IFC JD Power Cologne Global Outlook 29 Apr 10 - 10 04 26 EP by pumaixin


									Financing the Automotive Sector in Emerging Markets …

                 … in an incredibly fast changing world !

      JD Power Automotive Forecasting Global Outlook Conference
                                              Köln – 29 Apr 2010

                                                Emmanuel POULIQUEN
             Principal Industry Specialist, Energy Efficient Machinery
             How it was three years ago
             2007 Light Vehicles Output

          North                    European
         American                   Cluster                            10.4 M
          Cluster                    22 M                 China
           15 M                                            8M     Korea
                                                                  3.6 M
                                                       2M     ASEAN
                                                               2.3 M


                                              0.6 M


Page 2
         2017 Light Vehicles Output (JD Power Q1-2010)

                                                          China            Japan
                                                                           4.9 M
              Cluster                                     20.3 M
                                        26.2 M
              20.0 M                                                Korea
                                                                    1.6 M
                                                          4.0 M   ASEAN
                                                                   3.5 M

                         6.4 M

                                                  0.7 M


Page 3
                     How fast things go !
• JD Power Paris Round table – September 2006
    “Is Asia a global threat ?”
    “… The end of the Old Auto World ???”
    “Leverage your continent”
• 2008-2009
    Largest global financial crisis since the Great Depression
       • GM & Chrysler saved from the grave – are they still Zombie ?
       • US Market sales fall from 16.1 M in 2007 to 10.4 M Light Vehicles in
    While the developed countries car businesses collapse, governments
     inject massive amounts of deficit financed cash to save (or resuscitate)
     the Industry
    Fearing to go below 6% GDP growth, China pumps money in its own
     Industry … so much that 2009 becomes a boom year with sales of nearly
     13M light Vehicles !

                         Well, you know …
• “… Chinese cars are not American cars ! (and even less
  European or Japanese ones !)”
      Crash test !
      Emissions !
      Quality !
      Bells and whistles (?)
      Efficiency (!?)
• “Anyway, China is still an emerging country for long and they
  only make cheap cars for lower income people !”
• … but, well, perhaps we should pay attention a bit more ?
    BYD ?
    Tibet ?
    Africa ?

China emerging country for long …

… but should not we look a bit closer ?

      The path to 50 M Chinese Cars per year
• How many cars per year in China in the end ?
• In 2010:
     Japanese model: 128.3 M People – 60 M Car Parc – 5 M Light Vehicles Sold
        Car Sales = Car Parc (U.S. model: Car Sales = Car Parc / 20)
     China: 1 331.4 M People – 40 M Car Parc
        • The Japanese model would give 622 M Car Parc in China  50 M Light
          Vehicles Market (U.S. model: 30 M Light Vehicles Market)

• How long will the growth last ?
     2003: 2.36 M Cars Sold  2010: 9.6 M Cars Sold  CAGR = 22.1% !
     At 22.1% growth per year, 50 M Cars yearly sales would be reached in less
      than 9 years
     … 600 M cars on the Chinese roads by the end of next decade ???

            How fast ? The E-Bikes model
• 2009, China's output of electric bikes (E2W) reached 22.2 M

201x – We were
   warned !

A Chinese Tsunami ?

               Not a Chinese Tsunami ! (but …)
• 中国 = Country in the Middle = Self Centric – and pragmatic !
• Not a Japanese or Korean export model
    Largest internal market in history
    No former American protectorate
• 1980-2000: Get hard currencies to pay for technology
    Export whatever you can (From Barbie dolls to TV sets and PCs)
    Import technology and business know-how
• 2000-2010: Prime the internal demand era
    Grow the industry and expand technical know-how towards hi-tech
• 2011 and later: Internal demand attractiveness beats all markets

    Similar to the U.S. from 1900 to 1929 … but   15   times larger
    Exports still needed for offsetting raw materials/energy imports
    Flows of exports accelerate with Africa and South-America in line with imports
    Yuan becomes the reference trade currency for Africans … and others (?)
                            In the mean time …

• Confederate Europe expands its cluster to Middle east (500 M consumers
  with Oil, Gas, Solar and Nuclear Energy)
     North Africa and Turkey complement Eastern Europe as growth centers
     Cluster stability around the Euro
     Internal cluster industrial exchanges most important
• Astonished America is no more number one and must turn to frugality
     The Illness:
        • Hardest hit by inflation of oil and raw materials
        • Hardest hit by the diminishing power of the Dollar
        • Hardest hit by its national deficit
     A Cure: Considers “the confederation of NAFTA” - Strengthened Cluster
• South-America (Brazil cluster) grows well and learns to love China
• Japan and Korea become China economic protectorates
• India continues a difficult adolescence and re-explores links with Russia

             Cars: Enough oil for the world ?

Oil prices will skyrocket
China can’t afford a petrol/diesel engine model for long term growth
China will be THE driving market for EVs
                      Implications – Macro Level
• For China:
     Control of strategic raw materials sources
        • Oil ?              Yes, but it’s not the long term solution
        • Batteries:         Lithium  Tibet
        • Grid electricity: Uranium  Tibet
        • Others: (Copper, Iron, Lead, Nickel, etc …)  Africa, Latin America
     “Thrifty” high-tech to save as much energy and material as possible
     ICE cars  Serial Hybrids, E-Cars – Top-Down and Bottom-Up
     E-Bikes  E-Micro-Cars (or “Segway-QiChe” ?)
• For developed countries:
       Cars downsizing
       Some hybrid
       Europe, Japan used to smaller cars, dear oil, Nuclear energy  Easier adaptation
       North-America issues – Lobbies, Driving Distances, “Big and Plentiful” mentality
• For India and Russia:
     India comes years after China “first come, first served” natural resources policy in
      Africa and South America and could turn to Russia

                   Scenario for 2010-2030
• A decade of inflation worldwide (2010-2020)
• 2020: Yuan challenges the USD as the preferred currency for
• 1 USD = 1 EUR = 2 CNY ?
• Western countries and Japan GDP per head stagnant since 2010
• India “Small Car Hub” for Developed countries
• 2015-2030: Africa economy booming

• Global Industry Growth will stay dynamic – but driven essentially by
  Emerged (China) or Emerging Markets
• Boom in Energy management, Electricity Grids, E-Cars supply Chain
• Wind+Solar+Atomkraft ? Ja Bitte ! (or we’ll all suffocate !)

       What does this mean for the Car Industry ?
(… and how can my automotive business survive ?)
• Thrifty, Thrifty, Thrifty (even if you make Ferraris !)
     Know your shop floor, look for Muda !
• Serial Hybrids or EVs (small ones preferred)
• Light weighting, compatible with EV architecture
     Technology will evolve very fast BUT Quality will still stay paramount !
     “Reserved for future use”
• Cluster organization
     One Head Quarter in each cluster + Global R&D, Purchasing & Finance
      coordination – Strong, empowered China HQ
     Look for Low Cost should be next door ! (Logistics, Currency Zone)
     Next door emerging market have still growth potential !
• … and integrate Chinese, Spanish/Portuguese, Arabic and Russian !

             Finance: manage in a wild world
• Currency fluctuations (not-so-low cost sourcing)

• Market fluctuations
• Accelerate in emerging markets – with the right Banker
       Bankers support (Knows east/west/south)
       Hands on experience in your trade
       Development AND investment banker
       Present in all emerging countries
       World class understanding of your industry
       Long term view
• Promoting efficient products and processes
        IFC: Our Reputation and Value (Who we are)
• IFC is the world’s largest multilateral private sector investor in the emerging markets
• AAA rating
• Profitable every year since it was established
• 2,600+ people in more than 100 offices worldwide
• In-house syndications department working with over 200 banks
• Global benchmarking - identifies and disseminates international best practice
• Advice on environmental and social issues
• Political risk mitigation
• IFC Performance Standards adopted through the Equator Principles
 by over 50 global institutions.

IFC - Industry and Regional Experience
               •100+ country and regional advisory services offices worldwide


•Mexico City
                      •Bogota                            •Nairobi

                       •Sao Paulo

                                •Buenos Aires

                           Investments by Industry, FY09
                     •Commitments for IFC’s Account: $10.5 Billion

                           •   Private Equity and     •Subnational
                             Investment Funds 3%      Finance 3%
            • Oil, Gas, Mining                                             • Agribusiness
             and Chemicals 7%                                                7%

• Infrastructure                                                                            •Global Financial
  14%                                                                                       Markets 45%

• Health and Education
        • Global Manufacturing and Services         • Global Information
          14%                                         and Communication
            • Low emissions Cars, EVs                 Technologies 5%
            • Wind, Solar, Grids, EVs
            • Low Emissions Machines/Plants
            • Other …
                 IFC Strategic Priorities

• Strengthening the focus on frontier markets – IDA countries,
  poorer regions of middle-income countries, conflict affected
  and fragile states, and industries with the broadest potential
  for development impact

• Building enduring partnerships with emerging market players

• Addressing climate change and ensuring environmental and
  social sustainability

• Promoting private sector growth in infrastructure, health,
  education, and the food supply chain

• Developing local financial markets

IFC’s Business (What we do)
      Investment Services

• Loans and intermediary services

• Equity and quasi-equity

• Syndications

• Structured and securitized products

• Risk management products

• Trade finance

• Subnational finance

• Treasury operations

• CleanTech Venture Capital
IFC Offers to Clients (What we bring)
           Unparalleled Expertise

• Knowledge of global industries and local markets

• Financial sector influence

• Long-term partnerships; countercyclical role

• Sustainable investments

• Leadership on corporate governance

• Value-adding expertise

             How IFC differs from other Investors

• IFC can provide debt, equity, or a combination of both depending on the client’s needs
• IFC has a longer investment horizon (5-7 years) and is less cyclical than most financial investors
• With its equity investments, IFC can act as an “honest broker” in joint venture situations,
  give additional comfort for minority shareholders, and be a catalyst for other investors.

• Leading multilateral source of development finance – IFC’s breadth of investment expertise
  and years of experience in emerging markets add value to its clients

• IFC strong reputation adds credibility to investee companies that access international
  capital markets

• Best practice know-how on corporate governance, environmental management, local communities,
and insurance requirements

                       Questions ?

                Mr. Emmanuel POULIQUEN (普迈新)
                     Principal Industry Specialist
IFC - Global Manufacturing & Services – Energy Efficient Machinery
     Financing production and deployment of equipment that
    efficiently generate, store, transport or transform energy

                   2121 Pennsylvania Ave., NW
                     Washington, DC 20433
         Tel: +1 (202) 473-9114 Fax: +1 (202) 974-4394
                    Email: EPouliquen@ifc.org


      Per-capita fossil-fuel CO2 emissions, 2005

                        •World emissions: 27 billion tons CO2

                                           •AVERAGE TODAY

           •1-                                                  •STABILIZATION

•Source: IEA WEO 2007
 IFC Customer Profile: Multinationals, Regional and

•What is important about IFC to a company, by size and location
What IFC brings to an investment      Multinational   Regional   Local

Quality stamp of approval

Country risk mitigation

Exposure to country risk volatility

Good contacts/knowledge

Competitive cost
Long tenors
Access to local currency funding
Complementary funding source
                 Sector: Energy Efficient Machinery

•Brazil           •Brazil            •Brazil, Mexico   •Mexico
•Randon Group     •FRAS-LE           •Marcopolo        •Forja Monterrey

•US$65 million    •US$20 million     •US$38 million    •US$29 million
•Loan, Equity     •Loan, Equity      •Loan             •Loan, Equity

•Mexico           •Mexico            •China
•Metalsa          •Nemak             •TBK China

•US$33 million    •US$33 million     •US$4 million
•Loan, Equity     •Loan              •Loan

•China             •China
•Launch Tech       •Nanjing Kumho

•US$8 million      •US$102 million
•Equity            •Loan, Equity
   Sector: Energy Efficient Machinery
•India               •India            •India             •India
•Apollo Tyres Ltd.   •IAL              •LGB               •Tata Motors

•US$47 million       •US$10 million    •US$20 million     •US$50 million
•Loan                •Equity           •Loan, Equity      •Loan

•Indonesia           •Czech Republic   •Turkey
•PT Astra            •Hayes Lemmertz   •Standard Profil

•US$104 million      •US$38 million    •US$52 million
•Loan, Equity        •Loan             •Loan, Equity

•Turkey              •Egypt
•Uzel                •Amreya

•US$35 million       •US$5 million
•Loan                •Loan

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