After PSA and Opel, what’s next?

23 March 2017 | Ian Henry

Carlos Tavares and Mary BarraThe acquisition of Opel/Vauxhall by PSA should be complete by the end of 2017. The news that this was going to happen took the industry by surprise. With Opel/Vauxhall still losing money in Q3/2016, GM’s chief financial officer, Chuck Stevens, said the company would do what was required to put the situation right. Most observers took this to mean that a plant – or may more – would be closed; such a policy had been adopted many times before in recent years – viz the closures of Bochum, Antwerp and the Luton car plant.

Consequently, the idea of GM actually withdrawing from European vehicle manufacturing after some 90 years was a shock. The logic for GM was that it solved a major financial headache and allowed it to focus on North America and China especially, while for PSA the attractions are enhanced scale and the ability to share platforms and purchasing over a higher production volume. Many, including myself, were – and remain – somewhat sceptical that PSA will be able to solve the problems of Opel/Vauxhall which GM had been unable to solve for close on two decades. Time will tell, but PSA is already making its mark, stopping development of the next Corsa on a GM platform and switching it to PSA’s new CMP architecture.

As the industry absorbed the news and assessed its implications, it was not long before discussion turned to what might be the next moves in terms of industry consolidation. Fiat’s Sergio Marchionne expressed his disappointment at not being able to merge with GM, but appears to hold out hope that VW will be interested in some form of relationship; with VW having a lot to do to overcome the deep-seated problems of diesel-gate, the German group arguably has more pressing issues to deal with.

Last year, Nissan had taken a controlling 34% stake in troubled Japanese company Mitsubishi, reinforcing the scale and significant of the growing Renault-Nissan Alliance. Smaller Japanese players, especially Suzuki and Mazda, could be vulnerable to takeovers; however, Suzuki would not succumb to VW’s wish to direct operations at the Japanese company and their cross-shareholding is being unwound. Nonetheless, Suzuki is establishing an alliance with Toyota, but whether this will amount to anything more substantial is another matter; the notoriously independent Suzuki management will take some time before being convinced Toyota is the right partner for it.

Meanwhile in India, Tata is about to co-operate with Skoda on developing cars for this market and potentially further afield. And, to bring it back to GM Europe, a commentator in Automotive News has recently suggested that Tata’s UK subsidiary, JLR, should buy the Vauxhall brand to reinforce its position in the UK. JLR has, one suspects, rather more global ambitions, although given the way in which the industry never cases to surprise, such an idea should not automatically be dismissed.

The other factor in terms of the long-term consolidation of the industry is the role played by the Chinese firms. Geely has already acquired Volvo (which has grown strongly under its ownership) and on a more modest scale, it has acquired and is growing the London Taxi Company. The other major Chinese involvement in the global automotive sector is the 15% stake held by Dongfeng in PSA, which is where I started this blog. It would not be surprising if the next major move in consolidation amongst the car companies involved another major move by a Chinese player.

Tagged with: Fiat, Geely, JLR, Opel, PSA, Suzuki, Toyota, VW