Exhaust_AM_China

1、Aftermarket Business PlanExhaust systemPrepared by Nelson8th. Feb.20122Exhaust AM Business PlanMarket size overview3China passenger car population*Source: TIMER consulting 91217222532344754550102030405060200420052006200720082009201020112012E2013EMillions UnitsYearly increasing rate is ave. 20%4Marke

2、t structure0-3 Years, 39% 9.75M4-9 Years, 37% 9.25M10 Years &above, 24% 6MCurrent age structure of the passenger car population in ChinaChina, 20% 5MUS, 18% 4.5MKorea, 12% 3MJapan, 25% 6.25MEurope, 25% 6.25MSegmentation of Chinese car population by brand/ origin of manufacturer in M vehiclesThe

3、passenger car population has an average age of approx. 3-4 years. Complicated vehicle models due to many OEMs from Euro, US, JP, KR and CN. Sources: OICA,SCM, DOE50.760.790.840.900.920.940.950.991.071.591.832.292.392.412.482.994.2900.511.522.533.544.55ShanxiTianjinInner MongoliaFujianHun

4、anHeilongjiangAnhuiHubeiShanghaiYunnanShanxiSichuanLiaoningHenanHebeiBeijingJiangsuZhejiangShandongGuangdongPC population by provincesShanghai and Beijing are both city and province. Shanghai city takes 3% of the total China population.*Source : China yearly statistic report of 2008Million Cars6AM p

5、layers in the supply chainOEM Car makers buy auto parts from Tier1 suppliers such as Tenneco, Faurecia and sell directly to the 4S shops4S shop 4S shops(Sale, Spare part, Service, Survey) are the car dealers who are the only authorized channel to get OES parts for car maintenance and repair.OE suppl

6、ier These tier1 suppliers such as Tenneco and Faurecia are both supplying OES parts to OEMs and also have their own trading company dealing with IAM parts such as Walker and Laite. Their products are easily being seen as the OES part by the customer.Other local auto part manufacturer These are the a

7、uto part makers who are designing or copying OES parts, and mostly are fake parts.IAM distributor These are main wholesalers playing AM parts for big quantity. They are buying from auto part manufacturers and sell to auto part city shops and independent workshops.Auto part market This is a big marke

8、tplace collected 100-200 small shops dealing with auto part for small quantity. These shops sell not only parts from tier1 suppliers, but from local auto part manufacturers and even fake parts.Garage These are the car maintenance and repair workshops who buying from auto part city shops or IAM distr

9、ibutors according to the demand.7Aftermarket product flow4S shopOther local auto part ManufacturerIllegal flowIAM distributorManufacturerDistributor/ WholesalerWholesaler/ RetailerWorkshopGarageOE supplierAuto part marketOEMLegel flow*Source : Local IAM distributorOES partOE supplier branded partOES

10、 partOES partsOE supplier branded partOE supplier branded part or other branded partOthers branded partOthers branded part or fake partOthers branded part or fake partOE supplier branded part or other branded partOE supplier branded part, other branded part or fake part8Exhaust AM Business PlanWhat

11、brand we target9Car brand market analysis In China, Japanese car and Germany car takes separately 20% and 16% of the car sales. As AM for Japanese car is totally a different structure, we only focus on German car models.Population 2003-2010 (Million Cars)OEM plantsAftermarket conditionAvg. gross mar

12、ginSourcing conditionVolkswagen4.3VW has 2 JV plants in Shanghai and Changchun: FAW-VW and Shanghai VWMany unknown brands and fake OES parts found in the market. Quality level is very low. But users only care about price even short lifetime.2-8%Almost all the supplier have existing VW part. It is ea

13、sy to be sourced.Audi1.2Audi has one JV plant in Changchun:FAW-AUDIAudi is very popular in the high end car list. The market is still controlled by the OES parts. But there is an opportunity to develop good quality and competitive price IAM brand parts.15-30%There are suppliers who have existing Aud

14、i products and tooling with very competitive price. And it is also easy to get OES part for development. The tooling cost is also low.BMW0.62BMW has one JV in Shenyang: Brilliance BMWBMW is also very popular. The market is totally controlled by the OES. It is very hard to find IAM brand in the autoc

15、ity and less distributors doing BMW business as the quality is excellent and very low replacement.15-30%As request is very limited, very less suppliers have exisitng products and tooling.Mercedes0.35Mercedes has one JV in Beijing: Beijing Benz-DaimlerchryslerBenz is a well-known brand car, but polua

16、rity is no better than Audi and BMW. The sales volume is also low, so very less IAM players.10-20%As request is very limited, very less suppliers have exisitng products and tooling.10Evaluation and conclusionCar brandEvaluationVolkswagenEven though the population is high, there is not enough GM to s

17、tart the business. And for Bosal brand marketing, VW is not the right start point. But some high-end models such as Passat series can be added to extend the catalogue for the 2nd project.AudiAudi has available market demand and proper GM . So it is a good selection to start the business with Audi br

18、and.BMWBMW has a higher quality requirement and harder entry barrier. It could be the 2nd project to extend the catalogue when the business is going stable.MercedesMercede is an option only if there is enough market demand. Through the evaluation on all the brands in terms of population, gross margi

19、n, sourcing feasibility, we decide to start with Audi products. If the business is going stable, we can think about extend the product for BMW and Volkswagen.11Exhaust AM Business PlanPotential market12Consumption trend: OES or IAM?*Source : Stahlgruber market research13OES and IAM situation in Chin

20、a 4S shop consumes most of the OES partsThere is no popular IAM brand/player in the market except Walker and Faurecia which has OES advantage, but AM is not their business focus.Auto part market will still exist in the market even though there is no organized business system with trusted product and

21、 service. But it will not be the main player for aftermarket.China Homologation does not exist in China, but it will be on the topic in the coming 5 years.Bosal needs to stamp the image on the market with good quality part and service.*Source : Tecdoc market study77%10%13%OES(Supplied by Tenneco/Fau

22、recia/other OE suppliers)Tenneco(walker)/Faurecia/Other OE supplier brandUnknown brand/Fake OES part(Mainly in auto part city)14Main customer Independent aftermarket distributor Garage Auto part market 4S Shop15Main customer_IAM distributor Stahlgruber Shanghai We will work with Stahlgruber to sell

23、Bosal exhaust parts to distributors and their contracted workshops BASPT Beijing This is an OES distributor in Beijing who will do exhaust distribution in North China GXYY Shanghai This is a big Audi spare part distributor in Shanghai who is doing business with Tenneco and Faurecia, the 2 main OES m

24、anufacturers in China. And also there is the potentiality to sell Bosal exhaust through their network.16Main customer_GarageGarage certificateJob scopeTypicle shopLevel 1Engaged in automobile repair and assembly repair, can also be involved in automobile maintenance, minor repairs and automotive spe

25、cialized repair. Large scale and total completeness of testing equipments.Independent repair and maintenance workshopsAuthorized repair and service workshops 4S(Service, Spare parts, Sales, Survey)3S(Service, Spare parts, Sales)2S(Service, Spare parts)Level 2Engaged in automobile repair and assembly

26、 repair, can also be involved in automobile maintenance, minor repairs and automotive specialized repair. Medium scale and incompleteness of testing equipments.Independent repair and maintenance workshopsAuthorized repair and service workshops 3S(Service, Spare parts, Sales)2S(Service, Spare parts)L

27、evel 3TIERSpecialists in body repair, painting, tarpaulin, cushions and inner decoration repairs, electrical, instrument repair, battery repair, radiator, fuel tank repair, tire repair, auto glass installation , air conditioners, heaters repair, fuel injection pump, injector, carburetor repair, cran

28、kshaft grinding, cylinder boring mill, car cleaning maintenance repair or maintenance of special.Fast FittersTyre Fitting ShopsAuto CenterAuto Cosmetic WorkshopsAccording to Motor Vehicle Repair Management Regulation, the garages are divided in 3 levels.17Garage overviewLevel1, 9900, 3%Level2, 58200

29、, 20%Level3, 231200, 77%Level1, 163, 4%Level2, 1632, 44%Level3, 1929, 52%Garage ChinaGarage Shanghai*Source: TIMER consulting Total: 28,677Total: 3,72418Main customer_Auto part market*Source from Tecdoc market studyThere are 9 auto part markets in Shanghai and other big cities also have this kind of

30、 markets.Each one is collected with 100-200 shops per the size of the market.Most of the shops are retailers. Some are also wholesaler, specialized distributor.The market is not well organized. You can find many product with no brand and even fake OES partsThere is seldom shop doing exhaust product

31、in the market as the limit of stock space and turnover rate.19Main customer_4S shop Per the study by Tecdoc, the 4S shops are authorized by OEMs to do the maintenance and repair when the car is still in the warranty period. As it is not allowed to sell non-OES part, Bosal has no chance to sell produ

32、ct directly to 4S shop.204S shop distribution in China211121516Whole ChinaShanghaiBeijingGuangdong4S shop number195101020Whole ChinaShanghaiBeijingGuangdong4S shop number193181213Whole ChinaShanghaiBeijingGuangdong4S shop number1033625665Whole ChinaShanghaiBeijingGuangdong4S shop numberSources: http

33、:/ AM Business PlanWhere we are22Bosal position in the market 4S shopOther local auto part ManufacturerIllegal flowIAM distributorManufacturerDistributor/ WholesalerWholesaler/ RetailerWorkshopGarageOE supplierAuto part marketOEMLegel flow*Source : Local IAM distributorBosal China will work with Sta

34、hlgruber to sell exhaust productOES partsOE supplier branded partOES partsOES partsOE supplier branded partOE supplier branded part or other branded partBosal branded partOthers branded part or fake partOthers branded part or fake partOE supplier branded part or other branded partOE supplier branded

35、 part, other branded part or fake partOther branded part23Supply chain G/MTenneco/Faurecia OEM(50%) OEM 4S shops (150-200%) Car owner OE supplier branded partOE supplier IAM Distributor(25%)Auto part market(20-25%)Garage(50-60%) Car owner Bosal branded partSupplier Bosal(10%) Stahlgruber(20%) IAM Di

36、stributor(25%)Auto part market(20-25%) Garage(50-60%) Car owner 24Example of selling price evolutionBosal branded partOE supplier branded partBosal supplier1,150.00G/MTenneco1,130.00G/MBosal1,265.00115.00Walker1,700.00200.00Stahlgruber1,495.00230.00IAM distributor1,868.75373.75IAM distributor2,125.0

37、0425.00Auto part market2,242.50373.75Auto part market2,550.00425.00Garage3,363.751,121.25Garage3,825.001,275.00Car brandAudi A6Engin modelC5Muffler typeMid & End assemblyLiter2.4/2.8LYear2002Material409L Stahlgruber selling price is lower than the OE supplier branded market price by 25-30%25Exha

38、ust AM Business PlanStahlgruber Shanghai26Overview on Stahlgruber Shanghai1. Stahlgruber Shanghai is a joint venture company between Stahlgruber(50%) and Hella(50%)2. They rented 3,000sqm land for office and warehouse3. They have around 30 persons with sales and purchaser.4. They are now working wit

39、h several OE suppliers such as Bosch, Federal-Mogul, Hella, KYB, ACDelco5. Their products cover the range of Motor, Engine cooling, Brakes, Clutches, Lighting, Battery, Iginition6. They are working with 150 workshops with different levels in Shanghai. So far no business with IAM distributor.7. They

40、had built the webshop platform for the ordering system8. They has their own trucks for logistics within Shanghai area9. As the business is just started, the monthly turnover is still low27Business potentialitySell to garage Stahlgruber has now 150 independent workshops. It is estimated monthly sales

41、 with Stahlgruber is RMB11,000 per month. Sell to IAM distributor Stahlgruber is not interested to focus on the workshop for Bosal exhaust as there is not enough demand. The GM, Mr. Qing wants to find some AUDI distributors for the whole China market, thus, the sales volume could guaranteed. So far

42、the yearly demand is estimated to be totally 8,000 pieces and sales is roughly 2.34M RMB.Garage certificateHow many garagesLevel12Level263Level38528Business process with Stahlgruber Stahlgruber places order to Bosal China for a forecast of 3 months. Bosal China then purchases part from supplier for

43、3 months demand. Stahlgruber shares his warehouse with Bosal for free. Only Bosal has the right for product development with nominated supplier. Stahlgruber is the authorized dealer for Bosal product and sell to customers. It is the responsibility for Stahlgruber to ship the part to customer with pr

44、oper package. Stahlgruber agrees to do 30 days payment term with Bosal China.29Exhaust AM Business PlanWhat to sell30Audi product catalogueAudiModelLiterSilencer typeYearMaterialA6C51.8LMid&End silencer sub-assembly2002409LA6C51.8TFront silencer2002409LA6C51.8TMid silencer2002409LA6C51.8TMid&

45、;End silencer sub-assembly2002409LA6C51.8TMid&End silencer sub-assembly2003409LA6C52.4Mid silencer2002409LA6C52.4/2.8LMid&End silencer sub-assembly2002409LA6C52.4/2.8LMid&End silencer sub-assembly2003409LA6LC62.0TMid&End silencer sub-assembly2006409LA6LC62.4LMid&End silencer sub-

46、assembly2006409LSilencerCatalytic convertorSupplier has existing product and tooling for these products. For other Audi product, they need to develop per the OES sample.AudiModelLiterConvertor typeYearMaterial2002002.01998409LA6C51.8T2002409LA6C52.4Left2002409LA6C52.4Right2002409LA6C52.8Left2002409L

47、A6C52.8Right2002409LA6LC62.0T2006409LA6LC62.4Left2006409LA6LC62.4Right2006409LA6LC62.0TManu transmission2006409LA6LC62.0TAutomatic transmission2006409L31Audi product to be developedModelLiterProduct typeYearA41.8LMid silencer2005A41.8LEnd silencer2005A42.0LEnd silencer2005A41.8LCatalytic2005A42.0LCa

48、talytic2005A42.0LCatalytic2005Total development cost including design and tooling is around RMB 400,000 32Exhaust AM Business PlanSupplier selection33Evaluation criteriaEvaluation CriteriaWeight of importance1Years of experiences on exhaust system5%2Quality system, ISO9001 or TS169495%3Is a product

49、catalog available for AUDI or other high end brand20%4Tooling availability of AUDI or other high end brand20%5Leadtime of development for 10 kinds of products5%6Price level15%7Payment like delivery net6010%8What kind of matieral you are using for the products. ALU steel/Stainless steel/Mild steel5%9

50、Acceptance to make inventory for Bosal? How big and how long?5%10Minimun order quantity10%10 criteria was set to evaluate the potential exhaust suppliers. Total score is 10.34Supplier evaluationSupplier nameScoreMufflerKwongkee6.2Wuxi Honghu4.55Huatong4.4Hengtong6.75Kerui7.8Xintuo8.2Yuexing5.1Dongji

51、e4.1Liangfei5.05Lantian4.7Remcor4.4Yiyineng4.7CatalyticJiete6.85Sanyuan6.9Kwongkee6.2Conclusion:Hengtong, Kerui and Xintuo are selected for muffler product .Jiete and Sanyuan are selected for Catalytic convertor. They have solid AM experience, existing tooling and catalogue, and capability for short

52、 lead time developmentKwongkee is our existing supplier who was exporting muffler product to Benelux for Opel. It has the capability on Muffler, catalytic convertor, down pipe, tail pipe and complete product list for exhaust system. As they had been developed Opel muffler for us, they were selling the same product in China market. Even though Kwongkee is a good AM supplier, we have to be very careful to work with them. 35Exhaust AM Business PlanStrategy analysis36SWOT1.Bosal brand value on exhaust system globally2.Bosal research & developm