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Industry News: Six Automakers Will Remain In The Future Says Morgan Stanley Analyst


William Maley

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The past ten years has seen a number of automakers either being folded up or taken into other automakers. But an analyst believes there is more consolidation for the automotive marketplace.

Morgan Stanley auto analyst Adam Jonas said in a research note earlier this month says in the future there will only be five to six automakers in the world. This comes down to such factors as economics and technologies.

“We believe the radically changing landscape of autos requires a commensurate change of thinking in Detroit if the domestic OEMs, as we have traditionally known them, are to remain relevant 15 or 20 years from now. The world has too many car companies: We cover nearly 30 auto assemblers globally across eight countries. In our opinion, the balance of economic, competitive and technological forces will ultimately consolidate this figure to five or six players,” said Jonas.

Jonas' thoughts appears to be have spurned from Tesla Motors as the company has been very successful with their Model S rollout and introduction of new technologies. Last year, GM set up a group to study Tesla and see if they can take anything away from them.

“Tesla could either end up being Detroit’s worst enemy or its salvation. In our opinion, the disruption from Tesla comes early enough to allow an incumbent sufficient time to adapt its culture, capital allocation and recruiting strategy to the changing forces. With proper execution, Detroit may thank Tesla Motors for being that stiff board in the back of the head right when they needed it,” said Jonas.

It should be said that many of these predictions that have been spoken before have not amounted to anything. Will this one be any different? Stay tuned.

Source: The Detroit News

William Maley is a staff writer for Cheers & Gears. He can be reached at william.maley@cheersandgears.com or you can follow him on twitter at @realmudmonster.


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That's funny, I predict there will only be 6 financial analysts in the future.

GM

Ford

Chrysler/Fiat group

Tesla

Toyota

Hyundai/Kia

Nissan/Renault

Honda

Mazda

Mitsubishi

Subaru (though questionable as integration with Toyota becomes more apparent)

Tata/Jaguar/Land Rover

Citroen/Peugeot

Volkswagen Group

BMW

Mercedes

Volvo

Suzuki

Geely

And then the smaller ones that are still kicking:

Saab/NEVS

Fisker

Isuzu

and that's just a partial list.

Will there be some consolidation? Absolutely... but we don't see that list cut down to just 6 manufacturers.

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Ford, GM, Chrysler/Fiat will remain, one of them could possibly buy Tesla or a small company like Volvo or Mazda (and I know Ford went down that road before). I could also see Volvo, Citroen/Puegot or Mitsubishi even going out of business if they don't partner up with someone.

VW group is huge, they will be around and could buy another existing brand, but they have ever price tier covered pretty well and don't really need anyone else.

Toyota will probably buy Subaru to expand their AWD and sports car offerings.

Nissan/Renault could merger with Daimler, but I don't think they will.

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Consolidation is the oxygen to the auto industry surviving. I see more than just 5 or 6 companies but I do see many folding into others to survive.

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I could see the Chinese also snapping up some of these brands to gain footholds in other markets. Mazda is on shaky ground, but appears to be stabilizing.... watching the sales of the Mazda 3 here, that should be a bell-weather.

But, you have the US Big-3, the Japanese Big-3, and the German Big-3, that alone is 9 companies. Hyundai/Kia isn't going anywhere soon. Suzuki is still selling 2+ million cars a year even though they aren't in the US anymore. Geely is doing well apparently. Tata with Jaguar/LR has enormous amounts of debt, but seemingly is making money. One or two of PSA, Mitsu, Isuzu, Mazda, and Volvo might fold... but not all.. and there are some interesting merger prospects in that list as well.

Even with a massive amount of contraction, we're not going anywhere near the total this analyst suggests.

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sorta wish they would have let Chrysler die when they should have, instead of killing Saturn and Pontiac.

VW, Toyo, Nissan, Ford, GM, should all survive I thnk.

Why you see cheap ass CLA's and front drive Bimmers, BMW and Merc know they need to evolve out of being a pure lux make in other countries besides their own to survive. I think they will, but I think BMW in particular is destined for problems. They are going to have to scale back the model permutations and cheapen the product and go for volume I think.

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I could see the Chinese also snapping up some of these brands to gain footholds in other markets. Mazda is on shaky ground, but appears to be stabilizing.... watching the sales of the Mazda 3 here, that should be a bell-weather.

But, you have the US Big-3, the Japanese Big-3, and the German Big-3, that alone is 9 companies. Hyundai/Kia isn't going anywhere soon. Suzuki is still selling 2+ million cars a year even though they aren't in the US anymore. Geely is doing well apparently. Tata with Jaguar/LR has enormous amounts of debt, but seemingly is making money. One or two of PSA, Mitsu, Isuzu, Mazda, and Volvo might fold... but not all.. and there are some interesting merger prospects in that list as well.

Even with a massive amount of contraction, we're not going anywhere near the total this analyst suggests.

The Analysts would go for the consolidation because they would benefit from it, and so therefore they spin to create it probably.

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Europe is going to be the next big pain point. They have not had to deal with Major readjustment yet in their way to much capacity of assembly lines. The Unions think they can hold the country gov's to keeping everythin open and status quo yet they have not grasped that in todays global economy, adjustment have to be made now. I suspect we will see in the next 24 months massive plant closings as companies realign production to meet actual needs. Some of this will also come via moving production to other counteries with lower labor costs.

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Europe is going to be the next big pain point. They have not had to deal with Major readjustment yet in their way to much capacity of assembly lines. The Unions think they can hold the country gov's to keeping everythin open and status quo yet they have not grasped that in todays global economy, adjustment have to be made now. I suspect we will see in the next 24 months massive plant closings as companies realign production to meet actual needs. Some of this will also come via moving production to other counteries with lower labor costs.

Europe is still essentially in a near-depression since the continent NEVER purged its banking system of its problem children. (The USA, by contrast, allowed at least 400 small/medium banks to be shuttered and executives get prosecuted.) Europe's auto industry has the same problem in that there are far too many players and too few customers that will buy cars. If Europe were truly one marketplace with no interference from European auto unions (and especially governments!), the auto industry there would have gone through its consolidation & liquidation phase two or three years ago. Currently, there is simply no room for all the players in Europe right now. Sanity will return when auto companies radically shrink or go bust. VW will have to shrink; Peugeot will have to disappear; GM and Ford of Europe will have to cut back (same with FIAT); BMW and/or Daimler may not survive as is. Culling the herd is required of such a capital-intensive industry, and it cannot come soon enough for the Continent.

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  • 1 month later...

sorta wish they would have let Chrysler die when they should have, instead of killing Saturn and Pontiac.

VW, Toyo, Nissan, Ford, GM, should all survive I thnk.

Why you see cheap ass CLA's and front drive Bimmers, BMW and Merc know they need to evolve out of being a pure lux make in other countries besides their own to survive. I think they will, but I think BMW in particular is destined for problems. They are going to have to scale back the model permutations and cheapen the product and go for volume I think.

BMW needs a family brand above mini and below BMW.

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sorta wish they would have let Chrysler die when they should have, instead of killing Saturn and Pontiac.

VW, Toyo, Nissan, Ford, GM, should all survive I thnk.

Why you see cheap ass CLA's and front drive Bimmers, BMW and Merc know they need to evolve out of being a pure lux make in other countries besides their own to survive. I think they will, but I think BMW in particular is destined for problems. They are going to have to scale back the model permutations and cheapen the product and go for volume I think.

BMW needs a family brand above mini and below BMW.

Which again is a tough market to break into.

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For BMW? Na, not really. They could resurect some old German brand and the cache of it being "by BMW" would be enough to let it take off... here in the states at least. The Euros are a skeptical bunch... us Americans each anything foreign that is spoon-fed to us.

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