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

1. Photo: © Corbis
© Copyright 2008 Dow Jones and Company, Inc.

2. 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
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3. 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
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4. 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)
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5. 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
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6. 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? India's 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. It's 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 – India's low labor costs can't make this
Ghosn tells carmakers.” The Times, 08/01/07 miracle happen.
http://blog.wired.com/cars/2007/10/race-to-the-bot.html
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7. Looming Threats
Porsche sports cars can't meet EU's planned CO2 emissions limits - CEO
AFX News, 10/09/07
FRANKFURT Porsche AG chief executive Wendelin Wiedeking said the company's cars in their current
form won't 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 company's 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
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8. 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
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9. Ford Motors
In 2007, Ford’s attention was almost exclusively on unions and healthcare costs.
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10. General Motors
In 2007, GM’s attention was also almost exclusively on unions and healthcare costs
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11. 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
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12. Fiat and Renault-Nissan
At 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
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13. 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, 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.
Is this cheap “emerging
markets” car a threat?
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14. 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.
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15. 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.
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16. 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
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17. 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
Chrysler
France is not too ‘different’ and
Carbon emissions is a strong issue
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18. Press Trends
Press enthusiasm changes from moment to moment, but trends over time normally remain consistent
and problems remain persistent.
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19. 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
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