AUTO trends

Evolutionofconsumers’buyinghabitsParis18thMay2000A.T.KearneyGlobalAutomotiveStephenParker2A.T.Kearney12/9003/14/06/00AgendaTrendsintheglobalautomotiveindustryChangesinconsumerbuyingcriteriaTheimpactoftechnologyAutomotiveindustryandinsuranceConclusions-FriendsorFoes?3A.T.Kearney12/9003/14/06/00SuppliersGrowthstrategiesMega-suppliersCo-design/-engineeringFull-service-suppliersContinuouscostpressureSparePartsManagem.OEMLifecyclemanagementSecondsourcingwaveDeproliferationRestructuringCustomerHigherqualitydemandsHighervalueawarenessCustomerSatisfactionProfitabilityGlobalizationTechnologymanagementRetailrevolutionSuppliermanagementValuepricingMobilitysellingRestructuringNewdistributionchannels24h-deliveryChangingrolesandresponsibilitiesModularsourcingIntegratedvaluechainsConsolidationMarketingeffectivenessMergers&acquisitionsCooperationsJoint-venturesBrandmanagementReturnonmarketinginvestmentRelationshipmarketingGrowthstrategiesRegionalclusteringofcustomerdemandsWorldwidemarketingandsalesstrategiesInternationalmanufacturinglocationsGlobalsourcingInformationsystemsDatamanagementRobotic/AutomationNavigationandCommunicationsystemsConvergenceoftechnologiesTrendsintheglobalautomotiveindustryTheGlobalAutomotiveIndustryisfacingmajorchallenges4A.T.Kearney12/9003/14/06/00AlreadylowOEMmarginsinthecorebusinesswillfacecontinuedpressurefromcurrentlevelsofindustryovercapacityandplannedinvestments,whilstcross-subsidisationbypartsandfinancewillsufferfromincreasedcompetitionPremium/superluxurybrandsandlowervolumeplayersarebeingabsorbedwhilehighervolumeplayersarecontinuingtocompeteforgeographic,brand,andplatformadvantagesTheabovetrendsareconverging,drivingfurtherconsolidationandcreatinganindustrydominatedbyasmallnumberofmegaplayersIncreasingdifficultyindifferentiatingproducts,andtheeffectsofovercapacityaredrivingconsolidationintheindustryTrendsintheglobalautomotiveindustry5A.T.Kearney12/9003/14/06/005–6megaplayers6%targetaverageoperatingmarginProductionof5–12millionunitseach2005200540players1.6%averageoperatingmarginfortop8players(1992-1998est.)Averageproductionof1.3millionunits19971997ReducedcostsinallsegmentsIncreasednumberofmodelsandbrandsinallproductsegmentsMarginopportunitiesofpremiumbrands,nicheproductsandnon-coreproductswillbeerodedImpactofConvergingstrategiesTheseconvergingpressureswillcreateanindustrydominatedbyafewmega-playersTrendsintheglobalautomotiveindustry6A.T.Kearney12/9003/14/06/00AggregateOperatingMarginsWesternEuropean,JapaneseandUSCarProducers(1983-1996)Source:FTAutomotive:TheWorld’sCarManufacturers1997MarginsforEuropeanVMshavebeeninlongtermdeclinebutareimprovingasthemarketpeaksTrendsintheglobalautomotiveindustryOperatingMargin(%)8%6%4%2%0%-2%-4%-6%-8%JapaneseEuropeanAmerican’83’84’85’86’87’88’89’90’91’92’93’94’95’96JapaneseAmericanEuropean’95’967A.T.Kearney12/9003/14/06/00Source:McKinseyanalysisbasedonNADA,AAA,RurtzheimerInternational,FederalReserve,pressclippingsTrendsintheglobalautomotiveindustryDownstreamofcarsalesinsuranceisakeypotentialrevenuestreamnotadequatelycapturedbyOEM’stoday10%8%6%4%2%0%2%4%6%8%10%NewPriceDealerMarginIncentiveWarrantyCostOEMHoldbackShippingDealerPreparationNationalAdvertisingESP1stFinance2ndFinance3rdFinanceFloorPlanDealerOptionsDealerAdvertisingMaintenanceRepairsSalesTax(7%)-3SalesAuctionFeeInsuranceAfter-MarketAccessoriesLicence/registration/taxFuel/OilTyresCellPhone(5years)AudioSoftwareParkingTollsCrashDeductibleWash/miscellaneousScrapUsedPartsRecycleValueTypicallyspentwithOEMTypicalOEMparticipationequals43%ofrevenuestreamTotalrevenuestream:$68,001over10yearsTypicallyspentwithotherProviders8A.T.Kearney12/9003/14/06/00Theindustryisbeginningtofocusupontheprofitopportunitiesofdownstreambusiness1)RevenuesforFinancialServicescompaniesconsideringrateofInterests,fees,…Quelle:Competitiveanalyse5%7%4%9%5%4%2%1%3%OEMFinancingInsuranceAccessories/partsServiceCarrentalEurope(operatingProfit/Revenues1)USA(EBIT/Revenues1)NewcarsalesUsedcarsalesLeasing10%8%8%12%9%15%2%4%0%OEMFinancingInsuranceAccessories/partsServiceCarrentalNewcarsalesUsedcarsalesLeasingTrendsintheglobalautomotiveindustry9A.T.Kearney12/9003/14/06/00FordMotorCompany’sdownstreamparticipationRevenuestreamformidsizecarovertenyearsand10,0001miles,1998,$100400100210751,3505004754004,7001,4004,0902,6006,0002,1101,0006,6101,5002,9003,395CDRadioAllianceCopherBrothersAutoPartsSalesTax2AuctionFeeSecondFinanceThirdFinanceInsuranceAftermarketAccessoriesLicense,Registration,TaxesFordCreditUsed-CarFinancing,CertifiedUsedCarProgramCo-brandedInsurance3InternetAutoInsurance4AftermarketAccessoriesOn-lineKwikFit,AutoCollectionsDealerTireSalesRescueTelematicsCollisionTeamofAmerica69,591Gas,OilMaintenanceRepairsTyresCellPhoneUsedPartsScrapWash,MiscellaneousCrashDeductibleTollsParkingAudioSoftwareRecycleValueFord’sDownstreamParticipationTypicalautomakerparticipation:43%ofrevenuestreamNewprice($20,341)Dealermargin($1,311)Incentive($1,500)Warrantycost($400)OEMholdback($509)Shipping($550)Floorpl