GM lacks capacity as car market swings up; VW breathing down Toyota’s tailpipe as it gouges bigger share of global market; New York attorney general goes after Wall St bonuses.
GM lacks capacity as car market swings up
Bankrupt General Motors may reopen some of the 14 factories it closed in the past year, saying it can’t produce certain vehicles fast enough. That’s one of the penalties you pay when you go from being a bloated giant with huge over-capacity to an anorexic stripling as a result of the events leading up to the October 2008 market crash. Now the company says plants making the Chevrolet Equinox, GMC Terrain, Cadillac SRX crossover vehicles, and the Buick LaCrosse sedan can’t satisfy demand. GM stopped short of saying plants would be reopened, but hinted that the company could hire workers again if it perceived consumers are returning to the brand. In the meanwhile, the once-mighty manufacturer will try and raise output at existing plants. Photo: Reuters
Read more: AP
VW breathing down Toyota’s tailpipe as it gouges bigger share of global market
Watch out Toyota, Volkswagen’s out to get you, but it’s going to take a while. VW, Europe’s largest carmaker, sold 6.29 million cars and sport-utility vehicles worldwide last year, and on the back of that record, says it’s sticking to its plan of overtaking Toyota as the world’s biggest carmaker by 2018. Some manufacturers are back with a bang at the Detroit car show. VW saw 2009 sales increase 1.1% from 2008, with its global market share rising to 11.4% from 10.3%. Toyota has the best profit margins in the industry, so VW will also want to emulate that. The German manufacturer’s sales surged 37% in China, which overtook the US as the world’s largest vehicle market last year. China’s market now buys some 15% of all VWs sold. Analysts reckon VW has positioned itself better in emerging markets than competitors, successfully countering a shrinking European market.
Read more: Bloomberg
New York attorney general goes after Wall St bonuses
New York’s attorney general, Andrew Cuomo, is demanding to know how eight of the biggest US banks will structure bonuses on Wall Street. He is reported to want extensive information from the recipients of taxpayer money, and is especially interested in what clawbacks and vesting periods are built in as checks and balances, after industry executives admitted that sums being considered for bonuses go up to eight figures. The banks include Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, and Morgan Stanley. Cuomo, along with US President Barack Obama and the American public, is incensed that bankers and brokers are soon to pay themselves fortunes in bonuses, in a market that is recovering by way of federal bailouts.
Read more: The New York Times
Obama seeks to repay US public for federal bailouts
Talking about bailouts, US President Barack Obama will try to recoup as much as $120 billion of taxpayer money that rescued the US financial system, and will be looking at taxing large banks, according to administration and congressional officials. As a matter of political urgency, Obama needs to reduce the giant US budget deficit, which is at a level not seen since World War II. To do this, he also has to discourage the excessive risk-taking that led to a near implosion of Wall Street in October 2008. His decision comes on the back of public anger after financial houses reported record profits and began paying out huge bonuses. Millions of Americans are still out of work after markets collapsed, and they’re not taking kindly to the self-congratulatory largesse of the very institutions that brought the house down.
Read more: The New York Times
Fiat says Alfa Romeo is not for sale
Fiat chief executive, Sergio Marchionne, insists the company’s luxury sports car unit Alfa Romeo is not for sale. Instead, he is working to determine a strategic direction for the well-known brand, which may see it reintroduced to the US market. Fiat took a 20% stake in beleaguered US carmaker Chrysler in 2009, as part of the manufacturer’s bankruptcy restructuring. He says 2010 is a make-or-break year for Alfa, because of the marque’s ambition to compete with higher-end German cars, which so far hasn’t gone all that well. Marchionne says he believes Chrysler’s US sales will rebound in 2010, following a 36% decline in 2009, allowing it to hire engineering and development workers again. The US industry has been hamstrung by the losses brought about by the global recession, including the bleeding of talent and skilled workers as a result of widespread layoffs.
Read more: Reuters
Heineken buys into Mexican market, with eye on Americas
Heineken will buy Fomento Economico Mexicano SAB, producer of Dos Equis beer, in a deal valued at $7.7 billion. South Africa’s SABMiller pulled out of bidding for Femsa after it said it wouldn’t match Heineken’s offer. The Dutch brewer will issue new shares that give Femsa a 20% stake in the Heineken group. Femsa is the smaller of the two major Mexican breweries, and the all-stock deal is designed to tap faster sales growth in South America. Mexico, which strictly speaking is in Central America, is the world’s fourth-most-profitable beer market. Beer markets in Europe are becoming saturated, so Heineken, which distributes Femsa beers in the US, says it will use the acquisition to sell Femsa brands in Europe and Heineken in Latin America. Global competition in the world’s beer markets is fierce, with South Africa’s own SABMiller at the forefront of global acquisitions. In the meanwhile, anything that brings down the price of liquid gold, while increasing choice, is to be welcomed.
Barnes & Noble ramps up textbook rental business
Here’s a good idea that could turn around the dismal record of South Africa’s education authorities in providing pupils with textbooks. Bookseller Barnes & Noble is to launch a textbook rental programme for US college students, making it the newest entrant in a growing business sector. The rental books will be available though campus bookstores or their websites. The project was piloted in three of 636 campus booksellers, but has now been expanded to 25 retailers. The books will be rented for 42.5% of their original price, for the entire term. Barnes & Noble bought back its College Booksellers unit from its chairman last year in a deal worth $596 million. The idea of rental textbooks is one that could really solve some of South Africa’s educational woes. But the rental price would have to come down substantially in this country, although a full deposit might be in order to stop them disappearing from the shelves altogether.
Read more: The Huffington Post
Ford previews the prototype of the all-electric Focus
Ford has unveiled what it calls its “world-beating” new-generation Ford Focus at the Detroit car show, but what’s much more exciting is it intends to sell an all-electric version of the vehicle from next year. Ford says it’s noticed how fast the car industry and consumer tastes are changing (well done, Ford!), and in another sign that the company is moving with the times, it says the price of the electric car will be competitive with other electric vehicles, such as Chevrolet’s Volt. Getting fume-emitting cars off the road is seen as critical in preventing greater global warming. And while Ford won’t openly admit that it’s being driven by greenies and bunny-huggers, it’s recognised, at last, that cleaner compact cars are the way to go. With 80% of Ford Focus parts being common around the world, the US carmaker says it’s geared to provide an affordable product that offers quality, fuel efficiency, safety and technology benefits. Long live common sense!
Read more: Los Angeles Times
Big-hitting fund seeks to rescue recession-clobbered Eastern Europe
There’s gold in them thar debt, just ask the hedge funds (the ones that are still standing). So now, Vienna-based fund manager CRG Capital will join the European Bank for Reconstruction and Development and World Bank’s private-sector arm, the International Finance Corp., in buying distressed corporate assets in Central and Eastern Europe. The broad intention is to raise up to $300 million to help the region recover from recession. CRG says the fund will be similar to a private equity fund, buying cheap assets and turning them around before selling them on. CRG will later announce more new funds for Eastern Europe that focus on non-performing loans and distressed real estate assets. The markets are still rickety, though, so the strategy is one of cautious optimism.
Read more: The New York Times
Google gets walloped for ignoring intellectual property rights
Google’s battle with News Corp’s Rupert Murdoch over free content has taken an individual turn and the company may soon find itself paying monetary penalties to disgruntled authors of books. It’s agreed to hand over a list of books by Chinese authors that it digitised without their permission, and wrote to an association of 8,000 Chinese writers saying sorry for contravening their intellectual property rights. Google now says it will quickly work on an agreement on digitising books, after Chinese, American, French and German writers sued it over the digitisation project. To date, Google has believed it can just scan anything and everything and get away with it scot free. That’s pretty interesting thinking for a company that throttles competitors who try to emulate its business models and opens up a new chapter over copyright issues in the digital era. The clash between Google and writers is similar to its problems over its Books Search project, which seeks to digitise every known book and make the contents searchable online. Who gets paid, is the obvious question?
Read more: The New York Times
Alcatraz had some of the best prison food in the United States.