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Crystal Ball 2010: Shapes of Things to Come

With all of the merger and acquisition activity in the global automotive industry, do you ever wonder who will be left standing at the end of the decade?

With all of the merger and acquisition activity in the global automotive industry, do you ever wonder who will be left standing at the end of the decade? What companies will gracefully integrate new acquisitions, navigate the ever-evolving Internet wave, keep the unions at bay and survive to fight another day? 
Providata Automotive's recent in-depth industry analysis has determined that in 2010, the automotive landscape will have a decidedly different look than today's lineup.

Major Vehicle Manufacturers
2000
2005
2010
26
15
9

In 2010, Providata Automotive predicts that five main OEM manufacturing groups will produce 98% of the world's passenger cars and light trucks. Lets take a closer look at the new "Big 5". . .

Ford Motor Company—Based upon current trends, Ford is expected to pass General Motors as the top light-vehicle producer early this decade. With the recent approval to pursue Daewoo, Ford will be strategically positioned to deepen its market position in Asia and Eastern Europe through Daewoo's existing operations.

General Motors—GM's fall from the top spot will lead the company to realign and rethink its corporate strategy. Expect the sell off of GM's Hughes unit (at a hefty profit), complete reorganization of the upper echelon executives, and radical consolidations of GM's vehicle platforms. In an effort to catch Ford, expect GM to pursue the acquisition of Honda and BMW.

Toyota—Toyota's march on Europe will continue with new facilities and bids for PSA, BMW and possibly Rover in the offing. Expect Toyota to continue deepening its stakes in Daihatsu and Suzuki, while dispensing its shares in its numerous keiretsu suppliers. During the next 10 years, Toyota will remain a stable and potent force in the global automotive industry.

DaimlerChrysler AG—With new stakes in Mitsubishi and Hyundai, expect more strategic moves by the German-American monolith. The acquisition of Renault-Nissan is probably 5 to 6 years away but would be a logical move to deepen DCX's penetration into the European and Asian markets. Alternatively, DCX could court PSA and Honda and achieve the same strategy.

Volkswagen AG—VW's Euro-centric structure (it owns Audi, Rolls-Royce, SEAT and Skoda) should lend itself to an Asian acquisition or two. VW's conspicuous absence from the recent bidding for Daewoo, Hyundai, Kia, and Mitsubishi makes one wonder if a Toyota/VW marriage may be possible within the near-term.

Interestingly, you may have noticed that Renault-Nissan is missing from the above "Big 5" listing. Due to increasing competitive pressures within the European and Asian light-vehicle markets, we expect the newly formed company to be integrated into one of the remaining Big 5 companies (DaimlerChrysler would be the best fit) by 2010. Other major independents like Honda, PSA (Peugeot/Citroen), BMW, Rover, and Porsche will also feel the need to consolidate as globalization takes hold.

Where will the game be played in 2010?
Today we refer to Southeast Asia, Eastern Europe and South America as the emerging light-vehicle markets. But by 2010 the focus will have shifted to Central Asia, Africa and the Middle East.

Emerging Markets Shift Focus – Top Automotive Growth Centers

200020052010
Argentina
Brazil
China 
India
Russia
Thailand
China
India
Indonesia
Malaysia
Ukraine
Vietnam
Egypt
Iran
Kazakhstan
Nigeria
North Korea
Pakistan

North Korea? Iran? Nigeria? You can't be serious…

North Korea. With the eventual reunification of North/South Korea, Korea will encourage the development of its former enemy much like the incentive-laden development enjoyed by the former East Germany in the early 1990's. Expect large industrial projects designed to build up the country's infrastructure including low-cost vehicle assembly centers that will ship vehicles to Korea, Russia, India, and Southeast Asia.

Iran is an intriguing opportunity. With a population of over 50 million and ancient infrastructure, Iran is ripe for industrial development. The weakening hold by the current Islamic regime could lead to more liberal relations with Western countries, including the U.S. Geographically positioned between the high population centers of India, Pakistan, Bangladesh and the fellow Islamic republics of Saudi Arabia, Jordan, Syria and Egypt, Iran represents a strategically sound alternative for car makers looking to leverage its significant advantages.

Nigeria is a slumbering giant. With a population of over 100 million, its status as one of the world's leading oil producers and entrenched corrupt government, Nigeria represents a risky proposition for vehicle manufacturers expanding into Africa. Continuing political and economic instability could prevent expansion of the country's nascent automotive industry.

(One of the trends that I keep looking for is the shift of the North American automotive industry to a warmer climate—Florida, Bahamas or Jamaica would be nice...I can dream, can't I?)

 

Competitive Landscape 2000
 FordGMDaimlerChryslerVolkswagenRenaultToyotaIndependents
North AmericaFord
Mercury
Lincoln
Chevrolet
Buick
Pontiac
Oldsmobile
GMC
Cadillac
Chrysler
Dodge
    
EuropeVolvo
Jaguar
Aston Martin
Opel
Fiat
Saab
Mercedes-BenzVolkswagen
Audi
SEAT
Skoda
Rolls-Royce
Renault PSA
BMW
AutoVAZ
Rover
Porsche
Asia-PacificMazda
Daewoo*
Holden
Fuji/Subaru
Isuzu
Mitsubishi
Hyundai
 NissanToyoda Suzuki DaihatsuHonda
*Pending approval
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