Is Change Good?

By Brendan Moore

05.06.2009

yin-yang-symbol1As the Grateful Dead used to sing, what a long strange trip it’s been. And the name of the song that those lyrics are in is Truckin’, so maybe they had some insight into the present state of the automotive industry.

Some strange things have happened lately, with changes taking place that would have been the stuff of fantasy not so long ago. And, since the changes are not even close to being over, let’s recap as of today.

Despite the fact that billions of dollars of federal aid has flowed its way, Chrysler has declared bankruptcy and will be controlled by Fiat, an Italian automaker that has never been anything than an also-ran in the European market, and a minor presence in the global market. The whole “merger” was arranged by the federal government’s Treasury department in a process that resembled nothing so much as a shotgun marriage. Fiat wants another crack at the North American market they were driven out of decades ago.

Despite getting even more aid than Chrysler, General Motors is a half-step away from bankruptcy and has announced that Saturn, Saab and Pontiac (one of its most storied divisions) will close. Oldsmobile, another once-proud nameplate with a lot of history behind it, went years ago. GM’s Opel and Vauxhall in Europe are also on the block.

Renault, a French automaker is interested in buying Saturn from GM. They, like Fiat, want another shot at the North American market. Roger Penske, the clever auto retailer, is also interested in Saturn, So is an investment group that has many Saturn dealers as members. No word on what Penske and the investment group might sell on their lots, since its probably not going to be GM iron.

Geely, a small, upstart Chinese automaker, has quite an appetite for Swedish cars. They are bidding on both Volvo (a Ford unit) and Saab, GM’s cast-off.

Opel, Vauxhall and Saab are desired by Fiat in order to complete their dreams of world auto domination. Zaz, a Russian automaker, wants Opel alone.

Oh, and Saab has 9 other bidders besides Fiat and Geely.

These are probably not even all the potential players in this game of automotive musical chairs – more interested buyers may identify themselves shortly.

When all the dust clears, the French could own Saturn, the Italians own Chrysler and may own a German, British and Swedish company, the Chinese may own Sweden, the Russians could own a German company, and General Motors could be working its way out of bankruptcy.

And that, my friends, is probably going to produce profound changes in what all those companies offer for sale, and, where those products will be sold in the world.

As an example, in the US, there haven’t been any French cars sold in the country for a long time. Same goes for the mass-market Italian cars. What would a Saab be three years from now if Fiat owns the company? What would a Saab or a Volvo be five years from now if the Chinese company Geely owns the Swedish automaker? Would Saabs be sold in the US, a market where they just can’t seem to make any money? Would Volvos still be sold in the US after a Chinese company buys them? Will all Chrysler dealerships sell Fiats? Will there be a Chrysler car brand five years from now or just Fiat brands (Alfa Romeo, Lancia and Fiat)?

Really, this game could go on for hours and hours. When you think about all the new things that could happen as a result of these new combinations, the potential changes are staggering.

We are heading off to parts unknown in the auto sector. It’s exciting, if a little nerve-wracking.

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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6 Comments

  1. If I had to choose between the French makers, I’d rather have have Peugeot than Renault. But I don’t get to vote. I used to really like Saabs, but if they’re owned by a Chinese company, I just don’t know. If the Europeans get Saabs or Volvos from the Chinese and Opels from the Russians, and Jaguars from the Indians, wow. It was probably bad enough for the Europeans when Volvo, Saab and Jaguar were owned by the Yanks, right?

  2. This the way capitalism works, folks. Companies come and go depending on their ability to compete.

    The sorry excuse America has for auto producers is doomed.

  3. Cheap gas is what killed the American auto industry. If the price of gasoline in America had been what it was in Japan and Europe the last 20 yearsn the american auto manufacturing companies would have had products they could have sold anywhere in the world, not just in the U.S.

    There’s your problem, right there.

  4. If there is a God, He will never allow the Chinese to buy Volvo. Right now, if you’ve seen the videos circulating ’round the Interwebitubes, Chinese cars are little more than accordians. It’s probably safer to jump out of an airplane WITHOUT a parachute than crash in a Chinese car.

    Buying Volvo’s intellectual property and safety technology would instantly give their otherwise crap cars credibility and signal the death knell (probably) for many existing carmakers, as few could compete with low Chinese wages and their propensity for either blatantly copying designs and/or outright IP theft.

    Alan Mulally, please, you don’t need to sell Volvo. You’ve got Ford positioned on a path to success; all you need is the U.S. and world economy to come back (and more people to see that Toyotas/Hondas aren’t all they are cracked up to be).

  5. Saab to the CHinese is even worse than Volvo to the Chinese. Hasn’t Saab suffered enough lately?

  6. Yes. Change is good. Change has alway been good. If you don’t change then you become moribund. And look what that did to the US auto industry…

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