EURussia Partners - Automotivesupplychain.org

Challenges and opportunities in the
Russian automotive market
Automotive Supply Chain Congress 2014
11 June 2014
Contents
Section
About EURussia Partners
2013 top automotive markets
Russia among the other BRIC countries
The Russian vehicle market in 2008-2013
2013 car sales in Russia
Historical development
Major market trends
Market drivers
Government support to the auto sector
OEMs capacities in Russia
The Renault-Nissan-Avtovaz alliance in Russia
VW manufacturing operations in Russia
Ford Sollers JV roll-out
2013 OEM local content level
10 major macroeconomic trends in 2014
2014-2017 macroeconomic forecast
EURussia Partners LLC
Slides
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EURussia Partners – your partner on entering
and developing the Russian and CIS markets
Summary
• EURussia Partners LLC provides market entry and market development advisory
and investment services aiming at establishing or enhancing their presence on the
Russian and CIS markets
Our goal
• Capitalizing on our exclusive network of C-suite and top administrative contacts,
EURussia’s objective is to fortify business relationships and increase the business
activity of European industrial companies in Russia
Our team
• Our team has extensive industry experience and both technical and financial skills,
backed by a proven track record of setting up and developing successfully a number
of strategic alliances
Navigating your business to success
EURussia Partners
•
EURussia
Partners – your
leading advisor
for the Russian
market
EURussia Partners LLC
Market entry strategy, including detailed market research and feasibility study
services
• Strategic alliances, including distribution, contract and license assembly, joint
ventures and M&A advisory services
• Industrial manufacturing localization support
• Investment support services, including lead advisory, financing and structuring
support
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EURussia Partners offices
Main office
EURussia Partners LLC
Pokrovka 44-19
Moscow 105062, Russia
Tel: +7 495 917 4205
+7 916 330 2292
[email protected]
Moscow
Turin
Asian Office
Shanghai
European office
EURussia Partners LLC
Via S.Francesco d'Assisi 22
10121 Torino - ITALY
Tel: +39 011 19504063
+39 346 8536822
[email protected]
EURussia Partners LLC
EURussia Partners LLC
Block F, 10 Floor, Jin Ming
Mansion, No.8 Zun Yi South Road
Shanghai 200036, China
Tel: +86 21 5633 5346
+86 138 0178 9478
[email protected]
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2013 top automotive markets
# Country
Sales,
mln. units
Further
potential
1 China
17.9
=
2 USA
15.6
=
↓
↓
3 Japan
4.6
4 Germany
2.9
5 Brazil
2.8
6 Russia
2.6
7 UK
2.3
8 India
2.0
EURussia Partners LLC
↑
↑
=
↑
• 2013 market almost reached 83 mln.
cars
• China (+13.7%) and the USA (7.6%)
were the major drivers of the global
sales growth
• China’s growth was backed by the
stable economic growth throughout the
regions and the state policy, while the
US surge was triggered mostly by the
pent-up demand and stimulating credit
lending
• The BRIC countries still have the best
growth potential within the next 10
years
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Russia among the other BRIC countries
• 2013 car sales: 2.6 mln. units (-5.5%)
• Car fleet: 37 mln.
• Car density: 270 cars/1000 people
• # of automotive retailers: ~ 4 500
• GDP per capita: USD 15 000
Russia
•2013 car sales: 2.76 mln.
units (-3.4%)
• Car fleet: 27.5 mln.
• Car density:
137 cars/1000 people
• # of automotive retailers:
~ 5 000
• GDP per capita: USD 11 100
Brazil
China
•2013 car sales: 17.9 mln.
units +15.7%)
• Car fleet: 55.9 mln.
• Car density: 41 cars/1000
people
• # of automotive retailers: ~
21 000
•GDP per capita: USD 6 800
India
•2013 car sales: 2.0 mln. units (-10%)
• Car fleet: 13.5 mln.
• Car density: 11 cars/1000 people
• # of automotive retailers: ~ 4 000
• GDP per capita: USD 1 500
EURussia Partners LLC
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2008-13 vehicle market in Russia, ‘000 units
Segment
PC
2008
2009
2010
2011
2012
2013
Change,%
2 740
1 365
1 776
2 478
2 760
2 610
-5.5
LCV
182
90
121
166
172
162
-5.7
MDT + HDT
120
42
60
111
128
109
-14.3
20
10
12
16
17
15
-9.5
3 062
1 507
1 969
2 771
3 073
2 894
-5.8
Buses
TOTAL
EURussia Partners LLC
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2013 car sales in Russia
• Following three years of consecutive double-digit growth car sales fell by 5.5%
•
•
in unit terms and by 3% in monetary terms
Due to the strong import replacement policy, Russia-built foreign brands were
the only segment which demonstrated growth and reached about 50% of the
overall market
The drop in domestic brands sales was mostly due to the restructuring and
change of model range at Avtovaz
Category
Domestic brands
2013,
‘000 units
2012,
‘000 units
Change
2013 ,
USD bln.
2012,
USD bln.
Change
487
580
-16%
5.9
6.7
-12%
1 310
1 205
+9%
34.6
30.9
+12%
Imports
813
975
-17%
28.5
33.4
-15%
TOTAL
2 610
2 760
-5.5%
69
71
-3%
Russia-built foreign brands
EURussia Partners LLC
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Historical development
‘000 units
For the past 15 years the market passed
through 4 stages and now it is getting
into a stage of gradual saturation at about
2.8 – 3.5 mln. cars per year
USD/barrel
Stability
Monthly car sales, ‘000 units
Oil price, USD / barrel
EURussia Partners LLC
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Major market trends
• Significant increase of Chinese brands sales triggered by low price offering and a
•
•
•
•
•
•
•
wide model range
Premium brands continue growing
Continued strong performance of the Korean brands, both in absolute and relative
terms, due to a great value-for-money offering
The SUV segment continued growing with a double digit and is dominating the
market with a 35.8% share in contrast to B- and C- segment cars, which dropped
by 15.3% and 14.2% respectively. In contrast to Europe, the Russian car buyer
prefers SUVs and crossovers to minivans and MPVs.
The share of diesel engines is still negligible (a mere 6.8%) in contrast to more
than 50% across Europe.
Average car ownership is 4.6 years (3.4 for premium brands)
There is a strong shift towards a higher price bracket (+36.5% growth of cars
priced over USD 25 000 and decrease of budget-priced cars)
The average car price has been gradually increasing (USD 28 340 in 2013) and
now starts matching the average level in Europe
EURussia Partners LLC
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3 important features
1. The market is starting to
get to its point of saturation
• no major new investment in
new capacity and retail network
is expected
2. Transformation of the
Russian car buyer
• more educated, more
demanding, more serviceoriented
3. Competition will get
tougher
• both among OEMs and
Market drivers
1. Long term
• Disposable income / car prices
• Car density
• Availability of credit
2. Short term
• Demand stimulation
• Production planning
• Seasonality
3. Infrastructure
• Retail and service network
development
• Road infrastructure
• Public transport development
retailers.
EURussia Partners LLC
Page 11 of 20
Government support to the auto sector
1
2
3
2013 measures
• Car lending subsidies
• OEM and suppliers
modernization subsidies
• pilot project on car
manufacturing of
Russian brands under
one platform
Amount
Results
RUR 8.6 bln. 276 640 cars sold
Technological modernization of 30
RUR 3.52 bln.
Russian automotive companies
RUR 0.7 bln.
2014 measures
Restructuring of the Russian
Automotive Design Institute and
development of car concepts
Expected results
Compensation on R&D,labor and energy cost
allocated to Euro-4 and Euro-5 class vehicles
1
• OEMs and suppliers subsidies
2
• Regional subsidies for
replacing and upgrading the
municipal fleet
Sales of 5 000 vehicles produced in Russia
and based on CNG
3
• Government purchases
42 000 vehicles to be bought
4
• limitation of vehicles useful life Commercial vehicles older than 7 years
EURussia Partners LLC
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OEMs capacities in Russia*
Kaliningrad
Plant
Brand
Avtotor
BMW, Chevrolet,
Cadillac, Opel, KIA,
Hyundai
Plant
Capacity**
250***
Volvo Trucks
Brand
Capacity
Volkswagen, Skoda,
170 (340***)
Audi***
Mitsubishi, Peugeot,
125
Citroen
Volvo, Renault
15
Plant
Brand
Avtoframos
Renault
ZIL
ZIL, Fiat, Renault
Plant
Brand
GAZ
GAZ, Chevrolet,
Skoda, VW
300
Ford-SOLLERS
Ford
111
BAW
BAW
40
UAZ
UAZ, Isuzu
100
AVTOVAZ
LADA, Renault,
Nissan
1,000
GM-AVTOVAZ
Lada, Chevrolet
100 (120***)
TagAZ
TagAZ, Vortex
180
VW Group Rus
PSMA Rus
Plant
Hyundai
GM
Ford-SOLLERS
MAN
Nissan
Toyota
Scania
Brand
Hyundai, KIA
Chevrolet, Opel
Ford
MAN
Nissan
Toyota
Scania
Capacity
200
100 (230***)
125
6
50 (100***)
50
6.5
Plant
Capacity
SOLLERS
188
IzhAvto
50***
KAMAZ
Capacity
Brand
Capacity
Toyota, Mazda,
100
Ssangyong
Lada, Nissan
220
KAMAZ, MercedesBenz, Mitsubishi
83
Fuso
* This list is not exhaustive
** in ‘000 units
*** planned capacity
EURussia Partners LLC
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The Renault-Nissan-Avtovaz alliance in
Russia
• 4 plants with a total installed capacity of more than 1 million vehicles :
•
•
- Moscow:
160 000 vehicles per year
- St. Petersburg:
50 000 vehicles per year
- Togliatti:
900 000 vehicles per year
- Izhevsk
220 000 vehicles per year
A number of models already produced in Russia, and new models to come:
- Renault
Logan, Sandero, Duster, Fluence, L/B52
- Nissan
P32E, L42F, LB1A
- Lada
Kalina, Priora, Granta, 4X4, R/F90
- Datsun
- Powertrain
K & JH
29 % of market share in 2013:
- Renault
8%
- Nissan
5%
- Lada
16%
EURussia Partners LLC
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VW manufacturing operations – existing,
approved new and planned projects
Nizhny Novgorod
(110 000 vehicles/year)
Kaluga (150 000 engines/year)
Moscow
EA211 1.6 MPI
PQ35
Octavia SK 371
MQB-A1
Jetta VW 361
PQ35
N.Novgorod
Kaluga
Kaluga 1 (170 000 vehicles/year)
Yeti SK 316
Kaluga 2 (170 000 vechicles/year)
Polo G VW 251
PQ25/34
TIGUAN NF
MQB A2
Tiguan VW 316
PQ35
AQ3
MQB A2
Fabia SK 250
PQ25
A+SUV
MQB A2
A-Entry Lim. SK 251
PQ25/34
KALUGA 2 MIRRORS KALUGA 1 and will be
approved in Aug/Sep’2014 – ALL CAR LINES
WILL BE IN SOURCING IN 2014
EURussia Partners LLC
Existing project
Vehicle plant
Engine Plant
Approved new project
NSC
Planned project (under review)
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FORD SOLLERS JV roll-out
EURussia Partners LLC
Page 16 of 20
2013 OEM local content level
OEM / alliance
1
• Toyota Motor
Local content
10%
2
• Hyundai Motor Manufacturing Rus
48%
3
• PSMA Rus
20%
4
• Renault-Nissan-Avtovaz + Kamaz-Daimler
65%
5
• Ford-Sollers
37%
6
• GM + GM-Avtovaz
51%
7
• VW
42%
EURussia Partners LLC
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10 major macroeconomic trends in 2014
1. GDP growth is slowing down
2. Manufacturing index is almost flat
3. The ruble is devaluating (following the expected decrease in oil prices)
4. Retail sales turnover fall down (+3.9% compared to +5.9% in 2012)
5. Freight and logistics volumes are decelerating (+0.5% compared to +2.9%
in 2012)
6. Regional budget deficits are growing (1.1% of GDP)
7. Disposable income is increasing (3.3% in real terms)
8. Capital outflow is rising (+14.8%)
9. Credit financing is increasing (+30.4%)
10.Defaults on credits are increasing (+40.6%)
EURussia Partners LLC
Page 18 of 20
2014-2017 macroeconomic forecast
Indicator
2013
Global oil price, $/barrel
Consumer price index
RUR/USD exchange rate
2014
2016
2017
108
104
100
100
100
106.8
106.7
105.1
104.7
104.4
36-37 37-37.9
38.5-38.8
31.8 35.5-36
GDP growth, %
1.3
Manufacturing index, %
0.4
Investment, %
2015
0.5-1.1
2-3.2
2.5-3.8
3.3-4.2
1-1.6 1.7-2.7
1.6-2.9
2-3.3
-0.2 -0.1-2.4 2.4-6.1
1.6-7.3
4.7-8.1
Disposable income, %
3.3
0.5-0.9 1.3-2.5
2.9-3.7
3.4-4.2
Average salary, %
5.3
1.4-1.8 1.9-2.7
2.9-4.1
3.9-5
Retail sales turnover, %
3.9
1.9-2.4 2.1-3.3
3-4.1
3.6-4.2
Capital Inflow (+)/outflow (-), $ bln.
-60
-30
-10-0
0-15
Labour productivity, %
1.5
1.1-1.3 2.1-3.5
2.4-3.7
3.3-4.2
Unemployment, %
5.7
5.8-6.2
5.8-6.1
5.7-6
EURussia Partners LLC
-90
6-6.3
Source: Ministry of Economic Development of RF
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Thank you for your attention!
Ivan Bonchev
Managing Partner
Tel:
Email:
EURussia Partners LLC
+7 916 330 2292
[email protected]
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