10/12/2015 BBC Business Live


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This is Business Live from BBC News with Aaron Heslehurst and Ben


Unveiling the source of the scandal - Volkswagen prepares to release


the results of its investigation into how 11 million of its cars


Live from London, that's our top story on Thursday


Fall from grace - it was the world's biggest car


marker, but today VW will try and explain how its cars broke


emission test rules for over a decade.


Also in the programme: As the smog red alert lifts in Beijing,


so Chinese car sales grow at their fastest pace in two years.


Just what China needs! And the global market not tracking the


losses we saw in Wall Street and Asia.


And everyone has a book in them, so the saying goes.


But what if publishers and editors don't agree that


We meet the boss of self-publishing website Blurb.


And as one one woman admits to recruiting chefs for her cooking


business via the dating app Tinder, we want to know what's the most


Send us your stories of being hired or fired.


It was the largest car maker in the world, and now it's


the source of one of the biggest corporate scandals in history.


In less than two hours' time, the embattled car giant Volkswagen


will release the results of its long-awaited internal


investigation into the emissions rigging saga.


The company has been looking at how its diesel vehicles managed


It isn't clear what is expected from the release, but what is clear


is how much the scandal has hurt VW's bottom line.


So far, 11 million cars have been recalled globally.


These include Golf models and the Audi A3 from 2009 to 2015.


As well as footing the recall bills, VW is also facing lawsuits


from governments and motorists around the world.


UK sales in November were down a fifth from the same month a year


ago, despite the rest of the market making near 4% gains.


In the US, Volkswagen sales were 25% for the month as the extent


of the emissions scandal became clear.


More than ten billion euros - $10.1 bn - has been wiped off VW's


It has also cost chief executive Martin Winterkorn his job.


VW has just posted its first quarterly loss in a decade after it


took a $6.7 billion provision to help cover costs for the scandal.


But many experts believe the total bill could come to more than $30


billion as legal bills, fines and the cost of


George Galliers, Equity Research Analyst from Evercore ISI,


Welcome to the programme. We saw the numbers there. Talk us through your


view of this, because in different parts of the world, there are


different impacts on what people think of the scandal and how they


are voting with their feet and whether they are buying VW cars.


Exactly. What we are seeing, in the UK, sales were down 20%. In the US,


you have seen a sharp drop in sales, 24%. But in much of mainland Europe,


Volkswagen's market share is in-line with where it was tracking in the


first nine months of the year, so it doesn't look like consumers are


backing away from the box what brand.


We get an update this morning on the scale from VW's point of view. Some


analysts are ashamed that this could be good news for Volkswagen, a long


overdue restructuring and putting overdue restructuring and putting


the business in order and making it more efficient. Could it turn out in


the long run to be a blessing? That is the view we have taken. It is a


huge cost, around 20 billion year rose, but it has opportunity for the


company to address some of the inefficiencies around research and


development, purchasing and also high personnel costs. And we believe


the scandal will act as a catalyst for the company to take a closer


look at itself and look to remedy some of the rungs of the past. We


talked about the costs, 6.7 billion euros, but again, I am curious about


your thoughts. It is like the BP story. The costs of the scandal will


escalate, and some are now predicting 30 billion euros, just


over $30 billion. And we expect this to cost around 30 billion euros. We


think yesterday's announcement reduces that by around 10-15%. The


30 billion is made up of fixing the engines affected, 11 million


vehicles, the engines interacted by CO2, the legal implications, the


fines and impact on market share and pricing. It is a lot of money, but


not enough to do too much damage to Volkswagen. By the end of this year,


we think that Fox wagon -- Volkswagen will be sitting on offers


of 24 billion, so they have deep coffers.


Let's look at some of the other stories making headlines all around


the world. One of the Middle East's largest


retail chains has withdrawn Donald Trump products


from its shelves after he called for a temporary ban


on Muslims entering the US. The chain known as Lifestyle says it


has removed Trump Home products from its stores in the UAE, Kuwait,


Saudi Arabia and Qatar. Four tobacco companies are taking


the UK Government to court on Thursday over new rules


on packaging which they say From May 2016, all cigarette packets


will have to remove branding, The measures are aimed


at discouraging people from smoking. Australia adopted similar


legislation three years ago. Profit at Inditex, the largest


fashion retailer in the world and owner of Zara, says profits


soared 20% in the nine Net profit came in at more than $2.2


billion, giving the firm a strong Let's take a look round the world


at what's business stories Neil Woodford selling out of


Rolls-Royce. A lot of emphasis is placed on his actions, but he says


he has lost his long-term confidence in the business model. It is a big


blow for a company already facing a tough time. It has issued a number


of profit warnings and is facing major reorganisation. Plenty of


details there on the Rolls-Royce sale if you want them. Was that


Stephanie with Prince William? Yes! There you go. We don't need to see


that any more. That is a caption competition in itself! What is Steph


saying to Prince William and what is he saying to her? We will read out


the best ones later on. OK, let's go and take a look at the other


business stories. Celia Hatton is in Beijing. We thought that car sales


were slowing in China, but they have jumped 20%. And I guess with all the


smog stories of late, this is the last thing that China needs. The


moral of the story here is that tax breaks really work in China. Car


sales were down for much of the year, they had flat lined. Many


people were predicting the end to the growth of the car industry in


China, but really, the Government stepped in, they have the cost of


taxes on small cars in China, that represents 70% of the market here,


and that meant a lot of people took the decision to go out and buy a


car, so this is the second month we have seen explosive growth. Car


sales up 20% in the month of November, the biggest jump in two


years. OK, Celia, good on you. Thank you


for that update. So, car sales are up in China at the moment. I want to


talk about Asia. Some slipped or were fairly muted


because of the lower oil prices. The slump in the black stuff


continued to feed the slowing We saw Wall Street off. The rest of


Asia following. Tokyo's Nikkei closing


down at a five-week low. That said, one notable move


in the region was the Aussie dollar Australian jobs numbers surged


in November, pushing unemployment Europe expected to track the losses


on Wall Street and in Asia. We continue seeing this


seven-week low in Europe. The FTSE 100 is down, the Dax and


Cac fairly muted. The plunge in commodity prices -


again everything from iron ore, copper, aluminium


to the black stuff. Let's go and find out what should be


the big news over there today. More signs of continued strength in


the labour market. The number of Americans filing for a diploma last


week it's better to show that. They are near levels last recorded in the


70s. Also improving, the Government was my finances. The Treasury


Department will likely report a Treasury deficit of $68 billion


complied to $138 billion last month. Import and export prices are


expected to have both dropped. Meanwhile, photo shotmaker Adobe is


expected to report fourth-quarter earnings in line with estimates, but


the company has warned it will take a hit because of the strong dollar.


Their stock is up 26% this year. As always, Nada in New York for us.


Joining us is Anne Richards, Chief Investment Officer,


Let's talk about commodities. When you look at the actions of the


commodities firms, be that BHP, Glencore, Rio, there could be some


restructuring in the pipeline and the amount of debt these companies


have on their books. We are at the end of a quite a long cycle, at


least we hope it is the end. It does feel we are very close to that point


of maximum pain, because every single supplier that comes out to


the market with a statement right now, it is either cutting costs or


raising capital or trying to sell assets. A lot of debt has gone into


these companies to fund that growth, because everybody thought China was


it growth ever, and it is still growing, just not at the pace


before. That risk of some sort of fear of a credit default is


beginning to build up, so we see this acceleration of announcements


from companies, and that is giving the broader markets a bit of


concern. I am interested in this. We do hear different opinions. You say


we are hopefully at the end of this cycle, this lower in terms of the


prices, but it seems everybody had their eggs in one basket, which was


China. China still has growth but is slowing. Experts say they can't see


the light at the end of the tunnel just yet in terms of China returning


to better growth. So if it doesn't, these commodity prices won't go up,


will they? China is still growing at 6%, give or take. It is still more


than twice the rate of the UK. It needs to, because it is a larger


country. Not necessarily. It is very big, and so incrementally more


growth is more beneficial for demand. So the fact that it isn't


growing as fast as it was before and there isn't another China act there


to take on the Batten means we have to get used to a lower global level


of growth. Thank you very much. We are going to talk about shoes and


dating apps and allsorts of things a little later when we have a look


through the papers just to clarify. Still to come: Why penning your best


selling novel could be a lot easier We meet the boss of the biggest


self-publishing company You're with Business


Live from BBC News. It's been a dramatic week for mining


companies with a big slump There could be some more


big news from Glencore, We were just discussing some of the


headline issues for this week. Glencore could have an update for


us. It holds the distinction of being the worst performing stock in


the in Tyre FTSE 100. It has lost 70% of its value, and no surprise it


is in the commodity area. We heard from Anglo-American who had a


radical restructuring, 85,000 jobs to go, cancelling the dividend and


selling 35 minds. Glencore has said it is going to try to reduce its


mountain of debt, and that is a problem a lot of these companies


have, falling prices and a mountain of debt. It is going to try to


reduce it debt burden to 18 billion, and sell off some of its business is


to try to get its enormous balance sheet under control. It is the fatal


cocktail of declining prices and mountain of debt. So far this


morning, investors like what they have heard, the stock is up almost


8%, not out of the woods yet but early signs are investors like what


they hear today. Simon, thanks for that. We will talk


to you soon. You didn't even hear me at! Put your ear back in! Just


quickly, a big day-to-day. The UK interest rate decision. How long has


it been that it has been at a half of 1%? Since March 2000 and nine. We


have the interest rate decision again today, not expected to change,


all eyes really an America's central bank. And that meeting is next week.


So it is likely that America will fire the starting gun first before


the UK. But worth watching to see whether there is a change. There


could be a split of the nine members of the Monetary Policy Committee.


In the Guardian this morning, this is an undercover investigation by


the Guardian looking at conditions in the warehouse for Sports Direct.


They found some tough working practices. They say there is a lot


of concern for those workers. Our top story: Volkswagen is set


to unveil how 11 million of the company's cars


were falsifying emissions tests, We have been discussing the


implications for the business. Some are suggesting a long overdue


restructuring of Volkswagen could come as a result, and that could be


good news for the company in the long one, despite the awful


headlines it has faced over the rigging of those emissions tests.


Now, the famous saying goes that "Everyone has a book in them,


and in most cases, that's where it should stay".


But for those who really want to pen a bestselling novel,


or even just collate their wedding photos into an album,


In 2006, Eileen Gittins launched Blurb.


It now claims to be one of the world's biggest


Before Blurb, amongst others, she worked at the photography


For Blurb, customers need to download software and from there,


they can compile their photographic book.


Popular books include wedding photo albums,


Blurb offers a cheaper alternative for book printing


than traditional designer/printer setups.


Customers can also order ebooks as well as, or instead of,


Earlier, Eileen sat down with me and explained how the publishing


industry is shaking off its traditional image.


About two years ago, we developed our own e-book products


and tools so that people could make e-books.


And honestly, I expected that by now,


print would be down and e-books would be on the rise.


What is happening, in our world at least,


When people buy e-books, they also buy some


print copies, and when people make a print book, they also


So are you a printing company or you a publishing company?


In a similar way, we are a technology enabled


We are a technology platform that enables people


like you independently to publish, and we


support the whole back end, the printing, the e-book output,


You can sell on Amazon, the whole nine yardss.


You founded a couple of tech companies.


You went through the bubble bursting.


It's been an incredible path to where you


Back in the day when I worked at Kodak, we were doing things


The company, as a public company, needed to keep those


And so it just couldn't let go of that film engine.


When we used to talk about Kodak, you were there


It was a company that invented digital photography,


and the company went, "It's not going to catch".


It was so frustrating to be sitting on technology that the world wanted


and needed, but the business model of the company,


being a public company, just could not


abandon the film-based business, because it was the cash cow.


At the moment when the market crashed and


the bubble burst, VCs, as you may know, held back.


They were like, no, we can't continue to invest


because the horizon for an exit, which is


their business model, looked like it was extending out


Nothing was getting out, nothing was going public.


Many of us had to shutter the doors, lay people off, try to keep


One of the things that happened from that that


informed Blurb was that when I founded the company,


One was, we needed to build something that people were willing


Not "If we build it, they will come".


Actual products that people historically were willing to pay


What other business stories has the media been taking


Anne Richards from Aberdeen Asset Management is joining us


The Times says the world is running out of oil storage. You don't think


about this. We are only out of space to put its because of this huge


supply glut. We have had this huge supply glut, and we have something


like 3.5 billion barrels worth of storage globally. And more than 3


billion of that is already full, so there is not much margin for error.


To put that in context, 3 billion barrels is more than one month's


total global demand for oil. So what happens if they all get filled up?


Do you build new storage or do you cut production? Nobody is prepared


to cut production. Well, if there is nowhere to put it, the cost of


storage will go up. There is talk of floating tankers, but some of the


highest cost producers will have to exit. This highlights the problem


with commodities at the moment. That has been reflected in the cost of


insuring against default for some of the big companies. We will hear from


Glencore and later with an update on what they intend to do as a result


of that slump in prices. And this is being repeated across the industry.


It is, because the cost of that default insurance for Glencore has


jumped noticeably. Part of the reason is that there is only a


limited number of ways to raise money. Selling assets- well, who


will buy? There are limitations. It feels like we are approaching that


crunch point at the bottom of the cycle. There is a nice story here. I


am a happily married man and I have no idea about Tinder. Me


neitherex-macro but I have heard stories. But I have never heard


about one for recruiting for jobs on Tinder.


Yes, a start-up founder has been using the dating site to get hold of


male chefs. She says it is purely for business purposes. She runs a


cooking company and she says it is better than using the official site,


LinkedIn. It is interesting how we see social media for personal stuff


beginning to meld into social media for professional stuff. LinkedIn has


always been professional. Twitter has moved from really personal do to


much more professional, corporate advertising. It will be interesting


to see if Tinder becomes commercialised in that way. But I


think we are talking about a couple of chefs. I am not sure if this is a


game changer. What attracted her eye was that they were wearing aprons. I


am not sure if that is a generalisation that can be taken


into other cases. The key to getting a job if you are a chef is to wear


an apron in any profiles. No, the key is what they were wearing under


the apronex-macro we can't leave the show on that note. We have more


time? Oval. So, the shoes? What about these 3-D printed shoes? This


is a fantastic idea. If you are female, shoes are pointy stock I


have never met a woman with pointy toed feet. So this is an idea of a


digital cobbler. Still you can take pictures of your feet in 3-D and


somebody will have to issue that fits your feet. And since I have


duck shaped feet, I think this is terrific. Next time you are on, show


us. Talking appointed feet, you have never met my wife. Thanks very much.


See you soon. It was another wet night across


northern England. In Cumbria, we saw 68 millimetres of rain in the space


of 24 hours.


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