SAC corporate presentation

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Stahl Automotive Consulting

Corporate Presentation


Agenda

1

� SAC’s philosophy and areas of expertise

� Project examples

SOURCE: SAC

Stahl Automotive Consulting 2

SAC founder Martin Stahl has 20 years of broad expe rience in the automotive industry

SOURCE: SAC

Dr. Martin StahlSAC Founder, Managing Director

Martin has always been curious about the strategic questions of the automotive industry and turned his passion into a profession. His core areas of expertise are:� Corporate and growth strategy� Brand strategy � Product strategy and development� Sales and after-sales optimization� Automotive in emerging markets , especially Asia� New mobility solutions and e-mobility

Educational background

Professional background

Areas of expertise

Martin Stahl has a background in industrial engineering and holds a Ph.D. from the University of St. Gallen

He has been working with BMW Group for 10 years and with McKinsey for 4 years before founding Stahl Automotive Consulting


SAC’s values and contribution

What we aim for … … and how we deliver

Inspiring leaders by helping them to develop their perspective and …

We contribute with our broad automotive experience and help to see both, the big picture and the way forward

… collaboratively create lasting and substantial performance improvements …

We apply proven approaches and methodologies with an understanding of human factors to accompany our clients in the execution of improvement initiatives and to achieve measurable results

… in a long-term partnership

We follow a rigid code of professional values to build and maintain long-term partnerships with our clients

SOURCE: SAC


SAC’s core areas of competence

SOURCE: SAC

SAC’s core areas of

competence

Sourcing optimization

Productstrategy & develop-

ment

Organi-zationaltransfor-mationBrand

development

Corporate & growth strategy

(incl. M&A)

Sales &after-sales

Powertrainelectrification

Emergingmarkets

Mobility of the future &

digitalization


Corporate & growth strategy (incl. M&A)

� Within today’s automotive landscape, many companies aspire to further expand their business while in certain regions even new automotive players emerge (e.g. China); in order to successfully realize such plans, profound market entry/growth strategies are key

� Besides internal growth projects, automotive industry players are frequently utilizing M&A transactions to grow or secure their business , especially in sectors where the incumbent players either face consolidation (e.g. German intercity coach market) or are forced by customers to expand their global footprint (e.g. acquiring a supplier in Mexico)

� Developing market entry strategies along the “4Ps” product, pricing, place and promotion accompanied by a production strategy

� Ensuring products match customer demand

� Full-fledge M&A advise− Developing a comprehensive

perspective on potential M&A targets and identifying a short-list of targets (incl. first outlook on synergies)

− Performing a strategic due diligence of the selected target(s)

− Ensuring a professional post merger integration

− Creating viable business cases(incl. profit & loss, balance sheet, cash flow)

SAC expertise

SOURCE: SAC

Industry situation and outlook


Brand development

� As recent examples in the automotive industry show, even solid products are no guarantee for success if the brand of the product does not appeal to the target group

� Fancy brand definitions are only a piece of paper if the values are not properly translated into the organization as well as their products and services

� In general, having a strong, vibrant and finally relevant brand is becoming an increasingly essential asset as several transactions in the automotive sector illustrate, e.g.− Tata Motors spent $ 2.3bn to acquire the

Jaguar and Land Rover brands in 2008− Geely paid $ 1.8bn to acquire the

Volvo brand in 2010

� Developing a corporate vision and brand strategy/identity (incl. values, facets) as well as defining key USPs of the brand

� Identifying an attractive and sufficiently sized target group and deriving a crisp description of the respective product needs based on proven segmentation models (e.g. SIGMA Milieus®)

� Developing a brand and product attribute profile in the context of competition and market demand to derive specific targets (best-in-class, top-3, acceptable standard)

� Consolidating the main targets in a comprehensive target picture (incl. financial KPIs) and developing a long term-plan

SAC expertise

SOURCE: SAC



Product strategy & development

� Increasing customer expectations ,especially regarding vehicle design and speed of new innovations, are affecting the automotive industry; thus, implementing a well structured and efficient product development process is crucial for any automotive OEM

� Particularly in emerging countries like China, new automotive ventures are formed without longstanding experience in vehicle development within the organization

� Moreover, today’s major OEMs use modularized platform approaches to create economies of scale and increase their cost competitiveness

� Holistic perspective on the design of automotive product development processes (PDP) to help OEMs create competitive products (passenger and commercial vehicles) at cost and in time

� Guiding vehicle projects through the concept phase to ensure coherence to the brand and product attribute profile, customer expectations and cost targets

� In-depth understanding of individual process steps within the PDP (concept, series development, pre-production)

� Insights into future product trends and customer demand based on proven market data as well as our broad expert network

SAC expertise

SOURCE: SAC



Organizational transformation

� The global automotive industry is going through a situation of continuous transformation driven by several megatrends ; especially topics like autonomous driving, powertrain electrification, digitalization and global growth are challenging for OEMs and suppliers

� In general, companies regularly have to manage changes that affect their organization ; yet, more than half of all change projects fail because of the following reasons− 39%: Employee resistance to change− 33%: Management behavior does not

support change− 14%: Inadequate resources− 14%: Other obstacles

� Holistic change management approachbuilt around 4 key levers− Role-modeling− Fostering understanding and conviction− Reinforcing with formal mechanisms− Developing talent and skills

� Detecting and further developing core competencies of automotive OEMs (passenger and commercial vehicles)

� Identifying suitable areas for partnering/ outsourcing and supporting to find a capable partner/supplier

� Planning of organizational ramp-up, roles and key processes as well as identifying

required talent (e.g. in case of marketentry/growth strategy)

SAC expertise

SOURCE: SAC



Sourcing optimization

� Large OEMs increasingly demand from their suppliers to serve them on a global scale(e.g. stamping parts from a single supplier regardless of production location)

� In developed countries , suppliers deliver up to 85% of a vehicle‘s major components while in developing countries , some local OEMs still have a much higher value creation share ; consequently, different opportunities and challenges arise for suppliers as well as OEMs

� Regarding EV components (e.g. battery cells) it is not yet clear which technology will prevail and purchasing volumes of EV parts are still small due to rather low sales volumes; as a result, EV manufacturerslack economies of scale and couldbenefit from bundling with partners

� Consolidating the supplier portfolio of automotive OEMs (passenger and commercial vehicles)

� Identifying and evaluating potential sourcing partners to enable order bundling (e.g. for EV batteries)

� Company- or business-unit-wide bundling ofRFQs (e.g. for service providers)

� Effectively preparing supplier negotiations

� Identifying and realizing further cost levers

� Providing suppliers with a perspective on OEMs‘ global launch and cycle plans to forecast demand for specific automotive parts/components and derive accurate timing for respective RFQs

SAC expertise

SOURCE: SAC



Sales & after-sales

� The way how people purchase mobility (incl. vehicles) is changing due to the rise of the Internet and mobile applications (see e.g. the B2C e-commerce sales growth in selected countries 2014: China 64%, India 32%, Brazil 19%, UK 12%, USA 12%)

� To date, established OEMs have large dealership networks (e.g. BMW with ~600 dealers for ~250k sold cars in Germany 2014); however, several OEMs have begun to utilize the Internet (e.g. BMW with its agent model incl. online sales for the i3/i8)

� Furthermore, new industry players are looking for innovative approaches to ramp-up their sales network at minimal cost or to provide convenient after-sales solutions(e.g. carefree repair servicesthrough specialized providers)

� Defining the right setup and footprint of a new automotive OEM’s sales and after-sales network based on the given volume aspirations and resource restrictions

� Developing a regional sales and after-sales organization tailored to the competitive arena of the specific market

� Restructuring an existing OEM’s central and local sales organization by implementing effective offline (e.g. direct sales vs. licensed dealers vs. independent dealers) and online distribution channels

� Identifying capable sales and after-sales partners/suppliers (e.g. for repair, spare parts logistics) and facilitating the partner-

ship/supplier relationship building

SAC expertise

SOURCE: SAC



Emerging markets

� The rising level of income and ongoing urbanization in emerging countries like China and India lead to increased mobility needs , most notably a growing overall vehicle demand (e.g. in India with an expected vehicle sales CAGR of 10% from 2015-2021), particularly in the luxury segment

� Driven by the political agenda , there is a strong trend towards new energy vehicles (NEV) in China (expected CAGR of NEV sales in China 2015-2021 is 20-25%)

� Besides, Chinese OEMs have recognized that joint ventures are not the optimalapproach and have thus started to create indigenous brands or to establish own companies

� Supporting automotive ventures from emerging countries in building competitive passenger/commercial vehicle OEMs that are able to meet Western quality standards

� Supporting Western industry players to expand their business to emerging markets

� Particular China expertise− Track record of successfully conducted

projects in China’s automotive industry− Broad network and access to many

OEMs in China− Mandarin-speaking interviewers with

automotive background− Forecast data for the Chinese market

(volume forecasts, cycle plans etc.)

SAC expertise

SOURCE: SAC



Powertrain electrification

� Due to environmental issues like global warming, governments worldwide aim to reduce CO 2 emissions , e.g.− EU: max. 95g CO2/km for new passenger

cars in 2020 (fleet average)− China: 5l/100km for new passenger cars

in 2020 (fleet average)

� At the same time, costs for fossil fuel are expected to increase because of natural limitation and new, expensive technologies like fracking

� Furthermore, ongoing advancements in EV technology are projected to lead to decreasing cost for EV components (e.g. price on battery cell level expected to drop from 300 to 150 EUR/kWh until 2018)

� Global perspective on EV growth as well as key market forecasts and trends for passenger cars, commercial vehicles and powertrains

� Proven TCO model to assess market break-through of individual models in specific markets from an economic perspective

� Understanding of boundary conditions (e.g. legislation) in key markets like Europe, USA and China

� In-depth knowledge of EV component cost and performance (e.g. batteries, e-motors, power electronics)

� Perspective on sourcing landscape for key EV components (e.g. for Li-ion batteries)

SAC expertise

SOURCE: SAC



Mobility of the future & digitalization

� Several trends have an impact on the mobility of the future− Technological trends : e.g. autonomous

driving, powertrain electrification, further digitalization of the vehicles and the entire automotive value chain

− Economic trends : e.g. sharing economy, rise of emerging countries

− Social trends : e.g. urbanization

� As a consequence of these trends, we believe that offering transportation on demand with autonomous driving vehicles becomes a business model and that Integrated Mobility Providers will serve this business and thereby take over the customer relationships fromOEMs and rental companies

� Creating a common understanding within automotive organizations regarding the mobility of the future and performing a “fitness check” that assesses the company’s capabilities along the required core areas in the future

� Defining a vision for the automotive player in terms of whether to drive the change , be a fast follower or be a late follower

� Developing strategic measures that support the realization of the defined vision in a managed change process (e.g. transforming a traditional vehicle OEM into a service-oriented Integrated Mobility Provider)

SAC expertise

SOURCE: SAC

See our whitepaper for further information



Agenda

14

� SAC’s philosophy and areas of expertise

� Project examples

SOURCE: SAC


SAC serves clients globally

NOT EXHAUSTIVE

SOURCE: SAC

Countries with recent SAC studies

Germany

Automotive supplierMarket study on potential in China

Sweden

Commercial vehicle OEMElectromobility strategy

Mexico

Automotive supplierStrategy for market expansion to Mexico

China

Passenger carOEMDesigning a product development process

Japan

Commercial vehicle OEMMarket study for commercial vehicles

Europe

Passenger carOEMMarket entry strategy Europe

Austria

Automotive supplierLean optimization of production

China

Passenger car OEMElectromobility strategy


� Brand identity and related target groups in Europe

� Perspective on European market entry regarding− Product specification− Price positioning and target cost− Distribution strategy− Promotion and communication strategy− Production strategy

� Sales volume scenario

� Implementation roadmap 2015 – 2022

� Financial projections regarding the developed market strategy for 2015 – 2022

� Target picture 2022 (consolidation of study’s results)

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End products

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Project example:European market entry strategy for a new automotive player

SOURCE: SAC

� Client developed a product portfolio for an Asian market and intended to launch it in Europe

� Approach to enter the market was not yet defined

Automotive OEMIndustry:

3 monthsDuration:

1 Project leader1 Senior expert2 Consultants

Team size:

Situation

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� General analysis of the business environment in the different Mexican states (crime rate, incentives etc.)

� Comprehensive list of potential target companies (press part manufacturers) in Mexico that meet the aligned minimum requirements

� Outside-in assessment of relevant companies on long-list plus detailed company profiles of most promising target companies

� Outlined scenarios 2020 (invest, revenue etc.) for the 4 proposed target companies and recommendation how to move forward

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End products

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Project example:Strategy for market expansion to Mexico for an auto motive supplier

SOURCE: SAC

� Tier 1 supplier for press parts plans to expand footprint to Mexico in order to fulfill OEMs demand to supply key parts locally

� Objective was to acquire a local competitor

Automotive supplier

Industry:

2 monthsDuration:

1 Project leader1 Consultant

Team size:

Situation


End products

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Project example:Product development process (PDP) for a new Chinese automaker

SOURCE: SAC

� A Chinese SOEM planned to develop a new sub-brand from scratch with the objective to reach Western quality standards

� PDP was not yet defined


9 monthsDuration:

1 Project leader1 Senior expert2 Consultants

Team size:

Situation

� Holistic perspective on benchmark design regarding automotive product development processes

� Defined PDP with 5 levels of granularity (incl. deliverables, synchro points, etc.) and in-depth understanding of individual process steps within the PDP (e.g. lead time for sourcing decision of individual parts/services prior SOP)

� Built organizational capabilities in order to apply PDP (e.g. program room)

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Project example:Electromobility strategy for a commercial vehicle O EM

SOURCE: SAC

� Client is a leading commercial vehicle manufacturer that needed to derive a strategy for his EV products across key regions


18 monthsDuration:

1 Project leader2 Consultants

Team size:

Situation

� Comprehensive TCO perspective on most promising EV segments in the market

� Strategy to enhance market penetration for commercial EVs across geographies in a global approach

� Alignment of stakeholders on EV strategy across brands and functional units

� Integration of EV strategy with solution-oriented sales process and detailed plan for further implementation

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End products


Project example:Electromobility strategy for a passenger car OEM

SOURCE: SAC

� Client wanted to derive a market entry strategy and align R&D efforts accordingly to come up with winning products


4 monthsDuration:

2 Project leaders4 Consultants

Team size:

Situation

� Segmentation of the target market based on use case analysis of more than 10 customer groups

� Harmonized R&D landscape for key EV components (battery, e-motor, power electronics)

� Target cost for EV components as a guideline for development and purchasing

� TCO analysis regarding development of different EV powertrains in market segments

� Implications for R&D strategy, product portfolio and go-to-market approach

End products

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Dr. Martin Stahl Managing Director

Stahl Automotive Consulting GmbH & Co KG Otto-Heilmann-Straße 5 D-82031 Grünwald

Mobil: +49-170-410-7566

E-Mail: [email protected]

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