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‘December to Forget’: Automakers, retailers cut TV ads amid supply chain woes

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November 11, 2021

By Joseph White, Sheila Dang and Arriana McLymore

DETROIT (Reuters) – For years, luxury vehicle brands have promoted holiday season sales with slogans like Lexus’s “A December to remember.”

But automakers and dealers are on track to spend less on advertising this holiday season, industry executives and analysts said, leaving behind the generous lease deals and discounts of seasons past. A year of supply chain and production disruptions have left auto dealerships with roughly one-third of the normal inventory levels, giving sellers little reason to shell out for splashy holiday ads.

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“We will not be promoting the holiday season as we have been,” said Rory Harvey, vice president of General Motors Co’s Cadillac brand. With the supply of vehicles at a third of normal levels, he said, “why would you?”

In 2019, General Motors spent an estimated $106 million on TV commercials for Cadillac and $16.4 million on digital ads for the brand, according to estimates from ad measurement and analytic firms EDO and Pathmatics.

Automakers are not alone. Global supply chain disruptions are prompting inventory issues across multiple categories including electronics, toys and apparel. Online shoppers saw more than 2 billion out-of-stock messages last month, more than three times the amount in October 2019, according to the Adobe Digital Economy Index.

Carmakers – usually big spenders during the fourth quarter – spent about $23 million or 10% less on digital advertising between late July to the end of October when compared to the same period in 2019, according to Pathmatics, which compiled data for Reuters. The 2019 data excludes Instagram ads.

The industry also spent $57 million or 5% less on broadcast television commercials during that time frame compared with 2019, according to estimates from EDO.

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“Winter sales events are such an institutionalized event, that it’s hard not to do them,” said Kevin Krim, chief executive of EDO. “But if they do their jobs really well, they could make people unhappy if the cars aren’t there. It is a December to forget for the automakers.”

Ford Motor Co has begun a holiday campaign called “Get Holiday Ready,” to promote its F-series pickup and certain SUVs. Lexus is also going ahead with its annual “December to Remember” advertising campaign, which popularized the idea of a luxury vehicle as a holiday gift.

“For us to change it dramatically, it’s too important to the brand. It’s part of our DNA,” said the brand’s U.S. vice president for marketing Vinay Shahani. Lexus’ spending will be “in the ballpark” of past years, he said.

However, Shahani said, “certainly you could expect the offers may not be as compelling” as two years ago.

At the largest U.S. auto retail chain, AutoNation Inc, the plan is to spend less on advertising than in the pre-pandemic year of 2019, said Executive Vice President Marc Cannon. Discount offers from automakers “will be light all around,” he said.

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Media companies that sell ad time for national television commercials could feel the brunt of the disruptions, said Michael Nathanson, an analyst with MoffettNathanson, in a research note last week.

Nathanson said he expects the total amount spent on national TV ads to decline by 1% year-over-year in the fourth quarter, as car manufacturers, which continue to struggle with chip shortages, could run fewer holiday commercials, he wrote.

That would also represent a 7% total decline in ads from 2019, in pre-COVID times, he added.

KEEPING THE ATTENTION

Looking ahead to the holidays, and beyond the car lot, some of shoppers’ favorite brands may have temporary marketing blackouts, due to inventory and labor shortages.

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Department stores, including Macy’s and Nordstrom’s, spent 8% less on TV commercials from July 30 to Oct. 30 compared to the same period in 2019, according to EDO estimates.

Casual dining restaurants have slashed TV commercial spending by 56% compared to pre-COVID levels, as dine-in restaurants have struggled with fewer wait staff.

However, the supply chain disruptions have not caused data analytic firms to lower projections for total ad spending this year because brands want to maintain a customer’s attention for when products are finally available, said advertising experts who spoke with Reuters.

Data from Pathmatics, which tracks internet display ads and digital ads on platforms like Facebook and Twitter, shows that the top 25 advertisers in four key sectors – packaged goods, retail, electronics and gaming – doubled their spending over the past three months compared with the same period in 2020. For instance, e-commerce giant Amazon spent $304 million during the three months this year versus $176 million during the same period in 2020. Target spent $89 million versus $46 million during the same period in 2020.

Some advertisers have simply switched their messages to market products they have in stock while others merely want to keep their brand names in the front of consumers, said Bret Sanford-Chung, managing director of marketing consulting at KPMG.

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(Reporting By Joe White in Detroit, Sheila Dang in Dallas and Arriana McLymore in New York; Editing by Vanessa O’Connell and Aurora Ellis)

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Tesla sold 52,859 China-made vehicles in November – CPCA

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December 8, 2021

BEIJING (Reuters) – U.S. electric vehicle maker Tesla Inc sold 52,859 China-made vehicles in November, including 21,127 for export, the China Passenger Car Association (CPCA) said on Wednesday.

Tesla, which is making Model 3 sedans and Model Y sport-utility vehicles in Shanghai, sold 54,391 China-made vehicles in October, including 40,666 that were exported.

Chinese EV makers Nio Inc 10,878 cars last month, a monthly record high, and Xpeng Inc delivered 15,613 vehicles. Volkswagen AG said it sold over 14,000 ID. series EVs in China in November.

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CPCA said passenger car sales in November in China totalled 1.85 million, down 12.5% from a year earlier.

(Reporting by Sophie Yu, Brenda Goh; editing by Jason Neely)

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Renault Zoe goes from hero to zero in European safety agency rating

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December 8, 2021

By Nick Carey

LONDON (Reuters) – French carmaker Renault on Wednesday received a blow for its popular Zoe electric model, as the European New Car Assessment Programme (NCAP) gave it a zero-star safety rating in tests that are standards for Europe.

The carmaker, which is cutting costs and working to turn around its performance after overstretching itself over years of ambitious global expansion, also received a one-star rating for its electric Dacia Spring model.

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Euro NCAP said the latest Zoe had a worse seat-mounted side airbag than earlier versions. Euro NCAP noted the Renault Laguna had been the first car ever to receive a five-star rating in 2001.

“Renault was once synonymous with safety,” Euro NCAP secretary general Michiel van Ratingen said in a statement. “But these disappointing results for the ZOE and the Dacia Spring show that safety has now become collateral damage in the group’s transition to electric cars.”

In the year through October, the Zoe was the third top-selling fully-electric car in Europe, behind Tesla’s Model 3 in top place and Volkswagen’s ID.3.

In a press release titled “Hero to Zero,” UK insurance group Thatcham Research noted the Zoe had initially received a five-star rating back in 2013.

“It’s a shame to see Renault threaten a safety pedigree built from the inception of the rating,” said Matthew Avery, Thatcham’s chief research strategy officer and a Euro NCAP board member.

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Eleven cars received ratings in Euro NCAP’s final round of tests for 2021, which did not include Tesla models.

A number of other vehicles received five-star ratings, including BMW’s electric iX, Daimler’s electric Mercedes-Benz EQS, Nissan’s Qashqai and Volkswagen’s VW Caddy.

(Reporting By Nick Carey; Editing by Bernadette Baum)

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Weibo shares close down 7.2% in Hong Kong debut

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December 8, 2021

By Scott Murdoch

HONG KONG (Reuters) -Chinese social media giant Weibo Corp’s shares closed 7.2% below their issue price in Hong Kong on Wednesday, as it became the latest U.S.-listed China stock to seek out a secondary listing closer to home.

The Hong Kong debut was in line with a fall in Weibo’s primary listing in New York after a torrid week for U.S.-listed China shares, which are facing greater U.S. regulatory scrutiny and also under pressure from Chinese authorities.

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Weibo, which raised $385 million for its Hong Kong listing, opened at $256.20 and closed at HK$253.2 after a volatile debut session.

The stock had been priced at HK$272.80 each in its secondary listing in which 11 million shares were sold.

“For Weibo, it’s a matter of timing. The Hong Kong market had started to rebound this week and now we are seeing some softness emerging in the market,” said Louis Tse, Wealthy Securities director in Hong Kong.

Weibo’s fall came as Hong Kong’s Hang Seng Index closed Wednesday up 0.06% while the Tech Index was 0.03% higher.

Some major stocks such as Alibaba Group Holdings, down 4.35%, were off sharply as sentiment towards tech majors remains fragile.

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“The listing market in Hong Kong is very lukewarm right now,” said Dickie Wong, Kingston Securities executive director.

“Plus, there is regulatory pressure from the (U.S. Securities and Exchange Commission) on Chinese companies to disclose basically everything within three years.

“So there is a major trend that most of the U.S.-listed Chinese companies will seek secondary or dual primary in Hong Kong so they can exit the U.S. market if they need to.”

Ride-hailing giant Didi Global decided last week to delist from New York https://www.reuters.com/technology/didi-global-start-work-delisting-new-york-pursue-ipo-hong-kong-2021-12-03, succumbing to pressure from Chinese regulators concerned about data security and denting sentiment toward Chinese stocks.

Hong Kong and China’s mainland STAR Market have attracted $15.2 billion worth of secondary listings from U.S. listed Chinese companies so far this year, according to Refinitiv data.

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“The moves are probably based on the increasing recognition that the U.S.-China decoupling will not stop and will proceed steadily,” said LightStream Research analyst Mio Kato, who publishes on Smartkarma.

“I would expect a continuous flow of listings from New York to Hong Kong over the next year or two.”

The U.S administration is progressing plans to delist Chinese companies if they do not meet the country’s auditing rules, which could affect more than 200 companies.

Chinese companies https://www.reuters.com/business/us-sec-mandates-foreign-companies-spell-out-ownership-structure-disclose-2021-12-02 that list on U.S. stock exchanges must disclose whether they are owned or controlled by a government entity, and provide evidence of their auditing inspections, the Securities and Exchange Commission (SEC) said last week.

(Reporting by Scott Murdoch and Donny Kwok; editing by Richard Pullin and Louise Heavens)

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