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MAGO
EU DIVISION
CHOSEN COUNTRY:
GERMANY
M A R C H 21S T 2
0 1 4
THE GERMAN AUTOMOTIVE MARKET
KEYS IDEAS
• First-class brands – BMW, Volkswagen AG, Daimler AG• A strong and steady demand stimulated by one of the
highest GDP per capital but also cultural factors• An industry labeled for its quality and reliability• Innovation is one of the pillars of the German Automotive
Market, sustained by strong relationship between universities and research
institutions• A large network of small but competitive companies, for
instance, Germany hosts the largest concentration of OEM plants in Europe.
Investor opinion: These Industries have Potential in Germany“Which three of the following industries do you regard as the main drivers of growth in Germany?”
Source: Ernst & Young Standort Deutschland 2012.Up to three responses possible. Total respondents: A representative panel of 201 international decision-makers.
EUROPE'S MOST ATTRACTIVE COUNTRIES“WHICH THREE COUNTRIES ARE IN YOUR OPINION THE MOST IMPORTANT INVESTMENT LOCATIONS DURING THE NEXT THREE YEARS?”
Source: Ernst & Young Standort Deutschland 2012.Up to three responses possible. Total respondents: A representative panelof 840 international decision-makers
WHAT TO REMEMBER
• German economy is one of the most attractive in EU
• Europe’s largest automobile market based on production and sales figures.
• Germany is the European car production leader : some 5.9 million passengers cars were manufactured in German plants in 2011
• The country can be a support for exporting to others countries. Around 77% of cars produced in Germany is 2011 were ultimately destined for foreign shores.
COMPETITORSSeveral major global firms (Robert Bosch GmbH, CalsonicKansei Corp.,
Benteler Automobiltechnik GmbH)
Still, medium-sized suppliers account for 85% of the market
This diversity provides economic stability and growth
A great opportunity to gain a competitive advantage (differentiating ourselves from the competition by extensively using or R&D facility, because OEMs are trying to move the costs of R&D to suppliers)
Moderate power over buyers
CUSTOMERSMany German car manufacturing companies (BMW, Daimler, Volkswagen, Opel),
which have 47 OEM sites in Germany
Concentrated in certain areas across the country (SW, SE, E), which are all easily accessible (which might help us in facilitating JIT production, thus gaining an advantage)
Eager to interact with suppliers to develop R&D partnerships (especially as far as CO2 emissions are concerned)
Face a continuously growing demand and consequently need reliable suppliers to provide high-quality, relatively cheap (this relates to the costs we incur) car parts
The competition between them might also reduce their power over their suppliers
COSTL A B O U R C O S T I N C R E A S E H A S B E E N T H E L O W E S T I N E U R P O E .
A N N U A L I N C R E A S E O F 1 . 6 %
C O M P E T I T I V E N E S S I N T E R M S O F M A N U F A C T U R I N G C O S T I S H I G H E R T H A N F R A N C E A N D I T A LY A N D S I M I L A R T O J A P A N .
COST• The World Bank LPI ranking shows that Germany ranked 1st
in Logistics Performance Index (Transportation cost, inventory carrying cost, warehousing cost, packing cost etc).
ECONOMIC FACTO
RS
W H Y GE R M A N Y ?
B E L G I U M :P O P U L A T I O N : 1 1 . 1 M I L L I O NG D P P E R C A P I T A : $ 3 7 , 8 8 3I N F L A T I O N : 2 . 6 %G R O W T H : - 0 . 2 %F D I I N F L O W : $ -1 6 1 3 . 8 M I L L I O N
F R A N C E :P O P U L A T I O N : 6 3 . 4 M I L L I O NG D P P E R C A P I T A : $ 3 5 , 5 4 8I N F L A T I O N : 2 . 0 %G R O W T H : 0 . 0 %F D I I N F L O W : $ 2 5 . 1 B I L L I O N
Holland (Netherlands):Population: 16.8 millionGDP per capita: $42,194
Inflation: 2.8%Growth: -0.9%
FDI inflow: $-244.1 million
Italy:Population: 60.8 millionGDP per capita: $30,136
Inflation: 3.3%Growth: -2.4%
FDI inflow: $9.6 billion
Germany:Population: 81.9 millionGDP per capita: $39,028
Inflation: 2.1%FDI inflow: $6.6 billion
Growth: +0.9%
Largest economy in Europe and 5th largest economy in the
world in PPP
Economic review
EMPLOYMENT
AV
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CURRENCY/EURO-ZONEL O C A T I N G I N A C O U N T R Y W I T H T H E E U R O A L L O W S E A S I E R T R A D E F O R W H E N W E D O C H O O S E T O F U R T H E R O U R S A L E S .
W H E N T R A D E D O E S B R O A D E N T O O T H E R C O U N T R I E S , T H E U S E O F T H E E U R O W I L L B E A D V A N T A G E O U S O V E R E U R O P E A S I T W I L L S A V E T R A N S A C T I O N C O S T S E T C . A L S O R E M E M B E R T H A T G E R M A N Y I S A L A R G E P L A Y E R I N T H E E M U A N D A R E N O T S P E C I F I C A L LY S T R U G G L I N G A S O T H E R C O U N T R I E S H A V E B E E N . T H E E U R O - Z O N E I T S E L F I S C U R R E N T LY M A K I N G A S L O W R E C O V E R Y A N D G E R M A N Y A N D F R A N C E A R E S E E N A S T H E D R I V E R S O F T H I S .
GERMANY, WORLD’S TOP-RANKED INFRASTRUCTURE
TAX ENVIRONMENT
A STABLE LABOUR COST
MOTIVATED AND DEPENDABLE EMPLOYEES
A HIGH SKILLED WORKFORCE
ENGINEERING EXCELLENCE
CONCLUSION