fleet business in bric and emerging markets - roland berger · > a fleet market expansion...
TRANSCRIPT
Munich, March 2014
Fleet business in BRIC and emerging markets
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Executive summary > The EU-5 fleet markets are mostly saturated and, due to the European car crisis, their
future outlook is only modest in terms of sales potential and profitability > The BRIC fleet markets are past the introductory phase and show signs of expanding
and maturing – Annual fleet sales are currently approx. 2.5 million units and expected to rise steadily
> And beyond BRIC, other emerging countries are becoming more important and offer attractive growth potential compared to the challenging EU-5 markets
> A fleet market expansion concept for BRIC and growth markets helps professionalize and develop fleet business and improves the effectiveness needed for leveraging the impending upswing
> An integrated approach is needed to take advantage of the currently low opportunity costs and take into account lengthy development and implementation times
Now is the time to prepare for future growth in fleet business – Especially in BRIC and emerging countries in Asia and S. America
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© Roland Berger Strategy Consultants
Contents Page
A. Significance of fleets in emerging markets – Fleet sales in emerging markets offer the potential to increase sales volumes beyond the challenging European markets 4
B. Fleet professionalization in BRIC and emerging markets – To participate in future growth, we highly recommend a fleet market expansion concept for BRIC and emerging countries 9
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A. Significance of fleets in emerging markets
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Global light vehicle sales will increase by 20 million units by 2019 – Growth driven by BRIC and other emerging markets Light vehicle sales1) [m units]
1) Passenger cars and LCVs
Source: IHS; Roland Berger
+2%
2019
19.5
2012
17.2
+2%
2019
15.2
2012
13.2
+4%
2019
7.7
2012
5.8
5.1
+5%
2019
6.9
2012
+7%
2019
30.3
2012
19.0
2012
6.7 6.1
2019
-1%
2019
+4%
4.3
2012
3.2
5.9 7.1
2012 2019
+3%
North America
South America Rest of World
ASEAN
Japan/Korea
China
79.5
103.4
2012
+4%
2019
World +9%
2019
6.2
2012
3.4
India
Central/Eastern Europe Western Europe
CAGR [%]
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Well-established fleet business in EU-5 markets with moderate prospects – BRIC countries significantly gain in importance
62%
54%
39%
36%
48%
26%
13%
13%
38%
46%
61%
64%
52%
74%
87%
87%
91%9%
Estimated share of fleet sales 2012 [%]
1) Incl. rentals, dealers and OEM registrations 2) Estimates Share of private sales Share of fleet sales
EU-
51)
BRIC
2)
> Still going through economic hardship > Automotive fleet market outlook with
moderate prospects > Challenging competitive environment
> Positive long-term trend remains sound based on GDP and business growth
> Fleet business in BRIC countries is on the verge of becoming more developed
Fleet business in EU-5 and BRIC markets
Source: Dataforce; National Information Center; Roland Berger
EU-5
BRIC
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Even beyond the BRIC countries, there are interesting growth markets with opportunities for fleet business
Indonesia Thailand Malaysia Philippines Turkey Argentina Colombia ASEAN
Top Seller 2012
Reg. businesses ['000 #]2)
Vehicle sales 2012-2019 [m units, CAGR]
South America
+8% 1.7
1.0
+3% 1.4
1.2 +5% 1.1
0.8 +4%
0.8 0.6 +5% 0.2 0.2
+2% 0.9 0.8
+11%
0.3 0.6
271 297 325 820 764 219 498
Source: Worldbank; Econstat; IHS; automotive-fleet.com; Roland Berger
Fleet sales share 20121)
~20-30 ~20% ~10% ~10% ~15% ~10% ~5%
1) Estimates 2) Latest year available
Toyota Avanza MPV
Isuzu D-Max Pickup
Perodua Myvi Hatchback
Toyota Vios Sedan
Fiat Linea Sedan
Volkswagen Gol Hatchback
Chevrolet Aveo HB + Sedan
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To participate in the long-term growth opportunities of BRIC and other emerging markets, OEMs need to act now
> Fleet business in Europe has become increasingly challenging
> Sales opportunities in fleet are developing in BRIC and other emerging countries
> Use current pressure from global volume targets for expansion and globalization of fleet business
> Implementation of fleet market entry concept takes time (~12 months)
> Fleet business relationships in emerging markets are establishing now
Need for action
Source: Roland Berger
Global fleet environment today
Sales pressure in Europe today
Long-term growth in emerging countries
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B. Fleet professional-ization in BRIC and emerging markets
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A one-size-fits-all approach will not work – Market-specific approach is needed instead
OEM "Readiness" > Market position
B2B/B2C > Retail network > KAM potential > Production
footprint > etc.
EU-5 BRIC
Growth markets
Develop/ push
Defend
Build Catch up
High
Low Low High Market maturity
Assess attractiveness
Derive market strategy
Adapt processes, toolkits
> Market volume/growth (fleet) > Competitive intensity > Share of (full service) leasing > Significance of TCO > etc.
Source: Roland Berger
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A professional, modular fleet business concept helps improve both the efficiency and effectiveness of fleet sales
Market entry (no prior sales) > Key processes must be in place to start selling fleets > Hands-on process design with low level of system sophistication
1
Market basics > Basic processes required to fully operate a fleet business > Refinement and enhancement of "market entry" stage, incl.
additional processes as well as improved systems and tools
2
Market expansion > Further processes for active market expansion, including special
marketing campaigns as well as detailed monitoring and controlling tools
3
Market sophistication > All processes to operate professional fleet business fully
established and at the highest stage of expansion/sophistication 4
Pyramid structure of fleet operations
Source: Roland Berger
Level of sophistication
4
3
2 1
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Besides developing a general fleet concept, emphasis must also be on (local) implementation
Internal analyses and quick wins
Country- specific adaptation of concept
Operation of fleet business
Proces- ses
Organi- zation
Tools and systems
Operational implementation
> Market structure and size
> Customers > Competitors > Regulatory
environment
> Status quo of local fleet business
> Organization/ structure
> Dealer network > Initial improvement
areas
> Align with local conditions
> Priorities for localization
> Fleet strategy > Planning, monitoring, support > Acquisitions > Sales and customer management > Contract management > Dealer management > RAC business
> Reporting > Monitoring
Analyze status quo
Develop ideal fleet concept
Approach to professionalizing fleet operations
Source: Roland Berger
External market analyses
Concept focus Implementation focus
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Market-specific hurdles need to be overcome in BRIC countries to successfully adapt, design and implement the strategy
Segmentation & guidelines
What is the problem? What do I need to do?
Fleet-specialized dealers
Field consultants
Performance management
Pricing policies
Fleet organization
Fleet marketing
After-sales & financial services Key account management
> Lack of customer insights due to poor data transparency
> Conduct primary research > Commit to data sharing
> Blind implementation using retail concepts from mature markets
> Adapt retail concepts > Develop alternative concepts
> Low awareness and expertise for fleet business among field force
> Train & incentivize field force > Provide them with the necessary tools
> Capturing sales performance on dealer level is a challenge
> Establish a reliable performance measurement system
> Simplistic incentive schemes leading to unexploited customer relations
> Adapt advanced concepts & develop intelligent incentive schemes
> Lack of strategy & internal alignment > Scarcity of fleet resources
> Establish wholesale structures with dedicated resources and processes
> Lack of structured marketing approach for fleet
> Derive fleet marketing plan according to local market requirements
> Different customer requirements in after-sales and financial services
> Only offer and develop services suited to local market standards
> Difficult to identify buying center and build relationships
> Train key account managers in local market practices and implement CRM
%
Source: Roland Berger
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Segmentation & guidelines Fleet segments known and guidelines defined Fleet-specialized dealers Strategy executed by dealers
Performance management Sales performance managed and promoted Pricing policies Incentive levels and rules stipulated
Fleet organization Functions and internal resources deployed Fleet marketing Marketing approach and activities defined After-sales & financial services Service offer outlined Key account management Key accounts and potential candidates served
Field consultants Support is effectively delivered to dealers
%
Fleet professionalization defines all the factors between the NSC and dealers necessary for successful operations
Source: Roland Berger
Flee
t size
Fleet segments
The result of fleet professionalization
Resp
onsib
ility
Number of companies
NSC
Dealer
Big
Medium
Small
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China: Main fleet customer groups differ regarding holding periods, regional coverage, decision-making processes and criteria
Government Taxi companies Police Leasing companies Insurance companies
Decision- making process
> Central ministries: Central purchasing through public tenders
> Local governments conduct public tenders, but each department manages its own transactions
> Local taxi mgmt. bureau determines a shortlist of taxi models and brands
> Taxi companies or individual taxi drivers determine their preferred model based on a shortlist
> National or local Ministries of Public Security carry out group purchasing through public tenders
> Companies purchase centrally through tenders
> Companies purchase centrally through tenders2)
Decision criteria
> Brand fit to official profile > After-sales service
centers and discounts > Price (needs to be within
certain range)
> Price > Fuel efficiency > Maintenance cost > Quality/reliability
> Quality > Price
> Price > After-sales service
network coverage > Brand recognition
> Price > Brand > After-sales network
coverage
Regional coverage
> Capital: Group purchasing for all central authorities
> Other cites: Local purchasing
> All cities: Each city does its own purchasing
> Capital: Group purchase for Ministry of Public Security
> All cities: Local purchasing
> Big cities: Central purchasing at head-quarters such as in Beijing and Shanghai
> Big cities: Central purchasing at head-quarters such as in Beijing, Shanghai and Shenzhen
<5 years1) 4-8 years 8-10 years 3-5 years 5-6 years Holding period
1) New officials often buy new staff cars after a change in administration 2) Some companies also contact OEMs or dealers themselves instead of using public tenders
CASE STUDY: CHINA
Structure and characteristics of customer groups (example using China)
Source: Industry expert interviews; Roland Berger
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Your expert contacts for further questions
Source: Roland Berger
Jan-Philipp Hasenberg
Principal
Name
Position
Stephan Keese
Junyi Zhang
Joost Geginat
Wilfried Aulbur
Brazil
China
ASEAN
India
Dr. Marcus Hoffmann
Partner
Roland Berger Strategy Consultants Automotive Competence Center
Contact Roland Berger Strategy Consultants Automotive Competence Center
Am Sandtorkai 41 20457 Hamburg Germany
Mies-van-der-Rohe-Str. 6 80807 Munich Germany
+49 (69) 29924-6506 Phone +49 (89) 9230-8060
jan-philipp.hasenberg@ rolandberger.com
E-mail marcus.hoffmann@ rolandberger.com