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Expandingcurrentproduct/serviceportfolioReadthereportIt’sthemostoptimalstrategyforVolkswagenPhaetontoexpandcurrentproductandserviceportfoliofromthefollowingperspectives.23Content14PotentialChallengesOptimalStrategyPhaetonProfileChinaLuxuryCarMarketChinawillbecometheworld’slargestpremiumcarmarketMaindistributionprovinceofluxurybrandDivisionsofChineseluxurycarusersContent1ChinaLuxuryCarMarketDistributionofbrandattentioninluxurycarmarketKeybuyingfactors–whattrulymatters?4/21NumberofurbanhouseholdsbyannualdisposableincomebracketMillionhouseholdsSOURCE:McKinseyInsightsChina–Macroeconomicmodelupdate(2012);CanbackDangelChinaLuxuryCarMarket1Chinawillbecometheworld’slargestpremiumcarmarketGlobalpremiumcarsalesranking,thousandunitsPerhapsasearlyas2016,ChinawillovertaketheUnitedStatesastheworld’slargestmarketforpremiumcars.By2020,therewillbe23millionaffluenturbanhouseholdsinChina–7%ofthepopulationandroughlyequaltothetotalnumberofhouseholdsinGreatBritaintoday.海南黑龙江吉林辽宁河北山东福建江西安徽湖北湖南广东广西上海河南山西内蒙古陕西宁夏甘肃青海四川贵州云南西藏新疆江苏浙江北京(Salesproportionofnationwide)5/21SOURCE:McKinseyInsightsChina–Macroeconomicmodelupdate(2012);CanbackDangelChinaLuxuryCarMarket1Beijing,Shanghai,ZhejiangOver10%:Guangdong,Jiangsu,SichuanInnerMongolia,Shandong,Hebei,Liaoning,Fujian.5%-10%:2%-5%Maindistributionprovinceofluxurybrand6/213MainlyMale(30-39).Attentiononorginandproperty.Highpercentageofwomen(25-35).Careaboutluxuriousfigureandcostperformancemost.Successfulbusinessownersorseniorexecutive(35-45).Attentiononsocialidentityandcomfort.MainlyMale(30-39).Willingtotrytheadvancedfeaturesandtechnology.30-39.Emphasisonrepresentingpersonalidentityandimage.ChineseluxurycarusersaredividedintofivegroupsSOURCE:DAXUEConsulting2013LuxuryCarMarketResearchofChinaChinaLuxuryCarMarket3ChinaLuxuryCarMarket7/21SOURCE:DAXUEConsulting2013LuxuryCarMarketResearchofChinaMultinationalsdominateChina’spremiumcarmarket,withGermanautomakers(e.g.Audi,BMW,Mercedes,andtheVolkswagenGrouppremiumcars)accountingfor80percentofmarketshare;otherEuropean,Japanese,andUSbrandsmakeuptheremainder.However,competitionisheatingup,puttingpressureonprofitmargins.Distributionofbrandattentioninluxurycarmarket(May,2013)3ChinaLuxuryCarMarket8/21SOURCE:McKinseyInsightsChina–Macroeconomicmodelupdate(2012);CanbackDangelOriginofPhaetonDevelopmentofPhaetonSalesofPhaetonanditsmaincompetitorsContent2Optimalstrategy10/21TheVolkswagenPhaeton,launchedin2002,isafull-sizeluxurysedanmanufacturedbyGermanautomakerVolkswagen,describedbyVolkswagenastheirpremiumclassvehicle,aspiratingtocompeteonthelevelofitspremiumGermancounterpartsintheluxurymarketlikesoftheMercedes-BenzS-class,theBMW7-series,anditsVWGroupsiblings,theAudiA8andBentleyGTCoupe.3PhaetonprofileOriginThewholemanufacturingprocedurefocusonsedan’squality.Itisthedevotiontodetailthatmakesaworkofartandmasterpiece.Inthetransparentfactory,wherePhaetonsareassembled,passion,craftsmanshipandprecisionarechanneledintomotorcars.BuyerswillhaveanunforgettableexperienceenjoyingthehandcraftinginteriorandluxurydesignderivedfromGerman.TheVolkswagenPhaetonwasatechnologicalmarvelwithtopconfigurationswhenitwasexportedtotheUnitedStates.Salesfellshortofexpectations.ThesalesinAmericasawashortincrease,butplungedtoonly235in2006.Sothat,attheendofthe2006,PhaetonwaspulledfromtheUnitedStates.3PhaetonprofileDevelopmentSource:AnnualReportofVolkswagen11/21IncontrasttohowthePhaetonperformedintheU.S.,thesedancapturedtheattentionofbuyersinforeignmarkets,particularlyAsia,withmuchsuccesscominginSouthKorea.Inrecentyears,KoreahasbeensurpassedbyChinaasthePhaeton’sbiggestsalesmarketoutsideofGermany.3PhaetonprofileHighdemandfortheVolkswagenPhaetoninChinahasgivennewoptimismforitssuccessor.In2009,ChinesedeliveriesofthePhaetonworldwideroseto40%.Volkswagensuccessfullyincreasedthatfigureto3741vehiclesin2010,a158%gain,makingChinathebiggestmarketforPhaeton.In2012,thenumberofdeliveriesinChinais10000.Withexcellentperformanceintheserialyears,ChinaisnowthechiefmarketforPhaeton.ThenewPhaetonwaspresentedin2010BeijingInternationalAutomotiveExhibition.AndselectingChinaasthevenueforthelaunchofthenewPhaetonprovesVW'scommitmenttothisvastmarket.Phaetonisstillfarbehindfromitscompetitorsinsales,althoughithasoutstandingmarketperformanceinChina.12/213OptimalStrategyEnrichChina-specificproductportfolioPersonalizedservicesinPhaetonCustomizationCenterPhaetonExclusiveLoungeinthemostunderstatedwayContentsmallerenginesOptimalStrategy314/21offerChina-specificcarmodelsatappropriateprices--considerablylessthantheMercedes-BenzS-ClassandBMW7Series--loweringtheentrancelevelofpremiumcarstoembrace“newmainstream”consumers.Tofollowthetrendofstrictercontrolonfuelefficiencyandstrongerawarenessofenvironmentalprotection.Forexample,VWPhaetoncouldditchthethirstyV-8andW-12enginesusedpreviously,andusearangeofturbocharged4-cylinderandV-6engines,coupletoan8-speedautomatictransmissionforproduction.Aplug-inhybridmodelcouldalsojointherangeatsomepoint.EnrichChina-specificproductportfoliowith...Theoldergenerationofpremiumcarownerspurchasedvehiclesm