© copyright ibm corporation 2003 china sharpening the vision tobin alexander - vice president ibm...

© Copyright IBM Corporation 2003

China Sharpening the Vision

Tobin Alexander - Vice President IBM Global Automotive, Asia-Pacific Operations


2002 2003

Car Sales Up 75%

2003 – Exponential Growth


What a Difference A Year Makes!


2002 2003 2004

75%

15%

2004 Sales $2.3 million

2004 – Sales Up Only 15%


Declining Sales

Price Cutting

Profit Margins

Declining Sales

Profit Margins

Price Cutting


Why the Drastic Change?


1 The ratio of private car buyers to fleets has increased much faster than anticipated

2 Chinese economic policies have also impacted the market

3 Competition increased substantially

Four Fundamental Reasons

4 Steel prices increased over 40%


How Do We Respond?


Developed Markets vs. China

In Developed Markets: vs. In China:

Repeat Buyers First Time Buyers

Price reductions or cash incentives

stimulate demand

Price reductions delay purchases


The answer lies in the

forward value chain


Attract and Retain New Buyers

Invest in marketing, advertising and brand

development

Leverage warranty offerings to reduce cost of vehicle ownership

Reorganize sales and marketing organizations

Provide a complete ownership experience


Manufacturers Can’t Do It Alone

ManufacturerManufacturer

CustomerCustomer

Dealer and Service Network

Dealer and Service Network


Develop Creative Finance Options

China DevelopedMarkets

Cars Financed

20%80%


Conclusion: From Vision to Execution

Rethink and restructure sales, marketing, distribution, and after sales strategies and processes

Target messages to increasingly segmented markets

Pay more attention to the individual customer

Provide financing services unique to China

Provide best-in-class dealer sales and service


Companies that respond quickly will win in this market

Companies that respond quickly will win in this market

© copyright ibm corporation 2003 china sharpening the vision tobin alexander - vice president ibm...

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