fleet_business_in_bric_and_emerging_markets_20140313_roland_berger.pdf

Munich, March 2014

Fleet business in BRIC and emerging markets

2 Roland_Berger_Fleet_Business_in_BRIC_and_emerging_markets_20140313.pptx

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


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


A. Significance of fleets in emerging markets


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 [%]


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


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


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


B. Fleet professional-ization in BRIC and emerging markets


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.



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


Level of sophistication

4

3

2 1


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


External market analyses

Concept focus Implementation focus


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

%



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


Flee

t size

Fleet segments

The result of fleet professionalization

Resp

onsib

ility

Number of companies

NSC

Dealer

Big

Medium

Small


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


Your expert contacts for further questions


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

Fleet business in BRIC and emerging marketsNow is the time to prepare for future growth in fleet business Especially in BRIC and emerging countries in Asia and S. AmericaSlide Number 3A.Significance of fleets in emerging marketsGlobal light vehicle sales will increase by 20 million units by 2019 Growth driven by BRIC and other emerging marketsWell-established fleet business in EU-5 markets with moderate prospects BRIC countries significantly gain in importanceEven beyond the BRIC countries, there are interesting growth markets with opportunities for fleet businessTo participate in the long-term growth opportunities of BRIC and other emerging markets, OEMs need to act nowB.Fleet professional-ization in BRIC and emerging marketsA one-size-fits-all approach will not work Market-specific approach is needed insteadA professional, modular fleet business concept helps improve both the efficiency and effectiveness of fleet salesBesides developing a general fleet concept, emphasis must also be on (local) implementationMarket-specific hurdles need to be overcome in BRIC countries to successfully adapt, design and implement the strategyFleet professionalization defines all the factors between the NSC and dealers necessary for successful operationsChina: Main fleet customer groups differ regarding holding periods, regional coverage, decision-making processes and criteriaYour expert contacts for further questionsSlide Number 17

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