Polytechnic of Turin College of Engineering and Management Master of Science in Engineering and Management Master of Science Thesis Innovative financing techniques in the automotive market: a case study in Italy Supervisor: Candidate: Prof. Marco Cantamessa Francesco Audasso March 2020 Ringraziamenti Questa non sarebbe la conclusione del mio percorso universitario senza la disponibilità e il supporto dei colleghi che ho avuto in Santander: grazie Paolo, Stefan, Pier, Fabio, Massimo, Luisa e gli altri ragazzi della Direzione Commerciale. Grazie in particolare a Leo, Vale, Mar, Marco. Grazie agli amici che mi hanno sopportato in tutte le mie lamentele per i weekend e le estati passati sui libri invece che in montagna: siete stati uno stimolo. Grazie alla mia famiglia: la libertà, tranquillità e sicurezza che mi avete trasmesso sono state decisive. 5 Table of contents Premise and scope of work ..........................................................................9 Chapter 1 ....................................................................................................3 The market environment ..........................................................................3 1.1 Market competition.....................................................................3 1.1.1 Competitive environment .....................................................4 1.1.2 Global market ......................................................................6 1.1.3 European market ..................................................................7 1.1.4 Italian Market .......................................................................9 1.2 A new perception of mobility: from ownership to use ............... 12 1.2.1 Loans and TCM ................................................................. 12 1.2.2 Leasing and rental .............................................................. 13 1.3 Electric vehicles and bridge solutions ....................................... 16 1.3.1 Global electric market outlook ........................................... 16 1.3.1.1 Charging infrastructure .................................................. 20 1.3.1.2 EVs market in Italy ........................................................ 22 1.3.2 Policies and regulations ...................................................... 23 1.3.2.1 New Policies Scenario.................................................... 28 1.3.2.2 EV30@30 Scenario ........................................................ 29 1.3.3 Environmental impact ........................................................ 34 1.3.4 Future Challenges .............................................................. 37 1.3.4.1 Batteries ......................................................................... 38 1.3.4.2 Charging infrastructures ................................................. 42 1.3.4.3 Residual values and financing solutions ......................... 45 1.4 Financial products are tailormade on customers ........................ 46 1.4.1 Bridge solutions ................................................................. 47 1.4.2 Subscription plans .............................................................. 48 Chapter 2 .................................................................................................. 52 Project definition ................................................................................... 52 2.1 Clear market needs ....................................................................... 52 6 2.2 Santander Consumer Bank’s proposal ........................................... 53 2.2.1 The Bank ................................................................................ 53 2.2.2 The project: activities and resources ....................................... 55 2.2.3 The candidate’s role ............................................................... 58 Chapter 3 .................................................................................................. 61 Product planning .................................................................................... 61 3.1 Market research ............................................................................ 61 3.1.1 Analysis of the market environment and identification of possible incumbent competitors ...................................................... 62 3.1.2 Analysis of the customers’ needs and their propensity to adopt the new product ............................................................................... 63 3.1.3 Analysis of the impact of the new product on already existent loans of the same Brand and cannibalization threat ......................... 66 3.2 Feasibility study ........................................................................... 67 3.3 Activity and resource planning ..................................................... 69 3.3.1 Activity planning .................................................................... 70 3.3.2 Resource planning .................................................................. 72 Chapter 4 .................................................................................................. 74 Product design ....................................................................................... 74 4.1 Loan structure ............................................................................... 74 4.2 Duration ....................................................................................... 76 4.3 Legal and compliance Department check and refinement.............. 76 Chapter 5 .................................................................................................. 78 Advertising ............................................................................................ 78 5.1 In-house / outsourcing .................................................................. 78 5.1.1 In-house Development ............................................................ 78 5.1.2 Outsourcing ............................................................................ 79 5.2 Content selection .......................................................................... 80 5.3 Marketing and legal validation ...................................................... 81 Chapter 6 .................................................................................................. 84 Product launch and monitoring .............................................................. 84 7 6.1 Product launch .............................................................................. 84 6.2 Performance monitoring ............................................................... 85 6.3 SWOT analysis ............................................................................. 87 6.3.1 Strengths ................................................................................ 88 6.3.2 Weaknesses ............................................................................ 89 6.3.3 Opportunities .......................................................................... 90 6.3.4 Threats ................................................................................... 90 Conclusions .............................................................................................. 93 Sitography................................................................................................. 95 Bibliography ............................................................................................. 96 8 Table of Figures and Tables Figure 1.1 – The SWOT Analysis of global automotive market ..................5 Figure 1.2 - Global car registrations ............................................................7 Figure 1.3 - European car registrations ........................................................8 Figure 1.4 – EU car registrations in 2018, month-by-month trend ...............9 Figure 1.5 – Italian automotive market, yearly registrations ...................... 10 Figure 1.6 – Weighted average CO2 emissions (g/km) of new registrations, Italian market ............................................................................................ 11 Figure 1.7 – Global diffusion of EVs from 2013 to 2018 ........................... 17 Figure 1.8 – EVs sales in most relevant markets........................................ 19 Figure 1.9 – Global stock of charging points ............................................ 20 Figure 1.10 – Electric car and charges stock by country ............................ 21 Table 1.1 – part 1 ...................................................................................... 25 Table 1.1 – part 2 ...................................................................................... 26 Table 1.1 – part 3 ...................................................................................... 27 Figure 1.11 – Deployment of EVs adoption by scenario ............................ 30 Figure 1.12 – EVs sales shares by region, scenario and mode ................... 34 Figure 1.13 – CO2 emissions from well to wheel (WTW) ......................... 35 Figure 1.14 – GHG comparison, EVs vs ICE vehicles ............................... 36 Figure 1.15 - WTW and net GHG savings by mode and scenario, 2018-30 .................................................................................................................. 37 Figure 1.16 – New announced batteries plants, by mode and capacity ....... 39 Figure 1.17 – Battery capacity of EVs in key regions, from 2012 to 2018 . 40 Figure 1.18 – annual battery capacity increase by scenario ........................ 41 Figure 1.19 –