Margareta Pagano: Three shocks for the world's big carmakers
Sunday 04 April 2010
Two big events last week on opposite sides of the world will shake up the car industry forever, but the way we drive is likely to change most dramatically due to a third, quieter upheaval.
In Oslo, the world's only "proper" electric carmaker, Think, opened cutting-edge new research facilities on the site of the Norwegian capital's old airport at Fornebu. Four thousand miles away in Beijing, China's biggest private carmaker, Zhejiang Geely, paid £1.2bn to buy Volvo from Ford. In one swoop, China gets Volvo's brand, its technology and dealership network as well as an elephant-style footprint as a luxury carmaker on the global stage. This last point is important as most of China's 100 car companies are tiny, designed only for the internal market.
Both events were, in the jargon, tipping points, which could see us all driving electric cars by the end of the decade. At Think's new headquarters, some 70 of the world's top design brains are working on an even more advanced battery than the one in its City car. Together with its biggest shareholder and battery supplier, the US-listed Ener1 group, Think will soon be switching to superior lithium-ion batteries. With $47m of new money from Ener1, and the Norwegian government-backed private equity group Investinor, Think is now rolling out more cars. With 1,500 Think City cars across Europe, the company has an order book for another 2,300 being made by another partner, Valmet, in Finland, which makes Porsche's Cayenne and Boxter. A new plant in Indiana is opening this year and there are plans for the Far East.
Think's electric-heads claim its model is the only real alternative to the petrol engine, as hybrids, LPGs and hydrogen solutions have been shown to be poor, and battery cars such as G-Wiz are dismissed in the trade as four-wheeled motorcycles with a bowler hat on top. It's the only one to have been certified by the EU and is also the fastest – up to 100km and with similar safety standards as a Ford Fiesta.
But Think City still costs a lot. That's why, to date, most of Think's buyers are politically driven; local authorities and power companies across Europe are buying them for their fleets to show how green they are. If the work now going on in Oslo goes according to plan, Think hopes the €25,000 cost of the car will come down for the retail market over the next two years, but there will be fierce competition from its Nordic rival in Gothenburg, and Nissan and Ford are forging ahead with their own EV models. With Chinese money, though, Volvo is expected to accelerate its own C30 EV – also using the Ener1 battery – as well as push the marque in the luxury market. It makes sense for Geely to be at the cutting edge; the Chinese have a huge domestic market, scarce energy resources and big cities so the smaller and more efficient the car the better.
But it's the third trend, emeging from Milan's prestigious technology polytechnic, which will give us the most profound change of all. Here Professor Carlo Vezzoli is working with some of our biggest carmakers to see whether it makes sense to lease cars instead of selling them. Volvo, Honda and Renault are looking at flogging "not cars but mobility". Vezzoli predicts leasing cars is the future; it's cheaper and more sustainable as the manufacturer takes back the cars to recycle. Imagine that, no more second-hand dealerships; no more Arthur Daleys.
Yes, women must have equal pay, but Harriet's bossy Bill isn't the way to get it
The big battle for equality in the workplace is due for a showdown this week. One of the most pressing Bills yet to go through the House before the election is called is the Equality Bill, Harriet Harman's baby, and it's causing all sorts of indigestion among business people – men and women.
Many don't like Harman's new reserve power in the Bill, which could be used to force employers to disclose all details of the race, gender and disability breakdown of their workers. It's no surprise the CBI's John Cridland is mounting a last-minute campaign to stop this power which, he warns, could be used to name and shame in a way which could be unfair to business. It's a dynamite clause, and has revived tensions between Harman and the Business Secretary, Lord Mandelson, who agrees with Cridland.
While I don't like the idea of burdening business with any more regulation than necessary – or the unbearable bossiness of Ms Harman – I can't see how business has anything to fear from compiling these figures. But the real issue we should all be concentrating on is the way business still pays men far more than women for doing the same job. Take a look at yesterday's report from the Treasury Select Committee into "Women in the City". Forget the headline numbers, which show that women earn 55 per cent less than men; that's because they do most of the lower-grade work. The point is the way the report shows the huge pay gap between men and women doing the same work in many areas of finance; particularly in accountancy, where it is actually getting wider.
The committee's report is right to recommend that firms should be encouraged to change rather than be forced to by law. With any luck, this Bill won't get through – it really does need more work.
Appropriately enough, the equality fisticuffs come in what's called the "washing-up" period, when Parliament scrubs up before electioneering starts. And Harriet Harman may yet be left holding the dishcloth.
Flower power: Cath Kidston pulls off a pretty deal
Another British businesswoman has pulled off a blinder. Sharp on the heels of Natalie Massenet, the ex-fashion journalist who has just sold her Net-A-Porter online shopping site to Richemont for £50m, comes Cath Kidston with another corker. Kidston, designer of 1950-style quirky prints, has sold a majority stake to TA Associates, the giant US private equity house, valuing her empire – 28 shops in the UK and five in Japan – at about £100m. Both started out as one-woman bands: Massenet created her luxury cyberspace fashion empire, which employs 600 people and turns over £120m, after trying to buy jeans some 10 years ago, while Kidston grew her business about 13 years ago from making ironing board covers.
Both women also show it's possible to make money from retail by doing something different – a lesson to the high street men who churn out the same old shops – and how they didn't have to worry about glass ceilings because they didn't have any to break. Watch out for more deals like these – it's the way women will increasingly do business; entrepreneurial talent is gender free.
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