Transcript Slide 1

Automotive Industry and Emerging Markets
Sanjay Rishi
Global Automotive Industry Leader
IBM Global Business Services
© 2008 IBM Corporation
IBM Automotive
We are at a historical inflection point…..with revolutionary
changes transforming the global economy ….and the emerging
markets are at the epicentre of this change
© 2008 IBM Corporation
IBM Automotive
Emerging markets have fueled the growth of the automotive
industry … and will move towards becoming net exporters
2008e-2012e % Growth
Country
Prod.
Sales
Czech Rep
43.1
42.4
Poland
30.2
66.2
Romania
20.9
15.1
Russia
53.6
17.5
Slovakia
32.6
31.0
Turkey
10.6
45.8
2008e-2012e % Growth
Country
Prod.
Sales
Argentina
19.1
9.2
Brazil
13.1
13.7
Venezuela
15.9
9.6
2008e-2012e % Growth
Country
Prod.
Sales
China
55.0
54.9
India
42.4
49.0
Indonesia
44.1
52.2
Malaysia
31.2
32.2
Thailand
43.4
46.0
Source: 2007-08 OESA Industry Review, JD Power Automotive Forecasting
© 2008 IBM Corporation
IBM Automotive
China, India, and Russia have the fundamentals for continued
growth
Macro Economics
China
FDI (2006)
GDP – official exchange
rate (2006)*
Real GDP growth*
India
Russia
70B
16.9B
28.7B
2.5T
796B
733.6B
10.5%
8.5%
6.7%
Source: 2006 The World Fact Book, Business Monitor
Median Age - 2025
GDP Rank
10-20 year
difference in
median age
“YOUTH
PREMIUM”
60
50
40
30
20
10
0
Japan
West
Europe
US
China
India
Source: U.N. Department of Economic & Social Affairs,
Population Division
Rank
2007
2035
2040
#1
US
US
US
#2
Japan
China
China
#3
Germany
India
India
#4
China
Japan
Japan
#5
U.K
Germany
Russia
#6
France
UK
Brazil
#7
Italy
Brazil
UK
#8
India
Russia
Germany
Source: Dreaming with BRICs: The Path to 2050. Goldman Sachs
© 2008 IBM Corporation
IBM Automotive
Recent investments into Russia alone exceed $2.5B – partnerships
with federal and regional governments can provide large tax
advantages
Representative Examples of
Investment in Russia
Investor
Others,
13%
Isuzu, 2%
Product
Investment
Car Assembly
$555,000,000
& Avtotor Car Assembly
$342,000,000
Car Assembly
$292,000,000
Car Assembly
$292,100,000
Car Assembly
$92,000,000
Components
$80,000,000
Renault,
10%
Nissan, 6%
VW, 14%
Chevrolet,
12%
Toyota, 4%
Hyundai,
20%
Ford, 19%
Asian carmakers are expected to assemble more
than a half of all foreign cars in Russia by 2010
Source: Datamonitor
© 2008 IBM Corporation
IBM Automotive
Understanding specific nuances in each market is critical to
establishing successful, sustainable partnerships
• Shortage of skilled labor is a serious
challenge
• Conflicting interpretations of IP rights
drive investment strategy
• Inadequate infrastructure will impede
growth
• Roads, Ports
• Issues exist with collateral and ability to
assess credit risk for vehicle purchases
• Establishing brand affinity is a key
• R&D capabilities – an opportunity
Source: IBM IBV: Inside India, 2007; Inside China, 2006
© 2008 IBM Corporation
IBM Automotive
There are three key actions that enable growth
in emerging markets
 Establish deep government, university and
business community relationships
– Build local talent in a fiercely competitive
market
 Ensure business integrity
 Create local ecosystem of partnerships
– Open collaboration and trust
© 2008 IBM Corporation
IBM Automotive
Building and sustaining these new ecosystems of partnerships will
enable successful Globally Integrated Enterprises
 New networks for innovation
– Focus and speed
 New sources of high-value skills and knowledge
 New business models and corporate structures
© 2008 IBM Corporation
IBM Automotive
Sanjay Rishi
Global Automotive Industry Leader
IBM Global Business Services
[email protected]
© 2008 IBM Corporation