#1BMW STALI BMW DEALER NETWORK IN CHINA DR. DANIEL KIRCHERT SENIOR VICE PRESIDENT, SALES & MARKETING BMW BRILLIANCE AUTOMOTIVE OCTOBER 19, 2012 BMW GROUP M MINI#2CONTENTS. Leading in city coverage Best quality dealer network Sustainable development New business growth engine BMW dealer network in china, D.Kirchert, Oct 2012 Page 2#3MAINLAND CHINA IN COMPARISON TO WESTERN EUROPE: MORE THAN TWICE THE POPULATION AND LAND AREA. China West Europe Population in billion 1.3 0.5 Surface in million km² 9.6 4.3 BMW dealer network in china, D.Kirchert, Oct 2012 Source: China State Statistics Bureau, europa.eu Page 3#4ECONOMIC DEVELOPMENT HAS BEEN SUPPORTED BY GROWING URBANIZATION IN CHINA. China urbanization forecast by 2025 - Beijing Shangha Source: McKinsey Urbanization Report 350 million people will be added to China's urban population by 2025. (more than the population of the United States today) BMW dealer network in china, D.Kirchert, Oct 2012 Page 4#5BMW AND MINI ARE OUTPERFORMING THE PREMIUM SEGMENT'S GROWTH. BMW Group Sales Development (2007-2012) ('000 Units) BMW MINI Premium segment CAGR: 41% 52 52 2007 99 66 2008 BMW dealer network in china, D.Kirchert, Oct 2012 169 CAGR: +46% 91 2009 2010 Source: sales data 237 233 2011 2012 YTD Sep M MINI - We will sell the 1 millionth BMW in 2012 Q4 We surpassed 2011 FY in September 2012 Page 5#6332 BMW DEALER OUTLETS ARE IN OPERATION BY SEPTEMBER 2012. Daqing Jiamusi Harbin Kelamayi Mudanjiang Changchun Urumqi Songyuan Jilin Shenyang Hohhot Jinzhou Baotou Erdos Beijing Panjin Anshan Yingkou Yulin Yinchuan Taiyuar Datongangfang Baodir Tianjin Shijiazhuang Dongying Qinhuangdao Tangshan Dalian Yantai Xining Lvliang Handannan Weifang Changzhi Lanzhou Linfen Zibo Qingdao Yuncheng Luoyang Linvi Xinxiang Xi'an Hefei Zhengzhou Xuzhou, Pingdingshengbuan Yancheng Lianyungang Yangzhou Wuxi Nantong Anyang Deyang Mianyang lanjing Yichang Wuhan Changzho Zheniany Shanghai Huzhou Jiaxing East North South West Total 0000A Chengdu Wuhu Hangzhou Ningbo Lhasa Chongqing Leshan 5S 2 4S 72 SR 17 327 Changsha Shangra inhua Shaoxing Taizhou 1 1 7 Lishui Zunyi◆ Xiangtan Wenzhou 62 54 40 228 Panzhihua Zhuzhou Nanchang Ningde 17 10 14 58 Qujing MSR 1 0 1 3 Guilin Guangzhou Guiyang Chenzhou Ganzhou Fuzhou Kunming Liuzhou Zhaoqing Putian Zengcheng Quanzhou Longyan Service 12 8 8 5 33 Nanning Fosha Dongguan Xiamen 4S/5S Shantou Jjiangmen Huizhou UCC 1 1 1 0 3 Zhongsha ▲ SR/MSR Zhuhai Shenzhen Service(SC/FLR/FLC) Total 105 92 74 61 332 UCC Haikou Status: By 30 Sep. 2012 BMW dealer network in china, D.Kirchert, Oct 2012 Page 6#776 MINI DEALER OUTLETS ARE IN OPERATION BY SEPTEMBER 2012. Hohhot Shenyang Ordos Beijing Tangshan Taiyuan Tianjin Dalian Shijiazhuang Jinan Qingdao Lanzhou Zhengzhou Kuzhou Xi'an Nanjing Nantong Chengdu Wuhan Wuxi Shanghai Shaoxing Suzhouangzhou S-SR A-SR 4S Total Chongqing Changsha Nanchang East 18 4 4 26 Guiyang Ningbo Taizhou Wenzhou Fuzhou North 10 6 2 South 9 7 0 West 10 LO 5 1 Total 47 22 7 8666 Kunming Nanning Guangzhou ▲ Quanzhou Xiamen Qvjing Dongguan Zhuhai Foshan Shenzhen Haikou 4S BMW dealer network in china, D.Kirchert, Oct 2012 Harbin A-SR/S-SR Status: By 30 SEP. 2012 Page 7#8STRICT SELECTION CRITERIA ENSURES BMW PREMIUM SERVICES WITH DIVERSIFIED INVESTORS. Synergy Capability Training Resource■ Large Local People Development▪ Group Group ■ Government Relationship ■Local Market Advantage ■Land Resources 1. Good experience in automotive industry Dealer Selection Criteria 2. A mature management team 3. Know-how in the local market 4. Good/Excellent land resource 5. Healthy financial capability and willingness for investment 6. High commitment to the brand BMW dealer network in china, D.Kirchert, Oct 2012 Page 8#9CONTENTS. Leading in city coverage Best quality dealer network Sustainable development New business growth engine BMW dealer network in china, D.Kirchert, Oct 2012 Page 9#10WE KEEP INVESTING IN MORE TRAINING FACILITIES AROUND CHINA. Training Center Shanghai (2009) Beijing (2005) Training Base Nanjing ME (2005) & BP (2011) Chengdu ME(2007) Shenyang ME(2008) Guangzhou-ME(2009) Wuxi -ME (2012) Fujian - ME(2012) Wuhan ME(2012) Hangzhou - ME(2012) Guangzhou - ME (2012)& BP(2012) Tem. Training Site: BJ Lizeqiao: (2010) Shenzhen Sungang (2011) Beijing Shenyang Wuxi Nanjing Shanghai Training Center: 2 Training Base : 9 Temp. Training Site: 2 Body and Paint Site: 11 BMW dealer network in china, D.Kirchert, Oct 2012 Chongqing Wuhan * 4 Hangzhou Chengdu Fujian Guangzhou Shenzhen Page 10#11• • , BEYOND BEST CLASS TRAINING, WE PROVIDE FULL SCOPE HR SERVICES TO DEALER STAFF. Annual Dealer Remuneration Survey . HR Director Summit Dealer Staff Motivation Analysis • Dealer Management & Leadership training 。 New Investor Orientation 。 General Manager Camp • Leadership Development Programs BMW dealer network in china, D.Kirchert, Oct 2012 Retention Selection 留 Retail Qualification 选 People Management 用 • Dealer Apprentice Program • Assessment Center • Recruitment Tools Recruitment Training Development • 育 . . New Dealer Package • Certification Program ○ Sales consultant ○ Aftersales • Technician ○ Body&Paint • Product Launch Training Page 11#12STICK TO PREMIUM SERVICE COMMITMENT, WE CONTINUOUSLY IMPROVE STAFF QUALIFICATION AND RETENTION. Grading System Staff Certification 52-57 Sales Manager MasterSales Consultant Showroom Manager, Used Car Manager, 49-52 Fleet sales Manager Senior Sales Consultant 47-49 44-47 Certification for SC Sales Consultant 41-44 Sales Assistant Opportunities in other functions, eg. CRM, Marketing, After-sales 12000 Increase of Certifications 10000 ■Forecast Certification ■ Actual Certification 8000 After-sales Manager 52-57 6000 Top Level/ Master Technician Expert Level 48-52 MasterService Advisor Service Manager, Technical Manager, Workshop Manager, Parts Manager Opportunities in other functions, e.g. CRM, Advance Leveli 47-49 Senior Technician Performance Level Senior Service Advisor Marketing, Sales 4000 Middle Level/ Qualification Level 45-47 Technician Service Advisor 2000 Basic Level 43.45 Junior Technician Assistant Service Advisor 41-43 Apprentice 0 2008 2009 2010 2011 2012 F 15-Year Loyal Service Award Car purchase program for performing staff Certificate amficate BMW dealer network in china, D.Kirchert, Oct 2012 Award HARG Page 12#13CONTENTS. Leading in city coverage Best quality dealer network Sustainable development New business growth engine BMW dealer network in china, D.Kirchert, Oct 2012 Page 13#145S DEALERSHIP IS BMW CHINA'S PRACTICE FOR SUSTAINABILITY STRATEGY IN DEALER NETWORK. Sustainability Sales Service 售后服务 Survey 「信息反馈 「整车销售 BMW dealer network in china, D.Kirchert, Oct 2012 Sparepart 【零配件 Page 14#155S FURTHER EXTENDS THE SUSTAINABILITY CONCEPT WHICH COVERS THE WHOLE VALUE CHAIN. Product Production Retail I -Efficient Dynamic - BBA Tiexi Plant 5S Dealership BMW dealer network in china, D.Kirchert, Oct 2012 Page 15#16HOW IS 5S DEALERSHIP CHARACTERIZED IN TERMS OF SUSTAINABILITY? Economic Sustainable Mobility Sustainable Training Customer Orientation BMW dealer network in china, D.Kirchert, Oct 2012 M 5S Dealership Environment Sustainable Design Social Attractive Employer Recycling & Waste Management CSR on Dealer Level Sustainable Service Customer Involvement Operation Page 16#17FOCUSING NOT ONLY ON HARDWARE, 5S DIFFERENTIATES FROM OTHER OUTLETS BY THE EFFORTS IN CUSTOMER INVOLVEMENT, HEALTH & SAFETY AND EMPLOYEE CARE. Waterborne paint Paint Shop Ventilation Car Wash Water Recycling 北京星金 Bulling Xingahbus Health & Safety training Social Contribution - BMW JoyHome Waste & Recycle training Wind turbines BMW dealer network in china, D.Kirchert, Oct 2012 Page 17#18MULTI-WIN GIVEN THE GROWING AWARENESS OF SOCIAL AND ECOLOGICAL ASPECTS IN THE MARKET. Customer Benefit . Enhanced customer's retail experience • Good citizenship . demonstration Platform for the lifestyle of environment conservation Joint Efforts & Joint Joy 5S 5S Dealer Benefit . · • Higher customer & staff satisfaction Enhanced process/ • resource efficiency Better link to local community • Platform for BMW marketing & events 5S BMW Benefit • Contributing to BMW Group Sustainability Strategy in value chain • Supporting to BMW's brand image • Competitive differentiation BMW dealer network in china, D.Kirchert, Oct 2012 Page 18#195S CONCEPT WON POSITIVE FEEDBACK FROM THE MEDIA. + china.com* china.com corporation TAXI 網 "The introduction of the 5S leads BMW dealers into a new era. "The 5S concept, developed in China, may be rolled out globally. China is also becoming an important source of BMW's global brand strategy." BMW dealer network in china, D.Kirchert, Oct 2012 Page 19#20MEANWHILE, VARIOUS PROJECTS ARE IN THE PIPELINE AIMED TO FURTHER ENHANCE BRAND IMAGE AND NETWORK QUALITY. Objective: 1.Increase the number of possible contact points with customers and prospects. 2.Increase the services and benefits offered in its retail channels. 3.Enhance the retail experience at all touch points. Multi Channel Retail Experience Center Premium Retail Experience New Furniture Retail Enabling Employer Branding Brand Store New Roles Experience Center New Tools BMW dealer network in china, D.Kirchert, Oct 2012 Inspire customers... ..and become an ambassador for BMW. Hire Train Grow Dynamic Product Experience Page 20#21SAMPLES: 4S UPGRADE BMW dealer network in china, D.Kirchert, Oct 2012 Page 21#22CONTENTS. Leading in city coverage Best quality dealer network Sustainable development New business growth engine BMW dealer network in china, D.Kirchert, Oct 2012 Page 22#23COMPARED TO MATURE AUTO MARKET, CHINA STILL OFFERS OPPORTUNITIES BEYOND NEW CAR SALES. China Market Average New Car Sales % US Market Average New Car Sales % >90% 55% Others New car sales Source: Deloitte Research (2012 China automobile dealer risk research report) Source: USA NADA (National Automobile Dealers Association) industry analysis ■ Over 90% revenue contribution comes from new car sales only in China, much higher than the number in mature market. ■ A more balanced business model is expected driven by used car sales and aftersales, which are also becoming two major profit centers now. BMW dealer network in china, D.Kirchert, Oct 2012 Page 23#24ALONG WITH CAR PARK INCREASE, AFTERSALES SEE HUGE POTENTIAL FOR SUSTAINABLE GROWTH. (unit) 1,200,000 1,000,000 800,000 600,000 400,000 200,000 2009 BMW Car Park Development ■MINI ■ BMW >1 Million 2010 2011 2012 'Maintaining Joy' & brand commitment 'Efficiency' 'Transparency' and 'Care' 2012 Aftersales Brand Campaign RMIN 享受关怀时刻。 BMW事故救援给你无微不至的关爱。 10065-999) K -400-000-666,www.m.com. 为悦全力以赴。 ALL FOR JOY BMW dealer network in china, D.Kirchert, Oct 2012 • Focus on communication on "Care" with Accident Hotline. • Accident Parts is over 40% of BMW Aftersales parts business. BMW售后服务。悦常在,驾无忧, BMW路后服务 BMW is the 1st mover on this service in Automotive companies. BMW Page 24#25USED CAR BUSINESS CONTRIBUTES TO BMW FUTURE GROWTH AND PROFITABILITY ENHANCEMENT AS ANOTHER GRWOTH ENGINE. Improve market values and used car image for BMW and MINI. Support conquest of new customers for BMW and MINI. ■ Increase profitability of the used car business both for BMW group and dealer organization. Aftersales Aftersales New Car Customer New Car Sales New Car Business Vehicle end of usage Used Car Business Used Car Sales Used Car Customer BMW dealer network in china, D.Kirchert, Oct 2012 Trade-in New Car Used Car Reconditio n Page 25#26THANK YOU FOR YOUR ATTENTION! BMW dealer network in china, D.Kirchert, Oct 2012 Page 26