Fiat CEO predicts only six global automakers to survive

[SVT666]

Fiat CEO predicts only six global automakers to survive crisis

Only six automakers will survive the worldwide financial downturn, according to Fiat CEO Sergio Marchionne. ?By the time we finish with this in the next 24 months, as far as mass-producers are concerned, we?re going to end up with one American house, one German of size; one French-Japanese; one in Japan; one in China and one potential European player,? Marchionne told Automotive News Europe.

He said he believes the only way for an automaker to survive is if it makes more than 5.5 million cars per year. That would mean even his company, Fiat, would have to merge with another in order to remain viable.

?This business is going to be completely different. It cannot continue as it did in the past. Independence in this business is no longer sustainable.?

Potentially unstable automakers include those that are private or family owned, said analyst J?rgen Pieper. BMW, for example, is 46.6 percent owned by the Quandt family. Similarly, 30 percent of PSA/Peugeot-Citroen, is owned by the Peugeot family. Pieper said if the downturn continues, those families will likely try to sell their stakes in the automakers to protect their fortunes.

Pieper said BMW and Fiat are among the most vulnerable European companies. BMW CEO Norbert Reithofer recently stated his company is in the ?biggest crisis in its history,? so it would appear Marchionne and Pieper make a valid point.

Of course, no one really knows how much worse the downturn will get. But if the problems deepen, consolidation might be the only route to survival. This is already evident in America, where there is growing pressure for GM and Chrysler to merge.

On the other side of the argument, some analysts point to the failure of the Daimler-Chrysler merger as a deterrent to future consolidation. But if smaller automakers collapse as the result of the growing financial crisis, the net effect could be the same ? fewer automakers, each with larger slices of the market.

[cawimmer430]

I hate predictions.

[FoMoJo]

It sounds like a pretty harsh forecast. 

[cozmik]

My warranty better still be good in 2 years or I'm going to be mega pissed.

[the Teuton]

This is nowhere near the biggest crisis in BMW's history.  This guy is full of bologna.  BMW is a cockroach.  It will be around long after we're all gone.

[2o6]

This is nowhere near the biggest crisis in BMW's history.  This guy is full of bologna.  BMW is a cockroach.  It will be around long after we're all gone.

You spelled it too proper. The proper spelling in this situation is Baloney.

[the Teuton]

You spelled it too proper. The proper spelling in this situation is Baloney.

Bowl-log-na!

[cozmik]

I find his predictions of what companies will survive interesting I must say. It says essentially we're looking at Nissan-Renault (French Japanese) Toyota (Japanese) GM or Ford (American) BMW or Mercedes (German) and VW (the European player). Plus the Chinese company. Much seems likely, except that I don't see Honda going anywhere, same with Toyota. And I'd say Hyundai is probably pretty likely to weather the market at well.

I could almost see BMW and Diamler merging their operations. Diamler has been rocky from a profit standpoint for years now, up and down. BMW would seem to have been more consistent, but with both suffering now, I could see a merger happening, especially as they've been talking recently about working together (though just with parts).

[SVT666]

I don't think the German government would ever let M-B go down the drain.  M-B is the world's first car company.

[Submariner]

I don't think the German government would ever let M-B go down the drain.  M-B is the world's first car company.

I think the panic mongers have come out to play.

It's to be expected that Mercedes, and any other manufacturer who produces luxury automobiles would be hurting in a global economic recession.  But Mercedes (Daimler) has too many other things going for it.  I really doubt were going to see them disappear. 

As for this prediction, as I said before, it's a load of fear mongering.  I really doubt the global auto market is going to shrink as this man claims. 

[Submariner]

I find his predictions of what companies will survive interesting I must say. It says essentially we're looking at Nissan-Renault (French Japanese) Toyota (Japanese) GM or Ford (American) BMW or Mercedes (German) and VW (the European player). Plus the Chinese company. Much seems likely, except that I don't see Honda going anywhere, same with Toyota. And I'd say Hyundai is probably pretty likely to weather the market at well.

I could almost see BMW and Diamler merging their operations. Diamler has been rocky from a profit standpoint for years now, up and down. BMW would seem to have been more consistent, but with both suffering now, I could see a merger happening, especially as they've been talking recently about working together (though just with parts).

BMW could never work with Mercedes, at least at the level you speak of.  Although we car people may debate it, whether we would like to believe it or not, in the consumers eyes, a # is the same as a C, a 5 is the same as an E, etc, etc. 

[cozmik]

BMW could never work with Mercedes, at least at the level you speak of.  Although we car people may debate it, whether we would like to believe it or not, in the consumers eyes, a # is the same as a C, a 5 is the same as an E, etc, etc. 

That's the major issue I see as well, just didn't say it. But before I could see either failing, I see them merging. I'm not sure how that would work out though. Course they could both end up surviving ok.

[the Teuton]

Neither are going anywhere.  Behind Porsche, BMW is the second most profitable per car company on earth.  They aren't hurting, and they will continue to find ways to attract a premium buyer, even if that means introducing a (1)^(1/2) Series.  They always have and they always will.  The period between the 1940s and the emergence of the Neu Klasse cars in the late-1960s was, by far, the worst time for BMW.  Since then, they've basically been working the same formula, and it has been a charm for them.

Their business model is amazing.  One company I want to see what happens with, strictly from a car perspective, is Fuji Heavy.  In the grand scheme of things, Subaru is tiny, yet they seem to be doing pretty well.  I don't get it.

[sportyaccordy]

Neither are going anywhere.  Behind Porsche, BMW is the second most profitable per car company on earth.  They aren't hurting, and they will continue to find ways to attract a premium buyer, even if that means introducing a (1)^(1/2) Series.  They always have and they always will.  The period between the 1940s and the emergence of the Neu Klasse cars in the late-1960s was, by far, the worst time for BMW.  Since then, they've basically been working the same formula, and it has been a charm for them.

Their business model is amazing.  One company I want to see what happens with, strictly from a car perspective, is Fuji Heavy.  In the grand scheme of things, Subaru is tiny, yet they seem to be doing pretty well.  I don't get it.

Not to nitpick but a 1^.5 series would be a 1 series

[giant_mtb]

You spelled it too proper. The proper spelling in this situation is Baloney.

"too proper"?

[the Teuton]

Not to nitpick but a 1^.5 series would be a 1 series

It shall be the i Series, as not to be confused with anything Infiniti.  It might even be the -i Series.

[Colonel Cadillac]

Right around the turn of the millennium, each car company stated that they were planning on selling many more cars by 2010 than they were at the time. For the most part, they have been doing so (save the Americans...) up until late. Of course, when every company says they are going to sell more (and produce more), some of those companies are going to get pushed out due to the increased supply of cars in the world. The market has become much too crowded which has been pretty great for the consumers, but the recession is definitely going to push some of those companies out.

I think this guy is a little too extreme in his predictions, but there are a few that may be on their way out. I hate to see Chrysler getting any money from the government due to their inevitable folding. The German makes I believe are on pretty solid ground (BMW, Mercedes, and VW), but I see VW restructuring and possible eliminations of excess brands. The Japan 3 are also on solid footing, they all seem to have a lot of money to weather any downturn in sales and they each only have only two brands to support, but the smaller makes may fall out. The rest of the companies I do not have enough insight to know what they are going to do.

[Onslaught]

How the hell is Mitsubishi still around? Haven't they been in trouble for a long time?

[SVT666]

How the hell is Mitsubishi still around? Haven't they been in trouble for a long time?

After Chrysler, I think they'll be the next to go.