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Productivity Commission recommends end to taxpayers’ support for local car …

A final report on the future of Australian car manufacturing has recommended federal and state governments give no further taxpayer support to carmakers.

The Productivity Commission report endorsed a Federal Government move to scrap the Automotive Transformation Scheme after Holden, Ford and Toyota end their manufacturing in Australia.

Holden and Toyota will end their local operations by 2017 and Ford is to end its local car making in late 2016.

The Federal Government has also been urged to consider removing a 5 per cent tariff on imported vehicles once the local carmakers close their operations.

The report also recommended a progressive relaxation of restrictions on imports of second-hand passenger and light commercial vehicles.

It said an easing of those restrictions should apply for vehicles from countries that have design standards consistent with those recognised in Australia.

The report said the imported vehicles should be under five years old and a specific $12,000 duty that applies should end as soon as possible.

The Federal Government said it would consider relaxing import restrictions on second-hand vehicles but would ensure Australia did not become a dumping ground for older cars.

Industry Minister Ian Macfarlane said the issue would be considered as part of the Government’s review of the Motor Vehicle Standards Act.

He said the Government would be mindful of any possible impact on the domestic retail market for cars and also would ensure continued high levels of consumer protection.

Ian Weber from the Federal Chamber of Automotive Industries said he feared letting second-hand imports into Australia would end up compromising the current high safety standards for used cars.

“Part of that’s driven by the safety of cars coming into this country that is regulated by our members who bring them in and our members are held to the highest standards,” he said.

“If we drop those standards by letting ‘grey’ imports in I think that would be an enormous mistake.”

‘Virtual closure’ facing local car industry

The Australian Industry Group, a not-for-profit business support organisation, said the Productivity Commission’s report seriously downplayed the impact the end of car making could have for Australia.

Chief executive Innes Willox said the end of local manufacturing was much more than the economic “adjustment” the report was claiming.

“The report fails to acknowledge that the situation facing the auto sector is not just another minor adjustment in the economy [but] represents the virtual closure of an entire industry,” he said.

“This will happen within a relatively short span of time and it will affect a large number of businesses, employees and communities.”

Mr Willox said the Productivity Commission seemed to be putting potential job losses at the optimistic end of the scale.

“The commission predicts that 40,000 people will lose their jobs. They assume that 80 per cent of workers in the direct auto assembly workforce plus 40 per cent of workers in the automotive components supply chain will be retrenched,” he said.

“This is considerably more optimistic than other estimates of future job losses.”

He said too the report had a disturbing lack of practical recommendations for an orderly transition of businesses out of supplying local auto makers.

“It is difficult to see how 60 per cent of Australia’s automotive components industry will be able to survive unaffected by the demise of local passenger car assembly, or be able to successfully transition into other opportunities,” he said.

South Australia’s Automotive Transformation Minister Susan Close dismissed the report as a 326-page obit to the car industry.

“Having conducted a post-mortem of the automotive industry, the Productivity Commission is now advising governments on how to dispose of the body,” she said.

She said many thousands of workers and businesses would be disappointed by the “cold-blooded” findings of the report.

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The dark age for the automotive industry in Argentina


Statistics have shown that during the last semester of 2014, the sales for new brand cars dropped by 23% while used ones decreased by 9%. This results were provided by the Automotive Commerce Chamber (CCA – Cámara del Comercio Automotor) and the Association for Automotive Dealerships (Acara – Asociación de Concesionarios de Automóviles).

The drops are alleged to be in relation to the local demand that is way too low against the supply from the companies which in many cases have started to increase their stock alarmingly and secondly due to a decrease in the exports from Brasil.

Real and great concern

Most companies have started to develop contingency plans that include from suspensions to dismissals. No company is safe from this situation and this raises a huge distress due to the fact that more than 20,000 employees have been layoff and this contributes to rise the unemployment rate.

General Motors: 2.700 workers will be suspended one day a week.

Peugeot-Citroën: In its facility located in Villa Bosch, Buenos Aires, the company decided to suspend one of its two shifts. 1,000 workers were affected by this resolution.

Volkswagen: a decision was made to halt the Friday production from the Pacheco facility (Buenos Aires) since May. This company has stated that they have in stock more than 15,000. cars with no prospect of being sale. For that same reason, in addition to the previous measure, they have also decided to design a plan for volunteer retirement.

Scania: a company known for producing trucks and buses have also suspended its 400 workers from the facility located in Tucumán.

Renault: In its facility located in Córdoba, the company had to suspend nearly 600 employees.

Fiat: Since the beginning of the year this Company has suspended 2,100 workers from its facility located in Córdoba.

Iveco: In Ferreyra, a local town in Córdoba, Iveco decided to suspend 80% of its workers for 2 months.

One previous gear of this circuit

The autopart company called Montich has also been applying suspensions to its personnel. Its CEO, Ramón Ramirez, has acknowledged the crisis that is hitting the industry and has decided that Montich will start coping with the situation by reducing salaries and possibly a few dismissals.

Montich has a permanent plant of 490 employees and three facilities, in Córdoba, Buenos Aires and Brasil.

Its main customers are Renault, Fiat and Iveco, all companies going through the same crisis.

The crisis within this specific sector of the industry has a great impact on the companies previously mentioned. Official sources stated that between 2,000 and 2,500 employees were suspended and some auto parts companies have given their workers early licenses.

Auto dealerships

Due to the lack of activity and sales, many auto dealerships were obliged to close. High real estate costs, high maintenance costs and the obligation to support salesman and it salaries were between the main factors that turned this decision.

During the first four months of the year, 272,095 cars were registered which can be translated as a drop of 18%.

There is always someone to blame but oneself

Going back to the reasons given at the beginning of this article, let me say something more about the argentinean auto exports.

With the way the argentinean government is used to treat its fellow partners, Axel Kicillof, the minister of economy requested that the brazilian government should proposed a plan in which Brazil would increase their imports so that the deficit that hits the Argentinean economy (U.S. $3.100 million) would decrease and hopefully get to an equilibrium.

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Kicillof heads to Brazil for talks on automotive industry

Economy minister Axel Kicillof left Buenos Aires today to travel to Brazil, where he will meet with fellow ministers from the country to discuss the current situation of bilateral trade and the automotive industry.

Kicillof is expected to meet with Brazil’s Economy minister, Guido Mantega, and Industry minister Mauro Borges in order to analyse the trade situation between the South American neighbours, according to government sources.

Falling trade in automobiles, which prompted Brazil and Argentina to sign a new commercial pact in June, will also be discussed between Kicillof and his Brazilian counterpart.

The drop in new car sales in the internal market, as well as the contraction of export sales, have affected vehicles manufacturers and sellers located in Argentina. Union estimates claim that up to 170,000 workers have been affected by the decreasing activity in the industry.

Lower demand from Brazil, which purchases around 90 percent of Argentine vehicle exports, has also hit the industry hard. In July the sector sent 24,085 units abroad to various markets, 38.7 percent lower than the 39,289 exported during the same month.

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BMW has the biggest Facebook page in the automotive industry

According to social media statistics, BMW has the biggest Facebook page in the automotive industry. Same statistics point out that the success of the BMW’s Facebook page can be directly linked to how BMW encourages its fans to post pictures and share driving experiences across social media.

In return, the users receive exclusive news and information, sometimes used also as news sources by online magazines. For BMW, social media has been a playground where experiments were allowed until the right formula was found. BMW launched campaigns such as its “0 to Desir3” YouTube video contest, in which BMW encouraged its fans to submit 5.9 second videos expressing how much they want a BMW 328i sedan.

BMW has the biggest Facebook page in the automotive industry

BMW currently has over 18 million fans on Facebook.

In 2013, social media analytics tools show that 38 percent of consumers would consult social media channels before their next car purchase.

Millennials are without a doubt the most engaged demographic on social media and are the most active and willing to share content.

A recent survey carried out by Inside Facebook highlighted that 81 percent of millennials are active on Facebook with a median amount of 250 friends, statistics that far exceed those of other generations.

The automotive industry has begun to fully embrace social media. From automakers to car shows and automotive vendors, everyone sees the potential to not only connect with their fans but also drive sales.

By engaging with Facebook and other online networks, the car companies can publicize, for free for the most part, their products. The companies also look at the millennials as the next generation young professionals and future clients, so long-term relationships are needed to build trust and loyalty.

BMWBLOG has also been successful to engage with BMW fans through our own social media channels: Facebook, Twitter, Instagram and Youtube.

[Source: Bizjournal]

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22 Auto Industry Stocks to Consider for Your Stock Portfolio

NEW YORK (TheStreet) — With so many different investments options, investors often have a difficult time deciding which direction is the best one for them to take.

TheStreet is attempting to declutter the plethora of information available and present it to our readers in a way so that they can make wise investment decisions. Whether you’re an individual investor or work with a financial advisor, the objective is to help simplify the process and present information that’s user friendly.

The automotive industry is one of the largest consumer industries in the world. It amassed 85.4 billion automobiles sold in 2013, according to the International Organization of Vehicle Manufacturers.

Despite the recent success, the automotive industry has proved to be sensitive to global economic volatility. For example, the industry was hit hard domestically from 2006-2010, when net profit in the new-vehicle department was negative each year.

The overall industry is comprised of numerous different segments, including auto manufactures, interiors, powertrain systems, body structures, tire and diversified manufacturers. In fact, the industry as a whole is forecast to accrue a total value of $1.7 trillion and reach volume of 168.2 million units, a 39.6% increase since 2010, according to a report by

The purchase of a car is often attributed as one of the more unfavorable financial investments a consumer can make, but investing in the right automotive stock can prove to be very favorable.

What follows are twenty-two automotive industry stocks with descriptions from SP, ranked by our own proprietary quantitative ranking system at, which are worth looking over. Note that these ratings can change at any time. If you would like access to real-time ratings of these stocks, you can subscribe to TheStreet Quant Ratings. Buckle up.

22. Tesla Motors (TSLA)
Segment: Auto Manufacturers

Tesla Motors designs, develops, manufactures, and sells electric vehicles and electric vehicle powertrain components.

The company also provides services for the development of electric powertrain systems and components, and sells electric vehicle powertrain components to other automotive manufacturers. It markets and sells its vehicles through Tesla stores and galleries, as well as over the Internet.

The company operates a network of 80 stores and galleries in North America, Europe and Asia.

Tesla Motors was founded in 2003 and is headquartered in Palo Alto, Calif.

Free Report: Jim Cramer’s Best Stocks for 2014

TheStreet Ratings team rates TESLA MOTORS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

“We rate TESLA MOTORS INC (TSLA) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company’s strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins.”

You can view the full analysis from the report here: TSLA Ratings Report

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Mexico Auto Industry: Why Are Kia Motors, BMW, Nissan, And Mercedes Headed …

The announcement was so important for his country’s economy that Mexico’s president delivered the news himself. On the same day that General Motors Co. (NYSE:GM) said it would be calling home Cadillac SRX crossover production from Mexico in a deal worked out with the United Auto Workers union, South Korean automaker Kia Motors Corp. (KRX:000270) said it will spend more than $1 billion to construct its first auto manufacturing plant in Mexico, according to the Spanish-language El Financiero news agency. President Enrique Peña Nieto made the announcement Wednesday in Mexico City, highlighting the country’s determination to attract automotive investment.

“The Kia plant in LaGrange, Georgia, is working at capacity, and they had a choice to expand capacity there or follow what the industry has been doing in recent years,” Dean Barber, founder of Barber Business Advisors, a corporate site-selection adviser, told International Business Times by phone after the announcement was made. “Kia is building at the doorstep of the United States. Another good thing about that is Mexico has more free trade agreements than the United States, about 40.”

Bordering the world’s second-largest auto market to its north, Mexico has long been an ideal location for car manufacturing, especially after Canada, the U.S. and Mexico began dismantling protective trade barriers starting in 1994 with the North American Free Trade Agreement. At the time, Mexico produced a little more than one in 20 cars in North America; the most recent figures from the INEGI, the country’s statistics and census bureau, puts that figure at closer to one in five.

“Having a Korean company enter Mexico will mean that practically all global automakers will be represented in the country,” Armando Soto, president of Kaso y Asociados, a Mexico City auto industry consultant, told Bloomberg Businessweek.

Automakers have been attracted to Mexico’s low labor costs to produce small sedans, which offer slim profit margins compared to trucks, SUVs and luxury cars. In February, Honda Motor Co. Ltd. (TYO:7267) began making its Fit at a new $800 million plant in Celaya, Guanajuato state, marking the first time the five-door subcompact – popular among price-conscious empty nesters and first-time new-car buyers – is being built in North America. In February, Mazda Motor Corp. (TYO:7261) opened its first wholly owned plant in North America, a $770 million facility in Salamanca, Guanajuato state, that can make as many as 175,000 Mazda2 supermini cars and Mazda3 compacts.

“The Forte compact, Soul subcompact or Rio subcompact could be among the possibilities to be built [at the Kia plant],” reported Automotive News. Reuters confirmed Wednesday afternoon the Kia Forte would be the first car made at the plant.

In recent years Mexico has begun attracting the attention of companies seeking to build more high-end vehicles, a nod to the country’s improving workforce, which 20 years ago might not have been considered reliable or experienced enough to put together a BMW X5 or an Infiniti Q.

In June, Daimler AG (FRA:DAI), the maker of Mercedes-Benz, and Nissan Motor Co. (TYO:7201) announced plans to spend about $1.36 billion building a plant near Nissan’s existing one in the Mexican state of Aguascalientes. The project would see production of the Nissan’s Infiniti luxury cars by 2017 and future Mercedes models as part of an expanding alliance between the German luxury carmaker and Japan’s third-largest car company.

A week after that announcement Daimer rival Bayerische Motoren Werke AG (ETR:BMW) said it was spending $1 billion to build another plant in Mexico, one that will produce about 150,000 vehicles a year beginning in 2019. The German carmaker will make four of its popular models for the North American market in the central industrial city of Toluca.

“BMW and Mercedes are going to be building cars down there. They traditionally might have focused on lower end cars, but BMW, Mercedes, Infiniti – these aren’t low-end cars,” said Barber.

Mexican automotive workers make in a day roughly what U.S. car factory worker make in an hour, and there are more than a half-million of those Mexican automotive workers. Since 2011 Mexico has attracted nearly $10 billion in foreign direct investment (including commitments that have not yet been fulfilled) from the automotive sector, according to the Center for Automotive Research in Ann Arbor, Michigan.

Here’s a list of automotive assembly facilities in Mexico, including ones that have already broken ground but aren’t ready yet for production.

Bayerische Motoren Werke de México S.A. de C.V. 
Toluca, State of Mexico
BMW 3 Series compact sedan
BMW 5 Series mid-sized sedan
BMW 7 Series full-sized sedan
BMW X5 mid-sized luxury SUV

Mercedes-Benz México S. de R.L. de C.V.
Santiago Tianguistenco, State of Mexico
Freightliner trucks

Monterrey, Nuevo León state
Urban and touring buses

Saltillo, Coahuila state
Freightliner trucks

Saltillo Truck Assembly
Saltillo, Coahuila state
Ram pickup truck

Toluca Car Assembly
Dodge Journey mid-sized crossover
Fiat 500 city car

Cuautitlán Stamping and Assembly Plant
Cuautitlán Izcalli, state of Mexico
Ford Fiesta supermini

Hermosillo Stamping and Assembly
Hermosillo, Sonora state
Ford Fusion mid-sized sedan
Lincoln MKZ mid-sized luxury car

San Luis Potosí Assembly
San Luis Potosí, San Luis Potosí state
Chevrolet Aveo subcompact cars

Silao Assembly
Silao, Guanajuato state
Chevrolet Silverado
GMC Sierra

Ramos Arizpe, Coahuila state
Opel Corsa
Chevrolet HHR station wagon
Cadillac SRX crossover (production will move to Tennessee)

Honda De México S.A. de C.V.
El Salto, Jalisco state
Honda CR-V compact crossover

Celaya, Guanajuato state
Honda Fit five-door subcompact
Honda HR-V subcompact crossover

Nissan Mexicana, S.A. de C.V. Aguascalientes
Aguascalientes, Agusacalientes state
Nissan March supermini
Nissan Versa subcompact sedan
Nissan Sentra compact car
Nissan Frontier pickup truck

Nissan Mexicana, S.A. de C.V. Cuernavaca
Cuernavaca, Morelos state
Nissan Sentra
Nissan Versa
Nissan Frontier pickup truck
Nissan NV1200 light commercial vehicle
Nissan NV200 taxi for New York City

Toyota Motor Manufacturing de Baja California S. de RL de C.V
Tijuana, Baja California Norte state
Tacoma pickup truck

Volkswagen de México, S.A. de C.V.
Puebla, Puebla state
Jetta sedan
Golf compact five door

The list above excludes plants that make car components, like engines and chassis used by other assembly plants to build passenger vehicles.

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"J.D. Power" Gives The Auto Industry A Green Light On Digital Marketing

J.D. Power Gives The Auto Industry A Green Light On Digital Marketing image

You can’t turn on the television or open a newspaper without running into a car ad.

The auto industry and traditional advertising have always gone hand in hand, and that’s not likely to change. However, according to the new J.D. Power 2014 U.S. Automotive Media and Marketing Report, more and more new car owners are starting their content journeys via digital channels.

This comes as no surprise since nearly 65-90 percent of the buying journey (research, comparison shopping, consumer reports) is complete once a sales person is contacted and people in general are consuming content in a multitude of ways on various devices. However, the study could serve as an official stamp of approval for the auto industry to expand their digital marketing initiatives.

This was the first time in the 27-year history of the J.D. Power Report that digital media consumption habits, from search engine usage to social media activity, were even included (Hello Auto Industry! Meet Internet!) While their late-to-the-party efforts didn’t produce any Earth-shattering stats (93 percent of new-vehicle drivers still use a computer for Internet access, but 57 percent use mobile phones and 45 percent use tablets), to auto companies, it affirms the need to look beyond traditional medium to reach their prospective consumers.

One possible reason that it took so long to consider digital as part of the report is that car companies haven’t always aggressively targeted a younger demographic, assuming that older people are the ones making purchasing decisions. Thus, traditional marketing channels were the focus. Of course older people are using digital media just as much as the younger generation these days – 20 percent of those who said they used social media in the survey were 65 years or older.

Related Resources from B2C
» Free Webcast: Build Better Products by Identifying and Validating Your Riskiest Assumptions

So what do these findings mean for car brands? Shifting gears to digital marketing is becoming more the norm. It’s happening already, according to eMarketer: “Automakers and dealers will spend $6.15 billion on US digital advertising in 2014, up 18.8 percent from the previous year. All told, substantial annual digital ad spending increases by the US automotive industry will continue for the foreseeable future.”

J.D. Power Gives The Auto Industry A Green Light On Digital Marketing image PuvDc0edgSlkpFvdsad1fAYs GM6lLgyHimy1RC62o1RBBO7K7PyfmpcsmFNpA2GMRjT8EzSbmlN4jGrQwEwts1zQH 3tZpIEFAGBxSuFaOVvzV4dTs0EoLs EvrAZviLg 600x362

Hyundai’s “Walking Dead” Chop Shop

Social media campaigns, interactive website tools, hashtags, and viral video production are dominating marketing meeting agendas across the country across all industries, and cars are no different. As such, there has been some really innovative digital content including Hyundai’s “Walking Dead” Chop Shop, a zombie apocalypse car-building site, and the Jean Claude Van Damme “Epic Split” video from Volvo.

Auto industry marketers haven’t exactly been waiting around for validation from J.D. Power, but now that they have it, digital marketing efforts should continue to accelerate.

This article originally appeared on The NewsCred Blog and has been republished with permission.

Find out how to syndicate your content with Business 2 Community.

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How MobileEye Drives Auto Industry to Its ‘iPhone Moment’

NEW YORK (TheStreet) –– As driverless cars become more present over the next several years, Wall Street believes that MobileEye (MLBY) is best positioned to benefit significantly from this trend.

Several investment banks initiated coverage on the Israeli-based MobileEye, following its successful initial public offering earlier this month. MobileEye, which counts automakers such as BMW, Audi, Jaguar Land Rover, Tesla (TSLA)  , Ford (F) , Honda (HON) and Nissan (NSANY) as customers, shipped 1.3 million chips in 2013 to help automakers develop advanced driver assistance systems and semi-autonomous markets, noted Barclays Capital analyst Brian Johnson, who rates shares “overweight” with a $48 price target.

The company also believes its radar, sensor, microchip and camera technologies will allow it be the first to develop a semi-autonomous driving car at highway speeds. MobilEye is designing the first system for hands-free driving at highway speeds with two automakers, which it expects to launch in 2016.

Read More: Israel’s Mobileye Looks to Driverless Car after Record IPO

“Just as PCs and smartphones transformed computing, software will change the way we drive, and MBLY will likely be at the forefront of that change,” Johnson wrote in the note. “In our view, MBLY stock offers considerable upside potential given the company’s strong competitive position in the advanced driver assistance systems (ADAS) and semi-autonomous markets, which should drive a 45% revenue [compound annual growth rate or] CAGR through 2020 (largely from ADAS) and a 14% CAGR from 2020-2025 (as semi-autonomous kicks in at scale).”

Shares of MobileEye were higher in early Tuesday trading, up 4.2% to $39.80.

Currently, only around 3% of the automotive market uses ADAS, but that’s expected to move sharply higher within the next few years, as regulatory factors mandate it. Tesla CEO Elon Musk has talked about introducing an automated car in the past, potentially partnering with Google (GOOGL) , but noted that it would not come until at least 2016. 

Am a fan of Larry, Sergey Google in general, but self-driving cars comments to Bloomberg were just off-the-cuff. No big announcement here
— Elon Musk (@elonmusk) May 7, 2013

Mobileye, which generated $81.2 million in revenue in 2013 and $19.9 million in net income, has the chance to maintain its position in the Autonomous Emergency Braking (AEB) market, with its technology being at the core of 91% of the contracts won in the past three years, noted Deutsche Bank analyst Rod Lache, a position that is only like to increase. “And importantly, MobilEye appears to be expanding their lead by growing the functionality of their systems,” Lache wrote in a note. “This is expected to include sophisticated software that will serve at the core of the world’s first commercially available autonomously driving vehicles.”

Lache expects 2014 revenue of $131 million to reach $736 million by 2018, and ultimately reach $2.5 billion by 2025.

MobileEye, which expects to launch its autonomous driving system with six more automakers by 2018, is seen as the “Intel Inside” for ADAS, notes Johnson, but it could be much more, argues Citi analyst Itay Michaeli, who rates shares “buy” with a $48 price target. It could be the industry’s “iPhone moment.”

“Mobileye’s current ~80% share is staring at a $15+ billion LT addressable market (Citi ’25E rev = $3.3bln) with high entry barriers and a competitive edge from large unbiased databases,” Michaeli wrote in a note. “Mobileye
also sits in the most attractive leg of the supply chain; estimated NI margins 50%.”

Written by Chris Ciaccia in New York

Contact by Email.

Follow @Chris_Ciaccia

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Carbon Grabber campaign hunts for automotive industry logins

Europe’s automotive supply chain is being targeted by a malware campaign connected to the increasingly popular Carbon Grabber crimeware kit, researchers at Symantec have warned.

At first glance, what Symantec uncovered earlier this month when investigating a spam campaign spreading malicious attachments looks relatively innocuous, one of dozens of such incidents security firms pick up on in any given month.

The giveaway that there is more to this one is the unusual level of targeting which aims more than half of all spam at the at the car rental, insurance, commercial transport, and second-hand commercial and agricultural vehicle sales sectors in Germany, The Netherlands, Italy and to a lesser extent, the UK.

Using the lure of a bogus company called Technik Automobile GMBH offering to buy pre-owned vehicles, the attackers attempt to install the ‘Retgate’ credential stealer which monitors access to Outlook email accounts but can also be used to steal web logins from a range of browsers.

The attackers also directed the attack at customer service departments, a layer of SMBs that will enjoy good access to a range of company systems.

Symantec offers no information on the origin of the attack although a number of criminal gangs are known to use the Russian-developed Carbon Grabber toolkit that underpins it.

“One thing we know for sure is that if the attack is successful, the cybercriminals will have a foothold in the victim’s business. They would have the capability to send emails from the compromised Outlook account and to monitor for credentials entered into browsers,” said the research note.

The crimeware kit industry is still adjusting to the spectacular downing of the sector’s big daddy, Blackhole, late last year. Into the vacumm left behind it have emerged a number of other often very specialised kits, including the Magnitude kit used to distribute the CryptoWall ransom malware.

Carbon Grabber, first detected in January 2014, is small fry by these standards but a wave of attacks seems to have emerged from the kit all the same.

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The Global Auto Industry’s Recovery Gains Traction

DETROIT, MI–(Marketwired – Aug 25, 2014) –  Few economic sectors have mounted a more impressive comeback from the ravages of the financial crisis than the automotive industry. Both original-equipment manufacturers (OEMs) and component makers delivered five-year median annual returns that were well in excess of the median annual return for 26 industries, according to a new report by The Boston Consulting Group (BCG). The report, The 2014 Automotive Value Creators Report: A Comeback in the Making, is being released today.

OEMs produced a median annual total shareholder return (TSR) of 29 percent from 2009 through 2013, while component makers posted a median annual TSR of 33 percent. These results surpass the median annual return of 21 percent for the 26 industries tracked by BCG. The automotive industry’s recent performance represents an impressive recovery from the depths of the 2008 financial crisis, when the big three U.S. automakers alone posted nearly $75 billion in losses and unit sales plunged worldwide.

“The automotive sector has enjoyed a good run, but sustaining that standout performance will be a challenge,” said Xavier Mosquet, a BCG senior partner and a coauthor of the report. “OEMs and component makers will have to prioritize innovation to meet the needs of consumers.”

Important Sources of TSR: Focus and Scale
One of the report’s most striking findings is that OEMs’ country or regional focus influenced how they created value. OEMs that concentrated on emerging markets produced a median annual TSR that ranged from 36 to 49 percent, creating value primarily through a combination of margin improvement and sales growth. Automakers that focused globally on developed markets posted lower median annual returns that ranged from 23 to 35 percent, creating value in large part by expanding their profit margins, rather than increasing sales, and returning cash to shareholders through dividends and share repurchases.

“Our findings also highlighted the importance of global scale,” said Justin Rose, a BCG partner and a coauthor of the report. “It’s no accident that from 2004 through 2013, the five largest-selling OEMs posted a 47 percent increase in combined unit sales. Global scale not only helps OEMs remain competitive on costs but also positions automakers to capture share in high-growth markets and solidify their competitive advantage.”

Creating a Strategy for Sustainable Returns
To prepare a long-term value-creation strategy, OEMs and component makers should take into account all sources of TSR. “Global scale in itself is not sufficient to sustain performance, especially if growth comes at the expense of profitability,” said Rakshita Agrawal, a BCG principal and a coauthor of the report. “Both OEMs and component makers must also expand margins.”

Devising a long-term strategy will be an important challenge for industry executives. Analyzing a company’s performance in terms of its ability to deliver sustainable value creation is what investors do every day. Armed with the right tools, there is no reason why executives can’t develop an even better-informed perspective, given their intimate knowledge of their company’s plans and industry trends. When executives do, they can stay one step ahead of investor expectations and consistently generate superior shareholder value for many years to come.

A copy of the report can be downloaded at

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or

About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries. For more information, please visit

About features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management’s agenda. It also provides unprecedented access to BCG’s extensive archive of thought leadership stretching back 50 years to the days of Bruce Henderson, the firm’s founder and one of the architects of modern management consulting. All of our content — including videos, podcasts, commentaries, and reports — can be accessed by PC, mobile, iPad, Facebook, Twitter and LinkedIn.

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