Roads & Transportation

Macquarie wrong turns put toll road in bankruptcy

23 Sep 2014

The U.S. route backed in part by the Australian bank went bust because of scant traffic, its operator says. In reality, the buyers created insurmountable potholes by overpaying, loading on debt and losing derivative bets. They need only look in the vanity mirror for blame.

Uber can steer round German roadblock

2 Sep 2014

The U.S. taxi app says it will defy a ban issued by a Frankfurt court, risking fines of 250,000 euros per journey. This looks like Silicon Valley arrogance. But Germany’s taxi rules are outdated and flawed. Uber is sticking up for consumers and will probably prevail in the end.

French carmaker teaches world about cheap autos

15 Aug 2014

Renault’s no-frills brand Dacia is Europe’s fastest growing carmaker. Quick gains in market share and rich margins are arousing the interest of rivals, including GM. But selling vehicles for as little as 5,995 pounds isn’t easy. It requires a rethink of all aspects of carmaking. 

China’s e-commerce secret weapon: the delivery guy

11 Aug 2014

Fast, cheap delivery has fuelled online shopping, and the growth of companies like Alibaba and JD.com. Thank a plentiful workforce of low-cost couriers that U.S. rivals can only dream of. While that can last for a few more years, unhelpful demographic change is in the post.

Metalworkers, not McKinsey, bend VW to their will

8 Aug 2014

The U.S. consultant has advised some of the most conservative institutions in the world – the Bank of England, even the Vatican. But that hasn’t stopped unions forcing the German carmaker to show it the door. It flags how hard it will be to execute VW’s turnaround plan. 

Fiat-Chrysler can steer past bump in the road

7 Aug 2014

Fiat’s falling share price complicates its Chrysler merger. CEO Sergio Marchionne’s grand plan to unify the Italian carmaker and its American subsidiary will survive, but Fiat-Chrysler’s U.S. float may be delayed. The Fiat drop also presents a trading opportunity for the brave. 

VW fights symptoms not root of profit woes

31 Jul 2014

Volkswagen is embarking on a 5 bln euro efficiency scheme. Tackling bloated costs and poor margins at the core brand is long overdue. But the group is shying away from addressing the real causes of the malaise. It is too complex, overly centralised, and badly governed. 

Renault is showing a healthy turn of speed

29 Jul 2014

Demand is weakening in developing countries and there are some cashflow concerns. But the French car manufacturer is adding market share in Europe, its cost control is relentless, and profit margins are rising. Renault is well placed to move up through the global field of automakers. 

VW tilt at Fiat would be a bad idea

17 Jul 2014

Shares in Fiat are climbing on a German media report of a possible bid from Volkswagen for all or part of the $13 bln Italian carmaker. VW has enough on its plate. It’s hard to see the benefit of adopting Fiat’s problems. The logic of Fiat selling its Chrysler unit is weak too.

China’s subway splurge only half on right track

26 Jun 2014

Building more tube lines is a good idea. Asking international investors to fund them is not. Beijing’s $190 mln subway bond may be an exception. But given the positive externalities, urban transport is one thing China needn’t be coy about funding from the public purse.

China may get less than it bargains for from UK

18 Jun 2014

Britain’s $23.5 bln package of Chinese trade and investment comes with unspoken terms: keep quiet on politics, and don’t expect reciprocity. That’s not such a bad deal. Rule of law means Chinese money buys less influence in the UK than it would back home. China may be getting more rambunctious, but openness is still the best response.

Racy debt makes the AA’s IPO a high-octane bet

12 Jun 2014

The British roadside recovery firm is floating at an enterprise value of 4.3 bln stg. Buyers could get a bargain, but they need to be comfortable with life in the fast lane. Private equity sellers have left the AA towing abnormally large debt.

A London roadmap for regulating $18 bln Uber

10 Jun 2014

Cabbies are to protest in the UK capital. The online cab firm’s fresh valuation shows how much may be at stake. But Uber’s lower fares are welcome, and black cabs have other privileges. London has a chance to balance Uber’s consumer benefits and its disruptive impact.

Scania holdouts risk overplaying their hand

24 Apr 2014

Some minority investors oppose Volkswagen’s $9 bln bid for the rest of the Swedish truckmaker. But saying “nej” is risky. VW has effectively tied its hands, making a sweetener unlikely. The premium is already generous. If the buyout fails, Scania’s shares could fall steeply.

Panama Canal heading towards silly global failure

6 Feb 2014

A dispute over cost overruns could stop the 70 pct complete expansion of the Panama Canal. That’s ludicrous. American ports have already invested to take the bigger ships the wider canal will allow. With arbitration stalled, it’s time for a strong mediator to step in.

Panama Canal can and should avoid project meltdown

28 Jan 2014

Work has slowed down to a crawl over a cost overrun dispute. Both sides have a strong incentive to fix the problem. The key question is how to finance the remaining costs while an arbitrator decides who owes what. Any solution is likely to pile more risk on the contractors. 

Brazil infrastructure drive risks running aground

23 Dec 2013

President Dilma Rousseff’s $100 bln plan to spruce up rickety roads and ports only partly makes up for years of neglect. And a looming credit downgrade makes this the priciest time to splurge. Without a shift in Brazil’s savings rate, any investment boom will be short lived.

China web giants take the fight offline in 2014

17 Dec 2013

Chinese tech firms are leaving their comfort zones to win consumers. TV shows, logistics and electronics are all part of the arsenal for companies like Tencent, Baidu and Alibaba. These forays are as disruptive as they are risky, particularly for the sector’s high margins.

FirstGroup’s Greyhound activist gets it half-right

11 Dec 2013

Tom Sandell is right that First has cheap stock and a bad track record. It should also take any good offer for Greyhound buses. But his proposed spin-off of other U.S. units looks less useful. The onus is now on First to defend its existing routemap for value creation.

Alibaba dips cautious toe into logistics

10 Dec 2013

Investing in white-goods maker Haier is a new direction for the e-commerce group, whose high margins come partly from eschewing hard assets like unsold goods, trucks and warehouses. But e-commerce hinges on timely delivery – which explains Alibaba stepping down from its pedestal.