Title: Russian Auto Component Vendors Competitive Strategies within the new Market Conditions
1Russian Auto Component Vendors Competitive
Strategies within the new Market Conditions
March 2007
2 SOK-AUTOMOTIVE
- ? 1 Company in the Russian auto component
market - 12 years of rapid growth due to MA and
effective asset management
SOK-AUTOMOTIVE
Car Assembly Division
Auto Components Division
OJSC IzhAvto
SOK-AUTOMOTIVE Sales Revenue Trend, billion
CJSC Roslada
CJSC VazInterServis (automobile manufacture)
2
3 Auto Components Division
OJSC SchetMash Kursk
CJSC VAZINTERSERVIS Togliatti
OJSC Zavod Avtosve Kirzhach
OJSC OSVAR Vyazniki
- Instrument Sets
- Trip Computer
- On-board Monitoring System
- Automobile Speed Sensors
- Environment Air Temperature Sensors
- Adsorbers
- Clutch plates and components
- Steering gear connection
- Stabilizers
- Rear brake assemblies
- Pedal assemblies
- Lamps fog lamps, interior, exterior, lamp
clusters - Lamps rear lamps, clearance lamps, head lamps,
trunk lamps, cab lamps, number plate lamps - Optical assemblies
- Lamps head lamps, spotlamps, rear lights, fog
head lamp assemblies, turn signals - Lamps rear lamps, number plate lamps, rear
lights, turn signals
OJSC BelZAN Belebey
CJSC MOTOR SUPER Togliatti
CJSC PES SKK Samara (JV with Delphi)
CJSC SKK Samara
- Heavy-duty vehicle hardware
- Springs
- Automotive industry cables
- Air filters
- Heaters
- Plastic parts
OJSC Komplekt-LTD Togliatti
CJSC Kinelagroplast Kinel
OJSC SAZ Syzran
The enterprises are managed by SOK Group
- Front leg assembly module
- Cooling assembly module
- Radio fixture panel
- Fill piece assembly
- Air pipes
- Washer jars and overflow bottles
- Moldings
- Spot-facing
- Electric window lift, window raiser
- Sun visors
- Die fixtures
- Screens
- Safety bars
- OJSC Dimitrovgrad Illumination Appliences Plant
- OJSC Dimitrovgrad Power Metallurgy Plant
- OJSC Dimitrovgrad Bearing Liners Plant
- OJSC Dimitrovgrad Radiator Plant
- OJSC Dimitrovgrad Valve Plant
3
4New automobile market trend (thousand pcs)
Year 2000
Lada
Foreign brands
Russian brands
72,4
5
95
Other Russian
brands
27,6
Source RUSSIAN AUTO MARKET 2006, LADAONLINE
4
5New automobile market trend ( billion)
- Market capacity for new automobiles in the year
2006 is 28 billion.
Source RUSSIAN AUTO MARKET - 2006, LADAONLINE
5
6Sales forecast for new automobiles (thousand pcs)
- The share of new foreign autos has increased from
5 to 54 (in monetary terms, that is from 1,5
to 22 billion in the period 2000-2006)
Focus Group
- The capacity of the chosen vehicle focus group
will increase sevenfold by 2012 and will make 37
billion (at present, the capacity of the segment
of the selected focus group plus current models
of LADA is approx. 8 billion)
- Technical solutions used in designing and
manufacturing the focus group vehicles are at a
high level
Russian-assembled foreign autos Lada (forecast)
General level of requirements put to car
component suppliers in the world
Source RUSSIAN AUTO MARKET - 2006, LADAONLINE,
evaluation by SOK-Automotive
6
7Auto component market capacity forecast for the
chosen focus group ??? Aftermarket ( million)
- The capacity of the auto component market for the
chosen vehicle focus group will increase by 26 to
34 times by the year 2012 and will make 15 to 20
billion (at present, the capacity of the segment
of the selected focus group plus current models
of LADA is approx. 10 billion)
- Foreign auto component vendors are seeking
opportunities to start business in the Russian
Federation
Forecast for automobile sales
- Russian ???s show interest in the engineering
potential of foreign auto component vendors
Optimistic forecast 50 Pessimistic
forecast 30
Level of localization of Russian-assembled
foreign autos by 2012
Russia is on the eve of joining the WTO and a
gradual decrease of duties on both ready
autos (duties reaching 15 within 7 years) and
the average customs dues on imported auto
components
Source RUSSIAN AUTO MARKET - 2006, LADAONLINE,
evaluation by SOK-Automotive
7
8Auto components market
Current state
Trend
Domestic brands sector
- Stability of supply and demand
- High competition between domestic vendors
- Large amount of low-quality and counterfeit
products
- Cooperation of foreign auto component suppliers
with Russian ???s - Increase in competition between domestic and
foreign auto component vendors
Russian-assembled foreign automobile sector
- Rapid growth in demand coupled with a deficit of
supply - Competition between suppliers of original and
counterfeit spare parts on the aftermarket
- Expansion of warehousing and service
infrastructure - Localization of auto components to fit the
assembly lines
The Russian automobile market has entered the
active globalization phase
8
9Integration of the Russian car component vendors
into the world automobile industry
- Objectives
- Supply of auto components for perspective models
of Russian ???s (development of engineering
potential Joint Ventures, creation of
outsourcing partners system, developing
engineering functions on enterprises) - Supply of car components for Russian-assembled
foreign cars - (establish the reputation as a class 1 or 2
Supplier) - Export supplies within specialization
- (study the requirements of the Global Client,
benchmarking, reference for general production
development)
- Conditions of competitive capacity in the global
market - Client-oriented pattern
- (constant contact, study of demands, complex
solutions) - Deep specialization
- (understand the competitors products, quality,
shop price structure, problems and strong points
to develop own goals and tasks)
Competitive Capacity Matrix
9
10Strategy for the Russian auto component vendor
development
Global auto component market
World level of production and supply organization
Innovative technologies
Business Transparency
Compliance with Standards
International Alliances
- ISO/TS 16949 Implementation
- Lean Production system implementation
- Introduction of logistics standards
- Transition to IFRS
- Adjustment of corporate management to
international requirements - Building of transparent legal structure
10
11Basics for Russian auto component vendors
competitive capacity
- Long term and smoothly running relationships
ability with material Suppliers - Convenient location referenced to the potential
customers, infrastructural production prepared
facilities ability - Optimal price policy leading possibility
- Technological, human resources and investment
potential - Logistical convoying delivery possibility
- Administration management ability in regions
- Running business experience at Russian
infrastructure problems conditions (absence of
specialized mediators and outsourcings strict
business scope conducting, defined by regulating
authorities strict observance obligations
between the partners, developed professional
personnel market etc.)
11
12Tasks under way
Certification to comply with ISO/TOR 16949
requirements
- Certification to comply with ISO/TOR 16949
completed - CJSC SKK Jan 2005
- CJSC PES SKK Jan 2005
- CJSC MOTOR-SUPER May 2005
- CJSC Kinelagroplast Aug 2006
- CJSC VAZINTERSERVIS Nov 2006
- PLC Komplekt LTD Jan 2007
- OJSC SchetMash Feb 2007
- Terms of certification to comply with ISO/TOR
16949 - OJSC OSVAR, OJSC SAZ Mar 2007
- OJSC BelZAN, OJSC Zavod Avtosvet Jul
2007 -
Preparation and auditing of reports in compliance
with IFRS
All companies of the Auto Component
Division Nov 2007
12
13Tasks under way
Lean production Program
Introduction of Lean processes in the regular
activities of ALL enterprises of the
SOK-Automotive Division
CEO
Deputy Director General in Lean
Production (process master)
Directors of Divisions
Heads of Divisions
- Building maps of current and desired value
creation - Loss analysis
- Design and implementation of improvement plans
13
14OUR PARTNERS
Partner in exterior/interior system production
14
15THANK YOU FOR YOUR ATTENTION