October 26, 1999

Automotive Mergers

Andrew Charles

DaimlerChrysler(DC)-Renault-Nissan?
True, DC was in talks with Nissan before Renault bought in, and they need a cheaper brand in Europe, but Renault is also Renault trucks, one of the biggest players alongside DC, Fiat's Iveco and Volvo/Scania. The only reasonable targets for DC in Europe are PSA (Peugeot) or Fiat, which is more likely to part with its car operations than Renault. In any case Renault will probably remain free until we see the results of Nissan's restructuring. PSA is the most likely partner for DC, especially with its South American and Chinese operations. Mitsubishi and one of the remaining troubled Koreans are possible in Asia.

Suzuki and Daewoo provide GM with adequate Asian coverage, along with its Opel plants in Thailand, but its still weak in Japan, with partner Suzuki only producing small cars (and motorcycles) and Isuzu selling re-badged Hondas. Subaru is the obvious fit here. Its car range fits nicely with Isuzu's SUV's, providing a range with no gaps and no overlaps. That leaves medium and upper luxury. Resurrecting an old US marque like Peerless, Pierce-Arrow, Auburn or Deusenberg might work in the US, but they really need a more cosmopolitan (i.e. European) name. Hispano-Suiza might be available, part of the same aerospace components group as Messier Bugatti, and PSA has Talbot-Lago (and Panhard if GM wants to expand its Swiss-Canadian armored-vehicle business). The best (and most available choice) would be Fiat Auto, or even parent Fiat SpA (combining Iveco with Isuzu, adding the railway business to GM's EMD and splitting off or selling other businesses like Magnetti Marelli and New Holland). GM would gain a slew of name-plates, and combining Cadillac with Alfa-Lancia, Maserati and Ferrari could even boost its Euro-cred there and provide valuable experience for Cadillac's LeMans program.

So, long term Ford/Renault/Nissan, DC/PSA/Mitsubishi, GM/Fiat/Subaru. So who is left out? VW (which already has a large, international group), Toyota, Honda (both more likely to form loose alliances) and BMW. BMW could use a partner, for help with small engines and the troubled Rover group. On the other hand the Quandt family (or at least Maria?) is unlikely to sell (yet). Longer term who is available? VW and DC are direct competitors with Audi/Bentley and Mercedes/Maybach against BMW/RollsRoyce. Ford of course has Jaguar, Daimler (which they seem to have forgotten), Aston-Martin, Lagonda (by request) and now Volvo. That leaves GM, which (even with Fiat) would need brands in BMW's range, and with Rover BMW has more than it knows what to do with. A minority holding is most likely, with the Quandts holding the rest of the company. And of course there are still the Malaysian, Indian and Indonesian manufacturers like Proton (which now owns Lotus).

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