Global Auto Report Dj Insight 18032008
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Global Auto Report Dj Insight 18032008

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I was author of a pre-global recession media analysis report on the world\'s automotive industry

I was author of a pre-global recession media analysis report on the world\'s automotive industry

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Global Auto Report Dj Insight 18032008 Global Auto Report Dj Insight 18032008 Presentation Transcript

  • Photo: © Corbis © Copyright 2008 Dow Jones and Company, Inc.
  • Dow Jones Insight Media Analysis Report This report was created using Dow Jones Insight’s media analysis platform and is designed to highlight the media considerations that the global automotive industry might have beyond the traditional print media. This report is in no way complete and is intended only as a sample of its nature. Client engagements are customized and reveal considerably more detail, depth and focus. Table of Contents •Introduction…………………………………………………. 3 •Corporate Considerations ……………………………..…. 4 •Potential Issues Affecting Share Price……………….…. 6 •Looming Threats………………………………………..…. 7 •US Carmaker Issues: Ford and GM……………………. 8 •European Carmaker Issues: Fiat and Renault-Nissan... 11 •Tata Motors…………………………………………………. 13 •Carbon Emissions………………………………………….. 14 •Regulatory Considerations………………………………... 15 •European Carmaker Issues: Daimler and PSA…………. 17 •Press Trends……………………………………………….. 18 •Methodology………………………………………………… 19 •About Dow Jones Insight………………………………….. 20© Copyright 2008 Dow Jones and Company, Inc. www.solutions.dowjones.com/insight Proprietary and Confidential | 2
  • Introduction It’s no news that the global car industry is facing increased pressures that are accentuated by underlying turbulence in the global economic landscape. The credit crisis, led by the U.S. housing market slowdown and rising levels of consumer debt and rising gas prices are creating a backdrop of economic uncertainty. As consumer confidence trickles away, car companies are responding with a variety of tactical moves designed to stems revenue losses such as sales incentives which can cut inventories while raising consumer expectations that they’ll receive more for less money. But the global economic translates into a number of strategic issues that car companies must manage, including: Labor relations and soaring healthcare costs CO2 emissions charging and engine size Soaring raw material costs Price battle for market share Failing consumer confidence Productivity and quality control Growth in emerging markets Danger emerging from low cost alternatives in China, India, Brazil and Russia© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 3
  • Corporate Considerations: Company Vigilance is a Requirement Weakness strength weakness Share price Labor relations/soaring healthcare costs Brand value CO2 emissions charging and engine size Employee morale Soaring raw materials costs Sales/turnover/retained clients Price battle for market share Recruitment/retention Failing consumer confidence Strategic relationships Productivity/quality control Regulatory relationships Personal reputations opportunity threat “My priority is to change “We must adapt or die”, the company’s culture… describing the threat to at the top of the list I’d western car companies put dealing with reality.” from new low cost car makers in India and China.” Alan Mullaly – CEO Ford since late last year Carlos Ghosn CEO In Scotland on Sunday (28/01/07) Renault-Nissan in The Times (08/01/07)© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 4
  • Redirection May Also Be a Requirement The focus for new CEOs is on new models, quality and improved productivity to boost US presence.” Handelsblatt:, 09/07/07 There is a huge mountain to climb in the US if the company is to return to profitability. In the JD Power Reliability Ratings for 2006, VW ranked third from bottom with 171 problems per 1,000 vehicles, which was far worse than the industry average.” Business Week, 12/03/07 Martin Winterkorn Volkswagen Shares dropped sharpest in 4 years with BMW losing ground to rivals Mercedes. ‘A slip up would be welcome and then perhaps headcount can be sorted out.’ Just Auto, 01/08/07 ‘If you have increasing turnover the profit has to increase with it too. That’s the real issue. Q2 profit fell 23% despite a 7.3% rise in revenues.” Wall Street Journal,03/08/07 Norbert Reithofer BMW© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 5
  • Issues with Potential to Affect Market Share and Price The four Brazil-Russia-India-China (BRIC) Race to the Bottom -- How areas are four of the biggest growth markets Cheap Can A Car Get? for automobile manufacturers. October 03, 2007 China managed to chalk up a year-on-year growth of 25.9 percent in car sales for the first half of 2007,according to sources from the China Association of Automobile Manufacturers (CAAM). Xinhua Net, 07/07/07 US and European car companies depend on these markets to boost global market share. Would you buy a new car that costs less than an Armani suit--or a set of high- performance tires for your BMW Five What will happen when the new car that costs series? Indias Tata Motors plans to less than $10,000 dollars arrives in the introduce the One-Lakh Car (concept shown market? here) for about $2,500. Its a four-door sedan with a 600cc rear engine. Skeptics-- Renault-Nissan’s CEO Carlos Ghosn is and there are quite a few--believe that even sanguine about the threat. “Adapt or die – Indias low labor costs cant make this Ghosn tells carmakers.” The Times, 08/01/07 miracle happen. http://blog.wired.com/cars/2007/10/race-to-the-bot.html© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 6
  • Looming Threats Porsche sports cars cant meet EUs planned CO2 emissions limits - CEO AFX News, 10/09/07 FRANKFURT Porsche AG chief executive Wendelin Wiedeking said the companys cars in their current form wont be able to meet carbon dioxide emissions limits that the EU is proposing to introduce from 2012. EU proposals requiring emissions to be cut to an average of 130 grams per kilometer for all new cars from 2012 are physically not possible for the companys sports cars to adhere to, Wiedeking told Handelsblatt in an interview. Realistically, emissions requirements can only be graded by vehicle segment, Wiedeking told the newspaper. http://www.forbes.com/markets/feeds/afx/2007/09/10/afx4097668.html Merkel Supports Carbon-Dioxide Cut by Vehicle Segment By Jeremy van Loon and Claudia Rach, Bloomberg, 09/13/07 German Chancellor Angela Merkel backed a proposal by carmakers to reduce carbon-dioxide emissions based on vehicle category, a system that waters down existing European Union plans. ``Any solution needs to be fair and the German industry should know that it has my support for a solution based on vehicle segments, Merkel said in a speech today opening the Frankfurt Motor Show.http://www.bloomberg.com/apps/news?pid=20601100&sid=aa9.xsNyxbaQ&refer=germany© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 7
  • U.S. Carmakers Fixated on Labor and Healthcare Costs U.S. automakers lost 8% market share in 2006 - Asian car makers gained 5% and European manufacturers picked up 3%. U.S. automakers spent $12 billion on healthcare benefits for employees and former employees in 2005 while their Asian and EU counterparts spent less than 10% of that figure. The painful dialogue has begun – toll so far two lightening strikes – but agreement in principle at GM to set up independent fund to meet health & retirements costs reached – “days of selling cars at a loss could soon be over.” Times, 27/09/07 “Painful concessions are needed from the unions on healthcare as car makers have to be competitive in wages, benefits, work rules, flexible manufacturing and plant capacity.” Detroit News,04/01/07© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 8
  • Ford Motors In 2007, Ford’s attention was almost exclusively on unions and healthcare costs.© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 9
  • General Motors In 2007, GM’s attention was also almost exclusively on unions and healthcare costs© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 10
  • European Carmakers EU competitors have a second big issue on their radar– the cheap car in emerging markets. A third issue is also emerging around Italy’s Fiat and France’s carbon emissions. Renault-Nissan feel the Tata Motors cheap emerging markets car is an equally important story European manufacturers were also working on meeting EU carbon emissions regulations© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 11
  • Fiat and Renault-NissanAt Sergio Marchionne’s Fiat: At Carlos Ghosn’s Renault-Nissan: Union negotiations and the $10,000 dollar car Union negotiations and the $10,000 dollar car were grabbing high levels in terms of share of are grabbing high levels in terms of share of voice. voice. Carbon emissions was growing strongly too. Tata Motors and the low cost car© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 12
  • Tata Motors Renault’s Ghosn has the Logan in production and reports in the press suggest that demand is already outstripping supply. In early September, Ghosn signed an agreement to build a production plant for the car in Morocco. In 2007, Fords sales in the US fell nearly 3% to 16.14 million vehicles, their lowest since 1998, down from 16.55m in 2006, but Ford saw sales in China rise by 30%. Dieter Zetsche has signed an alliance with Chery Motors of China to build another low cost model. Is this cheap “emerging markets” car a threat?© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 13
  • Carbon Emissions The European Union has draft legislation ready to tighten car emission standards. Some European car makers are seeing tighter standards as an opportunity. French and Italian car makers are proposing a ‘single limit for all cars’ while the German makers want a ‘stepped emissions limit’ depending on the size of the car, making it an opportunity for some and a possible threat for others. PSA with Christian Streiff is targeting CO2 leadership with clean-diesel hybrids reducing emissions by at least 10g/km. Octane Week, 17/09/07 Daimler’s Dieter Zetsche is less effusive: “Daimler chief rips up US CAFÉ standards’ and pushes diesel”, Dow Jones, 23/01/07 Global interest in carbon emission stories is not going away.© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 14
  • Regulatory Considerations On emissions, car makers are under pressure: California already has emissions laws on its books and more U.S. State legislators are starting to follow suit. Twelve states have laws on the statute books while another six are ‘under consideration’. This will technically lead to the enforcement of greenhouse gas requirements for cars sold within the ‘borders’ This will add additional cost as not everyone has a Toyota Prius hybrid ready to roll off the production line. Once politicians get involved, there is an inevitable trend to make the laws a little tighter each time, forcing R&D costs and production costs even higher. This has happened when German Chancellor Angela Merkel took a a very public stand at the Frankfurt Auto Show. “Merkel backs German carmakers CO2 stance”, Reuters, 13/09/07.© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 15
  • Carbon Emissions At Martin Winterkorn’s VW: At Dr Norbert Reithofer’s BMW: Union negotiations and carbon emissions Union negotiations and carbon emissions grab the headlines. grab the headlines. The $10,000 car is on the radar too. The $10,000 car is on the radar too. Carbon emissions are a growing issue for both companies© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 16
  • European Carmaker Issues: Daimler and PSA At Christian Streiff’s PSA: At Dieter Zetsche’s Daimler: Union negotiations AND carbon The company has just come through the emissions grab the headlines. painful transition of unloading Chrysler. The $10,000 car is nowhere to be seen. It is understandable that its press coverage is dominated by a single labor issue. DaimlerChrysler has almost ‘single issue’ focus: selling off ChryslerFrance is not too ‘different’ andCarbon emissions is a strong issue© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 17
  • Press Trends Press enthusiasm changes from moment to moment, but trends over time normally remain consistent and problems remain persistent.© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 18
  • Report Methodology Overview The findings in this complimentary report summarize the results of a Dow Jones Insight text-mining platform. Our system gathers relevant content from more than 10,000 global traditional media sources plus social media sources including Websites, blogs and message boards. The Dow Jones Insight Media Lab consultants then review the results to produce a report with summary charts and analysis. This study analyzed coverage from the Dow Jones Factiva global media set unless otherwise specified. Media Set Press releases were excluded from this analysis by the exclusion of all “paid-for” wire services, except where stated otherwise. Datamonitor Profiles, News and Comment and Premium Research Reports were also excluded to ensure a high relevancy of the underlying data set. Routine General News and Republished News were also excluded. Search construction Search strings used for investigating products, terms, market issues and individuals were constructed using Dow Jones Factiva’s predetermined codes unless otherwise noted. Reporting Period Jan 1 2007 through Sept 30 2007© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 19
  • Dow Jones Insight delivers actionable intelligence that allows companies to optimize their communications strategies in order to nurture their reputation, increase earnings and achieve business objectives. It distills millions of articles and blog postings down to strategic quantitative and qualitative media metrics and provides visualization tools to help discern what it means. When companies know what is being said about them, they are able to discover both emerging opportunities and threats while they can still affect their outcome. Each Dow Jones Insight engagement is fully supported by the Media Lab, whose expert analysts and consultants both develop an organization’s research strategy and compose the search definitions that generate comprehensive media measurements and analysis. With Dow Jones Insight’s high-quality media analysis, you can: •Track drivers of corporate reputation •Understand issues and trends in time to act •Visualize “hot spots” in media coverage •Ensure accurate and reliable media measurement •Defend budgets and measure the return on investment for your campaigns For more information, or to arrange a demonstration, please visit: www.solutions.dowjones.com/insight© Copyright 2008 Dow Jones and Company, Inc. Proprietary and Confidential | 20