07/03/2017 BBC Business Live


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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!


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