Special Report on the Motor Show (1): Take your partners to survive: Conglomeration is the name of the game, says Martin Derrick - Motoring - Life and Style - The Independent

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.

Life and Style
tech
Arts and Entertainment
Robin Thicke's video for 'Blurred Lines' has been criticised for condoning rape
music
News
Paper trail: the wedding photograph found in the rubble after 9/11 – it took Elizabeth Keefe 13 years to find the people in it
newsWho are the people in this photo? It took Elizabeth Stringer Keefe 13 years to find out
Arts and Entertainment
Evil eye: Douglas Adams in 'mad genius' pose
booksNew biography sheds light on comic genius of Douglas Adams
PROMOTED VIDEO
Sport
FootballFull debuts don't come much more stylish than those on show here
Arts and Entertainment
Fringe show: 'Cilla', with Sheridan Smith in the title role and Aneurin Barnard as her future husband Bobby Willis
tvEllen E Jones on ITV's 'Cilla'
News
i100
Sport
Tim Wiese
sport
Life and Style
Kim Kardashian drawn backlash over her sexy swimsuit selfie, called 'disgusting' and 'nasty'
fashionCritics say magazine only pays attention to fashion trends among rich, white women
Arts and Entertainment
TVShows like Agents of S.H.I.E.L.D are little more than marketing tools
Arts and Entertainment
Hit the roof: hot-tub cinema east London
architectureFrom pools to football pitches, rooftop living is looking up
Travel
travel
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

    Project Manager with some Agile experience

    £45000 Per Annum: Clearwater People Solutions Ltd: Our client based in Chelmsf...

    Data/ MI Analyst

    £25000 - £30000 Per Annum: Clearwater People Solutions Ltd: Our client are cur...

    Project Manager (retail, upgrades, rollouts)

    £40000 - £45000 Per Annum + benefits: Clearwater People Solutions Ltd: Project...

    Project Manager (upgrades, rollouts, migrations)

    £350 - £425 Per Day: Clearwater People Solutions Ltd: Project Manager - 3 mont...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week