07/03/2017 BBC Business Live

This is Business Live from BBC News with Rachel Horne and Sally Bundock.

Va va voom - the press are at the Geneva Motor Show taking

in the latest models, but despite record sales

Live from London, that's our top story on Tuesday 7th March.

Stuck in first gear - we'll look at the problems facing

the European car industry ahead of the continent's

Also in the programme - snap, crackle and flop.

Shares in the company behind Snapchat fall 12%

following their sparkling debut on the New York Stock Exchange.

Let's see how the European markets have opened, not a lot of movement,

slightly up, slightly down, investors holding fire. We will find

out why later in the programme. Will the music stop playing

for the DJ who founded his own Later in the programme we'll speak

to the young entrepreneur hoping to connect students on campus.

Today we want to know... -- and Netflix are reported to be

working on choose your own adventure TV programmes, with actors filming

alternative endings, so let us know, what ending with July to change? --

what ending would you like to change?

European car-makers are gathered in Geneva for the annual motor show,

and they are celebrating record-breaking sales figures.

More than 15 million cars were sold in Europe last year -

that's the best result since the financial crisis.

But a sneaky peak under the bonnet of the continent's auto-makers

Yesterday, General Motors sold its European businesses

to the PSA Group - that's the company which owns

The deal highlights the gulf in profitability either

side of the Atlantic, and it's a problem that persists

In 2016, Ford announced a profit margin of 9.7% in North America.

This compares to just 4.2% in Europe.

It's a similar story for Fiat-Chrysler, which has

profit margins of 7.4% and 2.5% respectively.

Cars are an important export for many of Europe's biggest economies.

Given that national elections are due to take place in France

and Germany later this year, European governments will be keen

to keep their domestic car industries ticking over.

With me is BBC business correspondent Theo Leggett.

We have dragged him out of the newsroom! Good morning. Rachel

outlined the width in the profit margin that there is between North

American business and European business, why? It is very easy to

cut back over capacity and reduce costs if you are on the verge of

bankruptcy or have gone bankrupt, that is what happened to the North

American car industry during the financial crisis. General Motors and

Chrysler both filed for bankruptcy, they restructured, had talks with

the unions, changed pension arrangements, massively cut costs.

That did not happen in Europe, we had a subsidy of the car industry

with scrappage schemes and so one, so in Europe there is still too much

capacity, too many factories capable of making too many cars and not

running efficiently, even with the level of sales at the moment.

General Motors sold its European business to PSA, that was the

headline yesterday, but given the disparity in profits between Europe

and America, how will they square the circle? They will want to cut

costs and drive up the profit margins in Europe. The gob most

analysts predict that PSA group will have to cut some of its factories in

a few years. PSA chief executive has almost set out a beauty parade for

existing factories, which will be ranked according to efficiency. Once

existing agreements expire, we can expect cutbacks. The problem with

cutting back capacity in Europe is that it is deeply, deeply political.

Governments have stakes in car companies, the French and has a 13%

stake in PSA group, the German government has a stake in

Volkswagen, at least the state of lower Saxony does. Any attempt to

close a factory kicks up a political storm, that the problem.

What will be the gossip from Geneva? Geneva is a wonderful car show, car

makers come out with real exotica. I have seen a wonderful one this

morning, I am much how to pronounce it but it is produced by a

Singaporean company called Vander Electrics, developed in conjunction

with the Williams Formula 1 team. It is electric car, I have no idea if

it will work as it is meant to. Will you treat a picture for the viewers?

Yes. And Volkswagen has come up with a mobility concept, their idea of a

self driving car designed from the ground up. It looks like one of

those buggies you would travel around an airport in and the name

they have given it, self driving concept, they have called it Sedric.

We will check out your Twitter, for people who want to know what they

look like, his Twitter handle is @theothebald.

Airline passengers are suffering huge disruption due to the latest

five day strike by French air traffic controllers.

There is also a separate call to strike on Tuesday

More than 1,000 flights are expected to be cancelled this week

as carriers have been asked to slash their services by 25%.

Shares in Snap - the company that owns the popular messaging app

Snapchat - closed more than 12% lower overnight,

falling below the opening price from its first day of trading.

It's the first time its stock has dropped since the company listed

The fall follows advice from several analyst who've suggested investors

should sell amid strong competition from Facebook and Twitter.

A diplomatic row between China and South Korea have this that McGrath

has spilled onto the high street. Chinese authorities have closed

nearly two dozen retail stores of South Korea's Lotte Group

following inspections. It will hit the bottom line of one

of the largest companies in South Korea, the food and retail giant

Lotte, Korea 's fifth largest firm, it gets around 20% of its sales from

China but in the past week several of the businesses have faced a

backlash from hackers, customers, Chinese partners. Ten of its

department stores in China have closed and suddenly due to something

that seems completely unrelated on the surface, the building of an

American missile defence system, because Lotte had agreed to provide

so that South Korean land, which includes part of a golf course, to

allow the Americans to build a controversial missile defence system

which can shoot down ballistic missiles. The US says it is an

important line of defence against the North Korean missile development

programme, Beijing has lobbied heavily against it saying that the

powerful radars of the system are capable of monitoring Chinese

territory and it should not be allowed to go ahead. The Chinese, it

seems, are hitting back. There have been protests against Lotte, a

Chinese e-commerce site has temporarily closed the Lotte

shopping site, a Chinese snack maker says it will pull its products from

Lotte stores. It is the biggest duty free company in the world which

makes about 70% of its sales to Chinese customers, it said its

website was taken offline by a cyber attack. It is up and running again.

Chinese cosmetics retailer said it had scrubbed the name of Lotte from

its retailer, saying they would rather die than Kerry 's goods again

in the future. Lotte has said directly that any of these incidents

were linked to the missile project controversy. Thank you.

Well, the Dow Jones was down yesterday.

Then OK and the Hang Seng, not a lot of movement. Investors are concerned

about the lack of detail in President Trump's plans. -- the

Nikkei and the Hang Seng, not a lot of movement. We expect the interest

rate decision from the Fed next week, most expected to rise but

there is not a lot moving the market at the moment. In Europe, very small

movements. Let's go to Wall Street, with

similar and Hussein. On Tuesday the latest trade figures the January

will be released. It will show that the US trade deficit got better, to

$48.5 billion, up from $44.3 billion back in December. Trade was a big

part of Tres -- President Trump's election campaign, and these latest

figures will be looked at very closely by his economic team. Also

on Tuesday, the US Federal Reserve is expected to report consumer

credit figures for the month of January. Consumer credit is debt

taken on by individuals who intend to spend the money right away, so

things like credit cards or car loans. Consumer credit figures are

expected to have gone up to 17 point $10 billion, up from $14.16 billion

in December. Lots of economic data is coming out of the States. Let's

bear that in mind with the Fed meeting next week.

Joining us is Kathleen Brook, research director for City Index.

Nice to see you. Shares fell quite a bit for Snap, it is often volatile

when a brand-new company lists on the market which does not make

profits etc. But what is behind the fact that some indexers apparently

are blocking Snap from being included, put that in perspective

for us? They may block Snap because these big money managers that had to

buy every stock in an index do not like what Snap is doing, these are

tracker funds. Snap is saying that we want to list on these indices but

not give you any voting rights, so people will have to buy a large

amount of Snap and they do not want to not have a say. Snap wants to be

found a lead Company, the founder makes the decisions, get the acid

managers are saying if we have put a lot of money into the company, we

want to say -- yet the asset managers are saying. What we saw

with Google, Facebook and Alphabet, they have non-voting rights shares,

but they give those to company members or employees of the company,

they have caved and they do allow voting rights shares for these acid

managers. They have found a bit of middle ground. They are included on

the index, which is a very key thing and that is why a lot of analysts

are saying don't buy this show, it is not good for your future

prospects. We are told we had to leave it there, we will come back to

you. We have other stories to discuss in the papers, lots of

interesting stories. Still to come, will the music stop

playing for the DJ who founded his Later in the programme we'll speak

to the young entrepreneur hoping You're with Business

Live from BBC News. First, let's talk about the other

obsession in the UK, apart from the weather. House prices.

The latest House Price Index has just been published by Halifax.

It's shows that house prices rose 5.1% year on year in the three

Martin Ellis is a Housing Economist at Halifax and he joins us now.

Thank you for coming in. A rise of 5.1%, is this what you expected? We

are seeing a steady slowdown in the rate of house price increase. That

5.1% is actually about half where it was back in March last year. We have

seen quite a rapid slowdown over that period, but still quite a

robust pace of growth. We are still seeing house prices continuing to

rise, that increases still quite comfortably ahead of the rate at

which people's earnings increase on average, which is leading to

increasing affordability problems, putting prices further out of reach

for more and more people, which is causing a slowdown as it is putting

a constraint on housing demand. It is pretty much in line with what we

expect, we expect a trend to happen and we expect that to continue

during 2017. Can you give a sense of how it looks across the country,

where the hotspots are and where you are seeing this slowdown? These

figures do not give a regional breakdown, what is happening is the

slowdown is being driven by house prices decelerating, mainly in

London and the south-east. We have had a long period of very rapid

house price rises in the capital and we have seen that slowing down over

the last year to 18 months. That factor is really because of house

prices being so very high in relation to earnings and we are now

seeing mortgage payments taking up quite a sizeable chunk of peoples

income, it is the only part of the country where that proportion of

mortgage payments in relation to income is above the long-term

average, I think it is natural we should see that slowing in London

and the south-east. Lots of the of the country is seeing modest rises.

Thank you very much. Just Eat profits have jumped. The

online take-away food delivery service is also seeing its shares

rise today as well. Now let's get the inside track

on the latest startups Our next guest is a former music

producer turned entrepreneur. Rashid Ajami travelled from his

hometown of London to the US to study at Georgetown University,

but found it was difficult to His frustrations led to the creation

of a web-based platform called Campus Society,

which allows students to connect, Campus Society officially launched

in the UK in July 2016 and already has more than 250,000 registered

users on the platform. Ajami is now planning

a global expansion - first moving into areas including

Europe, India, Australia and China this year,

followed by the US in early 2018. Rashid Ajami, founder

and Chief Executive Officer of Campus Society, a digital

platform for the global A warm welcome. Thank you for having

me. It is a very new company. Yes. At the moment really just based in

the UK. But I must admit when I read about it and I learned about you, I

thought this is just what mark Zuckerberg was doing? It is about

knowledge sharing and creating a global student community. If I'm

studying anthropology in the UK and I'm interested in African culture, I

could reach out to someone in Africa and have a real-time interaction. It

is about bringing students together around topics they're passionate

about. Before you launched Camp Society, you were a DJ. What have

you taken from your time working as a DJ and working in the music

industry which has helped you with the launch of this start-up?

Building relationships is very important, having passion, marketing

branding has been helpful for me from the music. But I really felt

that this concept of building a student community was very important

so I put that aside because I really like to focus on this. Now you are

focussed on it. It is your full-time job. There is seven of you working

on this full-time? We're 30 people. Sorry, 30. You're making money. How

are you going to money advertise this idea? We want to share and chat

and be connected to people who are like-minded and who are students,

but how are you going to make money? First employers can connect and find

students to do virtual job interviews on the platform. Brands

can have a real-time interaction with students. It is more genuine

and universities who are looking for prospective students we can start

making that connection. Money advertisation is something we have a

lot of great ways to do it, but it is about helping the students. Has

anyone got hold of you, and spoken to organisations, it is just

students, it is an audience that companies are keen to talk to, isn't

it? Definitely. For us the main focus is growth. We want to become

the largest student community and bring all the world's students into

one place. Right now, it is about creating these communities and

bringing all these students together and that's where we're focussed.

Talking about money advertisation, you have an idea to introduce an

online currency specific to Campus. How would that work? The more you

contribute to this pool of knowledge, you gain this currency

online and we want to start to bring that into the real university world.

You can use it in your union and use it on campus. It is about giving

students this interesting currency based on how much they contribute.

So they would have to contribute and it would have to be valid

contributions and policed in some way to make sure that people weren't

just uploading stuff to go and feed themselves at the union? It is

important to have a very strong moderation. We have a strong

community team. We use artificial intelligence and we give the tools

to the community. So they can really moderate the different communities

that are happening. How will you get the organisations on board where the

students will spend this virtual money? So we feel because, you know,

sharing knowledge is so universal, it is integral to university, that

the universities will get behind what we're doing. So you're hoping

they will provide services really for nothing to students? Not a

Bitcoin but a campus coin? We want to get the universities to be part

of this and take care of the local experience. But they need to get

something in return? For us it is about bringing their students

together. It is on the local level bringing all the students to one

place, but as well as the global level and universities want to

connect with other universities. So we want to break down that barrier

and awe low all universities across the world to have these discussions,

these debates which aren't happening as much as I'd like to see

currently. Where do you the company in a year and in five years? What's

your vision? It is about getting, I'd like to see a few million users.

Really being this large community for students, moving into this

virtual currency and maybe virtual reality and being at the fore front

of knowledge sharing. In the meantime, until you are able to

money advertise it and make profits etcetera, you are relying on

investors, aren't you to pay your wages and the other 29? Yes. We have

great investors at the moment. They are really behind this concept. They

see the potential for money advertisation, but they see the

potential to change the way that knowledge sharing happens. All

right. We've got to leave it there. Thank you for coming in. We will

keep an eye on the Campus Society. The biggest names in the car

industry are in Switzerland Our Business Editor Simon Jack sat

down with Ford's President for Europe and asked him

what effect Brexit will Brexit already we can see the weaker

currency has a big impact on a company like Ford,

but we're optimistic that the EU and the UK Government can find

common ground so our critical industry that has so many

jobs to save, that there won't be a tear for any kind

of restriction on trade. We are a huge employer and a lot

of those employees are engineering jobs for global products

like transit and it is critical for the future of those jobs that we

are in a zero tariff environment. That's from Ford, the President of

Europe who was talking to Simon Jack.

We will be talking to the boss of PSA Group which announced yesterday

with General Motors it is buying General Motors European business.

That interview will be later on the BBC.

Kathleen Brooks joins us again to discuss.

Netflix have this idea of choose your own adventure where you can

decide where the plot goes next. Do you remember reading those choose

your own adventure books? Yes. Do you drink from the position bottle

go to page four. I never did that. I think it is a really interesting

dynamic, with Netflix you have had a really busy week. It's a Friday

night. I want them to make the decisions for them. I'm not sure how

many decisions I want to make. I would have a big row with my husband

because he would want one ending and I'd want the other ending. It would

just cause domestic arguments. If they make several endings you may

never get to the end of a show. It is hard enough to get to the end of

some of these shows. A box-set of endings. We have had good tweets.

Rosie said The Wizard Of Oz Is is one of the most disappointing

endings. Another viewer says, "I'm Spartacus." I can't remember how the

Wizard Of Oz Ended. Let's talk about the new factory, Nordic battery

plant. $4 billion worth. It sounds similar to what Tesla is up to? It

is set-up by former Tesla executives. They are looking at

opening the first European battery making plant in Scandinavia. That's

where they mine a lot of the minerals that need to go into the

batteries. I was shocked this is the first time that somewhere in Europe

has started buying or making these batteries and then added to that,

the fact that you know it is for Tesla or it will be for Teslament it

is not any of the European companies who are using the batteries and

really with pollution concerns etcetera, etcetera, should more

European car companies be thinking about electric? I think they should

do. We have been talking about hedge funds stockpiling cobalt which is

the mineral or material used in the batteries and it is saying here

there is a Finnish mine producing cobalt, one of the reasons why

they're looking at these countries, but whether those stockpiles of

cobalt could affect the industry? It pushes the prices up and it makes

them less attractive. Can we linger for a moment on this story that's in

the UK Just Eat profits? We have this rare luxury, we have time!

Let's talk about the online take away food delivery app. Pre-tax

profits 164% up for last year to ?91 million. It is doing extremely well.

It is going to expand globally. It is saying the market in the UK is

quite busy. There is many markets outside of Europe where there is not

much competition and they're going for it. It is one to watch, isn't

it? Fantastic performance. The CEO is leaving because of urgent family

matters, but he is leaving on a high. The outlook looks fantastic.

They have had 150% profit this year and looking for an extra 50% profit

next year. They just deliver whatever you want, don't they? You

have an app. You order your food from thousands of outlets. You

choose which outlet? They get it delivered fou and you pay through

their open tab I believe is the app. There is a couple of challengers

like Hungry House. They want to acquire Hungry House. The CEO is on

the move. It will be interesting to see who takes over in terms of what

the outlook is. It is a revolution. Do they deliver breakfast? That's

what I want to know!