NINETY EIGHT REGENCY

Ghosn's warning to automakers: Go big or you'll go away

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Ghosn's warning to automakers: Go big or you'll go away

Jesse Snyder

Automotive News Europe -- May 26, 2010 06:01 CET

Carlos Ghosn: “You also must be in every market -- and it's not just Japan, Europe and the United States anymore but also Brazil, Russia, China and India."

DETROIT -- Size matters in auto company survival, Renault-Nissan CEO Carlos Ghosn told an audience here Tuesday.

To cope with the escalating costs and scope of a global industry, successful automakers must complete a trifecta -- be able to compete in every technology, every market and every segment, Ghosn said during a luncheon speech at the Detroit Economic Club

“No 3 million-unit carmaker can make it,” Ghosn said, explaining why his Renault-Nissan alliance forged an alliance with Germany's Daimler AG.

Competency in one or two of the three skills is not enough, and only very large companies can afford all three, he said.

Technology is getting more expensive. Automakers must simultaneously develop gasoline, diesel, hybrid and electric vehicle technology because they can't predict which technologies will prevail, Ghosn said.

“You also must be in every market -- and it's not just Japan, Europe and the United States anymore but also Brazil, Russia, China and India. And you better be in Indonesia, too,” he said.

“And you can't be viable as a niche player, so you need to be in the upper, lower, 4-by-4 and crossover segments.”

'Technologies are expensive'

France-based Renault and Japan's Nissan do not consolidate their financial results and in some ways remain separate companies, but they cooperate on platforms and powertrains and some manufacturing. Through a holding company, Renault owns about 42 percent of Nissan.

That type of alliance is more flexible than a conventional merger, Ghosn said. He also cited the new alliance with Daimler -- initially to cooperate on developing a replacement small platform for Daimler's Smart division -- as a better way to cooperate.

“Technologies are expensive and you need a partner because nobody can afford to do it all alone.” Ghosn said.

Major players...someday

He predicted that as the Chinese auto market develops, domestic Chinese automakers eventually will emerge as major players.

“Right now, there is not one global Chinese automaker,” he said. “Not one has the scope of a company like Renault-Nissan or Volkswagen.”

But soon, a Chinese automaker -- or perhaps an Indian company -- will “buy something nobody else wants” and become a worldwide force, Ghosn predicted. “It could happen much faster than everybody expects.”

Much like the Koreans did in recent years, emerging-market automaker powerhouses can develop by constantly “benchmarking and copying best practices,” he said. “Nothing is ever unchanging in our industry.”

Read more: http://www.autonews.com/article/20100526/COPY/305259953/1193#ixzz0p2Rkfh2C

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See... I noticed something. Volkswagen is buying up everything they see and expanding brands. Now Carlos Ghosn is saying you have to be big.. If that is the case, GM should bring back Oldsmobile and Pontiac in North America and stop shrinking.... I am being sarcastic. I do not know what the solution is, but if size is everything GM would have to look at that option and selling them outside the United Ststes too. I know the CEO of GM Europe is looking to expand Opel outside Europe.

If this is the case, then Ford would have to expand Mercury in North America and expand Lincolns luxury reach outside the United States and come up with some "real" luxury cars.

If this is true what Ghosn and VW are thinking, GM has the brands. It would have to expand the existing ones and resurrect two of them. You have Holden sitting right there with a line up. If not anything, the platforms could be shared with American models getting unique sheet metal and interiors.

As for Ford, that is an easy fix. You would turn most of the current Lincolns in to Mercurys. This would put Mercury back in direct competition with Buick. Then Lincoln would have to develop some "real " luxury cars. The MKS while a nice car is not going to get it. Then you would combine and expand Lincoln Mercury globally using the Ford name. Bring Thunderbird and Mark Series and a contemporary Town Car while you at it.

See this Opel article here:

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This guy really fancies himself as 'The Oracle' from The Matrix, doesn't he ??

:roflmao:

That is why I was being sarcastic with my response. He really cannot see that far ahead. Honda seems to go it alone and is hanging in there.

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CSpec    515

:roflmao:

That is why I was being sarcastic with my response. He rally cannot see that far ahead. Honda seems to go it alone and is hanging in there.

Honda is a bigger and more diversified company than their automotive operations let on. At the moment their market capitalization is $56 billion compared with Ford's $38 billion. However I agree with Ghosn that we will see more consolidations and partnerships going forward.

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Drew Dowdell    5,169
But soon, a Chinese automaker -- or perhaps an Indian company -- will “buy something nobody else wants” and become a worldwide force, Ghosn predicted. “It could happen much faster than everybody expects.”

Way to predict the future there...... Have you heard of Tata/Jaguar/Land Rover?

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siegen    20

You have to have your fingers in many markets (whether it be different country's markets or different product markets) so the swings and fluctuations in any single market don't take your company under. This shouldn't be interpreted as having many brands in the same market, which is inefficient.

The fact that Honda was the only major player to stay in the black through the recession isn't a surprise. They are the world's largest motorcycle maker and the world's largest engine manufacturer, and they sell to just about every country. Their products also include solar panels, outboard motors, all sorts of power equipment, a jet airplane, and Asimo (though that isn't a salable product, yet).

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You have to have your fingers in many markets (whether it be different country's markets or different product markets) so the swings and fluctuations in any single market don't take your company under. This shouldn't be interpreted as having many brands in the same market, which is inefficient.

The fact that Honda was the only major player to stay in the black through the recession isn't a surprise. They are the world's largest motorcycle maker and the world's largest engine manufacturer, and they sell to just about every country. Their products also include solar panels, outboard motors, all sorts of power equipment, a jet airplane, and Asimo (though that isn't a salable product, yet).

That is why GM is trying to expand Opel outside Europe. Selling them as Buicks in the United States is not enough. But I was serious about one part of what I said in the earlier post. GM does need to get into other markets. They bought GM Daewoo for a reason. The one market no one can break into is Japan.

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Drew Dowdell    5,169

That is why GM is trying to expand Opel outside Europe. Selling them as Buicks in the United States is not enough. But I was serious about one part of what I said in the earlier post. GM does need to get into other markets. They bought GM Daewoo for a reason. The one market no one can break into is Japan.

Hyundai even gave up on that one.

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regfootball    252

sounds like what Ghosn is saying makes sense.

which also underscored the importance of Opel. To have let Opel die would have been a big dagger in maintaining GM as a credible automaker worldwide.

GM is on the right path. I don't think Ford can respond globally as quickly, even linked with Mazda. The Tony / Chrysler alliance might actually turn out the best in the long run as far as business practice. GM may not be diversified enough right now but at least they have a good Korean presence.

I bet BMW is running scared and is why you are hearing things like 3 cyl fwd BMWs and BMW collaborating with Saabs and such. As good as BMW is they are on a path to irrelevance if they don't diversify how they build cars and if they don't link up with others. Or, they will simply cost a ton and sell in niche volumes.

Saab has no alliances right now so they can be aggressive and innovative in collaborating.

Main truth above is the automakers have to develop all the technologies, not just one, and that is expensive.

Japan could be slicing their own necks here. With the Toyota debacle and restricted market and cheesy trade policies they may be exposing their car industry as a dying industry......

Edited by regfootball

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