Ford was supposed to be merging with Honda and BMW, then that rumour was denied. Then Ford or Fiat or Volkswagen was buying Volvo. As was BMW, assuming it had not been acquired by Volkswagen, Ford or Fiat first. And loss-making Nissan was heading for DaimlerChrysler, Ford or Renault.
Not everyone found the rumours amusing. Wolfgang Reitzle, the charismatic head of BMW cars, was clearly angry that press attention had wandered from the launch of BMW's new X5 off-road vehicle. He insisted BMW was not for sale.
"We are, and we will remain, a fine, independent car brand," he said.
If BMW were sold to Ford, car making in Britain would be hit hard. BMW's ailing Rover subsidiary could hardly expect to sustain a full range of models. Rover Longbridge, Britain's largest automotive plant, would face closure. And Ford's ambitions for Jaguar to take on BMW would have to be scaled down.
So it is just as well for the Midlands that Mr Reitzle stated: "A merger or co-operation with another manufacturer will not happen in the foreseeable future. I cannot bear to hear the stories from so-called industry experts that poor little BMW, this tiny specialist producer, has to be bought by an industry giant, if it is to survive."
Nevertheless, the mega-merger of Daimler-Benz with Chrysler has shown what is possible. And there is a need for cost-cutting consolidation, particularly in Europe. Jac Nasser, the new Ford chairman, predicted last week that the world car industry by 2010 would consist of six global giants producing more than 5million cars. He also admitted the speculation over a deal with BMW was "currently without foundation".
Mr Nasser is not alone in foreseeing the global rationalisation of car manufacturing. Overcapacity could amount to 20million cars, around half of current production. This means plants are not maximising profits. Booming car sales in Europe and America are not producing booming profits. And, with the Japanese market seriously depressed, many fear the next downturn may be just around the corner. A severe recession might make many plants unviable.
Professor Garrel Rhys, director of the centre for automotive industry research at Cardiff Business School, comments: "Profitability is just not what it was 10 years ago. Even car makers such as Mercedes and BMW, who can demand a premium for their products, find that this is smaller. They face serious competition from mass-market producers."
New cars are the key to keeping plants at capacity, but they cost ever more to develop - up to pounds 500m per model. So it is vital to spread development across several cars.
"We have launched 20 new cars in the last 24 months," proclaimed Ferdinand Piech, Volkswagen's chairman, in Detroit last week, where the annual auto show focused widespread attention on the global car industry. The new Beetle, with which Volkswagen has roared back into the North American market, was acclaimed as the Car of the Year at the show. This is a magnificent confidence trick. Underneath the bonnet, the Beetle is a Golf. Moreover, it is strongly related to its cousins at Skoda, Audi and Seat.
Using the same basic platform - chassis and engine - for different brands means that mass-market producers can compete with specialist car makers for their profitable markets. Volkswagen is to launch a limousine. Its Audi brand has already unveiled its top-of-the-range A8. At the same time, Mercedes is entering the European mass-market.
This remorseless competition for new segments, higher market share and economies of scale is already taking its toll on weaker companies.
"We are watching to see who will disappear," said Mr Piech. "Some of our European competitors are struggling because of heavy discounting. Some have to sell cheaply even though the market is still healthy."
The market pressure can only increase. Prices of European cars will fall as the euro enables easy price comparison. Once there is a genuinely free, pan-European market supplied by efficient producers, cars should be as cheap as in North America. That will, however, take time and will not be easy to achieve.
"Eventually, market forces will get through," said Professor Rhys. "There will be rationalisation. There are just too many players competing in Western Europe."
Current speculation suggests that the global winners will be GM and Ford from North America, Toyota and Honda of Japan, together with Volkswagen and DaimlerChrysler. This leaves Fiat, Peugeot, Renault and BMW as takeover or merger candidates - as well as Volvo.
However, little has happened, except rumours. For years, the six main European car makers - Volkswagen, Renault, Fiat, Peugeot, Ford Europe as well as GM-owned Opel/Vauxhall - have carved up 90 per cent of the market, each holding market shares around 15 per cent. This market structure is beginning to look fragile. Low-cost producers from the Far East are entering the market. And nationalistic car-buying is waning. Fiat has less than 40 per cent of the Italian market, Volkswagen less than 30 per cent of the German market. Even Peugeot and Renault are losing their dominance in France.
Meanwhile, Volkswagen is roaring ahead thanks to a series of exceptional cars. It has raised its European market share to 18 per cent, forcing Ford and Opel/Vauxhall, in particular, on the defensive. Ford now ranks number six in Europe, with less than 11 per cent market share. Yet Ford is fighting back. It has jettisoned its wind-tunnel jelly mould to produce eye-catching cars such as the Puma, the Ka and the Focus, which is being launched in the US this year. It may not be, as its president Bill Ford claimed, "the Model T of the 21st century" but it has every chance of becoming a genuine world car - like Volkswagen's new Beetle.
General Motors, the world's largest car company, has had a horrendous year with management problems at Opel and a summer strike at its North American plants. Nevertheless, it has the size, financial strength and global presence to recover strongly.
Renault, the car company most often cited as the weakest in Europe, is performing notably well. Last year, it confounded its critics with record sales figures. Thanks to the Megane range, Renault has become the best-selling single brand in Europe, out-selling even Volkswagen. Speculation over Renault's future, deafening at the time of the recent closure of a Belgian factory, has waned.
John Lawson, an analyst at Salomon Smith Barney, comments: "Renault had a fantastic 1998. The question is whether it can keep it up."
BMW attracts the strongest rumours because of the Rover debacle. Yet it, too, has had a record year, although the new 3 Series was only launched in the summer. Its performance in the key North American market remains stunning.
Nevertheless, BMW's core business is now under attack from all quarters. And the continuing losses from Rover and the aircraft engine joint venture with Rolls-Royce leave the company seriously weakened. Its apparently infallible management has committed an expensive gaffe in its softly-softly approach to Rover. Now there are signs of public discord between Mr Reitzle and BMW's chairman Bernd Pischetsrieder.
Even BMW's success in wresting the Rolls-Royce car brand for pounds 40m from Volkswagen's grasp looks an embarrassment. Currently, BMW has no factory and no workers with which to produce a new generation of Rolls-Royce cars. It cannot easily match Volkswagen's commitment to invest pounds 500m in Bentley over the next three or four years.
According to Salomon Smith Barney, BMW's profits this year will slide from DM1.3bn (pounds 450m) to DM1.1bn. Rover looks set to lose nearly pounds 200m both in 1998 and 1999 and is unlikely to break even in 2000. While BMW looks weak compared with the global giants, it is unlikely to be sold now. The Quandt family, which owns 46 per cent of BMW, has repeatedly stated its commitment to the company's independence.
As Ford's experience with Jaguar, Volkswagen's with Seat and BMW's with Rover show, mergers among car makers are not guaranteed instant success. Mr Piech does not expect another huge deal after the DaimlerChrysler merger.
Unlike Daimler and Chrysler, there are significant overlaps between the European merger candidates. To make any deal work, costs would have to be cut, plants closed and jobs lost. Combining Peugeot and Renault would be a nightmare for the French and might well not work. The companies are too similar. The same applies to combinations involving BMW and Fiat.
Nevertheless, market pressure could turn the rumours into reality. But it may take a recession to make it happen. In the meantime, Ford or Fiat will buy Volvo cars.
last year's models
The best-sellers of 1998
Make Total sold
Ford Fiesta 116,110
Ford Escort 113,560
Ford Mondeo 99,729
Vauxhall Vectra 92,179
Renault Megane 82,998
Vauxhall Astra 81,494
Vauxhall Corsa 75,673
Peugeot 306 70,169
Rover 200 64,928
Rover 400 57,318Reuse content