global auto report djinsight 18032008

8/14/2019 global auto report djinsight 18032008

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Copyright 2008 Dow Jones and Company, Inc.

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2Proprietary and Confidential| Copyright 2008 Dow Jones and Company, Inc.

Dow Jones Insight Media Analysis Report

This report was created using Dow Jones Insights media analysis platform and is designed tohighlight the media considerations that the global automotive industry might have beyond thetraditional 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. 3Corporate Considerations ... 4

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Potential Issues Affecting Share Price..Looming Threats...US Carmaker Issues: Ford and GM.European Carmaker Issues: Fiat and Renault-Nissan...Tata Motors.Carbon Emissions..Regulatory Considerations...European Carmaker Issues: Daimler and PSA.Press Trends..MethodologyAbout Dow Jones Insight..

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Introduction

Its no news that the global car industry is facing increased pressures that are accentuated byunderlying turbulence in the global economic landscape. The credit crisis, led by the U.S. housingmarket slowdown and rising levels of consumer debt and rising gas prices are creating a backdrop ofeconomic uncertainty. As consumer confidence trickles away, car companies are responding with avariety of tactical moves designed to stems revenue losses such as sales incentives which can cutinventories while raising consumer expectations that theyll 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 costsCO2 emissions charging and engine size

Soaring raw material costsPrice battle for market shareFailing consumer confidenceProductivity and quality controlGrowth in emerging markets

Danger emerging from low cost alternatives in China, India, Brazil and Russia
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Corporate Considerations:Company Vigilance is a Requirement

Share price

Brand valueEmployee moraleSales/turnover/retained clients

Recruitment/retentionStrategic relationships

Regulatory relationshipsPersonal reputations

Weakness

Labor relations/soaring healthcare costs

CO2 emissions charging and engine sizeSoaring raw materials costsPrice battle for market shareFailing consumer confidenceProductivity/quality control

My priority is to changethe companys cultureat the top of the list Idput dealing with reality.

strength weakness

threatopportunity

Alan Mullaly CEO Ford since late last yearIn Scotland on Sunday (28/01/07)

Carlos Ghosn CEORenault-Nissan inThe Times (08/01/07)

We must adapt or die,describing the threat towestern car companiesfrom new low costcar makers in India and

China.
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5/205Proprietary and Confidential| Copyright 2008 Dow Jones and Company, Inc.

Martin WinterkornVolkswagen

The focus for new CEOs is on new models, quality and improved productivityto boost US presence.Handelsblatt :, 09/07/07

There is a huge mountain to climb in the US if the company is to return toprofitability. In the JD Power Reliability Ratings for 2006, VW ranked third frombottom with 171 problems per 1,000 vehicles, which was far worse than theindustry average.Business Week , 12/03/07

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. Thats thereal issue. Q2 profit fell 23% despite a 7.3% rise in revenues.Wall Street Journal ,03/08/07

Norbert ReithoferBMW

Redirection May Also Be a Requirement
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Would you buy a new car that costs less than an Armani suit--or a set of high- performance tires for your BMW Five series? India's Tata Motors plans to introduce the One-Lakh Car (concept shown here) for about $2,500. It's a four-door sedan with a 600cc rear engine. Skeptics-- and there are quite a few--believe that even India's low labor costs can't make this

miracle happen.

Race to the Bottom -- HowCheap Can A Car Get?October 03, 2007

http://blog.wired.com/cars/2007/10/race-to-the-bot.htm

Issues with Potential to Affect Market Share and Price

The four Brazil-Russia-India-China (BRIC)areas are four of the biggest growth marketsfor automobile manufacturers.

China managed to chalk up a year-on-yeargrowth of 25.9 percent in car sales for the firsthalf of 2007,according to sources from theChina Association of Automobile

Manufacturers (CAAM).Xinhua Net , 07/07/07

US and European car companies depend onthese markets to boost global market share.

What will happen when the new car that costsless than $10,000 dollars arrives in themarket?Renault-Nissans CEO Carlos Ghosn issanguine about the threat. Adapt or die

Ghosn tells carmakers.The Times , 08/01/07
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http://www.forbes.com/markets/feeds/afx/2007/09/10/afx4097668.html

http://www.bloomberg.com/apps/news?pid=20601100&sid=aa9.xsNyxbaQ&refer=germany

Looming Threats

Porsche sports cars can't meet EU's planned CO2 emissions limits - CEOAFX News , 10/09/07

FRANKFURTPorsche AG chief executive Wendelin Wiedeking said the company's cars in their currentform won't be able to meet carbon dioxide emissions limits that the EU is proposing to introduce from2012. EU proposals requiring emissions to be cut to an average of 130 grams per kilometer for all newcars from 2012 are 'physically' not possible for the company's sports cars to adhere to, Wiedeking toldHandelsblatt in an interview. 'Realistically, emissions requirements can only be graded by vehiclesegment,' Wiedeking told the newspaper.

Merkel Supports Carbon-Dioxide Cut by Vehicle SegmentBy Jeremy van Loon and Claudia Rach,Bloomberg , 09/13/07

German Chancellor Angela Merkel backed a proposal by carmakers to reduce carbon-dioxide emissionsbased on vehicle category, a system that waters down existing European Union plans. ``Any solutionneeds to be fair and the German industry should know that it has my support for a solution based onvehicle segments,'' Merkel said in a speech today opening the Frankfurt Motor Show.
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Painful concessions are needed from the unions on healthcare as car makers have to be competitive inwages, benefits, work rules, flexible manufacturing and plant capacity.Detroit News ,04/01/07

The painful dialogue has begun toll so far two lightening strikes buagreement in principle at GM to setup independent fund to meet health& retirements costs reached daysof selling cars at a loss could soonbe over.Times , 27/09/07

U.S. Carmakers Fixated on Labor and Healthcare Costs

U.S. automakers lost 8% market share in 2006 - Asian car makers gained 5% and Europeanmanufacturers picked up 3%.U.S. automakers spent $12 billion on healthcare benefits for employees and formeremployees in 2005 while their Asian and EU counterparts spent less than 10% of that figure.



Ford Motors

In 2007, Fords attention was almost exclusively on unions and healthcare costs.



General Motors

In 2007, GMs attention was also almost exclusively on unions and healthcare costs



European Carmakers

EU competitorshave a second bigissue on their

radar the cheapcar in emergingmarkets.

A third issue is alsoemerging around

carbon emissions.

Italys Fiat and FrancesRenault-Nissan feelthe Tata Motors cheapemerging markets caris an equally important story

European manufacturerswere also working onmeeting EU carbonemissions regulations



Tata Motors and the low cost car

Fiat and Renault-Nissan

At Sergio Marchionnes Fiat:Union negotiations and the $10,000 dollar carwere grabbing high levels in terms of share ofvoice.

Carbon emissions was growing strongly too.

At Carlos Ghosns Renault-Nissan:Union negotiations and the $10,000 dollar carare grabbing high levels in terms of share ofvoice.



Is this cheap emergingmarkets car a threat?

Tata Motors

Renaults Ghosn has the Logan in production and reports in the press suggest that demand isalready outstripping supply. In early September, Ghosn signed an agreement to build a productionplant for the car in Morocco.

In 2007, Ford's 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.


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Global interest incarbon emissionstories is not goingaway.

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 areproposing a single limit for all cars while the German makers want a stepped emissions limit depending on 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 least10g/km.Octane Week, 17/09/07Daimlers Dieter Zetsche is less effusive: Daimler chief rips up US CAF standards and pushes diesel,Dow

Jones, 23/01/07

Carbon Emissions


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Regulatory Considerations

On emissions, car makers are under pressure:

California already has emissions laws on its books and more U.S. State legislators arestarting 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 soldwithin the borders

This will add additional cost as not everyone has a Toyota Prius hybrid ready to roll off theproduction line.

Once politicians get involved, there is an inevitable trend to make the laws a little tightereach 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 .


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Carbon emissions are a growing issue for both companies

Carbon Emissions

At Martin Winterkorns VW:Union negotiations and carbon emissionsgrab the headlines.

The $10,000 car is on the radar too.

At Dr Norbert Reithofers BMW:Union negotiations and carbon emissionsgrab the headlines.

The $10,000 car is on the radar too.


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France is not too different andCarbon emissions is a strong issue

DaimlerChrysler hasalmost single issuefocus: selling offChrysler

At Dieter Zetsches Daimler:The company has just come through thepainful transition of unloading Chrysler.

It is understandable that its press coverageis dominated by a single labor issue.

European Carmaker Issues: Daimler and PSA

At Christian Streiffs PSA:Union negotiations AND carbonemissions grab the headlines.

The $10,000 car is nowhere to be seen.


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Press Trends

Press enthusiasm changes from moment to moment, but trends over time normally remain consistentand problems remain persistent.


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Report Methodology

OverviewThe findings in this complimentary report summarize the results of a Dow Jones Insight text-miningplatform. Our system gathers relevant content from more than 10,000 global traditional media sources plussocial media sources including Websites, blogs and message boards.The Dow Jones Insight Media Lab consultants then review the results to produce a report with summarycharts and analysis. This study analyzed coverage from the Dow Jones Factiva global media set unlessotherwise specified.

Media Set

Press releases were excluded from this analysis by the exclusion of all paid-for wire services, exceptwhere stated otherwise. Datamonitor Profiles, News and Comment and Premium Research Reports werealso excluded to ensure a high relevancy of the underlying data set. Routine General News andRepublished News were also excluded.

Search construction

Search strings used for investigating products, terms, market issues and individuals were constructed usingDow Jones Factivas predetermined codes unless otherwise noted.

Reporting PeriodJan 1 2007 through Sept 30 2007


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Dow Jones Insight delivers actionable intelligence that allows companies to optimize theircommunications strategies in order to nurture their reputation, increase earnings and achievebusiness objectives. It distills millions of articles and blog postings down to strategic quantitativeand 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 emergingopportunities and threats while they can still affect their outcome.

Each Dow Jones Insight engagement is fully supported by the Media Lab, whose expert analystsand consultants both develop an organizations research strategy and compose thesearch definitions that generate comprehensive media measurements and analysis.

With Dow Jones Insights high-quality media analysis, you can:Track drivers of corporate reputationUnderstand issues and trends in time to actVisualize hot spots in media coverageEnsure accurate and reliable media measurementDefend 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
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