© Copyright IBM Corporation 2003 China Sharpening the Vision Tobin Alexander - Vice President IBM Global Automotive, Asia-Pacific Operations.

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Presentation transcript:

© Copyright IBM Corporation 2003 China Sharpening the Vision Tobin Alexander - Vice President IBM Global Automotive, Asia-Pacific Operations

© Copyright IBM Corporation Car Sales Up 75% 2003 – Exponential Growth

© Copyright IBM Corporation 2003 What a Difference A Year Makes!

© Copyright IBM Corporation % 15% 2004 Sales $2.3 million 2004 – Sales Up Only 15%

© Copyright IBM Corporation 2005 Declining Sales Price Cutting Profit Margins Declining Sales Profit Margins Price Cutting

© Copyright IBM Corporation 2003 Why the Drastic Change?

© Copyright IBM Corporation The ratio of private car buyers to fleets has increased much faster than anticipated 2 Chinese economic policies have also impacted the market 3 Competition increased substantially Four Fundamental Reasons 4 Steel prices increased over 40%

© Copyright IBM Corporation 2003 How Do We Respond?

© Copyright IBM Corporation 2005 Developed Markets vs. China In Developed Markets: vs. In China: Repeat BuyersFirst Time Buyers Price reductions or cash incentives stimulate demand Price reductions delay purchases

© Copyright IBM Corporation 2005 The answer lies in the forward value chain

© Copyright IBM Corporation 2005 Attract and Retain New Buyers Invest in marketing, advertising and brand development Leverage warranty offerings to reduce cost of vehicle ownership Reorganize sales and marketing organizations Provide a complete ownership experience

© Copyright IBM Corporation 2005 Manufacturers Can’t Do It Alone Manufacturer Customer Dealer and Service Network

© Copyright IBM Corporation 2005 Develop Creative Finance Options Cars Financed 20% 80%

© Copyright IBM Corporation 2005 Conclusion: From Vision to Execution  Rethink and restructure sales, marketing, distribution, and after sales strategies and processes  Target messages to increasingly segmented markets  Pay more attention to the individual customer  Provide financing services unique to China  Provide best-in-class dealer sales and service

© Copyright IBM Corporation 2005 Companies that respond quickly will win in this market