2015-12 Carmakers - World PDF

z
Carmakers - World
Market Analysis 2015-2020 Trends
Corporate Strategies
Report code:
5XMTR03
Analyst:
Kathryn MCFARLAND
Publication date:
December 2015
Global Markets And Competition
The 5 phases of Xerfi Globals

Global Markets And Competition reports
Identification of the playing field
At Xerfi Global, we believe that international classifications are not the only valid definition of a market. It
is the companies that make the sector and not vice-versa. During our first brainstorming session, we
strive to give a clear-cut definition of the scope of the report.
Identification of market leaders
2
3
During the second phase, Xerfi Globals analysts identify the players who will be studied in the report. Our
aim is not only to classify by total sales, but also to detect tomorrows movers and shakers, especially
those from emerging markets.
Identification of the main market indicators
Using the best and most up to date international sources, Xerfi Globals experts handpick the most
relevant indicators pertaining to both supply and demand.
Identification of corporate strategies
During a further brainstorming session, the Xerfi Global team aims to decipher the main corporate
strategies and key future trends.
Identification of the key conclusions
Thanks to a final brainstorming session, drawing on the knowledge of all the members of Xerfi Global, the
main conclusions are debated and ultimately summed up in no more than a dozen slides. Concision,
precision and accurate forecasts are our main aims.
This is a collective report written

under the supervision of: Kathryn MCFARLAND
Other contributors include: Alberto BALBONI

James BULLOCK
Mihai FRENT
Alessandro SCHILIRO
Carmakers World December 2015
Table of Contents
0. Conclusions
1. Market Fundamentals
1.1. Overview
1.2. The industry
2. Market Environment and Prospects
2.1. Market Overview
2.2. Demand
2.3. Supply
2.4. International Trade
3. Corporate Strategies and Competition
3.1. Competitive Environment
3.2. Structure of Competition
3.3. Corporate Strategies
4. Case Studies
5. Company Profiles
5.1. Volkswagen Group
5.2. Toyota Motor
5.3. General Motors
5.4. Hyundai Motor Company
5.5. Nissan Motor
5.6. Renault Group
5.7. Ford
5.8. BMW
5.9. Honda
5.10. PSA
5.11. FCA
5.12. Tata
5.13. SAIC
5.14. Geely
5.15. Tesla
6. Statistical Appendix
7. Sources
8. Annexes
4
15
16
18
27
28
46
51
55
60
61
75
91
109
116
117
129
140
151
161
164
167
176
179
182
185
189
192
195
198
201
212
216
0. Conclusions
Key Trends 2015 2020
Having reinvented itself after the global financial crisis and put into place deep structural changes that should have set
the stage for more sustained growth, the current challenge facing the world automobile market is the volatility of
demand combined with disruptive forces such as stricter regulations, changing technology and more sophisticated
customer expectations.
The uncertain future of emerging markets, particularly China, now the worlds biggest car market, which seems to be
running out of steam, leaves question marks hanging over the future growth of the industry. Automotive sales are
therefore expected to be slow-growing over the next five years, despite some revival of mature markets.
At the same time, carmakers are coming under pressure to invest heavily in new technology. Environmental and safety
regulations are becoming stricter and, in addition to this, customers are demanding more connectivity, automatism as
well as alternative mobility services. Such regulations and requirements create technological challenges and require
considerable investment and thus costs which carmakers have difficulty passing on to customers given the highly
competitive nature of the industry.
Cost pressures will mean that modular systems and high-volume global platform architectures will be the norm. A new
wave of consolidation via alliances and mergers may also be on the horizon so as to take advantage of synergies and
share the burden of investment.
As a result of the increased technological content in the value of cars, highly-specialised suppliers will become valuable
partners, and new entrants, in the form of technology companies, are bound to come onto the scene. Vehicles will
eventually be perceived less as products and;
- firstly, more as part of a service as car-sharing and mobility options increase in popularity and,
- secondly, as platforms for connectivity technology, which in turn will prove to be a major source of
added-value.
The premium sector will continue to attract attention from carmakers thanks to its higher margins. At the other end of
the spectrum, the small car segment will also continue to grow.
Despite the pressure facing the industry, governments are unlikely to let the industry suffer given its economic weight
and are likely to take measures to support the industry should it run into considerable trouble.
Globally, car sales are growing, but at a slower rate

Passenger car and commercial vehicle world production
Growth in passenger car and commercial vehicle world production
unit: million vehicle units
unit: annual growth in %
120
2015:
91.2m
units
100
80
2005:
66.7m
units
60
30%
25%
20%
15%
10%
5%
40
0%
-5%
20
Source: Xerfi Global with OICA, *Xerfi Global forecast
-10%
-15%
Carmakers profits are being squeezed in a highly-competitive environment

Aggregate profitability (operating margin) of analysed companies
unit: operating margin over net revenue; percentage change
8%
Intense competition means that the automobile industry reports relatively low profits, which
have hovered just over 5% on average over the last 5 years. Considerable investment in
globalisation as well as compliance with stringent fuel emission standards and fuel efficiency
requirements represent considerable structural costs for companies, weighing down on their
profits. From 2014, the deceleration in the Chinese market, in which companies have invested
heavily, has also led to a drop in profits for companies exposed to this market.
7%
6%
-2.8%
3.3%
16.8%
-9.1%
5%
4%
3%
2%
2010
2011
2012
2013
2014
Source: Xerfi Global with companies
Regulations and innovation carry a heavy cost, weighing down on profit

Regulations and innovation requirements that increase investment needs
Customer expectations
Regulations
Environmental
regulations
Safety regulations
Connectivity
Stricter emission
regulations mean
carmakers must invest
in new powertrain
development as well as
weight-saving
technologies.
Stricter safety
regulations mean that
carmakers must
develop and fit stateof-the art technologies.
Increased interest in
telematics, infotainment
and autonomy requires
considerable
investment.
Increased costs for carmakers that are difficult to pass on to end customers, given the highly
competitive nature of the business.
Source: Xerfi Global with FCA
and to complicate matters, the worlds largest market, China, is slowing

Main markets according to new vehicle registration or sales
Year-on-year growth in registration or sales of new vehicles in China
unit: million vehicle unit sales in 2014
unit: %
60%
China
US
50%
Japan
40%
Brazil
Germany
but China is now running

out of steam due to slower
economic growth coupled
with anti-pollution and anticorruption regulation putting
the brakes on demand.
30%
India
20%
UK
Russia
China accounted
for 26.6% of vehicle sales in 2014
making it, by far, the worlds largest
market
France
Italy
10%
0%
Source: Xerfi Global with OICA
10
15
20
25
Large, premium and geographically-balanced makers are best placed

Overview of factors allowing carmakers to remain profitable in the current market environment
a more pressing need to enter

into partnerships to share the
burden of investment
increasingly fierce competition

for market share
The currently difficult
environment with
slowing demand and
high-investment
requirements brings
a greater interest in premium

cars, which generate higher
margins
a more pressing need to cut

costs and increase efficiency via
the use of platforms and
standardisation
increased political involvement

(which can however both favour or
penalise carmakers)
THOSE BEST ABLE TO WEATHER THE STORM ARE CARMAKERS WITH:

SUFFICIENT SCALE TO ACHIEVE HIGH-EFFICIENCY AND TO MAKE HEAVY INVESTMENT WORTHWHILE
PREMIUM BRANDS
A BALANCED GEOGRAPHIC PRESENCE WHICH CAN ADAPT TO VOLATILE REGIONAL MARKETS
Source: Xerfi Global
10
Increased innovation will gradually shift general perceptions of cars

The traditional and possible future perceptions of vehicles
Such a shift is to
change carmakers
competitive
environment and
focuses considerably
POSSIBLE
FUTURE
PERCEPTIONS
OF VEHICLES
PERCEIVED AS A PLATFORM FOR

NEW TECHNOLOGY (I.E.
CONNECTIVITY, SELF-DRIVING
CARS ETC.) WHICH IS WHAT
PROVIDES THE ADDED VALUE
PERCEIVED AS PART OF A SERVICE (CAR SHARING, MOBILITY
SERVICES COMBINED WITH PUBLIC TRANSPORT)
TRADITIONAL
PERCEPTION
OF VEHICLES
PERCEIVED AS A PRODUCT FOR TRANSPORTING INDIVIDUALS
TIME
11
Carmakers financials are moving at different speeds

Key performance indicators and main growth drivers of leading global carmakers
units: billion euros, compound annual growth rate (CAGR) of sales in percentage, operating profit as a percentage of sales
COMPANY
Volkswagen
2014
SALES
202.46
Toyota Motor 194.01
GM
Ford
FCA
116.57
107.71
96.09
2010-2014
SALES CAGR
12.4%
9.4%
3.6%
2.8%
27.9%
2014
OPERATING
MARGIN
6.3%
10.1%
2.6%
2.7%
3.5%
2010-14
AVERAGE
OPERATING
MARGIN
KEY GROWTH AND PROFITABILITY DRIVERS
6.2%
Volkswagen sold over 10m cars worldwide, spanning from passenger cars to heavy
commercial vehicles. On a geographical basis, revenue growth was chiefly fuelled by AsiaPacific and North America.
Deliveries in all of its main brands have gone from strength to strength. However, the Audi
brand was the fastest growing, with the pace of volume sales rising 12.9% on annual average
over the 2010-2014 period.
6.4%
Toyota has been reinforcing its manufacturing operations across the globe, with a focus on
key growth markets in Asia. Revenue in Asia (excluding Japan) has grown faster than in all
other regions (13.3% on average per year over 2010-2014).
In 2014, North America outpaced Japan as Toyotas largest regional market, with a 34.6%
slice of revenue (compared to 30.6% for Japan).
4.2%
The decrease in petrol prices over the past years has reignited demand for SUVs and pick-up
trucks in North America, giving GM a revenue boost.
Additional tailwinds came from China where the group runs operations through a multitude
of joint ventures so as to develop vehicles that respond to the needs of Chinese drivers. GM
and it partners sold 3.5m cars in China in 2014 second only to the Volkswagen group which
delivered 3.68m units.
4.9%
Growth has been somewhat hampered due to a drop in market share in the US and sales in
Europe and South America combined with a weak presence in emerging markets as well as an
increase in the cost of goods that has not been transferred to customers. Ford also suffered
from considerable recall costs in 2014.
3.9%
Sales have been following an upward trend in the last five years primarily due to Chrysler's
sales in the consolidated accounts. Fiat hit the jackpot with its acquisition of Chrysler, whose
strong sales in the US have helped it to weather the European slump. Profit slowed in 2013
and 2014, mainly due to costs related to purchasing shares of stock from the UAW Retiree
Medical Benefits Trust and higher recall costs.
12
With car mix skewed towards small cars, Hyundai is very cost-efficient
COMPANY
Honda
Nissan
2014
SALES
20102014
SALES
CAGR
94.63 10.5%
80.76
6.7%
2014
OPERATING
MARGIN
5.0%
5.2%
2010-14
AVERAGE
OPERATING
MARGIN
5.4%
Net sales picked up in 2012 after dropping to a low in fiscal 2011 due, firstly, to temporary supply
chain disruptions caused by the Great East Japan Earthquake and the floods in Thailand and,
secondly, sluggish economic conditions in Europe and the US and slowed growth in Asia. They have
followed an upward trend since then thanks to strong sales in Japan and the US, as has profit, with
the exception of a drop in operating profit in 2014 when teething problems at a new plant in Mexico
dented sales and profit in the US.
5.5%
In recent years, Nissan has enjoyed strong revenue growth in the US and China they were the
groups largest markets in 2014, accounting for 26.1% and 23.0% respectively of total sales volume.
Over five years, Nissan has increased its global presence, encompassing a 6.2% share of the global
car market in 2014, compared to 5.8% in 2010.
SAIC
76.17 19.7%
2.4%
4.4%
While sales have seen continued growth over the last five years, profit has been dropping since 2011
due to increasing competition from local rivals and a slowing Chinese economy and this has been
exacerbated in 2015 with its joint ventures with General Motors and Volkswagen having to cut car
prices to rev up sales amidst Chinas huge economic deceleration.
Hyundai
Motor
63.64
8.5%
9.4%
Hyundai has recorded the highest profitability among leading car manufacturers its production
facilities are located mainly in low-cost countries (China, India, the Czech Republic, Russia, Turkey and
Brazil) and its product mix includes largely small-sized vehicles.
0.0%
PSA makes around 70% of its sales on the European market, making it highly-exposed to the slump
in demand in this region. Sales therefore dropped in 2012 and the company haemorrhaged 3bn of
cash due to a high cost base with unused capacity. The subsequent return to profit is attributable to
the positive product and price mix resulting from the success of launches and from the pricing power
policy as well as reductions in fixed costs.
2.8%
Renaults entry level vehicles (Clio, Duster, Logan, Sandero) continued to drive overall performance,
accounting for 42% of 2014 sales volume.
The Renault group sold 2.71m vehicles in 2014. Dacia-branded cars drove volume sales, rising 10.4%
on annual average, since 2009.
PSA
Renault
7.4%
53.61 -1.1%
41.06
1.3%
1.8%
3.9%
13
while BMW reaps the rewards of higher premium margins

COMPANY
TATA
Kia Motors
BMW
Geely
Tesla
2014
SALES
34.89
33.58
8.04
2.64
2.39
20102014
SALES
CAGR
19.5%
7.1%
7.4%
4.4%
128.8%
2014
OPERATING
MARGIN
9.1%
5.5%
11.0%
4.0%
-6.9%
2010-14
AVERAGE
OPERATING
MARGIN
8.9%
Tatas sales and profits have been constantly improving over the last five years, but this has been
primarily fuelled by British subsidiary Jaguar Land Rover while domestic business has been making
losses due to a slowdown in demand in the ailing Indian automotive industry coupled with increased
competition.
6.9%
The US and China have been the groups largest markets in terms of volume, followed by South
Korea and Europe.
Despite higher volume sales, the company recorded weaker performance in 2014, impacted by the
rise of the Korean Won and the fall of the Russian Rubble.
10.3%
BMW focuses exclusively on premium automobiles under just three brands, generating strong
brand value. The Mini brand has allowed it to increase its market share in the expanding small car
market. It has offset dropping demand in Europe and the US by exporting to emerging markets. The
company enjoyed record sales in 2014 with strong demand from China, Britain and the US.
6.5%
Geely had seen huge growth up until 2014. It should however be noted that this has not only been
fuelled by higher sales values and increased shares in operating subsidiaries but also thanks to
generous subsidies handed out by the Chinese government.
Sales slowed sharply in 2014 due to deteriorating political and economic conditions in its major
export countries, meaning exports fell by 50%. In China, Geelys sale also dropped by 16.8%. As a
result of this as well as due to an unrealised foreign-exchange loss at its Russian subsidiary, profit
also fell in 2014.
-18.1%
Having only launched its first vehicles in 2008, and following a high-price, low-volume business
model, sales have only just taken off and profit margins are yet to become positive due, not only to
fledgling sales but the continued high amount of investment required to develop the supercharger
network, improve batteries and expand the distribution network.
14
1. Market
Fundamentals
15
1.1. Overview
Key characteristics
Over one in four car sales is made in China
89.73
million
vehicles (car and commercial vehicles) were produced worldwide

in 2014. This represents a 2.8% increase on 2013.
17.4%
of the worlds population owns a vehicle.
42.1%
of vehicles were produced in Europe and North America, the

industrys traditional industrial bases.
42.5%
of vehicles were sold in Europe and North America, the industrys

traditional major markets.
China
is now the worlds largest car market, accounting for 27% of

sales.
16
1.1. Overview
Key characteristics
Conditions have pushed the industry to become increasingly efficient
Scope of the report
This report analyses the leading manufacturing companies in the automotive industry.
Some of these are very large groups with operations including motorbikes (BMW) or truck
and bus manufacturing (GM). However, the focus of this report is on the passenger car and
light commercial vehicle market.
Not only did the global financial crisis and recession shake up the industry through
The recession accelerated structural numerous bailouts and acquisitions, but it also forced many carmakers to reinvent
themselves, rethink their organisation and take a careful look at their cost structure as well
change
as their strategy. They have also been pushed to raise standards of quality and productivity
while keeping down prices.
Developing markets have proved to be very fertile ground for growth in the past few years
and thus creating scale in such markets has become a major focus for many major
Slowing emerging markets hang
carmakers. These markets (particularly China, the worlds largest vehicle market) are
however now showing signs of slowing meaning carmakers may need to redirect a
over the industry
considerable part of their attention onto mature markets once again, where growth is less
about scale and more about on quality and innovation.
Platform sharing and

standardisation become key
High industry collaboration
As the industry faces increasing costs due to environmental and safety regulations and
competition becomes more heated, major carmakers are focusing on manufacturing a
larger volume of passenger cars on global platforms so as to achieve economies of scale
and cost-savings via standardisation.
A growing web of joint ventures, alliances and partnerships is seen in the industry and with
players from other industries as carmakers are more and more willing to share platforms,
resources and technology in order to decrease R&D and fixed costs, ensure their
geographical presence and obtain economies of scale.
17
1.2. The industry
What are the main businesses?
Design, manufacturing, assembly and marketing are carmakers core activities

Simplified value chain of the automotive industry
NON-CORE
ACTIVITIES
CORE
ACTIVITIES
DISTRIBUTION
Distribution to the final client through a dealer or possibly

directly in the case of fleet deliveries.
FINANCING
Most carmakers offer lease and credit financing, which can

generate from around 5% to 15% of their revenue.
MARKETING
Brand value and therefore marketing is of extreme

importance. Carmakers are among the worlds most valuable
brands.
ASSEMBLY
The carmaker then assemblies the parts. On rare occasions

this will be outsourced to suppliers (such as Magna).
CAR PART MANUFACTURING
Strategic parts (engines, transmission and body) tend to be

produced in-house while other components are outsourced
to suppliers.
RESEARCH AND
DEVELOPMENT/DESIGN
Innovation and improvements resulting from R&D are

applied to new and updated models.
18
1.2. The industry
Who are the suppliers?
Carmakers require a wide range of supplied components

Common automobile components with outsourcing and supplier concentration
Although carmakers tend to keep

strategic parts (engine, transmission
and body) manufacturing in-house,
they require suppliers for a myriad
of other parts.
There are several layers of actors in
the supply chain: tier 3 suppliers
who supply raw materials and
commodities, tier 2 suppliers who
produce subsystems, and tier 1
suppliers who produce whole
systems and sell directly to
carmakers.
The proportion of value added to
automobiles by suppliers has been
continuously
increasing
and
components sourced from suppliers
now account for around 80% of a
cars component value.
Component
Outsourcing
Supplier
concentration
Glass parts
Exhaust system
Wheels and tyres
Climate control/engine cooling
Suspension
Braking
Steering
Seatbelts
Fuel systems
Audio/telematics
Interior parts
Axles, driveshafts and components
Electronics/Electrical
Engine
Transmission
Body/structure
Source: Xerfi Global with Bank of America Merrill Lynch, OESA
19
1.2. The industry
Who are the clients?
Most cars are sold to retail customers through dealerships

Primary sales outlets of the automobile industry
Fleets sold to
companies
governments
rental agencies
mobility schemes
Individual cars sold to clients through

car dealers
Around
20% of
sales
Around
80% of
sales
The majority of cars pass through retail automobile dealers to be sold to individuals. Although manufacturers like Tesla have
been making waves with attempts to sell directly to retail consumers, dealers have put up a fight to ensure they are not
leapfrogged in the distribution chain and direct automobile sales are prohibited in many parts of the world through legislation
such as dealer franchise laws in the United States. Fleet sales are made through dealers or directly from the manufacturer.
20
1.2. The industry
What are the main business segments?
Automotive companies primarily make cars and light vehicles

Main business segments of the automotive industry
AUTOMOTIVE COMPANIES
PASSENGER
VEHICLES
LIGHT COMMERCIAL
VEHICLES (LCV)
MOTORCYCLES
HEAVY
COMMERCIAL
VEHICLES (HCV),
BUSES
SCOPE OF THE REPORT
21
1.2. The industry
What are the products?
There is a wide array of passenger car models

Passenger car euro market segments
Segment
Description
Example
Mini cars
Renault Twingo, Fiat 500
Small cars
Peugeot 208, VW Polo, Renault Clio
Medium cars
VW Golf, Peugeot 308
Large cars
BMW 3 series, VW Passat, Ford Mondeo
Executive cars
Mercedes E class
Luxury cars
Audi A8, BMW7 Series
Sports coups
Audi R8 V10 plus
Multi-purpose vehicles
Renault Espace
Sport utility vehicles (SUV)
Honda CR-V
22
1.2. The industry
Vehicle density
In developed countries, over half the population owns a vehicle

Vehicle density for selected countries and regions
unit: car registrations per capita
CIS, Turkey,
other Europe
25.3%
EU and EFTA
56.4%
NAFTA
64.9%
Japan and South
Korea
54.4%
Asia/
Oceania,
Middle
East
7.3%
Africa
4.3%
Central and
South
America
16.7%
Source: Xerfi Global with Statista, latest data
23
1.2. The industry
Who are the key players?
Top manufacturers are from developed markets

Global ranking of carmakers by 2014 production volume of passenger cars and light commercial vehicles
unit: number of vehicles produced
Passenger cars
Light commercial
vehicles
Total light vehicles
TOYOTA
8,788,018
1,405,072
10,193,090
VOLKSWAGEN
9,766,293
128,598
9,894,891
GM
6,643,030
2,951,895
9,594,925
HYUNDAI
7,628,779
280,684
7,909,463
FORD
3,230,842
2,643,854
5,874,696
NISSAN
4,279,030
796,992
5,076,022
FIAT
1,904,618
2,812,345
4,716,963
HONDA
4,478,123
35,646
4,513,769
SUZUKI
2,543,077
473,633
3,016,710
10
PSA
2,521,833
395,213
2,917,046
11
RENAULT
2,398,555
363,414
2,761,969
Ranking
Company
Country
24
1.2. The industry
Leading automobile companies focus on different market tiers

Leaders market positioning, profitability and strategies
Market tier
EMERGING MARKET
MASS-MARKET
PREMIUM
SALES AND TECHNOLOGY

TRANSFER THROUGH JOINT
VENTURES
SCALE
BRAND VALUE
DIFFERENCIATION
INNOVATION
Leaders
positioning
Profitability
Principal market
strategies
25
1.2. The industry
The top 10 automakers account for almost three-quarters of production

Production of top 10 carmakers and other carmakers in 2014
unit: % of vehicle units
The worlds top ten carmakers account

for 73.4% of production, making the
industry fairly concentrated.
Top 10 carmakers:
73.4%
Other carmakers
26.6%
26
2. Market Environment
and Prospects
27
PESTEL analysis
Wealth is the main driver of car sales and politics protects it

PESTEL analysis of the automotive industry
P
E
CONOMY
S
T
E
OLITICS
OCIETY
ECHNOLOGY
NVIRONMENT
EGISLATION
POSITIVE
NEGATIVE
Government initiatives can encourage the

purchase of new vehicles specifically ecoxxx
vehicles
Governments protect the domestic industry
Protectionism impedes entry into new markets
Recovering mature markets

xxx
Lower fuel prices encourage vehicle usage
Slowing emerging markets, which were

previously major growth markets
Urbanisation
Cars as a status symbol
Infrastructure improvement
Car dependency
Improved public transport

Trend towards car-sharing
Changing social habits
Scandals and recalls lead to mistrust
Technological (connectivity, safety, fuel

efficiency) improvements to models allow for
increased sales opportunities
The technological imperative will result in a

talent war
Eco-innovations open up new sales

opportunities
Strict regulations, such as on CO2 emissions,

increase R&D spending
Carmakers must keep up with gas emission

norms and safety standards
IMPACT
28
Key characteristics
Governments often step in when the economy lets the side down
Politics play a major role as the

industry is of strategic importance
Economic prosperity is a major

growth driver
Mindsets regarding vehicles are

changing
The strategic importance of the automobile industry as a major source of direct and indirect
employment means it is rarely ignored by governments. Numerous examples of this were
seen during the recent financial crisis and subsequent recession, during which the American
government bailed out its car industry while EU states such as France, Spain, the UK and
Germany also set up initiatives to stir up demand to support national carmakers. This
protecting hand can also work against carmakers when it comes to expanding outside
national borders as tariffs, safety and environmental norms, certification and testing
requirements, luxury taxes, joint-venture or local part-sourcing regulations can be used and
abused to shield the domestic industry, blocking out outsiders.
Carmakers are also dependent on governments for alternative-fuel engine development,
whose success depends on the right recharging and refueling infrastructure, which can only
be established in collaboration with local and national authorities.
The car industry is cyclical in nature and depends on economic prosperity. Car sales have
globally recovered from the slump following the financial crisis. Improved finance conditions
are also helping to give sales a boost. Emerging markets have been an El Dorado for
carmakers over recent years although growth in the worlds hungriest car market, China,
seems to be slightly running out of steam. Nevertheless, mature market economies are
looking more positive, which indicates recovering demand for vehicles.
Developed and developing world societies have different needs with regard to vehicles. In
the developed world, including countries with traditionally high car dependence such as the
US, Canada or Australia, the trend is moving towards smaller cars offering lower profitability
and even away from traditional individual car ownership and in the direction of car-sharing
and mobility solutions combining car usage with public transport. On emerging markets,
urbanisation and increasing wealth has allowed huge sales opportunities on all parts of the
spectrum (entry-, mid- and premium level). However, vehicle infrastructure development on
such markets cannot necessarily keep up with demand and public transport is liable to
improve, limiting sales growth.
High-profile vehicle recalls due to defects or events such as that of VWs emissions scandal
can dent public confidence in the sector.
29
Key characteristics
Environmental legislation is weighing increasingly heavily on the industry

Technological advances concerning energy efficiency, connectivity and safety allow
carmakers to tap into new market opportunities. The majority of carmakers are putting a
Technology opens up new windows particular focus on alternative fuel hybrid and electric technologies. Connectivity is a
relatively new area of development and offers numerous ways of attracting new sales.
for differentiation
Carmakers are also starting to include vehicle-related technological services such as
mobility applications in their business, opening up an additional source of diversified
revenue.
Environment regulations put

considerable pressure on
carmakers
but also allows a window for
competitive advantages
Governments and supra-national authorities (such as the European Commission) are

pushing for cleaner transportation as vehicle emissions are responsible for a considerable
share of carbon emissions (12% in the case of Europe). This is a two-sided coin for
carmakers as it leaves them little choice but to invest considerably in research and
development to keep up with new standards but simultaneously opens up opportunities to
turn this to their advantage by offering new products liable to push consumers to upgrade
their vehicles. Consumers will be influenced by penalties and incentives such as lowemission vehicle rebates, opening up new sales opportunities for carmakers.
The European Union has recently been trying to lower the level of CO2 emissions
European-made cars can emit. This has been met by strong lobbying by some
governments, such as that of Germany, fearful that its premium car industry would not be
able to adapt to such legislation in the given time period. Such a response demonstrates
not only protectionism but also that legislation can be a heavy burden for carmakers,
forcing them to rapidly adapt to increasingly stringent environmental and safety
regulations. The recent VM emissions scandal further shows to what extent carmakers are
prepared to go to so as to get around regulations. Nevertheless, those who manage to
stay ahead of the pack in terms of respecting regulations can benefit from a competitive
advantage in this regard.
30
Focus on politics
Governments can ill afford carmakers collapse

The automotive industry, a major
employer with economic and political
clout, has historically been close to
governments hearts and thus
susceptible to protectionism. The
recent
financial
crisis
saw
governments come to the rescue in
numerous countries. In countries such
as Germany (where the car industry
directly generates around 4.0% of the
countrys GDP, 841,000 jobs and 11%
of Germanys exports) measures such
as
car-scrapping
subsidies
(admittedly not only limited to
German brands) were put into place
in the aftermath of the crisis to
stimulate demand and the German
government has equally lobbied
against
European
emission
regulations which would prejudice
the industry. In the US, the
Automotive
Industry
Financing
Program (AIFP) was set up and
invested $80bn to prevent the
industry from collapsing, which
would have threatened the overall US
economy, leading to the loss of
around one million US jobs and
posing a risk to financial market
stability.
Contributions of the automobile industry to Germanys economy

unit: %
The automobile industry in Germany accounts for
11% of
Germanys
exports
4% of its GDP
2% of its
workforce
(841,000 jobs)
Source: Xerfi Global with ITC and Eurostat
31
Focus on politics
Protectionism measures have a flipside, blocking expansion

Governmental intervention measures that block carmakers international expansion
TAFIFFS
JOINT-VENTURE REQUIREMENTS
INTERNATIONAL
EXPANSION
LOCAL CONTENT RULES

VOLUNTARY EXPORT RESTRAINTS
EMISSIONS OR SAFETY REQUIREMENTS
Government measures to protect domestic car industries of course have the downside of blocking out outsiders, thus limiting
international expansion. Car-making nations typically impose heavy tariffs on imports: the standard tariff for importing cars to
the US is 2.5% of their value while the European Union places a 10% charge on imported automobiles. Countries such as
China enforce considerable joint-venture requirements and local content rules to encourage carmakers to produce locally.
Emissions and safety requirements can also be used and distorted to prevent foreign cars from entering domestic markets.
32
Focus on politics
Government support is vital for alternative-fuel development

Government measures that support alternative-fuel vehicle development
Subsidies for eco-car

purchases
Environmental legislation
(emission reduction
requirements)
With government support,

alternative-fuel vehicles
become a viable and feasible
option for both
manufacturers and consumers
Sufficient
recharging and
refuelling
infrastructure
Research and
development
support
It is all very well for carmakers to develop vehicles with alternative-fuel engines, but such vehicles require infrastructure to
recharge or refuel such as electric charging stations for electric vehicles or hydrogen sources for fuel-cell hybrid vehicles,
without which vehicles cannot be commercialised successfully. Such infrastructure requires support from local, national and
transnational authorities. Furthermore, given the high costs of research and development for such technology, carmakers also
tend to require assistance at the beginning of the learning curve before reaching scale. Government legislation and initiatives
(such as subsidies for eco-car purchases) can also determine whether demand is sufficient to warrant investment in
alternative-fuel vehicles, particularly during periods of low petrol prices, as is currently the case.
33
Focus on politics
although lower petrol prices make the need less urgent

Average expenditure on vehicle ownership
Spot price of Brent petrol
unit: % of total expenses
unit: $US per barril
Gasoline and motor oil

Insurance
Maintenance and repairs
Rental, leases, licence and other charges
Financial charges
120
100
80
5,3%
9,2%
17,1%
60
46,4%
40
20
22,0%
0
1995
Source: Xerfi Global with U.S. Bureau of Labor Statistics, latest data
2000
2005
2010
2014
Sources : INSEE via Feri, *Xerfi forecast
Gasoline and motor oil expenses make up about half the costs incurred by vehicle ownership. Petrol prices shot up until mid
2014, making consumers increasingly interested in more fuel-efficient cars or engines powered by alternatives to gasoline, but
have since been on a downward tumble. This means that fuel-alternative vehicles have lost some of their economic interest
for consumers. Nevertheless, pressure to turn away from fossil fuel continues to be exerted by authorities and governments
for environmental and political reasons.
34
Focus on economics
As auto financing is common, sales are sensitive to credit conditions

Commercial bank 48-month new car interest rates in the USA
unit: %
7,5%
In most countries, a large part of

vehicle sales are financed. In the USA,
for example, this is true of around
90% of car sales.
When the financial crisis hit, lenders
limited credit, which had a knock-on
effect on automobile sales. With the
recovery, access to auto loans has
loosened and low post-crisis interest
rates have helped push up demand.
Friendlier
financing
conditions
typically affect carmakers in two ways
as not only do easier credit
conditions encourage sales but, what
is more, most carmakers also have a
finance segment, on which they
depend
for
additional,
albeit
marginal, profits.
7,0%
6,5%
6,0%
5,5%
5,0%
4,5%
4,0%
3,5%
3,0%
2008
2009
2010
2011
2012
2013
2014
Source: Xerfi Global with the Board of Governors of the Federal Reserve System
35
Focus on environment
Environmental legislation and fuel prices mean low-emission car growth

Number of new ultra-low emission vehicle registrations per year in the UK
Environmental considerations weigh
heavily on the industry. National and
supra-national authorities (such as the
European Commission) are pushing for
cleaner vehicles and are taking action to
shape
the
behaviour
of
both
manufacturers and consumers in this
regard. Manufacturers are obligated to
reduce emission levels of their vehicles
to meet increasingly strict regulations by
improving efficiency of petrol and diesel
engines and developing alternativelyfuelled cars such as petrol-electric
hybrids
or
all-electric
vehicles.
Consumers are influenced by penalties
and incentives such as congestion
charges and low-emission vehicle
rebates and are equally attracted to
more fuel-efficient vehicles due to
typically high petrol prices (although this
is less the case at the time of
publication). Sales of low emission
vehicles (LEVs) are therefore on the rise.
It is estimated that, due to government
incentives
and
legislation
and
subsequent growing customer demand,
up to a third of all cars purchased in
developed countries in 2018 will be
driven by alternatives to internal
combustion engines.
unit: number of new vehicle registrations
18 000
16 000
14 000
12 000
10 000
8 000
6 000
4 000
2 000
0
2010
2011
2012
2013
2014
Source: Xerfi Global with AAA
36
Environmental and safety regulations carry a heavy cost for carmakers

Regulations and requirements that increase investment needs
Environment
regulations
carry
a
considerable cost for vehicle makers. For
instance, the National Automobile
Dealers Association estimates that the
U.S. Corporate average fuel economy
(CAFE) regulations, set to come into
force in 2016, are expected to add
around USD 1,000 to the production
costs of a vehicle, as manufacturers need
to revisit design concepts, re-tool
manufacturing processes and find new
suppliers. Such expenses are difficult to
pass onto buyers in the highlycompetitive environment and carmakers
must bare a considerable part of the
brunt of this themselves. The recent
scandal involving Volkswagen illustrates
to what lengths carmakers are prepared
to go to so as to achieve apparent
compliance.
The same goes for safety regulations
(such as mandatory requirements for
backup cameras etc.). Such requirements
also increase costs which can be difficult
to pass onto end users.
Connectivity features remain more a
customer requirement than a regulatory
requirement but also imply additional
investment for carmakers.
Customer expectations
Regulations
Environmental
regulations
Safety regulations
Connectivity
Stricter emission
regulations mean
carmakers must invest
in new powertrain
development as well as
weight-saving
technologies.
Stricter safety
regulations mean that
carmakers must
develop and fit stateof-the art technologies.
Increased interest in
telematics, infotainment
and autonomy requires
considerable
investment.
Increased costs for carmakers that are difficult to pass on

to end customers, given the highly competitive nature of
the business.
Source: Xerfi Global with FCA
37
but when it comes to the crunch, the industry remains fairly protected
Typical government position when it comes to choosing between economics and environment
It is true that environmental

regulations have become increasingly
strict
(and
burdensome)
for
carmakers. However when it comes to
the crunch between
choosing
between the environment and the
health of the automobile industry, it
is typically the economic benefits of
the automobile sector that are
favoured by governments over
environmental protection. Indeed, it
seems the aftermath of the
Volkswagen emission fraud scandal
may result in more leeway being
given to European carmakers with
regard to emission framework. This is
not the first time measures have been
watered down or delayed to protect
the interests of an industry that is a
major contributor to the economies
of car-making countries. Germany,
but also other countries, have
frequently lobbied European bodies
to fight for more longer deadlines or
more
flexibility
in
emission
regulations.
When governments see that strict regulation is

liable to hurt their economies
ECONOMICS
ENVIRONMENT
38
Focus on society
Societal trends and attitudes towards cars vary from market to market
Societal trends and attitudes leading to variations in mature and developing markets
MATURE MARKETS
AGEING POPULATION
ATTITUDES ALTERED BY THE
RECESSION
DEVELOPING MARKETS
AUTOMAKERS MUST
ADAPT PRODUCTS TO
REGIONAL PSYCHES
YOUNG, GROWING POPULATION

NEW RICH
COST AND ENVIRONMENTALLY

CONSCIENCE
CARS ARE OFTEN STATUS

SYMBOLS
ATTRACTED BY ADDED-VALUE
TECHNOLOGICAL FEATURES
GREAT IMPORTANCE GIVEN TO

BRAND
The dichotomy between mature and emerging market demand is considerable in the automobile industry. As the recession
slowly fades in developed markets, ageing consumers are increasingly interested in value-adding technological advances such
as connectivity, fuel efficiency and safety. Meanwhile, emerging markets do not accept that developed-market models are
simply relocated to their regions. Tastes are not the same and vehicles often double as status symbols to a greater extent than
in mature markets. More importance is thus given to brand value in countries such as China and luxury cars have a great
appeal for the emerging group of the newly rich throughout developing markets.
39
Focus on society
Emerging countries harbour a growing number of wealthy customers

Income per capita and income inequality (2014)
units: horizontal axis = income per capita in dollars (purchasing power parity); vertical axis = index Gini (income
inequality, 0 represents total equality and 100 total inequality); size of bubbles proportional to population
55
Income per capita and income

inequality can be used to measure
the market potential for high-end
products such as premium cars.
Per capita income is higher and more
equally distributed in developed
countries, making them important
markets for the premium segment in
spite of their smaller population size.
Meanwhile,
some
developing
economies such as Brazil, Russia and
China are characterised by lower per
capita income but higher inequalities
and large populations. Considering
the large populations in these
countries, higher inequalities also
imply a significant number of wealthy
consumers. Growing income levels in
these countries opens new doors for
automakers positioned on the
premium and luxury markets.
Income inequality
50
45
Singapore
Turkey
40
Indonesia
35
Poland
Netherlands
30
Switzerland
25
United Arab
Emirates
Denmark
Sweden
Income per capita
20
0
10000
20000
30000
40000
50000
60000
70000
Source: Xerfi Global with World Bank and CIA World Factbook data
40
Focus on technology
Innovation is a principal battleground to differentiate from competitors

Main focuses of innovation in the automobile industry and results
INNOVATION IN THE AUTOMOBILE INDUSTRY
ALTERNATIVE-FUEL
ENGINES
ELECTRIC
(electricity)
THE NEED TO INNOVATE TO KEEP

UP WITH COMPETITORS, WITH
CUSTOMER REQUIREMENTS AND
WITH LEGISLATION RESULTS IN
INCREASED INTRA- AND INTERINDUSTRY COLLABORATION TO
SHARE COSTS AND EXPERTISE
CONNECTIVITY
TELEMATICS
INFOTAINMENT
HYBRIDS
(gasoline, biofuels,
diesels)
VEHICLE-TO-VEHICLE
COMMUNICATION
VEHICLE-TOINFRASTRUCTURE
COMMUNICATION
FUEL CELL HYBRID

(hydrogen)
41
Focus on technology
The connectivity market is set to expand quickly, but not selling prices
Estimated value of connected car technologies 2016
Breakdown of value of connected car technologies 2021
unit: %
unit: %
Safety
Entertainment
Vehicle management
Autonomous
Mobility management
Well-being
4,9%
2021
market
value:
122.7bn
8,8%
37,8%
10,7%
14,6%
23,2%
Source: Xerfi Global with PWC
Safety
Entertainment
Vehicle management
Home integration
Autonomous
Well-being
Mobility management
0,1%
4,6%
5,8%
6,2%
40,2%
10,9%
2016
market
value:
41.0bn
32,3%
The market value of connected car technologies is expected to triple over the next 5 years, opening up opportunities for
differentiation and new digital revenue streams, and at the same time making higher investment of the essence. It remains to
be seen which pricing strategies carmakers will use for their connected car products and services. Options include flat fee
structures, a pay-per-use structure, or a mixed structure. In any event, it is however unlikely that selling prices can be pushed
up in line with investment, meaning that return on investment will be eroded.
42
Focus on technology
Robotics and automation play a major role in car-making

Robot density in automobile vs. general industry in selected countries (2013)
unit: number of robots per 10,000 employees
Automobile
General Industry
1 800
1 600
1 400
1 200
1 000
800
600
400
200
0
Japan
Germany
USA
UK
China
Brazil
India
Source: IFR
Robot and automation technology play a key role in automobile manufacturing, much more so than in other industries. Based
on 2013 data for several large economies, robot density in the automobile industry was on average 10 times higher than in the
general industry. Indeed, robot and automation technologies historically has often stemmed from research and development
initiatives by major carmakers or car parts suppliers, some of which still operate their own robot activities.
43
Focus on technology
and carmakers continue to automate production processes

New installations of industrial robots worldwide by industry (2013)
unit: thousand units
Automotive industry
Although the automotive industry

traditionally accounts for the highest
share of both worldwide sales and
operational stock of industrial robots,
the industry has been investing even
more heavily in further automation
since
2010,
when
carmakers
worldwide came under great financial
pressure
following
a
costly
manufacturing model and collapsing
global car demand.
Electical/electronics industry
Metal and machinery industry
Rubber and plastics industry
In 2013, more than 69,400 new

robots i.e. 39% of worldwide units
sold during that year- were installed
in the global automotive industry, a
4% increase over 2012.
Food and beverage industry
Pharmaceutical and cosmetics industry
10
20
30
40
50
60
70
Source: IFR
44
Focus on technology
Technological advances are changing business models
Automated driver
Cars owned by individuals allow automated

driving thanks to software
Fleets of fully autonomous vehicles rove 24

hours a day and are available at the touch of a
smartphone
Individuals possess and drive their own cars
Ride-sharing apps and mobility solutions reduce

the need for individual car ownership
Traditional
Technology
New
The relationship between technology and business models
Human driver
Owned assets
Traditional
Shared assets
Business model
New
Source: Xerfi Global with FT and Morgan Stanley
45
2.2. Demand
Global car sales
Sales continue to expand, but at a slower rate

Registration or sales of new vehicles
Growth in registration or sales of new vehicles
100
20%
90
15%
80
70
10%
60
50
5%
40
0%
30
20
-5%
10
-10%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Global vehicle sales declined considerably in 2008 and 2009 as the aftermath of the financial crisis hit with its spiral of higher
unemployment, a drop in consumer confidence, high fuel prices and tightening credit conditions, bringing down demand in
all main world markets. Sales have since followed an upward trend particularly thanks to emerging country growth,
government initiatives to save the industry and stimulate growth, pent-up demand and friendlier credit conditions, reaching
14.3% growth in 2010. In 2015, purchases are gaining momentum in the NAFTA area and Western Europe but have been
pulled down by considerable declines in South America, Eastern Europe and Russia and, most importantly, in China, which had
previously driven a large part of growth. As a result, 2015 growth is expected to sit at just 1,0%.
46
2.2. Demand
Regional car sales growth
Global markets are uneven and volatile with emerging markets now slowing
The automotive industry remains uneven
and volatile on a regional basis due to
economic and socio-economic trends
but also infrastructure development,
customer requirements and government
regulations.
While Asia/Oceania/Middle-East was
previously considered an El Dorado,
propelling industry growth in the last
few years (mainly due to China) this
growth has slowed considerably from Q2
2014 to Q2 2015. Other markets such as
Central/South America, Russia and
Africa, which had seemed full of promise
when these markets started to emerge,
have also been decelerating.
Europe, on the other hand, has seen
negative growth over the longer term,
causing manufacturers to close factories,
but has picked up over the last year as
consumers become somewhat more
optimist about the economy. It remains
to be seen however if Volkswagens
emissions scandal will temper growth.
The NAFTA zone saw growth of 3.8%
from Q2 2012 to Q2 2015, due to a
recovering economy and pent-up
demand, low interest rates and falling
petrol prices, but this growth has slowed
of late to 0% from Q2 2014 to Q2 2015.
Growth in vehicle sales by region

unit: % change
Growth Q2 2014 Q2 2015
Growth Q2 2012 Q2 2015

Indian demand remains strong (although for
lower-cost cars) but Chinas demand is
slowing due to reduced economic growth as
well as anti-corruption and anti-pollution
laws.
Asia/Oceania/Middle-East
Europe
As economic conditions begin to improve,

Europe is slowly coming out of its slump.
NAFTA
The US economic recovery, low petrol prices

and pent up demand led to a revival of the
industry, but this has come to a standstill.
Africa
Africa remains a small market with potential.
Central*/South America
Consumer demand in Brazil has been hit by

dropping commodity prices, higher taxes
and interest rates as well as devaluation.
Russia
International sanctions, low oil prices and

devaluation have been depressing consumer
spending and consumer demand.
-50%
0%
50%
Source: Xerfi Global with OICA, *Excluding Mexico
47
2.2. Demand
Market size by country
China is now, by far, the worlds largest car market by volume

Main markets according to new vehicle registration or sales
unit: million vehicle unit sales in 2014
In 2009, thanks to increasing wealth,

a huge population and government
incentives, China overtook the US as
the biggest passenger vehicle market
in the world.
Other emerging countries such as
Brazil, India and Russia are also
among the major markets while the
traditional drivers of automotive
demand, the US, Japan and Germany,
are still huge and have been
recovering of late as emerging
market have been slowing.
The two top markets, China and the

US, together account for 45.7% of
demand for passenger cars, meaning
carmakers can ill afford to ignore
them.
China
US
Japan
China
accounted
for 26.6%
of vehicle
sales in
2014
making it,
by far, the
worlds
largest
market.
Brazil
Germany
India
UK
Russia
France
Italy
0
10
15
20
25
48
2.2. Demand
Regional car sales growth
but its growth is now stalling, weighing down on the industry

Year-on-year growth in registration or sales of new vehicles in China
unit: %
60%
50%
40%
30%
20%
10%
0%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015*
Demand for passenger cars shot up in China in past years, boosting the global industry thanks to its huge market size. However, Chinas
hunger for motorised vehicles is now slowing, initially because the Chinese government removed previous stimulus incentives (and even
replaced them with measures such as imposed quotas on new car registrations in order to control traffic congestion and air pollution),
and, more recently, due to slower economic growth as well as corruption crack-downs. As China has been a major growth driver and a
focus of major carmakers growth plans, its drop in demand has put a considerable spanner in the works for companies highly exposed
to the Middle Kingdom and are typically cutting back production and having to deal with high inventories. This in turn leads to increased
competition and price pressure, squeezing margins.
49
2.2. Demand
New passenger car registrations by segment
Consumers continue to favour small cars

New passenger car registrations by type in Western Europe
unit: % of new passenger cars in 2005 and 2014
Other
0,2%
Other
7,9%
Executive
10,9%
Uppermedium
13,1%
Executive
11,8%
Small
33,0%
2005
Uppermedium
16,5%
Lowermedium
29,8%
Lowermedium
35,0%
Source: Xerfi Global with ACEA
2014
Small
41,7%
Source: Xerfi Global with ACEA
With question marks hanging over petrol prices and general post-crisis belt-tightening, consumer are increasingly attracted to
small cars for their value: they are not only cheaper to buy but offer lower fuel consumption. Manufacturers are responding to
this trend by increasing the range, features and performance of compact cars. It is expected that, in the medium-to-long term,
demand will be bi-polar: customers will choose either smaller, fuel-efficient cars or will opt for luxury cars. The medium-size
segment will account for the smallest share of the market.
50
2.3. Supply
Global car sales
Global vehicle production growth slowed in 2015, but remained positive

Passenger car and commercial vehicle world production
Growth in passenger car and commercial vehicle world production
100
30%
90
25%
80
20%
70
15%
60
10%
50
5%
40
0%
30
20
-5%
10
-10%
-15%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Sales declined sharply in 2009, reflecting the rapidly deteriorating economic conditions and high inventory levels in mature markets
(Japan, the US and Europe). The marked decline in sales led to excess capacity in plants around the world, particularly in North America
and Europe. To give but a few example, Honda went from 100% NAFTA capacity utilisation in 2008 to 48% in 2009 while GM saw its
NAFTA capacity utilisation go from 85% in 2008 to a pitiful 37% in 2009. Meanwhile, in Europe, Frances overall capacity utilisation went
from 72% in 2007 to 53% in 2009. Production levels made a significant comeback in 2010 (+25.2%) to cater for pent-up demand, only for
growth to then be somewhat hampered by natural events (Great East Japan Earthquake and flooding in Thailand) in 2011. Since 2012
however, production has been slowing, seeing only 2.8% growth in 2014, in line with lower demand.
51
2.3. Supply
Location of production
Over one in four vehicles is now produced in China

Selected manufacturing countries of passenger and light commercial vehicles
unit: million vehicles in the first half of 2015
China is not only the worlds biggest

car market in terms of demand, but is
also the worlds largest manufacturer
of automobiles.
Main Chinese carmakers such as
Geely or Chery and foreign joint
ventures (such as those with
Volkswagen, Honda or GM) have
been ramping up production in line
with booming demand. China thus
manufactured 26.5% of total world
production in the first half of 2015
and 26.4% in the whole of 2014.
Long-established production bases in
the USA and Japan accounted,
respectively, for 13.4% and 10.1% of
global production in the first half of
2015.
Emerging countries such as India,
Brazil, Mexico (thanks to its position
in NAFTA, making it a favoured lowcost manufacturing base for the U.S.
market) and Thailand are also gaining
in manufacturing importance.
China
US
Japan
Germany
South Korea
45.6 million
vehicles were
produced in
the first half
of 2015.
India
Mexico
Spain
Brazil
China
accounted
for 26.5% of
these.
Canada
France
Thailand
UK
Russia
10
12
14
52
2.3. Supply
Location of production
A small amount of production is returning to mature markets

Growth of vehicle production by country, 2005-2014
Growth of vehicle production by country, Q2 2015-Q2 2014
unit: compound annual growth rate 2005 - 2014
unit: growth rate Q2-2014 Q2-2013
CAGR 2005-2014
Q2 2014-Q2 2015
China
Mexico
Indonesia
India
India
EU
Mexico
USA
Thailand
China
USA
Thailand
Japan
Japan
EU
Indonesia
-20%
-10%
0%
10%
20%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Over the last ten years, production has generally moved from traditional bases in Europe, North America and Japan to lower cost
regions. The aim has been to move production closer to expanding demand so as to match production and sales footprints, thereby
reducing currency exchange rate exposure and transportation costs but the shift has also been driven by lower labour costs, Within trade
blocks, such as NAFTA, EU, ASEAN and Mercosur, production has tended to move to the new Detroits: lower-cost locations within each
region. Nevertheless, this trend has been bucking of late as demand slows in low-cost regions and mature markets recover, meaning
some production is being brought back to Europe and the US. Automatisation is further boosting this. In the US, increased production is
additionally due to the shale gas revolution allowing lower fuel costs for manufacturing, making it an attractive industrial base once
again.
53
2.3. Supply
Raw material costs
Production costs are particularly exposed to steel prices

Total raw material cost in a typical US light vehicle
Change in price of hot-rolled coil
unit: % share in total value of raw materials
unit: annual change in USD per tonne
Steel
Fluids and lubricants
Plastics and composites
Copper and brass
Glass
Rubber
Aluminium
Other
Powder metal parts
Iron
1,0%1,0%
2,0%
0,4
0,3
0,2
0,1
7,0%
8,0%
0,5
29,0%
0,0
-0,1
8,0%
-0,2
9,0%
-0,3
15,0%
20,0%
-0,4
-0,5
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E
Source: Xerfi Global with OESA
Source: Xerfi Global with MEPS
The car industry uses a tremendous number of materials to build cars, including steel (29%), rubber (20%), aluminium (9%),
plastic (8%), petroleum products (15%), copper (7%), glass and others. On average, these variable costs make up about half of
most automakers total cost structure. As a result, automotive makers can be tremendously impacted by any hike in raw
material prices, particularly steel. As internationally traded raw materials and partially processed commodities such as
automotive steel can often be sourced at cheaper prices in low-cost markets, this has provided an added incentive to relocate
production to emerging market bases. However, steel prices have been falling over the last few years, reducing this pressure.
54
Exports and imports
Trade is dominated by intra-European commerce

Main global flows of exports and imports of motor cars
unit:% of total global export value
1.4%
NAFTA
11.6%
6.0%
Europe/CIS
35.9%
5.7%
7.3%
0.6%
9.1%
1.9%
0.9%
Asia
Oceania
6.1%
1.8%
Central and
South
America
1.5%
Source: Xerfi Global with Chelem, latest data
55
Global exports
Global exports have recovered from the crisis and are increasing
Global car export value
unit: billion euros
Global car exports amounted to

527.19bn in 2014, a ten-year high.
Exports have more than recovered
from the slump seen in 2009,
dragged down by low world demand
due to the financial crisis.
Nevertheless, the recovery in exports
should not be completed interpreted
as a return to business as usual as
figures may hide two increasingly
prevalent trends: firstly, exports are
less international and increasingly
intra-regional and, secondly, higher
value premium cars tend to be
exported more than low-value cars
(which are more readily produced on
local markets) thereby pushing up
export values.
In any event, the increasing export
value does indicate that the industry
is becoming more globalised with
carmakers expanding their offer
outside their national boundaries.
550
500
450
400
350
300
250
200
150
100
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: Xerfi Global with ITC
56
Intra-regional trade
but trade is predominately intra-regional

Main intra-regional flows of exports and imports of motor cars
unit:% of total global export value
NAFTA
11.6%
Europe/CIS
35.9%
Asia
Oceania
6.1%
Source: Xerfi Global with the World Bank, latest data
As carmakers look to better balance production with local demand, they have shifted their production sites closer to potential
consumers. Overseas production bases are then used to supply regional demand and reduce not only transportation costs but
also taxes and tariffs if such regions are in trade zones. It is expected that inter-regional imports from outside trade zones will
decrease while intra-regional trade, from low-cost pockets to the rest of the trade zone will intensify. For example, Nissan and
Volkswagen have established plants in Mexico to supply the NAFTA area while Suzuki has set up manufacturing facilities in
Hungary, from where it will produce for the European market.
57
Largest exporting countries
Germany and Japan are the undisputed export champions

Largest car exporters in 2005
Largest car exporters in 2014
unit: billion euros
unit: billion euros
Germany
Germany
Japan
Japan
Canada
USA
France
Canada
USA
South Korea
Belgium
UK
South Korea
Mexico
UK
Spain
Spain
Belgium
Mexico
France
0
20
40
60
80
50
100
150
Germany and Japan have had a long reign as leading automobile exporters. Not only have they stood at the top of the list for
the last decade but they are head and shoulders above the rest. The US overtook Canada in 2007 to become the worlds third
largest exporter. France has lost considerable ground over the last ten years, with much capacity being rationalised and
production being relocated to lower-cost neighbour Spain. Korea has seen its exports expand thanks to Hyundais growing
sales. Lower-cost countries within regional trade zones are often used as production bases and therefore register high exports.
Such is the case of Mexico, NAFTAs lower-cost zone.
58
Largest importing countries
The USA is, clearly, the worlds largest car importer

Largest car importers in 2005
Largest car importers in 2014
unit: billion euros
unit: billion euros
USA
USA
UK
China
Germany
UK
Italy
Germany
France
France
Spain
Canada
Canada
Belgium
Belgium
Italy
Australia
Australia
Netherland
Spain
0
20
40
60
80
100
120
20
40
60
80
100
120
The USA has dominated car imports in volume for over a decade, with most of its imports coming from Canada, the European
Union, Japan and, to a lesser extent, Mexico and South Korea. China has shot up the ranks of importers, going from 18th place
in 2005 to second place in 2014 as a result of rocketing demand. Russia also moved up to 9th in 2012 as demand has
increased considerably without a corresponding increase in domestic production but has since dropped dramatically to 14th in
2015 due to both trade embargos as well as slowing demand due to economic difficulties.
59
3. Corporate Strategies
and Competition
60
Driving forces of the industry
Carmakers are operating in an increasingly competitive environment

Competitive forces of the automobile industry
New entrants
++
Suppliers
++
Governments
++
+++
Rivalry
Substitutes
+
Customers
++
How to read this chart:

The darker the shading, the
stronger the force
61
Competitive rivalry
Fierce rivalry to maintain market share and expand in growth regions

New entrants
++
Suppliers
++
Governments
++
+++
Rivalry
Customers
++
Substitutes
+
The automobile market is no longer the playground of long-established Western manufacturers. The 1980s saw the arrival
on the world scene of Japanese carmakers such as Honda and Toyota, which have been growing their global market shares
ever since. In recent years, South Korean groups, namely Hyundai, have also been encroaching on markets previously
reserved for American and European firms.
On a regional basis, the auto industry has traditionally seen oligopolies, but this is becoming less and less the case with
most carmakers endeavoring to expand their international footprint to ensure their presence in all regions.
The race for new automotive technology, particularly for fuel-efficiency and alternative engines, is fierce and costly, putting
additional pressure on car companies to invest in areas which may take time to reap rewards. Furthermore, the increasing
role of infotainment and telematics systems makes innovation all the more important and rivalry to achieve a competitive
advantage is heated.
Due to these factors, rivalry in the global automotive industry is intense and car sales generate fairly low returns because of
strong price competition.
62
Consolidation
Carmakers have consolidated considerably over past years

Factors that drive industry consolidation
The global financial crisis spurred a
wave of consolidation, creating a
playing field in which the 10 top
carmakers now account for over 73%
of global production.
However, even before the financial
crisis, carmakers were no strangers to
mergers and acquisitions, alliances,
joint-ventures and partnerships. In an
industry in which efficiency is
paramount, such deals have always
had the drawcard of achieving scale,
streamlining distribution, boosting
asset efficiency, rationalising capacity,
sharing technology and possibly
developing a dominant position in a
niche market.
As the industry becomes more
global,
carmakers
also
use
collaboration and acquisitions to gain
access to new markets to hedge their
exposure to particular regions while
gaining access to new sales and
distribution channels.
Consolidation in the automotive
industry also results from market exit,
which can be partial when a carmaker
just pulls out from a particular region
or segment it no longer considers
viable.
INCREASE SCALE
AND REDUCE
OPERATING
COSTS
GAIN ACCESS TO
EXPANDING
MARKETS AND
INCREASE
GLOBAL
FOOTPRINT
ENTER NICHE
MARKETS (I.E.
PREMIUM)
INDUSTRY CONSOLIDATION
63
Customers
Carmakers must differentiate to stand out from the competition

Factors that obligate carmakers to differentiate and in what ways differentiation can be achieved
Vehicles are fairly

standardised
Switching costs are low
The offer is broad
Carmakers must differentiate what they offer from what their competitors offer
Services
Products
Prices
Dealerships/Network
Quality
Lower purchase price
Financing
Innovation
Fuel economies
Replacement parts/Warranties
Design/Appeal/Brand image
Lower maintenance costs
64
New entrants
Old players are invading others markets and new actors are emerging
New entrants
++
Suppliers
++
Governments
++
+++
Rivalry
Customers
++
Substitutes
+
Barriers to entry into the industry are substantial. Start-up capital requirements are high, brand value a major factor for
sales and technology know-how and minimum economies of scales must be gained almost immediately to ensure
competiveness. The risk of new carmakers coming onto the scene is therefore low but cannot be ruled out, as illustrated by
all-electric vehicle maker Tesla Motors founded in 2003.
Furthermore, the risk of existing players entering competitors territory is high. In the past, no one could have believed that
the Big Threes (GM, Ford, Chrysler) domination would be challenged. However, the establishment of Hondas first plant in
Ohio, US, marked the beginning of a new era in which the emergence of foreign competitors with the necessary capital and
technologies began to undermine the market share of US companies.
Carmakers are overcoming entry barriers to foreign markets through mergers and acquisitions and strategic alliances and
partnerships, jeopardizing the traditional ranking of regional leaders to some extent. Of course, this works both ways, as
such collaboration is designed to also strengthen the position of both the local and foreign party.
As automobile-specific technology develops and becomes a determining factor for demand and differentiation, new actors,
possessing specialist know-how, are coming onto the scene, increasing competition and accelerating the pace of change of
innovation. Companies providing connectivity and artificial intelligence now have considerable influence on carmakers. The
development of the Google driverless car is such an example of a company outside the traditional realm offering a service
that would add huge value to a vehicle, putting car manufacturers in danger of becoming mere providers of a support for
such technology.
65
Customers
As switching costs are low, customer loyalty is not a given

New entrants
++
Suppliers
++
Governments
++
+++
Rivalry
Customers
++
Substitutes
+
Although price sensitive, private customers have relatively little buying power as they do not purchase major volumes.
Nonetheless, due to the fairly standardised nature of the industry and the low switching costs associated with choosing a
competitors models, as well as the option of hanging on to older vehicles instead of buying new, clients can significantly
influence pricing decisions. Furthermore, it seems that consumers are becoming less faithful to brands and seeing cars
more as commodities while, at the same time, becoming more demanding with regards the inclusion of equipment such as
infotainment and are expecting high-end features to be standard.
In an attempt to gain client loyalty, carmakers try to differentiate through design and other functional innovations, as well
as offering a complementary range of services and warranties.
Businesses and car rental companies purchase large volumes, and thus have a certain degree of bargaining power.
Information about specifications, prices, quality and performance are increasingly accessible for customers, giving them
increased bargaining power. Meanwhile, automakers are also collecting more customer and car data via telematics and
sensors, but much of this information is yet to be put to use.
66
Customers
The Internet allows carmakers to reach clients directly, but only to an extent
Traditional distribution chain vs. emerging distribution chain
TRADITIONAL DISTRIBUTION CHAIN
Manufacturer
EMERGING DISTRIBUTION CHAIN
Dealer
Internet
Customer
Direct sales to customer is made
difficult due to legislation and
logistics
Customer
Manufacturer
Dealer
The automotive distribution model has been traditionally dominated by a unavoidable relationship with dealerships. Indeed, laws in the
US and elsewhere protect dealerships exclusive right to sell new cars. With the emergence of the Internet, however, automobile
manufacturers have begun setting up virtual showrooms and redefining, without fully circumventing, the role of dealerships. The
advantages of the Internet are particularly relevant in the information phase (comparison of different vehicles, quotations) as well as for
vehicle customisation selection and financing administration. Given the high cost of vehicles and the customers typical desire to test
before purchasing, as well as inventory issues, the dealership still serves a purpose as a physical point of sale. Carmakers who have tried
to go beyond this point to skip dealers have met strong resistance.
67
Substitutes
The risk of substitutes depends on available public and shared transport

New entrants
++
Suppliers
++
Governments
++
+++
Rivalry
Customers
++
Substitutes
+
Alternative means of transportation such as public transport or bicycles as well as car-sharing can be considered substitutes
to the individual purchase of vehicles.
The threat of alternatives varies from region to region depending on the travel distances involved and the availability of
public transport. In regions where public transport is not highly developed and distances are long, the switching costs
associated with using a different mode of transportation are high in terms of independence, convenience, and utility (such
as luggage capacity).
Conversely, in urban areas with high population densities, more alternatives are available (mass transit, bicycles, etc.) and
are often preferred by consumers and supported by government initiatives. Car-sharing, such as the autolib electric carsharing service in Paris, or car-pooling are also increasing in popularity. Such alternatives shift the perception of the car from
being a product purchased by individuals to a service available on demand.
Volatile oil and high ownership prices have a considerable influence on consumers' decisions to seek alternatives.
68
Substitutes
As vehicle density increases, alternatives to car ownership are sought

Trends leading to alternatives to individual car ownership
Vehicle infrastructure (roads and
parking spaces) does not always keep
up with growing vehicle density and
public transport tends to be favoured
by governments
INCREASING DEMAND
SATURATION POINT
REDUCING DEMAND
WITH MORE INTEREST
IN ALTERNATIVES
Individual car ownership

becomes a burden due to the
expense and inconvenience
As economies develop, increasing population +

increasing wealth +
increasing urbanisation
push up car sales
Consumers seek alternatives to

car ownership such as car-sharing
and mobility solutions
VEHICLE DENSITY
As an economy matures, car sales tend to expand as a result of increasing wealth and urbanisation. However, as vehicle
density subsequently increases, a lack of infrastructure (road and car parks) as well as the increasing expense of owning a car
(insurance, petrol, storage, road tolls) mean that private car ownership can quickly become a burden. For these reasons, there
is an increasing trend towards car-sharing and intelligent mobility concepts which provide users with the option of combining
several means of transport to best reach their destination. In turn, car sales are reduced while new doors open into the world
of mobility, which is being explored by carmakers like Daimler in high-density markets such as European cities.
69
Suppliers
Automakers rely heavily on suppliers, particularly if they are specialised

New entrants
++
Suppliers
++
Governments
++
+++
Rivalry
Customers
++
Substitutes
+
There are several layers of actors in the supply chain: tier 3 suppliers who supply raw materials and commodities, tier 2
suppliers who produce subsystems, and tier 1 suppliers who produce whole systems and sell directly to carmakers.
The more specialised and strategic the supplier, the more the balance of power tips in its favour. In the case of lessspecialised suppliers, carmakers can pick and choose their suppliers and switch from one to the other with little difficultly.
With the automobile industry being more consolidated than the car part industry, many suppliers rely on just a few
automakers to buy the bulk of their products and are greatly impacted if the automaker decides to switch.
The relationship between carmakers and their suppliers, previously more in carmakers favour, has changed significantly
over the past decade. Suppliers that originally provided ready-made parts have moved towards greater customisation,
tailoring products to the needs of specific companies while shifting towards the supply of complete functions (systems or
modules) rather than individual components and the share of value that suppliers provide is on the up. The relationship is
set to change again in the near future, as the increasing standardisation and globalisation seen in the car-making industry
will call for international mega-suppliers, pushing out small, regional suppliers.
Tech giants, such as Apple or Google, are becoming valuable suppliers (as well as potential competitors) as more
technology is incorporated into cars. Carmakers must ensure that such suppliers do not end up completely controlling incar operating systems and value and profits fall into their hands, leaving carmakers to simply provide the packaging for
the operating system as has been seen in the PC and handset industries.
70
Suppliers
The outsourcing of R&D to suppliers make them valuable partners

2014 R&D ratio of selected carmakers and suppliers
unit: R&D over revenue
Carmakers
have
long
been
outsourcing innovation to their
suppliers so as to reduce the burden
of investment. While carmakers
Hyundai and Toyota spent just 2.4%
and 3.7%, respectively, of revenues on
R&D in 2014, suppliers Valeo and
Denso spent 8.9% and 9.2%,
respectively, over the same period.
It is therefore increasingly common
for suppliers to invest more heavily in
research and development than
carmakers
themselves,
putting
innovation, technology, engineering
and thus bargaining power into their
hands.
CARMAKERS R&D
RATIO
SUPPLIERS R&D
RATIO
2.4%
8.9%
3.7%
9.2%
Source: Xerfi Global with companys annual reports
71
Suppliers
who are now gaining an innovative and value-added edge over carmakers
Automotive suppliers proportion of value added to worldwide automobile manufacture
unit: %
90%
85%
80%
75%
70%
65%
60%
55%
50%
45%
40%
1985
1990
1995
2000
2005
2010
2015
Source: Xerfi Global and Thomson Reuters via Statista
The proportion of value added provided by automobile suppliers has shot up going from 56% in 1985 to around 82% in
2015. Carmakers are therefore assuming more of a role as assemblers and less as manufacturers and have a huge dependence
on the expertise of their suppliers. This shift in power has been exacerbated by the fact that as automobile manufacturers
have expanded abroad over the last decade, they have encouraged suppliers to expand with them. This means that suppliers
are now more international and, additionally, more concentrated, leading to the formation of mega-suppliers, which can exert
considerable power over their clients.
72
Governments
The industry is large enough to attract considerable government attention

New entrants
++
Suppliers
++
Governments
++
+++
Rivalry
Customers
++
Substitutes
+
The automotive industry is large enough and vital enough in terms of employment to attract considerable attention from
governments.
Given the stakes involved in terms of employment, such attention is usually to carmakers benefit. The bail-outs of
automobile makers during the financial crisis and industry-specific initiatives, such as the car scrappage schemes to
encourage demand, demonstrate that governments are prepared to prop up the car-making industry.
Nevertheless, governments can wield control over carmakers, particularly when it comes to supporting their own national
industries in the face of foreign competition. The best example of this is China, where the governments action
determines not only its domestic state-owned industry but also the room to manoeuvre that foreign carmakers have.
Most other countries apply heavy tariffs to foreign cars, thus discouraging sales for non-local cars.
Government regulations, such as emissions and fuel economy regulations as well as compulsory safety equipment, are
becoming stricter and more expensive to comply with, meaning manufacturers must sell greater volumes to amortise
increasing costs. Nevertheless, it is also true that when it comes to the crunch and governments must choose between
protecting the industry and protecting the health of the environment, it is the industry which typically comes out on top.
Lobbying by government to delay or water down environmental regulations concerning automobiles is not uncommon.
73
Governments
The Chinese government continues to have long arm in the industry

The
Chinese
government
has
traditionally had a long arm in the
automobile business, and in the past
has, for example, banned most official
foreign-brand fleet purchases and
has forced overseas makers to
develop indigenous brands with
joint-venture partners. Faced with a
current slump in what has become a
pillar business that is too big to fail,
it is making moves to avoid a
downward spiral, bringing down an
industry that contributes directly and
indirectly to Chinas GDP, tax income
and employment.
In late 2015 measures have been
taken to cut purchase tax on smaller
engine vehicles and to reduce
controls and restrictions on new
energy vehicles so as to boost
greener vehicle production and
consumption while relieving Chinas
energy and environmental pressure.
This measure regarding smaller
engine cars was previously taken in
2009, so as to boost car sales during
the global recession.
Action taken by the Chinese government
The Chinese car market is

slowing as economic growth
drops
The Chinese government

considers the industry too big
to fail and intervenes
The purchase tax for

cars with engines 1.6
litres or less is cut to
5% in October 2015
and measures are
taken to reduce
controls on new
energy vehicles.
It is estimated that this move

will boost passenger-vehicle
sales by around 3 million units
a year
Source: Xerfi Global with business press
74
Aggregate net sales
Carmakers sales continue to expand, albeit to a lessor degree

Aggregate consolidated net sales of analysed companies
unit: billion euros
1 300
The industry has been enjoying

relatively strong growth over the last
five years. This has mostly been
driven by very dynamic emerging
markets and, to a lesser degree, by
improving
demand
in
mature
economies, where governmental
incentives to spur motor vehicle
purchases (such as old car scrappage
schemes) contributed greatly to the
industrys recovery after the world
financial crisis.
In the last two years, growth has
continued, but at a slowing pace as
pent-up
demand
is
fulfilled,
government initiatives come to an
end and frantic growth has slowed in
China. The drop in sales in Russia and
South America has also also taken its
toll on global sales.
1 200
4.5%
9.2%
1 100
10.9%
1 000
900
12.3%
800
700
600
500
2010
2011
2012
2013
2014
75
Ranking by production volume
Toyota manufactures the highest number of vehicles

Ranking of analysed groups by production volume (2014)
unit: vehicle units
Cars
LCV
Toyota
Volkswagen
General Motors
Hyundai
Ford
Nissan
Fiat-Chrysler
Honda
PSA
Renault
BMW
SAIC
Geely
Tata
Tesla
0
2 000 000
4 000 000
6 000 000
8 000 000
10 000 000
Source: Xerfi Global with OICA and companies
76
Ranking by net sales
but Volkswagen leads the pack in terms of sales revenue

Ranking of analysed groups by consolidated net sales (2014)
unit: billion euros
Volkswagen
Toyota Motor
GM
Ford
FCA
Honda
Nissan
SAIC
Hyundai Motor
PSA
Renault
TATA
Kia Motors
BMW
Geely
Tesla
0
50
100
150
200
250
77
Aggregate operating margin
Carmakers profits have hovered slightly above 5%

Aggregate profitability (operating margin) of analysed companies
unit: operating margin over net revenue; percentage change
9%
Intense competition means that the automobile industry reports relatively low profits, which
have hovered just over 5% on average over the last 5 years. Considerable investment in
globalisation as well as compliance with stringent fuel emission standards and fuel efficiency
requirements represent considerable structural costs for companies, weighing down on their
profits. From 2014, the deceleration in the Chinese market, in which companies have invested
heavily, has also led to a drop in profits for companies exposed to this market.
8%
7%
6%
-2.8%
3.3%
16.8%
-9.1%
5%
4%
3%
2%
2010
2011
2012
2013
2014
78
Profitability
Premium maker BMW has proven the most profitable

Ranking of analysed groups by EBITDA margin
unit: EBITDA over net revenue
2010-14 average operating margin
2014 operating margin
BMW
Hyundai Motor
TATA
Kia Motors
Geely
Toyota Motor
Volkswagen
Nissan
Honda
Ford
SAIC
GM
FCA
Renault
PSA
Tesla
-20%
-15%
-10%
-5%
0%
5%
10%
15%
79
Geographical footprint
Despite globalisation efforts, home markets remain the biggest

Sales by region of major carmakers (2014)
unit: + = 10% of total sales; red boxes indicate where domestic markets are the major market
Company
Home
market
North America
Europe
Asia-Pacific
TOYOTA
NISSAN
HONDA
HYUNDAI
TATA
SAIC
Africa/Middle
East/Other
GEELY
G.M.
FORD
TESLA
BMW
VOLKSWAGEN
PSA
RENAULT
FCA
Latin America
Source: Xerfi Global with companies. Data is approximate as regional reporting differ s between companies
80
Capex
Tesla must invest heavily due to the nature of its business

Tesla far outspends rival automakers,
partly because it is a relatively recent
addition to the car-making family and
thus is spending heavily to expand
production capacity, develop new
models and its store and service
network, and partly because, as an
electric car company, it must
additionally invest heavily in its
supercharger
network
and
its
Gigafactory battery plant.
In the case of the other carmakers,
the vast majority of the industrys
capital investment in recent years has
been dedicated to shifting operations
overseas, mainly by building new
manufacturing facilities in markets
with high demand, or by acquiring
stakes in competitors and setting up
joint ventures with local companies.
Capex is also often spent on
streamlining
and
modernising
production facilities, as well as the
launching of new products.
Honda has had the second highest
capex ratio among competitors over
the last 5 years during which capex
went towards the introduction of new
models as well as the upgrade of
production and R&D facilities.
Ranking of analysed companies by capex ratio

unit: capex over net revenue
2010-14 average capex ratio
2014 capex ratio
Tesla
Honda
Toyota
Tata Motors
FCA
Geely
BMW
Renault
PSA
Volkswagen
General Motors
Nissan
Ford
Hyundai
SAIC
0%
5%
10%
15%
20%
25%
30%
35%
81
Performance analysis
Volkswagen steers the industry, outpacing perennial leaders Toyota & GM

COMPANY
Volkswagen
Toyota Motor
GM
2014 SALES
202.46
194.01
116.57
2010-2014
SALES CAGR
12.4%
9.4%
3.6%
2014
OPERATING
MARGIN
6.3%
10.1%
2.6%
2010-14
AVERAGE
OPERATING
MARGIN
6.2%
Volkswagen sold over 10m cars worldwide, spanning from passenger cars
to heavy commercial vehicles. On a geographical basis, revenue growth
was chiefly fuelled by Asia-Pacific and North America.
Deliveries in all of its main brands have gone from strength to strength.
However, the Audi brand was the fastest growing, with the pace of volume
sales rising 12.9% on annual average over the 2010-2014 period.
6.4%
Toyota has been reinforcing its manufacturing operations across the

globe, with a focus on key growth markets in Asia. Revenue in Asia
(excluding Japan) has grown faster than in all other regions (13.3% on
average per year over 2010-2014).
In 2014, North America outpaced Japan as Toyotas largest regional
market, with a 34.6% slice of revenue (compared to 30.6% for Japan).
4.2%
The decrease in petrol prices over the past years has reignited demand
for SUVs and pick-up trucks in North America, giving GM a revenue boost.
Additional tailwinds came from China where the group runs operations
through a multitude of joint ventures so as to develop vehicles that
respond to the needs of Chinese drivers. GM and it partners sold 3.5m
cars in China in 2014 second only to the Volkswagen group which
delivered 3.68m units.
82
Recall costs can severally affect margins, such as those of Ford

COMPANY
Ford
FCA
Honda
Nissan
2014
SALES
107.71
96.09
94.63
80.76
2010-2014
2014
2010-14 AVERAGE
SALES
OPERATING
OPERATING
CAGR
MARGIN
MARGIN
2.8%
27.9%
10.5%
6.7%
2.7%
3.5%
5.0%
5.2%
4.9%
Growth has been somewhat hampered due to a loss in US market share, a drop in
sales in Europe and South America combined with a weak presence in emerging
markets as well as an increase in the cost of goods that has not been transferred to
customers. Ford also suffered from considerable recall costs in 2014.
3.9%
Sales have been following an upward trend in the last five years primarily due to
Chrysler's sales in the consolidated accounts. Fiat hit the jackpot with its acquisition
of Chrysler, whose strong sales in the US have helped it to weather the European
slump. Profit slowed in 2013 and 2014, mainly due to costs related to purchasing
shares of stock from the UAW Retiree Medical Benefits Trust and higher recall costs.
5.4%
Net sales picked up in 2012 after dropping to a low in fiscal 2011 due, firstly, to
temporary supply chain disruptions caused by the Great East Japan Earthquake and
the floods in Thailand and, secondly, sluggish economic conditions in Europe and
the US and slowed growth in Asia. They have followed an upward trend since then
thanks to strong sales in Japan and the US, as has profit, with the exception of a
drop in operating profit in 2014 when teething problems at a new plant in Mexico
dented sales and profit in the US.
5.5%
In recent years, Nissan has enjoyed strong revenue growth in the US and China
they were the groups largest markets in 2014, accounting for 26.1% and 23.0%
respectively of total sales volume.
Over five years, Nissan has increased its global presence, encompassing a 6.2%
share of the global car market in 2014, compared to 5.8% in 2010.
83
With car mix skewed towards small cars, Hyundai is very cost-efficient
COMPANY
SAIC
Hyundai
Motor
PSA
Renault
TATA
2014
SALES
20102014
SALES
CAGR
2014
OPERATING
MARGIN
76.17 19.7%
63.64
7.4%
53.61 -1.1%
41.06
1.3%
34.89 19.5%
2.4%
8.5%
1.8%
3.9%
9.1%
2010-14
AVERAGE
OPERATING
MARGIN
4.4%
While sales have seen continued growth over the last five years, profit has been dropping
since 2011 due to increasing competition from local rivals and a slowing Chinese economy
and this has been exacerbated in 2015 with its joint ventures with General Motors and
Volkswagen having to cut car prices to rev up sales amidst Chinas huge economic
deceleration.
9.4%
Hyundai has recorded the highest profitability among leading car manufacturers its
production facilities are located mainly in low-cost countries (China, India, the Czech
Republic, Russia, Turkey and Brazil) and its product mix includes largely small-sized vehicles.
0.0%
PSA makes around 70% of its sales on the European market, making it highly exposed to
the slump in demand in this troubled region. Sales therefore dropped in 2012 and the
company haemorrhaged 3bn of cash due to a high cost base with unused capacity. The
subsequent return to profit is attributable to the positive product and price mix resulting
from the success of launches and from the pricing power policy as well as reductions in fixed
costs.
2.8%
Renaults entry level vehicles (Clio, Duster, Logan, Sandero) continued to drive overall
performance, accounting for 42% of 2014 sales volume.
The Renault group sold 2.71m vehicles in 2014. Dacia-branded cars drove volume sales,
rising 10.4% on annual average, since 2009.
8.9%
Tatas sales and profits have been constantly improving over the last five years, but this has
been primarily fuelled by British subsidiary Jaguar Land Rover while domestic business has
been making losses due to a slowdown in demand in the ailing Indian automotive industry
but coupled with increased competition.
84
while Tesla is still far off from being a profit-generating business

COMPANY
Kia Motors
BMW
Geely
Tesla
2014
SALES
33.58
8.04
2.64
2.39
20102014
SALES
CAGR
7.1%
7.4%
4.4%
128.8%
2014
OPERATING
MARGIN
5.5%
11.0%
4.0%
-6.9%
2010-14
AVERAGE
OPERATING
MARGIN
6.9%
The US and China have been the groups largest markets in terms of volume, followed by
South Korea and Europe.
Despite higher volume sales, the company recorded weaker performance in 2014,
impacted by the rise of the Korean Won and the fall of the Russian Rubble.
10.3%
BMW focuses exclusively on premium automobiles under just three brands, generating
strong brand value. The Mini brand has allowed it to increase its market share in the
expanding small car market. It has offset dropping demand in Europe and the US by
exporting to emerging markets. The company enjoyed record sales in 2014 with strong
demand from China, Britain and the US.
6.5%
Geely had seen huge growth up until 2014. It should however be noted that this has not
only been fuelled by higher sales values and increased shares in operating subsidiaries
but also thanks to generous subsidies handed out by the Chinese government.
Sales slowed sharply in 2014 due to deteriorating political and economic conditions in its
major export countries, meaning exports fell by 50%. In China, Geelys sale also dropped
by 16.8%. As a result of this as well as due to an unrealised foreign-exchange loss at its
Russian subsidiary, profit also fell in 2014.
-18.1%
Having only launched its first vehicles in 2008, and following a high-price, low-volume
business model, sales have only just taken off and profit margins are yet to become
positive due, not only to fledgling sales but the continued high amount of investment
required to develop the supercharger network, improve batteries and expand the
distribution network.
85
SWOT analysis
Leaders are struggling to restore trust after a web of recalls and legal issues
SWOT analysis of leading global carmakers
COMPANY
STRENGTHS
WEAKNESSES AND RISKS
MAIN STRATEGIC PRIORITIES
Volkswagen
Presence in all categories of vehicles:

from compact cars to buses
Balanced price mix spanning from
mass-market brands to premium and
luxury brands
Geographically balanced footprint
Reputation tarnished over the defeat

device software installed on its diesel
vehicles
The defeat device issue entails legal
actions against the company and the
recall of millions of vehicles and several
billion euros in refitting costs and fines
Sustained investment in production

capacity in the US, Russia, and China
Stronger commitment to electromobility: 20 additional EV and plug-in
hybrid models by 2020
Advancing connectivity and automated
driving technologies
Toyota Motor
Steadily improving profitability and

financial situation; revenue growth
Global footprint
product
portfolio
Diversified
encompassing from compact cars to
trucks and buses; strong performance of
Lexus, its premium brand
Ongoing legal proceeding concerning

vehicle safety could impact brand image
and therefore sales, in addition to
profitability due to the cost of recalls
Lower car deliveries in 2014 (-1.6%
year on year)
Upgrade production capacities at

regional hubs, particularly in North
America
Towards new models of mobility with
the launch of Mirai, a mass-marketable
fuel cell vehicle
New partnerships to make better cars
GM
Leadership in the US, strong presence

in China
Increasing scale of its financial arm
reputation
and
sales
Stronger
performance of its luxury brand
(Cadillac)
Revenue performance greatly reliant

on the US and China
Fines and penalties related to
willfully and knowingly concealing
evidence over faulty ignition switches
installed in a series of cars
Gradually declining profitability since
2011
Focus on the US with new SUV and

pick-up launches
Develop Cadillac brand by establishing
a dedicated business unit
the
local
web
of
Enhance
manufacturing partnerships in China
unprofitable
operations
Cease
(development of Opel brand in Russia)
86
SWOT analysis
Rationalisation of platforms is a common theme

COMPANY
Its operating margin continues to

drop
Share in the US vehicle market
dropped in 2014, to which it is highly
exposed
Free cash flow has been negative in
the last 2 years
Drop in unit sales of late in countries
such as Russia, India, Australia, Turkey
and the Middle East and Africa
Rationalising its brand portfolio and

refining its global product line-up.
in
safety
and
smart
Investing
technology
Continued platform consolidation to
deliver customer-focused programmes
rapidly and efficiently across global
markets.
FCA
An extensive brand portfolio, from

small cars to premium vehicles
A strong position on both the North
American and European markets
A smaller scale of operations than

competitors
Overcapacity in Europe
Expansion in the premium segment so

as to benefit from higher margins in a bipolar market and make good use of
European overcapacity
Expanding sales in key global markets,
including through localised production
Rationalising vehicle platforms and
standardising components
Honda
Diversified portfolio (motorcycles and

engines with a high motorcycle market
share in Asia)
Strong brand value
Robust production and sales network
A leader in hydrogen fuel-cell
technology
Strong growth in sales since 2011
High exposure to Asia

Most of its profits are generated
outside Japan, leading to foreign
currency exchange risks
Honda has suffered in the past from
anti-Japanese sentiment in China, the
most promising car market
Reorganising regional divisions so they

are able to respond to local market
demands and particularities faster
Expanding fuel-cell products
Ford
STRENGTHS
A strong market presence across the

globe (second largest market share in
the US car market)
It has undergone huge structural
reorganisation to improve efficiency
The number of platforms it uses has
been rationalised, allowing cost benefits
87
SWOT analysis
Emerging markets in the slow lane hamper profits

COMPANY
STRENGTHS
Nissan
Being part of the Renault-Nissan

Alliance has resulted in cost synergies;
further benefits are expected from
strengthened ties with Daimler
Strong presence in China and the
US
A new wave of product recalls over faulty

parts in the US and Canada in January 2015
(nearly 800,000 vehicles concerned)
Expansion in China and other growth

markets
Increase production in Japan
Enhance collaboration with Daimler
SAIC
Benefits from government support

and procurement
Holds the highest market share in
China, the worlds biggest auto market
Attracts joint venture propositions
from foreign companies allowing
technology transfer and scale
Sales have been increasing steadily
over the last 5 years
Chinas entry into the WTO has reduced

room for manoeuvring in terms of
government support
Its own brands lack value, being
considered bottom of the range both in
China and abroad
Profit has been falling since 2011
Highly exposed to China, which is losing
steam
Developing new energy technology

Continuing joint ventures to expand
expertise and scale and to enter foreign
markets
Hyundai
Motor
Sustained volume growth

Production facilities are mainly
located in countries with low wages
Slowdown in revenue growth; declining

profitability and financial returns
Product mix tilted to small vehicles
Negative free cash flow in 2013-14
Boost manufacturing capacity, particularly

in China
Upgrade and expansion of product range
Building a stronger brand image
PSA
Strong brand value in Europe

Strong brand focus: just two
brands, one (Citron) positioned
slightly higher than the other
(Peugeot)
Increased international expansion
(particularly in China) over the last few
years
Poor sales and profitability over the last 5

years
Still highly dependant on Europe
Overcapacity woes
High labour costs as a high level of
production is in Europe
Maintaining distinct and complementary

brands
Product plan aligned with market demand
Entering new growth countries such as
Africa and the Mediterranean basin
Modernising plants
Strengthening industrial and commercial
partnership with Dongfeng
88
SWOT analysis
but companies continue to aim for internationalisation

COMPANY
STRENGTHS
Renault
Leadership in entry level cars in

Europe
Strong web of partnerships in electromobility
Margins have been structurally low

Sales stagnation over the past years
Despite continued success in entry
vehicle ranges, the group has a weak
presence in other price categories
Continued global expansion of entry

vehicle ranges
Improve financials
Lead in the zero-emission mobility area
TATA
Flourishing sales in the premium

segment through its subsidiary Jaguar
Land Rover
High market share in India and a
strong position in the bus and truck
market worldwide
Sales are geographically balanced
Steadily increasing net sales and
EBITDA
levels
of
research
and
Low
development
Highly dependant on Jaguar Land
Rover to keep financials out of the red
Poor marketing on the Indian market
Little investment made in Jaguar
international
business,
Expanding
including via the expansion of its
manufacturing footprint.
Cutting sales and production targets for
China
Kia Motors
Access to financial resources as part

of the Hyundai Motor Group
Growing number of car deliveries in
overseas markets
Weak performance in South Korea

Declining operating margin in recent
years
Enhance production bases with new

investments in Mexico
Diversify portfolio of environmentally
friendly cars following the launch of the
Soul EV in 2014
89
SWOT analysis
Specialised Tesla and premium BMW enjoy niche markets

COMPANY
BMW
STRENGTHS
Strong position on the premium

market
Rationalised brand structure
Net sales and operating margin have
been on an upward trend over the last 5
years
Highly exposed to Europe

Highly exposed to the premium
market
Recent product recalls
Unfunded pension obligations
Expanding its global production

network
Pushing ahead with connectivity
innovation
Expanding range of mobility services
Geely
Tesla
Benefits from government support

and high subsidies
Through the acquisition of Volvo,
Geely can absorb Volvos patented
technology and expertise
High level of exports from a low-cost
base
Specialised position on a niche

(electric car and battery products)
market
Control over sales and service centres
as they are company-owned
Strong brand value
Strong innovation
Weak brand influence

Business culture differences between
Geely and Volvo
Home brands have less prestige on
the Chinese market
Falling sales and profit in 2014 in line
with a weakening Chinese market
Still highly exposed to China
The company is yet to generate profit

Sales remain small-scale and capital
expenditure high
Opposition from car lobbies and
distributors regarding non-franchised
retail stores
Geely has abandoned its low-cost

strategy for an international strategy
and is attempting to enter into foreign
markets and its relocating production
to these markets
Focus on new energy vehicles
Focus on a single brand
Developing modular architecture and
standardised components
Expanding its network of Tesla stores

Developing charging network
Creation of a gigafactory to reduce
battery unit costs
90
Overview of main strategies
Carmakers key focuses include efficiency, a global presence and innovation

Overview of carmakers main strategies
EFFICIENCY AND COSTCUTTING
The use of platforms, which are being

increasingly rationalised and shared, and
standardisation of parts allow increased
efficiency with reduced cost.
GLOBAL MARKETING
POSITIONING
CARMAKERS
KEY FOCUSES
With emerging markets losing speed and mature

markets seeing some improvements, carmakers
must ensure they are in the right place at the
right time.
INNOVATION
Connectivity/Autonomy
Fuel-alternative engines
Mobility
The global market for connectivity is expected

to expand considerably with connected services
and apps becoming standard. Carmakers are
thus recognising they need to shift from being
mere providers of hardware to providers of
software-based connectivity solutions. Part of
this software will help cars to become more
autonomous.
Despite petrol prices falling of late, the race to

develop fuel-alternative engines remains on
due to environmental regulations as well as
uncertainty regarding the future development
of fossil fuel prices.
Car manufacturers, often in collaboration with

car rental companies, are entering the carsharing market via specific-use vehicles, multimodel mobility solutions or new Uber-style
business models. Such moves allow a new
window for sales but also for data collection
and hardware and software testing.
91
Overview of main strategies
Intra and inter-industry collaboration are used to achieve objectives

Examples of intra and inter-industry collaboration in the automobile industry
EFFICIENCY AND COSTCUTTING
Nissan will start production of its NP300 Frontier pick-up at Renaults facility in Crdoba, Argentina where a
common platform will also produce a pick-up truck for Renault and another for Mercedes.
Panasonic and Tesla sign an agreement for cooperation on the construction of a large-scale battery
manufacturing Gigafactory plant in the US.
Toyota, Nissan, Honda and Mitsubishi launch Nippon Charge Service, a joint venture that will see the
development of charging stations for electric-powered vehicles (including plug-in hybrids) across Japan.
GLOBAL MARKETING
POSITIONING
Nissan and Daimler are building joint facility in Aguascalientes. The plant will produce jointly developed Infinitiand Mercedes-Benz-branded premium compact vehicles starting in 2017-18.
SAIC-GM-Wuling, the joint venture between GM, SAIC and Wuling Motors in China, are setting up
manufacturing operations in Indonesia. Plans are to produce Wuling-branded vehicles at a facility that will be
built close to the capital city.
The PSA/Dongfeng joint venture sign an agreement with the city of Chengdu for the construction of its fourth
production facility in China. It should be completed by 2016.
INNOVATION
Audi, BMW and Daimler acquire HERE, Nokia Corporations mapping and location services business. This move
comes as the three carmakers intend to develop cloud-based maps and other mobility services for the
automotive industry.
Audi is working with Baidu and Huawei to enhance car connectivity features in China. Audi has teamed up with
Huawei Technologies to develop an Asia-specific LTE module. Audis partnership with Baidu involves iOS- and
Android-based platform integration between Audi cars and Baidu CarLife, a service similar to Android Auto and
Apple CarPlay.
PSA and Bollor Group sign a strategic cooperation agreement on developing shared mobility solutions,
including car-sharing schemes using conventional and electric vehicles.
Source: Company reports and business reports
92
Product quality
The mantra of quantity over quality is increasingly seen in the business

Carmakers aims when focussing on quality
Increased customer
satisfaction
Reduced recalls and

warranty claims
A FOCUS
ON
QUALITY
Improved cosmetic and
technical design
Boosted brand image
The financial crisis has changed the mindset of both manufacturers and consumers. Manufacturers have come to realise that,
particularly on saturated markets, the easiest way to generate profit margins is no longer hungrily through volume, but with a
greater focus on product quality and cost efficiency, even at the risk of losing market share. This is all the more true as
regional markets become increasingly erratic. At the same time, customers are more value-orientated. As a result,
manufacturers are focusing on luring in customers through improved design, reducing recalls and, therefore, increasing
customer satisfaction and brand image. With such an approach, carmakers are aiming for a greater degree of stability, so as to
better manage capacity and costs.
93
Global platforms
A move towards global platform architecture for cost and time savings
Advantages and disadvantages of the use of global platforms
ADVANTAGES
DISADVANTAGES
With cost pressures coming from regulations and heated competition, manufacturers are looking to reduce costs and cater to consumer
preferences for more segmented vehicles by using platforms and modularisation, improving product commonality. Carmakers must
ensure that the number of units produced per platform remains as high as possible so as to benefit from economies of scale and costefficiency. Major players are therefore rationalising their range of platforms at a global level and are simultaneously looking to diversify
the models each platform produces. Furthermore, carmakers are increasingly turning to platform-sharing with competitors. This trend
allows huge cost and time savings but also imposes the task of finding ways to differentiate between models built on a common
platform so that sales are not cannibalised, offsetting the advantages of platform sharing. Manufacturing risk is also concentrated,
meaning that recall numbers will be magnified in the event of a defect.
94
Standardisation
Component standardisation is liable to change the supplier structure

Rationale behind and results of standardisation
REDUCE RISK OF SUPPLY

CHAIN DISRUPTION
REDUCE COSTS AND TIME

TO MARKET
STREAMLINE INVENTORY
MANAGEMENT
STANDARDISATION
REDUCED MAINTENANCE
COSTS FOR END USERS
MEGA-SUPPLIERS
FAVOURED TO PRODUCE
HIGH VOLUMES
SMALL, SPECIALISED
SUPPLIERS PUSHED OUT
OF SUPPLY CHAIN
So as to cut costs and thereby increase margins, carmakers are turning to common component-based production models.
With such standardised models, the range of different components is reduced. The benefits are manifold for both the
manufacturer and end user; the cost and time spent on vehicle production can be lowered, inventory management
streamlined and vehicle maintenance costs brought down. Risk of supply chain disruption is also reduced as the standardised
parts are easier to come by than specialised parts. This approach has knock-on effects for suppliers. Only the largest of
suppliers can produce the high volumes required, pushing smaller, more specialised suppliers out of the supply chain.
95
Global platforms
Carmakers are reducing the number of platforms and increasing scale

Average number of platforms per carmaker
Average number of car bodies per platform
unit: number
unit: number
25
4,0
3,5
20
3,0
2,5
15
2,0
10
1,5
1,0
0,5
0,0
2004
2009
2014
Source: FCA (average across top 10 global OEMs, platforms that produce at least
2,000 cars a year)
2004
2009
2014
Source: FCA (data from FCA, Ford, GM, Honda, Hyundai, PSA, Renault/Nissan,
Suzuki, Toyota, VW)
Carmakers are consolidating the number of platforms they manufacture on. Ford, for example, had 27 global platforms in
2007, 12 in 2015 and plans to reduce this to 12 in 2016, with an eventual target of 8. This is in line with the general industry
trend: while the industry average was 22 in 2004 and 21 in 2009, it became 18 in 2014. The number of different car bodies
produced on a platform is simultaneously increasing, reaching 3.3 in 2014. Volkswagen is taking this a step further with its
MQB system, which is a modular architecture system that will underpin its Audi, VW, Skoda and Seat models and should
eventually replace its previous array of platforms.
96
Multi-brand strategy
while retaining a multi-branding strategy

Volkswagen s car brand family and their positioning
The ultimate
sports car
EMOTIONAL
High degree of
part
standardisation
and platform
sharing
Vorsprung durch
Technik**
Auto Emocin
The Sporting
Grand Toure
VALUE
PRESTIGE
Aus Liebe zum
Automobil*
Simply Clever
RATIONAL
Source: Xerfi Global with Volkswagen investor presentations; literally meaning * Out of love for cars; ** Ahead through technology
Volkswagen sells its cars under numerous brands: Volkswagen, Audi, Skoda, SEAT, Bentley, Lamborghini, Bugatti, Scania and
Porsche. In this way, it hedges its bets by covering a wide range of niches and customer segments and enjoys scale benefits.
So as to avoid cannibalisation it attempts to differentiate among its huge portfolio of brands by focusing on transmitting clear
brand values and a different personality to each brand. The group sells cars that have a high degree of standardisation at
totally different prices, due to its ability to differentiate them through design and successful brand management. For instance,
the groups most sold brands (Audi, Skoda, Seat and Volkswagen) are manufactured on the same platform and have a fairly
high degree of internal part standardisation.
97
Focus on the premium market
Premium cars enjoy better margins and thus attract attention

Toyota and BMWs 2013 and 2014 net profit, average 2010-2014 operating margin and ROE margin
Carmakers that generate a large part

of their revenue from premium sales
have higher profit margins. Toyota
may be head and shoulders above
BMW in terms of sales volume and it
generated a particularly high net
profit in 2014 but is very much
behind when it comes to operating
profit and return on equity as,
although volumes are lower, profit
margins per unit are much higher.
Furthermore, premium carmakers
earn extra revenue from their
financing department, which has
comparatively low costs.
It is therefore only natural that
numerous traditionally mass-market
carmakers are making moves to enter
the premium sector in an attempt to
benefit from its higher margins.
Hyundai for example is focusing on
boosting profit margins by launching
a standalone luxury brand (Genesis)
under which it plans to have a full
line-up of six products with four new
models by 2020.
units: billion euros; operating margin over net revenue; net profit over total shareholders equity
Net
profit
2013
Operating
margin
ROE margin
2014
Toyota
5.6%
8.0%
2013
BMW
2014
10.3%
15.8%
98
Connectivity
Growing connectivity technology opens up a new source for added value

Applications and advantages of vehicle connectivity
Customer
loyalty
Entertainment
Road
safety
Information
Vehicle
connectivity
Revenuegenerating
add-ons
Communication
Vehicle connectivity hardware, software and protocols are constantly being applied to new fields so as to provide users with
infotainment (information and entertainment) systems, telematics (for vehicle health information, trip tracking and geofencing), vehicleto-vehicle communication (for road safety), vehicle-to-infrastructure and in-vehicle Wi-Fi for portal access, among other things. Such
technology is typically accessed via in-built hardware and/or smartphones. It is estimated that around 20% of vehicles sold in 2015
include embedded connectivity and the global market volume is expected to double from 2015 to 2020, opening up a new source for
added value for carmakers. Connectivity can also encourage customer loyalty as switching costs can be incurred when changing from
one makers system to the others and, additionally, allows customer data collection. Furthermore, connectivity allows extra revenue to
be generated through in-car advertising.
99
Electronics and software
Electronics and software are becoming a major battleground

Electronic and safety systems that
allow improvements in quality and
safety are being targeted by
carmakers (and their suppliers alike)
so as to differentiate their products,
develop a closer relationship with
customers (via data collection) and
increase
margins.
Software
breakthroughs are becoming vital,
perhaps more so than progress in
hardware.
As a result, the contribution of
electronics and software content in
vehicles is on the up. It is estimated
that is amounted to less than 20% a
decade ago and now is as much as
35%. Furthermore, electronic system
make up over 90% of innovations and
new features.
Telematics, such as automatic parallel
parking, lane-keeping assistance or
sensors allow carmakers to interact
with consumers (such as providing
maintenance alerts) as well as
allowing tie-ins with third-parties
such as insurers (by offering
discounts for customers who drive
safely).
The share of electronics and software in automobiles and contribution to innovation

unit: %
35%
The current cost of

electronics and software
content in automobiles.
The contribution of
electronic systems to
automobile innovations
and new features.
90%
100
Product lifecycle management
Rapidly evolving technology shortens car lifecycles

The lifecycle of vehicles
Sales
Sales grow
With rapidly evolving

technology, the vehicle lifecycle
is shortening
Sales peak
Launch of new
model
Launch of updated
model
Time
Like all products, vehicles go through a lifecycle. After their initial launch, sales then grow until reaching a peak, after which
they drop. A few decades ago, car models tended to last around 8-9 years. With rapidly evolving technology, this is no longer
the case. Vehicle lifecycles now last around 2-3 years before being considered obsolete. At this stage, carmakers have the
option of launching a redesigned model. At present, carmakers are generally focusing on bringing out updated models with
improved fuel efficiency or with hybrid engines. As software becomes more vital, the pace of change in products and feature is
likely to accelerate further.
101
Car-sharing
Most carmakers have got on the car-sharing bandwagon

The global car-sharing market is
expected to grow at around 30% per
year to reach a value of $6 billion by
2020 and major carmakers are
making moves to enter the market.
Toyota has developed Ha:Mo, a local
transport system with the use of
personal
vehicles
and
public
transportation. BMW has also
partnered with rental car company
Sixt SE to develop DriveNow, a carsharing joint venture that allows
vehicles to be picked up and left
within a designated area. GM has also
introduced a peer-to-peer sharing
service called CarUnity through its
Opel brand in Europe and has set up
a service at a Shanghai university as
part
of
multi-model
campus
transport.
Car-sharing allows a new outlet for
sales, but volumes are, by nature,
smaller than they would traditionally
be in the case of individual
ownership. However, car-sharing
projects allow carmakers to gather
consumer data, test hardware and
software systems, expose their brand
and
gain
insight
into
user
experiences, thus offering advantages
outside pure sales numbers.
Number of shared vehicles in the Americas

unit: number of vehicles
30 000
25 000
20 000
15 000
10 000
5 000
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Increasing car-sharing offers

carmakers
an additional sales outlet

an opportunity to gather consumer data
an opportunity to test hardware and software

brand exposure
an opportunity to gain insight into user experiences
Source: Xerfi Global with the Transportation Sustainability Research Centre
102
Capital investment and R&D spending
Regulations and innovation are pushing up the need for investment

Aggregate capex and R&D spending of top carmakers*
unit: billion euros
Mainstream OEMs
150
Premium OEMs
The industrys capex and research and development requirements continue to increase,
particularly due to environmental and safety requirements, as well as customer expectations
regarding connectivity, which need to be met to ensure a competitive advantage.
130
110
90
70
50
30
10
-10
2010
2011
2012
2013
2014
Source: Xerfi Global with FCA; (*FCA, Ford, General Motors, Honda, Hyundai, Kia, Nissan, PSA, Renault, Toyota, Volkswagen, BMW, Daimler)
103
Mergers and acquisitions
suggesting that a new wave of alliances and mergers may be on the horizon
Average vehicle development costs
Types of potential alliances and cooperation between carmakers
unit: %
Vehicle tooling
Powertrain R&D
Powertrain tooling
One-off industrial co-operation

-
Vehicle R&D
Other
15%
5%
Long-term industrial co-operation

40%
Cross-shareholding
INTEGRATION
5%
35%
Source: FCA
Mergers and acquisitions

Given the increasing costs required to comply with stricter environmental and safety requirements as well as greater customer
demands which are pushing up required research and development and capex, it is highly likely that carmaker will increasingly
share the burden of investment via alliances, co-operation, and mergers and acquisitions with competitors but also with
suppliers and tech new entrants. The sharing of research and development (which makes up a huge 40% of vehicle
development costs) as well as tooling investments and plant utilisation and other synergies would allow large cost savings to
be made, thus generating higher margins.
104
Alternative engine development
Alternative engine development remains a major focus

Types of alternative-fuel engines
ALTERNATIVE-FUEL ENGINES
ELECTRIC
(electricity)
HYBRIDS
(gasoline, biofuels,
diesels)
Shorter driving distance
FUEL CELL HYBRID

(hydrogen)
Longer driving distance
Volatile petrol prices and environmental concerns have been spurring interest in alternative fuels for some time and all major carmakers
have found themselves caught up in the technological race to create vehicles with alternative-fuel engines. The challenge lies in creating
engines with vastly different powertrains and operating methods that are affordable yet have sufficient battery life. With currently
existing technology, electric vehicles are more suitable for short-distance mobility needs, which corresponds to urban area profiles, while
hybrids can be used for longer-distance travel. Currently low petrol prices takes some of the heat off the race but the uncertainty over
how long prices will stay low will last means alternative-fuel vehicles remain a priority. GM, for example, announced in October 2015 that
it would partner with LG to develop a battery for its planned Chevrolet Bolt electric car, despite falling petrol prices.
105
Expansion on emerging markets
Carmakers have generally been heavily investing in emerging markets

Benefits of emerging market presence for production and sales
PRODUCTION
SALES
OVERLAP
LOWER-COST LABOUR
REGIONAL
EXPORTS
LOCAL MARKET PRODUCT

ADAPTATION
CONDITION OF JOINT-VENTURE
AGREEMENTS
(i.e. cars
manufactured in
China can be
exported to other
parts of Asia)
ACCESS TO HUGE GROWTH

MARKETS
REDUCED IMPORT AND
TRANSPORT COSTS AND TIME
SALES MADE EASIER THROUGH
JOINT-VENTURES
Carmakers have been attracted by the huge growth markets available in emerging countries and have been establishing operations in
such countries, rather than relying purely on exporting, over the last few years. Being on site offers numerous advantages. Production is
typically cheaper due to lower labour costs and products can be more easily adapted to local tastes. Producing locally is also often a
condition of joint-venture agreements with local manufacturers, who in turn help with market access. Unit prices are also brought down
as tariffs and transport costs are done away with and, furthermore, products can be put on the market more quickly. Foreign production
sites can then be used to export regionally, which is particularly attractive in free-trade zones. Nevertheless, as emerging markets are
now slowing, it remains to be seen whether carmakers have overinvested.
106
Regional market volatility
Carmakers must face (particularly emerging) market volatility

A few short years ago, emerging
markets, particularly China, were
considered the El Dorado of the
automobile industry and carmakers
were rushing to use partnerships, JVs
and production relocation to ensure
their production and sales presence
in these growth areas. While there are
still sales to be made in such markets
due to fundamentals such as
population
and
low
vehicle
penetration, an economic slowdown,
particularly in China (with knock-on
effects for other countries) has taken
the wind out of the sails of carmakers
highly exposed to these regions,
leading to overcapacity.
It is now mature markets that are
seeing more growth potential with
Europe and the US expected to
continue their recovery, yet this
growth is unlikely to suffice to fill the
already existing overcapacity. Other
pockets of growth may include
countries such as Iran, Saudi Arabia
or Turkey but it remains to be seen if
these markets will also prove erratic.
Sales volume performance by region

units: change in %
2013-2014
GM International
Operations sales dropped
slightly in 2014 and given
Chinas slowdown, the
group may have to brace
itself for further
deceleration in the near
future.
2012-2013
GM International Operations
GM North America
GM Europe
GM has invested heavily in

South America, but slowing
growth in Brazil and
weakening South American
currencies have slowed
sales.
GM South America
-20% -15% -10%
-5%
0%
5%
10%
Source: GMs annual reports
107
Adjusting to slowing emerging markets
and are therefore readjusting their position, while keeping their options open
Faced with slowing demand in markets
in which they have heavily invested, such
as China, Brazil or Russia, carmakers have
been taking various measures. These
include putting the brakes on planned
capacity expansion, reining in existing
capacity and reducing costs by cutting
factory shifts and bonuses and
attempting to safeguard margins by
selling more higher-end cars.
In China, in which the majority of
carmakers
have
invested
heavily,
carmakers have been cutting their
official selling prices or offering
discounts. Despite suspicions of pricefixing (meaning that Chinese customers
are paying a premium), carmakers
indicate that reducing prices will weigh
heavily on their margins. Thus, carmakers
are attempting to balance margins by
seeking out ways to reduce costs by
taking an array of measures. Toyota for
example is planning on building a new
production line using the Toyota New
Global Architecture, which should allow
savings of up to 20%. Nissan and Honda
are also planning to achieve cost
reductions
by
updating
plants,
improving architecture, modularising
production platforms and sharing spare
parts.
Measures being taken by carmakers in slowing emerging markets

Stopping capacity
expansion and
employing less
existing capacity
or refining it (via
platforms)
Reducing staff
costs by cutting
salaries, bonuses
and shifts
Faced with
slowing
demand on
certain
emerging
markets,
carmakers
are
Reducing car sales

prices to boost
demand
Attempting to sell
more high-end
cars with higher
margins
Despite the reduced

growth in certain
emerging markets,
they continue to
expand (albeit at a
slower rate) and
their often huge
populations with low
vehicle penetration
continue to make
them key markets
for carmakers. Thus,
previous strategies
to ensure they are
present on such
markets are not
being stopped
completely, but
rather adapted.
108
4. Case Studies
109
The case of VWs emissions scandal
VWs emissions scandal reflects the pressure of the operating environment

Volkswagens
diesel
emissions
scandal that began in late 2015
perhaps reflects the general market
situation. Carmakers are currently
facing numerous challenges: stricter
environmental regulations, a more
competitive environment (due to
more globalised rivals as well as
slowing markets such as that of
China)
and
high
investment
requirements in areas such as
connectivity and driverless driving in
order to prevent this area being
dominated by high-tech companies.
Volkswagens actions to get around
environmental regulations reflects
what lengths carmakers will go to so
as to conserve market share in such
an environment.
It remains to be seen what the full
cost will be in terms of fines and
other compulsory payments such as
class action law suit settlements. It is
likely that the company will need to
engage in efficiency improvements
and investments cuts to help pay for
incurred costs. In addition, the
reputational damage for both the
company and German-made cars in
general is more difficult to measure.
Factors potentially leading to the VW emission scandal and the consequences
Stricter environmental
regulation
More competitive
market place
High
connectivity/autonomy
investment
requirements
Volkswagen is found to be
using software to falsify diesel
emission data during testing
Fines and class action

law suit settlements
Cost and investment

cuts
Tarnished reputation
for the company and
German industry
110
Hyundais entry into the premium market
Hyundai enters the premium market in an attempt to reverse its profit slide
With the premium market offering
good growth prospects as well as
higher profit margins, it is hardly
surprising
that
mass-market
carmakers are edging into the
premium
market.
Numerous
carmakers
have
been
making
strategic
acquisitions
or
are
revamping and revitalising their own
premium brands so as to benefit
from the perks of the premium
market. Hyundai is the latest to get
on board. It has been suffering from
falling profits over the last few years
with foreign competitors making the
Korean market more difficile and the
strong Korean won undermining
overseas sales. To escape this
downward slide, it has made the
move to launch a new global luxury
standalone car brand called Genesis.
The rebranding sees Hyundais
current Genesis line-up break off and
form its own entity. Hyundai is set to
launch six new Genesis models by
2020 to compete in the same bracket
as Toyotas Lexus or Nissans Infiniti.
Hyundais consolidated operating income and margin

units: billion euros; %
7
11%
10%
9%
8%
7%
6%
5%
4%
10
11
12
13
14
Given its falling profits, Hyundai is looking to the

premium-car market to boost its margins.
Global luxury car market size
unit: billion euros
400
350
300
250
200
150
100
2010
2011
2012
2013
2014
Source: Xerfi Global with Bain & Company: Fondazione Altagamma via Statista
111
The acquisition of Nokia Here by Daimler, BMW and VW
German carmakers acquisition of Nokia Here is both offensive and defensive

The rationale behind the purchase of Nokia Here by Volkswagen, Daimler and BMW
An offensive move:
to reinforce their position in the

connected and driverless car market
2.8bn
A defensive move:
Nokias digital
mapping business
to prevent the technology from being

sold to big tech competitors, allowing
them to monopolise such data and
leave carmakers out in the cold
Volkswagens Audi, Daimlers Mercedes-Benz and BMW have responded to the threat of competition from big tech in the era
of connected and automated car by purchasing Nokia Here, a digital mapping business. The 2.8bn deal gives the carmakers
access to highly-accurate maps that allow personalised location-based services for connected cars and driver-assistance
systems. It is also a defensive move, preventing such information from being monopolised by tech companies.
It remains to be seen whether such acquisitions will allow carmakers to compete with Silicon Valley players as continued
investment to develop such systems is, of course, required.
112
The forays of Chinese companies abroad
Chinese companies make forays abroad as the domestic market slows

Examples of actions taken by Chinese carmakers to expand outside of China
As the Chinese
market slows
In 2015, Geely announced it hopes to break into Europe and the
US markets in the new few years with a small crossover car, which
is likely to be an alternative-fuel model.
Chinese
automakers
are making
forays abroad
SAIC, together with its partners GM and Wuling Motors are

setting up a manufacturing facility in Jakarta, Indonesia. Lowcost minivans will be produced and sold in Indonesia, which
remains a high-potential market.
113
Teslas innovative business model and results
Teslas young and alternative business continues to require high investment

Teslas business model
Car considered an appliance
with upgradable software
and battery
Affordable electric vehicles
Innovation and design
Teslas net revenue, capital expenditure and operating margin

unit: billion euros; operating profit over net revenue
4,0
NET
REVENUE
6.7% from
regulatory
credits
2,0
0,0
2010
2011
2012
2013
2014
Direct sales to
customers/Showrooming
Teslas car sales are expanding, but not all its sales are
related to its vehicles. Its 100% electric vehicle range
means it earns a large number of regulatory credits such
as zero emission vehicle, greenhouse gas emission and
corporate average fuel economy credits, which it can then
sell to other automobile manufacturers. Such sales
generated almost 7% of net revenue in 2014. Credits are
location-specific as they depend on local authorities (such
as the State of California) so this income could be lost
with international expansion.
1,0
CAPITAL
0,5
EXPENDITURE
0,0
2010
2011
2012
2013
2014
2013
2014
0%
OPERATING
MARGIN
-50%
Teslas youth and the fact that its business model requires
the set-up of a charger network and battery development as
well as production capacity expansion means that capital
expenditure together with research and development
continue to grow and Tesla is yet to achieve a positive
operating margin.
-100%
-150%
2010
2011
2012
Source: Xerfi Global with companies, *for first three quarters
114
What Tata has gained from acquiring Jaguar Land Rover
Jaguar Land Rover is what is holding Tata together

Net revenue and profit before taxes with and without JLR
unit: billion euros
WITH JLR
WITHOUT JLR
40
NET
REVENUE
30
20
Jaguar Land Rovers sales

generated 83.06% of Tata
Motors revenue in 2015.
10
0
PROFIT
BEFORE
TAXES
3
2
1
0
Without Jaguar Land

Rovers contribution, Tata
Motors would be
unprofitable in 2014.
In the face of Tata Motors sliding

domestic Indian sales, the company is
able to hold its head above water
thanks to its Jaguar Land Rover (JLR)
unit, purchased from Ford in 2008.
In addition to revenue synergies,
increased international presence and
distribution and access to technology,
the acquisition also has more specific
benefits including greater scale for
Tatas steel business and offshore
income, making borrowing in dollars
a viable option and preferable to high
rupee financing rates.
-1
Source: Xerfi Global with companies, FY 2014
115
5. Company Profiles
116
Presentation
VOLKSWAGEN GROUP
2014 net consolidated revenue: 202.46 billion
Passenger Cars
74.6% of revenue
Commercial Vehicles
12.4% of revenue
Power Engineering
1.8% of revenue
Financial Services
11.2% of revenue
Fiscal year ended December 31, 2014
Headquarters
Wolfsburg, Germany
2014 key figures (consolidated)
Founded in 1937, Volkswagen is the worlds leading carmaker by sales

value and volume. The group engages primarily in the development,
production and marketing of passenger cars, light commercial vehicles,
trucks, buses and motorcycles.
Net sales
202.46bn
Operating margin
6.3%
Net margin
5.5%
Capex ratio
5.9%
R&D ratio
5.7%
Units sold
10.22m
Staff
583,000
Revenue by region (2014)
11 brands operate under the umbrella of the group, including Volkswagen,

Audi, Seat, Skoda, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Scania,
and Man.
In recent times, the group has been rocked by a serious scandal which risks
causing severe damage to its brand image and incurring huge costs. In
September 2015, it emerged that Volkswagen cheated emissions tests by
fitting a defeat device software on its diesel vehicles. That meant the cars
would initiate emissions control systems during testing, but, when not
being tested they could discharge nitrogen oxides far above the permitted
level.
Germany
19.4%
Europe & Other Regions
41.2%
North America
13.6%
South America
6.8%
Asia-Pacific
18.8%
117
Description of business
% OF SALES
OPERATING
MARGIN
PASSENGER CARS
74.6%
7.7%
Covers the development of vehicles as well as parts and components.

Main brands: Volkswagen, Audi, Ducati, Skoda, Seat, Bentley,
Porsche
COMMERCIAL VEHICLES
12.4%
3.6%
Development, production and marketing of light commercial

vehicles, trucks and buses, as well as associated components and
services under the Volkswagen, Scania and Man brands.
SEGMENT
DESCRIPTION
POWER ENGINEERING
1.8%
1.2%
Development and manufacturing of large diesel engines, turbo

compressors, industrial turbines, propulsion components, and testing
systems, among others.
FINANCIAL SERVICES
11.2%
8.5%
Provides financing for dealers and customers.

Includes banking and insurance activities, and fleet management
offerings.
118
Corporate strategy and recent events
SUSTAINED GROWTH ACROSS THE BOARD

In 2014, Volkswagen sold over 10m cars worldwide, spanning from passenger cars to heavy commercial vehicles. All of its main
passenger car brands enjoyed record sales: the Volkswagen brand sold 6.12m vehicles, Audi 1.74m, Porsche 189,800, Skoda
1.04m, and Seat 390,500 units. In China, the group sold 3.68m vehicles, an all-time high. So as to bolster future growth,
Volkswagen has continued to make investments in production capacities in the US, Russia and China. In 2015, the group is set to
introduce 60 new vehicles in the Chinese market, 15 of which are going to manufactured in China, for China.
In a 2bn investment, Volkswagen announces two new car facilities in China (Qingdao and Tianjin).
July 2014
April 2015
May 2015
August 2015
September 2015
Volkswagen Group is to manufacture the new Volkswagen midsize SUV in the Chattanooga plant, Tennessee, the
USA. This entails a 432m-expansion investment at the facility.
Volkswagen launches the new Golf Alltrack together with four new models in the Beetle line-up -two coups and
two cabriolets designed for the US market.
Volkswagen Group begins operations at its new Shanghai-Volkswagen (SVW) facility located in Changsha, southern
China. The site, whose yearly output amounts to 300,000 units, will manufacture the Volkswagen New Lavida, as well
as other Volkswagen and Skoda brands.
Volkswagen Group China consolidates its market leadership in the country. Combined sales of Volkswagen Group
China and Shanghai Volkswagen and FAW-Volkswagen, its two Chinese joint ventures, totaled 1,743,000 units in the
first half of 2015.
Volkswagen begins operations at its new engine facility in Kaluga, Russia. The engines produced will be fitted on
Volkswagen Polo and Skoda Rapid models manufactured at the Kaluga facility, as well as on the Volkswagen Jetta,
Skoda Octavia and Yeti, manufactured in partnership with GAZ at the Nizhny Novgorod facility.
SEAT has earmarked 3.3bn in R&D and capital investment for the development and marketing of four new models,
including the brands first compact SUV, over the next two years. SEAT is Spains largest car maker, encompassing
roughly 1% of Spains GDP and 4% of Catalonias GDP.
Volkswagen is unveiling its new Tiguan SUV at The International Motor Show in Frankfurt. The new line-up will
include four versions: the sporty Tiguan R-Line, the classic on-road, the off-road version and the Tiguan GTE a
plug-in hybrid concept car. The previous version of the Tiguan was sold in over 2.64 million units.
119
STRONGER COMMITMENT TO ELECTRO-MOBILITY: 20 ADDITIONAL MODELS BY 2020

Over 2015-2019, the Volkswagen Group will devote 85.6bn for product development and global growth. Two-thirds of the
amount are scheduled to go into developing more environmentally-friendly vehicles, with 20 new electric cars and plug-in
hybrids to be launched by 2020. Recently introduced or announced models include the Porsche Mission E, the Audi e-tron
quattro, and the Volkswagen Tiguan GTE.
February 2014
Volkswagen is launching the e-Golf, a fully-electric vehicle, with a range of up to 190km. Priced starting from
34,000, the model is Volkswagens second electric vehicle launched over the past six months.
April 2015
Audi to launch production of the A6 L e-tron in China. The plug-in hybrid model was designed specifically for the
Chinese market. The first A6 L e-tron is slated for production in early 2016.
June 2015
Volkswagen Group is teaming up with China-based SAIC Motor Corporation for future development and
production of electric vehicles at the Chinese joint venture SVW in Anting. In the coming four years, Volkswagen
intends to start manufacturing a total of 15 plug-in hybrid and fully electric vehicle models in China. The project is
part of a wider investment plan of Volkswagen group in China: by 2019, Volkswagen Group and its Chinese joint
ventures will disburse 22bn to expand/upgrade production capacity in China.
August 2015
Audi is teaming up with Samsung SDI and LG Chem to jointly work on battery-cell technology for the development
of its first battery-electric Audi SUV.
Audi is introducing its new Audi e-tron quattro a concept all-electric vehicle, at The International Motor Show in
Frankfurt. Audi aims to launch an all-electric, luxury sport SUV car in 2018.
September 2015
Volkswagen is unveiling its new Tiguan GTE a concept plug-in hybrid car not yet marketed, at The International
Motor Show in Frankfurt.
120
ADVANCING CONNECTIVITY AND AUTOMATED DRIVING TECHNOLOGIES

The world has been transitioning to a digital era, with the Internet of Things emerging as the next major technology trend. This
broader movement includes the automotive industry: today, cars can be connected to smart devices such as smartphones. In
the future, cars will be equipped with an increasing number of automated driving technologies. Volkswagen has been actively
developing next-generation solutions, which are currently being installed on its high-end brands, as part of its efforts to
transform its vehicles into smartphones on wheels.
July 2014
January 2015
April 2015
May 2015
July 2015
August 2015
Volkswagen Group is acquiring BlackBerry's European research and development centre in Bochum, Germany, and
transforming it into the Volkswagen Infotainment GmbH, as part of its strategy to enhance its car connectivity
expertise.
Audi launches the new Q7 vehicle, the first in the world to feature a wide-ranging selection of driving assistance
technologies, such as the adaptive cruise control with traffic jam assistant.
Audi is joining hands with DHL Parcel and Amazon Prime to deliver parcels directly to a car trunk based on keyless
access to a cars baggage compartment.
Porsche launches the Porsche Car Connect, enabling Apple Watch users to control and monitor a series of car
functions over any distance.
Audi acquires an interest stake in Cubic Telecom, an Ireland-based machine-to-machine technology group, in a
move to increase its expertise in the area of infotainment and connectivity.
Audi is working with Baidu and Huawei to enhance car connectivity features in China. Audi has teamed up with
Huawei Technologies to develop an Asia-specific LTE module. Audis partnership with Baidu involves iOS- and
Android-based platform integration between Audi cars and Baidu CarLife, a service similar to Android Auto and
Apple CarPlay.
Volkswagen Group, together with six national and international partners under the umbrella of the EU-wide Vcharge project, are aiming to advance research in the are of autonomous driving. The V-Charge trial vehicle is
based on a Volkswagen e Golf1 model.
Audi, BMW and Daimler to acquire HERE, Nokia Corporations mapping and location services business. This move
comes as the three carmakers intend to develop cloud-based maps and other mobility services for the automotive
industry.
Audi will participate in the "Cooperative Highly-Automated Driving" project funded by the German Federal Ministry
of Economics and Energy. The initiative aims to develop next-generation piloted driving technologies that Audi will
include in its future Audi A8 series.
Skoda launches the SmartGate in-car networking system compatible with Android, iOS and Windows platforms,
allowing users to access vehicle information (distance travelled, vehicle performance information) on their
smartphones.
121
CONTINUED DEVELOPMENT OF PREMIUM & LUXURY RANGES

The Volkswagen group comprises a diversified portfolio of passenger cars, spanning all price categories, from entry level to
premium and luxury. While the bulk of revenue and volume continued to be generated by its Volkswagen-branded cars, the
company has seen solid performance in its premium and luxury operations, driven by new model launches and sustained
industrial investment. Recent models introduced comprise the fifth-generation Macan, new Cayenne and Panamera variants for
Porsche; the Flying Spur V8, the Continental GT V8 S, and the Mulsanne Speed for Bentley; the Huracn for Lamborghini, etc.
February 2014
Porsche starts operations at its new facility in Leipzig. Total investment amounted to 500m. The facility will
manufacture the new Porsche Macan.
May 2014
Audi is launching 10 new ultrafuel-efficient, low-emission models in the Audi A3, A4, A5, A6 and A7 series. hereby,
the brands ultra product range has 22 models.
December 2014
Bentley is funnelling 60m to expand its headquarters in Crewe, the UK. The project involves the construction of a
new R&D facility to hasten development and marketing of the world's first ultra-luxury SUV slated for serial
production in 2016. In addition, Bentley has earmarked a total of 1bn for product and facility development over
the next three years.
Audi plans to make investments of over 24bn over the 2015-2019 period. Main initiatives include the development
of new models and technologies (70% of the total amount) as well as enhancing production facilities in Germany.
May 2015
Automobili Lamborghini, a subsidiary of the Volkswagen group, introduces a first SUV to its luxury vehicle line-up.
Annual output of the new model is set to reach 3,000 units, targeting markets such as the USA, China, the Middle
East, the UK, Germany and Russia.
122
Financial indicators
Consolidated operating income and margin
Consolidated net sales

250
units: billion euros; change in %

40%
200
30%
150
20%
100
10%
50
0%
14
Consolidated sales, net of returns

and
discounts.
Growth
in
consolidated sales is typically due
to an increase in sales volume or
an increase in unit prices.
Conversely,
a
decrease
in
consolidated
sales
typically
reflects a drop in sales volume or
a drop in unit prices.
12
7%
10
6%
5%
4%
3%
2%
-10%
8%
1%
09
09 10 11 12 13 14
10
11
12
13
14
R&D expenses and ratio
Number of vehicles sold

12
units: million of cars; change in %

24%
12
6,0%
10
20%
10
5,5%
16%
5,0%
12%
4,5%
8%
4,0%
4%
3,5%
0%
0
09 10 11 12 13 14
Operating margin is the ratio

between operating income and
net
sales
and
measures
profitability (the relationship
between revenue and costs). An
increase can reflect revenue
growing faster than costs.
Conversely, a decrease can reflect
revenue falling further than costs.
units: billion euros; % share
Number of vehicles sold, and

annual change in percentage.
R&D expenses are associated

with
the
research
and
development process of creating
new products or services. R&D is
often used as a proxy for
innovation.
R&D ratio is the percentage ratio
between R&D expenses and net
sales.
3,0%
09 10 11 12 13 14
Source: company information
123

Sales by segment
Sales performance by segment
units: billion euros; % of revenue
units: change in %
Passenger Cars
Commercial Vehicles
Power Engineering
Financial Services
3,73
1,8%
22,59
11,2%
2013-2014
Financial
Services
Revenue
breakdown
by
operating segment, expressed as
a percentage.
25,00
12,4%
2012-2013
Power
Engineering
Commercial
Vehicles
28,1%
Passenger Cars
150,6
8
74,6%
-10% 0%
10% 20%
Sales by region
Sales performance by region
units: change in %
Germany
North America
South America
Asia-Pacific
38,11
18,8%
39,37
19,4%
13,87
6,8%
27,62
13,6%
83,49
41,2%
Annual
sales
change
by
a percentage.
2013-2014
2012-2013
Asia-Pacific
South America
Revenue breakdown by regional

market,
expressed
as
a
percentage.
-20,7%
North America
Europe & Other
Regions
Annual change of revenues by

regional market, expressed as a
percentage.
Germany
-10%-5% 0% 5% 10%
124

Profitability ratios
Liquidity ratios
units: %
ROE
Quick ratio
ROA
30%
8%
7%
25%
6%
20%
5%
15%
4%
3%
10%
2%
5%
1%
0%
0%
09
10
11
12
13
Return-on-equity (ROE) is the

percentage ratio between net
income
and
total
equity.
Return-on-assets
is
the
income and total assets. Both
ratios measure the efficiency at
which the company uses its
equity and assets to generate
profits.
1,2
Current ratio (current assets

divided by current liabilities)
indicates whether the company
has enough resources to pay its
short term debt (12 months).
Quick ratio (current assets net
from inventories, divided by
current liabilities) measures the
companys immediate capacity to
repay its short term debt.
1,1
1,0
0,9
0,8
0,7
0,6
14
09
Solvency ratios
Current ratio
10
11
12
13
14
Free cash flow and capital expenditure

Debt-to-equity
FCF
Interest coverage
4,5
12 Debt-to-equity
is the ratio
between total liabilities and total
10
equity and reflects the companys
8 relative amount of debt. Interest
coverage (EBITDA divided by net
6 interest expenses) reflects the
company's debt burden, i.e. its
4 ability
to pay interest on
outstanding
debt. The lower this
2
ratio, the more the company is
0 burdened by interest expenses.
4,0
3,5
3,0
2,5
2,0
1,5
09
10
11
12
13
14
Capex ratio
6,5%
6,0%
5,5%
5,0%
4,5%
-2
4,0%
-4
Capex ratio is the percentage

ratio
between
capital
expenditures and net sales. Free
cash flow (cash from operating
activities
minus
capital
expenditures)
reflects
the
companys capacity to generate
cash net of capital investments.
3,5%
09 10 11 12 13 14
125
Statistical tables
Year
Consolidated net
sales
Annual % change
Consolidated
operating income
Consolidated
operating margin
Net income
Net margin
2009
105.19
-7.6%
1.86
1.8%
0.91
0.9%
2010
126.88
20.6%
7.14
5.6%
7.23
5.7%
2011
159.34
25.6%
11.27
7.1%
15.80
9.9%
2012
192.68
20.9%
11.50
6.0%
21.88
11.4%
2013
197.01
2.2%
11.67
5.9%
9.15
4.6%
2014
202.46
2.8%
12.70
6.3%
11.07
5.5%
units: billion euros; % change; operating income and net income as % of sales
Year
R&D expenses
R&D ratio
Annual % change
2009
5.43
5.2%
6.31
0.6%
2010
6.87
5.4%
7.28
15.3%
2011
7.23
4.5%
8.36
14.9%
2012
8.85
4.6%
9.35
11.8%
2013
10.19
5.2%
9.73
4.1%
2014
11.55
5.7%
10.22
5.0%
units: billion euros; % share; % change
126
Statistical tables
Segment
Passenger Cars
Commercial
Vehicles
Power
Engineering
Financial
Services
2014 sales
% of total
sales
Segment
margin (%)
2013 sales
2013 % share
2013-2014
change
2012 sales
2012-2013
change
150.68
74.6%
7.7%
146.63
74.6%
2.8%
148.16
-1.0%
25.00
12.4%
3.6%
25.96
13.2%
-3.7%
20.26
28.1%
3.73
1.8%
1.2%
3.85
2.0%
-3.1%
4.22
-8.9%
22.59
11.2%
8.5%
20.09
10.2%
12.4%
18.15
10.7%
units: billion euros; % share; % change; operating income as % of sales
Region
2014 sales
% of total
sales
2013 sales
2013 % share
2013-2014
change
2012 sales
2012-2013
change
Germany
39.37
19.4%
37.71
19.1%
4.4%
37.73
-0.1%
83.49
41.2%
79.35
40.3%
5.2%
77.65
2.2%
North America
27.62
13.6%
27.43
13.9%
0.7%
25.05
9.5%
South America
13.87
6.8%
17.50
8.9%
-20.7%
18.31
-4.5%
Asia-Pacific
38.11
18.8%
35.02
17.8%
8.8%
33.94
3.2%
127
Statistical tables
Year
Total assets
Total liabilities
Total equity
Debt ratio
ROE
ROA
Interest
expenses
Interest
coverage ratio
2009
177.18
161.96
37.43
4.33
2.4%
0.5%
1.15
1.62
2010
199.39
128.47
48.71
2.64
14.8%
3.6%
1.15
6.19
2011
253.77
246.29
63.35
3.89
24.9%
6.2%
1.15
9.84
2012
309.52
171.77
82.00
2.09
26.7%
7.1%
1.40
8.22
2013
324.33
234.30
90.04
2.60
10.2%
2.8%
1.51
7.71
2014
351.21
261.02
90.19
2.89
12.3%
3.2%
1.45
8.74
units: billion euros; percentage, ratio
Year
Current assets
Current
liabilities
Quick ratio
Current ratio
Operating
cash flow
Capital
expenditure
Capex ratio
Free cash flow
2009
77.78
69.53
0.92
1.12
12.74
5.78
5.5%
6.96
2010
85.94
76.90
0.89
1.12
11.46
5.66
4.5%
5.80
2011
105.64
101.24
0.77
1.04
8.50
7.93
5.0%
0.57
2012
113.06
105.53
0.80
1.07
7.21
10.27
5.3%
- 3.06
2013
122.19
118.63
0.79
1.03
12.60
11.39
5.8%
1.21
2014
131.10
130.71
0.76
1.00
10.78
12.01
5.9%
- 1.23
128
Presentation
5.2. Toyota Motor
TOYOTA MOTOR
Automotive
89.6% of revenue
Financial Services
5.9% of revenue
All other
4.5% of revenue
Fiscal year ended March 31, 2015
Headquarters
Toyota City, Aichi prefecture, Japan
Toyotas roots can be traced back to 1933 when it started operations as the
automobile subsidiary of Toyota Industries Corporation. Today, Toyota is
the worlds second largest by sales value and third largest by volume, with
8.97 units sold in the last fiscal year (compared to 10.22m for the
Volkswagen group and 9.93 for GM).
Net sales
Operating margin
194.01bn
10.1%
Net margin
8.0%
Capex ratio
12.3%
R&D ratio
3.7%
Vehicles sold
Staff
8.97 million
344,109
The company manufactures and markets from sub-compact and luxury

cars, to sport utility vehicles, trucks and buses under the Toyota, Lexus,
Daihatsu and Hino brands.
Toyota introduced the worlds first mass-produced hybrid car, the Toyota
Prius. Over the past three years, the group has continued to diversify its
line-up of eco-friendly hybrid vehicles. Moreover, in December 2014,
Toyota began mass-production and sales of Mirai, its first fuel-cell car.
Japan
30.6%
North America
34.6%
Europe
Asia
Other
9.9%
16.6%
8.2%
129
5.2. Toyota Motor
SEGMENT
AUTOMOTIVE
FINANCIAL SERVICIES
ALL OTHER
% OF SALES
89.6%
5.9%
4.5%
OPERATING
MARGIN
9.3%
21.8%
5.2%
DESCRIPTION
Toyota designs, produces and markets a wide range of vehicles:
subcompact (Yaris, Aygo),
compact (Corolla),
mini (Daihatsu-branded),
mid-sized (Camry, Reiz for the Chinese market, Avensis),
luxury (Lexus),
sports (Scion, the Lexus RC),
sport utility vehicles (Sequoia, 4Runner, RAV4, Highlander, FJ Cruiser,
Land Cruiser),
pickup trucks (Tacoma, Tundra),
minivans (Alphard, Vellfire),
as well as trucks and buses under the Hino brand.
Provision of financing to dealers and their customers for car
purchasing or leasing.
Comprises design and manufacture of prefabricated housing, the

operation of a Japanese website for automobile information
(GAZOO.com), and marketing of telecom services for KDDI (au
brand) in Japan.
130
5.2. Toyota Motor
UPGRADE PRODUCTION CAPACITIES AT REGIONAL HUBS

Toyota has been reinforcing its manufacturing operations across the globe, with a focus on key growth markets in Asia. In a move to
enhance its product line-up, Toyota is carrying out expansion investments at facilities in Indonesia, Russia, Brazil and, last but not least,
China. This follows recently completed upgrading works in India, Egypt, etc. Toyota has sought to establish production facilities in each of
its key regions, in order to cater to regional needs. For instance, in 2014, 74.4% of the total number of cars sold in North America were
manufactured in North America. Nonetheless, Japan continued to account for the highest share of production, with 4,125,000 out of the
8,929,887 units produced in the fiscal year ending March 31, 2015.
Toyota has started construction of its new powertrain facility located in Karawang, Indonesia. The facility will have a
yearly output of 216,000 units, half of which are destined for export markets.
February 2014
Toyota will export the Agya-based compact car model produced by Daihatsu, a Toyota subsidiary, in Indonesia to
the Philippines. The model will be marketed under the Toyota brand.
Toyota will cease production at the Altona Plant in Australia and use the facility as a sales and distribution centre
starting in 2018.
December 2014
Toyota is planning to double production capacity at its facility in Saint Petersburg, Russia to 100,000 vehicles by the
end of 2015. At present, the facility manufactures the Camry model for the Russian, Belarus and Kazakh markets.
The plant will accommodate production of Toyota RAV4 in 2016.
January 2015
Toyota to boost production of its Etios model at the Sorocaba Plant in So Paulo, Brazil, from 74,000 to 108,000
units by the start of 2016.
April 2015
Toyota is investing 100m in a new production line at its GAC Toyota Motor joint venture facility in Guangzhou,
China, which manufactures models such as the Highlander, Camry (including hybrid), Camry Classical, Levin, Yaris L,
and E'z. This will boost capacity by approximately 100,000 units.
August 2015
Toyota is adding a new production line at its Tianjin Faw Toyota Motor joint venture facility in Tianjin, China, which
manufactures models such as the Crown, Reiz, Corolla, Corolla EX, and Vios. This will boost capacity by
approximately 100,000 units. However, overall capacity at the plant will remain stable, as the group plans to retire
an out-dated line of production by the end of 2017.
131
5.2. Toyota Motor
TOWARDS NEW MODELS OF MOBILITY

Since the 2011 launch of the Toyota Prius hybrid model, Toyota has emerged as a leading manufacturer of eco-friendly
automobiles. The company continued to enrich its portfolio of hybrids with the introduction of next generation Voxy HV/Noah
HV in January 2014, the Esquire HV in September 2014, and the Alphard and Vellfire in January 2015. At the same time, the
groups decade-long efforts to develop a mass-marketable fuel cell vehicle have culminated in the launch of the Mirai model
(Mirai translates into future in Japanese) at the end of 2014. The Mirai, priced at above 50,000, is expect to sell 700 units in
2015, and approximately 3,000 units in 2017.
May 2014
Toyota, Nissan, Honda and Mitsubishi launch Nippon Charge Service, a joint venture that will see the development
of charging stations for electric-powered vehicles (including plug-in hybrids) across Japan.
June 2014
Toyotas i-Road and Coms ultra-compact electric cars will be accessible via a car-sharing project to be launched in
October 2014 by the City of Grenoble, France.
October 2014
Toyota is preparing to test joint vehicle charging infrastructure for both plug-in hybrid and electric vehicles. The
trials will take place in Aichi Prefecture during the November 2014-March 2015 period.
November 2014
Toyota expands its plug-in hybrid charging network to include stations managed by Nippon Charge Service.
Through the new fee-based service, Prius PHV owners will be able to access new charging stations across Japan.
Toyota launches the Mirai, the first mass marketed fuel cell car in the automotive industry. The Mirai can be
recharged in about five minutes and discharges only water vapour into the atmosphere.
January 2015
Toyota plans to increase production of Mirai-branded fuel cell vehicles to 700 units in 2015 and 2,000 in 2016 based
on current levels of demand.
February 2015
Based on i-Road, its three-wheeled electric vehicle, Toyota, in collaboration with the Times Car Plus car sharing
service, is testing a car sharing service in Tokyo.
July 2015
Toyota Motor, Nissan Motor, and Honda Motor to jointly participate in the development of refuelling stations for
fuel-cell vehicles in Japan.
August 2015
Toyota exceeds 8 million units in sales of hybrid vehicles. To date, the groups hybrid line-up comprises over 30
models, including a plug-in hybrid. Recently launched models include the Lexus RC300h, the Sienta Hybrid, etc.
132
5.2. Toyota Motor
BOOST DEVELOPMENT IN NORTH AMERICA

North America is Toyotas largest regional market, encompassing a 34.6% slice of revenue (compared to 30.6% for Japan).
Toyota models such as Corolla, Highlander, Tacoma, and, Tundra, as well as the Lexus RX350 have been in high demand in recent
years. In order to enhance operations in the region, the group is seeking to consolidate its North American production in Mexico
and the south of the US. Toyota is establishing a new R&D facility in Michigan, the USA, and investing in a new, regional
headquarters in Texas. Other upgrades have been completed at its Mississippi factory (which produces Corollas for export to
Latin America and the Caribbean), Indiana, and Alabama. Most importantly, Toyota is bringing Lexus production to the US, for
the first time in history: a 300m investment project will see the Lexus ES350 manufactured at the Georgetown, Kentucky facility.
January 2015
April 2015
June 2015
Toyota is on track to launch the first ever Lexus production line in the US. A 300m investment project will see the
Lexus ES350 manufactured at the Georgetown, Kentucky facility whose annual output will reach 50,000 units.
Toyota will build a new factory in Guanajuato, Mexico. The group aims to shift Corolla production from Ontario,
Canada, to the new facility in Mexico by 2019. This is part of Toyotas efforts to consolidate North American
production in Mexico and the south of the US.
Toyota to expand its R&D centre located in Michigan, the USA. The 126m project includes the addition of a vehicle
development facility and a supplier centre facility. In addition, Toyota will boost capacity of its engine development
centre.
Toyota announces plans to build its new North America headquarters in Plano, Texas, the USA. This is part of the
groups strategy to strengthen its operations in North America.
NEW PARTNERSHIPS TO MAKE BETTER CARS

The automotive industry has seen increased consolidation over the past decade. Despite ever fiercer competition in the sector,
companies are tying an increasing number of partnerships in order to achieve economies of scale and cut product development
costs. Toyota has also been riding these trends. For instance, it has recently announced a collaboration agreement with Mazda
for the joint development of environmental and safety technologies, and with Ford for in-vehicle infotainement technologies.
June 2014
Toyota Motor and Panasonic are collaborating for the development of technologies that connect cars to home
appliances. The two companies will develop new applications to control home appliances remotely from a vehicle.
May 2015
Toyota Motor and Mazda Motor sign an agreement which sets the basis for future joint development of vehicle
products and technologies. The two companies will pool their respective strengths in environmental and safety
technologies.
June 2015
Toyota Motor is teaming up with Ford Motor to advance the development of SmartDeviceLink technologies, in-car
telematics, for Toyota- and Lexus-branded vehicles.
133
5.2. Toyota Motor

250

25%
20%
200
15%
150
10%
5%
100
0%
50
-5%
25

and
discounts.
Growth
in
Conversely,
a
decrease
in
consolidated
sales
typically
10%
20
8%
15
6%
10
4%
2%
-10%
0%

units: million cars; change in %
25%

8
5%
20%
8
15%
6
10%
4%

4
3%
5%
2
4
0%
2
-5%
09 10 11 12 13 14

net
sales
and
measures
09 10 11 12 13 14
09 10 11 12 13 14
10
12%

with
the
research
and
innovation.
sales.
2%
09
10
11
12
13
14
134
5.2. Toyota Motor

Sales by segment

Automotive
units: change in %
2013-2014
2012-2013
Financial Services
All Other
8,95
4,5%
11,83
5,9%
All Other
Revenue
breakdown
by
a percentage.
Annual
sales
change
by
a percentage.
Financial
Services
Automotive
178,53
89,6%
0%
10%
20%
30%
Sales by region
units: change in %
Japan
Europe
Other*
North America
Asia
2013-2014
2012-2013
Other*
32,28
16,6%
15,98
8,2%
Asia
59,40
30,6%

market,
expressed
as
a
percentage.
Europe

percentage.
North America
19,17
9,9%
Japan
67,18
34,6%
-10% 0% 10% 20% 30%
Source: company information; *Other consists of Central and South America, Oceania, Africa and the Middle East.
135
5.2. Toyota Motor

Liquidity ratios
units: %
ROE
Quick ratio
ROA
14%
5%
12%
4%
10%
8%
3%
6%
2%
4%
1%
2%
0%

income and total equity. Returnon-assets is the percentage ratio
between net income and total
assets. Both ratios measure the
efficiency at which the company
uses its equity and assets to
generate profits.
0%
09
10
11
12
13
Current ratio
1,4

1,2
1,0
0,8
0,6
14
09
Solvency ratios
10
11
12
13
14

Debt-to-equity
FCF
Interest coverage
2,0
140 Debt-to-equity
is the ratio
between
total
liabilities
and total
120
80 coverage (EBITDA divided by net
interest expenses) reflects the
60 company's debt burden, i.e. its
to pay interest on
40 ability
outstanding debt. The lower this
20 ratio, the more the company is
burdened by interest expenses.
0
1,8
1,6
1,4
09
10
11
12
13
14
Capex ratio
10
16%
12%
4
2
8%
0
-2

ratio
between
capital
activities
minus
capital
expenditures)
reflects
the
4%
09 10 11 12 13 14
136
Statistical tables
5.2. Toyota Motor
Year
Consolidated net
sales
Annual % change
Consolidated
operating income
Consolidated
operating margin
Net income
Net margin
2009
135.00
-7.7%
1.05
0.8%
1.49
1.1%
2010
135.30
0.2%
3.34
2.5%
2.91
2.1%
2011
132.38
-2.2%
2.53
1.9%
2.02
1.5%
2012
157.18
18.7%
9.41
6.0%
6.85
4.4%
2013
183.02
16.4%
16.33
8.9%
12.99
7.1%
2014
194.01
6.0%
19.59
10.1%
15.48
8.0%
Year
R&D expenses
R&D ratio
Annual % change
2009
5.17
3.8%
7.24
n/a
2010
5.20
3.8%
7.30
0.9%
2011
5.56
4.2%
7.34
0.5%
2012
5.75
3.7%
8.87
20.8%
2013
6.49
3.5%
9.11
2.8%
2014
7.16
3.7%
8.97
-1.6%
units: billion euros; % share; million units; % change
137
Statistical tables
5.2. Toyota Motor
Segment
2014 sales
% of total
sales
Segment
margin (%)
2013 sales
2013 % share
2013-2014
change
2012 sales
2012-2013
change
Automotive
178.53
89.6%
9.3%
169.41
90.2%
5.4%
145.46
16.5%
Financial
Services
11.83
5.9%
21.8%
10.12
5.4%
16.9%
8.34
21.4%
All Other
8.95
4.5%
5.2%
8.20
4.4%
9.1%
7.60
8.0%
2014 sales
% of total
sales
Region
margin (%)
2013 sales
2013 % share
2013-2014
change
2012 sales
2012-2013
change
Japan
59.40
30.6%
18.8%
60.79
33.2%
-2.3%
56.35
7.9%
North America
67.18
34.6%
6.2%
56.55
30.9%
18.8%
43.94
28.7%
Europe
19.17
9.9%
3.0%
18.62
10.2%
2.9%
14.27
30.5%
Asia
32.28
16.6%
9.3%
31.88
17.4%
1.2%
28.91
10.3%
Other*
15.98
8.2%
5.0%
15.18
8.3%
5.3%
13.71
10.7%
Region
138
Statistical tables
5.2. Toyota Motor
Year
Total assets
Total liabilities
Total equity
Debt ratio
ROE
ROA
Interest
expenses
Interest
coverage ratio
2009
216.20
138.33
73.80
1.87
2.0%
0.7%
0.24
4.42
2010
212.41
138.81
73.60
1.89
4.0%
1.4%
0.21
15.97
2011
218.35
143.19
75.16
1.91
2.7%
0.9%
0.16
15.51
2012
252.77
166.23
86.54
1.92
7.9%
2.7%
0.16
57.51
2013
295.19
192.11
103.07
1.86
12.6%
4.4%
0.14
116.77
2014
336.81
220.42
119.59
1.84
12.9%
4.6%
0.16
120.26
Year
Current assets
Current
liabilities
Quick ratio
Current ratio
Operating
cash flow
Capital
expenditure
Capex ratio
Free cash flow
2009
93.13
76.12
1.09
1.22
18.23
10.24
7.6%
7.99
2010
84.27
76.87
0.98
1.10
14.42
12.05
8.9%
2.37
2011
87.77
83.93
0.91
1.05
10.35
10.91
8.2%
- 0.57
2012
98.20
91.98
0.93
1.07
17.46
14.06
8.9%
3.40
2013
111.97
104.58
0.94
1.07
25.97
19.08
10.4%
6.89
2014
127.77
117.05
0.96
1.09
26.26
23.92
12.3%
2.34
139
Presentation
5.3. General Motors
GENERAL MOTORS
GMNA
65.0% of
revenue
GME
14.3% of
revenue
GMIO
GMSA
GM Financial
9.2% of revenue 8.4% of revenue 3.1% of revenue
Headquarters
Detroit, Michigan, the USA
Established in 1908, GM is Americas leading carmaker and a global player in the

automotive industry. The group operates under the following business units: GM
North America, GM Europe, GM International Operations, GM South America and
GM Financial.
GM sold 9.93 million cars in 2014, primarily under the Buick, Cadillac, Chevrolet and
GMC brands. Secondary brands are Holden, Opel and Vauxhall in Europe; Baojun
and Wuling in China. In light of growing demand for its luxury models in the US
and China over the past few years, GM established Cadillac as an individual
business unit within the group in September 2014.
Amidst growing sales momentum, GMs reputation has been tarnished as the US
Department of Justice accused the group of wilfully and knowingly concealing
evidence over a faulty ignition switch which prevented the airbags from deploying
in a car crash, resulting in over 100 deaths and 1,000 injuries. GM has settled the
case in September 2015, accepting to pay a penalty of about 600m, and to be
placed under monitoring.
Net sales
116.57bn
Operating margin
2.6%
Net margin
1.8%
Capex ratio
4.5%
R&D ratio
4.7%
Unit sales
9.93 million
Staff
Sales volume by region (2014)
216,000
GMNA
GME
GMIO
GMSA
34.4%
12.7%
44.1%
8.8%
140
5.3. General Motors
SEGMENT
GMNA
GME
% OF SALES
65.0%
14.3%
OPERATING
MARGIN
DESCRIPTION
6.5%
GM North America designs, develops and produces vehicles under the

Buick, Cadillac, Chevrolet and GMC brands, particularly in the SUV and
pick-up truck categories.
Deliveries in North America amounted to 3,413,00 units in 2014 - a
16.9% share of the market.
-6.2%
GM Europe designs, develops and produces vehicles under the Opel and
Vauxhall brands. It operates primarily in Germany, the UK and Russia.
Deliveries in Europe amounted to 1,256,000 units in 2014 - a 6.7% share
of the market.
GMIO
9.2%
8.5%
GM International Operations covers activities in Asia, Africa and the

Middle East.
In China, GM operates under a series of 11 joint ventures with local
companies producing models branded Baojun, Jiefang and Wuling.
Deliveries in Asia/Pacific, Middle East and Africa amounted to 4,378,000
units in 2014 - a 10.2% share of the market.
In China, GM sold 3,540,000 units in 2014, with a 14.8% market share.
GMSA
8.4%
-1.4%
GM South America comprises activities in Brazil, Venezuela, etc.

Deliveries amounted to 878,000 units in 2014 (out of which 579,000 in
Brazil) - a 16.6% share of the market.
GM FINANCIAL
3.1%
16.5%
GM Financial operates through Ally Financial and other entities,

providing consumer loans and leases. Activities span North America,
Europe, Latin America and China.
141
5.3. General Motors
FOCUS ON THE US: NEW SUV AND PICK-UP LAUNCHES; BOOST CADILLAC GROWTH
In recent years, GMs performance in the US has reached historical highs on the back on new product launches, particularly in
mid-sized and large pick-ups and SUVs (Chevrolet Colorado, GMC Canyon) as well as in its luxury line-up (Cadillac Escalade).
GM foresees growing demand in coming years, with the overall market expected to exceed 17m units in sales, a level unseen
since 2001. Demand for small SUVs has been particularly buoyant in the US, and GM has positioned itself to grow in the
category with the recent launch of its Chevrolet Trax. In addition, building on strong performance in its luxury portfolio, GM has
established Cadillac as a separate business unit in 2014 in a move to bolster the brands development across the globe (five new
models are slated to be launched in North America in 2015, nine in China over the next five years, operations are set to
commence in Russia in coming years, etc.)
April 2014
GM unveils the Chevrolet Trax, a new vehicle in the small-SUV category, to be marketed globally.
GM inaugurates in Phoenix its fourth Information Technology Innovation Center in the US.
August 2014
GM introduces the latest model in its Chevrolet Volt electric vehicle line-up. GMs Volt has recorded stronger sales,
especially from non-GM customers. The company claims that seven of 10 new Volt buyers in 2013 did not
previously own a GM car - the majority of these customers traded in Toyota Priuses.
September 2014
Cadillac is established as an individual business unit within the GM group.
March 2015
Cadillac lifts the lid on the CT6, a premium luxury sedan and the eighth of a series of new vehicles meant to enhance
the Cadillac portfolio. By 2020, GM will have spent a total of 15bn for product development and marketing, in an
effort to position the brand as the ultimate expression of comfort, luxury and connectivity.
GM launches the 2016 GMC Terrain and Terrain Denali, new models in its line-up of compact SUV vehicles, at the
New York International Auto Show.
May 2015
September 2015
GM to allocate 0.9bn in order to upgrade its full-size truck facility in Fort Wayne, Indiana, the USA. The initiative is
part of GMs efforts to upgrade manufacturing in the US, with nearly 4bn in investment to be disbursed over the
next three years.
GM reaches a settlement with US authorities over a faulty ignition switch which prevented the airbags from
deploying in a car crash, which resulted in over 100 deaths and 1,000 injuries. GM was charged with wilfully and
knowingly concealing evidence about the switches which were fitted on-board approximately 2.6m compact cars
produced over the 2002-2007 period. GM will pay a penalty of about 600m, and will be placed under the
supervision of an independent observer.
142
5.3. General Motors
ENHANCE THE LOCAL WEB OF MANUFACTURING AND SERVICE PARTNERSHIPS IN CHINA

China has been one the groups key strategic markets, with local operations conducted through a multitude of joint ventures in
order to develop vehicles that respond to the needs of Chinese drivers. GM and its partners sold 3,540,000 cars in China in 2014
(whereas GMs sales in the US reached 2,935,000 units): 1,710,025 units via Shanghai GM, 1,787,931 units via SAIC-GM-Wuling
and 41,702 units via FAW-GM. Best-selling GM models were Buick (Excelle, Regal, Encore, the recently launched Envision) which
totalled 919,518 units, Chevrolet (Cruze, Sail, Malibu) with 717,007 units, and Cadillac (XTS, SRX.) whose sales volume rose
50% year-on-year to 73,500 units in 2014. Local brands such as Baojun and Wuling recorded sales of 1,608,571 units in 2014.
May 2014
Shanghai GM inaugurates the Buick aftersales store on Tmall.com. The latter is the online retail platform of Alibaba
Group, a leading Chinese e-commerce company.
July 2014
SAIC-GM-Wuling lays the foundation stone for its new R&D facility in Liuzhou, Guangxi. With this move, GM aims to
bolster development of new cars tailored to the taste of the Chinese customer.
October 2014
Shanghai GM will be the first automaker in China to install embedded 4G LTE services on-board its cars. Starting in
2015, the joint ventures vehicles will feature the OnStar 4G LTE, GMs high-speed connectivity technology.
December 2014
The SAIC-GM-Wuling team starts operations at its new facility in Chongqing. A project to add capacity - the
second phase of production - is in early stages.
April 2015
GM and SAIC set up the SAIC Motor Insurance Sales joint venture to provide insurance services for Buick, Cadillac
and Chevrolet customers in China.
July 2015
SAIC-GM-Wuling introduces the Baojun 560, the first SUV in the Baojun line-up, designed specifically for the
Chinese market. SAIC-GM-Wuling started marketing Baojun-branded vehicles in 2010. The Baojun family includes a
630 sedan, Le Chi mini-car, the 610 hatchback and the 730 MPV.
SAIC GM to start exports of Chevrolet Sail 3, third-generation Chevrolet Sail cars produced in China, to Chile and
Peru. SAIC GM hopes to start exports to other markets in South America, as well as to Africa and Asia.
SAIC-GM-Wuling launches the Wuling Hong Guang S1 MPV, the third-generation model in Hong Guang product
line-up.
August 2015
GMs SAIC-GM-Wuling joint venture in China delivers the first Baojun 560 SUV off the new production line at its
Baojun plant in Liuzhou, Guangxi. Total capacity added at the facility amounts to 400,000 vehicles, 400,000 engines
and 200,000 new energy vehicles a 1bn-euro investment.
143
5.3. General Motors
INVEST IN OTHER KEY MARKETS, CEASE UNPROFITABLE OPERATIONS

GM has continued to fine-tune its manufacturing footprint in recent years, responding to evolving demand trends in specific
regions and countries. At one end of the spectrum, the group announced the withdrawal of Opel from Russia and plans to stop
the development of the brand in China in March 2015. At the other end of the spectrum, GM has boosted investment in
manufacturing facilities and product development in Brazil, Indonesia, India, etc. The group will tap growing demand in the
premium category in Russia, by converting its existing Opel facility in St. Petersburg to develop and manufacture Cadillac
models.
March 2014
GM to pour 245m into capacity expansion at its Ruesselsheim plant in Germany. The facility will hence
accommodate production of new Opel models, including one model that will be rebranded Buick for sales in the US
market.
August 2014
GM intends to invest over 2bn in Brazil over the 2014-2018 period. The budget is earmarked chiefly for new vehicle
development, particularly of the Chevrolet brand.
September 2014
GMs first Chevrolet for export to Chile rolls off production line at the Talegaon plant in Pune, India. GMs facilities in
India - Talegaon and Halol have an annual output of 280,000 vehicles.
February 2015
SAIC-GM-Wuling, the joint venture between GM, SAIC and Wuling Motors in China, will set up manufacturing
operations in Indonesia. Plans are to produce Wuling-branded vehicles at a facility that will be built close to the
capital city.
March 2015
GMs Opel brand will withdraw from the Russian market by the end of the year as part of the groups effort to focus
on the premium segment. GMs will halt operations at its St. Petersburg facility as it prepares the ground for the
development and production of its Cadillac brand in Russia.
144
5.3. General Motors

120

35%
115
30%
25%
110
20%
105
15%
100
10%
95
5%
90
11
12
13

and
discounts.
Growth
in
Conversely,
a
decrease
in
consolidated
sales
typically
5%
4%
3%
2%
1%
0
11
12
13
14

10
units: million units; change in %

40%
30%
20%

7
6%
5%
4%

10%
0%
10
11
12
13
14

net
sales
and
measures
0%
10
14
7%
6%
0%
10

with
the
research
and
innovation.
sales.
3%
10
11
12
13
14
145
5.3. General Motors

Sales by segment

GMNA
GME
GMIO
units: change in %
2013-2014
2012-2013
GMSA
GM Financial
3,63
3,1%
GM Financial
GMSA
9,80
8,4%
10,76
9,2%
Revenue
breakdown
by
a percentage.
Annual
sales
change
by
a percentage.
GMIO
GME
16,62
14,3%
75,66
65,0%
GMNA
-50%
0%
50% 100%
Sales volume by region
Sales volume performance by region
units: million units; % of total units sold
units: change in %
GMNA
GME
GMIO
2013-2014
GMSA
2012-2013
GMSA
,0,88
8,8%
,3,41
34,4%
,4,38
44,1%
,1,26
12,7%
Sales volume breakdown by

percentage.
GMIO
Annual change of sales volume

by regional market, expressed as
a percentage.
GME
GMNA
-20%
-10%
0%
10%
146
5.3. General Motors

Liquidity ratios
units: %
ROE
Quick ratio
ROA
25%
6%
20%
5%
4%
15%
3%
10%
2%
5%
1%
0%

generate profits.
0%
10
11
12
13
Current ratio
1,4

1,2
1,0
0,8
0,6
14
10
Solvency ratios
11
12
13
14

Debt-to-equity
FCF
Interest coverage
14 Debt-to-equity
is the ratio
between
total
liabilities
and total
12
8 coverage (EBITDA divided by net
interest expenses) reflects the
6 company's debt burden, i.e. its
to pay interest on
4 ability
outstanding debt. The lower this
2 ratio, the more the company is
0 burdened by interest expenses.
4
3
2
1
0
10
11
12
13
14
Capex ratio
6%
5%
4%
3%
2%
1%

ratio
between
capital
activities
minus
capital
expenditures)
reflects
the
0%
10
11
12
13
14
147
Statistical tables
5.3. General Motors
Year
Consolidated net
sales
Annual % change
Consolidated
operating income
Consolidated
operating margin
Net income
Net margin
2010
101.37
29.6%
4.86
4.8%
3.49
3.4%
2011
112.35
10.8%
6.94
6.2%
5.67
5.0%
2012
113.83
1.3%
4.59
4.0%
3.63
3.2%
2013
116.20
2.1%
3.99
3.4%
2.82
2.4%
2014
116.57
0.3%
3.00
2.6%
2.10
1.8%
Year
R&D expenses
R&D ratio
Advertising expenses
Advertising ratio
2010
5.20
5.1%
3.18
3.1%
2011
6.07
5.4%
3.35
3.0%
2012
5.53
4.9%
4.04
3.5%
2013
5.38
4.6%
4.11
3.5%
2014
5.53
4.7%
3.89
3.3%
units: billion euros; % of sales
148
Statistical tables
5.3. General Motors
2014 sales
% of total
sales
Segment
margin (%)
2013 sales
2013 % share
2013-2014
change
2012 sales
2012-2013
change
GMNA
75.66
65.0%
6.5%
71.09
61.2%
6.4%
67.22
5.8%
GME
16.62
14.3%
-6.2%
16.42
14.1%
1.2%
17.24
-4.7%
GMIO
10.76
9.2%
8.5%
13.76
11.9%
-21.8%
15.39
-10.6%
GMSA
9.80
8.4%
-1.4%
12.32
10.6%
-20.4%
12.48
-1.3%
GM Financial
3.63
3.1%
16.5%
2.50
2.2%
45.2%
1.47
70.5%
Segment
2014
% of total
2013
2013 % share
2013-2014 change
2012
2012-2013 change
GMNA
3.41
34.4%
3.23
33.3%
5.5%
3.02
7.1%
GME
1.26
12.7%
1.39
14.3%
-9.8%
1.47
-5.2%
GMIO
4.38
44.1%
4.06
41.7%
7.9%
3.76
8.1%
GMSA
0.88
8.8%
1.04
10.7%
-15.3%
1.05
-1.3%
Sales volume
units: million euros; % share; % change
149
Statistical tables
5.3. General Motors
Year
Total assets
Total liabilities
Total equity
Debt ratio
ROE
ROA
Interest
expenses
Interest
coverage ratio
2010
103.84
76.79
27.05
2.84
12.9%
3.4%
0.85
5.73
2011
108.11
79.61
28.50
2.79
19.9%
5.2%
0.56
12.48
2012
111.71
84.61
27.10
3.12
13.4%
3.3%
0.58
7.95
2013
124.36
92.51
31.85
2.90
8.8%
2.3%
0.78
5.08
2014
132.83
106.32
26.51
4.01
7.9%
1.6%
1.37
2.20
Year
Current assets
Current
liabilities
Quick ratio
Current ratio
Operating
cash flow
Capital
expenditure
Capex ratio
Free cash flow
2010
39.66
35.25
0.87
1.13
5.07
3.14
3.1%
1.93
2011
48.54
39.79
0.95
1.22
6.10
4.67
4.2%
1.44
2012
52.33
40.36
1.02
1.30
7.93
6.03
5.3%
1.90
2013
60.93
46.66
1.08
1.31
9.44
5.66
4.9%
3.79
2014
62.55
49.12
1.07
1.27
7.52
5.30
4.5%
2.22
150
Presentation
HYUNDAI MOTOR COMPANY
Vehicle
81.0% of revenue
Finance
12.1% of revenue
Others
6.9% of revenue
Headquarters
Seoul, South Korea
Established in 1967, Hyundai Motor Company is South Koreas leading carmaker, and has a
strong presence in Asia and Europe. Along with Kia Motors Corporation, Hyundai Motor
Company is part of the Hyundai Motor group, a leading Korean chaebol (conglomerate)
with operations in finance, steel, construction, among other things. Hyundai Motor
Company holds a 33.88% stake in Kia Motors as of December 2013.
Hyundai Motor Companys production facilities are concentrated in South Korea and China,
which accounted for 60% of output in 2014. Hyundai also manufactures cars in India, the
US, the Czech Republic, Russia, Turkey and Brazil. In 2014, Hyundai sold nearly 5m cars, of
which 58.6% in the small passenger car category. Its affiliate, Kia, sold another 1.4m cars,
generating revenue of nearly 13bn.
Hyundai has seen tremendous sales expansion over the 2009-2011 period, by far
outperforming the industry. However, in recent years, its pace of growth has slowed down
considerably on the back of weak GDP growth and contracting car demand in emerging
markets. This was exacerbated by a shift in demand towards SUVs and bigger-sized cars,
which account for a relatively small slice of its production mix.
Net sales
63.64bn
Operating margin
8.5%
Net margin
8.6%
Capex ratio
3.8%
R&D ratio
2.4%
Vehicles sold
Staff
4,836,000 units
64,956 employees
Korea
44.7%
N. America
30.0%
Asia
6.9%
Europe
15.6%
Others
2.8%
151
SEGMENT
% OF SALES
OPERATING
MARGIN
DESCRIPTION
VEHICLE
81.0%
8.0%
Comprises the developing, manufacturing and sale of:

passenger cars (Equus, i20, i30, i40, Genesis, Azera, Elantra, Sonata,
Sonata Hybrid, Accent),
SUVs (Tucson, Santa Fe),
MPVs (H-1, H350),
buses (Universe, Unicity, Aerotown)
and trucks (Xcient).
FINANCE
12.1%
9.9%
Provides financing for car purchasing, and also covers credit card
processing, among others.
OTHERS
6.9%
3.1%
Comprises R&D, powertrain manufacturing and other activities

outside the scope of manufacturing and finance.
152
BOOST MANUFACTURING CAPACITY, PARTICULARLY IN CHINA

In recent years, Hyundai has kept boosting manufacturing capacity on the back of new product development (for example, the
group has recently launched its first MPV in Europe) and surging demand. In conjunction with Beijing Automotive Industry,
Hyundai has recently begun the construction of its fourth and fifth plants in China, with each facility scheduled to have an initial
capacity of 300,000 vehicles per year. Other manufacturing investments meant to accommodate commercial vehicle production
have been carried out at facilities in Turkey and South Korea.
October 2014
Hyundai Assan Otomotiv Sanayi, a Hyundai joint venture, rolls out the first New Generation i20 model off its
production line in Turkey. The car is designed in Europe for European markets.
February 2015
Hyundai earmarks a budget of 1.5bn to develop its range of commercial vehicles, with 1.2bn slated for new
product development and 300m for bolstering production capacity (to 100,000 units per annum) of its Jeon-ju
facility in Korea.
April 2015
Hyundai lays the foundation stone for its operations in Changzhou, Hebei Province, China. This will be the groups
fourth facility in China and will have an initial output of 200,000 units per year. A second stage of construction will
see the plant reach total annual capacity of 300,000 units in 2018.
May 2015
Hyundai enters the multi-purpose light commercial vehicle category with the introduction of the H350 model for
the European market. The H350 will be manufactured by Hyundais partner, Karsan Automotive, at a facility in Bursa,
Turkey.
June 2015
Hyundai starts construction of its fifth facility in China. Located in Chongqing, China, the plant to be jointly run by
Hyundai Motor and the Beijing Automotive Group - has a capacity of 300,000 units per year and entails 800m in
investment.
153
NEW PRODUCT DEVELOPMENT

Hyundais vehicle portfolio is comprised mostly of models in the small and mid-size segments (small passenger cars, compact
SUVs, and sedans). Among its best-selling cars are the i30, the Veloster, and the Elantra. Over 2014-2015, the group has
continued to upgrade its existing models and expand in new market categories (entered the sub-compact SUV segment in India,
and launched a premium sedan model). Recent introductions include the Tucson sport utility vehicle, including a fuel-cell
powered version; the Elantra compact sedan, the Sonata sedan; and, the Genesis luxury sedan.
May 2014
Hyundai to market the Tucson fuel cell vehicle in the US market. The model will be available under leasing: with a
monthly fee of about 400, the customer is granted unlimited hydrogen refuelling and maintenance services.
January 2015
Hyundai launches the new Sonata plug-in-hybrid, the groups first model in the plug-in hybrid electric vehicle
category. The car will be built in Korea and will be sold in selected markets worldwide.
July 2015
Hyundai introduces Creta, its first car in the sub-compact SUV segment, in India. The model will be marketed
globally in coming months.
September 2015
Hyundai unveils the next generation of its Elantra compact sedan model. The group hopes to sell 110,000 units in
Korea and 590,000 abroad in 2016.
At the Frankfurt Motor Show, Hyundai lifts the lid on its Vision G Coupe, a new luxury concept that will be the
starting point for the development of a premium line-up of cars.
BUILDING A STRONGER BRAND IDENTITY

So as to bolster its global expansion strategy, Hyundai has sought to strengthen its brand image and to raise public awareness
through sponsorship agreements. Hyundai has been an official partner of the UEFA competitions, and recently (June 2015)
replaced GM as the official automotive sponsor of the National Football League. Moreover, in May 2014 Hyundai Motor
introduced a new showroom concept in a move to enhance brand awareness. Dubbed Hyundai Motorstudio, the non-sale
showroom was initially launched in Seoul, with new ones scheduled to open in major urban areas worldwide.
May 2014
Hyundai unveils the first Hyundai Motorstudio in Gangnam, a business district in Seoul. The flagship showroom
will seek to promote the groups brand direction and aspirations.
November 2014
Hyundai unveils its largest dealership in Europe to date. Located in Frankfurt, the new sales location, along with an
additional 200 redesigned stores, will showcase the groups brand identity.
January 2015
Hyundai inaugurates in Moscow, Russia, the first Hyundai Motorstudio located outside of its home market. The
opening of the non-sale showroom is designed to raise brand awareness.
154

70

17,5%
60
15,0%
10%
50
12,5%
9%
40
10,0%
8%
30
7,5%
7%
20
5,0%
6%
10
2,5%
5%

and
discounts.
Growth
in
Conversely,
a
decrease
in
consolidated
sales
typically
0,0%
10
11
12
13
11
units: million cars; change in %

12%
10%
8%
6%
4%
2%
0%
10
11
12
13
14
12
13
14

net
sales
and
measures
4%
10
14
11%

1,6
2,6%
1,4
2,5%
1,2
2,4%
1,0
2,3%
0,8
2,2%
0,6
2,1%
0,4
2,0%
0,2
1,9%
0,0

with
the
research
and
innovation.
sales.
1,8%
10
11
12
13
14
155

Sales by segment

Vehicle
Finance
units: change in %
2013-2014
Others
Others
4,40
6,9%
7,68
12,1%
Revenue
breakdown
by
a percentage.
2012-2013
30,7%
Annual
sales
change
by
a percentage.
8,9%
14,2%
Finance
Vehicle
51,55
81,0%
0%
10%
20%
30%
40%
Sales by region
units: change in %
Korea
N. America
Asia
Europe
2013-2014
Others
2012-2013
Others
1,76
2,8%
9,91
15,6%
4,40
6,9%
28,45
44,7%
19,12
30,0%
475,6%
Europe

market,
expressed
as
a
percentage.

percentage.
Asia
N. America
Korea
-10% -5% 0%
5% 10%
156

Liquidity ratios
units: %
ROE
Quick ratio
ROA
22%
8%
20%
7%
18%
6%
16%
5%
14%
4%
12%
3%
10%

generate profits.
2%
10
11
12
13
Current ratio
2,0

1,8
1,6
1,4
1,2
1,0
14
10
Solvency ratios
11
12
13
14

Debt-to-equity
FCF
Interest coverage
Capex ratio
2,0
6,0 Debt-to-equity
3,8%
1,5
5,0
3,6%
1,0
4,0
0,5
3,0
0,0
2,0
10
11
12
13
14
is the ratio 2,0

1,0
relative amount of debt. Interest
coverage (EBITDA divided by net
interest expenses) reflects the 0,0
company's debt burden, i.e. its
ability to pay interest on
outstanding debt. The lower this -1,0
burdened by interest expenses.
3,4%
3,2%
-2,0

ratio
between
capital
activities
minus
capital
expenditures)
reflects
the
3,0%
10
11
12
13
14
157
Statistical tables
Year
Consolidated net
sales
Annual % change
Consolidated
operating income
Consolidated
operating margin
Net income
Net margin
2010
47.76
n/a
4.22
8.8%
4.28
9.0%
2011
55.47
16.1%
5.72
10.3%
5.78
10.4%
2012
60.22
8.6%
6.02
10.0%
6.46
10.7%
2013
62.25
3.4%
5.93
9.5%
6.41
10.3%
2014
63.64
2.2%
5.38
8.5%
5.45
8.6%
Year
R&D expenses
R&D ratio
Annual % change
2010
0.99
2.1%
3.70
n/a
2011
1.03
1.9%
4.10
10.8%
2012
1.16
1.9%
4.39
7.1%
2013
1.32
2.1%
4.62
5.2%
2014
1.52
2.4%
4.84
4.6%
units: billion euros; % change; % share
158
Statistical tables
2014 sales
% of total
sales
Segment
margin (%)
2013 sales
2013 % share
2013-2014
change
2012 sales
2012-2013
change
Vehicle
51.55
81.0%
8.0%
51.00
81.9%
1.1%
50.84
0.3%
Finance
7.68
12.1%
9.9%
7.05
11.3%
8.9%
6.18
14.2%
Others
4.40
6.9%
3.1%
4.19
6.7%
5.1%
3.21
30.7%
Segment
2014 sales
% of total sales
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
Korea
28.45
44.7%
27.64
44.4%
2.9%
27.56
0.3%
N. America
19.12
30.0%
18.29
29.4%
4.6%
17.62
3.8%
Asia
4.40
6.9%
4.59
7.4%
-4.2%
4.88
-5.9%
Europe
9.91
15.6%
10.04
16.1%
-1.2%
9.87
1.6%
Others
1.76
2.8%
1.70
2.7%
3.6%
0.30
475.6%
Region
159
Statistical tables
Year
Total assets
Total liabilities
Total equity
Debt ratio
ROE
ROA
Interest
expenses
Interest
coverage ratio
2010
67.53
44.08
23.45
1.88
18.2%
6.3%
1.26
3.35
2011
78.06
49.30
28.75
1.71
20.1%
7.4%
1.23
4.66
2012
86.65
52.49
34.16
1.54
18.9%
7.5%
1.18
5.08
2013
95.13
54.78
40.34
1.36
15.9%
6.7%
1.03
5.76
2014
104.97
60.32
44.65
1.35
12.2%
5.2%
0.99
5.42
Year
Current assets
Current
liabilities
Quick ratio
Current ratio
Operating
cash flow
Capital
expenditure
Capex ratio
Free cash flow
2010
31.03
22.42
1.21
1.38
3.12
1.46
3.1%
1.66
2011
34.88
23.64
1.29
1.48
2.95
2.07
3.7%
0.88
2012
39.10
23.41
1.56
1.67
3.81
2.14
3.6%
1.67
2013
41.96
22.76
1.62
1.84
0.86
2.26
3.6%
- 1.40
2014
46.36
25.08
1.64
1.85
1.51
2.39
3.8%
- 0.88
160
5.5. Nissan Motor
Presentation
Strategic focuses
NISSAN MOTOR
2014 net consolidated revenues: 80.76 billion
Automobiles
93.1% of
revenue
Sales financing
6.9% of revenue
Headquarters: Yokohama, Japan
Founded in 1933, Nissan is Japans second-largest carmaker by sales volume. In

1999, Nissan and Renault signed a global partnership leading to the creation of the
Renault-Nissan Alliance - the worlds fourth biggest carmaker, with combined sales
of 8.5m units during 2014. While the two groups share expertise on four key areas
(engineering, manufacturing and supply chain, purchasing and human resources),
the Renault and Nissan groups are managed independently.
With 5.32m units sold in FY2014, Nissan markets over 60 car models worldwide
under the Nissan, Infiniti and Datsun trademarks. The US and China were the
groups largest markets, accounting for 26.1% and 23.0% respectively of total sales
volume in the last fiscal year.
Recent events
April 2015: Nissan lifts the lid on Lannia, a mid-size sedan exclusively designed to
suit the needs of the youth generation in China.
September 2015: Nissan and Daimler start construction of their joint facility in
Aguascalientes. The plant will produce jointly developed Infiniti- and MercedesBenz-branded premium compact vehicles starting in 2017-18. By 2020, capacity will
reach 230,000 units a year.
September 2015: At 2015 Frankfurt Motor Show, Nissans premium brand, Infiniti,
unveils the Q30, its first model in the premium compact category.
Expansion in China and other growth markets

In recent years, Nissan has enjoyed strong revenue
growth in the US and China. In coming years, Nissan is
aiming to build on demand momentum by launching
a series of models designed specifically to appeal to
drivers in these markets. For instance, in April 2015,
the group introduced the Lannia, the Murano Hybrid,
the GT-R Nismo and 370Z Nismo, tailored to the
specificities of the Chinese market.
On the other hand, Nissan is seeking to start
production of its NP300 Frontier pick-up at Renaults
facility in Crdoba, Argentina where a common
platform will also produce a pick-up truck for Renault
and another for Mercedes.
Increase production in Japan
Following a broader reshoring-of-production move by
Japanese companies, including Toyota, Nissan stated
its intention to boost domestic car production to
above 1m units per year in 2016-17. In 2016, Nissan
will begin production of its Rogue SUV (X-Trail in
Japan) at its Kyushu plant, with an aim to export it to
North America.
Steering closer to Daimler
The Renault-Nissan Alliance has recently cemented its
2010 partnership with Daimler. Building on Nissans
Aguascalientes facility in Mexico, Daimler will boost its
production output in North America. Moreover,
Nissan and Mercedes will start to collaborate on part
and vehicle development, with plans to jointly design
models under the Infiniti and Mercedes-Benz brands.
161
5.5. Nissan Motor

90

25%
4,5
80
20%
4,0
70
15%
60
10%
50
5%
40
0%
30
-5%
20
-10%
10
0

and
discounts.
Growth
in
Conversely,
a
decrease
in
consolidated
sales
typically

10%
3,5

net
sales
and
measures
3,0
2,5
2,0
1,5
1,0
0,5
0,0
-15%
0%
09 10 11 12 13 14
09 10 11 12 13 14
Sales by segment
Sales by region
Automobile
Japan
North America
Europe
Asia
Other overseas countries*
Sales Financing
5,55
6,9%
Revenue
breakdown
by
a percentage.
7,88
9,8%
8,16
10,1%
15,43
19,1%

market,
expressed
as
a
percentage.
12,12
15,0%
75,22
93,1%
37,17
46,0%
Source: company information; *Oceania, Middle East, Central and South America excluding Mexico and South Africa
162
Statistical tables
5.5. Nissan Motor

Consolidated net
sales
Annual % change
Consolidated
operating income
Consolidated
operating margin
Net income
Net margin
2009
53.37
-10.9%
2.21
4.1%
0.30
0.6%
2010
62.29
16.7%
3.82
6.1%
2.27
3.6%
2011
66.80
7.2%
3.88
5.8%
2.42
3.6%
2012
62.03
-7.1%
3.72
6.0%
2.42
3.9%
2013
74.43
20.0%
3.54
4.8%
2.76
3.7%
2014
80.76
8.5%
4.19
5.2%
3.25
4.0%
Year
Segment
2014 sales
2014 % share
Segment
margin (%)
2013 sales
2013 % share
2013-2014
change
2012 sales
2012-2013
change
Automobile
75.22
93.1%
3.5%
69.76
93.7%
7.8%
58.37
19.5%
Sales Financing
5.55
6.9%
25.0%
4.66
6.3%
18.9%
3.67
27.2%
units: billion euros; % change; operating income as % of sales
2014 sales
2014 % share
2013 sales
2013 % share
2013-2014
change
2012 sales
2012-2013
change
Japan
15.43
19.1%
16.67
22.4%
-7.4%
15.29
9.0%
North America
37.17
46.0%
31.87
42.8%
16.6%
24.51
30.0%
Europe
12.12
15.0%
11.79
15.8%
2.8%
9.85
19.6%
Asia
7.88
9.8%
7.07
9.5%
11.4%
5.97
18.5%
Other overseas countries*
8.16
10.1%
7.03
9.4%
16.1%
6.42
9.6%
Region

*Oceania, Middle East, Central and South America excluding Mexico and South Africa
163
5.6. Renault Group
Presentation
Strategic focuses
RENAULT GROUP
Automobile
94.7% of
revenue
Sales financing
5.3% of revenue
Headquarters: Paris, France
Founded in 1898, Renault is a leading carmaker in Europe. It sells cars under the
Renault, Dacia and Samsung trademarks. In 2014, the groups sales amounted to
2.7m units: the Duster, the new Logan and the new Sandero-badged Dacia in
Europe and the Mediterranean Basin and Renault elsewhere as well as the Renault
Clio IV and Captur were its best-selling models.
In 1999, Nissan and Renault signed a global partnership leading to the creation of
the Renault-Nissan Alliance -the worlds fourth biggest carmaker, with combined
sales of 8.5m units during 2014. While the two groups share expertise on four key
areas (engineering, manufacturing and supply chain, purchasing and human
resources), the Renault and Nissan groups are managed independently.
Continued global expansion of entry vehicle ranges

Renault, a leading carmaker in Europe (10% market
share) is particularly known for its entry level vehicles
(Clio, Duster, Sandero) which accounted for 42% of
2014 sales volume. Sales of Dacia-branded cars have
risen over 10% on annual average, since 2009
(compared to 2.6% for Renault brands). In the coming
years, the group aims to increase manufacturing
footprint for entry vehicles in emerging countries, with
investments carried out in Brazil, Russia, Turkey, China
(ongoing construction of a plant in Wuhan with
Dongfeng Motor) and Argentina. In Malaysia, the
group will produce its entry-level sedan (Fluence) by
teaming up with Tan Chong Motors.
Improve financials
With the launch of new vehicles (Espace, Kadjar,
Captur) in higher-tier segments Renault hopes to
elevate its brand image and continue to improve its
operating margin from 3.9% in 2014 to over 5% by
2017.
Lead in the zero-emission mobility area
Recent events
June 2014: By acquiring 67.1% of the holding company that controls AvtoVAZ,
Renault and Nissan get a controlling stake (50.1%) in Russias AvtoVAZ.
September 2014: Renaults Sandouville plant (France) will make a new LCV based
upon the same platform as Renaults New Trafic for Fiat, starting in 2016.
October 2014: Dacia, Renault's low-cost brand selling in Europe and the
Mediterranean rim, records cumulative sales of 3m units since 2004.
November 2014: Renault starts operations at its Oued Tlelat car manufacturing
plant in Algeria. Production capacity installed amounts to 25,000 units per year.
March 2015: Renault to start manufacturing Logan and Sandero models at its Santa
Isabela facility in Argentina.
In June 2015, the Renault-Nissan Alliance, sold its

250,000th electric vehicle, a white Renault ZOE. With
electric cars such as Nissan LEAF, Nissan e-NV200 van,
Renault Kangoo Z.E van, SM3 Z.E. and Twizy, the
Renault-Nissan alliance, currently generating half of
total electric vehicles sales across the globe, has
sought to establish itself as a leader in zero-emission
mobility. In a recent deal, Renault has teamed up with
Vincent Bollor to begin manufacturing the Bluecar
electric vehicle, used in Paris Autolib urban car hiring
scheme. Bluecar production will hence shift from Italy
to Renaults Dieppe facility.
164
5.6. Renault Group

45

20%
40
15%
35
10%
30
5%
25
0%
20
-5%
15
-10%
10
2,0

and
discounts.
Growth
in
Conversely,
a
decrease
in
consolidated
sales
typically

5%
1,5
1,0
0%
0,5
0,0
-0,5
-15%
-5%
09 10 11 12 13 14
09 10 11 12 13 14
Sales by segment
Sales volume by region
units: thousand units; % of total
Automobile
France
Europe (outside France)
Eurasia
Americas
Africa, Middle East, India
Asia-Pacific
Sales financing
2,18
5,3%
Revenue
breakdown
by
a percentage.
38,87
94,7%

net
sales
and
measures
308,01
11,4%
577,60
21,3%
416,93
15,4%
389,70
14,4%
133,17
4,9%
Sales volume breakdown by

percentage.
887,01
32,7%
165
Statistical tables
5.6. Renault Group

Consolidated net
sales
Annual % change
Consolidated
operating income
Consolidated
operating margin
Net income
Net margin
2009
33.71
-10.8%
-0.40
-1.2%
-3.13
-9.3%
2010
38.97
15.6%
1.10
2.8%
3.42
8.8%
2011
42.63
9.4%
1.09
2.6%
2.14
5.0%
2012
40.72
-4.5%
0.73
1.8%
1.74
4.3%
2013
40.93
0.5%
1.24
3.0%
0.70
1.7%
2014
41.06
0.3%
1.61
3.9%
2.00
4.9%
Year
Segment
2014 sales
2014 % share
Segment
margin (%)
2013 sales
2013 % share
2013-2014
change
2012 sales
2012-2013
change
Automobile
38.87
94.7%
2.2%
38.78
94.7%
0.3%
39.16
-1.0%
Sales financing
2.18
5.3%
34.4%
2.16
5.3%
1.1%
1.56
37.9%
units: billion euros; % change; operating income as % of sales
2014
2014 % share
France
577.60
21.3%
Europe (outside France)
887.01
32.7%
Eurasia
389.70
14.4%
Americas
416.93
15.4%
Africa, Middle East, India
308.01
11.4%
Asia-Pacific
133.17
4.9%
Region volume
units: thousand units; % share
166
Presentation
5.7. Ford
Ford Motor Company
Automotive
94.2% of revenue
Financial Services
5.8% of revenue
Dearborn, Michigan
Headquarters

Net sales
107.71bn
Operating margin
2.7%
Net margin
2.2%
Capex ratio
5.2%
R&D ratio
4.8%
Staff
187,000 employees
Ford Motor Company was founded in 1903 by Henry Ford. The company
specialises in passenger vehicles, light commercial vehicles, SUVs, trucks,
hybrids and electric vehicles (EVs). Ford is also involved in finance with its Ford
Credit business.
Unlike domestic competitors, Ford did not go under Chapter 11 reorganisation
as a result of a huge restructuring programme that cut excess manufacturing
capacity and reduced brands. After many years of diversification and
development of several brands, Ford Motor is currently focusing on its core
Ford brand and revitalising that of Lincoln. The majority of its stake in Mazda
was sold and Volvo and Jaguar Land Rover are no longer part of the companys
portfolio. The company has 62 plants worldwide.
United States
57.4%
United Kingdom
8.1%
Canada
6.5%
Germany
5.2%
Others
22.7%
167
5.7. Ford
% OF
SALES
OPERATING
MARGIN
94.2%
3.9%
Development, production, distribution and service of:
Ford North America
57.2%
8.4%
Ford and Lincoln brand vehicles and related service

parts and accessories in the United States, Canada and
Mexico.
Ford South America
6.1%
-13.2%
Ford brand vehicles and related service parts and

accessories in South America.
Ford Europe
19.7%
-3.6%
Ford brand vehicles, components, and related service

parts and accessories in Europe, Turkey and Russia.
Ford Middle East & Africa
3.1%
-0.5%
Ford and Lincoln vehicles, service parts and accessories

in the Middle East and Africa.
Ford Asia Pacific
7.4%
5.5%
Ford and Lincoln vehicles and related service parts and

accessories in the Asia Pacific region.
Includes Ford Credit (vehicle-related financing, leasing,

and insurance) and Other Financial Services (holding
companies, real estate, and the financing and leasing of
some Volvo vehicles in Europe).
SEGMENT
AUTOMOTIVE:
FINANCIAL SERVICES
5.8%
DESCRIPTION
168
5.7. Ford

CONCENTRATING ON KEY BRANDS AND FINE-TUNING THE GLOBAL PRODUCT LINE-UP
Ford has been rationalising its brand portfolio in order to fully devote its resources to further growing its core Ford and Lincoln brands as
part of its One Ford plan. Over the last few years, the company has therefore eliminated a number of brands from its portfolio through the
sale of Volvo, Aston Martin and Jaguar Land Rover, phased out production of the Mercury brand and reduced its share in Mazda. At the
same time, it is refining its global product line-up. It launched 24 all-new or significantly refreshed products globally, including the all-new
F-150, Mustan, Escort, Ka, Transit and Lincoln MKC. 15 new global products are expected to be launched in 2015. With these products, Ford
aims to serve customers in all markets with a range of small, medium and large cars, utilities and trucks.
Ford issues five safety recalls and one safety compliance recall in North America.
Strong demand for new products boosts Fords August U.S. sales to their best levels in 9 years. Furthermore, Ford brand
September 2015
SUVs saw the best sales in 12 years.
UPPING IN-CAR SMART AND SAFE TECHNOLOGY
Ford is investing aggressively in a broad array of technologies that enhance vehicle connectivity to improve safety and integration with
devices such as smartphones. The company leverages this technology on global platforms. In the near-term, Ford is researching technology
to locate open parking spaces in crowded cities; make car-sharing easier; move vehicles across cities with remote control; use vehicles and
bicycles to gather information about traffic and parking conditions; and help make healthcare more accessible in rural areas. In the midterm, it is targeting additional semi-autonomous driving technologies and the emergence of integrated networks. In the long-term, it
believes that the landscape could look radically different and that connected traffic networks and smart vehicles capable of automated
navigation are likely to bring about new business models and contribute to improved personal mobility.
Ford enhances its SYNC Applink for app developers with new capabilities and tools for in-car experience innovation.
SYNC AppLink enables the use of voice-control smartphone apps from the drivers seat, and it allows for phone apps to
appear on the SYNC screen as they appear on the phone.
New Ford smartwatch apps allow electric vehicle owners to check their battery charge status, unlock their doors and
September 2015
monitor their driving score (petrol use, trip miles and braking and driving efficiency).
Ford announces it will launch innovative new adaptive steering technology in 2016 which will allow improved steering at
any speed.
TECHNOLOGY IMPROVEMENTS FOR BOTH PRODUCTION AND PRODUCTS
Ford is seeking to develop standardised flexible production facilities to increase efficiency while allowing the company to adapt to new
trends in market demand. It is reducing the number of platforms its vehicles are produced on and ensuring that these platforms can be
used to produce lighter, fuel-efficient vehicles with different engine models: hybrid, plug-in hybrid and pure battery. Ford has gone from
using 27 platforms in 2007 to 12 currently. It is aiming to employ just 9 by 2016 and eventually hopes to reduce this further to reach 8. It
aims to reinvest the savings resulting from its platform consolidation back into production development to introduce more products at a
faster product cadence. Indeed, new product launches can help to drive revenue and profit growth: over 50% of Fords global volume in
2015 will be from vehicles launched in 2014 and 2015.
169
5.7. Ford

115

12,5%
110
10,0%
7,5%
105
5,0%
100
2,5%
95
0,0%
90
-2,5%
85

and
discounts.
Growth
in
Conversely,
a
decrease
in
consolidated
sales
typically
11
12
13
6%
5%
4%
3%
2%
1%
11
12
13
14
US market share
units: %

6,0
2014
2,6%
2,5%
5,0
2,4%
4,0
2013
Share of the US vehicle market.
2,3%
3,0
2,2%
2,1%
2,0
2,0%
2012
1,0
14%
15%

net
sales
and
measures
0%
10
14
8%
7%
-5,0%
10
16%
1,9%
0,0

with
the
research
and
innovation.
sales.
1,8%
10
11
12
13
14
170
5.7. Ford
Sales by segment

Automotive Sector
units: change in %
2013-2014
2012-2013
Financial Services Sector
Financial
Services Sector
6,2
5,8%
Revenue
breakdown
by
a percentage.
Annual
sales
change
by
a percentage.
Automotive
Sector
101,51
94,2%
-5% 0% 5% 10% 15%
Sales by region
units: change in %
United States
United Kingdom
Canada
Germany
2013-2014
Others
Others
Germany
24,5
22,7%
7,03
6,5%
5,6
5,2% 8,78
2012-2013

market,
expressed
as
a
percentage.
61,8
57,4%

percentage.
Canada
United
Kingdom
United States
8,2%
-20% -10%
0%
10%
171
5.7. Ford
Liquidity ratios
units: %
ROE
Quick ratio
ROA
400%
12%

10% percentage ratio between net
income and total equity. Return8%
on-assets is the percentage ratio
6%
4%
2%
generate profits.
200%
0%
-200%
-400%
-600%
-800%
-1000%
-1200%
0%
10
11
12
13
Current ratio
2,6

2,4
2,2
2,0
1,8
1,6
1,4
1,2
1,0
14
10
Solvency ratios
11
12
13
14

Debt-to-equity
FCF
Interest coverage
Capex ratio
is the ratio 2,0

20,0 equity and reflects the companys
1,0
relative amount of debt. Interest
15,0 coverage (EBITDA divided by net
interest expenses) reflects the 0,0
10,0 company's debt burden, i.e. its
ability to pay interest on
5,0 outstanding debt. The lower this -1,0
0,0 burdened by interest expenses.
50,0
3,8%
25,0 Debt-to-equity
0,0
-50,0
-100,0
-150,0
-200,0
-250,0
-300,0
10
11
12
13
14
3,6%
3,4%
3,2%
-2,0

ratio
between
capital
activities
minus
capital
expenditures)
reflects
the
3,0%
10
11
12
13
14
172
Statistical tables
5.7. Ford
Year
Consolidated net
sales
Annual % change
Consolidated
operating income
Consolidated
operating margin
Net income
Net margin
2010
96.38
6.56
6.8%
4.91
5.1%
2011
101.87
5.7%
6.23
6.1%
15.11
14.8%
2012
99.85
-2.0%
4.72
4.7%
4.24
4.2%
2013
109.84
10.0%
4.98
4.5%
5.35
4.9%
2014
107.71
-1.9%
2.92
2.7%
2.38
2.2%
Year
R&D expenses
R&D ratio
2010
3.74
3.9%
2011
3.96
3.9%
2012
4.11
4.1%
2013
4.78
4.4%
2014
5.16
4.8%
Year
US market share
2012
15.2%
2013
15.7%
2014
14.7%
units: % share
173
Statistical tables
5.7. Ford
Segment
Automotive Sector
Financial Services
Sector
2014 sales
% of total sales
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
101.51
94.2%
104.19
94.2%
-2.6%
94.62
10.1%
6.20
5.8%
5.64
5.8%
9.9%
5.75
-1.8%
2014 sales
% of total sales
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
United States
61.80
57.4%
63.89
58.2%
-3.3%
57.13
11.8%
United Kingdom
8.78
8.1%
7.50
6.8%
17.0%
6.89
8.9%
Canada
7.03
6.5%
7.27
6.6%
-3.3%
7.12
2.2%
Germany
5.60
5.2%
6.43
5.9%
-12.9%
6.19
3.9%
Others
24.50
22.7%
24.74
22.5%
-1.0%
23.04
7.4%
Region
174
Statistical tables
5.7. Ford
Year
Total assets
Total liabilities
Total equity
Debt ratio
ROE
ROA
Interest
expenses
Interest
coverage ratio
2010
123.12
123.60
-0.50
-245.66
-974.9%
4.0%
1.52
3.23
2011
133.33
122.07
11.23
10.86
134.5%
11.3%
0.77
19.55
2012
141.60
129.41
11.92
10.85
35.5%
3.0%
0.53
7.95
2013
151.03
131.04
19.72
6.64
27.1%
3.5%
0.62
8.63
2014
155.89
137.07
18.54
7.39
12.8%
1.5%
0.82
2.89
Year
Current assets
Current
liabilities
Quick ratio
Current ratio
Operating
cash flow
Capital
expenditure
Capex ratio
Free cash flow
2010
88.92
36.54
2.31
2.43
8.58
3.06
3.2%
5.52
2011
89.87
37.65
2.27
2.39
7.31
3.21
3.2%
4.11
2012
93.58
54.89
1.60
1.70
6.76
4.10
4.1%
2.66
2013
98.37
55.42
1.67
1.78
7.81
4.93
4.5%
2.88
2014
98.56
57.67
1.61
1.71
10.85
5.58
5.2%
5.27
175
5.8. BMW
Presentation
Bayerische Motoren Werke GmbH

Automotive
74.2% of revenue
Financial services
23.7% of revenue
BMW Motorbikes
2.1% of revenue
Headquarters: Munich, Germany
Strategic focuses
Strategic expansion of global production
BMW has been expanding its global production
network. In 2014, it started production in Brazil at
its Araquari plant and is preparing to open a new
plant in Mexico with a capacity of up to 150,000
units in 2019. It is also stepping up local
production in Shenyang, China, which is set to
build six BMW models specifically for the Chinese
market.
Getting on the connectivity bandwagon
Bayerische Motoren Werke GmbH came into being in 1917. Today, it is one of
Germanys largest industrial companies, and a leading global premium car and
motorcycle manufacturer, with three main brands: BMW, MINI and Rolls-Royce.
It also manufactured motorcycles under the Husqvarna brand until the sale of
the unit in 2013. In addition to its manufacturing activities, the group also offers
a range of financial services.
The BMW Group is present around the world with its 30 production and
assembly plants in 14 countries as well as a research and development network
spread over 12 locations in 5 countries. The Group intends to remain focused
on the premium segments of the automotive industry. It had a workforce of
116,324 employees at the end of 2014.
BMW believes that the digital, connected world is

a particularly important area for premium
manufacturers when it comes to differentiation
and growth. It is thus pushing ahead with its
strategy
of
developing
forward-looking
technologies, including in the field of
digitalisation and is boosting its ranks of
engineers as a result.
Appealing to younger clients with mobility
Recent events
October 2014: the first car rolled off the assembly line of BMWs new plant
in Araquari, Brazil.
August 2015: 400 BMW i3s are commissioned for DriveNow car-sharing in
Copenhagen. The all-electric fleet is also interconnected with public
transport.
August 2015: BMW, together with AUDI and Daimler agree with Nokia to
acquire its mapping and location services business HERE.
BMW is selectively expanding its range of

mobility services. It has added London, Vienna,
Copenhagen and Seattle to its DriveNow (carsharing) service in 2014 and 2015. Its acquisition,
together with AUDI and Daimler, of Nokias HERE
should allow it to gain a strong basis for the next
generation of mobility and location-based
services.
176
5.8. BMW

9
units: million euros; change in %

16%
1,0
14%
0,9
12%
0,8
10%
8%
6%
4%
2%
0%

and
discounts.
Growth
in
Conversely,
a
decrease
in
consolidated
sales
typically
units: million euros; % of revenue

12%
10%
0,7
8%
0,6
0,5
6%
0,4
4%
0,3
0,2
2%
0,1
0,0
-2%
0%
2010 2011 2012 2013 2014
2010 2011 2012 2013 2014
Sales by segment
Sales by region
units: million euros
Germany
Rest of Europe
China
United States
Rest of the Americas
Other
Automobiles
Financial Services
BMW Motorcycles
0,17
1,91 2,1%
23,7%
Revenue breakdown by segment,

expressed as a percentage.
5,97
74,2%

net
sales
and
measures
1,11;
0,3; 14%
4%
1,37;
17%
1,5;
19%
1,3;
16%

market,
expressed
as
a
percentage.
2,46;
30%
177
Statistical tables
5.8. BMW
Consolidated
net sales
Annual %
change
Consolidated
operating
income
Consolidated
operating
margin
Net income
Net margin
Capex
Capex margin
2010
6.05
0.52
8.5%
0.32
5.3%
0.33
5.4%
2011
6.88
13.8%
0.79
11.4%
0.49
7.1%
0.37
5.3%
2012
7.68
11.7%
0.80
10.4%
0.51
6.6%
0.52
6.8%
2013
7.61
-1.0%
0.77
10.1%
0.53
7.0%
0.67
8.8%
2014
8.04
5.7%
0.88
11.0%
0.58
7.2%
0.61
7.6%
Year
units: billion euros; % change; operating income and net income as % of sales, capital expenditure and capital expenditure as % of sales
Segment
2014 sales
2014 % share
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
Automobiles
5.97
74.2%
5.63
74.2%
6.0%
5.75
-2.1%
Financial Services
1.91
23.7%
1.83
23.7%
4.4%
1.79
2.3%
BMW Motorcycles
0.17
2.1%
0.15
2.1%
11.8%
0.15
1.2%
Region
2014 sales
2014 % share
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
Germany
1.30
16.2%
1.18
15.5%
10.1%
1.22
-3.2%
Rest of Europe
2.46
30.6%
2.26
29.7%
9.2%
2.30
-1.8%
China
1.50
18.7%
1.53
20.2%
-2.3%
1.44
6.2%
United States
1.37
17.0%
1.27
16.7%
7.7%
1.34
-5.6%
Rest of the
Americas
0.30
3.7%
0.31
4.1%
-4.6%
0.28
9.9%
Other
1.11
13.9%
1.06
13.9%
5.5%
1.10
-3.7%
178
5.9. Honda
Presentation
Honda
Automotive
Business
72.1% of
revenue
Financial
services
11.7% of
revenue
Motorcycle
business
13.9% of
revenue
Power
Products
and Other
2.4% of
revenue
Headquarters: Tokyo, Japan
Honda, founded in 1948, designs, manufactures and markets a wide range

of products, from small engines and scooters to specialty sports cars.
It operates through the divisions Automobiles, Motorcycles, Financial
Services, and Power Products and Other. The Automobiles division deals
with car making and related parts. The Motorcycles division handles allterrain vehicles and motorcycle business. The Financial Services division
provides financial and insurance services. The Power Products and Other
division offers power engine articles.
Recent events
March 2015: Honda announces it will expand motorcycle and automobile
production capacity in India in line with expected future growth in the
country.
July 2015: Honda announces that it has begun local production of its
Accord sedan in Nigeria, where the automobile market is expected to
expand in the future.
July 2015: Honda, together with Toyota and Nissan agree on key details
regarding a new joint support project for the development of hydrogen
station infrastructure in Japan.
Strategic focuses
Adapting its six-region structure
Honda has been operating on a six-region
structure in which each organisation is
autonomous. Each region has its own production
capacity and sales, development and purchasing
functions. However, some regions have not seen
the sales growth expected and production has
exceeded demand, having a negative impact on
cost structure. Therefore, Honda is aiming to
promote complementary relationships between
each of the regions to increase flexibility.
Honing technologies to introduce new products

Honda aims to continuously develop new
products to ensure it continues to attract
customers. For example, in autumn 2015 it is set
to introduce the all-new Civic, which is to be built
on a new platform and equipped with a new
downsized turbo engine. In the area of nextgeneration energy technology, it is aiming to
begin sales of the successor to FCX Clarity in
Japan at the beginning of 2016. This fuel-cell
vehicle will usher in the next generation of
mobility. Its advancements in fuel-cell vehicles
are primarily thanks to its partnership with GM,
which started in 2013 and has allowed the
companies to slash the size, weight and cost of
the fuel cell stack.
179
5.9. Honda

100

35%
90
30%
80
25%
70
20%
60
15%
50
10%
40
5%
30
0%
20
-5%
10
-10%

and
discounts.
Growth
in
Conversely,
a
decrease
in
consolidated
sales
typically
7,0

7%
6,0
6%
5,0
5%
4,0
4%
3,0
3%
2,0
2%
1,0
1%
0,0
-15%
0%
2010 2011 2012 2013 2014
2010 2011 2012 2013 2014
Sales by segment
Sales by region
Automobile Business
Motorcycle Business
Financial Services Business

68,18
72,1%
Japan
North America
Asia
Other Region
Europe
Power Product & Other Businesses
2,29
11,04
2,4%
11,7%
13,11
13,9%

net
sales
and
measures
4,66;
15,18;
6,72;
5%
16%
7%
19,29;
20%

market,
expressed
as
a
percentage.
48,78;
52%
180
Statistical tables
5.9. Honda
Consolidated
net sales
Annual %
change
Consolidated
operating
income
Consolidated
operating
margin
Net income
Net margin
Capex
Capex margin
2010
63.45
4.05
6.4%
3.79
6.0%
7.93
12.5%
2011
56.43
-11.1%
1.64
2.9%
1.50
2.7%
7.67
13.6%
2012
70.13
24.3%
3.87
5.5%
2.61
3.7%
10.08
14.4%
2013
88.79
26.6%
5.85
6.6%
4.44
5.0%
6.58
7.4%
2014
94.63
6.6%
4.76
5.0%
3.62
3.8%
6.27
6.6%
Year
Segment
Automobile
Business
Motorcycle
Business
Financial Services
Business
Power Product &
Other Businesses
2014 sales
2014 % share
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
68.18
72.1%
65.15
72.1%
4.7%
54.74
19.0%
13.11
13.9%
11.81
13.9%
11.0%
9.51
24.2%
11.04
11.7%
4.96
11.7%
122.8%
3.89
27.3%
2.29
2.4%
2.16
2.4%
6.0%
1.99
8.4%
2012 sales
2012-2013 change
2014 sales
2014 % share
2013 sales
2013 % share
2013-2014 change
Japan
15.18
16.0%
15.74
18.7%
-3.6%
13.67
15.1%
North America
48.78
51.5%
39.73
47.3%
22.8%
32.75
21.3%
Asia
19.29
20.4%
16.61
19.8%
16.1%
13.68
21.5%
Other Region
6.72
7.1%
7.19
8.6%
-6.5%
6.23
15.5%
4.9%
4.80
5.7%
-3.0%
3.81
26.0%
Region
4.66
Europe
181
5.10. PSA
Presentation
PSA Peugeot Citron

Strategic focuses
Implementing its Back in the Race plan
Automotive
66.4% of revenue
Automotive
equipment
31.2% of revenue
Finance
companies
2.5% of revenue
Headquarters: Paris, France

Peugeot SA was founded in 1896 and in 1976 it merged with Citron SA to
create PSA Peugeot Citron (PSA). The Peugeot and Citron brands share
common technology, development and assembling assets while retaining
separate sales and marketing structures. The company manufactures and
distributes automotive vehicles and replacement parts, and also offers
financial services.
The company has a long history on its domestic market in Europe and was
slow to enter markets abroad. However, in 2014, China became the groups
largest national market.
Recent events
July 2014: The PSA/Dongfeng joint venture sign an agreement with the city
of Chengdu for the construction of its fourth production facility in China. It
should be completed by 2016.
June 2015: PSA and Bollor Group sign a strategic cooperation agreement
on developing shared mobility solutions, including car-sharing schemes
using conventional and electric vehicles.
June 2015: PSA announces it will set up a new assembly plant in Morocco
as part of plans to cut production costs and reduce its dependence on
European markets. Production will be of small and subcompact lower-cost
vehicles destined for Africa and the Middle East and will start in 2019.
The Back in the Race plan was launched in 2014

and is four-pronged: 1) maintaining DS, Peugeot
and Citron as three distinct and complementary
brands, stepping up the development of DS as a
premium brand.; 2) a focused, targeted global
product plan more aligned with market demand;
3) accelerating growth in China, returning to
profit in Latin America and Russia and entering
new growth countries such as Africa and the
Mediterranean basin; and 4) modernising plants
and reducing costs and inventory.
Strengthening the partnership with Dongfeng

As part of its efforts to reinforce its presence in
China, PSA is strengthening its industrial and
commercial partnership with Dongfeng. It aims
to lift its JV production capacity to over one
million units a year in 2016 and triple its volumes
to 1.5 million vehicles per annum by the early
2020s. It also hopes to create a new joint R&D
centre and establish a new joint venture for
expansion in the rest of Asia and possibly in
other emerging markets.
182
5.10. PSA

59,00
6%
3,0
58,00
2,0
4%
57,00
2%
56,00
55,00
0%
54,00
-2%
53,00
-4%
52,00
-6%
51,00
50,00

and
discounts.
Growth
in
Conversely,
a
decrease
in
consolidated
sales
typically

4%
2%
1,0
0%
0,0
-2%
-1,0
-4%
-2,0
-6%
-3,0
-8%
-4,0
-5,0
-8%
-10%
2010 2011 2012 2013 2014
2010 2011 2012 2013 2014
Sales by segment
Sales by region
Automotive
Automotive Equipment
16,93
31,1%
Europe
North America
Latin America
China & South-Asia
Middle East & Africa
India Pacific
Eurasia
Finance Companies
1,34
2,5%

net
sales
and
measures
2,1% 1,6%

4,4%
7,1%

market,
expressed
as
a
percentage.
7,4%
7,4%
36,08
66,4%
70,0%
183
Statistical tables
5.10. PSA
Consolidated
net sales
Annual %
change
Consolidated
operating
income
Consolidated
operating
margin
Net income
Net margin
Capex
Capex margin
2010
56.06
1.80
3.2%
1.13
2.0%
2.89
5.2%
2011
58.51
4.4%
1.09
1.9%
0.44
0.7%
3.63
6.2%
2012
55.45
-5.2%
-4.55
-8.2%
-5.81
-10.5%
3.73
6.7%
2013
53.08
-4.3%
0.77
1.4%
- 2.67
-5.0%
2.49
4.7%
2014
53.61
1.0%
0.95
1.8%
-0.97
-1.8%
2.43
4.5%
Year
Segment*
2014 sales
2014 % share
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
Automotive
36.08
67.3%
36.46
67.3%
-1.0%
38.30
-4.8%
16.93
31.6%
16.07
31.6%
5.4%
15.46
3.9%
1.34
2.5%
1.46
2.5%
-8.4%
1.59
-7.8%
Automotive
Equipment
Finance
Companies
units: billion euros; % share; % change, *before reconciliation
2014 sales
2014 % share
Europe
37.53
70.0%
North America
3.98
7.4%
Latin America
3.95
7.4%
China & South-Asia
3.83
7.1%
Middle East & Africa
2.37
4.4%
India Pacific
1.10
2.1%
Eurasia
0.86
1.6%
Region
units: billion euros; % share; % change. As regions were redefined in 2014, a comparison cannot be made with previous years
184
5.11. FCA
Presentation
Fiat Chrysler Automobiles

NAFTA
54.3% of
revenue
EMEA
18.1% of
revenue
Maserati
2.9% of
revenue
LATAM
8.9% of
revenue
Ferrari
2.6% of
revenue
APAC
6.5% of
revenue
Componen
ts
6.3% of
revenue
Other
0.4% of
revenue
Headquarters: London, UK
Fiat Chrysler Automobiles was established in 2014 by merging Fiat S.p.A.
into a new Netherlands-based holding company with headquarters in
London, UK. It operates through two main subsidiaries: FCA Italy (previously
Fiat Group Automobiles and FCA US (previously Chrysler LLC). Its brands
include Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Lancia as well as Ferrari and
Maserati.
The Peoples Bank of China owns 2% of Fiat Chrysler, making the Chinese
central bank one of the groups key investors
Recent events
January 2014: the company acquires the remaining 41.5% in FCA US that it
did not already own. In 2009 Fiat formed an alliance with Chrysler, a U.S.
automaker founded in 1925, in which Fiat took a majority interest, saving it
from bankruptcy.
August 2015: the companies announces an Alfa Romeo SUV will go into
production by the middle of 2016 as part of its expansion of its luxury
range.
September 2015: FCA will shift a considerable amount of its car production
to Mexico while keeping more profitable pickups and crossovers in the U.S.
Strategic focuses
Premium and luxury brand strategy
FCA has a wide spectrum of brands, including
those positioned at the premium (Jeep, Alfa
Romeo) and luxury (Maserati, Ferrari) end. The
group has decided to shift a significant part of its
portfolio towards the higher profit margins
offered by premium sales. It plans on
redeploying overcapacity in Europe and in the
EMEA for the worldwide production of premium
vehicles. It has recently expanded in the luxury
end through the introduction of new Maserati
models and is also currently expanding its range
of Alfa Romeos.
Expanding international business
FCA plans to expand sales in key markets
throughout the world by continuing efforts to
localise production of Fiat brand vehicles
through JVs in China and India and sales of Jeep
vehicles in LATAM and APAC by localising
production through new facilities in Brazil.
Localised production allows local demand to be
addressed without transportation costs and
import duties.
Continuing convergence of platforms
The company continues to rationalise its vehicle

architecture and standardise components with
the aim of increasing sales volumes and
profitability as well as facilitating speed to
market, quality improvement and manufacturing
flexibility.
185
5.11. FCA

120

70%
4,0

5,0%
100
60%
3,5
4,5%
50%
80
40%
60
30%
40
20%
20
10%

and
discounts.
Growth
in
Conversely,
a
decrease
in
consolidated
sales
typically
4,0%
3,0
3,5%
2,5
3,0%
2,0
2,5%
1,5
2,0%
1,5%
1,0
1,0%
0,5
0,5%
0,0
0%
0,0%
2010 2011 2012 2013 2014
2010 2011 2012 2013 2014
Sales by region
Sales by segment

NAFTA
EMEA
LATAM
APAC
Components
Maserati
Ferrari
Other Activities
2,6%
2,9%
6,3%
6,5%
8,9%
North America
Brazil
China
Germany
2,0% 1,9%

54,3%
18,1%

net
sales
and
measures
Other Countries
Italy
Other
United Kingdom
3,6%
5,1%
6,6%
7,3%
7,8%
56,8%

market,
expressed
as
a
percentage.
8,8%
186
Statistical tables
5.11. FCA
Consolidated
net sales
Annual %
change
Consolidated
operating
income
Consolidated
operating
margin
Net income
Net margin
Capex
Capex margin
2010
35.88
1.11
3.1%
0.09
0.2%
2.86
8.0%
2011
59.56
66.0%
2.45
4.1%
1.33
2.2%
5.53
9.3%
2012
83.96
41.0%
3.70
4.4%
0.04
0.1%
7.53
9.0%
2013
86.82
3.4%
3.35
3.9%
0.90
1.0%
7.44
8.6%
2014
96.09
10.7%
3.40
3.5%
0.57
0.6%
8.12
8.5%
Year
2014 sales
2014 % share
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
Italy
7.05
7.3%
6.94
7.3%
1.7%
7.28
-4.6%
North America
54.60
56.8%
47.55
56.8%
14.8%
45.17
5.3%
Other Countries
8.42
8.8%
9.27
8.8%
-9.2%
10.22
-9.3%
Brazil
7.51
7.8%
8.43
7.8%
-10.9%
9.83
-14.3%
China
6.34
6.6%
4.44
5.1%
42.8%
2.70
64.6%
Germany
3.46
3.6%
3.05
3.5%
13.3%
3.17
-3.6%
United Kingdom
1.93
2.0%
1.45
1.7%
32.6%
1.43
1.7%
France
1.84
1.9%
1.96
2.3%
-6.1%
2.06
-4.8%
Other
4.94
5.1%
3.72
4.3%
32.8%
2.11
76.5%
Region
187
Statistical tables
5.11. FCA
2014 sales
2014 % share
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
NAFTA
52.18
54.3%
45.60
52.5%
14.4%
43.49
51.8%
EMEA
17.43
18.1%
16.78
19.3%
3.9%
17.26
20.6%
LATAM
8.53
8.9%
9.87
11.4%
-13.6%
10.97
13.1%
APAC
6.25
6.5%
4.62
5.3%
35.3%
3.13
3.7%
Components
6.06
6.3%
5.69
6.5%
6.6%
5.69
6.8%
Maserati
2.76
2.9%
0.0%
Ferrari
2.50
2.6%
0.0%
Other Activities
0.38
0.4%
4.25
4.9%
-91.0%
3.42
4.1%
Region
188
5.12. Tata
Presentation
Tata Motors Group

Automotive
99.5% of revenue
Other operations
0.5% of revenue
Headquarters: Mumbai, India

Tata Motors Group, founded in 1945, specialises in the manufacturing and
distribution of passenger and commercial vehicles. Its division Tata Motors
Limited operates mainly in India. Via subsidiaries and associate companies,
Tata Motors has operations in the UK, South Korea, Thailand, South Africa
and Indonesia.
Its subsidiary Jaguar Land Rover, acquired in 2008, focuses on the global
premium market.
It also has an industrial joint venture with Fiat in India.
Recent events
Strategic focuses
Implementing its Horizonext plan
Tata Motors announced Horizonext in 2013. It is
a customer-focussed strategy with four prongs:
enriched customer purchase experiences, quality
services, world-class manufacturing practices and
new, modified and refreshed products to
improve revenue and ensure a competitive
pipeline for the future. As part of this it has
launched ConnectNext, a vehicle connectivity
service.
Expanding international business
Tata Motors seeks to continue entering new
markets and, in recent years, has grown its
market share in markets such as Kenya, Nigeria,
Tanzania, Congo and Senegal as well as Australia
and is focused on increasing its presence in
Southeast Asia and Latin America. It is also
considering expanding its global manufacturing
footprint to take advantage of import duty
differentials and local sourcing.
Cutting sales and production targets for China
January 2015: The Bolt premium hatchback was launched. It is a key

product under the Horizonext turnaround strategy.
May 2015: GenX-Nano range was launched in May 2015 with technological
advancements and design engineering.
September 2015: Tata announces it will open a vehicle assembly plant in
Nigeria.
Faced with high inventories in a slowing Chinese

market, Tata Motors has cut prices, sales and
production targets at its Chinese Jaguar Land
Rover arm. It is also lowering the price of some
of its models on the Chinese market. JLRs sales
in China fell by a third during the second quarter
of 2015 after having fallen by 20% in fiscal 2014.
189
5.12. Tata

40

35%
3,5
35
30%
3,0
9%
2,5
9%
2,0
9%
1,5
9%
1,0
9%
0,5
8%
30
25%
25
20%
20
15%
15
10%
10
5%
5
0

and
discounts.
Growth
in
Conversely,
a
decrease
in
consolidated
sales
typically

10%
0,0
0%
8%
2010 2011 2012 2013 2014
2010 2011 2012 2013 2014
Sales by segment
Sales by region
Automotive
Other
India
China
Rest of World
United Kingdom
Rest of Europe
United States
0,18
0,5%

4,25
12,1%
4,21
12,0%
4,77
13,6%
10,19
29,0%
4,7
13,4%
34,98
99,5%

net
sales
and
measures

market,
expressed
as
a
percentage.
7,03
20,0%
190
Statistical tables
5.12. Tata
Consolidated
net sales
Annual %
change
Consolidated
operating
income
Consolidated
operating
margin
Net income
Net margin
Capex
Capex margin
2010
17.09
1.52
8.9%
1.24
7.3%
1.09
6.4%
2011
22.06
29.1%
2.07
9.4%
1.81
8.2%
1.86
8.4%
2012
25.11
13.8%
2.17
8.7%
1.32
5.3%
2.51
10.0%
2013
30.86
22.9%
2.67
8.7%
1.87
6.1%
3.61
11.7%
2014
34.89
13.0%
3.19
9.1%
1.87
5.4%
4.23
12.1%
Year
Segment
2014 sales
2014 % share
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
Automotive
34.98
99.5%
30.99
99.5%
12.9%
25.11
23.4%
Other
0.18
0.5%
0.17
0.5%
6.5%
0.30
-45.0%
2014 sales
2014 % share
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
India
4.77
13.6%
4.61
14.8%
3.5%
5.99
-23.1%
China
10.19
29.0%
8.82
28.3%
15.6%
5.98
47.5%
Rest of World
7.03
20.0%
6.31
20.2%
11.5%
4.79
31.8%
United Kingdom
4.70
13.4%
3.92
12.6%
19.9%
2.99
31.0%
Rest of Europe
4.25
12.1%
3.92
12.6%
8.6%
2.98
31.5%
United States
4.21
12.0%
3.58
11.5%
17.6%
2.53
41.3%
Region
191
5.13. SAIC
Presentation
SAIC Motor Corp

Vehicles and parts

99.5% of revenue
Financing
0.5% of revenue
Headquarters: Shanghai, China

SAIC Motor Corp. Ltd., formally known as Shanghai Automotive Co., is a
Chinese state-owned automotive manufacturing company founded in
1997. Its business activities include the sale of passenger and commercial
vehicles, and components such as engine, transmission, power train,
chassis, exterior trim and also offers automotive trade services such as auto
financing business.
In 2014, SAIC was the largest producer in China, manufacturing over 4.5
million vehicles. SAIC Motor sells vehicles under its own brands, Roewe and
MG, as well as under joint venture brands.
Recent events
February 2015: SAIC-GM-Wuling announce they will establish a new plant
in Indonesia.
March 2015: SAIC and Alibaba initiate a fund for developing connected
cars.
July 2015: SAIC and GM announce they will invest around 4.5 billion over
the next few years to develop a new family of small Chevrolet vehicles
aimed at emerging markets. The cars should go on sale in 2019 in countries
such as India, China, Brazil and Mexico.
Strategic focuses
Continuing joint ventures
SAIC has a large number of joint ventures
including with General Motors and Volkswagen
as well as a three-way joint venture SAIC-GMWuling.
Chinese consumers continue to favour foreignbranded cars over local brands and joint venture
with mature-market companies help to get
around this. Furthermore, such partnerships have
allowed the company to achieve scale quickly
and have opened up doors to technological
expertise as well as management experience.
to move expand abroad
With growth slowing in Chinas car market,
Chinese
automakers
are
eyeing
export
opportunities but also overseas manufacturing
facilities. The joint venture SAIC-GM-Wuling
announced in 2015 that it would build a factory
in Indonesia to manufacture vehicles and
Indonesia and other Southeast Asian markets.
.. and to invest in green vehicles
Chinas national fuel economy standards are set
to become increasingly strict and carmakers are
therefore under pressure to build cleaner cars.
The SAIC-GM-Wuling joint venture is thus
planning to open a factory dedicated to green
cars in China with an annual capacity to build
200,000 electric or highly-electrified cars.
192
5.13. SAIC

80

45%
4,0

8%
70
40%
3,5
7%
3,0
6%
2,5
5%
2,0
4%
1,5
3%
1,0
2%
0,5
1%
35%
60
30%
50
25%
40
20%
30
15%
20
10%
10
5%

and
discounts.
Growth
in
Conversely,
a
decrease
in
consolidated
sales
typically
0,0
0%

net
sales
and
measures
0%
2010 2011 2012 2013 2014
2010 2011 2012 2013 2014
Sales by segment
Sales by region
Vehicles and Parts

China
Financial
0,4
0,5%
Other
0,14
0,2%

76,08
99,5%

market,
expressed
as
a
percentage.
76,34
99,8%
193
Statistical tables
5.13. SAIC
Consolidated
net sales
Annual %
change
Consolidated
operating
income
Consolidated
operating
margin
Net income
Net margin
Capex
Capex margin
2010
37.08
2.42
6.5%
1.67
4.5%
0.87
2.4%
2011
51.67
39.3%
3.57
6.9%
2.45
4.8%
1.96
3.8%
2012
57.63
11.5%
3.07
5.3%
2.52
4.4%
1.94
3.4%
2013
68.42
18.7%
2.01
2.9%
3.01
4.4%
1.90
2.8%
2014
76.17
11.3%
1.82
2.4%
3.40
4.5%
1.74
2.3%
Year
2014 sales
2014 % share
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
Vehicles and Parts
76.08
99.5%
68.39
99.5%
11.2%
58.08
17.7%
Financial
0.40
0.5%
0.30
0.5%
33.6%
0.31
-3.4%
2014 sales
2014 % share
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
China
76.34
99.8%
68.55
99.8%
11.4%
58.29
17.6%
Other
0.14
0.2%
0.13
0.2%
1.8%
0.10
29.6%
Segment
Region
194
5.14. Geely
Presentation
Strategic focuses
Geely Automobile Holdings Ltd
Automotive & Related Parts

100% of revenue
Headquarters: Binjiang District, Hangzhou, China
Standardisation and modulation

Particularly via its Volvo activity, Geely is
developing new modular architecture and a set
of components for future C-segment cars. The
modular architecture and set of components will
not only deliver world-class product technologies
and attributes but also considerable cost saving
in terms of development, testing and sourcing,
leading to significant economies of scale.
Expansion at home and abroad

Geely Automobile Holdings Ltd. (Geely) is a private Chinese automotive
manufacturing company engaged in the production of automobiles,
motorcycles, engines and transmissions. Geely bought Volvo in 2010 from
Ford and has owned the British taxi maker The London Taxi Company since
2012.
Having followed a multi-brand strategy, the Emgrand, Englon and Gleagle
names were phased out in 2014 in efforts to reduce sprawl.
The group is looking to achieve economies of

scale through expansion of sales volume and
production capacity by broadening its product
range and geographical presence in both
Chinese and international markets. As part of
this, the group has been investing in the
localisation of production in its major export
markets.
Investing in new energy vehicles
Recent events
September 2014: Geely announces that it has inked a deal with Apple to
integrate CarPlay into an upcoming compact SUV model, making it the first
Chinese automaker to support the infotainment system.
December 2014: The company replaces its Emgrand, Gleagle and Englon
brands and will market all brands under the single Geely brand.
April 2015: Geely is set to begin producing a small crossover utility vehicle
in 2016 on a common platform jointly developed with Volvo.
In view of increasing demand for new energy

vehicles and the Chinese governments
promotion of this initiative, the company intends
to continue investing in its own research as well
as working in partnerships and strategic alliances
with international players to benefit from
technology and knowledge transfers. The group
is also leveraging Volvos hybrid electric vehicles
to achieve a gradual transition from hybrid to
pure electric technology.
195
5.14. Geely

4,0

30%
0,3
20%
0,3
3,5
3,0
10%
2,5
2,0
0%
1,5
-10%
1,0
-20%
0,5
0,0

and
discounts.
Growth
in
Conversely,
a
decrease
in
consolidated
sales
typically
8%
7%
0,2
6%
5%
0,2
4%
0,1
3%
2%
0,1
1%
0,0
-30%
0%
Capital expenditure
Sales by region

China
Europe
Africa
Middle East
Other Countries
Korea
Central & South America
0,27
0,26
0,25
0,24
Capital expenditure (capex).
0,23

net
sales
and
measures
2010 2011 2012 2013 2014
2010 2011 2012 2013 2014
0,28

9%

market,
expressed
as
a
percentage.
0,03
0,04
0,04
0,07
0,08
1,1%
1,5%
1,5%
2,7%
0,23
3,1%
8,8%
0,22
0,21
2010 2011 2012 2013 2014
2,13
81,3%
196
Statistical tables
5.14. Geely
Consolidated
net sales
Annual %
change
Consolidated
operating
income
Consolidated
operating
margin
Net income
Net margin
Capex
Capex margin
2010
2.22
0.15
6.6%
0.15
6.8%
0.23
10.3%
2011
2.43
9.4%
0.16
6.5%
0.18
7.4%
0.26
10.5%
2012
2.92
19.9%
0.20
6.8%
0.24
8.3%
0.23
7.8%
2013
3.49
19.6%
0.28
8.0%
0.32
9.3%
0.25
7.0%
2014
2.64
-24.5%
0.11
4.0%
0.17
6.6%
0.27
10.1%
Year
2014 sales
2014 % share
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
China
2.13
81.2%
2.68
76.5%
-20.5%
2.28
17.2%
Europe
0.23
8.9%
0.37
10.7%
-37.7%
0.21
78.0%
Africa
0.08
3.0%
0.06
1.8%
26.1%
0.03
146.1%
Middle East
0.07
2.6%
0.22
6.4%
-69.0%
0.24
-7.8%
Other Countries
0.04
1.6%
0.04
1.1%
5.4%
0.03
28.6%
Korea
0.04
1.4%
0.07
2.1%
-50.3%
0.08
-11.4%
Central & South

America
0.03
1.2%
0.05
1.3%
-31.2%
0.04
30.3%
Region
197
5.15. Tesla
Presentation
Strategic focuses
Tesla Motors
Design, development, manufacturing and sales of electric vehicles

and electric powertrain components
100% of revenue
Expanding its unique distribution strategy

Unlike legacy automakers, Tesla does not have a
dealer network but uses company-owned stores
and an online sales model. It plans on expanding
its network of Tesla stores worldwide to support
the roll out of its cars.
Development of a charging network
Headquarters: Palo Alto, California

Tesla Motors is a U.S. automotive and energy storage company founded in
2003. It designs, manufactures and sells electric cars, electric vehicle
powertrain components and battery products. Its products include electric
vehicles such as the Model S, Model X, and the Tesla Roadster.
Tesla has established its own network of sales and service centres and
Supercharger stations globally to accelerate the widespread adoption of
electric vehicles. It is currently producing and selling its second vehicle: the
Model S sedan. It commenced deliveries of Model S in June 2012 and as of
December 2014 it had delivered almost 57,000 Model S vehicles worldwide.
Recent events
January 2014: Tesla expands its supercharger (electric vehicle charger)
network in Europe to connect the Netherlands, Germany, Switzerland and
Austria. Supercharger stations are placed along well-travelled highways.
July 2014: Panasonic and Tesla sign an agreement for cooperation on the
construction of a large-scale battery manufacturing Gigafactory plant in
the US.
September 2015: The Tesla Model X, its first SUV model, is revealed. After
an initial launch in the United States, Model X will be sold in all the markets
where Model S is available including in Asia and Europe.
Teslas electric cars cannot take off if there is not

a sufficient charging network. Tesla is therefore
growing its supercharger stations. At the end of
the 2014 financial year, Tesla had 380
Supercharger stations open in North America,
Europe, and Asia. Access to the Supercharger
network is available free of charge to owners of
Model S vehicles with the 85 kWh battery pack
options and when purchased as an upfront
option for 60 kWh. It are planning to
methodically expand the Supercharger network
over the next few years in the United States,
Europe and Asia.
Reducing battery costs
So as to reduce unit costs of its batteries and
thus make electric cars more affordable, Tesla is
investing in building a Gigafactory, with which
it aims to reduce unit costs by 30%. It plans to
use the battery packs manufactured at the
Gigafactory for its vehicles, as well as for
stationary storage applications.
198
5.15. Tesla

3,0

450%
0,0
400%
2,5
350%
2,0
300%
250%
1,5
200%
1,0
150%
100%
0,5
50%
0,0
0%
-0,1

and
discounts.
Growth
in
Conversely,
a
decrease
in
consolidated
sales
typically
-20%
-0,1
-40%
-0,2
-60%
-0,2
-80%
-0,3
-100%
-0,3
-120%
-0,4
0%

net
sales
and
measures
-140%
20102011201220132014
2010 2011 2012 2013 2014
0,8

20%
Capital expenditure
Sales by region
0,7
0,6
United States
China
Norway
Other
0,5
0,4
Capital expenditure (capex).
0,3
0,63
26,3%
1,1
45,8%
0,2
0,1

market,
expressed
as
a
percentage.
0,31
12,9%
0,0
2010 2011 2012 2013 2014
0,36
15,0%
199
Statistical tables
5.15. Tesla
Consolidated net
sales
Annual % change
Consolidated
operating income
Consolidated
operating margin
Net income
Net margin
2010
0.09
-0.11
-125.8%
-0.12
-132.2%
2011
0.15
74.9%
-0.19
-123.1%
-0.19
-124.6%
2012
0.31
102.3%
-0.29
-95.4%
- 0.30
-95.9%
2013
1.51
387.2%
-0.05
-3.0%
-0.06
-3.7%
2014
2.39
58.8%
-0.16
-6.9%
- 0.22
-9.2%
Year
2014 sales
2014 % share
2013 sales
2013 % share
2013-2014 change
2012 sales
2012-2013 change
United States
1.10
46.0%
1.11
73.5%
-0.5%
0.26
328.9%
China
0.36
14.9%
0.0%
Norway
0.31
12.9%
0.16
10.8%
89.9%
Other
0.63
26.2%
0.24
15.8%
164.0%
0.05
395.1%
Region
Capex
Capex ratio
R&D
R&D ratio
2010
0.08
90.3%
0.07
79.7%
2011
0.15
96.9%
0.16
102.3%
2012
0.18
57.9%
0.20
66.3%
2013
0.20
13.1%
0.17
11.5%
2014
0.73
30.3%
0.35
14.8%
Year
200
6. Statistical Appendix
201
Vehicle sales
Registration or sales of new vehicles
Growth in vehicle sales by region
unit(s): millions, %
Year
unit: % change
Volume
Growth
2005
65.9
2006
68.4
3.7%
2007
71.6
4.7%
2008
68.3
-4.5%
2009
65.6
-4.0%
2010
75.0
14.3%
2011
78.2
4.3%
2012
82.2
5.1%
2013
85.6
4.2%
2014
88.2
3.0%
2015*
89.1
1.0%
Growth Q2 2012
Q2 2015
Growth Q2 2014Q2 2015
Russia
-43.5%
-38.0%
Central*/South
America
-21.6%
-16.0%
Africa
2.3%
-4.0%
NAFTA
3.8%
0.0%
Europe
-1.1%
2.0%
Asia/Oceania/
Middle-East
16.6%
2.0%
Region
202
Vehicle sales by manufacturer in 2014
Vehicle sales by manufacturer in 2014

unit: number of vehicle units
Year
Passenger Cars
Light commercial vehicles
Total light vehicles
TOYOTA
8,788,018
1,405,072
10,193,090
VOLKSWAGEN
9,766,293
128,598
9,894,891
GM
6,643,030
2,951,895
9,594,925
HYUNDAI
7,628,779
280,684
7,909,463
FORD
3,230,842
2,643,854
5,874,696
NISSAN
4,279,030
796,992
5,076,022
FIAT
1,904,618
2,812,345
4,716,963
HONDA
4,478,123
35,646
4,513,769
SUZUKI
2,543,077
473,633
3,016,710
PSA
2,521,833
395,213
2,917,046
RENAULT
2,398,555
363,414
2,761,969
203
Sales of low-emission vehicles and car sales by country
Number of new ultra-low emission vehicle registrations

per year in the UK
unit: vehicle units
Year
2010
2011
2012
2013
2014
Source: Xerfi Global with AAA
New vehicle registrations or sales in 2014

unit: number of units
Country/Region
Vehicles
1,300
2,100
3,500
4,400
15,900
Italy
1,492,642
France
2,210,927
Russia
2,545,666
UK
2,843,025
India
3,176,763
Germany
3,356,718
Brazil
3,498,012
Japan
5,562,887
US
16,841,973
China
23,491,893
204
Vehicle sales in China and new car interest rates
Year-on-year growth in registration or sales of new

vehicles in China
unit: %
Year
Growth
2006
30.3%
2007
21.7%
2008
7.3%
2009
52.9%
2010
33.2%
2011
5.2%
2012
7.1%
2013
15.7%
2014
9.9%
2015*
1.00%
Commercial bank 48-month new car interest rates in the

USA
unit: %
Year
Rate
2008
7.02%
2009
6.72%
2010
6.21%
2011
5.73%
2012
4.88%
2013
4.43%
2014
4.24%
Source: Xerfi Global with the Board of Governors of the Federal Reserve System
205
Vehicle production
Production of selected countries of

passenger and light commercial
vehicles in the first half of 2015
World production of passenger

cars and light commercial vehicles
Growth of vehicle production by country

unit: compound annual growth rate 2002 2012
Country/Region
Volume
Russia
0.73
UK
0.84
Thailand
0.94
France
1.04
Canada
Year
Volume
Growth
Country/Region
2005
66.7
4.20%
2006
69.2
4.10%
2007
73.3
6.80%
1.10
2008
70.7
-3.60%
Brazil
1.28
2009
61.8
-12.40%
Spain
1.46
Mexico
1.81
2010
77.7
26.60%
India
2.05
2011
79.9
South Korea
2.32
2012
Germany
3.08
Japan
4.65
US
6.12
China
12.10
CAGR
20052014
Q2
2014Q2
2015
EU
-5.7%
5.00%
Japan
-1.1%
-8.20%
USA
-0.3%
3.00%
Thailand
5.9%
-1.80%
3.20%
Mexico
8.1%
8.60%
84.2
6.60%
India
10.0%
7.20%
2013
87.7
4.00%
Indonesia
11.3%
-14.50%
2014
89.7
2.80%
2015*
91.2
0.50%
China
17.2%
2.60%
Source: Xerfi Global with

OICA
206
Vehicle exports
Biggest car exporters 2005
Biggest car exporters 2014
unit: billion euros
Country/Region
Germany
Japan
Canada
France
USA
Belgium
South Korea
UK
Spain
Mexico
unit: billion euros
Value
87.27
64.05
29.95
27.21
25.11
23.18
21.89
19.52
19.34
10.76
Country/Region
Germany
Japan
USA
Canada
South Korea
UK
Mexico
Spain
Belgium
France
Value
120.41
66.70
46.40
33.76
33.72
31.87
24.37
24.02
22.79
14.44
Global car export value

unit: billion euros
Year
Value
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
391.19
425.96
454.70
432.82
312.03
418.94
457.42
500.40
506.67
527.19
207
Vehicle imports
Biggest car importers 2005
Biggest car importers 2014
unit: billion euros
Country/Region
USA
unit: billion euros
Value
100.85
Country/Region
USA
Value
116.16
UK
32.03
China
44.93
Germany
29.46
UK
34.86
Italy
24.55
Germany
34.71
France
21.34
France
23.30
Spain
18.49
Canada
20.31
Canada
16.12
Belgium
20.27
Belgium
15.90
Italy
17.12
Australia
7.45
Australia
11.92
Netherland
6.89
Spain
11.26
208
Production volume by group
Analysed groups production volume 2014

Year
Volume
Toyota
10193090
Volkswagen
9894891
General Motors
9594925
Hyundai
7909463
Ford
5874696
Nissan
5076022
Fiat-Chrysler
4716963
Honda
4513769
PSA
2917046
Renault
2761969
BMW
2165566
SAIC
2034924
Geely
890652
Tata
625646
Tesla
31655
209
Net sales by group
Ranking of analysed groups by consolidated net sales (2014)

unit: billion euros
Year
Value
Volkswagen
202.46
Toyota Motor
194.01
GM
116.57
Ford
107.71
FCA
96.09
Honda
94.63
Nissan
80.76
SAIC
76.17
Hyundai Motor
63.64
PSA
53.61
Renault
41.06
TATA
34.89
Kia Motors
33.58
BMW
8.04
Geely
2.64
Tesla
2.39
210
Aggregate net sales and operating margin
Aggregate consolidated net sales of analysed companies

unit: billion euros
Year
Value
2010
826.87
2011
928.54
2012
1029.69
2013
1124.24
2014
1174.66
Aggregate operating margin of analysed companies

unit: billion euros
Year
Change
2010
5.1%
2011
5.3%
2012
4.8%
2013
5.6%
2014
5.5%
211
7. Sources
212
Company websites
Toyota
www.toyota.com
Volkswagen
www.volkswagen.com
General Motors
www.gm.com
Ford
www.daimler.com
Honda
www.honda.com
BMW
www.bmw.com
Renault
www.renault.com
Nissan
www.nissan.com
Tesla
www.teslamotors.com
FCA
www.fcagroup.com
PSA
www.psa.com
Hyundai
www.hyundai.com
Tata Motors
www.tatamotors.com
SAIC
www.saicgroup.com
GEELY
www.geely.com
213
International organisations
Eurostat
Eurostat
www.ec.europa.eu/eurostat
Financial Times
Financial Times
www.ft.com
OECD
Organisation for Economic Co-operation and Development

www.oecd.org
World Bank
World Bank
www.worldbank.org
Intracen
International Trade Centre

www.intracen.org
CHELEM
Comptes Harmoniss sur les Echanges et L'Economie Mondiale

www.cepii.com
214
Industry bodies and consultancies
OESA
Original Equipment Suppliers Association

www.oesa.org
OICA
The International Organisation of Motor Vehicle Manufacturers

www.oica.net
215
8. Annexes
216
Fiscal periods and exchange rates
TOYOTA
2014 fiscal year ended 31 March 2015. Exchange rate: 1JPY= 0.0071EUR
GENERAL MOTORS
2014 fiscal year ended 31 December 2014. Exchange rate: 1USD = 0.7476EUR
VOLKSWAGEN
2014 fiscal year ended 31 December 2014. Exchange rate: 1EUR = 1EUR
FORD
HYUNDAI
2014 fiscal year ended 31 December 2014. Exchange rate: 1KRW = 0.0007EUR
PSA
BMW
HONDA
FCA
RENAULT
TESLA
NISSAN
TATA
2014 fiscal year ended 31 March 2015. Exchange rate: 1INR = 0.01338EUR
SAIC
2014 fiscal year ended 31 December 2014. Exchange rate: 1RMB = 0.1214EUR
GEELY
2014 fiscal year ended 31 December 2014. Exchange rate: 1RMB = 0.0964EUR
217
Statistical framework
Automobile companies are classified under the 3353 code of the Industry
Classification Benchmark (ICB).
Automobiles (3353) code of the ICB
classification
The Automobiles (3353) code refers to Makers of motorcycles and passenger

vehicles, including cars, sport utility vehicles (SUVs) and light trucks. Excludes makers
of heavy trucks, which are classified under Commercial Vehicles & Trucks, and
makers of recreational vehicles (RVs and ATVs), which are classified under
Recreational Products.
218
Glossary
CATEGORY
ENGLISH
ITEM
DEFINITION
ITEM
DEFINITION
CAGR
Acronym for Compound Annual Growth Rate. TCAM
Acronyme de Taux de Croissance Annuel Moyen, ou CAGR

en anglais.
Capex
Short for "Capital Expenditure"), an item of the cash-flow

statement used as a proxy for investment in property, plant
CAPEX
and equipment (PPE). Generally entails physical assets used
to maintain or increase operation capacities.
Abrviation de "Capital Expenditure", un lment du tableau

de trsorerie mesurant l'investissement dans les
immobilisations corporelles. Il sert valuer l'effort consenti
pour maintenir ou dvelopper les capacits de production.
Free
cash flow
The cash that a company is able to generate after subtracting Cash flow
expenses needed to maintain its asset base. disponible
Le Free Cash Flow, ou Cash Flow disponible en franais,

correspond la trsorerie gnre par une entreprise aprs
dduction des dotations aux immobilisations.
Goodwill
Goodwill is the difference between the purchase of the fair

Goodwill
value of assets and liabilities acquired by a company.
Aussi appel cart d'acquisition ou survaleur, le goodwill est

la diffrence entre le prix d'acquisition et la juste valeur
d'lments du passif et de l'actif acquis par l'entreprise.
Gross profit is the result of the difference between total sales

and the cost of making products or providing services.
Marge brute
Payroll and interest costs as well as taxes are not taken into
account.
La marge brute correspond la diffrence entre le chiffre

d'affaires et le cot de fabrication du produit ou de la
fourniture de services. Les salaires, les intrts, les taxes, etc.
n'entrent pas dans le calcul de la marge brute.
Gross profit
Basic financial
analysis
FRENCH
Impairment
charge
Impairment charges occur when a company has found that

the value of its goodwill has been overestimated and needs Perte de valeur
to be revised.
Liabilities
Liabilities encompass all obligations arising from a

company's past operations and which will result in an
outflow of resources in the future. Liabilities are divided into Passif
short term and long liabilities, and represent the debt a
company owes to its creditors.
Net debt
Net debt is calculated by subtracting a company's cash from

Endettement net
its total debt.
L'endettement net se calcule en dduisant le cash disponible

d'une entreprise du montant total de ses dettes.
Net profit/
net margin
Net profit refers to a company's total earnings. It is the result

of the difference between net sales and all operating and
Rsultat net
non-operating expenses such as taxes, interests, depreciation
and amortisation expenditures.
Le rsultat net est le bnfice net d'une entreprise. Il

correspond la diffrence entre le chiffre d'affaires et toutes
les dpenses oprationnelles et non-oprationnelles comme
les impts, les intrts, les charges de dprciation et
d'amortissement.
Operating
profit/operating
margin
Operating profit refers to the earnings generated by the

normal business operations of a company. Operating profit is Rsultat
the result of the difference between sales and total operating oprationnel/marg
expenses. Operating margin is expressed in % and is e oprationnelle
computed by dividing operating profit by net sales.
Une perte de valeur se produit lorsqu'une entreprise est

amene revoir la baisse la valeur de son goodwill.
Le passif comprend toutes les obligations contractes par
une entreprise dans l'exercice pass de ses activits et qui se
matrialiseront par des dcaissements terme. Le passif peut
tre courant ou non-courant, et reprsente l'ensemble des
crances d'une entreprise.
Le rsultat oprationnel dsigne le bnfice dgag par une

entreprise grce l'exercice de ses activits traditionnelles. Le
rsultat oprationnel est obtenu en dduisant les dpenses
d'exploitation du chiffre d'affaires. La marge oprationnelle,
exprime en %, est obtenue en divisant le rsultat
oprationnel par le chiffre d'affaires.
219
Glossary
CATEGORY
Basic financial
analysis
ENGLISH
ITEM
DEFINITION
ITEM
R&D expenditure
Expenses associated with the research and development

process of creating new products or services; it is often used Dpenses de R&D
as a proxy for innovation.
Return on assets
Return on assets is calculated by dividing a company's net

income by its total assets. It measures the ability of the Retour sur actif
company to generate profits from its assets.
Return on equity
Return on equity is calculated by dividing a company's net

Retour sur fonds
income by its shareholder equity. It measures the ability of a
propres
company to generate profits from its investment funds.
Sales
Working capital
Assets
BRICs
Macroeconomic
concepts
FRENCH
Business climate
Consumer price
index
Consumer
sentiment
Consumer
spending
Earnings made from the sales of goods and services,

excluding VAT and other taxes. Reflects, total volumes sold, Chiffre d'affaires
selling prices, exchange rates and product mixes.
Working capital is the difference between currents assets and
Fonds de
current liabilities. When positive, working capitals means a
roulement
company would able to pay its short term debt.
Assets encompass all the economic resources owned by a
company. They are commonly divided into short term (cash, Actif
trade receivables, etc.) and long term assets
Acronym referring to Brazil, Russia, India and China, a group
of countries with similar characteristics in terms of economic
development. These countries report dynamic growth rates BRICs
across all major industries, and also enjoy a very large
population.
Business climate refers to the general economic sentiment. It
is measured by various indicators based on questionnaires
Climat des affaires
sent to survey participants from firms representative of the
economy.
An indicator which measures changes in prices of consumers Indice des prix la
goods and services bought by households. consommation
Consumer sentiment refers to the degree of optimism of
households as regards the state of the economy. Consumer Moral des mnages
sentiment is often used as a proxy for future spending.
Spending by households on durable and nondurable
Dpenses des
products or services. Often used as a proxy for short-term
mnages
demand in an economy.
DEFINITION
Dpenses associes au processus de recherche et de
dveloppement de nouveaux produits et de nouveaux
services. C'est un indicateur de la capacit d'innovation d'une
entreprise
Le retour sur actif est calcul en divisant le rsultat net d'une
entreprise par le total de son actif. Il mesure la capacit d'une
entreprise crer de la richesse partir de ce dont elle
dispose.
Le retour sur fonds propre est calcul en divisant le rsultat
net d'une entreprise par le total de ses fonds propres. Il
mesure la capacit d'une entreprise crer de la richesse
partir des capitaux apports par ses actionnaires.
Le chiffre d'affaires correspond au total des ventes hors taxes
de biens et de services. Il est le reflet des volumes couls,
mais aussi du prix de vente moyen, des taux de change et
des variations du mix produit.
Le fonds de roulement est la diffrence avec l'actif courant et
le passif courant. Un fonds de roulement positif signale que
l'entreprise pourrait honorer ses crances court terme avec
ses actifs court terme.
L'actif regroupe toutes les ressources conomiques dtenues
par une entreprise. I
Acronyme dsignant le Brsil, la Russie, l'Inde et la Chine, un
groupe de pays prsentant des similarits en termes de
dveloppement conomique. Ces pays affichent des taux de
croissance trs dynamiques dans tous les principaux marchs,
Le climat des affaires dsigne le sentiment conomique
dominant. Il est mesur par des indicateurs tablis sur la base
de questionnaires envoys des professionnels reprsentatifs
des grands secteurs d'activit.
Un indicateur qui mesure les variations de prix pour les biens
et les services achets par les mnages.
Le moral des mnages dsigne la perception de la situation
conomique qu'ont les mnages. Cet indicateur est souvent
utilis pour valuer les futures dpenses des mnages.
Dpenses des mnages en biens et services durables et nondurables. Cet indicateur est souvent utilis pour valuer la
demande court terme.
220

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Global Markets And Competition

The 5 phases of Xerfi Globals

Identification of market leaders

Identification of the main market indicators

Identification of corporate strategies

Identification of the key conclusions

This is a collective report written

Other contributors include: Alberto BALBONI

Carmakers World December 2015

Carmakers World December 2015

Carmakers World December 2015

Key Trends 2015 2020

Carmakers World December 2015

Globally, car sales are growing, but at a slower rate

Growth in passenger car and commercial vehicle world production

unit: million vehicle units

unit: annual growth in %

Source: Xerfi Global with OICA, *Xerfi Global forecast

Source: Xerfi Global with OICA, *Xerfi Global forecast

Carmakers World December 2015

Carmakers profits are being squeezed in a highly-competitive environment

Source: Xerfi Global with companies

Carmakers World December 2015

Regulations and innovation carry a heavy cost, weighing down on profit

Carmakers World December 2015

and to complicate matters, the worlds largest market, China, is slowing

Year-on-year growth in registration or sales of new vehicles in China

unit: million vehicle unit sales in 2014

but China is now running

Source: Xerfi Global with OICA

Carmakers World December 2015

Large, premium and geographically-balanced makers are best placed

a more pressing need to enter

increasingly fierce competition

a greater interest in premium

a more pressing need to cut

increased political involvement

THOSE BEST ABLE TO WEATHER THE STORM ARE CARMAKERS WITH:

A BALANCED GEOGRAPHIC PRESENCE WHICH CAN ADAPT TO VOLATILE REGIONAL MARKETS

Source: Xerfi Global

Carmakers World December 2015

Increased innovation will gradually shift general perceptions of cars

PERCEIVED AS A PLATFORM FOR

PERCEIVED AS A PRODUCT FOR TRANSPORTING INDIVIDUALS

Carmakers World December 2015

Carmakers financials are moving at different speeds

Toyota Motor 194.01

KEY GROWTH AND PROFITABILITY DRIVERS

Source: Xerfi Global with companies

Carmakers World December 2015

KEY GROWTH AND PROFITABILITY DRIVERS

Source: Xerfi Global with companies

Carmakers World December 2015

while BMW reaps the rewards of higher premium margins

KEY GROWTH AND PROFITABILITY DRIVERS

Source: Xerfi Global with companies

Carmakers World December 2015

Carmakers World December 2015

Over one in four car sales is made in China

vehicles (car and commercial vehicles) were produced worldwide

of the worlds population owns a vehicle.