Expansion Aspirations of Asian Truck OEMs Shaking Up the Global Industry. Roman C. Mathyssek Truck Market Analyst

Transcription

1 Expansion Aspirations of Asian Truck OEMs Shaking Up the Global Industry Roman C. Mathyssek Truck Market Analyst

2 Global Truck Sales: MDT and HDT (>6t) 000 s 2,500 2,000 1,500 1, Actual Forecast Asia E-Europe S. America JPN NAFTA W-Europe Truck sales hit 2 million units for the first time in 2004, and remains above this level A slowdown in Asia in 2005 was balanced by further growth in Western Europe & NAFTA, keeping truck volumes at high historical levels A recovery in China over the next few years is expected to broadly make up for the slowdown in Europe and NAFTA 2

3 World Demand Generates Potential For Additional 420,000 Trucks By 2015 Potential for volume growth is good, but is biased towards emerging markets where risks are also greater World demand is forecast to average 1.9% per year (compound growth) between now and 2015 ASIA NAFTA W-EUROPE E-EUROPE S-AMERICA 000 s % 16% 25% 7% 5% 7% 22% 34% 6% 7% 16% 28% 46% 42% 31% 6% 8% 15% 26% 45% % 8% 14% 26% 46% 3

4 Presentation Outline Introduction The Chinese and Indian OEMs The Japanese OEMs Potential New Markets Which Players For Which Markets Potential Market Movements and Implications Conclusion 4

5 Coincidence or New Trend? Hino targets ex-foden customers in the UK Tata plans global expansion CNHTC sold 10,000 Trucks to Iran 5

6 Introduction Cause and Effects of Expansion Drivers: Action: Global expansion of West European manufacturers into emerging markets Emerging markets growth rates high Capitalization on growth potential Leverage scale potential Reaction: Asian manufacturers had to move their situation Local players attacked in their territory Asia Product improvement necessary rising standards Defend domestic market position and action of major Asian manufacturers their ambition Exploit sales potential new product generations Build a strong global position especially Japanese players 6

7 Chinese and Indian OEMs Two Major Events Asian Market Growth Haulage Fleet Formation & 1990 s 1950 s Asia (excl Japan/Oc nia) % Aggressive Product Renewal Strategy Past Models Technically and economically outdated Crude Trucks, operated by owner-drivers Focus on Medium Trucks New Models New generation, technically and commercially upgraded Professional fleet usage Life-cycle costing High "value for money" Focus on Heavy Trucks 7

8 Chinese and Indian OEMs Current Global Market Presence Chinese and Indian OEMs product offensive New products quantum leap explore global sales potential Potential in overseas markets present for new HDT generation But currently, limited global market presence of Chinese and Indian OEMs Chinese OEMs Indian OEMs 8

9 Japanese Manufacturers Overview Strength: Complete product portfolio Very high technical level especially on emissions technology Offer efficient and robust trucks at competitive price Weakness: LDT and MDT majority of global sales Relative to industry peers, high leverage realization of strategies affected Gradually subjected to price pressures from low cost OEMs cost leadership" position unsustainable in long run Japanese 9

10 Japanese Manufacturers Gateway Into Strong Asian Market Position Helpful to enter Asia Market presence and know-how Link between Western companies and Asian emerging market players Access state-of-the-art technology 10

11 Global Segment Definitions Which type of market segments can be distinguished? Top end: Life-cycle cost, reliability, efficiency, comfort, safety Low price sensitivity Advanced: Efficiency, reliability, comfort Moderate price sensitivity Budget: Low cost, robustness High price sensitivity Many possible new markets/regions to enter, decision contingent upon many factors Match between market demand and product features vital prerequisite for commercial success 11

12 Regions and Their Demands Growth: Volume change : 10k % increase : 3.0% Market Demands: High operating economy, comfort safety Profitability: Truck sales & service profitable Growth: Volume change : 62k % increase : 10.9% Western Europe Market Demands: High operating economy, comfort, prestige (owner operators) Profitability: Restored, no price wars, service profitable Growth: Volume change : 3k % increase : 2.3% NAFTA Japan & Oc nia Market Demands: Top-end trucks, demands on par with Western Europe, Australia broad market demands Profitability: Sound possibilities for generating profits Total Market MDT HDT 12

13 Regions and Their Demands (Cont d) Asia (excl JPN&Oc nia) Growth: Volume change : 276k % increase : 38.6% Market Demands: Shift from budget to advanced truck Profitability: Higher, due to fleet formation process Service products, new profit potential Growth: Volume change : 48k % increase : 32.7% Eastern Europe Market Demands: Shift from budget to advanced truck Profitability: Increasing, result of professional haulage service products increasing in popularity Growth: Volume change : 16k % increase : 12.9% South America Market Demands: Advanced trucks with high operating economy, MDT mix of budget and advanced trucks Profitability: Price pressures, service add to profitability Total Market MDT HDT 13

14 Lucrative Markets and Segments Globally, the following holds: HDT Segment Growth rates high and above MDT Higher profitability Client structure and service products MDT Segment Stable growth, below HDT rates Less profitable Consequently, HDT segment is more profitable than the MDT segment Top end markets are more profitable than advanced markets and budget markets Japanese OEMs seek growth in top end markets and HDT segment Focus of Chinese and Indian OEMs on the HDT based expansion Chinese and Indian focus on advanced markets former Japanese and West European undisputed domain 14

15 The Asian Truck OEMs Broad Market Coverage Global Sales Regions of Various Trucks Sophistication Levels Japanese Indian Chinese Top-End HCV Sales Regions: W-Europe Japan & Asian Tigers USA & Canada Oceania & S-Africa Middle East Advanced HCV Sales Regions: Eastern-Europe Rest of Asia South America Middle East Budget HCV Sales Regions: Eastern-Europe Rest of Asia Africa 15

16 Global Status Quo Segments and Regions W. Europe E. Europe Asia (excl. Japan, S-Afr, S. America JPN/Oc nia) Oc nia NAFTA Advanced Segment Top End Segment Local OEMs Budget Segment 16

17 Strategic Movements, Changing Dynamics The Indian and Chinese Players Impact occurs on local and global basis: Chinese and Indian OEMs use new trucks to defend domestic position challenge new entrants Chinese and Indian OEMs use new HDT generation to target advanced markets Attractive growth rates Profitability Advanced markets product acceptance contingent upon their openness and brand loyalty Fact: Established European, American and Japanese players need new differentiation strategies survive price pressures Introduce new technology/services into market Enhance brand loyalty 17

18 Strategic Movements, Changing Dynamics The Indian and Chinese Players W. Europe E. Europe Asia (excl. Japan, S-Afr, S. America JPN/Oc nia) Oc nia NAFTA Budget Segment Top End Segment Advanced Segment WE OEMs? CHN Local OEMs WE & JPN WE, US & JPN? WE & JPN? 18

19 Global Movement, Resulting Pressures The Japanese Players Japanese attacked in Asia by Chinese and Indian OEMs Position in Japan unchallenged core HDT revenue generator for companies in short and medium term Shift current product line and enter new top end markets and advanced markets Emphasise HDT more most important segment Defend market position Value for money" gradually shared with Chinese and Indian OEMs especially in overseas markets 2 out of 4 Japanese Truck OEMs strategically integrated in global truck manufacturers autonomous actions limited 19

20 Global Movement, Potential Market Entries The Japanese Players W. Europe E. Europe Asia (excl. Japan, S-Afr, S. America JPN/Oc nia) Oc nia NAFTA Top End Segment Advanced Segment? WE OEMs WE OEMs? CHN? WE & JPN WE, US & JPN WE, US & JPN? WE & JPN? Local OEMs Budget Segment 20

21 Different Scenario Cooperation Between Complementing Companies Market entry risky and resource intense Many companies with global ambitions few will make it! Partner reduce risk and costs win-win situation for geographic and product complements Recent examples of strategic agreements between complementary firms Scania & Hino MAN & Force Motors Mahindra & Navistar Isuzu & Bogdan Shake up can occur via cooperation or individual market entry 21

22 Hurdles to Overcome Giving Incumbents More Time As Market Entry Is a Long-Term Process Entry hurdles hard to overcome providing an edge to incumbents Sales/Service network Image and Brand Time and resource consuming process Perfect match between product and market features no chance without sales infrastructure and adequate branding Global expansion is a slow process, taking long-term view Domestic market importance for Asian OEMs not substantially changed in short and medium term 22

23 Possible Impacts and Consequences Locally and Globally Local basis the Intra-Asia effect Japanese gradually hand-over cost-leadership position to Chinese and Indian OEMs As core global differentiation factor for the Japanese OEMs, technology and service products will grow in importance Japanese trucks, the global Asian-Premium trucks? Global basis moving vertically and horizontally Japanese OEMs: Focus chiefly on top end markets, some advanced markets and expand HDT position Offer MDT and HDT in top end markets value for money trucks Chinese and Indian OEMs: Focus on advanced markets, refrain from top end markets Use price to compete with incumbent players 23

24 Conclusion Chinese and Indian Truck OEMs seek to expand into advanced markets Shake up the advanced segment Japanese target growth in HDT segment in top end markets Shake up the advanced, but predominately the top end segment In short and medium term, OEMs domestic markets still contribute a substantial portion to companies overall revenue foundation for long term changes laid now Advanced markets a global Truck OEM melting pot Market entry strategy cooperation or individual approach Incumbent players defence: Differentiation important, strengthen market entry barriers brand, technology, services 24

25 Thank You Roman C. Mathyssek Truck Market Analyst