Car sales falter as China puts the brakes on

Poor sales in the US and Europe predicted to worsen

Growth in the Chinese automotive sector is slowing, and this is having an effect on global manufacturers concerned with oversupplying the market.

As more and more western carmakers have already established production bases in the country it now looks as though the days of 40% – 50% increases in growth are now over.  Alva predicts that manufacturers will look to other emerging markets such as Latin America to offset possible negative effects of slowing China sales.

In terms of the sector’s reputation, August was dominated by first half year results, with sales and corporate issues accounting for 42% of the issues coverage in total. Both the US and Europe posted a downturn in sales across the board, in line with Alva’s predictions. Government support for low carbon technology as well as consumer engagement and education from manufacturers over the benefits of this technology will be the key to a recovery in these markets. It is anticipated that sustainability (6%) will become an increasingly important topic in the coming months.

The outlook for the rest of the year looks poor; Alva anticipates worsening figures due to the end of government incentives as well as low consumer confidence and rising raw material costs.

“With first half year results out of the way, attention will return to the two main themes of emerging markets and low carbon technology,” said Alberto Lopez-Valenzuela, CEO of Alva. “The latter will be boosted by the forthcoming Paris Motor Show in October which will likely focus heavily on Electric Vehicles, causing an increased interest in the technology.”

General Motors (GM) overtook Toyota as the most prominently discussed manufacturer in August (22% to 12% respectively), largely due to discussion around its Initial Public Offering filing (7%) and its recall of 250,000 cross over vehicles due to defective seat belts (2%).  There are many concerns surrounding GM’s IPO, with the company’s recent change in management and its poor consumer reputation for safety and quality presenting major risks to the potential success of the offering.

“It cannot be stressed enough how significant GM’s IPO is to the future success of the company,” said Alberto Lopez-Valenzuela, CEO of Alva. “Management of all GM’s stakeholders, but especially shareholders, investors, financial analysts and the general public is vital to improve GM’s reputation and drive up the value of its stock price ahead of the IPO.”

Each month, corporate reputation analysis company Alva reports on the biggest reputational risk issues in the Automotive sector using information collected from its proprietary analytics tool.

For the latest updates on emerging Automotive issues follow Alva on Twitter @AlvaAutomotive

Ends

Summary of Automotive Industry Issues in August 2010

Alva analyses content from over 1 million mainstream media, blog, micromedia, forums, brokers notes and social networking sites

Top 10 Manufacturers

1. General Motors- 22.06%
2. Toyota- 11.59%
3. Ford- 10.71%
4. Chrysler- 5.67%
5. Nissan- 4.98%
6. Chevrolet – 4.62%
7. Volkswagen- 4.40%
8. Honda- 3.89%
9. Fiat- 2.71%
10. Volvo- 2.27%

Top 10 Issues

1. GM files first batch of paperwork for its IPO – 5.62%
2. GM reports $1.3bn profits in Q2 – 3.61%
3. Toyota announces voluntary safety recall for Corollas – 2.12%
4. Probe of Toyota black boxes find no new defects – 2.02%
5. Chrysler narrows second quarter loss– 1.84%
6. GM recalls 250,000 cars over defective seat belts – 1.71%
7. GM asks investors to have faith in upcoming stock – 1.69%
8. Toyota quality issues continue – 1.61%
9. Geely completes Volvo acquisition – 1.57%
10. Automakers reports quarterly and first half results – 1.51%

Issues Dominance

1. Corporate- 23.15%
2. Sales- 19.23%
3. Regulation- 12.27%
4. Safety – 8.53%
5. Production – 7.41%
6. Brand – 6.79%
7. Quality & Service – 6.46%
8. Emerging Markets – 6.18%
9. Sustainability – 5.63%
10. Research & Development – 2.35%

About Alva

Alva specialises in analysing corporate reputation and reputational risk.

Our services equip organisations with the analysis tools to manage reputation and reputational risk in the same way as any other valuable business asset.

Alva’s services are industry sector specific. Reputation analysis services for the Automotive and Energy and Utilities industries are already being delivered with services for the financial services communities following shortly, with 32 industry sectors planned in total.

Alva’s founding team brings more than 50 years experience in media intelligence, business analysis and technology innovation, having worked at leading organisations such as Clifford Chance, Deutsche Bank, Datamonitor and PA Consulting.

Alva’s Board of Directors consists of industry experts with extensive first-hand experience in managing reputation at PLC level. Alva Chairman Andrew Vickerman is the former Global Head of Communications & External Relations at Rio Tinto Plc. Serving as Non-Executive Directors are Alan Schofield, former special-adviser and press secretary to HM Government and Mark Rigby, Director of Corporate Affairs at Sainsbury’s PLC.

For further information please contact Alastair Pickering at 020 3102 9655, or visit www.alva-group.com

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