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Saturday, May 17, 2003 |
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Industry brief: Automobiles The global auto industry would seem to be far from a tight oligopoly. In the US, for example, consumers can choose among scores of car brands, from companies headquartered in Germany, Japan, Korea, France, England, Sweden, and Italy, as well as the United States. In the US, the days when the Big Three had no competition are long gone. Historically it took around 50 years from the early years of the industry. when there were scores of brands and companies in the United States, to the era of the 1950's, with the Big Three becoming absolutely dominant. That dominance was short-lived, thanks to the arrival of cheaper and ultimately better-made cars in starting in the 1960's. This was a classical disruption of an oligopoly, where the rules of the game had been rewritten just as a few companies thought they had dominated it all. But that disruption has long played out. The Big Three never lost it all, but they were certainly threatened, and had to work hard to maintain a strong, but smaller, market segment. Now a second disruption threatens. There is simply too much auto making capacity in the world, and the markets aren't growing very fast. The manufacturers overproduce each year by millions of cars. And since cars are far more durable than they were even 30 years ago, the turnover has slowed down. As a result, independent companies are forced to put themselves up for sale, or go out of business. As the market gets more and more global and free trade treaties open borders, the idea of national car companies is starting to wane. It's no longer unthinkable that a foreign concern might own a local company, even in such closely held economies as Japan and Korea. And the major auto makers have manufacturing plants across the world, so that companies like Honda and Toyota can claim that they are no longer really making foreign cars in the USA, for example. Mazda has a factory in Spain, GM in Thailand, and so on. Where full acquisitions have not taken place, strategic partnerships and partial buys have become important ways of linking companies together. The Daimler-Chrysler merger in 1998 was just the opening round in a series of mergers, acquisitions, and major buys that have taken place over the last four years. Only Honda and Toyota have stayed out of the land rush, preferring to build their fortunes organically, from within. In addition, more acquisitions and mergers are on the way. Fiat, for example, is always rumored to be on the block, and both Porsche and BMW may be too exposed to run as separate companies. It's not hard to imagine a world in which there are only five or six major global auto producers. The most notable deals of the last few years include:
Auto rands and companies * a brand controlled, but not as majority stockholder
6:07:12 PM 
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Last update: 9/4/2007; 8:52:27 PM .
