Special Report on the Motor Show (1): Take your partners to survive: Conglomeration is the name of the game, says Martin Derrick

IT IS often said that the truck industry is a barometer of the economy; its fortunes today are the fortunes of all of us tomorrow. It is the first industry to feel a downturn, the first to go into recession, but also the first to indicate when the upturn is about to start.

It could also offer some pointers to the way the car manufacturing industry is heading. Recently it was announced that DAF and Mercedes-Benz Trucks were holding talks aimed at bringing the two companies together, but the move towards greater collaboration - and even acquisition and takeover - between truck manufacturers started years ago.

As long ago as 1975 Iveco was set up through the integration of five marques from three different countries. Since then it has acquired Ford of Britain's truck division, Pegaso of Spain and Seddon Atkinson of the UK.

However, Iveco's chief executive officer, Giancarlo Boschetti, says: 'It takes no great insight to realise that the world does not stop in Europe, that Europe is not the only stage on which the success of vehicle manufacturers will be played out in the future.'

So does the truck industry trend, for larger conglomerations to come together to achieve economies of scale and to pool technological and production expertise, and to sell products worldwide, hold good for the car manufacturing industry?

Karl Ludvigsen, chairman of the motor industry analysts Ludvigsen Associates believes that to be so. 'Further concentration in Europe is likely,' he says. 'It is needed to gain improved efficiencies and reduce unproductive overheads to meet the Japanese challenge. It is also needed to take full advantage of the opportunities provided by the single market in Europe.'

Certainly, the motor industry as it stands today looks set for some big changes. Rolls-Royce's trading loss of between pounds 10m and pounds 15m for the first half of the year is increasing speculation that it will have to find a partner. Analysts say the company will not be able to invest sufficient on its own to match the developments of Mercedes-Benz, BMW and Japanese manufacturers at the upper end of the market.

Similarly, Porsche has seen sales worldwide falling away and it is thought that it will come to an agreement with a larger partner, probably Volkswagen.

Rover's parent company, British Aerospace, can sell the company next August without having to repay the incentives it received to take the company off the Government's hands in 1988.

Despite statements by John Cahill, the BAe chairman that there are no plans to offload Rover, it is understood that two major European manufacturers - believed to be Volkswagen and Fiat - are negotiating with BAe to buy the 80 per cent stake in Rover that BAe holds.

Certainly Mr Ludvigsen believes that Fiat will have taken over that 80 per cent share by 1994, as a means of gaining access to a healthy share of the UK market, an established dealer network and productive manufacturing facilities. The Italian company would also be acquiring the jewel in Rover's crown, Land-Rover, taking it into the one sector of the market in which the Fiat Group is not represented.

Mr Ludvigsen also predicts that Volkswagen will acquire not only Porsche but also Chrysler. operations. VW will gain access to the North American market eliminating 'the only weakness in its global strategy'.

In France, Renault will escape from government control in 1996 and will then merge with the PSA (Peugeot and Citroen) Group to form a single company, which will also encompass Volvo car and truck activities.

More radically, Mr Ludvigsen argues that Ford will lose its independence in Europe by the end of the century. 'By 2001 I forecast that Ford will be a minority holder of an interest in Fiat's European car operations, which will have absorbed the European Ford plants and networks with one exception: Jaguar, which will remain a subsidiary of Ford in the USA.'

Outlandish speculation? In the 1980s Fiat and Ford went a long way towards merging their European operations. Talks broke down because neither party wanted to lose management control. But Fiat did take over Ford's UK truck operations and more recently has acquired all Ford's farming and construction equipment operations worldwide.

Mr Ludvigsen's scenario for the year 2005 leaves just six European motor companies, excluding the Japanese.

These are BMW, which will retain its independence and which will also have acquired Rolls-Royce along the way; GM Europe, with its Lotus, Saab and Polish FSO operations; the Peugeot-Citroen- Renault Group, which will include Volvo; VW-Chrysler, which will encompass Chrysler Europe, and the Lamborghini, Porsche, Skoda, Seat, Audi and Volkswagen marques; the Fiat-Ford Group, encompassing Fiat, Ford, Ferrari, Lancia, Maserati, Alfa Romeo, Innocenti, FSM, Vaz, Zastava and Rover and Land-Rover, though perhaps not Jaguar and Aston Martin, which would remain subsidiaries of the US Ford parent; and Mercedes- Benz, which will retain its independence.

It seems remarkable that so much change could take place in such a short time. Some of the decisions that will have to be made will be hard, harsh even; and some of today's best-known showroom names may disappear.

But this is nothing new. Let us not forget that Rover is all that remains of many proud independent British brands from Austin to Wolseley. And on the Continent, Borgward, Panhard, Simca and Delahaye are little more than memories now. Over the years there have been many periods of mergers and acquisitions as the motor industry adjusted to new economic conditions.

Change is already in the air for the European motor industry. The chiefs of the car companies are in no doubt about the threat from the Japanese, who in past years have already targeted and then picked off other strategic industries one by one.

Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Life and Style
Men with beards rejoice: Your beard probably doesn't harbour faeces-like bacteria
health
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Ashdown Group: Trainee Consultant - Surrey/ South West London

    £22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

    Ashdown Group: Trainee Consultant - Surrey / South West London

    £22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

    Ashdown Group: Recruitment Consultant / Account Manager - Surrey / SW London

    £40000 per annum + realistic targets: Ashdown Group: A thriving recruitment co...

    Ashdown Group: Part-time Payroll Officer - Yorkshire - Professional Services

    £25000 per annum: Ashdown Group: A successful professional services firm is lo...

    Day In a Page

    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before