china automotive industry scenario 2022 executive summary

© Copyright EBS Business School and China Europe International Business School

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China Automotive Industry: Scenario 2022

Focus: The Premium Car Segment A joint research project of

Automotive Institute for Management (AIM), EBS Business School, and CEIBS Center for Automotive Research (CCAR),

China Europe International Business School (CEIBS).

Executive Summary

What? A strategic foresight study utilizing expert-based scenario development

methodology to analyze the political, economic, socio-cultural and infrastructure environment of the automotive industries premium segment in China in 2022 and its implications for strategic planning in the automotive sector. The study is part of the Industry Intelligence Research Program following the approach of ‘LOOKING INTO THE MINDS OF LOCAL EXPERTS’ - integrating the insights of more than 80 local industry experts from the premium automotive industry in China.

The report China Premium Automotive Industry: Scenario 2022 extensively elaborates on how China’s premium automotive industry might look like and demonstrates an analysis process how to evaluate potential (re)actions improving strategic flexibility for the future of China’s premium automotive industry in 2022.

This executive summary introduces the study’s background and objective, illustrates basic steps of the specifically developed methodology, depicts selected results and explains how managers can integrate the report into their firm’s strategic planning for the Chinese market.

Why? Today, China is the largest automotive market in the world. The country has experienced impressive growth rates over the past decades. Despite current single-digit growth rates of annual new car sales, the premium segment continues to experience impressive growth rates and is already the second biggest premium car market in the world.1 However, the Chinese automotive market is not only expected to grow further but also to undergo substantial changes which will induce new challenges for automotive companies operating in China. These challenges include an ongoing mobilization of more than 1bn. people, unstoppable urbanization, changing demographics as well as consumer requirements, and rising environmental considerations. Inevitably, China’s still growing relevance for the global automotive industry requires decision makers to constantly re-think or at least re-evaluate their strategies for the Chinese market in order to benefit also in the future from the tremendous growth potentials. As stated by one of our study participants: “it’s no doubt that the biggest automotive market will become one of the drivers on international level”.

For Whom? The “Scenario 2022” report is designed to support senior executives and corporate strategy managers in the development and/or re-evaluation of their current plans for China’s premium automotive industry: Be prepared for the future of China, “the central kingdom” (Chinese: Zhōngguó) of the global automotive industry.

1 In this study, the automotive premium segment refers to passenger vehicles with a purchase price > 250k RMB (e.g. Buick Lacrosse, VW Passat, Audi A6, Mercedes-Benz E Class).


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How? The Automotive Institute for Management (AIM), EBS Business School, and the CEIBS

Center for Automotive Research (CCAR), China Europe International Business School (CEIBS), have initiated an annual Industry Intelligence Research Program to support decision makers and managers of China’s automotive industry and provide a better understanding about how the industry might develop and what it means for their companies. The research program integrates a web-based expert panel approach and workshop sessions among automotive experts in China to jointly assess the future of China’s premium automotive industry.

Process Graph 1: The China Automotive Industry Intelligence Research Focus and Process

Understanding China’s

Automotive Industry

STEP 1: Online real-time Delphi study with local industry

experts to gather distinct perspectives on ‘hot topics’.

STEP 2: Expert Workshop to develop

scenarios of the future political, socio-

cultural, economic and technological

infrastructure environment for the

automotive industry in China.

STEP 3: Expert Workshop

to evaluate the impact of future institutional

changes on firms’ local operations

of the future automotive industry

in China.

STEP 2: Expert Workshop to develop

scenarios of the future political, socio-

cultural, economic and technological

infrastructure environment for the

automotive industry in China.

STEP 3: Expert Workshop

to evaluate the impact of future institutional

changes on firms’ local operations

of the future automotive industry

in China.

Which changes might occur in the

institutional environment? How changes might interrelate and

what does it mean for a firm?

Challenge 1:

Uncertainty

about future institutional developments

Challenge 2:

Ambiguity about

institutional interdependences

Delphi Study Scenario Workshop

Step 1: The participating industry experts access an online real-time Delphi software to evaluate a combination of industry environment, macro-perspective and value-chain projections with respect to their probability of occurrence and impact on the industry. During the online interaction, the participating experts are also requested to explain the reasons for a high/low assessment of a projection and can review their peers’ arguments/ratings anonymously to re-asses their initial estimates for each projection. Step 2: Industry experts develop in the first workshop on CEIBS campus scenarios about the business environment of China’s automotive industry in 2022. The workshop integrates the projections of Step 1 and elaborates scenarios from four different perspectives (PEST): The political environment examines regulations of the Chinese Government put into

effect which might support further growth or constrain the industry through the formation of potential hindrances.

The economic perspective examines which players (e.g. OEMs/Suppliers) will dominate the value chain and how the major characteristics of their business relationships might look like.

The socio-cultural environment examines on the one hand purchasing criteria of customers per se and on the other hand trends and expectations of the society at large of particular interest for the automotive industry.

The technological infrastructure perspective examines “soft” (e.g. knowledge) and “hard” (e.g. infrastructure) factors that are most relevant for the industry.


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Scenario Matrix Approach

Graph 2: Basic Scenario Matrix for Industry Environment Analysis

Scenario Content

Each scenario matrix is framed by two industry environment projections determined by their respective occurrence and non-occurrence evaluating in detail the consequences for the industry’s major stakeholders such as customers, suppliers, OEMs, the Government of China and China’s society at large.

Industry Dynamics Workshop

Step 3: Own assessment in a second workshop on individual firm level: How examined projections for China’s automotive industry from the Delphi study

might interrelate with each other to get a better understanding about underlying drivers and cause-effect relationships among the institutions of China’s automotive industry.

How the developed scenarios or particular projections of China’s automotive industry affect a firm’s local operations on functional level (e.g. Research and Development, Sourcing and Procurement, Manufacturing and Production, Human Resources, Marketing and Distribution).

Graph 3: The Institutions-Resources Matrix to elaborate Functional Strategies

Organizational(Structures, Processes, Leadership Style etc.)

Technological(IP Rights, Production

Technologies, Tacit Knowledge etc.)

Human Resources

(Executives, Employees etc.)

Physical Assets(Plants, Machinery etc.)

Ind

ust

ryE

nvi

ron

men

t

Relationships(within company,

functions, customer or suppliers etc.)

Effects on department’s resources


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Selected Key Results from Delphi Study

High level of uncertainty regarding future development In total, 5 out of the 19 examined projections (26 %) resulted in moderate consensus among the participating industry experts, while 14 of the projections were still controversially discussed at the closure of the study yielding an average probability of occurrence of 51 % across all projections. The future of China’s automotive premium segment is difficult to predict - affirming the relevance of the study for both senior executives and further investigations. Selected projections all highly relevant for China’s automotive industry The average impact of the projections was rated as 3,6 and the minimum reported impact was 3,2 (Scale 1-5): All projections are of high interest to managers and decision-makers of China’s automotive premium segment. The future industry environment: a similar but challenging picture The industry environment projections show that the political, economic, socio-cultural and technological infrastructure environment of China’s automotive industry will not change dramatically until 2022 – but some relevant changes might occur.

Graph 4: Quantitative Results of Macro-Perspective & Industry Environment Projections

Dimension Macro-Perspective Projections Probability Consensus Impact

Macro

Perspective

“Global Chinese OEMS”: In 2022, Chinese OEMs achieve 25% of their annual cars

sales in developing countries (e.g. Brazil, Russia, Africa). 51%

40

Very Strong

Dissent

3,5

“Mainstream Premium”: In 2022, the premium segment accounts for more than 15%

of annual new car registrations in China.59%

32,5

Strong

Dissent

3,7

“Remote Areas”: In 2022, more than 50% of new premium cars in China are sold in

tier 3-4 cities and rural areas. 44%

30

Strong

Dissent

3,5

Dimension Macro-Perspective Projections Probability Consensus Impact

Macro

Perspective

“Global Chinese OEMS”: In 2022, Chinese OEMs achieve 25% of their annual cars

sales in developing countries (e.g. Brazil, Russia, Africa). 51%

40

Very Strong

Dissent

3,5

“Mainstream Premium”: In 2022, the premium segment accounts for more than 15%

of annual new car registrations in China.59%

32,5

Strong

Dissent

3,7

“Remote Areas”: In 2022, more than 50% of new premium cars in China are sold in

tier 3-4 cities and rural areas. 44%

30

Strong

Dissent

3,5

Dimension Industry Environment Projections Probability Consensus Impact

Political

“Vehicle Fleets”: In 2022, the Government of China and State-Owned-Enterprises

have to use exclusively Chinese OEMs’ brands in their vehicle fleets.52%

43,8

Very Strong

Dissent

3,5

“Access Restrictions”: In 2022, registration of new passenger cars and entry in tier1-

3 cities in China is only eligible to passenger cars with displacement volume lower than

2.0 liters.

41%

38,8

Strong

Dissent

3,8

Economic

“Profit Margins“: In 2022, OEMs’ profit margins in China’s premium segment have

decreased by more than 50% compared to the profit margins in 2011. 60%

30

Strong

Dissent

3,7

“Dealership Consolidation”: In 2022, the top 25 dealership groups in China have a

combined market share of more than 60% of annual new car sales.63%

25

Moderate

Dissent

3,6

Socio-

Cultural

“National Pride”: In 2022, China’s young generation is strongly driven by national

pride considerations in their lifestyle and consumption behavior including premium car

purchases.

43%

33,8

Strong

Dissent

3,6

“Interior Design”: In 2022, the brand perception of premium cars is significantly more

driven by a car’s interior design and features (e.g. cockpit ambience, rear space, center

console) than a car’s exterior design (e.g. front/rear lights, radiator grill).

50%

20

Moderate

Consensus

3,2

(Hard/Soft)

Infra-

structure

“Corporate Universities”: In 2022, each OEM runs own corporate universities and

training centers (vocational, service, and design) to attract, develop and retain sufficient

numbers of well-qualified employees in China.

58%

35

Strong

Dissent

3,5

“Public Transport”: In 2022, public transportation is perceived as a convenient

alternative mode of transportation by more than 90% of premium car owners in tier1-3

cities in China.

49%

40

Very Strong

Dissent

3,7

Dimension Industry Environment Projections Probability Consensus Impact

Political

“Vehicle Fleets”: In 2022, the Government of China and State-Owned-Enterprises

have to use exclusively Chinese OEMs’ brands in their vehicle fleets.52%

43,8

Very Strong

Dissent

3,5

“Access Restrictions”: In 2022, registration of new passenger cars and entry in tier1-

3 cities in China is only eligible to passenger cars with displacement volume lower than

2.0 liters.

41%

38,8

Strong

Dissent

3,8

Economic

“Profit Margins“: In 2022, OEMs’ profit margins in China’s premium segment have

decreased by more than 50% compared to the profit margins in 2011. 60%

30

Strong

Dissent

3,7

“Dealership Consolidation”: In 2022, the top 25 dealership groups in China have a

combined market share of more than 60% of annual new car sales.63%

25

Moderate

Dissent

3,6

Socio-

Cultural

“National Pride”: In 2022, China’s young generation is strongly driven by national

pride considerations in their lifestyle and consumption behavior including premium car

purchases.

43%

33,8

Strong

Dissent

3,6

“Interior Design”: In 2022, the brand perception of premium cars is significantly more

driven by a car’s interior design and features (e.g. cockpit ambience, rear space, center

console) than a car’s exterior design (e.g. front/rear lights, radiator grill).

50%

20

Moderate

Consensus

3,2

(Hard/Soft)

Infra-

structure

“Corporate Universities”: In 2022, each OEM runs own corporate universities and

training centers (vocational, service, and design) to attract, develop and retain sufficient

numbers of well-qualified employees in China.

58%

35

Strong

Dissent

3,5

“Public Transport”: In 2022, public transportation is perceived as a convenient

alternative mode of transportation by more than 90% of premium car owners in tier1-3

cities in China.

49%

40

Very Strong

Dissent

3,7

Remarks: Each projection is formulated as an extreme statement to generate detailed comments from the participating experts. Probability (0-100%); Impact on Chinese automotive industry (low (1) –(5) high). Consensus (Level of agreement between 50 Delphi study participants measured as Interquartile Distance).


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The most likely projections (>50%) draft the picture in which the ‘golden ages’ are over, premium-cars are substantially higher in demand and dealerships go through consolidation.

A substantially risen demand for premium cars and car-registration/urban-access restrictions are expected to have the highest impact on the segment.

When combining probability and consensus, it can be concluded that the chances of interior design driving brand-differentiation are “50-50”, while governmental fleet policies, the global positioning of Chinese OEMs and public transportation are very controversially discussed.

Graph 5: Probability Consensus Impact Analysis for Macro-Perspective & Industry Environment

3,1 3,3 3,5 3,7 3,9 4,115202530354045Low HighLow High

Consensus ImpactProbability

30%

40%

50%

60%

70%

Vehicle

FleetsVehicle Fleets

Public

Transport

Public Transport

Global Chinese OEMs

Global

Chinese

OEMs

Access

Restrictions

Access

Restrictions

Corporate

UniversitiesMainstream Premium Mainstream PremiumProfit

Margins

Profit

Margins

Remote AreasRemote Areas

National Pride

National Pride

Interior

Design

Interior

Design

Gold-Rush is

over?

Carefully monitor, given the

high impact and probability.

Mobility ≠ Cars? China’s Vastness…

Dealership

ConsolidationDealership Consolidation

Corporate

Universities

3,1 3,3 3,5 3,7 3,9 4,115202530354045Low HighLow High


Low HighLow High


30%

40%

50%

60%

70%

30%

40%

50%

60%

70%

Vehicle

FleetsVehicle Fleets

Public

Transport

Public Transport

Global Chinese OEMs

Global

Chinese

OEMs

Access

Restrictions

Access

Restrictions

Corporate

UniversitiesMainstream Premium Mainstream PremiumProfit

Margins

Profit

Margins

Remote AreasRemote Areas

National Pride

National Pride

Interior

Design

Interior

Design

Gold-Rush is

over?



Mobility ≠ Cars? China’s Vastness…

Dealership

ConsolidationDealership Consolidation

Corporate

Universities

Selected Scenario Workshop Results

The most likely PEST scenarios: merging the ‘old’ with the ‘new’ The most likely* PEST scenarios confirm a similar picture of China’s automotive industry in 2022 compared to 2012, but with quite some substantial changes which are mostly expected to even ‘change the rules of the game’ in China’s automotive industry.

From a political perspective, the industry experts

expect the scenario “GERMAN STIGMATA” to be the most likely* for 2022 (Probability 40-60 %). This scenario renders that… …the Government of China (GOC) and state

owned enterprises NEITHER use exclusively Chinese cars in their vehicle fleets therefore less emphasizing support for developing domestic OEMs’ brands,

…nor that the GOC restricts car registrations or urban access to passenger vehicles with a displacement volume <2.0 liters in tier 1-3 cities therefore leaving the fuel efficiency issue to the industry.

In short, political SCENARIO 3 renders current customers’ preferences and market shares in the premium segment to largely remain comparable in 2022.

Political Environment Projections for 2022

“Vehicle Fleets”: The Government of China and State-Owned-Enterprises have

to use exclusively Chinese OEMs’ brands in their vehicle fleets.

“Access Restrictions”: Registration of new passenger cars and entry in tier1-3

cities in China is only eligible to passenger cars with displacement volume lower

than 2.0 liters.

*Assessed during workshop discussions with local industry experts in China

“A

cc

es

s R

es

tric

tio

ns” Hig

h

SCENARIO 1

20-35% Probability

“GREEN PREMIUM”

SCENARIO 2

0-15% Probability

“CERTIFIED CHINESE CARS”

Pro

bab

ility

of

occu

rre

nce

SCENARIO 3

40-60% Probability

“GERMAN STIGMATA”

SCENARIO 4

10-20% Probability

“CHINESE PREMIUM”

Lo

w

Low Probability of occurrence High

“Vehicle Fleets”


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From an economic perspective, the industry experts expect the scenario “WALL STREET” to be the most likely* for 2022 (Probability 45-55 %). This scenario renders that… …neither OEMs’ profit margins in the premium

segment decrease substantially, …nor dealerships consolidate substantially

yielding a few remaining large players which jointly account for the major share of annual new car.

In short, economic SCENARIO 3 renders the attractiveness of China’s premium segment to remain high and bargaining power to largely remain with OEMs in 2022.

From a socio-cultural perspective, the industry experts expect the scenario “SHANGHAI” to be the most likely* for 2022 (Probability 40-50 %). This scenario renders that… …China’s younger generation neither

emphasizes national pride considerations in lifestyle and consumption behaviour,

…nor the brand perception of premium cars to be more driven by a car’s interior design.

In short, socio-cultural SCENARIO 3 renders customers’ preferences to not differ substantially from the TRIADs and a strong preference for foreign brands to drive purchasing decisions in the premium segments in2022

From a technological perspective, the industry

experts expect the scenario “OUTPUT but no IMPACT” to be the most likely* for 2022 (Probability 50-60 %). This scenario renders that… …OEMs in China substantially invest into

corporate universities and training centres to ‘breed’ local talents,

…but the public transportation is not perceived as a convenient alternative mode by premium car owners in China’s tier 1-3 cities.

In short, technological SCENARIO 4 renders domestic automotive players to particularly benefit from widely available talents in China and domestic cars to be at least a choice for the mainstream segment

“D

eale

rsh

ip C

on

so

lid

ati

on“

H

igh

SCENARIO 1

20-30% Probability

“SLUMDOG MILLIONAIRE”

SCENARIO 2

0-10% Probability

“STAR TRECK”

Pro

bab

ility

of

occu

rre

nce

SCENARIO 3

45-55% Probability

“WALL STREET”

SCENARIO 4

15-25% Probability

”TRANSFORMERS”

Lo

w


“Profit Margins”

Economic Environment Projections for 2022

“Profit Margins“: OEMs’ profit margins in China’s premium segment have

decreased by more than 50% compared to the profit margins in 2011.

“Dealership Consolidation”: The top 25 dealership groups in China have a

combined market share of more than 60% of annual new car sales.


“In

teri

or

De

sig

n“

H

igh

SCENARIO 1

10-25% Probability

“SANTIAGO DE CHILE”

SCENARIO 2

10-15% Probability

”SEOUL”

Pro

bab

ility

of

occu

rre

nce

SCENARIO 3

40-50% Probability

“SHANGHAI”

SCENARIO 4

20-30% Probability

“FORBIDDEN CITY”

Lo

w


“National Pride”

Social Environment Projections for 2022

“National Pride”: China’s young generation is strongly driven by national pride

considerations in their lifestyle and consumption behavior including premium car

purchases.

“Interior Design”: The brand perception of premium cars is significantly more

driven by a car’s interior design and features (e.g. cockpit ambience, rear space,

center console) than a car’s exterior design (e.g. front/rear lights, radiator grill).


“P

ub

lic T

ran

sp

ort“

H

igh

SCENARIO 1

0-10% Probability

“IMPACT without OUTPUT”

SCENARIO 2

10-20% Probability

“OUTPUT with IMPACT”

Pro

bab

ility

of

occu

rre

nce

SCENARIO 3

20-30% Probability

“Neither IMPACT nor OUTPUT”

SCENARIO 4

50-60% Probability

“OUTPUT but no IMPACT”

Lo

w


“Corporate Universities”

Technological Environment Projections for 2022

“Corporate Universities”: Each OEM runs own corporate universities and

training centers (vocational, service, and design) to attract, develop and retain

sufficient numbers of well-qualified employees in China.

“Public Transport”: Public transportation is perceived as a convenient alternative

mode of transportation by more than 90% of premium car owners in tier1-3 cities

in China.



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The results from the stakeholder projection analysis question many of established expectations on the future of China’s automotive value chain in 2022. Eight value chain projections evaluate the potential future of China’s automotive value-chain with respect to Research and Development, Sourcing and Procurement, Manufacturing and Production, Distribution and After-Sales. According to the participating experts, China’s automotive value chain will undergo substantial changes until 2022 and will share some characteristics with nowadays’ automotive value-chains in the TRIAD markets. Graph 6: Quantitative Results of Industry Value Chain Projections

Dimension Economic Value Chain Projections Probability Consensus Impact

R&D

Engineering Service Providers: In 2022, foreign engineering service providers in

China strongly integrating ‘Chinese’ design elements with foreign engineering

standards/technological know-how completely drive the development of new cars in

China’s automotive premium segment.

60%

40

Very Strong

Dissent

3,7

Chinese Global Trends: In 2022, China’s automotive industry drives global trends in

the premium segment due to the most dominant group of creative automotive

designers and marketing professionals worldwide working in China.

46%

30

Strong

Dissent

3,5

Sourcing

Suppliers’ M&A: In 2022, Chinese automotive suppliers have the majority control

(majority stakes) of more than 30 out of the current global top 100 suppliers (e.g. from

Europe, Japan, USA).

52%

20

Moderate

Consensus

3,7

Secondary Component Market: In 2022, more than 55% of annual revenues in

China’s automotive supplier industry are generated in the secondary component

market (e.g. maintenance, repair and replacement parts).

55%

13,8

Strong

Consensus

3,4

Production

Automation and Standardization: In 2022, more than 90% of domestic automotive

firms have successfully automated and standardized their production processes and

outperform foreign competitors’ productivity levels in China.

47%

37,5

Strong

Dissent

3,6

Distribution

After-Sales

After-Sales Service: In 2022, dealerships in China generate more than 50% of their

annual revenues through service-offerings (e.g. repair and maintenance, finance,

insurance).

62%

23,8

Moderate

Consensus

3,7

Used Car Market: In 2022, the Government of China strongly regulates the used-car

market which is dominated (>50% sales) by less than 5 dealership groups. 39%

20

Moderate

Consensus

3,3

Customers

2nd Hand Premium: In 2022, more than 90% of China’s current and potential car

buyers prefer buying a used premium car instead of buying a lower-priced new car

from the mass market segment.

44%

28,8

Moderate

Dissent

3,7

Dimension Economic Value Chain Projections Probability Consensus Impact

R&D

Engineering Service Providers: In 2022, foreign engineering service providers in

China strongly integrating ‘Chinese’ design elements with foreign engineering

standards/technological know-how completely drive the development of new cars in

China’s automotive premium segment.

60%

40

Very Strong

Dissent

3,7

Chinese Global Trends: In 2022, China’s automotive industry drives global trends in

the premium segment due to the most dominant group of creative automotive

designers and marketing professionals worldwide working in China.

46%

30

Strong

Dissent

3,5

Sourcing

Suppliers’ M&A: In 2022, Chinese automotive suppliers have the majority control

(majority stakes) of more than 30 out of the current global top 100 suppliers (e.g. from

Europe, Japan, USA).

52%

20

Moderate

Consensus

3,7

Secondary Component Market: In 2022, more than 55% of annual revenues in

China’s automotive supplier industry are generated in the secondary component

market (e.g. maintenance, repair and replacement parts).

55%

13,8

Strong

Consensus

3,4

Production

Automation and Standardization: In 2022, more than 90% of domestic automotive

firms have successfully automated and standardized their production processes and

outperform foreign competitors’ productivity levels in China.

47%

37,5

Strong

Dissent

3,6

Distribution

After-Sales

After-Sales Service: In 2022, dealerships in China generate more than 50% of their

annual revenues through service-offerings (e.g. repair and maintenance, finance,

insurance).

62%

23,8

Moderate

Consensus

3,7

Used Car Market: In 2022, the Government of China strongly regulates the used-car

market which is dominated (>50% sales) by less than 5 dealership groups. 39%

20

Moderate

Consensus

3,3

Customers

2nd Hand Premium: In 2022, more than 90% of China’s current and potential car

buyers prefer buying a used premium car instead of buying a lower-priced new car

from the mass market segment.

44%

28,8

Moderate

Dissent

3,7

Remarks: Each projection is formulated as an extreme statement to generate detailed comments from the participating experts. Probability (0-100%); Impact on Chinese automotive industry (low (1) –(5) high). Consensus (Level of agreement between 50 Delphi study participants measured as Interquartile Distance).

The most likely projections (>50%) draft the picture in which foreign Engineering

Service Providers (ESPs) drive OEMs’ new-car developments and dealerships direct their primary attention towards after-sales services - indicating a large secondary component market.

OEMs’ sole reliance on foreign ESPs, a shift towards after-sales services and the demand for 2nd hand premium cars are expected to have the highest impact on the industry.

When combining probability and consensus, it can be concluded that suppliers will increasingly focus on the secondary component market while the role of foreign ESPs for the industry and the technological process competencies of domestic firms are very controversially discussed.


- 8 -

Graph 7: Probability Consensus Impact Analysis for Industry Value Chain Projections

3,1 3,3 3,5 3,7 3,9 4,110152025303540Low HighLow High


30%

40%

50%

60%

70%

Low HighLow High


30%

40%

50%

60%

70%

30%

40%

50%

60%

70%

Engineering Service

ProvidersEngineering Service

Providers

After-Sales

ServiceAfter-Sales

Service

Secondary

Component

Market

Secondary

Component

MarketSuppliers’ M&A Suppliers’ M&AAutomation and

StandardizationAutomation and

Standardization

Chinese Global Trends Chinese Global

Trends2nd Hand

Premium2nd Hand

PremiumUsed Car

MarketUsed Car

Market

What are the

pros & cons?



Who wins the

race: China or

West?Used = Premium?

Take for

granted?

According to the experts, the 8 industry value chain projections imply for China’s

automotive industry in 2022: ‘ESP’ driven Research and Development: Foreign engineering service providers

(ESPs) will play a crucial role in China’s automotive industry: ESPs are expected to successfully integrate ‘Chinese’ design elements with foreign engineering know-how and to drive development of new cars in China’s premium segment. Nonetheless, China’s automotive industry will not be in the position of a global trendsetter due to a shortage of designers and marketing professionals.

Maturating Chinese Suppliers: Domestic suppliers will continue to acquire major stakes of large foreign suppliers in order to integrate those suppliers’ technological know-how as well as management practices and to expand into new geographical markets. In the domestic market, the enormous secondary component market will shift Chinese suppliers’ focus towards after-sales.

Learning Process Competence: Chinese automotive firms will not successfully automate and standardize their production processes - foreign competitors will remain their competitive edge and can still outperform domestic firms’ productivity levels.

Potential in the Used-Car Market: Chinese customers’ preference for new cars will prevail - despite ‘value-for-money’ offerings such as 2nd hand premium cars - and the overall used car market will be fragmented without a concise regulatory framework – inducing little consumer confidence in this market.

What does the report offer?

How to integrate the “Scenario 2022” insights in your strategy The report is specifically designed to account for a strategist’s individual interests: There is no ‘one size fits all’ solution for strategy. The report is structured to easily fit with your particular interests or your firm’s current and upcoming plans in/for China. “China Automotive Industry: Scenario 2022 Report” integrates the assessments of >80 local industry experts on: …16 scenarios (4 scenario matrices) to better understand how China’s future

automotive industry might look like and how to prepare individual functional strategies today assessing physical assets, human resources, organizational structures, technologies and relationships.

…assessments of the probability and impact for 8 industry environment, 3 macro-perspective and 8 industry value chain projections supporting senior executives to understand how the future of China’s automotive industry and its value chain might look like in 2022.


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The report also includes a specifically developed framework (Institutions-Resources Matrix) which allows corporate strategist and functional heads to systematically transfer our industry experts’ insights into strategic planning implications and consequences on a functional strategy level in order to better plan future budgets and increase strategic flexibility:

Identification and evaluation of the department’s or function’s strategic plans as well as those topics and unresolved or potential issues considered to be the most relevant ones;

Identification of the associated PEST scenarios (or projections) in terms of relatedness;

Assessment of the identified scenarios’/projections’ potential effects on the department’s/function’s resources along five categories;

Identification of re-occurring or conflicting patterns with respect to the elaborated effects along the distinct PEST scenarios (or projections), followed by development and evaluation of potential countermeasures to account for the most necessary adaptations of a department’s resources at an early stage - based upon individual prioritization.

Responsible?

Dr. Roger Moser Managing Director ASIA CONNECT CENTER, University of St. Gallen; Automotive Institute for Management, EBS Business School; [email protected]

Prof. Thomas E. Callarman Director CEIBS Center for Automotive Research, Professor of Operations Management, China Europe International Business School (CEIBS) [email protected]

Prof. Dr. Franz-Rudolf Esch Director Chair of Automotive Marketing and Brand Management Professor of Brand Management and Automotive Marketing, EBS Business School [email protected]

Questions?

Christian Kuklinski Researcher/Doctoral Candidate Automotive Institute for Management, CEIBS Center for Automotive Research, [email protected] / [email protected] Phone: +49 611 7102 2062

CEIBS Center for Automotive Research (CCAR) China Europe International Business School 699 Hong Feng Road, 201206 Shanghai www.ceibs.edu/ccar/index.shtml

Automotive Institute for Management (AIM) EBS University of Business and Law Gustav-Stresemannring 3, 65189 Wiesbaden www.aim-ebs.de

mailto:[email protected]





http://www.ceibs.edu/ccar/index.shtml

http://www.aim-ebs.de/