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The Evolving Car Industry

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by

Charlie Cao

on 26 September 2014

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Transcript of The Evolving Car Industry

The Evolving Car Industry
Global Car Industry
Introduction & Overview
Projections
Focus Market - China
Major Influences
Customer Purchasing Factors
Governmental Forces
Product Quality
Societal Forces
Market for Electric Cars
Top Players in China
VW's Brand in China
Strategic EV Market
E-Golf Amongst Other EVs
Q&A and Short Video
Governmental Forces
Product Quality
Societal Factors
Favour German Car Brands
Reliability of Car is Important
Safety is a Pinnacle Concern
Environmental Impact
Efficiency
Car as a Status Symbol
Luxury and Style
Personalizing to Distinguish
Used for Business
Used for Dating
Part of "The Chinese Dream"
Pollution Concerns
Dependence on Foreign Oil
Government Tax waiver
Public Works Projects
Tyler VanGilder
Daniel Wu
Frank Cochrane
Charlie Cao

Global Car Industry
Areas of Focus
Global Car Industry

Urbanization of Populations
BRIC nations
Middle-class growth
Increasing incomes
Growing purchasing power
Regulatory Environment
Government Regulations
Tariff Costs
Currency Fluctuations
Political/Government relations
Global Environmental Regulations
Pollution; CO2 emissions
Uncertain Fuel costs
Manufacturing Development
Modularization
Import/Export Decisions
Versatility of manufacturing techniques
Emphasis on Co-Location
Chinese Market
Government Aid
30% of government vehicles to be eletric/hybrid vehicles by 2016
Waiving 10% purchase tax on EV from Sept 1 2014 to end of 2017
Purchase subsidy on electric vehicles
Limit on amount of regular vehicles sold in polluted cities
Chinese Government considering 100b Yuan fund to expand charging station network
Chinese Market
Exploding EV Market
Projected to catch up to major players in 2017
Average cost of EV ranges from 100,000 to 400,000 Yuan
Increasing disposable income
Urban residents' disposable income rose 9.7% to 26,955
Rural residents' disposable income rose 12.4% to 8,896
Private Firms/Individuals
Charging stations were previously built by state owned companies
Private firms are now allowed to compete as well - Tesla deal to build 400 charging stations in China
Wealthy individuals are helping build charging stations
Top Players in China's Auto Market
Source: IHS Automotive, Roland Berger May 2014
Light Vehicle Sales, 2002-2019 (proj.)
Industry Trends
Power of joint ventures (SAIC, FAW, and Wuling)
In 2014, VW captured 11.3% of China auto market
Further separation from GM, who has 7%
VW's sales in China equal to GM's sales in U.S
Long established track record in China
Established in 1985 when China had 3 automakers
Supported by powerful joint ventures
Brand association with Audi, Bentley, Porsche, and other luxury brands
9 out of China's top 20 selling models were VW
Unexpected contender (Ford Focus)
Volkswagen's Brand Recognition China
Strategic EV Market
Affordability for China'a middle class
Quality, Safety, and Performance
Utility and Family
Controls set by Chinese Government
Address issues with pollution
Supports eco-friendly or green energy
Sales data from China Daily
VW data from Volkswagen Group China

EV Competitors
Budget <30K
Middle Market 30-50K
Luxury >70K
The VW E-GOLF vs the Ford Focus Electric
Same price range (36K USD)
USD to RMB 6.13
VW gains the edge on mileage (85 vs 76)
Data provided by: "The Guardian"
Data provided by:
"The Guardian" & J.D. Power
Data Provided by:
"The Guardian" & Science Daily
Full transcript