Are We On The Verge Of MASS Consolidation In The Automotive Industry? Who Do YOU Want To See Team Up?

So Agent00R was really Marchionne all along and this is his final question right out of Confessions of a Capital Junkie?

Now that China is allowing Complete Foreign Ownership of car companies - I actually believe that there will be new companies formed there - some by US makers - and some of the current Partnerships - will be bought out.

FCA - which bet the farm on Suv's. Trucks, and Crossovers - at this time has WON THE BET - by dropping most cars. That will reduce the need for it to combine. On the other hand - Honda and especially Mazda are in a less tenable position - dependent more on car sales - and I expect Mazda to need a Truck Partner.

THe winners in all of this will be the companies that have spent the money to produce the new flexible platforms - that reduce costs.(Gm, VW, Toyota among them) THose that did not have a problem - it has been shown that having a large number of "Brands" under one roof is not particularly good - so there is LESS incentive for the Haves to want to buy out the have nots.

So - I do not expect a lot more consolidation - the companies that can afford do not NEEd more Brands to dilute their sales to. THE added costs are not worth it today.

I think you'll see:

Toyota fully absorb Mazda and Subaru and quite possibly take BMW in one bite.

GM and Ford will merge with Chinese companies.

The French auto industry will be in business as long as the French government keeps them alive, but no one wants them. Ditto the Italians.

The Renault-Nissan-Mitsubishi mess is big enough to sink all three companies.

FCA will be swallowed whole by Hyundai-Kia or the Chinese because FCA is in deep trouble given it dearth of competent product outside of pickups and two of the Jeeps.

VW will have and Old GM implosion.

Geely is one to watch along with GAC and SAIC-Nanjing because they have deep pockets. It would not surprise me to see Geely go after Tata's ownership in JLR.

Interesting note on the French. Peugeot is a leader in auto profit in Europe (not saying much) and claims to already turned Opel into the black.

Sure they have. LOL

Fortunately, Toyota can't absorb BMW since the Quants and the State of Bavaria combined have a majority stake and they have stated in no uncertain terms that BMW is not for sale.

The "stated in no uncertain terms" crap is just positioning BS. In a hard negotiation stating that something is not for sale merely means "my price is high". Aside from the automotive bigotry and hubristic reactions of "those damned Japanese people won't be allowed to buy BMW", the fact is that BMW is a small company relatively speaking and will not be able to remain autonomous forever because they simply do not have the market coverage to sustain independence. Factor in that BMW seems to be stumbling with products as of late and you can see the scenario that BMW could be sold or merged. It most decidedly will happen sooner or later.

Agreed. I think Mazda as a brand is not relevant. If it disappeared who would care? Miata owners? Maybe they would like a convertible GT86 instead? Subaru and BMW would be a good fit and get improved operations and quality. Small and independent is too hard to pull off. You need a parent with very deep pockets to keep up with technology, keep platforms and models current and keep pricing near market norms.

@CC Toyota is moving to absorb Subaru and Mazda. Subaru is sort of useful to Toyota's bottom line, but Toyota's interest in Mazda is probably more of a hedge against a Chinese company taking Mazda than any value Mazda brings to Toyota.

Consolidation is best done when it fills in missing core competencies or needs. For example FCA has a distribution and service network, outside of China, that took $ and years to build. It has one strong global brand, Jeep, and a USA brand RAM and and the engineering skills and plants retooled to build them. It has an automation partner rather than the money pit DIY approach. It has the regulatory experience needed for the USA and Europe. But it doesn't have newer platforms, electric technology, or the funds to engineer those and its weak in China. Tesla has an electric platform, battery plant, and a huge investment in automated production in Fremont. But it doesn't have a distribution and service network to support volume sales, lacks the production engineering skills to make Fremont work, and really doesn't have the funds needed for being in the higher volume segment of the market. Several Chinese companies have the money thanks to being in a growing and consolidating home market, have shown they can develop platforms (Volvo/Geely) but need EV technology in their home market, sales and distribution networks outside China, local manufacturing in these markets, some market specific fill in products, and knowledge to engineer products to meet regs. A roll up of FCA, Tesla and a large Chinese firm would be a game changer in the industry. The spoiler in a potential deal is Tesla's stock price is too high for anybody to buy it and make economic sense.

I can see Geely buying Tesla and then replacing Teslas with vehicles of better quality.

Tesla's stock is inflated and there are massive warning signs that all is not right.

The signal of what direction FCA will go will come soon. That will be in the person that Manley and Palmer pick to replace Altavilla. If that person is from Torino, then FCA will still have one foot in Italy. If however that person is from Auburn Hills it will probably be the start of a very ugly divorce.

I predict an ugly divorce because Jeep and Ram desperately deed a mainstream manufacturer to back them up and to sustain the momentum, but no one in their right mind would want 4 dead to dying Italian brands.

Make Porsche independent again!!!!

That makes ZERO business sense.