Bo Andersson CEO AvtoVAZ AVTOVAZ
The Russian Automotive Industry Today & Tomorrow Bo Inge Andersson President & CEO of AVTOVAZ
ТВОЙ ГОД ТВОЕ БУДУЩЕЕ
10 June 2015 Current Macroeconomic Situation
•1 Global Oil Prices have fallen by over 50 % • In Q1 2015 Russian Income from oil export reduced by 43.5%
•2 Imposed Sanctions on Russia from the West • In 2015 estimated affect can reach 75 B-EURO or 4.8% of GDP
•3 RUB Rate has plunged vs. EUR and USD • In Q1 2015 EUR/RUB and USD/RUB grew up to 90-100%
•4 Cost of Borrowing has increased substantially • In 2014 key interest rate was increased by Russian central bank from 5.5% to 17.0%. Current rate is 12.5%
•5 Increasing Inflation and Russian Recession • Annual Inflation in May was 15.8% • GDP decrease in Q1 2015 is 2.2%, annual forecast is -2.5 to -5.0%
3 Passenger Vehicles Market Outlook
• AVTOVAZ forecast the Market to drop by 32-36% in 2015 vs. 2014
M-units
3.10 3.00 3.0 2.90 2.8 2.77 2.7 2.68 2.90 2.6 2.60 2.80 2.55 2.5 2.70 2.5 2.4 2.58 2.4 2.52 2.46 2.20 2.40
2.0 2.10 1.85 1.8 1.8
1.59 1.70 1.5 1.4 1.4 1.3 1.50
1.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
4 Actual Optimistic Forecast Pessimistic Forecast Who we are 2015
Leading Manufacturer 585,000 of vehicles in Russia Cars & CKD
Own Brand Name LADA Market Share in Russia (4M 2015) 18.7% Market Share in <600 k-RUB segment 51% Dealer Network in 336 Russia dealers Export 29 countries Controlling Alliance Rostec Auto B.V., a part of Shareholder Alliance Renault-Nissan Togliatti, Russia 5 Headquarters The Russian Automotive Industry Majority of Russian plants have problems being cost competitive due to low production capacities k-units / year Production Capacities of Russian Plants 1000 910 900
800
700
600
500
400 300 Typical plant in other Markets 300 200 190 175 200 – 400 k-units / year 200 150 150 120 110 100 100 75 75 75 100 50
0
UAZ
Renault
GAZ
Moscow
Ford
Izhevsk
GM
Togliatti
Kaluga
AVTOVAZ AVTOVAZ
Elabuga
Ulyanovsk
Nissan Toyota
Togliatti
Kaluga
Nizhny Nov. Nizhny
Volkswagen
Nab. Chelny Nab.
Ford-Sollers Ford-Sollers
Vsevolozhsk
Huyndai-Kia
GM-AVTOVAZ
St. St. Petersburg St. Petersburg St. Petersburg St. Petersburg PSA/Mitsubishi
6 Alliance Market Share 2014 and 2015
LADA and the Alliance are gaining market share in Russia
40% 37.1% 37.4% 36.8% 35.0% 34.7% 34.6% 2.4% 2.6% 34.2% 35% 33.1% 33.1% 2.8% 32.8% 32.3% 32.2% 2.6% 2.0% 31.0% 31.0% 31.3% 30.6% 30.9% 6.5% 6.3% 6.0% 1.9% 2.0% 7.7% 6.6% 30% 6.6% 7.6% 5.3% 8.7% 5.5% 6.3% 5.3% 6.8% 8.1% 7.5% 7.2% 25% 8.0% 8.2% 7.1% 8.3% 7.4% 7.9% 8.4% 8.2% 8.0% 8.8% 8.6% 8.8% 20% 8.4% 7.1% 7.5% 7.9% 8.8% 7.5%
15%
20.7% 10% 19.6% 19.0% 19.3% 19.2% 17.2% 17.8% 18.3% 16.2% 15.6% 16.0% 16.0% 16.3% 16.3% 15.7% 14.1% 14.0% 5%
0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 2014 2015 LADA Renault Nissan Datsun Infiniti 7 TOP-10 Russian Automotive Market 5M 2015
5 out of TOP 10 cars are produced by AVTOVAZ 4 out of TOP 10 cars are LADA branded
Granta 1 5.0% Solaris 4.5%
Rio 3.4%
Kalina 2 1.9% Largus 3 1.8%
Duster 1.7%
4x4 4 1.7%
Logan 1.7%
Polo 1.6%
Camry 1.2% 8 Improved LADA Customer Opinions
Overall Opinion by Brands in 2011-2015 Overall Opinion by Models in 2014
7.0 6.9
8 6.8 6.7
6.6
7 6.4 6.3 6.2 6.2 6.1 6.1 6.0
6 6.0 5.9 6.0 5.8 6.0 5.8 5.9 5.9 5.6 5.8 5 5.6 5.7 4.4 5.6 5.4 4.6 5.3 4 3.7 3.7 5.2 5.3 3.5 5.2 5.0 Q1 2014 Q2 2014 Q3 2014 Q4 2014 3 2011 2012 2013 2014 1Q'2015 LADA Largus LADA 4х4 LADA Granta LADA Priora LADA Kalina
9 Key Priorities in 2015
•1 Launch Vesta & XRAY on time, with right Quality and Cost
•2 Restructure the Supply Base
•3 Continue to Change Management Culture to Drive Continuous Improvements
•4 Improve Customer Satisfaction
•5 Improve Quality in Engineering, Purchased Parts and Production
•6 Reduce Cost in all Business Areas
10 LADA Vesta
SOP – 25 September 2015
SOS – 25 November 2015 LADA XRAY
SOP – 15 December 2015
SOS – February 2015 Using benefits of the Alliance
1• Implementation of Global best practice processes in production, quality and other business areas
2• Use Global benchmarks to drive continuous improvement
3• Consolidation of purchasing volumes to increase purchasing power
4• Fill up unused production capacity to cover fixed costs and supply Alliance with both vehicles and components
13 Russian Automotive Market – Key Points
1• Russia is still and will keep being Top 10 markets in the world
2• Russian Customers are very demanding but Represent a large Opportunity
3• Number of Cars per 1000 people is 284 in Russia
4• Russia will continue to be an Important Strategic Market for the Renault-Nissan Alliance
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