CHINA FIELD TRIP May 10th –12th, 2011
This presentation may contain forward-looking statements. Such forward-looking statements do not constitute forecasts regarding the Company’s results or any other performance indicator, but rather trends or targets, as the case may be. These statements are by their nature subject to risks and uncertainties as described in the Company’s annual report available on its Internet website (www.psa-peugeot-citroen.com). These statements do not reflect future performance of the Company, which may materially differ. The Company does not undertake to provide updates of these statements.
More comprehensive information about PSA PEUGEOT CITROËN may be obtained on its Internet website (www.psa-peugeot-citroen.com), under Regulated Information.
th th China Field Trip - May 10 –12 , 2011 2 PSA in Asia – Market Forecast, PSA in China: ongoing successes and upsides Frédéric Saint-Geours Executive VP, Finance and Strategic Development Grégoire Olivier, Executive VP, Asia Table of contents
Introduction
China: the new auto superpower China: a global economic power The world’s largest automotive market The growth story is set to continue
PSA in China China: a second home market for PSA 2 complementary JVs Key challenges in China and PSA differentiation factors
A sustainable profitable growth Extending the Chinese Success ASEAN strategy Capturing the Indian opportunity
th th China Field Trip - May 10 –12 , 2011 4 PSA – a global automotive player (1/2)
> 39% of PSA’s 2010 sales are realized outside of Europe, of which 28% in Asia
Russia & CIS Europe 30 * 59 500 2 195 300
Asia 391 800
Latin America ** CKD units RoW 294 300 477 000 184 300
Worldwide Sales 3 602 200
* Western + Central + Eastern Europe ** Argentina + Brazil + Chile + Mexico
th th China Field Trip - May 10 –12 , 2011 5 PSA – a global automotive player (2/2)
> PSA is on track to reach its objective of 50% of sales outside Europe by 2015
% Sales outside of Europe • PSA has become an increasingly 50% international group over the past decade 39% • In 2010, growth was driven by non- 32% 30% European countries 26% ► China: + 38%
► Russia: + 37%
9% ► Latin America: + 27% ► Europe: + 1.7%
2000 2007 2008 2009 2010 2015 target
th th China Field Trip - May 10 –12 , 2011 6 Historical presence in China
> PSA has been present in China for more than 20 years
1985 – 1996 1997 – 2004 2005 – 2009 Since 2010 First steps Initial production Stable development Acceleration and 2nd JV
• 1985: Guangzhou Peugeot • 1997: Sale of PSA’s stake in • 2006: Launch of DPCAFC, auto • 2010: Strengthening of the Automobile JV (GPAC) GPAC financing JV, sponsored by partnership with DPCA Bank of China, Banque PSA 1992: Dongfeng Citroën • 2002: New cooperation • 2010: JV agreement between • Finance and DPCA Automobile Company agreement with Dongfeng Chang’An and PSA • 2007: China Business Unit is commercializes first Citroën ► DCAC become DPCA • 2010: Set up of the Asia created to manage operations ► Sells both Citroën and Department in Shanghai, vehicles in China in China; located in Beijing Peugeot brands headed by Grégoire Olivier, • 1996: New plant with annual • 2008: China Tech Center member of PSA’s Managing capacity of 150,000 vehicles • 2004: Capacity increased to 300,000 vehicles; PSA and opens in Shanghai Board DFM each own 50% of DPCA • 2009: Launch of the second • 2011: Unveiling of the DS5 at DPCA plan in Wuhan the Shanghai Motor Show
PSA Sales in China (thousands of vehicles) 400 376 272 300 209 203 179 200 140 85 103 89 53 100 28 33 44 52 - 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
th th China Field Trip - May 10 –12 , 2011 7 Exposure to China
> China represents more than one quarter of PSA’s non European sales
China as a % of non European sales (Thousands of vehicles)
China 18% 26% 27% 179k 272k 376k
2008 2009 2010
82% 74% 73% PSA ex-Europe 798k 757k 1 031k
th th China Field Trip - May 10 –12 , 2011 8 PSA operations in China
> China is PSA’s second market
China: 2nd market of PSA Peugeot Citroen in the world Strong local footprint
• 375 700 vehicles sold in 2010 (+38% VS 2009) • 17k employees with continuing growth • DPCA: 3 plants (o/w one dedicated to engines) • Market share of 3.4% and a fourth in construction in Wuhan • X2: Doubling of our sales in China • CAPSA: 2 manufacturing plants between 2008 and 2010 (o/w one dedicated to engines) • Renowned in the field of • China Tech Center: a R&D center designed Corporate Social Responsibility (CSR) for 1 000 engineers and designers
th th China Field Trip - May 10 –12 , 2011 9 Key achievements
> China represented 10% of PSA’s volumes in 2010 > 17 000 PSA employees in China out of which 11 000 DPCA employees PSA volumes sold in China (thousands) DPCA employees in China (thousands)
x% Market share +27.1% 376 CAGR 10.9 11.0 272
3.5% 203 209 179 3.4% 9.5 140 3.3% 4.8% 3.9% 3.6% 89 4.4%
2004 2005 2006 2007 2008 2009 2010 2008 2009 2010 Share of Chinese operations in PSA 10% 20% China 376k €242m
2010 2010 Net income Volumes Group share 3 602k €1 134m
Rest of the world 90% 80%
th th China Field Trip - May 10 –12 , 2011 10 Complementary product offering
> With the CAPSA JV, PSA will be present in all automobile segments in China except low-end
Premium DS: between premium and value Brands
DPCA DPCA: value Brand Value to be maintained Passenger Vehicles Own brand: entry level Entry CAPSA own Brand PC Brand
Low-end
LCV: Chinese market Commercial Vehicles CAPSA own Brand LCV specificities
th th China Field Trip - May 10 –12 , 2011 11 World class manufacturing capacities
> PSA currently has 3 plants in China, and will add 3 more in the near future
Existing Planned
• Wuhan plants ► Plant 1: 300 000 vehicles Xiangfan Plant : Wuhan: ► Plant 2: 150 000 vehicles DPCA Motor and mechanical DPCA plant 1 ► Plant 3: 300 000 vehicles gearbox assembly DPCA plant 2 (start-up end 2013)
DPCA plant 3 • Xiangfan engine plant ► Currently at 550 000 capacity
► Will be brought to 850 000 Guangdong:
CAPSA vehicle plant • CAPSA Guangdong plants CAPSA engine plant ► 200 000 vehicles
► 200 000 engines
th th China Field Trip - May 10 –12 , 2011 12 The PSA value proposition
> A unique value proposition
• At the forefront of both design and comfort, ambassador of the French savoir-faire in China
► Beautiful cars, comfortable interiors with state-of-the-art technology
► DS Line at the forefront of design since the 1950’s; recently re-launched by PSA ► Success of the DS5 unveiling at the Shanghai Motor Show • Reliable and safe driving experience
► One of the global leaders for vehicle safety
► High standards for the Chinese market ► Continuous safety improvement • Leader in clean vehicles
► Technological edge in low emission engines
► STT, Turbocharged Direct Injection engines, etc ► Hybrid vehicles • Two brands with distinctive image
th th China Field Trip - May 10 –12 , 2011 13 Importance of brand differentiation
> Brand is a key element for Chinese consumers
• The car plays a major role in the Chinese society
► Vehicles in China have become a mass consumption market
► A fast growing market in every segment from low-end vehicles to luxury ones ► Most of PSA ’s clients are first time buyers: image plays an important role
• Chinese automotive consumer: a very well informed customer who looks for a car corresponding to his needs
► Vehicles represent a sizeable investment for Chinese households, who gather a lot of information during the purchase process
► Importance of value for money
► Specific needs according to social level and generation
• Brand image is linked to the country of origin ► Germany: reliable, durable and robust; South Korea: value for money
► French vehicles are recognized for their impressive and differentiate exterior design as well as their “romantic” image
Chinese consumers are seeking cars with personality
th th China Field Trip - May 10 –12 , 2011 14 PSA brands image
> Peugeot and Citroën brands are well suited to the Chinese market
• PSA offering in China ► Passenger vehicles in key segments of the Chinese market, from premium to value ► Entry in the LCV segment via CAPSA JV
• Citroën positioning in China coherent with world brand strategy ► “Creative Technology” ► The Citroën brand values : boldness, creativity, high expectations
► Citroën Line up: modern and innovative cars, with a high level of technology
► Citroen DS Line up: distinctive cars with a high level of refinement, embodiment of luxury “à la française”
• Peugeot to benefit from a new image positioning in line with the global brand identity ► “Motion and emotion”: going up market with a dynamic and differentiating design ► The Peugeot brand values : confidence, passion and inspiration
► Emotional vehicles focused on excellence and driving pleasure
• Capsa own brand ► A Chinese brand with occidental and technological backing ► Carefully done with a good value and an optimized style
th th China Field Trip - May 10 –12 , 2011 15 R&D China Tech Center (Shanghai)
> The CTC will play a major role for PSA both in China and in other regions
• A real contribution to PSA ► Royalties contribution from DPCA and from CAPSA to leverage PSA’s technology globally ► KD sales to JVs of common technological parts to amortize globally parts development ► Localization in China Tech Center (Shanghai) of gasoline hybrid development team to leverage local engineering skills and supplier base
• Short term benefits ► Scale effects: R&D costs and CAPEX could decrease by €200 per car for a development that encompasses both Europe and China ► The 508 case : 65 000 units to be sold in China out of a total 200 000 units. The project was developed in France for the two zones
• Long term benefits ► Once the center has reached the 1 000 persons level, a technology developed by the CTC may be used on more than one platform including European ones (for example: a telematics module)
th th China Field Trip - May 10 –12 , 2011 16 Purchasing
> Moving from « follow sourcing » to « common sourcing »
• Global programs implementation ► Modules • Ex : steering system for small vehicles same supplier China / Latin America
► Engines & gearboxes • common sourcing Europe / Chine of new EB & EP6 engines, DCT gearbox
► Platforms • common sourcing of new BVH2’ platform for PSA & JVs
► Vehicles • T73 & B73 programs for China / Latin America / Russia : • M3/M4 India project : common sourcing of key components
• Benefits ► Minimize development & tooling spends ► Leverage volume effect on purchasing prices
► Procure safer supply chain : possible cross sourcing China / Europe
► Establish relationship with best Chinese suppliers
► Generate profits for both PSA and JVs
th th China Field Trip - May 10 –12 , 2011 17 PSA China export potential
> PSA’s JV partners, Chang’An and Dong Feng, are both strong exporters of Chinese vehicles
Chinese vehicle export volume (2010, % of total exports) • Strong export potential from China
16% ► Both Chang’An and Dong Feng have strong 26% export platforms which PSA could leverage
► Although production currently centered 12% on the Chinese market
4% • PSA China is developing car bodies in China 4% 10% 4% fit for other areas of the world 4% PSA exports parts for local assemblies in Asia 5% 7% 8% • and Latin America: 207 sedan in Malaysia, 408 in Argentina Chery Chang'An Great Wall Dongfeng BAIC Brilliance GAIC Jiangnan Lifan
th th China Field Trip - May 10 –12 , 2011 18 Roadmap to success in Asia
> Three-pronged approach to success in Asia
China Other Asia Asia R&D
CAPSA ASEAN INDIA
+
• Strengthen DPCA partnership and renew • Develop offering across • Extend local R&D product line-up the ASEAN region capabilities • Launch CAPSA JV – sell first vehicle in • Launch Indian operations with • Asian R&D benefits 2012 the construction of a dedicated across all PSA • DPCA: 5% market share target local plant locations • CAPSA: 3% market share target
th th China Field Trip - May 10 –12 , 2011 19 PSA ambitions (1/2)
> 8% of the total Chinese market
• Increasing brands differentiation to better cover the market and build different customer experiences
• Launching new brands with CAPSA
• Enriching the product portfolio
• Addressing each consumer expectations with "Entry", mainstream and premium products
th th China Field Trip - May 10 –12 , 2011 20 PSA ambitions (2/2)
> China: a key lever for future value creation
• Leveraging price policy by increasing perceived quality
• Local R&D and engineering skills for the benefits of the entire Group, in China and other regions
• To "Common sourcing" across the purchasing chain: scale effects and purchasing power
th th China Field Trip - May 10 –12 , 2011 21 Table of contents
Introduction
China: the new auto superpower China: a global economic power The world’s largest automotive market The growth story is set to continue
PSA in China China: a second home market for PSA 2 complementary JVs Key challenges in China and PSA differentiation factors
A sustainable profitable growth Extending the Chinese Success ASEAN strategy Capturing the Indian opportunity
th th China Field Trip - May 10 –12 , 2011 22 China is where it happens
> China has experienced significant growth over the past decades, and is now the world’s second biggest economy, overcoming Japan in 2009 Gross Domestic Product since 1980 Old Shanghai in $ trillions China took over Japan in 2009 20 CAGR 1980-2000 2000-2016 China 9.3% 15.0% 15 France 3.3% 5.6% Japan 7.6% 2.1% 10 United States 6.6% 4.1%
5
0 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016
China France Japan United States Gross Domestic Product per Capita since 1980 New Shanghai in $ thousands 60 CAGR 1980-2000 2000-2016 50 China 7.9% 14.4% France 2.9% 5.0% 40 Japan 7.2% 2.2% 30 United States 5.4% 3.1% 20 10 0 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016
China France Japan United States Source: IMF, World Economic Outlook Database, April 2011
th th China Field Trip - May 10 –12 , 2011 23 A high quality consumer platform
> China’s middle class will become the third largest in the world by 2020
Private domestic consumption, 2007 Private domestic consumption, 2020 (Forecast) CAGR 2007–2020 ($ billion, 2000) ($ billion, 2000) (%)
United States $8 276 United States $11 034 2.2
Japan $2 863 Japan $3 397 1.3
United $1 195 China $2 520 Kingdom 8.3 United Germany $1 138 $1 447 Kingdom 1.5
China $890 Germany $1 325 1.2
France $884 France $1 067 1.5
Brazil $555 India $1 058 6.3
Mexico $554 Brazil $901 3.8
Canada $528 Mexico $749 2.3 India $476 Canada $673 1.9
Source: McKinsey
th th China Field Trip - May 10 –12 , 2011 24 An urbanized country
> China’s scale of urbanization is unprecedented: around 225 of the top 600 cities will be in the Chinese region(1) by 2025
Top 600 cities Additional cities (c.1,400)
Source: McKinsey Global Institute Cityscope (1) China including Hong Kong and Macao, and Taiwan
th th China Field Trip - May 10 –12 , 2011 25 Table of contents
Introduction
China: the new auto superpower China: a global economic power The world’s largest automotive market The growth story is set to continue
PSA in China China: a second home market for PSA 2 complementary JVs Key challenges in China and PSA differentiation factors
A sustainable profitable growth Extending the Chinese Success ASEAN strategy Capturing the Indian opportunity
th th China Field Trip - May 10 –12 , 2011 26 The world’s largest auto market
> China became the world’s largest automotive market in 2009
Global Light Vehicle Volumes (millions of vehicles)
0.02007 10.0 20.0 0.02008 10.0 20.0 0.02009 10.0 20.0 0.02010 10.0 20.0
US 16.1 US 13.2 China 13.2 China 17.4
China 8.1 China 8.7 US 10.4 US 11.6
Japan 5.2 Japan 4.9 Japan 4.5 Japan 4.8
Germany 3.4 Germany 3.3 Germany 4.0 Brazil 3.3
Italy 2.7 Russia 2.9 Brazil 3.0 Germany 3.0
UK 2.7 Brazil 2.7 France 2.7 France 2.6
France 2.5 France 2.5 Italy 2.3 India 2.4
Russia 2.4 Italy 2.4 UK 2.2 UK 2.2
Brazil 2.3 UK 2.4 India 1.8 Italy 2.1
India 1.5 India 1.5 Russia 1.5 Russia 1.9
th th China Field Trip - May 10 –12 , 2011 27 Importance of cars in China’s culture
> The car is a major element in today’s China
• Evolution of the 三大件 "sandajian": 3 things to own for Chinese people
70’s 80’s 90’s Today
• Today the car enjoys an essential function and a high degree of importance into Chinese people’s life • In today’s fast developing and growing China, the car will accompany its owner into his evolution on the social scale
th th China Field Trip - May 10 –12 , 2011 28 Historical volumes (PC / LCV)
> Commercial vehicles and personal vehicles follow the same trend and grow very rapidly: from 2008 to 2010, volumes have doubled
Evolution of PC and LCV volumes since 2005 (in millions) CAGR 2005 - 2010 12 PC Volumes LCV Volumes 25% 29% 11.3 10
8 8.4
6 6.1 5.7 5.3 4.8 4 4.3
3.1 2.8 3.0 2 2.5 2.0
0 2005 2006 2007 2008 2009 2010
th th China Field Trip - May 10 –12 , 2011 29 Mapping of the local market
> Foreign brands are very popular in China: 2 cars out of 3 are non Chinese brands
Share of Country of origin (2010) • Among foreign brands, Japanese cars are the most represented (25% of local production):
Korea ► Toyota
10% ► Nissan US ► Honda 12% 32% China ► Suzuki • European brands account for 21% of the cars EU 21% sold in China: ► Volkswagen
► 25% Audi Japan • French brands have small (<5%) market share
th th China Field Trip - May 10 –12 , 2011 30 Mapping of the local market
> The Chinese market is dominated by the C-segment
PC market volumes
SUV A >300 kRmb < 50 k Rmb 250 -300 kRmb 6% 2%5% MPV 12% B 9% 15% E 4% 200 -250 kRmb 13% 2% 150 -200 kRmb 6% Split by Split by 31% D 18% category segment pricing segment
43% 35% C 100 - 150 kRmb 50 - 100 kRmb
th th China Field Trip - May 10 –12 , 2011 31 Market volumes by segment
> 2 out of every 5 cars sold in China are now C segment. In the coming years, larger segments will experience the highest growth rates
China PC sales forecasts (Thousands of vehicles) CAGR 10-15
12% 12% SUV 13%
4% 6% 2% 2% MPV 22% 18% 18%
E and above 12%
D 13%
43% 40%
C 11%
B 15% 15% 16%
A 8% 6% 5%
2010 2015e
th th China Field Trip - May 10 –12 , 2011 32 Regulatory and political environment
> China is an open and controlled market • The Joint-Venture (JV) system: ► Local presence possible only by establishing a JV company with a Chinese partner, maximum 50% of shares ► The number of JV is limited to 2 for Passenger Vehicles and 2 for Commercial Vehicles • Market share for international brands : ► According to the NDRC, 60% to 75% of market sales will have to come from Chinese brands in the coming years • Import taxes remain high (25%), Chinese government will continue to support local production • Automotive industry strategic development controlled and led by the NDRC, according to HEC Eurasia analysis: ► 1985 - 2000: acquire technological knowledge ► 2000 - 2010: start and develop exportations ► 2010 - 2014: reduce dependence toward JV companies and increase exportations ► 2015 and after: guarantee Chinese brands domination on the Chinese market
th th China Field Trip - May 10 –12 , 2011 33 Table of contents
Introduction
China: the new auto superpower China: a global economic power The world’s largest automotive market The growth story is set to continue
PSA in China China: a second home market for PSA 2 complementary JVs Key challenges in China and PSA differentiation factors
A sustainable profitable growth Extending the Chinese Success ASEAN strategy Capturing the Indian opportunity
th th China Field Trip - May 10 –12 , 2011 34 Estimated 2020 market size
> China should account for one third of the global automotive market by 2020
Top 20 auto markets by 2020
30 1/3 of worldwide market
25 in 2020! Millions ≈ 20 4! 15
10
5
0
l ia e S zi ia ia y K ly e in a co a in lia ia a ina U a d an s an U ta ran e i d ra a s in h In p s I anc I pa or ex na k tr y nt C Br Ja u rm r S K ones a U la e R e F h d M C us a g G t In A M ou Ar S
2020 = 28.5m vehicles in China
th th China Field Trip - May 10 –12 , 2011 35 Passenger car ownership Benchmark
> Despite low car ownership levels, even compared to other BRIC nations, the automobile market in China is already huge
800
Number of PC on the roads 700 135,000,000 PC
Italy 25,000,000 PC 600 Canada Switzerland Australia Austria UK 500 Spain France Germany Sweden Belgium USA GreeceNetherlands Japan Poland 400 Czech Rep Portugal
300 Malaysia Passenger cars equipment rate 2010: Sth Korea Russia 200 Romania 35 vehicles/1 000 inhabitants Mexico Argentina Brazil South Africa 100 Turkey Iran Indonesia India China 0 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 2009 Passenger cars market
th th China Field Trip - May 10 –12 , 2011 36 Geographical distribution of sales
> The market is highly concentrated: 52% of the market is located in the top 7 provinces
Geographical repartition of the Chinese auto market (2010)
1.9% Growth Market Sales Rate Share 1.8% 2010 2010 2010 1 Shandong 999 012 28.7% 9.2% 1.3% 3.4% 2 Guangdong 944 950 28.9% 8.7% 2.5% 3 Jiangsu 943 815 37.0% 8.7% 1% Beijing: 7.1% 4 Zhejiang 928 580 37.1% 8.6% 5.5% Tianjin: 2.2% 5 Beijing 767 001 36.4% 7.1% .5% 2.8% 9.2% .4% 6 Hebei 601 151 28.8% 5.5% Shanghai: 2.5% 7 Sichuan 523 166 15.1% 4.8% 2.8% 4.6% 8.7% 0.1% 2.4% 4.8% 8.5%
2.8% 1.8% 1.2% 2.6%
2.4% 8.7% 1.7%
.6%
th th China Field Trip - May 10 –12 , 2011 37 Overview of Chinese cities
> Although China’s top 4 cities currently represent 38% of the country’s urban GDP, smaller Tier 3 and 4 cities should be an important growth driver in the coming years
Beijing Shanghai Tier 1 – “Big Four” (38% of urban GDP) Guangzhou Shenzhen
Tianjin, Wushan, Shenyang, Foshan, Tier 2 – 38 cities (37% of urban GDP) Nanjing, Chongqing, Hangzhou, Chengdu, Jinan, Xian
Shantou, Wafangdian, Huainan, Taizhou, Anshan, Zaozhuang, Huaian, Jilin, Weifang, Guiyang, Yixing, Taian, Tier 3 – 181 cities (29% or urban GDP) Putian, Yancheng, Rizhao, Handan, Yangzhou, Laiwu, Huhehaote, Suqian, Changde, Huizhou
Macheng, Haining, Tongchuan, Meihekou, Neijiang, Jiangshan, Hetian, Tumen, Liupanshui, Fuding, Fecjheng, Zhaodong, Tier 4 – 596 cities (16% of urban GDP) Xinji, Huaihua, Qianjiang, Danyang, Nangong, Guangyuan, Potou, Jiutai, Shuzhou, Anshun, Zhalantu, Baoshan
Source: McKinsey
th th China Field Trip - May 10 –12 , 2011 38 Table of contents
Introduction
China: the new auto superpower China: a global economic power The world’s largest automotive market The growth story is set to continue
PSA in China China: a second home market for PSA 2 complementary JVs Key challenges in China and PSA differentiation factors
A sustainable profitable growth Extending the Chinese Success ASEAN strategy Capturing the Indian opportunity
th th China Field Trip - May 10 –12 , 2011 39 PSA operations in China
> Over the years, PSA has developed a wide range of activities in China
50% 50% 50% 50% Imports China Tech CAPSA Center
75% 25%
DPCA Peugeot Finance Motorcycles
• Automobile operations led by 2 Joint-Ventures with leading Chinese players ► DPCA with Dong Feng, 3rd biggest Chinese automobile player ► CAPSA with Chang’An, 4th biggest Chinese player
• The company has also established a leading R&D center: the “China Tech Center”
• Other PSA operations in the region: Faurecia, GEFCO, Banque PSA Finance, DPC Auto Finance ► Operational: Faurecia, GEFCO, Peugeot Motorcycles ► Financial: Banque PSA Finance, DPC Auto Finance
th th China Field Trip - May 10 –12 , 2011 40 China Tech Center
> Opened in September 2008, PSA’s China Tech Center is the first fully operating R&D center of an international car maker in China
Profile • The China Tech Center (CTC) is PSA Peugeot Citroën’s first R&D and styling facility outside Europe • Works closely with PSA Peugeot Citroën research and development facilities around the world and with the R&D unit operated by DPCA, which employs more than 1 000 engineers and technicians • The CTC creates products perfectly adapted to the expectations of Chinese clients, and will become a global development centre for new energies
Key data • Currently employs more than 450 engineers, designers and technicians; total workforce will quickly rise to 1 000 people • Cooperation agreement signed between CTC and the Automobile Institute at Shanghai’s Tongji University in 2008 • In April 2010 in Shanghai, Citroën presented Metropolis, the brand’s first concept car designed and produced in Shanghai by CTC teams
th th China Field Trip - May 10 –12 , 2011 41 Existing distribution networks Peugeot network in China
> DPCA has recently developed a new identity for its Chinese dealerships, and will continue its current roll-out scheme to reach 300 at end 2011
• New Image in April • Network development ► End of 2010 210 dealerships & 152 agents ► Aim in 2011 300 dealerships & 220 agents
• New identity ► More than 50 dealerships with the new identity at the end of 2010 ► New identity applied for the 508 (Launch in April)
th th China Field Trip - May 10 –12 , 2011 42 Existing distribution networks Citroën network in China
> The Chinese Citroën dealership network currently consists in 597 dealerships and agents, with high customer satisfaction of 81.2% • Strong presence in China: 597 dealerships and agents • Service leap by introducing new standards: customer satisfaction up to 81.2% • The brand connotations of Dongfeng Citroën have been reinterpreted, becoming more fashionable, modern and responsible, and bringing more fun to the consumers
> CAPSA will also develop a dedicated network for its DS line
th th China Field Trip - May 10 –12 , 2011 43 PSA presence in Chinese society
> PSA is actively involved in Chinese society
PSA website in Chinese PSA community commitment in China
• Shanghai World Expo
► Sponsor of the French Pavilion
► The Group showcased its vision of environmentally friendly mobility
• Selected awards
► New China Agency’s 2009 socially responsible business award
► 2009 Best corporate citizen award from the st Unveiling of the DS5 in Shanghai 21st Century Business Review and the 21 Century Business Herald
► PSA was cited by the Nanfang Weekly as one of the four automobile manufacturers that made the largest charitable contribution to China
► In 2010, the Group received China’s prestigious Golden Bee social responsibility award
th th China Field Trip - May 10 –12 , 2011 44 Faurecia / GEFCO / Financing
> PSA offers the whole scope of the group’s activities in China
Faurecia GEFCO Banque PSA Finance
• Faurecia has some 6 000 • Operations with DPCA’s outsourced • DPCAFC, a joint venture of DPCA employees in China (incl. JV) production warehouse in Wuhan and BPF, launched its automobile • 25 plants in China, 4 core since 2004 financing operations in Beijing in 2 August 2006 and has since businesses ► Two 8 000m buildings extended them throughout the ► ► Manages a forward supplier Emissions Control country Technologies warehouse that stocks parts for DPCA suppliers • Provides wholesale financing for ► Automotive Seating Dongfeng Peugeot and Dongfeng ► Provides alternative logistics ► Interior Systems solutions for the DPCA Citroën dealers and retail financing solutions for Chinese car buyers ► Automotive exteriors assembly line (new vehicle • The group also operates four reception, preparation, line-side • The joint venture leverages the research centres with 600 delivery of parts, etc) financial support and network of Bank engineers • GEFCO has also developed sea, air of China as well as the automobile and rail transport services for financing expertise of Banque PSA • Sales of €1bn in 2010, up Finance 60% vs 2009 imports to and exports from China since 2005
th th China Field Trip - May 10 –12 , 2011 45 Table of contents
Introduction
China: the new auto superpower China: a global economic power The world’s largest automotive market The growth story is set to continue
PSA in China China: a second home market for PSA 2 complementary JVs Key challenges in China and PSA differentiation factors
A sustainable profitable growth Extending the Chinese Success ASEAN strategy Capturing the Indian opportunity
th th China Field Trip - May 10 –12 , 2011 46 PSA has a strong experience in managing JVs and partnerships
Diesel Engines 17 million diesel engines produced since 1998
Petrol Engines More than 1.8 million units since 2006
Hybrid Components Development of hybrid components for front-wheel-drive vehicles POWERTRAIN
Petrol Engines Engines and mechanical sub-assemblies since 1966
SUVs and Electric SUVs since 2005 and now electric vehicles Vehicles 82 000 Peugeot and Citroën SUVs produced VEHICLES
PASSENGER Compact City Cars 1.6 million compact city cars produced since 2005
Light Commercial Light commercial vehicles and MPVs
MPV Vehicles and MPVs LCV / 6.3 million vehicles produced since 1978
th th China Field Trip - May 10 –12 , 2011 47 Two strong partners
> DFM and Chang’An are both in the top 4 Chinese automotive players Chinese vehicle volumes, 2010 Passenger and Commercial Vehicles 00
00 3,322
00
00
2,043 1,971 1,952 00
00
00 793 631 510 492 00 367 299
0 SAIC FAW DFM Chang'an BAIC GAIG Chery BYD Geely Great Wall
th th China Field Trip - May 10 –12 , 2011 48 Overview of DPCA
> DPCA commercializes both Peugeot and Citroën brands in China
50% 50%
• 376k vehicles sold in 2010; 3.4% market share • 3 plants, with another one in construction
th th China Field Trip - May 10 –12 , 2011 49 Overview of CAPSA
> CAPSA will develop three complementary product lines
50% 50%
CAPSA
DS Citroën Own Brand – PC Own Brand – LCV
• Factory with capacity of 200 000 vehicles • Engine factory with capacity of 200 000 engines • R&D center in Shenzhen
th th China Field Trip - May 10 –12 , 2011 50 DPCA product positioning Peugeot product range
> Peugeot offering in China is mainly geared towards upgrading models
207 5p 03 2009 207 Sedan 12 2008
307 5p 02 2008 307 Sedan 09 2007
408 01 2010 508
th th China Field Trip - May 10 –12 , 2011 51 DPCA product positioning Citroen product range
> PSA offers a wide range of Citroën products in China
C2 5p 10 2006 C Elysée 5p 03 2009 C Elysée 4p 04 2008
Xsara Picasso 04 2007 C Quatre 5p 09 2008 C Quatre Sedan 06 2009
C Triomphe 09 2006 C5 11 2009
th th China Field Trip - May 10 –12 , 2011 52 DPCA product positioning Import product range
> Specific proposals are imported
207 CC
308 CC
th th China Field Trip - May 10 –12 , 2011 53 Table of contents
Introduction
China: the new auto superpower China: a global economic power The world’s largest automotive market The growth story is set to continue
PSA in China China: a second home market for PSA 2 complementary JVs Key challenges in China and PSA differentiation factors
A sustainable profitable growth Extending the Chinese Success ASEAN strategy Capturing the Indian opportunity
th th China Field Trip - May 10 –12 , 2011 54 A number of issues could affect the Chinese auto market in the coming years
> PSA has identified a series of issues it will address in the near future
• Demand constraints ► Congestion
► Development of public transportation • Efficient vehicles ► Regulation ► More difficult penetration in Tier 2 cities
• Competition • Differentiated strategy ► Strong competition from local and foreign brands • Adapted products ► Price pressure • R&D ► Over or limited capacity, high utilization rates
• Inflation ► Cost of raw materials • Dedicated platforms
► Labor
th th China Field Trip - May 10 –12 , 2011 55 Increasingly competitive Chinese market (1/2)
> Western auto players are all present in China through a complex web of JVs
Toyota Fiat 50% Guangzhou Honda 50% 50% FAW Mazda Fiat 65% Guangzhou 50% Guangzhou Kia FAW-Toyota Honda Honda Audi Toyota Motor 10% Automobile 50% Planned JV FAW Haima 50% 30% 50% 25% Dongfeng FAW-VW 20% Tianjin FAW Renault 30% Honda Dongfeng Planned Merge Xiali GAIC 10% Yueda-Kia 60% 50% VW 34% 44% 51% 15% 50% 25% DFMC SAIC-VW FAW JV to be dissolved TAIC 50% DFM Group Zhengzhou Nissan 5 50% Opel 0% Volvo Jiangling Nissan Fujian Prod Under license SAIC 50% 50% DPCA Yizheng Geely Jiangnan Chinese group Geely 75% Chang’an PSA Shanghai 50% Changfeng GM Auto Group CA-PSA GM 51% Motor SAIC 50% 49,9% BAIC Shanghai Zhongtai 51% Chinese producer GM-Wuling Ford Guangzhou Hafei 42% Soueast 35% Brillance Baolong Chang’an Foreign – Chinese Chery Auto Auto 36% Ford Mazda 25% Changhe Capital JV 10% Daimler 15% Daewoo Auto Chery Fujian 50% Feitian 49% Chang’an Mazda Israel Brillance Beiqi International BYD Beijing Benz Suzuki Automotive Group Israel DC 16% 50% 99% Changhe Corp 50% Beijing Suzuki Hyundai Brillance BYD Auto 49% SBDNT BMW Huatai Suzuki Mitsubishi Chrysler 50% 50%
Daimler BMW Hyundai
th th China Field Trip - May 10 –12 , 2011 56 Increasingly competitive Chinese market (2/2)
> Competition to grow stronger in the PC segment
• All auto players are present in China
• Historically, nationally owned Chinese companies were mainly present in the LCV segment ► More than 70% of their sales ► LCV represents only one third of volumes for private Chinese OEMs
• Government seeking to increase market share of local offering ► JV own brands encouraged ► Creation of local champions via active M&A policy
th th China Field Trip - May 10 –12 , 2011 57 Road congestion
> Local governments could set forth new policies to limit road congestion
IBM Commuter Pain Index (emotional and economic toll of commuting, 100 = most onerous
Beijing anti-congestion measures (2010) • Annual passenger vehicle registration levels decreased by c. 70% to 240k per year • Individual new car buyers to bid for licenses via a monthly lottery • Non-Beijing vehicles no longer allowed to enter the city during peak hours
• Beijing ranked world’s most congested city by IBM • Road infrastructure currently not adapted to rising car ownership levels • Several Tier 1 – 3 cities already have very high vehicle densities
th th China Field Trip - May 10 –12 , 2011 58 Successful HR platform: PSA knows how to find talent
• Recruitment ► Active presence on campus (20% of new recruits) and via PSA’s own job fair ► Long term partnership with top Chinese universities: top 4 Engineering universities are long term partners for research ► Employee Referral Award
• Training ► PSA University set up in China ► Diversification program, e.g. to promote female employees and younger generations ► 50-100 Chinese employees sent to France each year for on the job training
• Retention ► Annual Performance Bonus Program ► Company Car purchasing Preferential Program
th th China Field Trip - May 10 –12 , 2011 59 Table of contents
Introduction
China: the new auto superpower China: a global economic power The world’s largest automotive market The growth story is set to continue
PSA in China China: a second home market for PSA 2 complementary JVs Key challenges in China and PSA differentiation factors
A sustainable profitable growth Extending the Chinese Success ASEAN strategy Capturing the Indian opportunity
th th China Field Trip - May 10 –12 , 2011 60 Strategy: a new dimension in China
• The Group’s development in China is based on three key drivers
► Strengthening the partnership with Dong Feng and accelerating DPCA’s development
► Creating a new joint venture with automotive manufacturer Chang’An to produce light commercial vehicles, the Citroën DS range and vehicles to be marketed under a new brand
► Designing and producing dedicated vehicles through local R&D capabilities
• Increase DPCA’s market share to 5% and CAPSA’s market share to 3%, through
► Continuous renewal and extension of the product portfolio to new market segments
► Leadership in clean vehicles in China
► Leadership in innovative mobility solutions
► Expanded geographical presence
th th China Field Trip - May 10 –12 , 2011 61 Strategy: a new dimension in China Reinforce our partnership with Dong Feng
> PSA announced the strengthening of its partnership with Dong Feng in September 2010
• 5-year investment of RMB11bn, of which €650m for PSA Peugeot Citroën
• Streamlined, more efficient governance structure
• Accelerated launch plan, renewing product line-up
• Third plant in Wuhan from 2013, raising total annual capacity to 750k vehicles
• Ongoing development of dealership networks
th th China Field Trip - May 10 –12 , 2011 62 Strategy: a new dimension in China A complementary partnership with Chang’An
> PSA will broaden its coverage of the Chinese market through its JV with Chang’An
• On 9 July 2010, PSA Peugeot Citroën signed a 50-50 joint venture agreement with the Chinese manufacturer Chang’An to produce and sell passenger cars and light commercial vehicles in China
• The agreement will develop a new range of vehicles, and will be strategically aligned with DPCA’s offering
• Based in Shenzhen, in Guangdong Province, the joint venture will have initial annual production capacity of 200 000 vehicles and engines
th th China Field Trip - May 10 –12 , 2011 63 Solid Growth Prospects Leadership in clean vehicles
> PSA at the forefront of low-emission technologies
• The Chinese Government is promoting the development of low-emission vehicles
• In December 2009, PSA Peugeot Citroën unveiled its clean vehicle strategy in China for the next ten years ► The goal is to sharply reduce its vehicles’ carbon emissions in China to approximately 95 grams by 2020 ► Strategy for China is in line with targets set for Europe
• To meet this ambitious target, the Group will deploy a range of technologies, each of which provides customers benefits as well as a reduction in carbon emissions: ► The launch of six new petrol engines by 2020 ► A new generation of automatic gearboxes ► A plug-in hybrid petrol vehicle ► Electric vehicles
th th China Field Trip - May 10 –12 , 2011 64 DPCA results
In million € 2008 2009 2010 Sales (in K units) 179 272 376 Revenues 1 501 2 299 3 936 Recurring operating income (8) 129 309 % of revenues -0.5% 5.6% 7.8% Income taxes 2 6 (22) Net Income 16 113 320 Net income, Group share 8 57 159
th th China Field Trip - May 10 –12 , 2011 65 DPCA contribution to PSA profitability
> 50% DPCA contribution : 154 M€ in ROC (+0.2 point of additional margin)
2009 2010 In million € PSA PSA PSA 50% DPCA Elim. PSA 50% DPCA Elim. Pro Forma Pro Forma
Revenues 48 417 1 149 (134) 49 432 56 061 1 968 (221) 57 808 Recurring operating (689) 64 (625) 1 796 154 1 951 income % of revenues -1.4% 5.5% -1.3% 3.2% 7.8% 3.4%
th th China Field Trip - May 10 –12 , 2011 66 First dividend payment by DPCA in 2011
• Payment by DPCA of RMB589m paid on April 28
• Future dividend in line with earnings growth
• Compatible with an ambitious product & industrial plan self financed
th th China Field Trip - May 10 –12 , 2011 67 A solid DPCA Balance sheet
> Net cash position due to strong cash flow generation > Permits self-financing future expansion plans
In million euros End 2009 End 2010
Net (debt) / cash (37) 226
Total equity 341 610
Gearing 10.9% (37.4%)
• Strong support from large group of Chinese banks • Currency financing: 25% in €, 75% in US $ • Competitive interest rates
th th China Field Trip - May 10 –12 , 2011 68 Table of contents
Introduction
China: the new auto superpower China: a global economic power The world’s largest automotive market The growth story is set to continue
PSA in China China: a second home market for PSA 2 complementary JVs Key challenges in China and PSA differentiation factors
A sustainable profitable growth Extending the Chinese Success ASEAN strategy Capturing the Indian opportunity
th th China Field Trip - May 10 –12 , 2011 69 Strong potential of Asia beyond China
The South-East Asia market is expected to increase by more than 50% over the next > decade. The Indonesian market will reach 1m vehicles.
Personal Vehicles and Light Commercial Vehicles (in thousands) 188 745 600 104
Thailand Vietnam
540 675 130 212
Philippines Malaysia
1,124 139 520 75
Indonesia Singapore
2009 2020
th th China Field Trip - May 10 –12 , 2011 70 Diverse markets (1/2)
In spite of their geographical proximity, ASEAN consumers do not buy > the same types of vehicles.
Volumes by segment for the 4 major ASEAN players in 2009
450,000 401,067 400,000
350,000 • Among the four major ASEAN countries targeted by PSA, each 300,000 has its specificities ► Malaysia and Singapore have 250,000 233,492 208,626 a majority of 3 Sedan cars 200,253 200,000 ► Thailand buys both personal vehicles and pick-ups
150,000 ► Indonesia has a majority of multi-purpose vehicles 100,000 70,102 59,237 50,051 50,000
0 Malaysia Thailand Singapour Indonesia Personal Vehicles (& Sedan) MPV SUV/TT Pick-Up Others
th th China Field Trip - May 10 –12 , 2011 71 ASEAN: PSA Vision and Strategy
• Growth of the Peugeot brand from local assembly of CKD from China and India • Better integration (sales / sourcing) between each ASEAN countries • Targeted offering for key countries
Malaysia Thailand Vietnam Indonesia • B, C and D segments • B segment (little • C segment (Sedan cars) • Multi-purpose low-cost • Sedan cars or sport hatchback vehicles) • Multi-purpose low-cost vehicles (7 seats) utility vehicles • Pick-up vehicles vehicles (7 seats) • Minibuses (12 seats) • Potential export markets • Minibuses (12 seats) for Chinese activities
th th China Field Trip - May 10 –12 , 2011 72 Table of contents
Introduction
China: the new auto superpower China: a global economic power The world’s largest automotive market The growth story is set to continue
PSA in China China: a second home market for PSA 2 complementary JVs Key challenges in China and PSA differentiation factors
A sustainable profitable growth Extending the Chinese Success ASEAN strategy Capturing the Indian opportunity
th th China Field Trip - May 10 –12 , 2011 73 India: an attractive market (1/2)
> A huge country with young population and growing socio-economic status
• Country Size: 3.3 million sq kms • Total Population: 1.13 Billion People ► Growth to continue (fertility rate: 2,7)
► 49% population <29 years old ► Expected to have the largest population in the world by 2025
• Strong Economic Growth: ► India expected to be the fifth largest consumer market in the world by 2025
• Number of Cars Per Person : 8/1000 in 2009
th th China Field Trip - May 10 –12 , 2011 74 India: an attractive market (2/2)
> The Indian automobile market will be the 4th largest in the world by 2020 > Indian Automobile Market Growth > Main Brands Sold in India (2010)
6000 en milliers Inde VP+VUL 5634 3% 5500 5% 5000 5%
4500 4068 4000 14% 50% 3500
3000 2650 2865 2500 19% 2000 2012
1500
1000 Maruti Suzuki Hyundai Tata 500 Chevrolet Ford Honda
0 VW Toyota Fiat 1993 2000 2010 2021 • 2.4m units in 2010 • High market concentration ► +32% between 2010 and 2009 ► VP market dominated by 3 brands with 83% market share ► Top 4 vehicles capture almost 50% of the market ► +226% since 2000
th • Western entrants are experiencing significant growth levels • Expected to be the 4 largest market in the world by 2020 even for the late comers
th th China Field Trip - May 10 –12 , 2011 75 PSA project in India
> PSA plans to move fast on the Indian front
• The Group will enter the market via its Peugeot brand and plans to sell, as a first step, a mid-sized sedan car ► First vehicles will be sold in the coming years
► PSA could use India as an emerging markets platform for neighbouring countries
• Greenfield development ► The Group will build a dedicated plant in India ► Local R&D team will help develop specific models for the Indian market
• Next step ► 2011: decision on the location of the plant site (PSA currently in discussions with the States of Tamil Nadu and Andhra Pradesh)
th th China Field Trip - May 10 –12 , 2011 76 Shanghai PSA China Automotive Market China Field Trip , May 10, May 201 1 Overview
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"A4rb_standard_band_east" – 20100701 – do not delete this text object! two two driversmain growth for Chinese automotivemarket are disposable income Fastthe GDP household and rising growth DRIVERS GROWTH Source: Source: Roland Berger analysis Major Drivers of Auto Enlarging population for for car consumption at affordable prices service readiness Fast GDP growth infrastructure/ More More choices Increasing MarketGrowth fin. fin. and used car services model launch byOEM Strong export growth Development of auto grade roads/highway disposable income due to competition Fast growing high Strong fixed asset stimulus program Rising household Fast urbanization Speed upof new Retail Retail price drop investment/ Government in in the past FDI - 2009 Auto consumption loan increased by~20% in triple as that of 2001 Length of high wayreached 60.3 KKM in 2009, compensation has been announced models of From 2009, consumer tax has been loweredfor since 2001 PV retail price keeps an annualdrop of 5.2% (face 221 new models of PVwere launched in 2009 since Urbanization rate increases by1.2 PDI in 2009 due to the economic crisis CAGR=24.6% (2001 was launched in 2009 An RMB4,000 grew by 10.4% annuallysince2005 - lift included) 2000 1.6L bn and below,and car replacement economic stimulus program - 2008), 2008), decreased Notes PSA China trip_RB speech_v4.pptx field % annually by 11.2% Trend(11 - 15) 5
"A4rb_standard_band_east" – 20100701 – do not delete this text object! Car Parc per 1,000 person 1,000 per Car Parc mature markets in verythatCarcompared still China is in with penetrationlow BACKUP Source: Source: PowerJD Car Disposable PenetrationVS income 1,000 100 200 300 400 500 600 700 800 900 0 - 0 MID Indonesia 2011Q1 India - LONG TERM POTENTIALTERM LONG China Malaysia & EIU 5,000 Thailand ; Roland Roland ; Berger analysis Taiwan 10,000 Germany 15,000 Dispensable Income per capita (EUR) capita per IncomeDispensable Japan 20,000 Australia 25,000 USA 30,000 PSA China trip_RB speech_v4.pptx field • • Comments capita in future capita per income disposable rising expectedon its potential huge has China that indicates rate car penetration and capita per income disposable between Positivelycorrelation markets withmature compared is China in rate penetration car years,10 than more for growth fast enjoyed has market automotive Chinese Although still very low low verystill based 6
"A4rb_standard_band_east" – 20100701 – do not delete this text object! A B C D aboveE and MPV SUV and SUV segments are expectedsurpass to market average B, A, of B andCsegmentsgrowth havelargest volume, while BY SEGMENT Source: Source: Power,JD Units) ('000 Forecast PV Sales China China market volume PV segmentsby 3% Above market Above averagemarket 2005 22% 34% 10% 20% CAAM 6% 5% , Roland Berger Roland analysis , 2% 2010 15% 43% 18% 12% 6% 4% 2% 2015F 16% 40% 18% 12% 5% 6% ( CAGR 05 17% 19% 35% 27% 20% 27% 49% - 10) (10 CAGR 15% 11% 13% 12% 22% 13% 8% - 15) • • • • Comments purchase and more customized vehicles customized more and purchase second on needs increasing consumer's SUV and average market outgrowto segment B stimulate and behavior spending consumer rationalize will Less subsidy in future segment important still an be will D segment reduction, and emission saving energy on policy government's to due average market belowto fall expectedis D segment of growth Though China in car first family the is usuallycar segment C as market PV in segment market largest theremain still but down,slow will growth C segment MPV PSA China trip_RB speech_v4.pptx field will grow rapidly due to due rapidly willgrow MPV 7
"A4rb_standard_band_east" – 20100701 – do not delete this text object! market sharetotal in Chinese local BY ORIGIN Sources: Sources: Roland Berger analysis 1) Not includingexport (2006 origin brand bystructure Sales Share China Japan EU U.S. Korea ofcountry origin ( 2006 28% 26% 23% 14% 10% 2007 28% 30% 22% 13% 7% brands have been growing fast, now taking fast,now brands havegrowing been 2008 27% 32% 22% 11% 8% 2006 - 2009 2010 30% 27% 21% 12% 10% - 2010) ) 2010 32% 25% 21% 12% 10% • Comments quality and performanc and quality brands. international have brands local China Chinese years,five past During – – – equip Bosch ABS from brands local China of lots example, For players. leading international from features Well equipped (e.g. partners international with cooperation on based improved greatly been have performance and Quality brands) international of price than lower ~30% (overall price lower much with segment same the in offerproducts brands local China occupied higher market share market higher occupied Chery Cheaper price and improving and price Cheaper with e are key success factors success keyare e PSA China trip_RB speech_v4.pptx field AVL on engine) on compared with compared ～ 30% 8
"A4rb_standard_band_east" – 20100701 – do not delete this text object! segments areAlso, brands China local lower more concentratedthe in BY ORIGIN Sources: Sources: Roland Berger analysis Asegment Share byplatform (China local brands vs.international brands) 2006 66% 34% • • advantage brands' local China China local brands local China 2007 68% 32% International brands offered brands International Higher 2008 69% 31% - end segment customers care more about more care customers segment end 2009 71% 29% 2010 71% 29% B segment 2006 42% 58% diminishes quickly diminishes much more products more much 2007 International brands International 35% 65% 2008 35% 65% 2009 43% 57% 2010 41% 59% , mainly because mainly , social status social in B and above segments aboveand in B C segment 2006 18% 82% 2007 23% 77% represented by international brands international by represented 2008 22% 78% 2009 26% 74% 2010 30% 70% PSA China trip_RB speech_v4.pptx field D segment 2006 94% 6% 2007 92% 8% 2008 91% 9% 2009 12% 88% 2010 12% 88% 9
"A4rb_standard_band_east" – 20100701 – do not delete this text object! Several are alreadylaunched New BrandsencourageJV policy Government creationOwn of JV BRANDOWN Source: Source: Roland Berger analysis OEMs Venture Joint l OEMs Nationa OEMs Private - wave wave starts from1997 Private OEMs' launch brand Chery Geely, , 1997 1998 Maple, Maple, BYD , wave wave starts from2006 National OEMs' launch brand 2003 2003 Besturn Roewe,2006 ,2006 MG,2007 Eagle, Eagle, Riich 2008 EVERUS , 2009 Emgrand Aeolus,2009 , 2008 Rely, , 2009 2009 Venucia PSA China trip_RB speech_v4.pptx field launch wave starts from2010 Joint Baojun Shanghai Shanghai 2010 - venture venture OEMs' brand , 2010 , Englon , 2010 – 10
"A4rb_standard_band_east" – 20100701 – do not delete this text object! China fragmentedmarket automotive is highlystill INDUSTRY RESTRUCTURING Source: Source: • (2010) concentration Industry Analysis concentrationofindustry 17% of total sales volume)sales total 17% of (112playerssmall contribute of withlots playerssmall is industry automotive Chinese Overall, Other 112Other CAAM , CATARC 17% , JAMA 83% , Topplayers 10 JMVA , Roland Roland Berger analysis , fragmented • 2010) Japan vs. (China 3 playerstop Share of SAIC FAW DFM Others lacks of strong leading players leading strong of lacks China market, domestic Japanese with Compared – – No. 1 player's contribution: 18% vs. 42% 18% vs. contribution: player'sNo. 1 Top67% vs.48% contribution: 3players' China 18% 16% 14% 52% Japan 33% 42% 13% 12% PSA China trip_RB speech_v4.pptx field Toyota Honda Nissan Others 11
"A4rb_standard_band_east" – 20100701 – do not delete this text object! and mergerupgradethrough & acquisitionsplayersbyleading industryconsolidation encouragingThe bodyhas regulatory been INDUSTRY RESTRUCTURING Source: Source: Roland Berger analysis The major drivers upgrade ofindustry • industry service after and parts lagging from Opportunities • government local from subsidies and China western of potential market from Opportunities • structure capacity optimized less and capacityover to due Consolidation • industry auto to plan industrial national of impact The M&A lagging behind the growth of sales, whichprovides opportunities of The development of parts and after subsidies from localgovernment potential, wellfounded industrial base, lowerlabor cost, and Western china isvery attractive for auto industry due to its market structure result willin M&Aand capacity optimization Over capacity for Chinabrands local and ineffective capacity breakthrough of core components, and capacity optimization enhancement for brands, Chinalocal focus on newenergy vehicle, The focus of 12th 5 and restructuring - year planinclude competitiveness - sales services industry is - sales • industries stream down and up of consolidation and model business of new emergency the drivewill Value optimization chain • technology energynew of impact The • China western and inland to Expansion • • group supplier of large establishment and acquisition overseas through competitiveness their enhance will Parts industry • OEMs for Optimization Capacity new profit opportunities through businessinnovation industry through cooperation and acquisition and explore Traditional and non acquisition of key suppliers energy technology suppliers becoming OEMs and OEMs' The pressure of controlling key technologies drivewill new Expand to western Chinathrough cooperation or acquisition with OEMs Establish large supplier group to strengthen the relationship Acquire key technologies through overseas acquisition acquisition targets The OEMs whostuck in the middlebecome willpotential - traditional players enter will auto PSA China trip_RB speech_v4.pptx field 12
"A4rb_standard_band_east" – 20100701 – do not delete this text object! SAIC Chery SAIC Tianjin FAW BAIC Geely DFM Buyer accelerate futurein Merger place anditspacehave beentakingwill & acquisitions INDUSTRY RESTRUCTURING Source: Source: Domestic - VW Iveco AVCJ Xiali M&A M&A database; database; Roland Berger analysis cases ofautomotiveOEMscases Zhongyu Kaima Target Chongqing FAW Nanjing FAW FAW Fujian Daimler Yangzi Huali Chengdu Automotive Automotive Hongyan 1 n.a 10.738 300,000 502 800 N.A. 123 ( Deal size RMB bn . mn mn mn ) bn 2006 2007 2007 2008 2009 2009 2010 Start from 2010 Time ------7 2 12 3 3 8 2 12 PSA China trip_RB speech_v4.pptx field 67% 67% share acquired Enter CV Strategic acquisition group 100% acquisition after merger To produce 40% share acquired Still in process Another 10% share acquired Comment Jetta , within Sagitar 13
"A4rb_standard_band_east" – 20100701 – do not delete this text object! B. Development of New of New EnergyVehicle PSA Chinafield trip_RB speech_v4.pptx 14
"A4rb_standard_band_east" – 20100701 – do not delete this text object! Source: Source: shortagecrudeconsumption oil in China automotivemarket the of The hasgrowth fast intensified OIL CONSUMPTION Crude Crude oil [tons in consumptionChina m] National National energysecurity is threatened as automotive crude oil consumption is growing China energy China 1993 7.5 Percentage of automotive oil consumption in total in oil consumption automotive of Percentage consumptionoil crude Automotive Totaloil consumption crude yearbook, yearbook, 1995 7.5 China statistic statistic China 1997 20.3 bureau, bureau, Roland Berger Roland 1999 22.7 2001 28.5 2003 33.3 2005 34.4 2006 36.8 PSA China trip_RB speech_v4.pptx field 2010E 44.0 2020E 57.0 15
"A4rb_standard_band_east" – 20100701 – do not delete this text object! Source: Source: energyand emissionconsumption Powertrain TECHNOLOGYSOLUTION Technologypriorities focusand COMBUSTION ENGINE Roland Roland Berger "Conventional" ICE electrification is electrificationregarded asaneffective to reduce way recuperation + stop Integrated hybrid … - start > > > > > > + boost, short + boost, High Variable air, fuel, electrification Massive downsizing, reduced friction Optimized (green) fuels base and load full range Optimized combustion Single displacement approx. 400 e ELECTRICALPROPULSION - - drive power batteries power + plug processes processes - E in range range extender - drive with ICE drive with cm CAS 3 , Pure Pure EV PSA China trip_RB speech_v4.pptx field > > > > > High High Downsizing, reduced friction reduction high/full processes/emissions, Optimized combustion 250 Single displacement approx. cm - - energybatteries e power 3 Fuel Fuel extender EV - Cell motors with with range - throttle 16
"A4rb_standard_band_east" – 20100701 – do not delete this text object! recent years encourageto the developmentenergy of new vehicles Chinese manygovernmentprograms haslaunchedstimulus in NEW ENERGYPOLICY Source: Source: Public information; Roland Berger analysis Technology. Science& Ministryof Technology and Information Ministryof Industry Taxation administration of State Ministryof Finance NDRC State Council New vehicle energypolicyschedule I ndirect impact impact policy 863 Electric863 Vehicle project 2001 Mid plan of energyplan of - saving /long 2004 D - term term irect irect impact impact policy Five 11th plan year energy saving projectsaving energy 863 new energy and new863energy - Scientific/Technolo plan (2006 Mid to Long Midto gy Development gyDevelopment 2006 - 2020) - term 11thfive Production Admission AdministrationAdmission Production energy saving and cutting pollution cutting andsaving energy China national plan for copingwith forChina nationalplan Comprehensive working plan onplan workingComprehensive Catalogue of the State industryStateCataloguethe of of New Energy Automobiles NewEnergyof - structural adjustment structural year plan for energy develop energyforplan year climate changeclimate 2007 Governmen Fuel tax consumptio Adj. PV on t work report 2008 n tax adj Automobile industry industryAutomobile hybrid, electric and fuel and electric hybrid, subsidies to users of userssubsidies to providingCircularon revitalization plan revitalization hybrid, electric and electric hybrid, PSA China trip_RB speech_v4.pptx field Circular on providingon Circular subsidies to users of usersto subsidies fuel cell cars in 13 carsfuel cell cell cars in 13 major 13 in cars cell major cities adjust the adjust 2009 cities Subsidies for privateSubsidies for Several policySeveralabout New energy vehicleNew energy EV station technologystation becomes one of onebecomes purchase of purchase seven strategicseven 2010 and industries EV charger EV 17
"A4rb_standard_band_east" – 20100701 – do not delete this text object! framework more to detailed, practicalimplementation guideline high Government's fromdirectional, has policy moving NEW ENERGYPOLICY Source: Source: Roland Berger analysis Trends in Chinese policygovernment'son Technology Preference OEM TypePolicy • • • • Government supports development of development supports Government brands local and R&D self Support Bureau Tax and Finance of Ministry also including organizations multiple to & Tech Science of Ministry from extend departments Policymaking standard industrialization and sales and manufacturing for policies financial practical to framework visionary directional, from Moving – – – – – – the future Supporting field hybridin advantage developlike to would Government industrialization for policysupport require not do and fast developing alreadyare technologies hybrid medium and Mild consumers of instead OEMs to directly paid are subsidy Purchasing technology local with components key require subsidy receivingand list recommended government entering Models OEMs foreign of benefit avoidto technology mature gain have OEMs and suppliers local until starts time Policydeployment EV PHEV development could help the required infrastructure construction of construction infrastructure required the help could development NEV PHEV PHEV and and EV EV to help local OEMs gain competitivegain OEMs local help to PSA China trip_RB speech_v4.pptx field - level 18
"A4rb_standard_band_east" – 20100701 – do not delete this text object! C. Evolution in Automotive Automotive Distribution PSA Chinafield trip_RB speech_v4.pptx 19
"A4rb_standard_band_east" – 20100701 – do not delete this text object! become keythe drivers growth Market tier3and4citieshave now is deepening, penetration PENETRATIONCITIES TIER INTOLOWER Source: Source: Roland Berger analysis PV Marketshare bytier ofcity Tier 1 Tier 2 Tier 3 Tier 4 2006 29% 29% 23% 19% 2007 29% 27% 23% 21% 2008 29% 25% 24% 22% 2009 28% 24% 25% 23% 2010 28% 23% 25% 24% • Comments Examples: – – – – Tier 4 Tier 3 Tier 2 Tier 1 PSA China trip_RB speech_v4.pptx field - – - – Beijing, Shanghai Beijing, Sanya Dongguan Zhongshan , Xianyang , Dalian , , Lanzhou , 20
"A4rb_standard_band_east" – 20100701 – do not delete this text object! Single form of 4S a hasevolving alsobeentowards graduallyDistribution channel DIVERSIFICATIONSTOREIN FORMATS Source: Source: Roland Berger analysis • Evolution Evolution in networkretail formatand topology Covering only tier 1/2 cities 1/2 tier only Covering - centered satellite 4S 4S 4S 4S - mode with enhancedmode with service capability Penetration with star • Covering downtown, community and satellite cities around cities satellite and community downtown,Covering City showroom Downtown 2S / 3S - mode distribution centered around 4S Service Service 4S PSA China trip_RB speech_v4.pptx field Community 4S suburban area T ier 2/3 cities, 2S SHOWROOM SATELLITE / 3S 4S 21
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"A4rb_standard_band_east" – 20100701 – do not delete this text object! increase terminal of installationratecars new in Telematics TELEMATICS Source: China China telematicsmarket development [RMB Aftermarket OE bn iSuppli telematics ] , Roland Berger analysis 2008 18 25 8 market size ( size market applications and services will grow fast with significant and servicesgrow fastapplications with will 2009 20 31 11 OE 2010 21 15 36 vs. aftermarket) vs. 2015E 16 38 54 CAGR 25.7% - 8.2% 0.1% (10 - 15) • • Comments of total market share by 2015) by share market of total position leading major gain OEMs will cars new rate in installation terminal of increase significant withfast willgrow telematics Chinese – – – – services, such as safety, as etc. such services, care, emergency own their withloyalty customer Increase end facilities high and fancy more with margin Gain higher competitiveness product Increase ipods notebooks, phones, mobile own withtheir equipments these link they when especially facility,convenience and entertainment regard will Consumers , and so on so and , (~30% by 2015) by (~30% PSA China trip_RB speech_v4.pptx field telematics as a newa as (~70% - 29
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"A4rb_standard_band_east" – 20100701 – do not delete this text object! AUTOMOTIVE CHINESE CONSUMERS th th China Field Trip - May 10 – 12 , 2011 2 Agenda
> Chinese consumers
• Chinese Generations • Role of “the car” in China • Chinese automotive consumers characteristics • Chinese automotive consumers evolutions
th th China Field Trip - May 10 – 12 , 2011 3 Chinese generations
► … … ! Traditional After 80’s ► 2010 Shanghai Expo Generation (born: 1980-1995) 2008 Beijing Olympic (born: 1950-1965) Key orientation: ► Key orientation: personality, ► 2004 Liu Xiang Olympic Field & Track Champion stable self-expression ► 2002 Xiaoming NBA Star 1997 Introduce Internet Post Culture ► Revolution ► 1997 The Return of Hongkong Generation ► 1984-1990 Open more Economic Developing district (born: 1965-1980) ► 1984 Economic System Reform Key orientation: ► 1982 One Child Policy status, ► 1981-1986 Female Volleyball Five Successive Championships quality of life► 1978 Reform & Opening-up Policy
► 1966-1976 Culture Revolution Consistent values over ► 60’s-70’s Go to countryside Nationalism - Growth/Wealth - Entertainment ► the1959 generations:-1961 Year’s of Nature Disaster 60’s 70’s 80’s 90’s 2000’ 2010’
th th China Field Trip - May 10 – 12 , 2011 4 Chinese generations
► … … !
► 2010 Shanghai Expo ► 2008 Beijing Olympic ► 2004 Liu Xiang Olympic Field & Track Champion ► 2002 Xiaoming NBA Star ► 1997 Introduce Internet ► 1997 The Return of Hongkong ► 1984-1990 Open more Economic Developing district
► 1984 Economic System Reform ► 1982 One Child Policy ► 1981-1986 Female Volleyball Five Successive Championships ► 1978 Reform & Opening-up Policy ► 1966-1976 Culture Revolution ► 60’s-70’s Go to countryside ► 1959-1961 Year’s of Nature Disaster 60’s 70’s 80’s 90’s 2000’ 2010’
th th China Field Trip - May 10 – 12 , 2011 5 Chinese generations
• Mainstay of the family • Grow up in the society transition • Avant-garde, open to everything & society • Well educated and looking for • Heavy digital equipped • Pragmatic with a stable success • No real worries to the future career • Willing to spend • Self expression is their lifestyle
60’s 80’s 90’s
th th China Field Trip - May 10 – 12 , 2011 6 Role of “the car” in China
Red flag CA7
Dongfeng CA71
Shanghai SH760
60’s 80’s 2010’
th th China Field Trip - May 10 – 12 , 2011 7 Role of “the car” in China
> The car: a major character in today’s China • Evolution of the 三大件 “San-Da-Jin” three main things
70’s 80’s 90’s Today • Today the car enjoys an essential function and a high degree of importance into Chinese people’s life • In today’s fast developing and growing China, the car will accompany its owner into his evolution on the social scale
th th China Field Trip - May 10 – 12 , 2011 8 Role of “the car” in China
> “Becoming car owner”: a clear evolution 成就感 Achievement feeling
更好生活品质 Life quality 伙伴 / 好朋友 improvement Perfect partner
th th China Field Trip - May 10 – 12 , 2011 9 Chinese automotive consumers characteristics
> The society changed from the productive to consumptive > The typical “pyramid structure” is going to change
Upper Upper Trend Upper
Middle Middle
Lower Lower Lower
th th China Field Trip - May 10 – 12 , 2011 10 Chinese automotive consumers characteristics
> Chinese new car buyer: young without experience
The Chinese car buyer is: • 1st time buyer: 88% • Young: 35 years old • Mainly male: 69% • Pursuing social recognition and status • Highly educated: 55% at least college or university degree • Family oriented: 70% of 3 persons household • Average income household: RMB130 000 /year • Mainly urban users: 85% • Heavy car users: 23 000km/year • Gathering of lot information during purchase process • Price sensitive and budget controller • More second time buyers • Concerned about environmental issues
th th China Field Trip - May 10 – 12 , 2011 11 Chinese automotive consumers characteristics
> A clear and simple perception of the market offering
Price Casual usage + Coupe/sport car Body style Wagon Off-road vehicle + SUV Usage occasion
MPV Brand Origin
5W RMB 10W RMB 15W RMB 20W RMB 30W RMB
Luxury car Family usage 豪华型 Comfort car Economy car 舒适型 Entry-level car 经济型 代步车 Business usage
th th China Field Trip - May 10 – 12 , 2011 12 Chinese automotive consumers characteristics
> The brand image is linked to the country of origin
• Reliable, durable and robust image • Low manufacturing and finishing quality High safety, good dynamics, with high level Lack of independent innovation in design • • of craftsmanship • Low price and maintenance cost China Germany • Long history in China • Unreliable performance • Classical and traditional design
Tier 3 Tier 1 preference preference • High technical skills level and low fuel consumption South Korea • Advantage in value for money Japan • Car interiors reflect delicate and low usage costs workmanship and excellent in minor Tier 2 ergonomic design • Less reliable and durable compared preference with Japanese products • More stylish in design when compared France US to German brands
• Grand (Da Qi) style, roomy, big size but without • Impressive and differentiated exterior design good taste • Romantic and quality of life image • High fuel consumption, but recent improvement is perceived
th th China Field Trip - May 10 – 12 , 2011 13 Chinese automotive consumers characteristics
> Specific needs according to social level
Demographics Needs and expectations of cars
• Business owner • Want to show off prestige and status Upper • Top Management in enterprises • Strong preference for premium brands • Yearly HHI: above RMB500 000
• Middle management in enterprises • Care more about the recognition of their peers, • Small business owners Upper - and don’t want to show off and be different from others • Professionals Middle • Brand focused: follow popular brands • Senior civil servant • Advanced features also offer a strong appeal • Yearly HHI: RMB200 000-300 000
• Good balance of price-related factors (e.g. price, • White collar/common staff fuel economy, maintenance cost) and features Middle • Junior civil servant (e.g. power, space, and equipment) • Yearly HHI: RMB100 000-150 000 • Care about value for money
• New graduates who just started working • Rigid and limited budget Lower - • Retirees • Low cost-driven: fuel consumption, maintenance cost Middle • Individual business owners • For young people, trendy and novel design is also • Yearly HHI: below RMB80 000 important
th th China Field Trip - May 10 – 12 , 2011 14 Chinese automotive consumers characteristics
> Specific needs according to generation
• Conservative, less open to new • Recognition of their peer group and • Advocate differentiation which at the Value- things appreciation of the ideal social group same time can be accepted by the group orientation • Value stability of work and life, • Work hard to pursue self-fulfillment • Balance of work and life: working hard averse to changes and risk and a high quality of life is in pursuit of happiness in life
• Most rational among all customers • Strong preference for models • Sophisticated consideration: take many • More differentiation - oriented but… with long history aspects into consideration e.g. price, family • Also care about value for money and • Decision-making is strongly use, suitability for business occasion and practicality influenced by others e.g. their personal image, etc. Cars needs & children • Brand or model with a middle-class image • Car associated wording: expectations • Car associated wording: is strongly preferred ► 个性 “gexing”: personality 有品味 ► 传统 “chuantong”: • Car associated wording: ► “you pinwei”: taste traditional ► 大气 “daqi”: grand ► 与众不同 “yuzhong butong”: ► 主流 “zhuliu”: mainstream ► 和谐 “hexie”: harmony different from the mass ► 中庸 “zhongyong”: in the middle
50’s 60s’ – 70s’ 80s’
th th China Field Trip - May 10 – 12 , 2011 15 Chinese automotive consumers evolutions
> A multiple development of the Chinese consumers
Increasing incomes for the 1st time buyers More « white collar » Always more potential buyers consumers
Répartition des revenus Population Population
Point d’entrée achat auto Revenus des ménages Tomorrow’s consumer More consumers from More female consumers the “after 80's” generation More experienced buyers (“2nd time buyers”)
th th China Field Trip - May 10 – 12 , 2011 16 Chinese automotive consumers evolutions
2005 2006 2007 2008 2009 2010 2011F 2012F 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F GDP Rate 11.3% 12.7% 14.2% 9.6% 9.1% 10.0% 9.5% 9.3% 9.3% 9.1% 8.8% 8.5% 8.2% 7.9% 7.6% 7.3% 7.2% 7.1%
Family quantity in city & town 1.9 1.96 2.04 2.09 2.19 2.23 2.63 3.07 3.26 (100 million)
(5,7] 8.3% 9.9% 11.9% 13.6% 14.4% 15.3% 16.0% 16.5% 16.7% 16.7% 16.3% 16.1% 15.6% 15.0% 14.3% 13.6% 12.7% 11.7%
Family income (7,9] 3.4% 4.4% 5.8% 7.2% 7.9% 8.9% 9.8% 10.5% 11.2% 11.7% 11.9% 12.1% 12.3% 12.1% 12.0% 11.7% 11.3% 10.9% (10,000) (9,15] 2.7% 3.8% 5.5% 7.5% 8.8% 10.6% 12.4% 14.2% 16.0% 17.7% 18.9% 20.4% 21.6% 22.4% 23.1% 23.6% 23.9% 24.0% >15 0.5% 0.9% 1.6% 2.5% 3.3% 4.5% 5.9% 7.5% 9.5% 11.8% 14.4% 17.1% 20.0% 23.0% 26.1% 29.3% 33.3% 37.3%
1940s/1950s 6.2% 5.7% 5.3% 3.0% 2.8% 3.9% 1960s 29.4% 25.2% 21.3% 18.9% 16.7% 16.4% Generations 1970s 40.8% 44.7% 41.6% 41.0% 41.5% 37.4% 1980s 23.2% 24.0% 31.4% 36.8% 38.7% 41.7% 1990s 0.2% 0.4% 0.6%
>= 65 9.1% 9.6% 10.9% 13.2% Age population >=15,<64 71.4% 71.6% 70.6% 68.6% <14 19.6% 18.8% 18.6% 18.3%
Passemger vehicle demands 331.7 429.7 531.6 569.3 862.6 1190 1357.2 1537.2 1731.5 1922.1 2096.2 2272.3 2453.9 2639.8 2834.2 3016.1 3199.9 3372.4 (10,000) Increased demands compare to 68.5 98 101.9 37.7 293.3 327.4 167.2 179.96 194.37 190.54 174.14 176.09 181.64 185.82 194.48 181.88 183.78 172.5 last year (10,000) increase rate 26.1% 29.5% 23.7% 7.1% 51.5% 38.0% 14.1% 13.3% 12.6% 11.0% 9.1% 8.4% 8.0% 7.6% 7.4% 6.4% 6.1% 5.4%
Family Car Young Couple’s Car “Roominess” Car Car for fun “Expressive” Car
th th China Field Trip - May 10 – 12 , 2011 17 Chinese automotive consumers evolutions
Motion Emotion
207 CC 308 SW
508 407 Coupé 408 Creative Technology
C4 Coupé Grand C4 Picasso
C5 C6
th th China Field Trip - May 10 – 12 , 2011 18 Thank you! 谢 谢 您 !
th th China Field Trip - May 10 – 12 , 2011 19 China TechDASI/DRDS Center China TechR&D Center& Styling R&D et Style
PFL April 2011 China Tech Center
• Created in 2008
• R&D & Design centre of PSA in China to better answer to China’s market specificities
• Imagined & elaborated the concept car Metropolis
th th China Field Trip - May 10 –12 , 2011 2 A multicultural styling and technical team
> Almost 450 employees, 40 expatriates, 6 nationalities > Ramp up: 1 000 employees by 2013
Chen Xia Marc Pinson Pierre Castinel Charlie MA Alain Klein Cédric Zhang Gu Xiang Combemorel R&D Style Style Projects Fonctional Fonctional Quality Performance Citroën Peugeot Vehicles & Projects Vehicles Powertrain
China Field Trip – 10-12 May 2011 3 The China Tech Center team
> A young, English-speaking team > With initial experience acquired at other companies
Age Language Background
Supplier 9% >40 English 9% 30-39 27% French 9% 37% Carmaker 20-29 Other 46% 19% 45% Young graduate
73% Outside design 26% bureaus
China Field Trip – 10-12 May 2011 4 Our mission
A C E I
2011 2012 2013 2014 2015
B D F G H
Consumption laws EC5 EC8 EP6 EP8 EB EB STT HY2
Styling & Chinese values and codes Addressing the Usage patterns & Packages and equipment 4 critical success factors in China Reliability & Validation Legislation & Technologies
China Field Trip – 10-12 May 2011 5 Our responsibilities
• Create Asia-friendly styling while respecting the worldwide brand codes defined in France • Lead projects and develop products aligned with the Chinese market, while complying with PSA standards and the job sharing with the JVs
Construction Architecture and Detail design Definition of Product Industrial of vehicle concept dimensioning and Process production JAP JEP JCT JRO JMP JEL JML ALC ROVS Client Vehicle Parts Process needs development design design
Customer Production JV needs Global Parts Process design development development Vehicle PSA synthesis
Concept Convergence Style - Means preparation for validation evaluation Technology - Product and Product Adjustment Launching and Production Design Industrialisation and Detail design Global specification Process Development
China Field Trip – 10-12 May 2011 6 Our initial achievements
> Will be brought to market beginning in 2011 > Will influence Peugeot and Citroën styling codes from 2013 - 2014
Core C segment model Will replace the 307 Sedan end 2011
Premium C segment model New Dong Feng Citroën line-up in this segment, to supplement the C-Quatre, end 2012
METROPOLIS
The DS range Future Citroën executive model
China Field Trip – 10-12 May 2011 7 Our growth project
> Create a team that is integrated into the Group’s R&D process and loyal to PSA
China Field Trip – 10-12 May 2011 8 Our growth project
> Develop in Shanghai the technologies specific to Asia or used primarily in the region: petrol hybrids, Asian infotainment
Petrol hybrids
2011 Petrol HY4 demonstrator for the Shanghai Motor Show in April
2012 Plug-in hybrid demonstrator
2013 Fleet
2014 Mass production
• 45 Chinese employees dedicated to hybrid powertrains
• Immersion in the French teams
• Chinese petrol hybrid events led from Shanghai
China Field Trip – 10-12 May 2011 9 Oxygen 888: 8 targets
> 1 To hire 450 engineers in 2011 > 2 To keep employee turnover below 12% > 3 To manage DRDS as a lean organization fully integrated in the PSA R&D process. ► All UEC level 2Executive training: 100% level 1 management ► Make PSA University in China, launched in 2011 ► Working Standards mapping and improvement > 4 To reinforce project management: ► Set up Platform organization in China ► Set up project team assistance ► CTC take the lead of different new model projects > 5 To complete range of core engineering teams: ► Set up Vehicle and Power train synthesis teams ► Manage quality information collection, analysis, and spread to engineering teams ► Create engineering teams for Process engineering Electric and Electronic architecture & software Power train adaptation, Chassis & suspensions > 6 To develop Petrol Hybrids teams > 7 To develop Asia infotainment team > 8 To develop a new CTC with test and validation facilities
China Field Trip – 10-12 May 2011 10 Second JV with Chang’An Eric APODE President Table of contents
A new strategic JV for PSA in China
CAPSA product strategy
CAPSA industrial profile
CAPSA financials and next steps
th th China Field Trip - May 10 –12 , 2011 2 A new partnership with Chang’An
• On 9 July 2010, PSA Peugeot Citroën signed a 50-50 joint venture agreement with the Chinese manufacturer Chang’An to produce and sell passenger cars and light commercial vehicles in China • The agreement will develop a new range of vehicles, and will be strategically aligned with DPCA’s offering ► Distinctive vehicles via the DS line ► JV own brand ► Light commercial vehicles • Based in Shenzhen, in Guangdong Province, the joint venture will have initial annual production capacity of 200,000 vehicles and engines
1st vehicle launch in 2012 3% market share
th th China Field Trip - May 10 –12 , 2011 3 The right partner
> Chang’An is the ideal partner for PSA’s second Chinese JV.
Volumes sold in China in 2010 Chang’An key characteristics (PC + LCV, thousands of vehicles) 0 1 000 2 000 3 000 4 000 • Entered the auto segment in 1980; now the 4th biggest Chinese automobile player SAIC 3 322 ► Plans to sell 5m units by 2015 FAW 2 043 • Present in both passenger and commercial segments
• Currently has JVs with Ford, Suzuki, Mazda and Volvo DFM 1 971 • State-owned via two shareholders: Chang'an 1 952 ► China South Industries Group (77%)
BAIC 793 ► Aviation Industry Corporation of China (23%)
GAIG 631 Strong complementarit ies between both groups
Chery 510
BYD 492 • Brand development (in • Sales / business PRC and abroad) development 367 Geely • Business development • Administrative support (tax, license, authorizations) Great Wall 299 • Equipment acquisition • Talent recruiting and • Equipment acquisition training • Talent recruiting
Source: Guotong
th th China Field Trip - May 10 –12 , 2011 4 Geographical implementation: complementary geographical footprint for PSA
CAPSA will run its operations from the Guangdong province, one of the richest in China > and offering a strong domestic market for both passenger and commercial vehicles
Guangdong localization Guangdong province key characteristics • Close to Hong-Kong • Surface area: 177 900 Km2 • Population (2009): 95 millions (1st) • GDP (2009): RMB3 900bn (1st) • Capital: Guangzhou
Guangdong market • 2009 vehicle registrations ► 722978 VP, 8.7% of Chinese Total (2nd)
► 105751 Minivans, 5.2% of Chinese Guangzhou Shenzhen Total (5th) • Foreign Investment: 12.3 billion USD (20% of China Total) Zhuhai • 4th harbor in the World Hong Kong
th th China Field Trip - May 10 –12 , 2011 5 Table of contents
A new strategic JV for PSA in China
CAPSA product strategy
CAPSA industrial profile
CAPSA financials and next steps
th th China Field Trip - May 10 –12 , 2011 6 CAPSA product lines
50% 50%
CAPSA
DS Citroën Own Brand - PC Own Brand - LCV
• Between premium and value • Entry-level brand • Designed to Chinese market specificities • Competing with conventional premium • Competing with high-end Chinese own • Moderate price with European brands like Mercedes-Benz, BMW, brands and low-end international standards Audi, etc. brands • Attractive exterior and interior design
> A more extensive product portfolio > A greater market coverage for China
th th China Field Trip - May 10 –12 , 2011 7 CAPSA positioning
> With the CAPSA JV, PSA will be present in all automobile segments in China except low-end
Premium DS: between premium and value Brands
DPCA DPCA: value Brand to Value be maintained Passenger Vehicles CAPSA own Brand Own brand: entry level Entry PC Brand
Low-end
CAPSA own Brand LCV: Chinese market Commercial Vehicles LCV specificities
th th China Field Trip - May 10 –12 , 2011 8 DS line
> The DS line will offer new and exciting vehicles, well-suited to the Chinese market CITROËN DS, Original engineering for inspired experiences • DS is an innovative generation of cars, designed to open new territories, new perspectives to premium car buyers. • Inspired by 90 years of CITROËN heritage and automobile excellence made up of the brightest European technology and style, infused with modernity and cosmopolitan spirit, DS cars invent the future, now. • DS cars provide you with intense sensations, enrapture you by their exquisite attention to details and refinement, captivate you by its unique architecture and outstanding design. Alive, DS cars are engineered for inspired experiences. • CITROËN invents a new breed of cars, distinctive cars invented to enlarge real life and enrich your senses. Let yourself be transported.
th th China Field Trip - May 10 –12 , 2011 9 Dedicated DS stores visual and format
th th China Field Trip - May 10 –12 , 2011 10 DS5 World reveal at the Shanghai motorshow on April 2011
th th China Field Trip - May 10 –12 , 2011 11 JV own brand (1/2)
> The JV’s own brand will offer both passenger and light commercial vehicles > Positioning
• Own brand will tackle a growing mass market segment • Passenger Car will target the "Entry" level: ► Higher quality, safety and robustness than low end, at affordable cost
► Competes with relatively high-end Chinese own brands and relatively low-end international brands • Compatible with potential overseas markets, either in mature markets ("Entry segment") or emerging markets • Light commercial vehicle will be rather high-end
> Vision • The Own Brand will promote four specific core values : ► Progressive : global vision, pursuit of success, continuously improving ► Hospitable: customer oriented, aesthetic and value for money
► Forward-looking : visionary, state of the art technology, modern standard
► Trustworthy : assured quality, integrity, safety
th th China Field Trip - May 10 –12 , 2011 12 Own brands in China
> Around 25% of Chinese consumers would favor an own brand over a JV’s historical brand
• Desired brand of next vehicle purchase: 7% What kind of brands will you most probably 22% Tier-1 city choose when you buy a new vehicle next time? n=152 71%
Total (%) By city tier (%) JV Brand Local own brand 12% JV own brand 12% Local own brand
27% Tier-2 city n=259 61% JV own brand 24% TotalTotal (%) n=605 64% JV International Brand n=605 15%
Tier-3 city 23% n=194 62%
Source: INS research (China, Mar. 2011, n = 605); Roland Berger
th th China Field Trip - May 10 –12 , 2011 13 DS brand roll-out
> CAPSA should open around 250 DS stores in China in the next 5 years
Number of stores • Dedicated line of DS stores in premium cities: 241 +116% ~70 in China CAGR 149 92 • Progressive roll-out 24 ► First stores in eastern provinces (Zhejiang,
2012 2013 2014 2015 Guangdong, Shanghai, Beijing) ► Progressive roll-out in western provinces
Number of cities • 60 to 100 new store openings each year over 123 77 2013 - 2015 51 19 • 100% of Premium cities covered by the end of 2014 2012 2013 2014 2015
Number of provinces 27 28 30 14
2012 2013 2014 2015
th th China Field Trip - May 10 –12 , 2011 14 Table of contents
A new strategic JV for PSA in China
CAPSA product strategy
CAPSA industrial profile
CAPSA financials and next steps
th th China Field Trip - May 10 –12 , 2011 15 Key milestones
The JV aims at building competitive and high quality passenger and commercial > vehicles, with all capabilities required to develop genuine models
JV SIGNING N+1 N+2 N+3
First Phase • Produce passenger / commercial • Beginning of the • Plant under • First sales in the • First sales of the vehicles based on DS-Citroën plant construction construction DS line JV’s own brand and JV own brand (see Product vehicles on top • Set-up of the • Beginning of the • Roll-out of the DS of DS sales plan) purchasing plan, marketing plan network • Manufacture and sell 200,000 agreements with suppliers • DS network vehicles limited to a small • Build an engine facility with an • Roll-out of the DS number of output of 200,000 units per year network Eastern states (mainly Shanghai, • Develop an R&D center to • Establishment of Beijing, achieve model localization the JV R&D Guangdong) center • Set up purchase system to maximize local procurement
th th China Field Trip - May 10 –12 , 2011 16 CAPSA dedicated R&D center
> R&D is key to CAPSA’s success
• The R&D Center is a branch of the JV company ► Will be located in Shenzhen ► The JV company will invest in the R&D Centre a total amount of c. RMB500m ► Subsidy from the local government of RMB500m
• In the first phase (until end of 2013), the R&D center will mainly focus on : ► Vehicle and powertrain factory design (2 vehicle factories and 1 powertrain factory) ► Localization of projects (Vehicles and Powertrain) developed by mother companies including final testings of local components, sub-systems and complete vehicle
• The R&D Center shall then (starting 2014) be able to focus on the autonomous development of complete vehicle and powertrain
• Target : 1 000 employees in 2015
th th China Field Trip - May 10 –12 , 2011 17 Table of contents
A new strategic JV for PSA in China
CAPSA product strategy
CAPSA industrial profile
CAPSA financials and next steps
th th China Field Trip - May 10 –12 , 2011 18 Capital investment
PSA and Chang’An have committed to more than RMB8bn of capital investments > to build one vehicle and one engine plant, both with a capacity of 200k
Incremental Investments (RMBbn) CAPSA Capital Needs (RMBbn)
3.7 Sources
0.6 0.6 8.5 0.5 Equipment & Construction Other costs Tools
3.9 Equity Existing Assets (RMBbn) Debt 1.2 0.2 0.1 Subsidies
Land use rights Plant Building Equipment & Other
4.0 Working Capital (RMBbn)
0.9 0.5 0.5
R&D Marketing Others
th th China Field Trip - May 10 –12 , 2011 19 Key financials / objectives
Production plan (Thousands of vehicles) 200 000 • RMB2bn cash contribution from PSA between 2011 and 2012
• Dividend policy in accordance with earnings’ growth 65 000
2 000 1st vehicle launch in 2012 N+1 N+2 N+3
DS Own brand / CV
th th China Field Trip - May 10 –12 , 2011 20