Be a player in the entry-level segment. Strengthen and extend the ... Citroën
Xsara Picasso .... Become an established and profitable industry player.
Objective: 1 ...
EMERGING MARKETS - GLOBAL SOURCING An international purchasing strategy serving the PSA Group ambitions
ANFIA – May 26, 2008 - Torino
Bernard BRASEY Purchasing Executive Director
AGENDA
CAP 2010 – Ambition 2015 Emerging Markets Purchasing Organisation Strategy and Global Sourcing
Strategy and Ambition 2010 - 2015
3
2010 Challenge Back to growth and profit
2015 Ambition Each business: Among the best in the industry in growth and profitability To reach the highest possible enterprise value
Key Drivers Our employees’ commitment to winning A move towards a culture of speed, action, results An outstanding relationship with a remarkable and first class supplier base 4
Automotive Division From CAP 2010 … Product and service quality European product offensive Competitiveness plan International offensive
… to Ambition 2015 The most competitive carmaker in Europe The leader in environmentally friendly cars With a broad and profitable international base Delivering long-term profit growth
5
Product and service quality A customer-centric company
Product quality Halve the number of quality incidents Divide by three incident resolution time
Service quality Peugeot and Citroën ranking among the European Top 5 A “revolution” in customer service One back office for both brands
6
European product offensive Broaden the Peugeot and Citroën lineups Take our share of the growing market segments Boost our leadership in commercial vehicles Develop “competitive premium” models in each segment
European product plan 2003-2006
Peugeot 308
Citroën C4 Picasso
2007-2010
New concept Lineup extension Model renewals Restylings Total
2 4 9 7 22
5 5 18 1 29
Sedans Non-sedans Light commercial vehicles Total
11 7 4 22
9 14 6 29
Citroën Jumpy
7
International offensive : Mercosur A new dimension through product coverage
2010 Mercosur
Peugeot 307 Sedan
Citroën C4 Pallas
Peugeot 206 SW
Citroën C3 XTR
Citroën Berlingo
Citroën Xsara Picasso
Double the number of model launches to 12 Be a player in the entry-level segment Strengthen and extend the two brands’ dealer networks Swiftly free up additional production capacity Increase local content, strengthen R&D
2015 Ambition Brazil : join the "Big 4" Argentina : become the undisputed market leader Objective : 400,000 unit sales
8
International offensive
New growth regions
Eastern Europe Plant search underway – decision mid 2008 Small gas engine Capacity : 600.000 engines/year SOP in 2012
India & Mexico Strategic assessment underway
9
Competitiveness plan Cap 2010 : on track ! Halve our warranty costs Increase purchasing performance : global sourcing up to 40% Reduce overheads and fixed costs by 30% Shorten development cycles by 30% Reduce supply chain costs by 10%
2015 Ambition Become the most competitive carmaker in Europe
10
Competitiveness plan Cap 2010 … and beyond Roll out the “PSA Production System” – Lean Engineering & Manufacturing Develop flexible, modular platforms Extend the manufacturing and sourcing base in emerging markets
2015 Ambition A highly competitive manufacturing base
11
Worldwide sales : over 4 million vehicles in 2010 Russia + Mercosur + China sales
Total Europe* sales X
up 300,000 over the period
X
up 400,000 over the period
+ 10% 3,094
2,965
®
+ 100%
3,270
®
800
401 173
2002
2006
2010
2002
2006
2010
*Western Europe + Eastern Europe + Rest of World (excluding Russia, Mercosur and China)
12
AGENDA
CAP 2010 – Ambition 2015 Emerging Markets Purchasing Organisation Global Sourcing
Automotive Market in Russia
6th largest world automotive market 4th largest in Europe - ahead of France Russian car fleet is over 28 million cars 50% of Russian fleet is more than 10 years old Car density (per 1000 inhabitants) = 210
A continuous and steady growth since 2002
2007 2002
In a fast growing market, foreign built-up and imports are taking over Russian brands 3 000 000
2 500 000
2 000 000
1 500 000
1 000 000
500 000
0 2003
2004
2005
Russian Production
2006
CKD/SKD
BU
2007
Russia will catch up with Germany by 2010 MARKET FORECAST 2007- 2015 4500 4000 3500
3500
x 1000 vehicles
3100 2850
3000 2500 2000 1500
2450
650
3300
550
940
1200
500
450
3955 400
1400
1600
1800
1920
2055
350
2190
655
1000 500
4090
600
720
800
3685
3820
995
1190
1250
1300
1350
1385
1450
1500
1550
2008
2009
2010
2011
2012
2013
2014
2015
0 2007
IMPORTS
CKD/SKD and modern Russian cars
Current Russian cars
PSA Peugeot Citroën in Russia
OEMs Manufacturing Footprint SOK
Avtotor Production :
20 000
RusPromAuto Production : Production :
Production :
90 000:
Production :
70 000
66 000
500 000 1)
500 000
Production
AvtoVAZ Production :
Production :
800 000
15 000 SOK
GM-AvtoVAZ Production: 75
Production :
000
30 000
Project Russia Kalouga 180km SW of Moscow
• JV PSA 70 % – Mitsubishi 30 % • Greenfield manufacturing project : final assembly plant (body-in-white, painting, vehicle assembly) • PSA Capital Investment : in excess of 300 Million Euros • Cooperation SUV and PSA mid-sized platform vehicles • SOP : Q1/2011 • Capacity : 150.000 veh/year with a possible extension to 300.000 v/year
21
XIANGFAN WUHAN
Automotive Market in China
CHINA - Vehicles in use (in thousands) 18,7%
18,6%
USA in 1982
17,8% 17,0%
16,5%
144 900
15,4%
131 460
14,1% Number of vehicules (x 1000)
Japan in 2006
Growth
158 530
12,8%
118 510
106 050
11,7% 10,9%
94 050
10,2% 9,4%
82 420 71 450 61 310 52 050 43 880 31 600
2005
36 970
2006
2007
2 008 F
2 009 F
Source : State Information Center (S.I.C.)
2 010 F
2 011 F
2 012 F
2 013 F
2 014 F
2 015 F
2 016 F
2 017 F
CHINA - Car density (per 1000 population) Japan in 1968 Korea in 1992 17,9%
18,2%
17,9%
114 105
16,7% 15,2%
95
15,1%
86 13,1% Number of vehicules for 1000 people
69
Growth
78 13,0% 10,3%
61
10,5%
10,5%
53
8,6%
46 39 33 24
2005
28
2006
2007
2 008 F
2 009 F
Source : State Information Center (S.I.C.)
2 010 F
2 011 F
2 012 F
2 013 F
2 014 F
2 015 F
2 016 F
2 017 F
Car production (local production and import) Imports are less than 5 % Trend and forecast (in thousand)
65%
12 987
63%
11 940 10 905 9 919 8 992 8 142 7 353 6 297
30% 27%
5 301
25%
24%
4 282 19% 17%
3 282
15%
213% 594 2 301
11%
10%
10%
10%
9%
2013F
2014F
9%
1 391 684
2000
855
2001
2002
2003
2004
Source : State Information Center (S.I.C.)
2005
2006
2007
2008F
2009F
2010F
2011F
2012F
2015F
XIANGFAN WUHAN
PSA Peugeot Citroën in China
International offensive: China A new dimension through an extended geographic coverage
2010 China JV with Dongfeng Start-up manufacturing facilities on the East coast Renew the Peugeot and Citroën lineups and double the number of model launches to 12 North North East East
Feasibility study for a JV with Hafei Extend product coverage to 80% of the market Light commercial vehicles and sub-compact cars 3rd plant in the South East
China Business Unit
Beijing Beijing West West
Center Center Hubei Hubei
East East
South South West West
Develop R&D and styling centers Strengthen purchasing
South South East East
2015 Ambition Become an established and profitable industry player Objective: 1 million units in the mid - term 27
Automotive Market in Iran
IRAN
A unique Geographical and Strategic position
● Border line of Europe & Asia ● Surrounded by some 20 developing countries ● Connecting bridge between Central Asia and rest of the World ● Potential market with a 300 million population ● Plenty of natural Resources ● Fairly cheap Labor and Energy 29
Iran Automotive Industry VEHICLE PRODUCTION IN IRAN 1400
(1993-2008)
(UNITS,000)
1200 1050
1100
1150
1200
950
1000 750
800
Average annual growth
540
600 379
400
68
71
92
1993
1994
1995
200
124
176
206
240
297
24.5%
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
0
• Growing young population - 70% aged less than 30 years
• An ageing 6 million car fleet • 30% of car fleet is over 20 years old and needs to be replaced for saving energy and reducing pollution 30
Automotive Market in India
The demand drivers for the auto industry Short Term
Long Term
Infrastructure development ($500 billion in the next 5-6 years)
According to McKinsey, the middle class will grow from 50 million to 550 million by 2025
Low car density (8/1000)
Continuously Improving Quality resulting in Export of Automobiles and Auto components
Access to capital
Supply side – Low cost of Skilled Manpower, Design Capability
Passenger Vehicle Production
( in thousands)
PROJECTED CAGR 2007-2014 Cars = 10.1% MUV’s = 2.4% Overall=9.6%
3 500 3 000
2001-2007 CAGR Cars =17.5% MUV’s = 15% Overall=17.2%
2 500
3.0m 277
2654
1.8m
2 000
1729 1545
1 500 1 000 500
1210
1309
1488
207 1575
1323
988 669 564
105
722 842 608
114
1028
1113
146
182
196
222
2003-04
2004-05
2005-06
2006-07
241
0 2001-02
2002-03
Cars
MUVs
2007-08* 2009-10
Total Pass Veh
* Estimated on the basis of 11 months actual data Source: SIAM & ACMA-McKinsey Report
2014-15
Strengths Cultural « distance » to Western Europe 4 hours of time difference allow good coordination English as official language Multicultural environment and awareness Good knowledge of the European culture
Experience in automotive industry Network of Automotive carmarkers and suppliers for decades Leadership in R&D and software development Maturity to develop strategic relations with customers
Good macro economic drivers Competitive labor cost High level of education Efficient manufacturing processes and practices Quality awareness (QS, ISO TS 16949…)
34
AGENDA
CAP 2010 and Ambition 2015 Emerging Markets Purchasing Strategy and Organisation Global Sourcing
ANFIA May 26th 2008 - Bernard BRASEY
35
Purchasing overview (2007 Spend – in million of €) PRODUCTION Europe Mercosur Vehicles SPARE PARTS NON PRODUCTION Equipments and Machines Services Prototypes TOOLING SPORT ACTIVITES TOTAL
23 057 22 334 715 8 1503 4500 2000 2500 155 320 60 29 595
36
PSA Purchasing offices Russia (2008)
Turkey (2005)
Central Europe (2005)
China (2004) Trnava : Poland, Hungary, Czech rep, Slovakia
India (2006
Shanghai : China, Taiwan, Korea Istanbul : Turkey, Bulgaria, Romania Mercosur : Latin America Téheran : Iran
Mercosur (2004)
Iran (2006)
India South Africa
South Africa (2007)
Without offices : Maghreb, Serbia & Montenegro, Asean, Russia ANFIA May 26th 2008 - Bernard BRASEY
37
Purchasing headcount Close to 1 300 professionals EEC
963
France Spain Germany UK Slovakia Rep Turkey Russia Iran India
Asia
173*
Shanghai Wuhan
Mercosur 144 Argentina Brazil
* : including DPCA
South Africa 38
AGENDA
CAP 2010 and Ambition 2015 Emerging Markets Purchasing Organisation Strategy and Global Sourcing
ANFIA May 26th 2008 - Bernard BRASEY
39
Why Global Sourcing ?
PSA international growth
Need of total competitiveness
« GLOBAL SOURCING = A NECESSITY TO KEEP OUR SUPPLY CHAIN CONTINUOUSLY COMPETITIVE » ANFIA May 26th 2008 - Bernard BRASEY
40
Strategy Develop “Low Cost” based suppliers AND at the same time Develop the “Low Cost Sourcing” of our “High Cost” suppliers
Manufacturing and Sourcing initiatives in LCCs
Tier 1 Western suppliers : offer high-tech solutions Improvement of Quality and Engineering capabilities
New LCC suppliers LCC : Leading Competitive Countries ANFIA May 26th 2008 - Bernard BRASEY
41
Forecast 40%
LCC content in the total purchasing spend
15%
2005
19%
2006
23%
2007
2008
2009
2010
Outstanding opportunities for all of us
ANFIA May 26th 2008 - Bernard BRASEY
42
New LCC Suppliers To identify, evaluate and develop new suppliers
Serial production Development RFQ on project parts Serial production RFQ on existing parts Qualification Audits
Major role of purchasing international offices
Prospecting
ANFIA May 26th 2008 - Bernard BRASEY
43
A strong determination 100 % of commodities have a LCC strategy
Supporting PSA objectives (Quality, Procurement, Cost, Design)
GLS Road Map for each commodity
« Balanced Sourcing » - Historical suppliers - New LCC suppliers ANFIA May 26th 2008 - Bernard BRASEY
44
Exemple of a Purchasing Matrix Difficulté technique
Fonctions complexes •Airbags •Étanchéité carrosserie •Direction électrique •Système navigation •ABS, ESP, BSI •Eclairage
Commodités •Matières premières •Fixations •Roues tôles •Pièces fonderie •Emboutissage •Eléments BV •Alternateurs, Démarreurs
ANFIA May 26th 2008 - Bernard BRASEY
Fonctions stratégiques •Système d’injection •Turbo •Planches de bord •Sièges
Commodités coûteuses •Catalyse/filtres à particules •Roues aluminium •Pneumatiques •Culasses •Systèmes carburant •Faisceaux
45
Purchasing Matrix Difficulté technique Fonctions complexes •Sourcing phase amont •Devlpmt/Validations lourdes •Panel réduit •Co-conception éventuelle •Approche plateforme •Resourcing rare •Fort impact garantie Commodités •Stratégies achat uniquement •Compétition •Resourcing par ensembles •Qualité pré-requise. Peu de PSF •Enchères •Sourcing projet tardif •Peu d’écotechs •Développement léger
Compétition
Coopération Fonctions stratégiques •Stratégie d’entreprise •1 ou 2 fournisseurs par famille •Relations durables •Collaboration amont (avant projet) •Co-conception •Fournisseurs mondiaux •Collaboration en garantie Commodités coûteuses •Audits coûts •Ajustements matières cotées •Contrôle éventuel rangs 2 •Recherches matière alternatives •Ecotech transversales
Coût/véhicule 46
GLOBAL SOURCING Corporate commitment PSA to engage in a global sourcing strategy Not an objective but a mean to ensure a sustainable competitiveness for our supply chain Will eventually become standard Sourcing in a well-balanced approach between historical western suppliers and LCC suppliers Risks but also outstanding opportunities in front of us
ANFIA May 26th 2008 - Bernard BRASEY
47
Thank you for your attention …
EMERGING MARKETS - GLOBAL SOURCING An international purchasing strategy serving the PSA Group ambitions
QUESTIONS ANFIA – May 26, 2008 - Torino