Bill Russo to Chair Automobility Panel at JP Morgan Global China Summit

Beijing China, June 5, 2017

How China is Shaping the Future of Mobility

Click here to watch the recording of the panel discussion

The China auto market is transitioning from a period of rapid growth and expansion of individual car ownership to a future where mobility needs are served via a more diverse stream of personal mobility solutions.   Personal mobility solutions now include new cars, an expanding supply of good quality used cars, as well as on-demand mobility (ODM) services (including bike sharing and ride hailing) for people who prefer a pay-per-use model over ownership. 

China’s market is also quite unique with its short history of car ownership, ultra-dense urban population, and high penetration of the mobile internet.  With an urbanization rate of 56%, China’s urban population now exceeds 750 million people, and the transportation needs of this increasingly urbanized population has driven the explosive demand for personal mobility.  With a car population of over 190 million vehicles at the end of 2016, individuals who own cars are still far outnumbered by those who do not, and mobility needs are increasingly served through mobility services “usership” beyond just individual car “ownership”.

In this context, automakers are expanding their focus from the product (the “automobile”), to the utility that is derived from the product (“automobility”), and are challenged to create a business model and digital ecosystem optimized to provide digitally-enabled solutions for both car owners and users.

We will discuss: How are these factors shaping the auto market in China?  What solutions are being developed to ease mobility “pain points” in China?  How do you see these solutions impacting and shaping our everyday lives today and in the future?  How will this impact the structure of the industry going forward?

Innovations such as these, originating from both traditional OEMs and new mobility solutions platforms, many of whom are Chinese, is paving the way to an entirely new business model for China’s auto industry.

Topics for discussion:

  • Defining the disruption in the China context – What are the disruptive trends in the world of mobility?
  • Big picture view of the competitive landscape – What does the new competitive landscape look like and how will it evolve?
  • How should incumbents respond? Disrupting or being disrupted? – What new internal capabilities are required? How to work with local start-ups:  compete or collaborate?
  • China for the world – Will China lead to world’s development and innovation in Connected Mobility?


Prof. Dr. Jochem Heizmann
, Member of the Board of Management, Volkswagen AG; President & CEO, Volkswagen Group China

Mr. Olaf Kastner, President & CEO, BMW Group Region China

Mr. William Li, Founder & Chairman, NIO

Dr. Daniel Kirchert, President & Co-Founder, Future Mobility Corporation

 

Moderated by:

Mr. Bill Russo, Managing Director, Gao Feng Advisory Company

Driving Large Scale Electrification of China’s Automotive Industry

Gao Feng Insights, May 2017

China’s automotive industry is entering a period where discontinuities and disruptions are likely to reshape the competitive landscape – and this represents an opportune time to guide the development in alignment with China’s overall industrial development goals.  With the issuance in April 2017 of the Automotive Industry Mid to Long Term Development Plan, the Ministry for Industry and Information Technology (MIIT) provides “guiding principles” for the development of China’s auto industry for the next decade.

Leveraging new energy and connected vehicle technology as entry points for accelerating auto industry development and transformation, the policy’s objective is to transform China from the largest auto market to a global leading automotive production base.  Specifically, the guideline sets a goal for Chinese new energy vehicle[1] (NEV) companies to be among the Top 10 NEV companies worldwide by 2020, and to further expand their global impact and market share by 2025.  A target has been set for the domestic NEV sales to reach 2 million units by 2020, and 7 million units by 2025 (20% of total vehicle sales).

Chinese automakers have struggled to reach a global leadership position in the automotive industry due to their relatively short history and lack of technical experience in advanced automotive technologies centered on the internal combustion engine.  The NEV market opens a window for China to potentially level the playing field and assume a more competitive position versus the global industry, as multi-national players have not yet established a sustainable market leadership position.

[1] New Energy Vehicles include Plug-in Hybrid (PHEV) and Battery Electric Vehicles (BEV)

Rising Opportunities in China’s Automotive Independent Aftermarket

Gao Feng Insights, May 2017

China’s automotive industry has entered a new phase where new car sales growth decelerates, while the car population expands and the average car age increases.  This brings enormous opportunities for expansion of the independent aftermarket.

In this paper, we examine the complexity of China’s independent aftermarket including the distribution channel and service shops.  We also examine the key success factors, market dynamics and emerging marketing channels in the independent aftermarket.  We will highlight the implications of these developments for key players along the value chain.

Bill Russo Speaks at 22nd CLSA China Forum

Tianjin, China, May 15, 2017

Title: China’s Auto Industry in the Age of Disruption  – The Birth of the “Automobility” Business Model


For global automakers and their suppliers, China represents the greatest opportunity for growth in the 21st century.  Since 2009, China has been the world’s largest market by volume, and surpassed 28 million units in annual car sales in 2016.  Over the coming decades, we believe that China will remain the key battleground for dominance of the global auto industry.  However, this battle will not be waged using the conventional automotive technologies which have been refined over the past century.  We believe several driving forces, which are particularly evident China, have the potential to disrupt the status quo of the automotive industry:

Bill Russo, managing director of Gao Feng Advisory Company, presents on Day 1 of the 22nd CLSA China Forum at The Ritz-Carlton, Tianjin on Monday 15 May.
  • The unique context of China’s urban transportation challenge, the high penetrationrate of mobile internet, combined with the rapid and aggressive introduction of alternative mobility and ownership concepts, are compressing the time needed to commercialize smart, connected car technology and related services.
  • The automotive value chain is being disruptedby non-traditional players as they enter and compete to deliver mobility solutions.  Disruptive new entrants are utilizing big data to draw insights about customers’ mobility patterns in order to address their “pain points” and offer new solutions for their mobility needs.  Such mobility needs are increasingly being met through on-demand and shared services versus individual ownership.

It is the confluence of these forces, along with rapid innovation to address “pain points” associated with mobility in the China context, are positioning China as the catalyst to drive the transformation of the business model and technological underpinnings of the global auto industry.  In this course, we highlight the major disruptions that lie in the path to success in China’s automotive industry, including:

  1. The rapid rise of on-demand mobility and the digital mobility ecosystem
  2. The link between hardware innovation and the economics of the digital ecosystem
  3. The explosive growth of aftermarket services and the emergence of the Independent Aftermarket (IAM) and online-to-offline (O2O) channel