There’s some chilling commentary from Fiat’s CEO, Sergio Marchionne, over at Reuters today.
Last week, when I did the Saab Sale Options article here at TS, there were 12 distinct companies that I mentioned, plus one wild-ass possibility and a number of un-named Russian and Chinese entities. All of these entities exist today and to varying extents, all of them should have the ability to continue existing in a rational, stable market.
This year, however, we see a market that’s becoming more rationalised than rational, and a market that’s about as far from stable as you can get. Marchionne notes that this will have consequences:
“The only way for companies to survive is if they make more than 5.5 million cars per year,” Sergio Marchionne told the European edition of Automotive News, an industry publication.
“As far as mass-producers are concerned, we’re going to end up with one American house, one German of size; one French-Japanese, maybe with an extension in the U.S.; one in Japan; one in China and one other potential European player.”
Reuters note that the only companies producing volumes of more than 5.5 million cars at the moment are Toyota, General Motors, Volkswagen, Ford Motor and Renault-Nissan.
That means Marchionne’s own Fiat is considered vulnerable, and with it the Fiat, Alfa Romeo, Lancia, Maserati and Ferrari brands. Can you imagine a world without Ferrari or Alfa Romeo?
Assuming that Toyota would pick up Subaru and that someone would pick up Hyundai, Volvo and Jeep, the following brands would have to be considered vulnerable in the medium term: Peugeot and Citroen (maybe one of those would be retained for the sake of differentiation), Maserati (currently owned by Fiat, but would you buy Fiat and keep both Maserati and Ferrari), Proton and Lotus (maybe the Lotus name will survive as an engineering arm), Chrysler, Dodge, Mitsubishi, Alfa Romeo, Lancia, Skoda, Seat, Mercury, Mazda……and Saab?
Can you imagine how much more dull our motoring lives will be without this variety to look at and think over? Actually, if you’re in the US, don’t bother answering that. There’s a lot of these that don’t sell in your market already.
I think the second hand and classic car markets are going to become all the more important for enthusiasts who want to preserve a bit of variety in their driving lives.
If you think about it, this is a path we’ve been heading down for a long time now. Whilst consumers want the biggest vehicle they can afford to run, legislators want safety and efficiency. This means that in today’s world, the process of designing a car that won’t get penalised by future legislation is basically a science project.
Companies will move more and more towards a singular optimum design for aerodynamics and pedestrian safety. Companies will move more and more towards similar architectures, not only because of the savings the mega-companies will realise as a result, but also becuase as more is known about the best handling and driveability, more companies will move towards that. As the road to perfection becomes clearer, more companies will gravitate towards it. All that there will be to differentiate them is the wrapping.
What can you do to keep the possibility of variety?
1. Keep an old car running. It’ll be harder and harder to do as the years progress, but I’d like to keep at least one car in my garage that doesn’t have any electronic aides in it. Or at least no electronic safety devices. Man and machine. Mechanical engineering. Balance. Control.
2. Demand that someone make cars that ignore environmental and safety factors. Cars that engage, thrill and reward, as well as punish when something goes wrong. This is not likely to happen except for a small number of botique manufacturers that make track-day specials (Caterham, Arial, etc) but I hope they survive.
3. Hope and pray that these new mega-companies, if they do eventuate as Marchionne predicts, preserve as many name plates and as much variety as possible.
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As I write this, it’s Sunday here in Australia. I think this is a poignant enough reminder to get in my car some time today and let it rip for a while. I might even get the 900 Aero out for a few blockies, despite my thinning clutch.
I suggest you do the same.
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Hey my friend, Saabs have always been a thrill to drive and at the same time, considerate of environmental and safety factors. That’s what makes a Saab a Saab! Safety and environmental legislation can be met and even exceeded without the need for total homogenization in the automotive world. Let Saab get back to being Saab and I’m sure they’ll show the rest how it’s done!!
Fiat should hurry up and buy Saab. At least then Fiat will become a slightly bigger manufacturer.
GM’s bailout package will make it isolationist as it will be only be able to spend bailout funds in the US. This will leave GM Europe which includes Vauxhall, Opel and Saab largely in a postion where they have to fend for themselves. IF GM NA then sorts itself out (not great odds) and trys to treat GM Europe the way it has done in the past, it may be in for a quite a surprise. I rather hope it gets that surprise!
Yeah, he’s right – the bigger you are, the easier to justify a bailout package from your respective government.
Maybe by 2025 we’ll all end up buying our cars at Wal-Mart and Ikea. Probably not such a bad thing, after all. Have to say, the Swedes and the rest of the Europeans have contributed to this as much as the Americans.
Seriously. All of us classic 900 owners need to band together to design and/or source some parts that are no longer available. for example, transmissions
Just a small point but:
I would agree that continuing consolidation is a natural direction to take. However, I would see this primarily in terms of groups ( Volkswagen/ Toyota/Renault/Saab-AstonMartin etc……) and less so in terms of marques. THe groups may consolidate and some marques disappear but there idea of mega -marques seems far off to me. Thats why Toyota has Lexus and Suzuki. VW/Porsche has Audi/Lamborghini/Seat/Skoda etc….
Look behind the everyday brands that you see in the supermarket, the IT store, etc and there are many more brands than there are parent groups. In the area I work in ( pharmaceutical/medical) there are many more brands/companies than there are factories. In a post-modern world, brand, IP and EBIT drive everything in my view.
When reduction towards 5 automative groups tends to lead towards less brands and boring combinations, someone will produce an alternative somewhere, somehow. Even big automotive groups will not let the market down and produce Ford-T-wise, PT is right, some variation will always be offered. Nor will we turn all into classic car drivers for everyday, the few hardcore enthusiast not regarded. Look at the many specialist cars, not just in their native UK, they pop everywhere. With many variations, suitable for different budgets and tastes. From dustbin rubbish till exhuberant glitter. Loot at the relative succes of nostalgia brands like Morgan. Or look at the customisez sector, not my piece of cake, but it develops every day …
I.e. I’m personally curious about the Loremo (a lightweight payable downsizer if it ever comes to production) & the Artega GT (a serious cayman/911-contender, available from right now, just not within my budget, yet).
Maybe it’s about time to buy that (2nd) lotus or caterham (or if someone of you has got a Alfa 6 – Sei/Montreal/99 or classic 900 turbo/… in good condition, I’m interested). Mister Marchionne just gave another argument to do so.
Fewer big groups may survive but that is not a problem at all.
Look at VW. Here you can have a VW, Seat, Skoda as kind of lower end brands. In the middle you get Audi and on top Porsche, Bugatti and Lambo. Did I forget a brand?
And the clue is, they are more or less the same stuff. For example VW SUV and Porsche SUV. Same car produced in Pressburg/Slovakia. Only different in some design aspects. The customers seem to accept this.
Toyota does the same thing with Lexus/Toyota. I guess, they got the idee first and VW copied later.
The question is, if any company thinks the Saab brand is worth to survive. Or, if the Swedish market is interesting enough to keep Saab on the list.
Be honest, Saab can easily be substituted even on the Swedish market. If the Saab brand would disappear next year, shoppers could find themselve happy in just any other brand. For example Audi or VW.
Swade,
I do think that in the future a number of smaller car-producers will have to look for a harbour big enough to offer some safety in times of trouble. That’s the case with Chrysler now, who can only hope they’ll keep their battered ship afloat long enough – and, in a different way – with Porsche, who are now (!) in the lucky position to buy themselves a harbour – VeeDub – that will shelter them if things get a little rougher. And this they will, for Porsche and for everyone else.
PSA will have to find a strategic partner, too – why not Fiat, for instance.
So what about Saab?
Saab is a very small player, and in my opinion, there will be nothing like an independent enterprise under that name anymore. To develop a car from scratch is a thing that can no longer be done without the resources of a huge company – even the new Porsche Panamera is based upon the Porsche Cayenne, which is based upon the VW Touareg – and the salesmen at Porsche know exactly why there is no new platform for that car – Porsche simply couldn’t pay for it without going to the limit.
So Saab will – in this way or another – have to be part of some bigger thing – and I do think GM is no longer a worst case scenario; GM are obviously no longer capable of running Saab without someone else. So someone else will spend some money and take some influence – and maybe that will provide for the momentum Saab needs to become “very Saab” again.
Let’s hope for the best!
Yours
saabista63