Automechanika Dubai

Tuesday, September 30, 2014

1

AGENDA  Short presentations

Q & A

 Lunch/Networking

SPEAKERS Mr. Michael Dehn Group Exhibitions Director Epoc Messe Frankfurt

Mr. Subhash Joshi Senior Analyst Frost & Sullivan Ms. Prachi Satoskar Head - Automotive GfK

GCC Car Modifications Conference 24 – 25 November, 2014 The Meydan Hotel Dubai, United Arab Emirates

Our partners and supporters:

Michael Dehn – GCC Car Modifications Conference Presentation on 29 September 2014

5

Programme

Legal Situation

Insurance

Warranty

Michael Dehn – GCC Car Modifications Conference Presentation on 29 September 2014

Government

Standards Certification

Day 2 November 25, 2014

Private Sector

Private Sector

Government

Day 1 November 24, 2014

Testing Inspection Registration Law Enforcement

Application Best Practice

6

Our list of confirmed high-profile speakers includes:

Michael Dehn – GCC Car Modifications Conference Presentation on 29 September 2014

7

Thank you for your attention! www.gulfcarmods.com

AUTOMECHANIKA DUBAI The largest international automotive aftermarket trade exhibition in the wider Middle East

JUNE 2 - 4, 2015

Automechanika Dubai

Tuesday, September 30, 2014

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Automechanika Dubai

Tuesday, September 30, 2014

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Automechanika Dubai

Tuesday, September 30, 2014

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Automechanika Dubai

Tuesday, September 30, 2014

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Automechanika Dubai

Tuesday, September 30, 2014

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Automechanika Dubai

Tuesday, September 30, 2014

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Automechanika Dubai

Tuesday, September 30, 2014

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Automechanika Dubai

Tuesday, September 30, 2014

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Main Trans-Shipment Destinations for Automotive Related Products

Trade Visitors from KSA 1892 1800

37.5% increase from 2013 to 2014

1600

281% increase from 2010 to 2014

1400

1376 1225

1200

1000

859 800 673

600

400

200

0

2010

2011

2012

2013

2014

Mr. Subhash Joshi Senior Analyst Frost & Sullivan

Insights on KSA Automotive Market Passenger Vehicles and Spare Parts

Prepared by:

Automotive & Transportation Practice Frost & Sullivan International Inc., Dubai September 2014

Contents

Section

Slide Numbers

Vehicle Sales Section

4

Vehicle Parc Section

7

Spare Parts Section

11

Key Questions

16

23

Passenger Vehicle Industry – Sales

24

KSA Vehicle Sales—Trends …Past Trends and Current Market…. Overall growth of 5.3% CAGR (2008-2013)….. Current Sales = 714,183 Units (2013)

Passenger Vehicle Sales, Past Trends and Current Sale, KSA, 2008-2013 CAGR – 5.3%

800,000

20.0%

•

KSA is the largest car market in the region

•

Used vehicles imports has reduced by half over last 5 years, currently accounts for nearly 4% of the total vehicle market

•

Market expected to grow at CAGR 6.3% to reach about a million (968,000) by 2018

700,000 15.0%

In Units

500,000

10.0%

400,000 5.0%

300,000 200,000

0.0% 100,000

-

Growth %

600,000

-5.0% 2008

2009

2010

Cars & Pickups

2011

2012

2013

YoY Growth %

Source: Frost & Sullivan analysis. 25

KSA Vehicle Sales—Country Share …Japanese and Korean OEM’s will continue to dominate

MARKET SHARE BY COUNTRY OF BRAND (BRAND OF ORIGIN) , 2013 & 2018(f)

South Korea

Japan

Market Share: 54.2% (T- 40.2%)

2013

Outlook (2018): 49.1%

2013

Market Share: 24.9%

Outlook (2018): 29.5%

U.S.A

Market Share: 15.5% (GM -8.7%)

2013

Outlook (2018): 13.5%

European Union

2013

Market Share: 3.2%

Outlook (2018): 3.7%

Others

2013

Market Share: 2.2%

Outlook (2018): 4.2%

Source: Frost & Sullivan analysis. 26

KSA Vehicle Sales—OEM Share …Hyundai/Kia increasing their presence; Toyota, dominance to continue – Major change expected in Brand Share

OEMs

**

^^

How customer perceives the

2013 Market Share

2018(f) Market Share

40.2%

36.4%

 Strong across the GCC markets, leader in KSA

24.9%

29.5%

 Hyundai gaining market share in taxi segment

7.3%

 GMC considered good brand but Chevrolet has lower perception  GM rationalized its network from 3 dealers to 2 dealers, likely to rationalize to 1 by 2017

1.2%

8.0%

 Nissan perceived to be a costlier brand and has limited reach in KSA, New dealer appointed to increase presence

6.9%

5.1%

 Investing to regain share, but outcome uncertain

2.7%

2.9%

 Honda accord likely to gain good market share

8.7%

Brand

Product

** Includes Hyundai & Kia ^^ Includes all GM brands: GMC, Chevrolet, Cadillac & Hummer Other players like Suzuki, Proton, Mazda, Renault gaining their market share

Comments

Network

Low

Medium

High

Source: Frost & Sullivan 27

Passenger Vehicle Parc – Units In Operations

28

KSA Vehicle Parc (Units in Operations, UIO) …Past Trends and Current UIO…… Growth of 6.4% (CAGR 2008-2013)

Overall 7.1 million passenger vehicles running on KSA roads (2013), where JRD region accounts for more than 60% population (of vehicles) Passenger Vehicle UIO, Past Trends and Current UIO, KSA, 2008-2013 CAGR – 6.4%

8.0

9.0% 8.0%

7.0

7.0%

6.0

6.0%

5.0

5.0% 4.0 4.0% 3.0

3.0%

2.0

2.0%

1.0

1.0%

-

0.0%

2008

2009

2010

Cars & Pickups UIO

2011

2012

2013

Growth %

In Million Units

Facts & Assumption: • Vehicles classified in two categories to arrive at parc numbers: Cars and Pickups • Life of the vehicle = 12 to 15 years (depending on geography) • Yearly salvage percentage considered for calculating the parc on an average, nearly 4.1% cars are salvaged every year out of total cars registered (in that year) against ~7.0% pickups • Yearly exports percentage considered for calculating the parc on an average, nearly 8.7% cars are exported every year out of total cars registered (in that year) against ~10.0% pickups

YoY Growth % Source: Frost & Sullivan analysis. 29

KSA Vehicle Parc—OEM Market Share …Toyota, GM and Ford are the leading payers….

Parc, 2013: 7.1 Million Vehicles OEM Wise Share

Ford, 10.5%

GM (Chevy, GMC), 12.6%

Hyundai, 10.2%

Nissan, 1.8%

Kia, 2.9%

Mitsubishi, 0.7% Others, 9.9%

Toyota, 51.4%

 Toyota is the leading player across the GCC and dominates the KSA market with more than 51% share  Nissan is rebuilding its brand through a newly appointed distributor, target to sell 60,000 vehicles in 2014 and 150,000 by 2016  Ford is looking forward to de-risk its KSA portfolio; we might see some major changes in near future which will strengthen their local presence in the KSA  We expect Toyota, Ford, Nissan and Hyundai to dominate the parc in future

Source: Frost & Sullivan analysis. 30

KSA Vehicle Parc (UIO)—Forecast and Other Facts …Expected Growth = CAGR 5.3% (2013-2018) •

Vehicle PARC highly dependent of past performance; we expect parc to grow at CAGR of 5.3% – Stable environment to base decisions

•

9.1 million passenger vehicles to be in operations by 2018

•

Japanese and Korean vehicle likely to dominate the UIO where Korean companies (Hyundai) will increase its market share by almost 7-8% (to reach approx 16% by 2018)

•

More than 5 year old vehicle = 55% (expected in 2018 = 50%)

•

More than 10 year old vehicle = 22% (expected in 2018 = 18%)

•

The average age of the vehicle in KSA − 2013 = 7.5 years − 2018 = 7.0 years (expected)

•

Average mileage •

2008 – 23,700

•

2013 – 30,715

•

2018 – likely to reach at 32,620 by 2018 Source: Frost & Sullivan analysis. 31

KSA Auto Components Market

32

KSA Spare Parts Market—Overview Total Market – USD 3.8 billion (2013)

Important Segment Characteristics Factors

Assessment

Trend

Growth

▲

Current Opportunity Size ($ B)—2013

3.8

—

Future Opportunity Size ($ B)—2018

5.5

▲

7.7%

▲

Dependency on Imports

Very High

●

Number of Competitors

----------

▲

Degree of competition*

7

▲

Market Age

Forecast Period Market Growth Rate

TREND

Decreasing

Stable

Increasing

▼

●

▲

* On scale of 1 to 10 where 1 indicates low level of competition among existing participants and 10 indicates the highest .

Note: Market size estimations only includes imported components . All figures are rounded. The base year is 2013. Source: Frost & Sullivan analysis. 33

KSA Spare Parts Market—Breakup by Category of Parts Auto Components Market: Percent Sales Breakdown by Type of Auto Component, KSA, 2013

•

The key Servicing & Maintenance parts include Filters, Spark Plugs, Belts, Brakes Pads/Shoes/Linings…..

•

Average vehicle runs for passenger vehicles in KSA is more than 30,000 kilometer, this has grown by almost 30% in last 5 years

•

These vehicles are categorized in 4 categories – Private Cars, Taxi, Rental Car and Leasing

•

Unlike UAE, KSA does not have strict regulation to reregister vehicle every year, the re-registration happens every 5 years (for private vehicles) and every 3 years (for taxies)

Mechanical, 22% Maintenance , 44%

Collision, 34%

• The yearly maintenance cost include 3 to 4 minor service and 1 Major service • • •

Average maintenance cost in Taxi & Leasing segment = Minor Maintenance = SAR 320-350; major Maintenance = SAR 2,000-2,500 Rental Car = Minor Maintenance = SAR 300-330; Major Maintenance = SAR 2,000-2,500 Private Segment = Minor Maintenance = SAR 400-450; Major Maintenance = SAR 2,000-3,000

1 USD = 3.75 SAR

Source: Frost & Sullivan analysis. 34

Channel Analysis 6 routes exist for supply of parts in the KSA Aftermarket with increasing competition from OE parts

Parts Supply

OES

Alternate Parts

OE Parts

Spurious

Imports Domestic Imports

System Suppliers Example Bosch Chassis Systems supplying brake components

Note : OES – Original Equipment Spares OE Parts – OE fitted brands supplied in independent after market Alternate parts – Brand other than OE brand supplied in the independent after market Spurious – Products which are not original and branded as original popular brands in the market Imports – It includes domestic imports, which means a part is directly getting imported from the country of origin without involving local operation other supplier System suppliers – They supply the brand under their name eg. Bosch braking products Source: Frost & Sullivan analysis. 35

Channel Analysis (Continued) ….Channel size analysis

The OES, OE Parts and domestic imports (Genuine Parts) are the key channels accounts for nearly 71% in total part sales Channel wise sales breakup, approximate, KSA, 2013

Spurious 14%

System Suppliers 3%

•

OES dominates the market due to strong presence of their NSCs (vehicle distributors also deals in independent after market)

•

A vehicle distributors typically operates through 5 channels to supply parts = 1. Workshop Servicing Channel; 2. Workshop Counter Sales Channel; 3. Wholesale Fleet Channel, 4. Wholesale Dealer Channel and 5. Exports (limited to Sudan, Egypt)

•

Domestic Import is becoming the key channel due to higer margin kept by NSCs while dealing in OES and OE parts

OES 30%

Domestic Imports 15%

Alternate Parts 12%

OE Parts 26%

Total market: $3.8 Billion Source: Frost & Sullivan analysis. 36

Key Questions & Hints? •

Trading vs Physical Setup?

•

Trading vs Manufacturing?

•

OEMs/Vehicles offering potential for Parts?

•

Markets to look for?

37

State your need, we would be happy to serve you… Subhash Joshi Industry Manager Automotive & Transportation Practice Middle East, North Africa and South Asia Frost & Sullivan International Inc. 210, EIB-4 BT Building Dubai Internet City PO Box: 502395 Dubai, United Arab Emirates Ph: +971 4 4331 893

www.frost.com

For Media queries, contact: Tanu Chopra Senior Manager- Corporate Communications Middle East & North Africa Email: [email protected] Website: www.frost.com

CONTACTS

38

Thank You

39

KEY TO SAUDI ARABIA – RIGHT SEGMENTATION Prachi Satoskar

© GfK 2014 | Key to Saudi Arabia

40

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42

GfK Retail Panel Market research along the supply chain

GfK Retail Panel

Retail Data | POS Data | Product Data

Manufacturer

Consumer

Retail Wholesale

 Brick and mortar  Clicks and mortar  Pure online

Importer

GfK Household Panel

© GfK 2014 | Key to Saudi Arabia

Buyer Data | Purchase Data | Equipment Data

43

GfK Retail Panel process Definition of product group

Communication of the results

Data check, identification and extrapolation to the universe

Definition of distribution channel

GfK Retail Panel

Data syndication from sample

© GfK 2014 | Key to Saudi Arabia

Definition of corresponding universes

Sample definition – based on statistical methods

44

Audited product groups Car Tyres

Truck Tyres

Not audited

Passenger Car Tyres

New Truck Tyres

EM- / Agriculture Tyres

Remoulded Truck Tyres

Motorcycle Tyres Bicycle Tyres…

4x4 SUV Tyres Light Truck Tyres

© GfK 2014 | Key to Saudi Arabia

45

Country scope North America

USA

Planned

Europe West Europe East

Austria France Germany

New

Italy Netherlands

Czech Rep.

Russia

Greece

Turkey

Hungary

Ukraine

Kazakhstan

Spain

Poland

Portugal

Romania

UK

Asia Pacific

Middle East

Africa

Saudi Arabia

Egypt

Australia

Future

Philippines

Japan

Future

S. Korea

Taiwan United Arab Emirates

© GfK 2014 | Key to Saudi Arabia

Thailand

China

Indonesia

Future

Malaysia

India

46

Saudi market – market with a large potential High Value Inspite of Lower Population than Developed Countries Saudi Arabia

United Arab Emirates

Jul 13 Oct 13 Jan 14 Apr 14

Jul 13 Oct 13 Jan 14 Apr 14

Sep 13 Dec 13 Mar 14 Jun 14

Sep 13 Dec 13 Mar 14 Jun 14

12

Ths.Un.

Germany

Italy

Jul 13 Oct 13 Jan 14 Apr 14

Jul 13 Oct 13 Jan 14 Apr 14

Sep 13 Dec 13 Mar 14 Jun 14

Sep 13 Dec 13 Mar 14 Jun 14

1.017

1400

USD MIO 1272 10.956

1200

10

1000 8

8.286

847

800 USD Mio

Ths. Un. (x 1.000)

828

6

6.037

5.886 600

Population: 28.8 mil (2013)

Total 12 Months (units): 6.8 mil

4

Population: 9.3 mil (2013)

Total 12 Months (Val): 668K US$

526

488 441

Total 12 Months: 2.65 mil Total 12 Months (Value): 315K US$

561 4.008

3.699

3.668

400

3.272

2 141 1.402

146 1.563

177 1.794

205 2.062 80

75

75

85

698

632

458

474

Population: 80.6 mil (2013)

Population: 59.8 mil (2013)

Total 12 Months (Units): 23.9 mil

Total 12 Months (Units): 21.8 mil

Total 12 Months (Value): 3.1Mi US$

Total 12 Months (Value): 3.2Mi US$

0

© GfK 2014 | Key to Saudi Arabia

200

0 *Cov erage: the cov erage v aries f or each country UAE: 70%, KSA: 65%, Germany : 54%, Italy : 79% Source: Gf K’s retail sales tracking data. July 2013 – July 2014

47

SUV / 4x4 Cars loved by the People Higher Percentage for 4x4 even compared to developed markets due to Off Road / Desert Driving

10%

11%

4%

19% 70%

86%

Germany

Saudi Arabia

SUVs / 4x4s

United Arab Emirates

Italy 6% 6%

3%

19%

78%

88%

Passenger car

4x4

Light Truck

Source: GfK’s retail sales tracking data. July 2013 – July 2014 © GfK 2014 | Key to Saudi Arabia

48

KSA: 4x4 dominated by premium brands – lesser competition in brands and items With lower number of brands in passenger and 4x4 compared to developed market, more opportunities available

Passenger Car Tyres

4x4 Tyres

Light Truck Tyres

2,485 120

2,500 109

100

Germany: 163 Brands

2,000

Italy: 178 brands

No. of brands

1,500 60

40

20

53

55

Germany: 74 Brands

Germany: 107 Brands

Italy: 91 brands

Italy: 105 brands

1,000

No. of Items (x 1.000)

80

500

577

204

0 Source: GfK’s retail sales tracking data. July 2013 – July 2014 © GfK 2014 | Key to Saudi Arabia

0 PRJ 79961 - RG 4051691 - RP 23118107 - ID 427755633 49

KSA: 14% of the Items contribute 80% of Sales for Passenger Car and 4x4 11% of brands contribute 80% value for Passenger Car vs. 15% for 4x4

Passenger Car

4x4

Light Truck

400

343

345 Brands making 80% Sal Val Items making 80% Sales Val

300

No. of brands

Items making 80% Sales Units

200

100

79

80

35 12

8

36

11

0 Source: GfK’s retail sales tracking data. July 2013 – July 2014 © GfK 2014 | Key to Saudi Arabia

PRJ 79961 - RG 4051691 - RP 23118107 - ID 427755633 50

Most of the brands and items operating in the western region contributing 54% of the market volumes and 52% in value West main contributor for all the Segments Sales Units Sales Value % % West

Jul 13-Jul 14

West

Central

East

South

Jul 13-Jul 14

Central

Passenger Car

67.4

68.6

71.1

67.2

East South

4x4

4.3

Light Truck

29.3

27.5

29.9

2.0

1.5

2.9

52.0

54.0

1,589

1.277,0

348,0

160

131,9

35,5

105

100

81

68

2,445

1,980

1.521

996

203

165

237

127

Ths.Un.

3,829

MIO.USD

359

Selling Brands

23.7

22.9

18.2

19.1

5.0

5.2

7.469

28.4

Selling Items

Ths

SAL./SHOP

540.056

Source: GfK’s retail sales tracking data. July 2013 – July 2014 © GfK 2014 | Key to Saudi Arabia

51

Mainly Budget Items selling in Passenger Cars compared to the Premium in 4x4 Total

7.7

7.5

9.2

9.6

7.8

8

8 10.4

Passenger Car

7.1

11.3

9.1

7.3

9.1

10.4

10.7

11.2

7.7

11.6

6.3

6.6

3.2 3.8 6.9

7.7

5.8

8.6

8.3

7.9

5.5

5.3

8.5

8.2

10.0

15.8

8.2 12.3

11.1

10.2

12.1

10

15.3

14

14.3

8.4

698

0 < 200 LC 200 < 250 LC

250 < 300 LC

9.6

12.2

11.9

300 < 350 LC 350 < 400 LC

22.6

21.5

19.4

21.7

13.6

15.8

450 < 500 LC

11.9

26.3

500 < 600 LC

14.0

7.4

5.6

5.9

8.9

8.2

6.6

6.1

458

7

15.3

9.0

7.6

18.6 1.017 19.2

7.2

400 < 450 LC

15.1

11.2

11.8 9.2

7.7 30.2

29.8

28.8

25

474

10

600 < 700 LC >= 700 LC

12

19.4

7.3

632

3.9

14

9.1

8.4

13.3

6.3

14.8

8.7

7.8

16.2

6.8

4.4 4.1

7.2

11.0

19.3

2.5 4.2

14.8

11.8

12.1

10.6

18.6

11.1

2.7 3.5

Light Truck

15.9

8.6

8.4

12.7 11.2

14.9

12.8

8.4 12.8

13.7

7.5 7

8.4

10.3

7.5 7.8

7.9

11.7

11.2

13.2 8.6

10.9

4x4

6.1

7.5 8.5

6.9 5.4

10.0

9.2

12.4

2.7

2.2

19.5

7.3

MioSAR

254

259

255

235

168

174

170

159

79

78

77

67

8

8

9

10

Share

100,0

100,0

100,0

100,0

65,9

67,0

66,4

67,5

31,0

30,0

30,2

28,4

3,2

3,0

3,4

4,0

Source: GfK’s retail sales tracking data. July 2013 – July 2014 © GfK 2014 | Key to Saudi Arabia

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Passenger Car: 35% value from >=17“, with fewer brands and selling items 13” 1.9 78

13" 14"

14” 81

15”

16”

17”

18”

19”

>= 20"-23"

22

24

78

11.7

66

15"

17"

43

Selling Brands

16" 26.2

16 18" 19" 20"

Others

550

24.3

510

462

322

16.3

271 Selling Items

6.7

135

125

150

4.4 7.8 Ths.Un.

1,123.3

1,887.0

716.5

1,399.7

192.5

94.5

175.4

184.7

PRICE USD

52.5

69.9

114.4

87.3

174.2

237.2

223.2

227.2

Source: GfK’s retail sales tracking data. July 2013 – July 2014 © GfK 2014 | Key to Saudi Arabia

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SUV/4x4 Car: 59% Value from >=17“, With Fewer Brands and Selling Items 11% of brands contribute 80% value for Passenger Car vs. 15% for 4x4 14"

13”

6.7

14”

15”

16”

39

37

17”

18”

19”

>= 20"-23"

15

17

15" 16"

17"

33.7

Selling Brands 22

16

18"

6

4

19" 20"

175

Others

158 38.0

92

Selling Items

73

71

49

7.6

28

2.6 4

10.1 Ths.Un.

6

133

531

517

83

19

77

83

69.4

103.5

130.9

152.4

190.1

277.6

273.7

227.7

PRICE USD

Source: GfK’s retail sales tracking data. July 2013 – July 2014 © GfK 2014 | Key to Saudi Arabia

54

Conclusions

1. High Value Market – High Ratio of Population to Consumption 2. Huge Potential for 4x4 Tyres – contributing high Value 3. West remains the Focus Area 4. Key to Market – Focus on the Less Congested Segments of 4x4 5. >17” with high demand potential and less competitions is a niche area to enter

© GfK 2014 | Key to Saudi Arabia

55

Questions?

Prachi Satoskar Head – Automotive [email protected] +9714 4296713

© GfK 2014 | Key to Saudi Arabia

56

THANK YOU Responding to the wide-ranging transformative change in the automotive industry with consumers’ changing desire and digital demands, automotive companies need the insights as foundation of winning strategies that ensure competitive differentiation through distinctively engineered and designed products and services. GfK’s automotive industry experts provide insights into today’s markets and consumers’ demand of tomorrow by looking at consumer, retail and media data. Combining deep global industry skills with proven market research expertise, we turn research into smart business decisions for automotive companies to create winning strategies that translate into revenue.

© GfK 2014 | Key to Saudi Arabia

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Prachi Satoskar Head – Automotive [email protected] +9714 4296713

© GfK 2014 | Key to Saudi Arabia

58