TPT July 2012

Global Marketplace

In brief . . . › Facebook has a market value of nearly $105 billion, and its initial public offering on 18 May drew worldwide attention. Almost as riveting as the IPO itself was a news item about Eduardo Saverin, one of four co-founders of the social networking site. The event made Mr Saverin into a multi-billionaire with federal tax consequences that he chose to sidestep by renouncing his US citizenship and taking up residence in Singapore. The United States does not eliminate or reduce income tax assessments on those of its citizens who make their principal residence elsewhere. According to Reuters, “This makes America’s plutocrats qualitatively different from every other country’s super-rich.” While most of the reaction to the defection fell in the narrow range from anger to scorn, a few outliers took the view that paying a tax rate of 35% – and reducing his fortune by more than one-third – was too much to ask of the 30-year-old Mr Saverin. › According to the Wall Street Journal (27 April), American multinationals have been adding jobs – but mostly abroad. In the WSJ analysis, 35 big US-based multinational companies added jobs much faster than other US employers over the previous two years; but nearly three-quarters of those jobs were overseas. These companies boosted their employment at home by 3.1%, or 113,000 jobs, between 2009 and 2011, the same rate of increase as the nation’s other employers. However, notes the WSJ, they also added more than 333,000 jobs “in their far-flung and faster-growing foreign operations.” Automotive With European city-dwellers souring on car ownership, Daimler and BMW turn their attention to membership-based carsharing “Daimler AG is flooding Berlin with Smart cars to claim a greater share of Europe’s burgeoning rent-by-the-minute urban auto market.” Chris Reiter, of Bloomberg News , went on to report that in April the maker of Mercedes-Benz cars installed the largest fleet of its Car2go short-term rentals in the German capital, overwhelming Bayerische Motoren Werke AG’s (BMW) DriveNow offerings two-to-one. A result of the fading allure of car ownership in European cities, this pursuit of Berlin drivers marks a trend: fierce competition among auto makers to win over urban consumers and boost sales from services. To tap a growing customer base, Daimler and BMW are ramping up city-based services that allow drivers to pay by

the minute for the use of a car. According to Frost & Sullivan, a consulting group cited by Bloomberg , total membership in carsharing services in Europe is projected to surge to about 15 million people by 2020 from 700,000 at the end of last year. To put this in context, 13.6 million cars were sold in the region in 2011. (“Autos-by-the-Minute Flood Europe with 20-Fold Surge Seen,” 11 May) Mr Reiter observed that, for Daimler, its Car2go service – which like DriveNow costs 29 cents a minute in Berlin – is part of a strategy to retake the luxury-car lead from BMW by the end of the decade. He wrote, “Achieving the goal rests on its success in expanding its appeal, especially with younger drivers.” After Daimler started up the Car2go service in Ulm in southern Germany in 2008, BMW responded last year with DriveNow, a joint venture with rental company Sixt AG. The Munich-based company intends to overtake Daimler in services, matching the top position it has held in luxury-auto sales since 2005. BMW sold 1.67 million cars last year, outpacing the 1.38 million deliveries of Daimler’s Smart and Mercedes models. › Bloomberg pointed out that BMW’s DriveNow, which also operates in Munich and Düsseldorf, has “a lot of catching up to do.” Car2go has expanded to 12 cities, including electric- vehicle fleets in Amsterdam and San Diego, and plans to add an average of one a month this year. The expansion will reach 20 markets in Europe and North America, where DriveNow will compete with the likes of Massachusetts-based Zipcar Inc. The Daimler startup, which plans to break even in two years, targets 50 cities in Europe and 30 in North America by 2016. Car2go has 85,000 customers; DriveNow, 27,000. Mr Reiter said both services differ from station-based carsharing in allowing customers to start and end a rental anywhere in the service area, making one-way trips the norm. The cars are accessed and tracked electronically. Elsewhere in automotive . . . › Infiniti, the luxury division of Japanese auto maker Nissan, intends to begin making cars in China in 2014. For the brand to reach its aggressive sales target of 500,000 units by 2016, local production in the world’s largest automobile market is considered a necessity. In Infiniti’s first production outside of Japan, factories run by Nissan and its Chinese joint-venture partner will turn out two models. The Infiniti announcement on 20 April came on the eve of the Beijing auto show, a platform for both domestic cars and the global brands for which the Chinese have a perceived partiality. In the same week Ford Motor, of the US, announced it would build a $760-million auto assembly plant in the eastern city of Hangzhou, under a plan to double its Chinese production capacity to 1.2 million vehicles a year. Growth in China’s vehicle sales – which plunged from an astonishing 35% in 2010 to 2.5% last year – is forecast to rebound to about 5% this year: stronger than in either the US or Europe.

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July 2012