United we stand is the mantra for manufacturers

As the automotive industry prepares for major mobility disruptions in the coming decade, companies have figured out that it makes sense to join hands and pool competencies while saving on costs.

The latest big ticket announcement was that of Fiat Chrysler Automobiles (FCA) and Groupe PSA which will now merge and work in tandem for the future. PSA recently acquired Opel and Vauxhall from General Motors and the merger with FCA will catapult the company to the top league along with Volkswagen, Renault-Nissan and Toyota.

If the dramatic sequence of events had not occurred when Carlos Ghosn was arrested in Tokyo late last year, FCA might well have become part of Renault-Nissan (and Mitsubishi). It is well known by now that the former Chairman of this alliance, who awaits a long drawn-out trial in Japan, was keen on this merger.

His arrest pretty much scuttled these plans even though FCA reached out to Renault subsequently but kept Nissan out of the merger proposal. This naturally irked the Japanese entity and it required the French government’s intervention to step in and sort things out.

PSA has now stepped into the space which Renault was hoping to occupy. It is now clear that the bigger task on hand for the latter is to rebuild the relationship with Nissan. Since the time Ghosn was whisked away to a detention centre in Japan last year, top guns have been quitting the alliance at an alarming rate.

Subsequently, the levels of distrust between the partners have only been deepening by the day. Today, there is a new CEO in place at Nissan and the whole process of strengthening the alliance will begin in right earnest. It is not going to be easy but there is really no way out.

Whilst on the topic of partnerships, Toyota and Suzuki have taken their bonding to the next level by way of an equity cross holding. Going forward, it is perhaps only a matter of time before they merge and jointly build on their strengths in markets like India, Africa, the Middle East and Latin America.

The other new partnership is that of Ford and Mahindra & Mahindra where the latter will spearhead the effort both for India and other emerging markets. The idea is to pool in individual strengths of frugal engineering, technology and greater global access in order to create a new script.

Beyond cars, commercial vehicle makers are also forging alliances in this new competitive world. The latest is Isuzu which bought out UD Trucks from Volvo and will team up with the Swedish truck maker for new technological initiatives. Likewise, Hino Motors (a Toyota subsidiary) and Volkswagen’s Traton are working together in the CV space.

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