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Central & Eastern Europe Developments Automotive News Global Conference - Detroit Jan ’08 Chris Lacey – General Motors
Today :
• Central & Eastern European Markets
−What are they
−How are they developing
−GM’s go-to-market strategy
−Conclusions
…..and finally ………
GM’s “Central & Eastern Europe” • 29 countries
− East of Germany, North, West & East of both India & China!
− 12 time zones / 25 million sq. kilometers
− 475 million population [8% of the world, 54% of Europe]
− 84 million vehicles in car parc today [Average age = 12+ years]
− 30 languages, 4 religions
• GDP range (nominal 2006)
GDP Total (million USD) Per Capita (USD)Russia 986 940 Slovenia 22 079Moldova 3 266 Uzbekistan 753
• Complex legislative environment
• Less than 20 years ago private vehicle retailing illegal –now one of the fastest growing vehicle markets in the world !
To put the Region in perspective
Diverse demand and usage
How are they developing ?
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
2001 2002 2003 2004 2005 2006 2007 (0+12)
CE EE Russia
Automotive Industry Market – C&E Region
13,30% of Europe4,60% of Global
25,10% of Europe8,70% Global
Annual Growth 20%
GM’S “Go-to-market approach”
• Our 5 P’s
− The right Partners within GM to provide products for the range of price points required
− The right Partners in market place for manufacturing
− The right Partners for component supply
− The right Partners in the market for vehicle distribution and repair
− The right Partner philosophy with our customers
The right Partners within GM for Product : • European Opel & SAAB
• North American Cadillac / Hummer /Chevrolet SUVs
• Asian [GM DAT] Chevrolet cars and SUVs
• Russian [GM AvtoVaz] Chevrolet Niva
Real evidence of GM’s Globalisation and “One Company” approach.
The right Partners within GM for Product:
The right Partners for manufacturing
• GM and GM DAT (formerly Daewoo) have a long history of manufacturing in the C&E Region from early 90’s
• GM in late 90’s actually stopped vehicle manufacturing in 3 GM plants in the region – Hungary, Poland (Warsaw), and Turkey
• Daewoo had 4 regional plants (licensed assemblers) all still operating (in Ukraine, Poland (FSO), Uzbekistan, & Romania)
• 180,000 GM DAT vehicle kits assembled in these plants are not recorded in GM Sales in the region
• Recent developments include the new GM plant in St Petersburg and manufacturing licenses being granted to Zastava in Serbia, Azia Avto in Kazakhstan, and FSO in Poland
• Currently GM vehicles are manufactured or assembled at 9 locations in the region
GM Manufacturing Footprint in C&E Region
Non-GM CKD/SKDZAZ (Ukraine)
Azia Avto(Kazakhstan)
Non-GM SKD
St. Petersburg Shusari
Avtotor (Russia) Non-GM SKD/CKD
Zastava (Serbia)
Non-GM CKD/SKD
FSO (Poland)Non-GM SKD/CKD
Gliwice (Poland)
UZDW(Uzbekistan)
Non-GM CKD/SKD
GM Avtovaz (Russia)
Non-GM CKD/SKDZAZ (Ukraine)
Azia Avto(Kazakhstan)
Non-GM SKD
St. Petersburg Shusari
Avtotor (Russia) Non-GM SKD/CKD
Zastava (Serbia)
Non-GM CKD/SKD
FSO (Poland)Non-GM SKD/CKD
FSO (Poland)Non-GM SKD/CKD
Gliwice (Poland)Gliwice (Poland)
UZDW(Uzbekistan)
Non-GM CKD/SKD
GM Avtovaz (Russia)
JV CKD
The right Partners for component supply• GM’s Global Purchasing and Supply Chain group
aims to increase component sourcing close to where we build
• They extend supply channels, identify local suppliers and develop to GM standards for local and global manufacturing
• Purchases in C&E region increased by 81% from 2003 to 2007, now 21.4% of total GME purchases
• 440 TIER 1 Suppliers in C&E region • Resident Global Purchasing staff in C&E region
increased by 305% • C&E region purchasing transactions 100%
integrated in GPSC processes
Innovative customers need to be served well !
The right Partners for Distribution & Repair • GM network growth [contracts]
‘95 = 202 ‘01= 402 ‘07 = 765
• In depth blueprinting
• Best applicant selection:Management focus / site location / funding / customer service attitude
• Full multi-brand approach appropriate to location & opportunity
• Facilities to full European standards from day 1
• Communication / motivation / training & guidance
The right Partners for Distribution & Repair
NPBT
n.a.
2,07%
2,75%
0
100
200
300
400
500
600
700
800
1997 2001 2007
un
its p
er
deale
r
0
100
200
300
400
500
600
700
800
No
of
sit
es
Average Throughout
No of sites
The right Partner philosophy with our customers.• Changing the “old image” of the pre ’90’s
industry & treating customers with respect− Transparent retail pricing [no premiums]
− Warranty & “Policy”
− Realistic labor / repair rates
− Satisfaction survey
− CRM activities
− Retail finance and leasing options
− Vehicle exchange or “buy back” policy
− Excellent parts warehousing and fast delivery
− Open communication /dialogue / CAC’s
− G2 used car programme
Self Assessment / Learnings & Observations Could we have done better?
• Dealer in house systems• Full portfolio - only in 60%
of market covered- Full CV range - Low cost product < $8,000
• Wholesale & Retail finance in all markets
• Faster manufacturing capacity increases
• More training & more training
Learnings & Observations
• No phones to mobiles • Cash to credit cards • Brand is King • High % Internet use• Mobile / clothes / travel /
car / apartment / house• Millionaires Show [Russia]• Distribution partners’
positive can do attitude and investment policy
• Entrepreneurs everywhere
Operational Difficulties and Legislation
We try hard not be lost in the complex maze…
9.0%
7.6%7.1%7.2%
5.7%
4.4%
3.8% 4.0%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
2001 2002 2003 2004 2005 2006 2007*
0
100,000
200,000
300,000
400,000
500,000
600,000
GM volume GM Mkt. Sh. Opel Mkt. Sh. Chevrolet Mkt. Sh.
100K
522K*
2001 through 2007 – A Success StoryGM Volume & Share Development – Central & Eastern Europe
*Excludes 180K GM Daewoo Kits sold in the region in 2007
……………..and finally
• Market Volumes :
- Russia = 2,708,659
- Ukraine = 584,823
- Turkey = 625,843
- Poland = 372,054
- China = 8,190,436
- Brazil = 2,220,481
- India = 1,812,375
….and finally ….Emerging Markets ??
……………..and finally
Request:
Can all of the Global Automotive Industry stop calling these markets & Brazil, China and many others:
“Emerging” Fact:
They have “Emerged” and are our markets of
“Growth & Opportunity”
We forget / ignore/ mistreat them at our peril.
Playing To Win
Central & Eastern Europe
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