 15.7%<br />
2015 25.1M 47.4%<br />
2010<br />
4.9M<br />
2015 4.8M 4%<br />
Global Total Industry<br />
Volume<br />
2009 vs. 2015<br />
2010<br />
2.7M<br />
2015 4.9M 79.2%<br />
2010 3.3M<br />
2015 4.2M 27.8%<br />
Source: Global Insight
Total Industry Volume 2008 - 2015<br />
Million vehicles<br />
Source: Global Insight
<strong>China</strong> Passenger Car Market by segment<br />
000’ vehicles<br />
CAGR (2010-15)<br />
18%<br />
8.4%<br />
4.8%<br />
Luxury<br />
Premium<br />
Volume<br />
Volume<br />
Source: Global Insight (PC and LCV)
Luxury demand driven by wealth creation<br />
1 million USD millionaires<br />
No. 2 USD billionaires in the world<br />
# of Billionaires in 2010<br />
USA 413<br />
CHINA 115<br />
Russia 101<br />
Others 581<br />
Distribution of millionaires in <strong>China</strong> in 2010<br />
Total 1,210
<strong>China</strong>: Luxury Car Market<br />
000’ vehicles<br />
<strong>China</strong> will be the 2 nd largest luxury Passenger<br />
Car market in the world from 2013<br />
Source: Global Insight
Car Parc 2008 - 2015<br />
Millions vehicles<br />
Car Parc Units '000 35,496 44,321 51,199 58,735 66,934 75,794 85,306<br />
Population millions 1,335 1,341 1,348 1,355 1,362 1,368 1,375<br />
Cars/'000 Population 26<br />
33 38 43 49 55 62<br />
Source: JD Power/IMF
<strong>Inchcape</strong> <strong>China</strong> Strategy<br />
3 Steps to build scale in the premium end of the market<br />
<strong>China</strong>’s large size means scale needs to be focused on a regional basis<br />
2007 2010 2011 2016 2016<br />
2020>>><br />
Step 1 Step 2 Step 3<br />
Establish local presence,<br />
recruit strong<br />
management team and<br />
prove retail economics<br />
Scale up presence in<br />
targeted regional markets<br />
with our preferred OEM<br />
brand partners<br />
3 sites 20 sites<br />
Accelerate expansion
Retail Centres Step 1
Retail Centres
Retail Centres
Retail Centres
Our top 5 Priorities<br />
Growing<br />
market<br />
share<br />
Growing<br />
aftersales<br />
Improving<br />
margin<br />
Controlling<br />
working<br />
capital<br />
Selective<br />
capital<br />
expenditure
Operational focus on our top 5 priorities to deliver our<br />
Customer 1 st strategy<br />
Growing<br />
market<br />
share<br />
Leverage OEM new product launches and<br />
programs<br />
Leverage car shows and customer lifestyle<br />
events to drive quality traffic<br />
Raise the bar on Customer Service Standards<br />
Drive referrals from existing customers and<br />
aftersales customers<br />
Traffic<br />
Leads/Traffic<br />
Test drives/Traffic<br />
Order/ Traffic<br />
Growing<br />
aftersales<br />
Data mining of existing customers service<br />
records<br />
Build partnerships with Insurance to drive B&P<br />
business<br />
Raise the bar on Customer Service Standards<br />
Leverage Vehicle Health Check<br />
Enquiries<br />
Booking/Enquiry<br />
Intakes/Enquiry
Operational focus on our top 5 priorities to deliver our<br />
Customer 1 st strategy<br />
Improving<br />
margin<br />
Weekly price setting and tracking by model<br />
Improve penetration of accessories, F&I<br />
Weekly tracking of margins for aftersales<br />
Control utilities, consumables costs<br />
Controlling<br />
working<br />
capital<br />
Inventory cover to maintain at lower than 1.5 months<br />
Maximize usage of Supplier Finance with minimum interest<br />
charge<br />
Negotiate better payment terms with miscellaneous suppliers<br />
Selective<br />
capital<br />
expenditure<br />
No major investments planned in existing sites<br />
Focus on preferred brands and cities
We are now executing Step 2 of our <strong>China</strong> Strategy<br />
2016 Vision<br />
To operate 20 premium 4S<br />
sites<br />
Scale up <strong>China</strong> presence in<br />
targeted provincial markets<br />
with our preferred OEM brand<br />
partners
<strong>China</strong>: an attractive opportunity for <strong>Inchcape</strong><br />
800<br />
Vehicle density per 1,000 adults<br />
600<br />
400<br />
200<br />
0<br />
India<br />
<strong>China</strong><br />
Russia<br />
Brazil<br />
UK<br />
Italy<br />
France<br />
USA<br />
Germany<br />
Japan<br />
0<br />
Source: JD Power, IMF<br />
10,000 20,000 30,000<br />
40,000<br />
GDP per Capita (US$)<br />
50,000
<strong>Inchcape</strong> <strong>China</strong><br />
<strong>China</strong>’s economy will continue to grow from strength to strength<br />
Low car penetration ensures that the automotive industry has significant growth potential<br />
Increasing affluence will drive the luxury car market segment to grow even faster<br />
<strong>Inchcape</strong> <strong>China</strong> is well positioned and ready to take advantage of this attractive<br />
opportunity:<br />
Tested the retail unit economics,<br />
Built a local organisation,<br />
Localised our operating processes<br />
We are confident that building a portfolio of scale retail businesses, with our core brand<br />
partners in the fast growing premium segment is the right expansion strategy for <strong>Inchcape</strong><br />
<strong>China</strong>
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