Why GM Failed In India
CNBC:
Over the last 20 years, the
Indian automotive market has grown from
about 500,000 new passenger cars,
hatchbacks, sedans and utilities to
about 3.5
million in 2018.
The market has an expected compound annual
growth rate of about 5 to
6 percent over the next 10 years.
But, some automakers have struggled
to make it work.
Among them is General
Motors, the largest U.S.
car company. GM stopped selling cars in
India in 2017 after years of
declining market share.
It's a striking move for GM, which
in recent years has also closed
shop in other regions around the
world, as leadership focuses on
maximizing profits and making investments
in new technologies such as
electric power trains
and mobility services.
With a population of more than
1 billion people, India is becoming
one of the world's
largest automotive markets.
The country is poised to surpass
Japan as the world's third biggest
new car market in 2021.
So while there is ample
opportunity for automakers, the Indian
landscape has been particularly difficult
to navigate, especially for
American firms. GM watched its share
of the Indian market erode
steadily over several years, bottoming out
at about one percent in
2016 just before the
automaker pulled out.
So if the Indian market is
growing, why did GM struggle, especially
when GM has been
so successful in China?
To be fair, quite a few automakers
tend to have difficulty in the
Indian market. First of all, India
is a massive country with a
diverse population of roughly 1.3
billion people.
India, I think, we are
definitely a complex market.
The income levels
are quite heterogeneous.
We are divided, actually into
urban India and rural India.
The consumer requirements are actually
different even the needs are
different in both these markets.
There are a few criteria a
mass market automaker ought to meet.
They are fuel efficiency, resale
value, proximity of service stations
and the affordability of parts
and low servicing costs.
I think first thing is price.
We are a country with a
very low per capita income.
Indians are very price sensitive.
But price is not the only factor.
So now the customer also needs
some more value, for example, with
styling elements. And then, I think,
the consumer also wants a global
brand. They want a
brand which is aspirational.
The consumer wants an overall combination of
all P's, you know it may
be product, it may be
price, it may be positioning.
Which makes the things
quite complicated for OEMs.
These might seem pretty attainable,
but many automakers have
struggled to meet these
in the country.
There are a couple of companies who
have managed to crack that code
and there are several more with shares
of the market ranging in size
from small to smaller.
By far, the most successful automaker
in India is the Japanese firm
Suzuki, which alone owns
half the Indian market.
Suzuki has enjoyed something of
a first mover advantage.
It was the first major automaker to
enter India, and it did so
through a joint venture
with Indian manufacturer Maruti.
Suzuki also specializes in highly
fuel efficient vehicles, which are
extremely important in
the Indian market.
After Suzuki, Korean maker Hyundai is
the second largest with 16
percent of the Indian market.
After that, Indian, Japanese and Korean
makers such as Honda, Tata,
Kia and Mahindra all more or less
have equal degrees of market share.
Kia in particular, is a relatively
late coming brand that has been
able to succeed in India.
I think an excellent example is
Kia Motors which recently entered, it
was a new brand and
they gave a great proposition.
They were in an SUV segment and
I think suddenly right from the month
one, we saw a great success
for this OEM, in India.
Then the remaining 10 percent of the
market is made up of others such
as Ford, Renault, BMW and Nissan.
Early on, GM entered the India market
with its Opel brand, a mass
market brand GM had
owned in Europe.
While Opel cars tended to be
affordable, they failed to resonate with
Indian buyers.
I think later on they realized that's
not a brand which is really
going to work well in India because
that was not a value proposition
which they were offering
to their customers.
But then GM introduced its Chevrolet
brand to the country, which
brought it more success.
It was a great success.
They launched a few great
products like Chevrolet Cruze Chevrolet
Beat. They had that start which
they were really looking forward.
Despite these efforts, the automaker had
trouble taking share in the
Indian market. It was the first
automaker to introduce a diesel fuel
powered car of its size.
At the time, the Chevrolet beat
was the smallest diesel powered car
customers could buy in India.
It was a strong proposition and
benefited from a government subsidy
on diesel engines.
But in the end, the
diesel Beat had few takers.
The company may also have made a
misstep by trying to introduce a
low-cost vehicle GM manufactured with
its Chinese partner SAIC called
the Chevrolet Sail.
Their plan got derailed with the
introduction of Sail because I think
they underestimated the consumer aspiration
and then, I think, the
decline started. GM also fell victim
to a kind of self-reinforcing
cycle. One challenge it struggled with
was the lack of an adequate
dealer and servicing network.
More premium brands such as Mercedes
and BMW often attract customers
with the means to travel
further for service and sales.
But, mass market brands such as
GM's Chevrolet are targeting middle
class buyers who value convenience.
Dealerships in India often sell a
single brand so GM's low sales
volumes meant a single dealer might sell
only a handful of cars in a
month and risk taking losses on
the costs of running the business.
In the end, such low market share
made it difficult for GM to justify
maintaining a presence
in the country.
The automaker officially stopped selling
cars in India on December
31, 2017.
GM told CNBC it explored many
options for its India business, but
ultimately withdrew after it
determined the increased investment
originally planned for the country would
not deliver the returns of
other global opportunities.
It continues to operate services
for existing Chevrolet customers in
the country. In September, the
automaker entered a long-term
partnership with Tata Consultancy Services,
which will do engineering
design for GM vehicles meant
for markets around the world.
The move out of India was part
of a larger pullback GM has been
making around the world as
it restructures its business.
We're seeing other automakers follow
suit as they're pruning.
They're pruning the dead branches and
focusing on where they can be
strong. For GM, this is a huge shift
because GM of old used to be all
things to everyone everywhere.
And, it has now decided that
is not the proper strategy.
The automaker told CNBC if it doesn't
see a clear path to leadership
and long term sustained profits in
a particular market, it will look
at opportunities to focus its resources
on areas that will lead to
the greatest results. It added that this
is the same approach it has
taken elsewhere.
The automaker also sold its
European operations to French carmaker
PSA in 2017.
At the time it pulled out of India
GM had two factories there, one in
the Gujarati city of Halol
and another in Talegaon.
The Halol plant was acquired by
MG Motor, the once famed British
brand now owned by Chinese
automaker SAIC Motor Corporation.
GM has a joint venture with
SAIC to produce cars in China.
Reports surfaced in November 2019 that
SAIC is also in talks to
acquire GM's Talegaon plant, along
with fellow Chinese automaker
Great Wall. GM told CNBC it
is exploring strategic options for the
plant. The move out of India was
a retreat for GM and for American
auto industry. Ford is starting
to do the same.
It's trimming some
of its offerings.
Global economy and global auto
market is slowing some.
Certainly true here in the
US, it's true in China.
There's just not enough money to
go around to every single market,
too every single vehicle line.
Look at Daimler and BMW,
they've announced major employee cuts.
But in some ways it might
have been a shrewd move.
The other thing that is happening
in the market that has never
happened before is we are on the
verge of massive disruption of the
industry. You know, we're going to
have a future of electric
vehicles, autonomous vehicles and new
ways to acquire personal
transportation and now
mobility service.
There's all kinds of things.
Nobody knows when that's going to happen
or how it's going to happen,
but it's requiring a
lot of investment.
Companies like GM just can't keep putting
a ton of money into the
future as well as a ton
of money in today's stuff.
While analysts do expect the
Indian automotive market to continue
growing in the foreseeable future, it
did hit a slump in 2019.
Maruti Suzuki sales were growing
until February 2019, but have
slipped every month, year
over year, until October.
Suzuki said in November that the slowing
Indian market was one of the
factors behind the company's falling overall
sales and net income in
its second fiscal quarter.
So I think right now the
market is going through turmoil.
Our economy is struggling and if
we only talk about the automotive
market we are talking about a decline
of minus 14 percent in 2019
calendar year light vehicles.
So obviously this year is the
kind of degrowth happening, which has
not happened in last
two decades, in India.
2020, we are just talking about a
kind of a flat growth but then
going forward, in 2021, '22, '23,
the assumption that our economy
should be back, you know, the
GDP growth rate will start growing
above seven percent. Indian
automotive analysts note the country's
auto industry has to contend
with the relatively recent rise of
mobility services such as ride
hailing. The potential of these
competing technologies is still
unknown, but could affect how
interested in car ownership Indians
remain in the future.
In the end, GM did make some of
the right choices when trying to go
into India. GM was right in
terms of localizing their products
typically for the Indian market, making
it, in line with the taxation
because they were able to save tax.
But, at the end of their day, were
really not able to match with what
the competitors were offering.
If the Indian economy picks back up,
GM may find itself trying to
profitably re-enter the country.
GM's rival Ford, which has been in
India since 1995, said in October
2019 it will create a new
joint venture with Indian manufacturer
Mahindra, which Ford said will help
it develop new products faster
and drive profitable growth.
Why The Toyota Land Cruiser Is Disappearing From America
CNBC:
The Toyota Land Cruiser is one of
the auto industry's longest lasting and
many would say most widely respected
brands in continuous production since
the 1950s.
It is Toyota's longest selling vehicle
and a living piece of automotive
history. The Land Cruiser helped Toyota
gain credibility as a maker of
tough, durable vehicles at a time
when Japanese automakers needed to
convince skeptical buyers.
It was also one of the first
vehicles Toyota imported to the United
States, helping to establish the reputation
that turned Toyota into one of
the best selling brands
in the country.
The Land Cruiser is the only model
in the Toyota lineup that has been
available for every single model year
since Toyota came to the United
States in 1958.
Every other Toyota model
has come and gone.
Nothing has been in the market with
that nameplate on every single year
other than Land Cruisers.
Early versions of the Land Cruiser were
known for their Spartan design and
Off-Road capability, while later Iterations became
popular as a high end
family hauler in the
SUV crazed 1990s.
But in 2019, the Land Cruiser appears
to be disappearing from the U.S.,
attracting just one-fifth of the buyers who
bought it at the peak of its
appeal. At least one report holds that
Toyota will pull the Land Cruiser
from the U.S. around 2023.
Some in the industry even say it might
be time for the Land Cruiser to go.
Thers say the vehicle could find success
again in this SUV crazed market.
If Toyota strips it down and
returns it to its rugged roots.
So what happened?
Why? When trucks and SUVs are
seeing unprecedented levels of popularity in
the United States, is the Land Cruiser
selling only a few thousand units?
How did it go from being
a pivotal pioneer in Toyota's international
strategy to an
often overlooked product?
Toyota's truck heritage can be traced back
to its earliest days as a
company. Toyota Motor was founded in the
late 1930s by a young businessman
who wanted to diversify the fabric
weaving equipment business he had
inherited from his father as a
way of protecting against the larger
troubles in the textile industry.
Seeing the potential in the
young but growing automotive industry;
Kiichiro Toyoda studied the major carmakers of
his day, such as Ford and
Chrysler, and had begun a
serious effort to make cars.
However, his plans were interrupted by
Japan's involvement in World War 2,
and Toyota became a supplier of
military vehicles for the Japanese war
effort. After the war ended, Toyota made
trucks and buses to help with
Japan's reconstruction.
But there was a turning point in
the year 1950 when North Korea invaded
South Korea and Toyota received
an order from the U.S.
armed forces in Japan
for four-wheel drive trucks.
Korea was in fifty one, was really
hot and heavy combat in the
UN forces were losing a
lot of vehicles over there.
And in order to replenish them, they had
to bring them all the way from
the United States for the Army was
anxious to get some vehicles built
closer to the front.
And obviously, Japan is a is a
puddle jump away from from Korea.
So they presented these bid requests
to the manufacturers and Toyota said,
yeah, okay, we'll do it. So they built
a utility vehicle that was based on
the army's specifications.
And obviously, here's what we want.
Here's the Jeep. What we want.
So Toyota put it together.
And Toyota had also competed for a
bid to supply trucks to the Japanese
national police forces.
But initially lost that to Mitsubishi,
which offered a version of the
legendary American Willys Jeep.
But Toyota improved its own model, which
became known as the Toyota Jeep
BJ The letters, BJ standing for B-series
engine and the J standing for
Jeep. Toyota demonstrated the vehicle's capability
by testing it on famed
rugged journeys that had only ever been
made on horseback, such as by
following the route of a legendary
samurai's climb up Japan's Mt.
Otago and another climb up
a section of Mount Fuji.
Improvements Toyota had been making to
its truck worked and the company
won the police contract
away from Mitsubishi.
In the meantime, Willies had trademarked
the Jeep name, forcing Toyota to
abandon it. So in 1954, Toyota
chose a new name Landcruiser.
That same year, it began exporting
its Land Cruiser to other markets,
first to Pakistan, then
Saudi Arabia in 1955.
In many cases, the Land Cruiser was
the first vehicle Toyota exported to
other countries, as was the case
with several African nations such as
Angola, Cameroon and South Africa in
the late 1950s and early 1960s.
And they actually called it the
Land Cruiser strategy when entering other
markets. It was essentially the vehicle that
they would bring in ahead of
those passenger vehicles and those other
vehicles, because they knew that
there was that reputation associated with
the Landcruiser, that if they
could bring that in and so that
that the cars following behind it would
also sell because they're sitting there right
there on the lot next to a
Land Cruiser. Land Cruiser is made up
nearly 40 percent of all vehicles
exported from Japan in 1957.
Toyota began selling the Land
Cruiser in the U.S.
in 1958, that year it sold just one
unit of the vehicle, along with 287
units of Toyota's sedan.
The Tokyopet Crown, due to some
difficulties Toyota had with the Crown,
the Land Cruiser ended up being the
only model the company sold in the
U.S. from 1961 to 1965.
The Land Cruiser would remain little changed
for the next two decades from
the mid 1950s to the late 1970s.
But over time, Toyota did update the
vehicle, steering its design toward a
more premium product with a
more plush feature rich interior.
It also grew bigger.
Many of the changes coincided with
the first sport utility vehicle craze
in the 1990s, when the SUV became
the new preferred family car and luxury
SUVs such as the Lincoln Navigator,
the Cadillac Escalade and the Land
Rover Range Rover were
rocketing upward in popularity.
That was a peak for Land
Cruiser sales in the U.S.
Even with the marketing
and the advertising.
We've got an ad here in the museum
and it shows I think it says something
like, if you want to be the CEO,
drive whatever, you want to be the
chairman of the board.
You drive a Land Cruiser, and that's kind
of how it was was marketed, was
you drive this as sort of a
status, but it doesn't get any better.
Correct. Toyota sold 18,602 Land Cruisers
in 1999, the largest number in
records dating back to 1973.
But in 2001, sales fell to 7,591.
About half of what they had
been in the previous year.
And they fell further from their.
That same year, some trucks that
could be considered close competitors
suffered dips in sales, too.
But in the years that followed,
at least some of those rebounded.
Land Rovers, Range Rover, for instance,
is priced comparably to the Land
Cruiser and sales of that vehicle
climbed from 5,771 in 2001 to
8,549 in 2002, 12,086 in 2003, and
13,546 in 2004.
Both high fuel prices and a recession would
put a damper on all new car
sales in the later 2000s.
But since the U.S. economy has recovered in
the wake of the 2007 to 2009
financial crisis, Americans have run back
to their sport, utilities and
pickup trucks and snapped up
the increasingly popular crossover which
blends elements of cars and trucks.
Demand for high end sport utility vehicles
has grown along with the rest
of the market. But Land
Cruiser sales have not rebounded.
Part of the reason for this is
that the Land Cruiser has some steep
competition. At the high end there's there's
more and more choices when it
comes to SUVs. I mean, you could get
a Porsche SUV, you get a Tesla SUV.
There's more and more choices there.
If you're really looking for something that
had that kind of presence or
are you looking for a certain brand?
Take the Range Rover.
Sales of that vehicle grew from 7,800
in 2012 to slightly more than 19,000
in 2018.
That is compared with little more than
3000 Land Cruisers sold in the same
year. There is also competition
from within Toyota's own stable.
Buyers who want the Toyota name can buy
a much cheaper three row SUV that
isn't meant to climb mountains.
The automaker began marketing the similarly
sized Toyota Sequoia in 2000,
selling 9,925 that year.
Sales skyrocketed to more than
70000 units by 2002.
However, sales of that model also fell
over time to just over 11000 in
2018. What we see with the Landcruiser is
it's becoming more and more of a
niche because if you want a three
row large SUV, these have really become
cars, right? So because small as you
see, that started with Honda series
and Toyota rapports, they've grown up
now there's midsize ones, there's
three row SUV.
So a vehicle like the Land Cruiser
has a smaller and smaller following
because people don't
need that capability.
They don't need to go up
a Rubicon or something like that.
Toyota also sells another model that
is essentially a land cruiser with
more premium features.
The Lexus LX, that model sold
an additional 4,753 in 2018.
You're talking about an
85 thousand dollar vehicles.
Vehicle starts at that price.
You look, everything else in the market
that being sold is a luxury
vehicle. So it if you look anywhere else,
it makes more sense as a Lexus.
But to have Toyota selling a vehicle
that could be option up to 100
thousand dollars doesn't really make
sense in today's market.
Another reason the Land Cruiser might be
struggling is simply that it has
been more than a decade since Toyota
updated it with all the competition
at the higher end of the market.
Automakers are under tremendous pressure
to keep products fresh.
What does it bring to the table?
Compare that new competitive set that
it's against like large flagship SUV
is. And while that's taking off right,
both from a luxury and a mainstream
perspective, it's one of the things where
they really if they want to keep
alive, they have to redesign it because
everyone else, you know, like the
flagship luxury cars now flagship luxury
SUV, and they're just not
competing in the same space because they've
gone on for so long about a
redesign. Toyota also spends little, if
any, money marketing the Land
Cruiser in the US.
This, combined with its high price and
declining sales, have led some to
argue that it is time to cut
the Land Cruiser entirely from Toyota's U.S.
lineup and leave only
its Lexus badged twin.
At least one report has surfaced that
Toyota will do exactly that in 2023.
Toyota told CNBC it had no comment
on plans for the Land Cruiser.
But as it languishes in the U.S.,
the Land Cruiser name continues to
thrive elsewhere, especially in parts
of the world where people
still need capable vehicles.
The extent of the Land Cruiser is
global renown might seem surprising to
Americans unfamiliar with
the vehicle's history.
Toyota sold 319,200 Land Cruisers around
the world in twenty eighteen.
Its top five markets are Australia,
China, Japan, the United Arab Emirates
and Russia. In that order, Toyota
sold 42,300 Land Cruisers in Australia
alone in 2018.
The brand is so strong in some
parts of the world that customers in
several countries can buy versions of
the truck Americans never see.
For example, in many parts of the
world, it still sells the Land Cruiser
70 series.
Toyota began making in
1984, though U.S.
buyers can only purchase the
latest Land Cruiser model.
Toyota sells the rugged, functional, far
lower priced 70s series alongside
more current versions
in several markets.
Of course, Toyota still does a
strong business in trucks and sport
utilities. In the U.S.,
for example, the Toyota Tacoma is the
top seller in the midsize pickup
category. The 4Runner, a smaller Off-Road
sport utility, still sells well
in the U.S. Its sales have
grown from 44,316 in 2011 to
139,694 in 2018.
And Toyota has expanded its Toyota
Racing Development sub brand, which has
built its reputation on making
tough purpose built high performance
Off-Road Vehicles.
Landcruiser loyalists say a stripped
down, more affordable Land Cruiser
would be a hit in the U.S.
slightly more than a decade ago.
The company brought the FJ cruiser to
market a purpose built sport utility
with a boxy design that recalled
elements of the early FJ Landcruiser
models. But the FJ cruiser was discontinued
in the United States and most
other countries around the world living on
and only a select few markets.
Americans who love the Land Cruiser legacy
and what the truck did for
off-roading may have to settle for
another name while looking enviously at
buyers elsewhere in the world where
its name is still well-known and
cherished.
How Chevrolet Started, Grew & Became $11.5 Billion Company
Success Secrets TV:
How Chevrolet Started, Grew & Became $11.5
Billion Company
The name Chevrolet originated from a Swiss-born
American racer Louis-Joseph Chevrolet, who
founded his company with William Durant in
1911, stayed for four years and then left
his own company to Durant in 1915.
The Chevrolet Company previously called the
Chevrolet Division of General Motors Company
and simply called the Chevy is the automobile
department of General Motors, a manufacturing
company in the United States.
How Chevrolet Began
Twenty years before Chevrolet, Durant was
the founder of a successful Durant-Dort Carriage
Company which manufactured horse-drawn vehicles.
And so Durant wouldn't even touch a car with
a ten-foot pole, let alone allow his daughter
to ride in what he called, "loud and dangerous
horseless carriages."
But as time passed he realized that there
were more cars than carriages on the American
streets; an experience that did not settle
well with the relatively tentative public.
As the government regulated cars for their
safety, Durant had other ideas.
Why not improve the security of these cars
instead?
In 1904, Durant approached a struggling Buick
Motor Company and became its controlling investor.
Within a span of four years, Durant demonstrated
his salesman attitude and transformed Buick
into a leading automobile name amongst the
likes of Ford, Oldsmobile, and Cadillac.
For Durant, however, it was only the start.
Durant figured he could further improve his
odds in the industry if he built a holding
company that would control several automobile
divisions, with each division manufacturing
their own car.
With the Buick's outstanding profits, Durant
had sufficient capital to found the General
Motors Company in 1908.
A year later, General Motors acquired several
car brands like Buick, Oldsmobile, Cadillac,
Elmore, and others.
Unfortunately,Durant got so carried away in
his "automobile acquisition crusade" that
GM suffered cash shortage with their sales
losing to Ford's.
And so, in 1910, General Motors showed Durant
the exit door.
But Durant did not give up.
Having regained his bearings, he reunited
with an old colleague from the days of the
Buick motor company, Louis-Joseph Chevrolet.
Durant knew the Swiss-born American as a man
whose competency for car mechanics matched
his passion for racing.
In 1909, Louis had participated in the Giant
Despair Hillclimb.
An oddly apt name, considering the Hillclimb
race was less about the racers themselves
and more about test-driving the competing
car brands they drove.
Therefore, when Durant offered a chance to
build more automobiles, Louis couldn't resist
signing his name on the dotted line alongside
Durant's.
In 1911, Louis co-founded the Chevrolet Motor
Company with Durant.
Durant used Louis’ racing status as a means
of building a motor company, and his way of
getting back at General Motors.
The first Chevrolet car, the Series C Classic
Six was designed by Etienne Planche with directions
by Louis.
The prototype was ready before the company
was incorporated even though the production
didn’t happen until 1913 where it was introduced
at an auto show in New York.
In 1914, Chevrolet redesigned its logo.
And so a "bowtie emblem" logo was used on
Chevrolet’s first produced cars in 1914:
the Chevrolet H series and L series models.
That same year, Durant and Louis argued about
their differing intentions for Chevrolet’s
future car designs.
Durant wanted simple and affordable cars that
would surpass those of Fords.
On the other hand, Louis preferred playing
it fast and loose, with luxury or racing cars.
These differences split these two associates
and Louis sold his shares of the company to
Durant.
Now alone at the helm, Durant was able to
focus on his next winning car design.
He achieved this in 1916 when the cheaper
Chevrolet Series 490 finally outpaced Ford
in sales and cemented Chevrolet’s place
among the big automobile names.
To say Chevrolet made huge profits during
this period would be a severe understatement.
Durant revisited General Motors as a controlling
investor, purchasing their stocks, which gave
him the leverage to launching himself into
leading General Motors once more.
By 1917, Durant had become the president of
General Motors.
All was right, now that Durant's "big automobile"
dream was back on track.
And of course, his first directive was merging
the highly successful Chevrolet into the parent
company General Motors as a separate division.
How Chevrolet Grew
In 1918, Chevrolet launched a new V8 powered
model, the Series D for open two-seat cars
and the touring cars that could seat 5 passengers.
These models didn't sell well though and they
were scrapped by the next year.
Given Chevrolet's successful track record
in the market, General Motors rebranded and
sold their commercial grade cars and trucks
as Chevrolet with similar appearances with
the Chevrolet’s vehicles in 1919 from Chevrolet
factories located in Flint, Michigan.
The automobile company built several branch
assembly plants in New York, Ohio, Missouri,
California, Texas, and Canada.
Somewhere between the 1920s and 1940s, Chevrolet
would see Durant's vision for "producing simple
and affordable cars" come true.
In fact, Chevrolet, Ford and Plymouth were
known to Americans as "the low priced three".
During this period, one of Chevrolet's most
notable cars was the Stovebolt introduced
in 1929, which was tag-lined "a six for the
price of four".
This and several generations of the car model
blew away the competition of Ford and Plymouth.
In 1953, the Chevy Corvette, a sport’s car
with two seats and a fiberglass body debuted
to become the first mass-produced sports car
in the United States, championing the "America's
Sports Car" appeal.
The appeal of the Corvette and other Chevrolet
passenger cars would be enhanced with the
first-time introduction of Rochester Ramjet
fuel-injection engine as a high-performance
option for the price of $484.
The Chevrolet small block V8 car design made
its debut in 1955 and remained in circulation
longer than other mass produced engines around
the world.
Modifications to the V8 engine including the
aluminum block and heads, the electronic engine
management and the port fuel injection gave
birth to the designs in production today.
In 1958, Chevrolet introduced the Impala series,
which went on to become one of the best-selling
American cars in history experiencing popularity
during the 60s and 70s.
The parent company General Motors introduced
Chevrolet to Europe in 2005.
With rebranded cars manufactured from the
General Motors branch in Korea acquired Daewoo
Motors.
The economic depression between 2007 and 2010
hit Chevrolet hard.
But the road to recovery began in 2010 with
the introduction of fuel-efficient cars and
trucks to compete with foreign automobile
manufacturers.
Within the same year, Chevrolet introduced
the plug-in hybrid electric vehicles, Chevrolet
Volt in America, which was sold under the
name Opel/Vauxhall Ampera throughout Europe
with a record 5,268 units soldand became the
world's best-selling plug-in hybrid electric
vehicle (PHEV) car in 2012, winning the award
for the North American Car of the Year, European
Car of the Year and World Green of the Year.
The series was then named the combined Volt/Ampera
that was sold across the world.
It exceeded the 100,000 unit sales milestone
in late 2005 and eleven years later the Volt
family of vehicles had become the world's
best-selling plug-in hybrid as well as the
third best selling electric car after the
Tesla Model S and the Nissan Leaf cars.
In 2011, Chevrolet set a global sales record
of 4.76 million vehicles sold worldwide
In late 2013, the Chevy brand was withdrawn
from Europe by General Motors leaving the
Corvette and Camero lines.
In 2016, Chevrolet unveiled the first affordable
mass-produced all-electric car the Chevrolet
Bolt EV.
This car too has won several awards.
Where Chevrolet Is Today
Chevrolet now has its headquarters in Detroit,
Michigan, and operates throughout 140 countries
in North and South America, Asia, Australia,
South Africa, and Europe with over two million
vehicles sold annually in the US alone and
a brand value of $11.5 billion.
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Why Big Dairy Companies Struggle In India
CNBC:
You know who's got milk?
India. India is the world's biggest
producer and consumer of dairy.
In 2018 alone, India produced 186 million
metric tonnes of milk — about
410 billion pounds and 22 percent
of the milk produced globally.
Almost all of that is consumed
domestically thanks to India's dairy-heavy
diet — think creamy curries, yogurt drinks,
and a popular type of butter
called ghee.
A quick note before we proceed:
this includes milk from buffaloes, which
are an important source of
milk in many developing countries.
the point is that India loves milk.
In 2011, the French dairy company Danone
hoped to capitalize on this by
opening a division in India.
Danone opened its own processing plant
in Haryana and tried to capture
some of India's 1.2
billion dairy lovers.
But less than a decade later,
Danone shuttered their dairy business in
India. That same year, the company
made 28 billion dollars worldwide and
was in the top
three global dairy companies.
With all this success, elsewhere, why
did Danone's dairy business sour in
India?
Let's start with some
background on Danone.
Their business is broken down
into three categories: specialized
nutrition, like supplements and formula
for babies; bottled waters and
seltzers; and dairy
and plant-based alternatives.
That one makes up over half of their
global sales, but it's also the one
that failed in India.
Danone does still sell specialized nutrition
products in the country, but
they don't break out
those sales figures separately.
Oh, and yes — this is the
same company as Dannon in the U.S.
The company decided to rebrand to
make the spelling less confusing for
American consumers.
Anyway, now for some background
on India's dairy industry.
There are about 75 million
dairy farmers in India.
Most of them are women who own one
or two buffaloes or cows to supplement
the family's income.
Nearly half of India's milk is not
sold, but consumed by the farmers
household. This makes India's dairy
industry far more fractured and
localized than other countries
where Danone operates.
Take the company's native France and
one of its biggest customers, the
U.S. Each has far fewer dairy farms
with herds that dwarf India's one or
two animal average.
This was Danone's first big problem
in India: sourcing milk is difficult.
Of the half not consumed by
farmers' households, only about 15 percent
goes to big organized companies
or government run cooperatives.
The rest goes to hundreds
of small, local milk processors.
Even the largest companies like Amul,
Mother Dairy, and Nestlรฉ have tiny
percentages of the market, and
they've been there for decades.
Market research firms Mintel and
Euromonitor declined to release specific
market share numbers to CNBC.
However, a 2016 piece in The
Economic Times of India citing Euromonitor
put the figures at about
7 percent for Amul, 3.7
percent for Mother Dairy, and 2.9
percent for Nestlรฉ.
In short, tapping into the existing
dairy infrastructure is effective but
time consuming.
Imagine the effort of contacting dozens
or hundreds of local and regional
dairies, processors, or
individual farmers.
But establishing a separate supply chain
altogether is very expensive —
a lesson Danone learned the hard way.
And when Danone did get milk, the
company focused on the wrong products.
Danone pushed plain yogurt and flavored
yogurt drinks — popular in places
like the U.S.
and France with high
profit margins to boot.
But in India around the time when
Danone arrived, yogurt comprised only 7
percent of the dairy consumed.
The real money was in ghee, a
type of clarified butter, and plain old
fluid milk, a product with razor-thin
margins dominated by those hundreds
of local small-scale producers.
Analysts explained to CNBC the simple
reason why Indian consumers shunned
Danone's prepackaged yogurt.
And if Indian consumers did want to buy
premade yogurt, they had a slew of
cheaper options than Danone.
Dairy never accounted for more than 10
percent of Danone's sales in India,
a far cry from its global 50 percent.
Its specialized nutrition arm picks up
the slack, and the company
announced a renewed focus on that
division when it shuttered its dairy
operation. Meanwhile, two of their
biggest competitors, Amul and Nestlรฉ,
made nearly five billion and
750 million from dairy, respectively.
But not all hope is lost
for Danone's dairy in India.
In January 2018, the same time
that Danone ended its dairy production
there, the investment arm of the company
announced its part in a 26.5
million dollar investment in Epigamia,
an Indian yogurt startup.
This could be a sustainable move
for Danone in India's dairy industry
because Epigamia offers consumers products that
add value onto the plain
yogurt they can make cheaply at home.
But perhaps most importantly is this:
while much of the population still
makes yogurt the old-fashioned way, analysts
predict that a growing number
of consumers will want to buy premade
options as they move into corporate
jobs in developing urban centers.
Very
large numbers indeed.
If only 5 percent of India's 1.35
billion people decides to buy prepackaged
yogurt, that's over 67 million
consumers — more than the entire
population of Danone's native France.
Why Dunkin' Donuts Is Failing in India
CNBC:
Dunkin' is synonymous with breakfast
pretty much everywhere you go. There are
more than 12,600 restaurants in 46
countries from Kuwait to Aruba.
But there is one market where the
company is failed to capture national
attention, India. As of 2018, it closed
more than half of its stores in just
over two years, citing a lack of
profitability and operational efficiency.
So what went so wrong for Dunkin' in
India? To answer that let's go back to 2012,
when Dunkin' launched its first
location. Dunkin' granted exclusive
franchising rights to Jubilant FoodWorks, the same franchisee that brought
Domino's Pizza to India, one of the top
restaurant brands in the country. Dunkin'
entered with its typical breakfast first
strategy and it braced for heavy traffic
at the start of the day. But it didn't
take long to figure out that Indians
weren't all that interested in the
American morning routine. The majority of
Indian consumers don't prefer to
grab-and-go their breakfast.
They'd rather have a sit-down meal. Yeah
basically when you look at doughnuts.
So basically when Dunkin' Donuts came to India it's it's regarded as a breakfast
for all the Western countries or
wherever the Dunkin' Donuts have their
outlets. But in India, it's the consumer
preferences are totally different. So
here, people you know they generally
prefer their local cuisine for their
breakfast. And it wasn't just the timing
of the offering, it appeared to be the
menu itself. To be fair, Dunkin' tried to
localize its offerings. It had custom
doughnuts catered to Indian tastebuds,
like the mango doughnut. It had Lychee
coladas. And for a brand that rarely
ventures outside its core product, Dunkin'
even rolled out a spicy sandwich lineup.
In an effort to localize its menu, this
coffee loving brand even downplayed its
beverage branch of business, which
accounts for about 60% of Dunkin sales.
Instead, it marketed its food to a nation
that's not exactly crazy about coffee.
But it wasn't enough to help Dunkin'
shake its doughnut first reputation.
Dunkin' was seen as more of a pastry shop
and Indians didn't want to start their
day with sweet baked goods.
Doughnut is basically considered as a desert right and a desert which is a lot of other
assortment added onto it so it's a high
calorie
assortment. And therefore, it's more like a
luxury. It's more like impulse kind of a
purchase. Which you make if you are
celebrating or is there a special
occasion or you know once in a while
Indians having a switch tooth would like
to indulge in that kind of a purchase.
So Dunkin' pivoted. It pushed it's
operating hours later, it rolled out its
Diwali doughnut, which touted savory
flavorings like chickpeas, saffron and
chilly. But key Dunkin's tweaked image,
was actually to downplay the doughnut. So it tried something it hadn't done before,
burgers. With burgers, Dunkin' was able to
get more foot traffic in and the non
beef lineup was designed to appeal to
the country's vegetarians. But making
burgers the anchor product of the brand,
just appeared to dilute Dunkin's image
rather than help it. Decided advertising
on burgers rather than doughnuts.
I'm gonna need to go global brand wind
doughnut in your name. You cannot say that
we are not doughnuts than here's something else, right? So that's really against the
basic rule of marketing, which is focus.
In a statement to CNBC, Dunkin' Brands
said that it finds it important to
include core Dunkin' products alongside
more regional menu items to cater to
local tastes. But Dunkin' didn't comment
on its store closures in India. Another
potential misstep had nothing to do with
the menu. Dunkin' expanded too fast, its
locations were too big and those huge
retail spaces translated into higher
operational costs. So when Jubilant
FoodWorks announced plans to pare back more Dunkin' shops in 2018, it came as
little surprised that its new plan was
to focus on small stores and kiosks. But
keep in mind, Dunkin' isn't alone in its
struggle with the doughnut.
Dunkin's main doughnut rivals, Krispy
Kreme and Mad Over Donuts, entered
the market within a few years of one
another and at first things were pretty
great. Doughnuts were initially a hit
when they were first introduced into the
Indian market. The young population which was more acceptable to American tastes
and culture. And so for them it was the
issue of novelty and therefore, doughnut
market saw a surge in the in
in the Indian, you know, subcontinent and
we had Dunkin Donuts, which entered the
market at that point of time and we all
know the drive, right? From 22 stores, they reached up to 77 stores in 2017. Which
was the peak of Dunkin Donuts in India.
But Aggarwal said that the donuts
popularity has started to stagnate and
now the doughnut chains of India are
feeling the pressure. The doughnut is
struggling. It's not just Dunkin' and
Krispy Kreme. There have been declining
sales across doughnuts for quite some
time. Not just in India but if doughnuts
were working they would be Dunkin'
Donuts doughnuts but they're now just
Dunkin'. And so that's if it's not working
here, it's it's certainly not working in
India. That precipitous fall in the
popularity of the doughnut is partly to
do with the more health-conscious India.
India's becoming a very health conscious
market, right? So people are moving away
from sugar and salty food and looking
for more healthier options. So that's one
of the reasons why I feel that the sales
have kind of stagnated.
But even though Indian consumers are
looking for healthier foods, some desert
chains in the country aren't struggling
like Dunkin'. In fact, one of Dunkin' Brands
other businesses, Baskin-Robbins, is
killing it in India. Baskin-Robbins which
is franchised in India by Graviss Group,
has more than 725 stores in the country
and claims to be the largest ice cream
chain in India. So if Baskin-Robbins
and Dunkin' are two fruits from the same tree, then why is one doing so much better
than the other in India. Euromonitor says
it's because Baskin-Robbins focused on
its signature product, ice cream. And
according to a Mintel report, the ice
cream industry is heating up in India.
Mintel estimates that in 2021 657.2
million litres of ice cream will be
purchased in India. But doughnuts well
they're just not a favorite for the
adult Indian consumer. So Dunkin's big
problem in India seems to have more to
do with the fact that it's failing to
give Indian consumers what they're
looking for and less to do with any
mistake made by either Dunkin brands or
Jubilant FoodWorks. Take Dunkin' Brands,
the company in the United States is by
no means failing. The company has seen a
steady grow than revenues over recent years.
The Indie market isn't biased against
international companies, more
specifically, Dunkin' Brands because
Baskin-Robbins has seen such success in
India. And Jubilant FoodWorks, which
franchises Dunkin' in India, also
franchises Domino's Pizza, one of the
most popular brands in the country. It's
also not the first time an international
Dunkin franchise agreement has flopped
either. Dunkin' has tried and failed to
enter China twice. And in 2015 it decided
to step back in a third time with a
better understanding of what Chinese
consumers want and an ambitious goal to open 1,400 restaurants. So will Dunkin' in
India have the same story as Dunkin in
China? or will it be able to turn things
around? Experts say it's certainly worth
trying. With the population size second
only to China, India is thought of as the
last great battleground for
international fast food rivals. Only
about three percent of all food service
establishments there are chained. In
Western markets, it's over 50 percent. So
if you're looking to capture market
share in the U.S., you have to take it away
from somebody else. But if you enter
India in the right way, with the right
formula, there's tremendous potential
upside. And reducing store sizes is part
of that formula. For the U.S. store, they
have been reducing their sizes, store
sizes, which which is the same strategy
which was being followed by Mad Over
Donuts or Krispy Kreme. The brand
slashed unprofitable stores and instead
started focusing on small kiosks to sell
their products. And remember how they
basically ignored their beverage unit
when first entering the country, that's
not happening anymore. They're planning
to introduce more teas to their menu to
cater to Indian. Tastes they're probably
better off on the hot beverage focused
side of it than trying to localize
the menu to get away from it being
donuts. So yeah, Dunkin' in India has had to overcome
a lot upon entering the market and it
still does. But by adding tea based
beverages to their menu and offloading
unprofitable stores for kiosks, Dunkin'
may be able to save itself in India
after all.
Why Ford and GM Scaled Back in Europe | WSJ
Wall Street Journal:
(thoughtful music)
- [Narrator] Take a look at this map.
It shows 23 plants that Ford
has in Europe from the UK to Russia,
but recently, Ford laid out plans
to cut six of these European factories.
- So six of 'em, they're gonna sell one.
They're closing several,
they're gonna lay off about 20%
of their workforce there,
which is about 12,000 people.
- [Narrator] But Ford is
not the only U.S. automaker
that's scaling back in
Europe, two years ago
General Motors pulled out of
the market almost entirely,
selling their European brands
to French car maker Peugeot.
Both companies expanded
to Europe decades ago
as a wider strategy to scale globally,
but they both had trouble
making money in the region.
Let's take a look at these two charts.
This one shows Ford's operating costs
in Europe over the past six years.
The gray is profits overall,
and the red is profits in Europe.
Now let's go to GM, this chart
shows GM's losses in Europe
over the 20 years before they
pulled out of the region.
So, why has it been so hard
for these two auto makers
to turn a profit in the European market?
- So the first reason is that
Europe's always been a real tough market.
Ford and GM have always been sort of
middle of the pack there,
I mean the real powerhouses
are Volkswagen, Renault, Peugeot,
and when you're sort of a
middling player in Europe,
when you already have
small profit margins,
it just makes life a lot
harder for the U.S. brands.
GM is making a decision to only compete
in markets where they're the number one
or number two operator,
and so they felt like
they've lost money there for 20 years,
and they didn't wanna continue to do that.
- [Narrator] And while GM has largely
pulled away from Europe, Ford is looking
to scale back and shift focus.
- What's behind this is a
change of business strategy.
They're selling fewer passenger
cars to individual buyers,
and they're focusing more
on their commercial market
where they're strong, which
is cargo vans and trucks
to business buyers and governments.
Bigger vehicles generally
equate to bigger margins.
There's less competition,
they're the number one commercial
van auto maker there, so they
already are more profitable
in that space and they
feel like if they focus
on growing that, they could
boost margins even more.
- [Narrator] The second
reason U.S. auto makers
are scaling back has to do
with Europe's tight environmental rules.
- Another big factor that
GM talked about a lot,
when it pulled out, was
emissions standards.
Europe has some of the most
stringent in the world,
and they're only gonna get tougher,
and that's gonna cost a lot of money
for the car companies to comply
because they're gonna have to invest in
hybrids and battery electric cars.
It's mostly battery technology.
Battery cells, the costs
have come down some,
but most experts think we're still
six, eight, 10 years
out from an electric car
being sort of on-parative cost
wise with a gas powered car.
- [Narrative] The last major reason
is that Ford and GM are gravitating
back to their sweet spot, SUVs and trucks.
- I mean these U.S. car
companies are really good
at making big SUVs and big pickup trucks.
I mean Ford's, the best
selling truck in the U.S.
is Ford's F150, it has
been for years and years.
GM sells the Chevy Silverado,
and the Chevy Suburban.
These are huge vehicles
that aren't sold in Europe.
The gas prices are too expensive.
You know, the streets are narrower.
People don't have as many big
garages like we do in the U.S.
And so, I mean that's what
Detroit has focused on,
and that's where they make
virtually all their money.
And that's why they've never
really been all that great
at making small cars,
and the European brands
have a big advantage over
the U.S. brands there.
So they're playing to their strength.
Companies like GM and Ford, for decades
they tried to build
scale, not only in Europe,
all around the world because it's
a really capital intensive
business, and you need scale.
And now what you're seeing is,
they've got other needs to
spend that capital elsewhere.
Electric vehicles, autonomous vehicles.
So they realize they can't
be all things to all people
in all markets, and they've
gotta pick their battles.
They've gotta choose where
they're gonna spend their money.
(soft music)
GM Korea closes Gunsan plant for final time after 22 years in operation
ARIRANG NEWS:
GM Korea officially closed its plant in Gunsan
today, ending two decades of production there.
The shutdown is part of the restructuring
plan agreed upon by General Motors and the
South Korean government.
The company will be looking to bounce back,
but the Gunsan-area economy might not recover
for a long time.
Oh Soo-young reports.
General Motors has closed one of its four
plants in South Korea,... leaving an economic
vacuum in the western city of Gunsan.
The automaker's decision came in February
as part of its corporate restructuring efforts,...
bringing the factory's 22-year history of
car manufacturing to an end.
Of the factory's 18-hundred workers, most
have taken voluntary retirement, 400 unpaid
leave -- while 200 are awaiting placements
at GM Korea's three remaining plants.
However, the fallout of the shutdown is expected
to be far-reaching.
Churning out some 270-thousand vehicles a
year,... the factory accounted for half of
Gunsan's exports, and a third of total exports
for the greater Jeollabuk-do Province.
The livelihoods of some twelve-thousand local
workers, employed by 130 affiliates and subcontractors
that supplied auto parts to the factory, are
on the line.
Other local businesses, including restaurants
and real estate agencies, are also expected
to suffer due to the outflow of workers.
To mitigate the impact on the local economy,
some 20 million U.S. dollars from the central
government's supplementary budget this year
has been earmarked to support Gunsan's workers
and businesses.
The government plans to roll out employment
support and take measures to attract new businesses
to the city.
Even so, experts doubt the region will ever
be able to fill the gap left by GM's departure.
"0:00 There doesn't seem to be a large company
that wants to move its operations to Gunsan...
0:27And I think part of the problem is that
the region has become less attractive because
GM Korea's been there so long that I think
Gunsan really didn't put much effort into
attracting other businesses."
However, the expert says the initial pain
of structural reform may pay off eventually,...
leaving the region with a glint of light at
the end of tunnel.
" They do have a lot of people who are familiar
with how manufacturing works so there is some
human capital there that they can use.
They should have good road systems and if
nothing else they have the large factories
that GM Korea used that they may be able to
utilize elsewhere."
The expert also urged the authorities to act
quickly as the plant is now shut for good,
and tens of thousands of local residents face
an uncertain future.
Oh Soo-young, Arirang News, Gunsan.
Why Wall Street Traders Are On The Decline
CNBC:
Wall Street used to
be full of traders.
Buying and selling stocks or bonds in
person or in the packed trading
pits in Chicago, New
York and London.
Prestigious investment banks boasted of
trading desks the size of
football-fields. Now, they're losing money
on trading operations and
laying off scores of traders.
There's a very famous anecdote out
of Goldman Sachs, where about 15
years ago they used to have about
500 human traders on a trading
floor, making markets in stocks
and basically connecting buyers and
sellers using the telephone.
And that's going away. You know,
obviously with the rise of
electronic trading in stocks and now
today they have three people.
The number of trading, sales and research
jobs at the top 12 U.S.
banks have dropped precipitously in
the last nine years.
In 2010, those big banks employed
about 21,000 people who worked in
equities — or stocks — and 27,800
people who worked with fixed income
or bonds. By the third quarter
of 2019, those banks employed about
16,000 people in each category , a
drop of about 5,400 jobs in
equities and nearly
11,600 in bonds.
Deutsche Bank, Citigroup and Societe General
are just a few of the
big financial firms to announce t
rading desk layoffs in recent
months. Deutsche Bank, in particular,
decided to ditch its entire
global equities trading operation ,
about 18,000 jobs in total.
The shift to electronic trading and
passive investing are the big
culprits behind the trend.
Now more and more big Wall Street
firms are finding it harder and
harder to make money from trading.
The rise of passive investing
in algorithmic trading or squeezing
profits in the trading business
to razor thin margins.
Experts say electronic trading made
markets much more efficient, and
it's made trading more accessible
and cheaper for the masses.
But the shift to electronic
and algorithmic trading isn't without
risks. We've wanted to see
what was going on.
We saw some real panic
a little below 11,000.
A quick dip guys came in
to buy gold in a hurry.
So what's happening to Wall
Street's once prestigious trading
profession? When we think of traders
on Wall Street, most people
think of this.
Known as 'open outcry,' the negotiation
practice was started in the
17th century in Amsterdam at the
first stock exchange in the world.
The Dutch East India Company was the
first company to go public in
history. After the creation of
the exchange, investors could finance
a group of upcoming voyages by
the Dutch East India Company instead
of individual voyages, diversifying their
risk and return received
dividends. A few hundred years later,
stock exchanges had popped up
all around the world.
And the stock exchange remained the main
set-up for trading up to the
1990s. You have to understand that
negotiation mattered for a long
time. With Nasdaq, it mattered
up until the Nasdaq scandal.
There was a big scandal in
an almost billion dollar settlement where
the Nasdaq dealers were colluding to
fix the prices basically, and
fixed the bid offer
spreads on Nasdaq stocks.
Once that settlement happened, people
had to start handling orders
differently. And that gave birth
to what's called electronic
communication networks, which were the
precursors to the modern
exchanges. And as more and more
markets became more and more fair,
electronic markets blossomed and frankly,
paper tickets went the way
of the buffalo. Larry Tabb is the
founder of TABB Group, a research
and strategic advisory firm
focused on capital markets.
When you traded on Nasdaq, you really
had to call a market maker.
Before they became an exchange
in the early 2000s.
All it really was, was an
order routing mechanism and it routed
orders to the market maker
who had the best price.
But each trade had to be okayed
and then traded really by human
market maker. Prior to Reg NMS and
around 2005, the New York Stock
Exchange still took roughly nine
seconds to execute an order.
And so most trading was still done
manually, even though a lot of the
order routing was
done electronically.
The Regulation National Market System, or
Reg NMS, was the first set
of ground rules for U.S.
trading. It protected and helped
investors and ultimately smoothed
the transition of
computers into trading.
Online trading really started to
take over thanks to electronic
communication networks, personal computers,
increased trading pit
regulation and the rise
of online brokerage firms.
Although electronic communication networks or
ECNs started in the
late 60s, they didn't become
mainstream until much later.
ECNs automatically matched buyers and seller
s, removing the need for
negotiation. Now all equity changes
are pretty much fully
automated. The New York Stock Exchange
still has the floor, but most
of the activity occurs in
the open in the close.
Most of the intraday
trading happens electronically.
First, let's talk about our
definition of a trader.
We're not talking about people
who occasionally trade on their
Robinhood and E-Trade account.
We're talking about professional investors
who buy and sell financial
assets for organizations like hedge
funds, banks and private equity
firms. According to the Securities
Industry and Financial Markets
Association or SIFMA, there
were 484,500 U.S.
employees in the securities
industry in the 1990s.
As of December 2017, there are
952,500 people working in the
securities industry in the U.S.
At investment banks, however, there's
been a drop in employment.
Traders, sales and research roles dropped
from 49,200 in 2010 to
32,200 in 2019, a decline
of almost 35 percent.
Bonuses on Wall Street increased vastly
from 1989 when the average
bonus was $24,928.
They peaked in 2006 at $248,223.
The average bonus fell to $225,644.
As of 2018, that average bonus has
made its way back to around
$153,700, however it's still
down from 2017.
Ever since I would say 2010,
2011, compensation across Wall Street
has been falling. And the reason for
that is the fee pool for fixed
income and equity trading has gone
in one direction of using
essentially lower. And so when that
happens, they have less money at
the end of the year
to give people bonuses.
Bonuses are still at least the lion's
share of what senior people on
Wall Street make. They
eat what they kill.
One of the recruiters I spoke to
said, you know, he counsels the
people that he's talking to.
They say, like, if you can't make,
if you can't live on this
business, making $300,000, $500,000 , which,
by the way is still lot
of money. And, you know, then, you
know, then you should leave the
industry. You're never going to make
a million dollars a year plus
anymore. From 2010 to 2019, trading
revenues in fixed income and
equities at banks like Bank of
America, JPMorgan and Deutsche Bank
have dropped from $149
billion to $83 billion.
The move to electronic trading puts scores
of floor traders out of a
job. If you look at pictures of
the trading floor in 2000 versus
today , it's probably a tenth
the number of actual traders.
Today, there's more news reporters
and columnists walking around
except for the open and the close .
There's almost no activity that
happens on the floor.
It all happens in Mahwah, New
Jersey, where the exchange computers
are. That's all really activity.
It's all happening by
algorithms and upstairs desks.
With computers filing trading orders,
trading volumes have soared.
Prior to electronification in January 1997
, the average daily volume
in U.S. equities was around 1.17
billion shares. By December
2019, it was 6.54
billion shares. It used to be
that traders looking at screens would
say this is the price.
That price would be where
they would enter their order.
Today, if you want to trade a
million shares of Microsoft, you're not
going to do 10
hundred thousand share orders.
You're not going to even do
a hundred ten thousand share orders.
You're going to do ten thousand
one hundred share orders .
And a computer can do that far
faster without getting tired than a
human being. The velocity of trading
is dramatically faster than it
used to be, and it's basically taken
humans out of that last mile
market. Algorithmic trading is taking over
the stock market and it's
not without flaws.
The flash crash of 2010 caused the
Dow to plunge 9 percent in a
matter of 36 minutes.
The drop was triggered by a large
sell order that was then met by
high frequency trading firms who started
buying and selling to each
other. Other market makers weren't able
to step in, resulting in the
crash. I don't know.
There is fear. This
is capitulation, really.
The machines had to be broken.
A night indicates that a technology
issue occurred in the companies
market making unit.
Since 2010, more flash crashes
have occurred and regulations have
been announced to deal
with the issue.
However, no perfect solution has
been put in place.
Another driver of the long-term decline
in trading jobs comes from
the competition between active
and passive investing.
Many trading firms use active
investing, a strategy that involves
tracking individual investments like
stocks closely for profitable
opportunities. While it can mean big
profits, it can also be quite
costly and risky.
Passive investing refers to index
funds and exchange traded funds.
They allow investors to purchase large
stock indexes or groups of
stocks. It's called passive because
they don't need to constantly
monitor the investments.
One of the reasons the technicals
and momentum investing might have
worked so well over the last
decade is that the biggest investors
were passive or ETF investors.
These are investors that simply buy
a stock if they're seeing inflows
into that their underlying ETF.
When it comes to pure performance
over the long haul, passive
investing is beating
out active investing.
Only 23 percent of active funds could
beat out the average return of
passive funds in the 10
years before June 2019 .
A lot of these trends have kind
of push down the level of
participation by institutional investors
in the U.S.
equities markets, mostly because
they're under greater competition
from passive funds which
don't trade as much.
Their fee structures are lower, and
because of that, the more active
funds tend to benchmark closer to
what the passive funds do.
They're trying to turn over their
portfolio fewer times so that they
don't have their expensive trading and
they're cutting costs and that
costs push them more towards electronic
channels and more human and
more expensive channels.
After the financial crisis of 2008,
regulators moved to crack down on
the cash investment banks could
use for risky bets.
If you remember, the financial crisis
was started in part because of
these hugely risky bets that investment
banks like Goldman Sachs, B
of A Merrill Lynch had taken.
And so when regulators saw that know,
they said, look, we have to cut
this out. We created something
called the Volcker Rule.
The Volcker Rule really prohibited or
at least tamp down the hedge
fund like bets that these banks
could do using their own money.
With banks strapped for liquidity, they
didn't need as much manpower
as before. Prior to the financial
crisis, banks provided double the
liquidity that they provide today.
So on a numbers basis, this arguably
means that half of the traders
that were required prior to the
crisis are no longer necessary.
For these reasons, most big banks
are moving away from trading.
The profitability question for trading is
also a driver of banks
moving into other higher margin
areas within their business models.
And really this cost pressure and
this deflation is driven by tech.
So it's driven by technological advances
that have created a cheaper
environment in which
to do everything.
It's also been created
by price discovery.
It's very easy for consumers to
shop around for the lowest cost
option. Given the acceleration of
information availability in today's
day and age. The decline in trading
jobs and revenue hurt the big
banks and large investment firms.
Banks like Goldman Sachs instead are
focusing on a new venture, c
onsumer retail businesses.
This is still the classic white
shoe New York investment bank, and
something like 40 percent of the
revenue still comes from trading and
trading bonds and stocks.
What is Goldman Sachs doing?
They're moving into mainstream consumer
retail businesses like markets where
they want to gather deposits
which are a cheap source
of funding and make loans.
So this is a perfect example.
If you like Goldman Sachs and
their strategy, they're moving into
something that's a bit more diversified,
that's a little bit less
volatile. From quarter to quarter, you
see trading can result in a
lot of volatility. You're going to
see the traditional banks get
smaller. You can see
the electronic players, the Citadel's,
the Virtu's, the Jumps, the
Jane streets, the HRTs of the world,
I think you're gonna see them
get bigger. If you
look at the trading
community that's being hired today,
they're not the traditional
traders finance MBA background, they
all have a very strong
quantitative backed.
When we think about the rise
of quantitative traders, these are still
human beings that are
developing the algorithms.
It's currently built out by humans,
but it could very quickly turn
into pure algorithms that learn
on their own through machine
learning. It's a very difficult
time for the institutional brokerage
community. On the other hand, I think
it's a really good time for
individual investors.
I think they're getting better value
and all those fees that were
going to brokers into the buy
side are actually staying in the
investor's pocket.
2018 Chevrolet Traverse - Review and Road Test
Kelley Blue Book:
the second generation Chevrolet Traverse
it's a three row midsize SUV that we
really like propelling our positive
vibes is a deeply functional interior
let's start somewhere boring door
storage the front rear doors are loaded
with bins and nooks galore though I'm
not quite sure what defines a bin versus
a nook beyond the aforementioned door
nooks smaller items can be stowed in the
sizeable center console in this spot
below the second row climate controls or
in a handy USB adjacent bin beneath the
center stack aside from slight pressure
in the upper back region the front seats
are superbly comfortable and as the
driver you'll enjoy a highly
customizable driving position supported
by well-placed arm rests just know drive
like a maniac and you'll wish for more
lateral support Headroom is
unsurprisingly excellent up front but
that excellence extends rearward as well
Tim is six foot something and look his
head is not mashed against the headliner
nobody cares also he's British and too
polite to complain about legroom so I'm
going to proactively slide and angle my
seats slightly forward. Thank you. Sorry I was uncomfortable. It's fine.
with less diplomatic occupants rear-seat
nice space could be tight but as
consolation third row dwellers are
gifted a wealth of cupholders decent
foot space under the second row and two
USB outlets on that note the Traverse
comes with USB ports in all three rows
that plus an optional three prong outlet
means well-charged devices ensuring your
family never has to, you know, speak
where material quality is concerned the
Traverse leaves room for its Buick
Enclave sibling to fancy things up even
so GM's mainstream offering incorporates
some soft materials and in many places
uses a soft coating to spruce up hard
plastics in other places it doesn't with
the second and third row stowed Traverse
owners have a substantial ninety eight
point two cubic feet to fill raised
those seats and twenty three cubic feet
of dedicated cargo space remains
supplemented by an additional 3.2 cubic
foot underfloor storage hold while
prattling on about the traverses many
fine qualities we should reserve time to
talk about how it drives and how it
drives is lovely the suspension
skillfully absorbs bumps while keeping
the chassis in check when cornering and
when you pick up the pace interior noise
is mostly quashed except for some
whistling in this region, which you would
hear if I didn't have to stop for that
stoplight
the man says I have to stop
providing propulsion is a mighty 3.6
liter v6 that tows up to 5,000 pounds
and moves the Traverse with real
authority when asked maybe more
impressive is the standard 9 speed
automatic it's a shining star of a
transmission that delivers virtually
seamless transparent shifts and when you
introduce the accelerator to the carpet
acceleration and downshifts occur without
delay for its size the Traverse is
fairly efficient aided by an
inconspicuous but undefeatable automatic
engine start/stop system that saves fuel
when the vehicle is motionless if you
don't mind giving up a few mpg the
optional all-wheel drive system adds
traction inslippery conditions a
turbocharged four-cylinder engine is
also available but only in the sporty
Traverse RS producing less horsepower
more torque and better city fuel economy
than the v6 the real trick with a
relatively large SUV is to hide its
girth the Traverse does just that with
light and easy steering and a tight
turning circle that make it a confident
parking tool parked on the flipside
visibility over your right shoulder is
terrible especially since depending on
where the seats are the right second row
headrest completely blocks the side
window in my experience if you can see
what's in the adjacent Lane lane changes
are less stressful
helping address those visibility
concerns our higher trim features like
blind spot monitoring a 360 degree
camera system rear cross-traffic alert
and rear but not front parking sensors
rounding out the option roster are
indulgences like wireless phone charging
a hands-free tailgate heated and
ventilated front seats leather and a
heated steering wheel choose the fancy
high country trim with its power folding
seats and traction enhancing dual clutch
rear differential and you can spend
nearly fifty three thousand dollars it's
worth mentioning that adaptive cruise
control is only offered on the high
country trim while many competitive SUVs
offer similar technology at a lower
price point and if you need eight seats
you're stuck with the low end L & LS
trims as higher Traverse trims only come
with seven in basic not quite $31,000
form the Traverse comes surprisingly
well equipped with keyless entry and
push-button start three-zone automatic
climate control a wide-angle backup
camera a smart slide 2nd row seat for
easy third row access and 7 airbags
including a center airbag that deploys
from the inboard side of the driver's
seat the standard infotainment system is
a 7-inch unit featuring apple carplay
and android auto but buyers can also
upgrade to an 8 inch system with a
lockable storage area behind the screen
hiding the traverses elusive seventh USB
port either way the screen is decently
sized placed within reach and the menus
are a cinch to navigate while shopping 3
row midsize SUVs it's always smart to
investigate the alternatives some
standouts include the roomy VW Atlas
the practical Toyota Highlander the
thoughtfully crafted Honda Pilot and the
strong selling Ford Explorer
pleasant to drive and
competitively-priced with lots of cargo
space and room for up to 8 passengers
the Chevrolet Traverse is fantastically
suited for family duty despite some
formidable competition the Traverse is a
midsize SUV that deserves your attention
How the Tabasco Factory Makes 700,000 Bottles of Hot Sauce Per Day — Cult Following
Eater:
(dramatic music)
- [Daniel] For over 150 years,
Tabasco's famous red pepper
sauce has come from one place:
Avery Island, a small area
of land surrounded by bayous
in Southern Louisiana.
It was first made by Edmund McIlhenny,
and the company has stayed
in family control ever since.
Every single CEO has been
a descendant of McIlhenny.
Nowadays, hot sauce is everywhere
and although Tabasco is seen
as a fixture in the industry,
it's important to remember
that when Tabasco was created,
we were still over 100 years
away from the buffalo wing.
Hot sauce just wasn't a thing back then,
and Tabasco laid the foundation
for this whole movement
that we're finally having now.
Tabasco as a sauce really
revolutionized America's idea
of standardization,
manufacturing, and distribution.
I think a lot of people take
for granted how hard it is
to keep a product consistent
with changes in weather
and the growth of automation.
There are just so many
opportunities that companies have
to take shortcuts on their ingredients.
I'm out at Avery Island
to see how the descendants
of McIlhenny have been making
the same exact product for 150 years
and meet the people
responsible for creating
one of America's most
popular sauces of all time.
(hot sauce pouring)
- It's the capiscum
fruitessence variety Tabasco.
From right here, it's five
years from the time this pepper
is essentially made into
a bottle of Tabasco's.
This is the original
plant that E. McIlhenny,
my great-great-grandfather got,
and then started making the sauce
and pickling it with vinegar
to let it sit for three years,
but that was all by accident
how he came to three years.
It took him a little while to
actually get the final recipe,
but the process itself, as
you'll see, hasn't changed much.
There's a few more pieces
of equipment, but that's it.
Everything used to be grown until the 60s
right here on Avery Island,
then we started growing around Louisiana
and then into Mexico and
Venezuela and then all over.
- [Daniel] The main purpose
of the growing operations
on Avery Island is to grow
huge fields of peppers
and to choose only the top 1% of seeds
to send away to be grown elsewhere.
- We look for the right plants,
we mark them, we pick them,
and those seeds are used to
send to Latin America, mostly,
where we do the majority
of our harvesting.
- Are these financially
the most efficient pepper
for you to work with?
- Absolutely not.
- Really?
- It's a more attractive looking
pepper than a lot of them,
but it's very inefficient.
- [Daniel] Why?
- They're very small,
it's hard to get off.
- Are they all picked by hand
or do you guys have machinery?
- No, they're all picked by hand.
We've been trying to develop
a machine that would do it,
but it's just not very efficient.
- I'm gonna have a bite.
- What you'll feel is it starts working
mostly on the front of your tongue,
then it'll start going back.
(coughs) It'll stop you from talking.
That was great.
You ate the whole thing.
- Thanks, just wanted to show
my commitment to the brand.
- I appreciate that.
- It's also pretty cold
outside and now I feel like
I'm a little bit warmer.
I think we both look a little more red.
- Yeah, definitely.
- [Daniel] Once the
peppers have been picked,
the seeds are extracted
and sent all over South America
and Africa to be grown
from seed to pepper.
At that point, the peppers are combined
with a little but of salt and
ground into a pepper paste,
which is then shipped back to
Avery Island for processing
in these large containers.
- All right, ready to go!
Woo! (laughs)
- How many barrels do you fill up a day?
- 100 barrels.
- 100 barrels.
k- Average.
- Is this a one person job?
- Mm-hm.
- You can do it all on your own?
- Mm-hm.
- All right.
You needed me a little bit, right?
- (laughs) Moral support.
- Ah, it's so f****** cool.
I'm going.
- Now.
There you go.
That's it.
What separates us from
everybody else is what we do,
'cause they age it for
three years with this.
This whole process.
There's a lotta people
who are Tabasco fans,
love Tabasco, that have
no idea the pepper sauce
is aged for three years.
- Now we filled a bunch of barrels
and we're gonna put the lid on
and get them ready for aging.
All right.
- This is its natural state.
All this is, is ground Tabasco pepper,
the day it's picked,
with salt added to it.
Doesn't take much, it is spicy.
Very fresh, grassy notes through it.
Like a fresh chile.
- Definitely get some grass.
♪ Ah ♪
(hammer banging)
- Could you explain the reasoning
for the salt lid that goes on here?
- The salt that you're seeing here
is not actually touching mash at all.
There's a lid here, obviously a solid top.
Maybe if there's a small
imperfection in that lid
that we don't see, that
salt jams itself in there
and acts as a seal.
- Cool.
- It's an extra protective layer.
- [Daniel] Now the barrels are sealed
and sent to the aging
warehouse for over three years.
I can't stress this enough:
all of the world's future
Tabasco is in this room.
- [Harold] There's about 55,000 in here
of these barrels.
- Jesus.
This is all the future Tabasco?
- All the future Tabasco.
Each barrel makes approximately
10,000 2-ounce bottles of Tabasco.
- Oh my god.
- There's a lot in here.
You can look down that one.
- What?
Do you like the cobwebs a little bit?
- Yes, it's a natural way
of keeping the insects down.
- This is so crazy 'cause the barrels
are like a living entity
and obviously it would be so much easier
to just put everything in a giant bin,
like a controlled
plastic or stainless bin.
It's just such a human
stage of this process.
Now I got to see what the
three year old mash tasted like
after spending all that
time in the warehouse.
Right here, we have three years from now.
We're time traveling.
- Correct.
(hammer banging)
- So this is the same?
- Absolutely.
- It's lost all this water?
- All this moisture.
That's part of the fermentation process.
You have evaporation and things like that.
- Does it lose some of the spice?
- No.
- You almost get a miso vibe.
You get that fermentation.
It's not just straight salt,
it's one cohesive unit now.
Not just a bunch of lone rangers
in a barrel over there.
- That's it.
- This is the blending department.
This is where we take the
three year old aged mash
and we make it into
Tabasco red pepper sauce.
- The three year old
mash then makes its way
into the mixing room where
it's combined with vinegar
at a measure of 70-30
and mixed for approximately three weeks.
Is this hot sauce heaven?
- Hot sauce heaven, right there.
I call it Sauceville.
- Sauceville.
Are you the mayor?
- Sauceville, Louisiana.
I'm the mayor.
Come see me anytime.
These are my vinegar tanks.
I get about two truckloads
of vinegar every day.
12,000 gallons go really, really fast.
- This is the three year old mash.
- That's three year old
aged mash ready to go.
- From here what happens
is the three year old mash
gets sucked into one of those machines
and then mixed with vinegar.
- To the mixing tank upstairs.
- Gotcha.
One of the ways Tabasco
keeps the product consistent
is by blending all of the peppers
from the different countries
together in each batch.
- We use 12 barrels.
A mixture of different countries together.
I might put three to
four countries together.
That's how we get the 96
barrels that we use every day.
- The nose in here is quite pungent.
It smells like...you get a
little bit of the hot sauce,
but it's just a lot of vinegar.
How is it?
You get used to it?
- Oh yeah, you get used to it.
After a few years of working over here,
you get used to the smell.
I don't smell anything.
- Even when you walk in
first thing in the morning?
- First thing in the morning.
- You think it smells
like everything else?
- Smells like go time to me.
- From the storage tanks down there,
they get pumped up into here.
- And constantly stirred 14-28 days.
It's the 12 barrels of mash,
vinegar, all mixed together.
- So from here it gets strained.
- Every tank you gonna
get anywhere from 1,000
to 1,500 pounds of seed, and pepper pulp,
you're gonna get about
30-40 pounds of pepper pulp.
- After everything comes
out, then you get this,
which is finally what we know of
as Tabasco.
- Tabasco sauce.
That's ready to go.
Only thing I gotta do here
is take a sample to the lab,
let them test it for me.
They test the salt, the pH,
the acidity, the pungency,
and they tell me if it's good or not.
We only make good stuff over
here so it's gonna be good.
- So what keeps you interested
and excited is making something
that is as close as possible
to the thing that's
been done for 150 years.
- Yeah, so knowing that,
it's tradition for me.
When I go in the store,
I get to see Tabasco brand
pepper sauce on the shelf.
I had my hands in making this
and it's known all over the world
so I'm just proud to be a part of it.
The tradition that keeps going and going
and going and going.
It don't get much better than that.
I like it, I can do it another 40 years.
If I come to your house
and you don't have Tabasco
brand pepper sauce,
it'll be a quick visit.
(laughs) Just make sure
you have it on the table
ready to go.
- You'll leave a restaurant
if they don't--
- I'll leave a restaurant.
- [Daniel] Once Tabasco sauce
is finished and approved,
it makes its way to the bottling facility,
which is literally next door.
Just a reminder that everything Tabasco
happens on this island.
So what goes on in there?
- It's really, really pretty simple.
The sauce comes down into a filler.
You'll see the bottles go around.
They get filled.
They get labels put on them.
They go in a carton and
then they go in a box.
Really, really simple, but
it's moving really fast
and it's really pretty cool
to see how dynamic it is.
- And how many bottles do
you guys get through a day?
- So on a good day.
- On a good day.
- On a good day we'll make
about 700,000 equivalized units.
- My great-great-great-grandfather...
- You're related!
- I'm related.
In his lifetime, he made 350,000 bottles.
30 years, 25 years of
making Tabasco sauce,
he made 350,000 bottles.
That's a shift right now,
not even, half a shift.
- [Daniel] So really, the
stages of this factory
are organizing bottles, filling
bottles, closing bottles.
- [John] Pretty simple.
- [Daniel] But it's pretty
cool that you guys do it here.
How often is this factory running?
- At this time of year,
during the fourth quarter,
holiday season, we're
running five days a week
almost 24 hours a day.
- No s***.
- Yeah, yeah, we're busy.
- Oh my god.
- It gets kind of mesmerizing.
You can sit and watch this stuff
and you just feel your mind go blank.
It's really kind of incredible.
- [Daniel] In trying to
figure out how Tabasco
has gotten so popular over time,
I think it's important to
look at the consistency.
The company is literally
run by descendants
of the same person that started it
and every single person who works here
is obsessed with making the product
as closed as they can to the
original product that was made.
- You've seen the process
and you've tasted the mash,
you've tasted the pepper.
- Frankly, I tasted too
much product and by-product
because I was just eating
that and nothing else.
- As a reward for all of
your hard work, we have a...
- Whoa!
- This is a stainless steel spoon.
It's like a badge of honor.
When you walk around the factory,
people know that you tried the mash.
- Will they let me in the bars
in New Orleans with this thing?
- No, they'll probably arrest
you if they see you with it.
They'll think it's something else.
To grandaddy.
- Yeah, let's move mountains.
- The process for making sauces nowadays,
you grind everything up within it.
We have to take stuff outta this one.
When you look at the flavor
profile, it's fairly flat.
It really needs to work with something.
That's what we want,
that's the purpose of this.
- I gotta say, I've said this before,
but going through all the stages today
and meeting all the people that really
care about what goes in here,
it changes it a bit for me.
I enjoyed that Tabasco
bite a little bit more
than I usually do.
- That's really good to hear.
That's what we're here to do.
- Thank you so much for having us today.
- Thank you for making the trip down
and spending the time to
learn about us a little bit.
- [Daniel] At this point
I think it's safe to say
that hot sauces may come and go,
but Tabasco has proven
that is has staying power.
(gentle music)
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