140 Years Continental 1871 – 2011 Years Continental 1871 – 2011 ... Greatwall (Tianjin II Plant)...
Transcript of 140 Years Continental 1871 – 2011 Years Continental 1871 – 2011 ... Greatwall (Tianjin II Plant)...
140 Years Continental1871 – 2011
1 / Jay Kunkel / © Continental AG
Automotive News China Conference
1
Jay KunkelPresident Continental China
Automotive News China Conference
China - Moving from Volume to Value
China – Moving from Volume to Value
a. How to manage the largest but most fragmented market ?
b. How to cope with changing regulatory policies ?
c. How to manage the demand for Fuel Efficiency, Safety and
2 / Jay Kunkel / © Continental AG
Automotive News China Conference
Information?
d. How to manage to develop and retain the required skill-sets?
China – Moving from Volume to Value
a. How to manage the largest but most fragmented market ?
b. How to cope with changing regulatory policies ?
c. How to manage the demand for Fuel Efficiency, Safety and
3 / Jay Kunkel / © Continental AG
Automotive News China Conference
Information?
d. How to manage to develop and retain the required skill-sets?
Opportunities – Low Vehicle DensityLow car density presents market opportunities, but growth in megacities is limited
above 55
40-55
30-40
below 30 Beijing:
191
Shanghai:
per 1,000 people
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Shanghai:
74National Vehicle density
(per 1,000 inhabitants)
785USA
Russia 254
Germany 536
China 53
Source: CSM light vehicle density database; National statistic reports
Opportunities – World class Chinese OEMs jump on the global stageChina becomes critical for the success of global OEMs
29% 12% 18% 14% 19%7% 12% 19% 13% 2% 15% 13% 100% 19% 97%
5%
51%
99% 83%
50%
75%
100%
8.2 7.6 7.5 6.8 6.7 5.3 3.5 3.2 2.4 2.3 1.7 1.6 1.4 1.3 1.1 0.9 0.8 0.7 0.6
2011 Global and China light vehicle sales of top 20 OEM groups
Global volume, mn unitsChina’s Contribution Rest of World Contribution
Total Volume
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Source: JD Power & Roland Berger
GM*: excluding SGMW; SAIC *: including SGMW
0%
25%
More and more regional involvement in global vehicle Planning, Development, Process and Design Verification and Purchase DecisionResult
Opportunities – Capacity ExtensionThe total number of car assembly plants will increase from 120 in 2011 to 142 in 2015
Greatwall (Tianjin II Plant)
Mid-size car, Hover H7
est. SOP:2012
Tianjin
BAIC Beijing C50. C60. C71, EV
est. SOP:2011
Beijing
ChangAn Auto (Beijing Plant)
Own brand passenger cars and new energy vehicles
SOP:2012
Cherymini-van
est. SOP: 2011
BAIC-Chongqing YinxiangMini van
SOP: 2012
Beijing Hyundai (III plant)Accent, Elantra, Yuedong, Sonata etc.
SOP:2012
Geely (Chengdu Plant)
Gleagle GX7, Emgrand EV8
SOP:2011
Daqing
Geely Volvo Volvo models
In Plan
Changan- Ford Mini van
SOP: 2012
Dongfeng Yueda Kia Motor Kia Forte, Soul, Carnival, Cerato, Optima, Rio
In plan
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SOP: 2012FAW VW Audi, Jetta, Sagitar, Magotan etc.
Foshan
Dongfeng-RenaultRenault Logon, Fluence
In plan
Guangzhou
ChangAn PSA (Hafei Plant)SOP: 2012
Shenzhen
Zengcheng
Shanghai VW
PVs
In plan
Kaifeng
Hangzhou
Dongfeng YulongLuxgen 7 SUV, MPV etc.
SOP:2011
BYD (Changsha plant)
Yizheng
SVW (Yizheng Plant)
Capacity: 300,000
SOP:2012
Shanghai
Chongqing
Changsha
Wuhan
Dongfeng Honda (Wuhan II plant)
Hongda CRV, CIvic, Spirior
DPCA (PSA)Peugeot 207/307, Picasso, Elysee, etc.
SOP: 2013
Chengdu
Gleagle GX7, Emgrand EV8
Geely Volvo Volvo models
In Plan
Nanchang
JMC (Jiangling Motors II plant)
Ford Transit, Landwind, Baowei, S-Drive
SOP: 2011
SOP: 2013
Nanjing
SGM-WulingChevrolet Lechi, Baojun( first model GP50), Wuling Mini-vans
Liuzhou
In plan
In plan
Source: CSM plant capacity report, media reports
Opportunities - Local Brand DevelopmentVehicle content (= Value) is significantly increasing with local brand differentiation
Local Brands Restructured Brands
CHERY
New JV Local Brands
Revival of high-end brands
Chinese Brands
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GEELY
Low end segment High-end segment
Chinese brands are moving upwards to higher-end C and D segments with
increasing content
25
30
35
40
45
50
55
60
46%
59%9
58%9
84%7
2015
2010
2000
Market Share of Top 2 OEMs in 2010
Number of OEMs with > 1% Share
Concentrated
China Automotive Market Outlook – Challenges AheadFragmentation: how can economies of scale be achieved in the largest but most fragmented market ?
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0
5
10
15
20
25
INDIAGERMANYUSCHINA JAPAN KOREA
20%
38%11
46%12
22
Fragmented
Source: IHS report: Automotive Economics 11 Oct 2011
China Market OutlookVehicle content / value instead of volume development for sustainable growth in future
ChinaChina
CAGR =21%
2007/2011
CAGR =9%
2012/2016
10,919
21,200
CAGR =18%
2012/2016
China unit: mn EURChina unit: mn EUR
Vehicle Production Development – 2007 / 2011; - 2012 / 2016
Market Value Development (Continental Portfolio)
– 2012 / 2016
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Source: - IHS_Vehicle_Production_Forecast_04_10_2012 (2007-2010)- IHS_LV_Production_Bodystyle_GC_2012M02 (2011-2016)
China
RoW
22%
78%2012 2016
10,919 Volume Market Share – 2011 / 2016
China
RoW
26%
74%
Source: Continental Internal Study- Based on Continental Product portfolio
2011 2016
China Automotive Market Outlook – Challenges AheadFragmentation in numbers of OEMs and vehicle platforms require standardized products
Consolidated market structure is characterized by technical requirements
Product
Functional Requirements
TechnicalRequirements
Average Vehicle Volume per Platform (2012)
95,000
4.5 mnvehicles with 174 platforms
8.1 mnvehicles with 85 platforms
Avg. Volume/Platform
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China Automotive Industry: More than 85 OEMs & more than 250 car platforms
Product
Functional Requirements
TechnicalRequirements
Fragmented market structure is characterized by functional requirements
Remark: SGM is categorized into Int. OEMs; bubble size represents its market sharePV= Sedan + MPV + SUVSource: IHS production database version: 2012M03
Chinese OEM
26,000
International OEM
Technology / Product Life Cycle Management: Current Situation
Strategy is based upon development of advanced technology
� No significant focus on reduction of cost / achievement of economies of scale?
� Where economies of scale are achieved, have the products failed to become “Cash Cows”?
� Leaves products vulnerable as the product matures
Sales
Product
Development
Introduction Growth DeclineMaturity
Vulnerable to Price competition
Existing Technology /Product Life Cycle
Management focuses on
TPLC Management influences how steeply
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Eu
ros
Sales
Total
Profit
TimeFree Cash
Flow
Profit Margin
Management focuses on the early phases of the technology/product life
cycle targeting installations on high end
vehicle
influences how steeply this curve declines
Technology / Product Life Cycle Management: Alternative Strategy
Affordable Vehicle Product Strategy
� Use affordable vehicle applications to extend product/technology’s life cycle
� Develop products for low cost/high-volume applications
� Use development advantages to reduce costs, reduce weight, and consolidate components
Sales
Product
Development
Introduction Growth DeclineMaturity
Standardization of product design at early stages facilitates improved Life Cycle Management through later stage
cost reductions, facilitating economies of
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Eu
ros
Sales
Total
Profit
TimeFree Cash
Flow
Profit Margin
cost reductions, facilitating economies of scale
Technology / Product Life Cycle Management: Alternative StrategyAffordable Vehicle Product Strategy
� Use affordable vehicle applications to extend product/technology’s life cycle
� Develop products for low cost/high-volume applications
� Use advanced technology to reduce costs, reduce weight, and consolidate components
Sales
Product
Development
Introduction Growth DeclineMaturity
As growth of a technology begins to reach its peak, beginning integrating the
technology into systems and modules
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Eu
ros
Sales
Total
Profit
TimeFree Cash
Flow
Profit Margin
technology into systems and modules
Front caliper
FA-L
Actuation
ABA
ABS MK100 Airbag Control
Unit (SPEED)
Chassis
& Safety
Powertrain
Fuel supply EMS Easy U Temp. Sensor
Intake Air
Transmission
East Platform
ElectronicThrottle Control
Standardization for Market Specific SolutionsExamples of technology development in China for China
Knock Sensor
Wheel Speed
Sensor
Transmission
Speed Sensor
Engine Speed Sensor
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Powertrain
Interior
Instrument
ClusterImmobilizer
Basic Function
Controller (BFC)
Integrated solution
Radio+HVAC
EASY PASE &
Start/Stop Button
Integrated Instrument
Cluster & Compact
Function Controller
Bluetooth
Car Kit
Development of Market Specific Solutions - local engineering as key success factor
Heihe - 2002
Changchun - 1995
Zhangjiagang - 2005
Nanjing - 2011
Engineering Centers in China
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Shanghai-2009Jiading - 2009
Changshu - 2010
Wuhu - 1995
China – Moving from Volume to Value
a. How to manage the largest but most fragmented market ?
b. How to cope with changing regulatory policies ?
c. How to manage the demand for Fuel Efficiency, Safety and
16 / Jay Kunkel / © Continental AG
Automotive News China Conference
Information?
d. How to manage to develop and retain the required skill-sets?
Consolidation
Policy
Incentives
Regulations
China Automotive Market Outlook – Challenges Ahead How to cope with changing regulatory policies ?
•Revised Foreign Investment
Catalogue
•Five-Year Plan for developing New
Energy Vehicles
•Revised government vehicle
catalogue in favor of local brands
1.8 L
•Limitation of Vehicle Fuel
•The “winners” – dominating OEM groups
•Go West
•New JV brands
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Consolidation
Capacity Extension
Local Brands Fuel Efficiency
Key Components
New Energy Vehicle
Market growth in valueResult
Consumption•Direct Injection, Turbocharger, Start-Stop
•EPS, CAN bus, ESC, TPMS, DCT
•EV and Plug-In Hybrid
Summary of Factors Impacting China Car Sales in 2011Positive demand factors outnumber & outlast those negatives in the coming years
Imp
ac
t Demand/Supply side
Low vehicle density
Demand side
Strong growth potential from lower Tier 3 /4 cities
Demand side
JV brand development
Demand side
Increasing vehicle export
Demand side
IOEMs ramp up capacity Po
sit
ive
Supply side
Electronic content growth
Demand side
Subsidy for Fuel Efficient Vehicle / NEV
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Demand side
End of Incentive Policy
Demand side
Macro Economy Development
Supply sideInsufficient
Manufacturing Capacity
Supply side
Japan Earthquake
Increasing vehicle export IOEMs ramp up capacity
Time2011 2012-15
Ne
ga
tive Demand side
Ownership Cost including Parking Fees and Gasoline Cost
Demand side
Vehicle ownership restriction (few cities)
growth
China – Moving from Volume to Value
a. How to manage the largest but most fragmented market ?
b. How to cope with changing regulatory policies ?
c. How to manage the demand for Fuel Efficiency, Safety and
19 / Jay Kunkel / © Continental AG
Automotive News China Conference
Information?
d. How to manage to develop and retain the required skill-sets?
Combustion engine
Diesel direct injection 25%
Energy management
Power on demand - Steering, climate 6%*Advanced energy management- Start/stop 2 – 7%
Driver
e.Horizon(Telematics, ACC, ADAS) 5%
Body
Light weight brake system,lower brake drag 1 - 2%
Regulations on Fuel Efficiency – how to address it in China ?Local development and manufacturing of key technologies
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Diesel direct injection 25%Gasoline direct injection 15%Diesel SCR** 5%Turbocharger 7.5%
Alternative drive concepts
Hybrid electric vehicle including regenerative brake system 25%
Tires
Low rolling resistance, TPMS 2 - 5%
Transmission
Double clutch transmission 3%
**SCR: Selective Catalytic Reduction
*% : possible reduction of fuel consumption
Active Safety Safety Telematics
TCUTelematics Control Unit
e-Horizon
EPSPowerpack
ChassisController
EASElectronic Air Suspension
ESCElectronicStabilityControl
HMI
Vehicle-to-XCommunication
AFFP®
AcceleratorForce FeedbackPedal
Sensors
Wheel Brakes
Megatrend: Safety – how to address it in China ?Local development and manufacturing of key technologies
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Vehicle Surrounding SensorsPassive Safety
SRLShort Range Lidar
SMRShort & Mid Range Radar 24GHz
LRRLong Range Radar77GHz
CameraACU + CISSAirbag Control Unit+ Crash Impact
Sound Sensing
pSAT, gSATPressure and Acceleration Satellites
PPS pSatPedestrianProtectionSystem
evSATSensor forHigh-VoltageBattery Cut-off
Megatrend: Information – how to address it in China ?Local development and manufacturing of market specific solutions
Auto LinQ
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Mobile View
Car View Home View
Partner View
Box solution with front-end,
back-end and connectivity
components as China specific solution
Safe and intuitive HMIoperation in the car through use of
Voice Recognition and Text-to-
Speech
Open platform for attractive
local Apps which personalize car
over life cycle
China – Moving from Volume to Value
a. How to manage the largest but most fragmented market ?
b. How to cope with changing regulatory policies ?
c. How to manage the demand for Fuel Efficiency, Safety and
23 / Jay Kunkel / © Continental AG
Automotive News China Conference
Information?
d. How to manage to develop and retain the required skill-sets?
Customer proximity as a key success factorContinental in China
Headquarters @ Shanghai
Shanghai Beijing
Chongqing
Liuzhou
Guangzhou
Wuhan
Hangzhou
6 2 3
2 2
2 1 2
1 1 2
2 1
1 1
1
1
1
1
1
1
Headquarters: 1
1
2
Manufacturing: 18
Tianjin
Changshu
Changchun
Wuhu
Zhangjiagang 1
1
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Status: Jan. 2012
Nanjing
Heihe
Hangzhou
Taipei1
1
1
1 1
1
1
1Lianyungang
Ninghai
Hefei
Jinan
1
Engineering: 10
Sales : 19
Total Employees > 16,000Total Employees > 16,000
Comprehensive benefits
Internal transfer
Retention bonus program
Competitive salary
Employee
China Automotive Market Outlook – Challenges Ahead Need for Local Experts – how to manage to develop and retain the required skill-sets?
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Internal & External Training
Motivation (employee
events)
Company Culture
Internal transfer & Career
development
Employee
retention
Need for local expertsPeople – critical success factor for moving to value
Entrepreneurship
Exciting job challenges
Early responsibility
Attraction Retention
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challenges
Open doors & open views
Multifaceted career opportunities
Performance-oriented working atmosphere
Localization of Entire Value ChainInvestment in HR - Employees make THE difference!
HR Awards in 2011 Global Engineering Excellence Network
A platform between Continental and leading Chinese engineering universities to strengthen
education for engineers for businesses
• 100 Best HRM Companies of 2011
• Outstanding Performance for Best Campus Recruitment of 2011
• Most Popular Employer on Campus (Automobile Components Industry) 2011
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• China's Ideal Employers, 2011
• Top 15 Ideal Employer in High Ethical Standards 2011
SummaryChina – from Volume to Value: converting challenges into opportunities
Local Talent
Individual mobilityFuel efficiencySafety, Information, Affordable cars
�Standardization
�Software instead of Hardware
�Time to market
Fragmentation
Policies Growth
�Employer of choice
�Retention of key talents Cost
Recruiting
Skill sets
Retention
Local Talent
28 / Jay Kunkel / © Continental AG
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Government targetsProduct development
Local technology�Localize new technologies
�Specific Chinese product
roadmap
Policies
Competitiveness Localization of value chainBrand imageLocations
�Strong invest into
engineering
�Product development in
China for China
Growth