China is the third-largest automotive consumption market and is projected to become the largest by 2020. Key players in the industry have already shifted their attention to China, which is now an important battleground that poses many challenges. Looking back, China’s automobile industry has gone through different periods of booming, growth, restructuring, and maturity; all the while, BCG has been one of the leading strategic consulting firms heavily involved in the entire development process.
This industry is unique in that automobiles are the only industrial goods sold directly to consumers. We recognize that competition between brands, both local and global, is very different from other industrial goods or consumer goods. BCG’s efforts in China’s automotive industry cover both strategy and operations.
Strategy
Overall strategy: We help both foreign and local OEMs assess overall market situations and their own advantages and/or disadvantages in different segments to define strategy. BCG has identified growth opportunities, potential acquisition targets, and partnership opportunities for numerous clients and has also conducted market segmentation analysis.
Brand strategy: We identify the best position for different brands, both global brands and local Chinese brands, to create the most effective competition strategy in each market segment. BCG works to create appropriate marketing communication plans and align internal staff with market positioning. We assisted one foreign OEM client in building a multi-brand auto wholesale/retail business.
After sales strategy: We help clients tackle challenges related to aftermarket, sales and service, and distribution. BCG has conducted benchmark analysis between different companies and business models to achieve deeper market penetration, higher sales turnover, and better distribution channel setup.
Innovation and new business model initiation: We work with automotive companies to shift their business to advanced and innovative products such as fuel-efficient models. We also identify new business models to develop China into a more sophisticated market and focus on achieving first-mover advantage to create long-term winning positions.
Operations
Operational efficiency: We find ways to optimize supply chain flow and operational flow to meet the just-in-time standard. We also improve production efficiency to deliver better final products with limited resources and reshape organizational culture for long-term behavior improvement.
Organization improvement and reconstruction: We analyze organizational needs under different business models and restructure organizations to better serve business strategy and fulfill long-term development targets.
Sourcing: We assess the processes and operations suitable for sourcing based on savings potential, local conditions, and effect on the final product. We also help OEMs partner with local suppliers in more cooperative and strategic ways and work with foreign OEMs to achieve large-scale sourcing optimization in complex joint-venture set-ups.
Dealership management: We conduct market assessments for auto retailing, identify root causes of lackluster performance, learn from strong-performing dealers, and leverage best practices to improve sales and customer experience at dealerships. BCG has restructured dealership networks and created dealer improvement programs to help clients improve dealer performance and execution.
BCG Greater China has worked with almost all of the leading global automotive OEMs and the top companies in China, and we have a deep understanding of the Chinese consumer and the market environment.
- Aiding a Multinational’s Acquisition Target Search
- Develop China Entry Strategy for an Online Used Car Advertiser
- Improve Automotive Dealer Performance
- Used Car Business Strategy for a Luxury Car OEM
- Brand Launch Support for a Leading Global Automotive OEM
- Sourcing Strategy for a Leading Automotive OEM
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David Jin Partner & Managing Director Shanghai +86 21 2306 4000 |
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David Lee Partner & Managing Director Shanghai +86 21 2306 4000 |
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Christoph Nettesheim Senior Partner & Managing Director Beijing +86 10 8527 9000 |
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Publications
April, 2010
[PDF]Winning the BRIC Auto Markets: Achieving Deep Localization in Brazil, Russia, India, and China
For the next decade, the future of the automotive industry lies in the BRIC countries. Together, Brazil, Russia, India, and China will account for some 30 percent of world auto sales in 2014—while also offering significant opportunities for cost-effective R&D, sourcing, and manufacturing. China will remain the largest of the four BRIC auto markets, expanding its share of total BRIC sales from 53 percent in 2008 to 61 percent in 2014. The report examines the strategies employed by leading OEMs and suppliers in localizing their R&D, sourcing, manufacturing, and sales in the BRIC countries; assesses the future development of these markets; compares local capabilities and resources; and defines numerous best practices that can help auto companies operate effectively in the BRIC countries.
January, 2008[PDF]Winning the Localization Game: How Multinational Automotive OEMs and Suppliers Are Realizing the Strategic Potential of China and India
Although virtually all of the world's leading automotive OEMs and suppliers have localized at least some of their operations to China, India, or both, in many cases these companies are not yet realizing the competitive advantage they sought in making the move. For instance, some are even finding that their unit production costs are higher in these countries than they are at home. Clearly, the challenges of localization are proving more daunting than anticipated.
A BCG team led by Nikolaus Lang, Bernd Loeser, and Christoph Nettesheim recently conducted a study in which they interviewed close to 100 senior executives at more than 40 European, Japanese, and North American companies, including 8 of the world's top 10 automotive OEMs and 15 of the top 20 suppliers. Their goals were to gain insight into the difficulties these companies are facing in localizing the key steps in their value chains—R&D, sourcing, manufacturing, and sales—and to identify best-practice approaches in each area. Although their analysis focused on the automotive industry, the lessons that emerged can be usefully applied to other industries as well.
Press Releases
March 26, 2010
BRIC Auto Markets Offer 'Exceptional' Growth Opportunity and Largely Untapped Strategic Potential, Says New Study by The Boston Consulting Group For at least the next decade, the future of the automotive industry lies in the BRIC countries. Together, Brazil, Russia, India, and China will account for 30 percent of world auto sales in 2014—while also offering significant opportunities for cost-effective R&D, sourcing, and manufacturing, says a new report released today by The Boston Consulting Group (BCG). View more
BCG in the News
August 11, 2008
CBN Weekly
Advices for Global Automotive Producers Advices for global automotive producers to maintain high growth rate in Chinese market：fully leveraging R&D and souring advantages and breaking through the bottleneck of sales.
May 12, 2008
China Business News
Auto MNCs in China and India：Not Cheap Localization Automotive MNCs are paying a high price for achieving localization in China and India due to lack of scale, over-design of car model and extra expense of quality control.
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The World’s Next E-Commerce Superpower: Navigating China’s Unique Online-Shopping EcosystemMore -
The Dragon Wants to Spend: Turning the Corner on Consumer Lending in ChinaMore -
Dressing Up: Capturing the Dynamic Growth of China’s Fashion MarketMore -
Navigating the New Consumer Realities: Consumer Sentiment 2011More