It would probably be a good thing to claim that I am a regular reader of Financial Times for purposes of snootiness, but in point of fact, it generally occurs only when I am spending an inordinate amount of time in an airport and pick up a copy for free in an airport lounge. It so happened that I got one this past December 8. And as I went through it, I began to see how the auto industry has a rather extensive effect throughout the world, financially and otherwise.
So let’s go through it and see.
- • Page 1. Opening paragraph of a story by Pilita Clark: “ExxonMobil and Shell would cease to exist in their current form in 35 years’ time under measures that UN negotiators are considering for a legally enforceable global climate pact to be sealed in Paris next year.” Seems that climate talks are addressing CO2 emissions. One proposal has it that energy companies would be responsible for the emissions. Good thing for them auto companies are doing such a good job of controlling what comes out of tailpipes.
- • Page 3. Another story by Clark on the climate talks, but this one of the consequences of low crude prices. The author writes: “A prolonged dip in prices has the potential to encourage the use of petrol-guzzling cars and other sources of greenhouse gases that countries aim to curb in a global climate deal in Paris at the end of next year.” Arguably, this is almost the case because the classic “gas-guzzler” is no longer. Sure, the Bugatti Veyron gets 10 mpg combined, but the number sold on a global basis is barely a rounding error when you take the number of cars that get 20+ mpg, so even if there were suddenly a run on gas-guzzlers, the consequence would be minimal at most.
- • Page 17. Milan is offering drivers vouchers for public transport if they don’t drive. According to the story by Andy Sharman, Milan has the worst traffic congestion of any city in Europe or North America (based on data from Inrix). So the city is using a connected car device made by Octo Telematics in cars that have insurance from a company named Unipol. The telematics device provides information on where a car is located between the hours of 7:30 a.m. and 7:30 p.m. Leave the car parked all day, get a voucher worth €1.50.
- • Page 18. The woes of Uber, this time based on an alleged rape in New Delhi. Amy Kazmin writes, “Uber’s reputation is likely to be dented by the incident in a market anxious about safe modes of transport for women, especially at night. It is the company’s latest headache in India, after a run-in with the Reserve Bank of India over its payment system.” Although critics are quick to jump on Uber for various problems, let’s face it, it didn’t get a $41-billion valuation by not being perceived as, well, being valuable. Were it a noncontender, Uber would have long ago been over.
- • Page 20. A story on why BP is preparing to cut jobs because of the precipitous decline in oil prices. Writes Henry Sanderson, “BP has been divesting parts of its portfolio and is now a third smaller than it was four years ago, the company said. It plans $10bn of asset disposals by 2016 as part of its restructuring plan.” Remember that one of the factors that really hurt U.S. OEMs in 2008-09 was high gas prices. They divested. A couple filed for bankruptcy. While I’m not suggesting BP will get there, surely seems as though things are changing.
- • Special report, page 1. A story about Japanese electronics group Sharp, the company that makes iPhone screens. According to the piece by Kana Inagaki, “Sharp, which has been supplying displays for cars and aircraft for two decades, is betting that more displays will be installed in vehicles together with cameras and sensors to enhance safety features.” In addition to Sharp’s attention on auto, the story says that Sony is also beginning to concentrate on providing sensors for vehicles. Yes, electronics is where there will be huge growth even for companies that are probably better known for products that aren’t vehicle-related.
Yes, oil and gas are used for things other than cars. Yes, Milan and other urban centers have issues that go beyond gridlock. Yes, new companies like Uber face all manner of challenges, but functional and reputational. Yes, Sharp is still going to be selling a whole lot of iPhone screens. Yes, the Financial Times of December 8 had numerous stories that were not vehicle related, even at a stretch.
But it is clear that the importance of the auto industry to the global economy is something that is hard to overestimate.
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