GM’s sales rose to a record in China

GM, the biggest foreign carmaker in China, increased its sales with 68 percent to 230,048 vehicles last month. That is a record in China. They already sold 71 percent more vehicles this quarter then last year. GM China even surpassed the US deliveries for the first quarter of 2010. In 2009, the US was the most important market for GM, with a sale of 2 million vehicles compared to 1.83 million vehicles in China.

GM aims to increase its China sales to 2 million vehicles this year, by introducing ten new models. This increase doesn’t mean a growth for GM China. Rising sales are encouraging the carmakers to add production capacity in China, even as the growth rate may slow down this year. Because of the crises there were some serious consequences for GM, but since last year GM is doing it much better.

The Chinese automotive market transcends gradually the American market in volume. The American market stays the most important in turnover. Chinese costumers prefer smaller cars, like the Hyundai Elentra or Buick Excelle and the Chevrolet Cruze of GM. Also Toyota, the largest carmaker of the world, increased its sales in China.

The most important reason, in my opinion, that causes the rise of the sales in China is due to the Chinese government. They halved the sales tax on new vehicles and they set aside subsidies for customers who replace their old models. Because of these measures, the government helps stimulating the demand and protects their own market.

http://www.tijd.be/nieuws/ondernemingen_industrie/GM_boekt_recordverkopen_in_China.8900153-434.art

1000 prices have been decreased by Delhaize

Delhaize has decided to cut prices of 1000 products of national brands in Belgium. It’s the biggest price-cut the retailer has ever made. For a couple of years Delhaize has been a real price-fixer. The launching of the budget brand 365 was the first step, later followed by huge price-cuts on brand products. Thanks to this new politic, Delhaize has a bigger market share.

It’s already the 5th price-cut Delhaize has carried through in one and a half year time. Thanks to a combination of Delhaize’s biggest trumps (namely a qualitative offer and a well balanced assortment), a stronger positioning on national brands and an elaborate offer of qualitative own brands at sharp prices, Delhaize’s position as ‘value leader’ on the Belgium market becomes stronger.

Products which underwent a price-cut are for example Nutella, the hazelnut spread. Nutella will become 7% cheaper. A package of diapers, Activ fit maxi will become almost 12 percent cheaper.

As consumer this is partially good news... I mean now it’s good news. But a price-cut of 12 percent means that we have paid too much in the past! What will happen with the producers? I hope for them they won’t feel too many pressure. We may not forget that cheaper own brands have to be produced and that can only be realized if the brand manufacturer makes enough profit.

I doubt the new strategy of Delhaize. Delhaizes range of products isn’t that huge anymore. Of most products you can only find 2 brands. Besides most of the time one of the 2 brands is the own brand. Why does Delhaize accent the price now? I have always associated Delhaize with the quality aspect. So I find it normal that we have to pay a higher price for the products of Delhaize. That does not mean that I’m never surprised when the prices appear on the screen.

This is also good news for the Colruyt- buyers as Colruyt always sells at lower prices than most of the competitors. Colruyt will have to follow the price decreases but actually, this won’t be necessary. I think Delhaize will never sell at prices lower than those of Colruyt. After all the price-cuts Delhaize has already made, they are still 10.9 percent more expensive than Colruyt.

Het nieuwsblad: 'Delhaize start nieuwe ronde in prijzenoorlog'

Deutsche Bank gets its faith sealed in court

In this week’s blog I will inform you about the so-called deceiving products of Lehman Brothers. The decision to prosecute Deutsche Bank was taken yesterday and is confirmed by the spokesman of the public prosecutor’s office.

Earlier, Citibank sold structured bonds of the company Lehman Brothers that is now declared bankrupt. Last year, Citibank was brought before the criminal judge in a event hall to provide for the stampede of people rushing to get their money back.

The complaint regarding Citibank resembles to the one held against Deutsche Bank. The public prosecutor’s office claims that the customers of Deutsche Bank were unaware of what they were buying. The information given concerning the product was incorrect, they claimed that the product did not contain any risks, but after all the contrary came true.

The Deutsche bank has tried to make amends with their customers. They were prepared to buy the pieces at the rate that is formed for these products on the secondary market. Using that method, customers can regain 33 % of their initial investment.

After reading the article, I was really shocked that things like these still happen. There are so many organizations looking out in the interest of the customers such as Test Aankoop (not in this segment of the market of course).

On the contrary, there are many people that are unaware of these malpractices and believe the agent sitting in front of them, informing them about the product. After all, people have a lot of confidence in these agents because they are ought to tell clients what they should do with their savings.

http://www.standaard.be/artikel/detail.aspx?artikelid=6M2OAADD&subsection=215

Sioen looks back on negative year results

The car industry is one of the most frequently mentioned sectors when things take the downturn and in consequence when talking about severely wounded victims of the financial crisis. Unsurprisingly, the incalculable amount of delivery partners is also part of the victim list. Sioen, producer of technical textile, such as car seat covering, has suffered a big loss.

In 2009 Sioen made a total loss of 11.2 million Euros, in contrast to a profit of 3.2 million Euros one year earlier. More specifically, the turnover dropped by 20.4 %, which brings the result down to a total turnover of 251.9 million Euros. Furthermore, the company announced that the profit amounts 5.4 million Euros, consequently we clearly see a decrease by 75 % on an annual basis in comparison to last year.

Last mentioned negative results are the outcome of amortizations on activities that were sold and let down. The company has made use of the crisis to right size the company and restrain its activities. According to Financial Director Geert Asselman they have cut away the superfluous fat. Last year the company saved more than 15 million Euros. On the one hand 13 million on the reduction of general costs, on the other hand 2.6 million on personnel. The company was able to achieve this by making use of temporary unemployment and stimulating part-time work.

Next to the earlier mentioned savings on costs and personnel, they’ve also taken the necessary measures concerning activity efficiency. First of all Sioen sold Roltrans, a Polish establishment which manufactures covering sails for trucks. For clearness’ sake, the sails’ production will be continued but the adaption is being put to an end. Because of this decision they will no longer compete with their customers. This choice has certainly fallen on good ground with the customers according to the company.

In addition, also a smaller activity concerning the factory in Roubaix will be thrown to the winds. The factory was originally bought to acquire R&D knowledge. The factory produced technical dashboard foil in small quantities but is now being replaced by a new establishment in Moeskroen. The modern assembly-line will manufacture the same product on a larger scale, which will make things more profitable for Sioen.

As a final point, Mr. Asselman dares to face the future and is more optimistic about the situation in 2010, he expects an up going turnover and profit.

Personally I believe that 2010 will have something up on its sleeve and make a slight turn for the better for the manufacturer of technical textile.

Some time ago Volvo Trucks Ghent announced the introduction of a new assembly team. Seen the fact that the truck industry is responsible for 50% of Sioen’s total turnover, this is definitely promising news. On the other hand, let’s not forget that the inferior performance over the last few years can’t be rectified in one single year. We have to stay realistic and realize that it will take several years to regain previous losses.

Additionally, I must say that the takeover of Volvo by the Chinese Geely Group can be seen as good news for Sioen. Why? Because maybe the Chinese market has a lot of potential for Sioen because of the possibility to become a deliverer to Volvo Cars as well. Next to that, this can also open new horizons for other Asian car brands. Let’s hope for Sioen that other car brands acquire a taste for their company.

Source: "Sioen slikt 11 miljoen euro verlies"

Smartphone pioneer Palm on intensive care

Palm, which once broke new ground on the Smartphone market, is challenging some severe headwind these days. First of all, the new Smartphone models are experiencing disappointing sales. Secondly, the company is facing substantial competition in that same market nowadays. And thirdly, the company has built up a large amount of debts. In the opinion of many observers, two scenarios remain feasible. The first possible scenario is an inevitable bankruptcy, the second option is a complete takeover of the company.

Last week, because of extremely disappointing quarter results, two financial analysts decided to lower their target rates drastically immediately after the publication. Moreover, they didn't just lower their target rates, they were reduced to zero. In other words, they set the target rates to a point where they are worthless. After all, first mentioned wasn't the only underlying motivation. A short time before target rate drop the CEO, Jon Rubenstein, had announced that the company expected a turnover of 112 million Euros over the ongoing quarter while analysts had counted on a total turnover of nearly three times that volume. Last quarter, 408,000 out of 960,000 distrubuted devices were sold, which means that less than half of the retail distribution sales were achieved. This is just one of the consequences after the company lost more than 4% of its market share in comparison to a few years ago. Every loss of market share is damaging news, but if you see that your market share halves in just a few years time there are some serious business management issues.

If we take a look at what went wrong and when the company started experiencing a downturn, we see a large number of concerning reasons. Let's take a closer look on the broader history of this company. Palm was founded in 1992, at that moment Palm was really ahead of its time. It was actually seen as the promising architect of the mini-computer. Later on, when Palm's Treo - Dial functions were added to the original PDA - entered the market, it again led the way to new technologic dimensions. Things started changing drastically when Apple suddenly introduced the iPhone, which made Palm the first victim of a succesful market innovation. Engineers and software developers had some serious difficulties in trying to get a grip onthe swiftly shifting Smartphone market and it took a while for them to come up with a counteract in the shape of Palm OS.

Strengthened by the support of the investment company Elevation Partners under the lead of Bono, Palm managed to bring out a new collection of smartphones in 2009. After being given positive reactions, the brand needed to deal with important structural difficulties such as a lack of application sales and interest of the users. If we take a look at the direct competitor named Apple, we see that this is exactly what took the brand to the position it's in today. The iPhone really isn't that much without its wide range of apps. Another troublemaking thing was the hardware. If we include the fact that the delayed launch of one of its most promising products was disturbed by the launch of the iPhone 3GS into the total package, there are definitely some noticable causes at the starting point of the sales disappointments.

Last but not least, Palm has massive stocks which will have to be sold at lower prices. Automatically, this will have a downturn effect on the profitability and at the same time get in the way of the debt cutback. In addition to the current downbeat, the Smartphone market is only becoming more and more competitive.

In my humble opinion, the thing Palm isn't taking account is that they have an different audience compared to innovative, up-to-the-minute brands such as Apple and Blackberry. The latter have really changed their business models to focus on this new group of users and rethought their products to cope with these changes. The importance of a good team of engineers, driven by technology and innovation is more than ever of great value. If Palm really wants to play a significant role on the same market, they will need to be in on the beat and decide not to go with the flow to innovate. This reminds me of an old saying in the stock exchange backdrop. It goes like this: Bulls make money, bears make money, and lemmings get slaughtered. Lemmings are being seen as the group of traders that follow the mass. Because Palm followed the market evolution and didn't innovate by launching a new set of products, it didn't manage to be succesful. They only were succesful at the start, when they really where the architect of the Smartphone market.

In the market of Smartphones, the most important thing is to create a hype around your product. That's why brands like Apple try to spread their products as much as possible. That's because being mobile in every possible way is hot business in this day and age. I actually think that setting the target rate at zero is a good statement to state that the expectancies are harrowing. An example of how it should be done is what Google did when introducing Android, at least they knew the right way to do it. For most companies like Apple it's extremely difficult to stay on top of the league by staying innovative, not many companies have succeeded in that intention. That's why according to what I think, the market share of Apple will have declined drastically within a year or five. I am well aware of the market and I must say Google has the possibility to be a gigantic competitor and innovator in this segment within a few years of time.