Can Cadillac exist in the premium car market ?

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Can Cadillac exist in the premium car market ?
 
- The Cadillac make (GM group), saw its US sales drop by 50% in almost ten years, from 250 000 units to 130 000 units in 2013. Today, Cadillac sells most of its vehicles in the US (95% of sales), it sells  a few thousand in China (33 000 in 2014) and in Russia (10 000 units in 2014). In Europe, the American group's premium brand is almost non-existent.

- Most of Cadillac models are produced in the NAFTA region: in the US in Lansing (ATS-CTS models), Arlington (Escalade) and Lordstown (ELR), in Mexico, at Ramos Arizpe (SRX) and finally in Canada in Oshawa (XTS). In China, the Cadillac SLS and STS models are produced with SAIC .

- In order to compete with German premium brands (Mercedes, BMW and Audi) and Japanese premium brands (Lexus, Infiniti and Acura), the US group must therefore increase sales of Cadillac in the US and in China. Indeed, its competitors (especially German) are much more present in these countries, which are currently the most important markets for premium vehicles.

- However, the current range of Cadillac models spans through fewer segments and through fewer body types than that of a manufacturer such as Audi, BMW or Mercedes. Thus, Cadillac offers sedans/coupes from segment D to segment F and SUV from segments E and F. There is a clear lack of models on the lower segments, C, D, and even B. These vehicles are essential for the success of a premium brand since segments C and D are the largest segments in China (as well as segment B in the foreseeable future), while in Europe BMW (with the series 1, X1 and Mini), Audi (with the A3, Q3 A1) and Mercedes (with the Class A, CLA and GLA) have increased their sales volumes thanks to this strategy.

- Cadillac recently announced that it wanted to double the number of its models by 2020. New models are as expected: a sedan from segment F (2019-2020), a plug-in hybrid version of the new sedan from segment E, the CT6 (scheduled for 2015). Alongside a 4-door sedan from segment C (based on the Chevrolet Cruze in 2018 ), a C-segment SUV in 2017 and a SUV from segment D in 2017-2018. The new leadership of the American brand believes that it will take 20 years to catch up with German brands, however the plan announced seems rather weak in order to face competitors that are already present on these segments in China, the USA and Europe. These same competitors also have their own development plans, and one shouldn’t that other European brands will be targeting these segments: Volvo and Jaguar.
 

14-31-8  


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Indonesian exports on the rise driven by Toyota

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Indonesian exports on the rise driven by Toyota
 
- Indonesia’s vehicle exports has been on the rise. It surpassed 100 000 units for the first time in 2008 and reached the 170 000 unit in 2012 and 2013. Volume increased by 9,8% to nearly 93 000 units in the first 6 months of 2014, and year-round exports are expected to top 200 000 units.

- Growing export from Indonesia is stimulated by two factors: rising export of Toyota’s mass-produced models (Fortuner and Innova) and growing exports of small passenger LCGCs (low cost green cars) to ASEAN countries. In addition, Indonesia’s vehicle industry development target through to 2025 sets its vehicle export volume at 386 000 units for 2015, over 600 000 units for 2020 and over 1 millions units for 2025, raising export share of total production of over 20%.

- Toyota increased its vehicle production capacity to 250 000 units per year in January 2014 and has began preparations to use the country as an export base, taking advantage of the weak Indonesian currency. Toyota began exporting (the Vios and the Yaris) to Singapore, Brunei and other ASEAN countries. In March 2014, the carmaker launched export to nine countries in the Middle East, including Saudi Arabia, UAE and Kuwait with a monthly scale of 3 000 units. Export volume is aimed to increase by 30% in 2014 compared to 2013 (from 118 000 units to 152 000 units). In 2016, Toyota’s export volume is projected to surpass the carmaker’s sales volume in Indonesia.

- Suzuki exports (APV, Grand Vitara, Swift, Ertiga and Wagon R) decreased by 7,4% to 21 000 units in 2014. But  targeted volume aims to reach 26 000 units in 2015 and 30 000 units in 2018. Other carmakers, such as Nissan (Grand Livina, X-Trail, Datsun Go+) and Honda (Freed and Brio Satya) have yet to release export plans; however they are planning to boost their volumes in coming years. 
 

14-31-6  


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In June 2014, China had 23 348 passenger cars dealerships

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In June 2014, China had 23 348 passenger cars dealerships
 

- According to the results of a study conducted by an Inovev partner in China, the Chinese mainland had in June 2014, 23 348 passenger cars dealerships. This result, is to be compared to the 21 756 counted in July 2013, shows an increase in the number of dealers in China.


- However, this figure hides differences based on carmaker strategies. Indeed, due to the large number of small local carmakers, dealers selling domestic brand vehicles account for nearly half of the retaillers (11 299 dealership). However, the sales efficiency (volumes of monthly sales per dealership) is below 48 units. Moreover, the declining sales of local Chinese carmakers in 2014, suggests that the rate of sales will further decline  in the second half of this year.


- Behind Chinese brand dealerships, Japanese brands come next with 4 603 dealerships, European brands had 4 313 dealerships, American brands had 1 937 dealerships and finally Korean brands had 1 196 dealerships. By group, VW is most present in the country with 2 122 dealerships.


- Wuling, VW and Audi are the brands with the most significant sales efficiency rate (respectively with 277 units, 171 units and 144 units), followed by BMW (83 units) and Mercedes (77 units). Japanese brands are less efficient with a sales efficiency of 64 units, less than half of the efficient obtained by Korean brands (122 units), while there was 4 times more Japanese dealerships than Korean ones.


- Finally, the coastal provinces of Shandong, Guangdong, Jiangsu and Zhejiang are the ones who opened the most dealerships in recent years. However, dealerships should now be opening more and more in inland cities and medium-sized cities, following the  sales growth in these areas.

 

14-31-5  


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Vietnam aims to produce 1.53 million vehicles (PC+LCV) in 2035

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Vietnam aims to produce 1.53 million vehicles (PC+LCV) in 2035
 
- In July 2014, the Vietnamese government approved the country’s long-term automotive industry strategy. Since the automotive industry is positioned as one of the country’s key sectors, support to this industry is to be strengthened. Vehicle production target is set at 228 000 units for 2020 (including 20 000 units for export), 466 000 units in 2025 (37 000 units for export) and 1,53 million units in 2035 (90 000 units for export).

- Vehicle types (segment or body) that will be primarily developed are light utility vehicles (LUV), short/medium buses, fuel-efficient small passenger cars (A and B segments), and special purpose vehicles (SPV).

- The different ministries involved in this plan (Ministry of Industry and Trade, Ministry of Planning and Investment, Ministry of Science and Technology) are planning a policy system to attract foreign investment (incentives and taxes, technology foundations for local vehicle production). But today, the Vietnamese government is focused on ensuring tax revenues, restricting trade deficit and easing congestion in cities without dismissing the plan for active industry development.

- Concrete measures to realise the long-term goal are yet to be announced. In order to face the increasing competition from Thailand, Indonesia, Malaysia and other ASEAN countries, Vietnam must reduce value-added tax, special consumption tax, and registration tax among other burdens on locally-made models, introduction of incentives to attract foreign investors and select strategic vehicles more thoroughly.

- Although, Vietnam has a strong potential for becoming an important vehicle market, the current poor competitiveness of local production plants calls for support measures from the government.
 

14-31-4  


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PSA redefines production targets for European plants in 2017

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PSA redefines production targets for European plants in 2017
 

- PSA (Peugeot-Citroën) has updated and communicated the new production targets for European plants by 2017.


- Firstly, the Group confirms its commitment to produce 1 million vehicles in France in 2017, a slightly larger amount than the levels produced in 2014 (950 000 according to PSA and 1 million units according to Inovev) but the volumes will still remain a lot lower than those of 2007 (1.5 million units).


- According to Inovev the volume of production in 2017 (a volume already reached in 2014), is easily achievable, especially given the volume of the European market by this deadline and the arrival of new models.


- By plant, the group’s plans for 2017  are (compared to 2014) :

- Sochaux: a volume of 385 000 vehicles, an increase in production of 20% due to the success of the 308, to the arrival of the Opel Zafira and the new 3008 (despite the transfer of the 5008 to Rennes).

- Rennes: a production volume of 110 000 vehicles (against less than 70 000 in 2014), thanks to the arrival of the 5008.

- Mulhouse: a volume of 300 000 vehicles (against 280 000 in 2014), a slight increase (thanks to the new C4 and DS).

- Valenciennes: a volume of 65 000 vehicles (against 75 000 in 2014), a slight decrease (end of the Fiat Scudo).

- Poissy: a volume of 140 000 vehicles (against 260 000 in 2014), representing a decrease of 45% due to the transfer of the C3 and 208 to Trnava whose volume should reach 340 000 vehicles in 2017.

- Vigo, Villaverde, Mangualde : volumes up by 12%, 46% and 26% respectively, due to the increasing sales pace of the C4 Cactus, the future Berlingo, Partner and the arrival of future Opel Combo.

 

14-31-3  


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