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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