Will Japan's auto industry consolidate?

[AlRozzi]

There is An article at AutoNews with this title http://www.autonews.com/article/20160210/OEM/160219991/will-japans-auto-industry-consolidate

 

Basically says tech moving fast, too costly for smaller-scale players. Alludes To mazda and Suzuki perhaps linking to Toyota, Honda to GM

leaving only 3 companies in Japan.

Edited February 10, 2016 by AlRozzi

[J-150]

Yes, of course.

 

Lee Iaccoco forecast this in the 80s. It's just taken longer to occur.

 

Nissan is already tied up with Renault.

 

Toyota has acquired all of Daihatsu and picked up a stake of Mazda and Subaru.

 

Suzuki may exit cars to focus on small engined product if they don't get bought out.

 

Isuzu has some strength in trucks but even they will get bought out. Maybe GM reacquires them.

 

Consolidation will happen. The juggernauts (GM Toyota VW) will acquire the small fries. The mid size companies (Honda, Ford, BMW, Hyundau, Renault - Nissan, FCA) are too large to acquire but will survive by merger.

[fordmantpw]

Really, I see it as almost inevitable for small cars. Realistically, the costs to develop something like a Fiesta or Focus are along the same lines as a Fusion or Taurus. The costs of the raw materials to go into them, and the cost of assembly is not that much smaller either. But, since the cars are physically smaller, you can't charge as much for them, so there is little to no profit left in them. Ford is trying to take some of the assembly costs out by moving that to Mexico, but still, there's just no much left on the bone. If the development costs can be shared across 2, 3, or more automakers to develop the platform, then costs can be much better controlled, leaving more funds to put in a better interior or sexier exterior. And let's face it, most small cars are not sold by the platform that underpins them, but the quality and ergonomics of the interior along with the looks of the exterior. Those pieces would be unique to each make and nobody would know the underlying bits are shared. FCA may actually be on to something here...

[RichardJensen]

juggernauts (GM Toyota VW) will acquire the small fries. The mid size companies (Honda, Ford, BMW, Hyundau, Renault - Nissan, FCA) are too large to acquire but will survive by merger.

 

I disagree strongly with this premise.

 

Past a certain point, the size of the company doesn't give you much of an advantage either in terms of first unit cost, unit volume (consider that the Focus has often been the best selling nameplate on the planet), part cost or, ultimately, profit margin.

 

As long as a company is large enough to cash flow competitive new products, there is neither a need to merge nor any advantage in doing so.

 

GM, Toyota, VW, BMW, Daimler, Honda, Ford, Nissan/Renault and Hyundai/KIA are all well above that threshold.

Edited February 10, 2016 by RichardJensen

[fordmantpw]

 

I disagree strongly with this premise.

 

Past a certain point, the size of the company doesn't give you much of an advantage either in terms of first unit cost, unit volume (consider that the Focus has often been the best selling nameplate on the planet), part cost or, ultimately, profit margin.

 

As long as a company is large enough to cash flow competitive new products, there is neither a need to merge nor any advantage in doing so.

 

GM, Toyota, VW, BMW, Daimler, Honda, Ford, Nissan/Renault and Hyundai/KIA are all well above that threshold.

 

I don't think there will be mergers as much as platform sharing on smaller vehicles. In the way of Mazda/Ford in the early days, only with better differentiation with what's on top.

[akirby]

 

In the way of Mazda/Ford in the early days, only with better differentiation with what's on top.

 

By better you mean more than just swapping the Mazda and Ford badges?

[fordmantpw]

 

By better you mean more than just swapping the Mazda and Ford badges?

 

Well, Mazdas also got that horrendously ugly orange gauge lighting as well.

[Anthony]

Here's Jalopnik's take on it: http://jalopnik.com/japans-automakers-could-merge-into-three-groups-or-less-1758298241

[akirby]

 

Well, Mazdas also got that horrendously ugly orange gauge lighting as well.

 

They did that? Ugh. Although I have to admit back in the 80s I did prefer the orange monochrome monitors to the green ones - probably because everybody had green ones and orange was new.

 

Beyond that orange and red lighting and gauges suck.

[bzcat]

I don't think a lot of people really understand what is going on in Japan.

 

First, you have the issue with kei cars. Suzuki is the only one that wants to keep things the way it is because it is dominate player in that segment. Everyone else thinks the Japanese Govt should amend its tax code so kei cars can evolve to become more like A-segment cars in the rest of the world. So Suzuki is unlikely to be involved in any merger unless it sees that the Japanese Govt is ready to kick its butt to the curb.

 

Second, the car industry in Japan is already aligned in 3 different groups (leaving Suzuki aside for the moment because it doesn't sell many non-kei cars). You have Toyota, which controls Subaru and has a tight leash around Mazda too. You have Renault-Nissan, which essentially keeping Mitsubishi alive. And you have Honda, which will remain independent until the end of the universe.

 

Not a lot of actual Western-style consolidation will take place over in Japan for the foreseeable future because there is no need. You will just see these brands become more specialized as directed by Toyota and Renault. For example, Subaru has already exited subcompact cars and kei cars and will focus on the US market. Mazda will likely see that its room to maneuver greatly limited by Toyota in the next few years. Mitsubishi will likely exit the car business altogether and just focus on SUVs given Nissan's dominance in cars in Japan. Eventually, these companies will end up sharing resources and engineering but I don't see outright takeovers.

 

Suzuki is its own special case. The value of the company is all locked up in India. Suzuki is the leading brand in India and this was the reason why VW wanted a piece of that company. But buying into a Japanese company is generally not thought of as a good business strategy. I can't really envision anyone trying to buy Suzuki and inheriting a dead end kei car business and the bureaucratic Japanese business culture just to get a seat at the Indian market table. So I think the most likely outcome is that Suzuki will eventually enter into some sort of partnership with another company to develop merging market deathtrap* cars - and that company won't be Toyota as these pundits are speculating because Toyota already owns Daihatsu and it does pretty well on its own.

 

* deathtrap car is not literal, just means value engineered to market-specific cost points.

Edited February 10, 2016 by bzcat