GM pursues global group, but managing far-flung empire is tricky
DETROIT - The agreement that gives General Motors 20 percent of Fiat Auto is merely one more step in the automaker's strategy to strengthen the 'General Motors group.'
Reprints
Print
Respond
But not everyone agrees GM can effectively manage a long string of networks and alliances that spans the globe.
At the Automotive News World Congress last January, GM CEO Jack Smith said GM already has in place what most companies are seeking through merger and acquisition - namely, a truly global and diverse network of brands, manufacturing and distribution.
With the addition of Fiat to GM's alliances, GM holds stakes in companies that account for nearly a quarter of the world's vehicle output.
PERSPECTIVE 2000
The world isn't getting smaller. It's just that the major auto companies are getting so much bigger. GM, Ford Motor Co. and Volkswagen AG - the three biggest of all - are among those that have been on an acquisition path in the 1990s. Consider:
GM bought 50 percent of Saab in 1989 and bought the other half in 1999. It has increased its ownership of Isuzu to 49 percent, picked up 20 percent of Fuji Heavy Industries (Subaru) and retained 10 percent of Suzuki. It builds cars in California with Toyota and in Canada with Suzuki, and has engine-development agreements with Toyota and Honda.Looking beyond Asia, GM in March acquired a 20 percent stake in Italy's Fiat Auto while Fiat took a 5.1 percent stake in the U.S. company.
In 1990, Ford purchased Jaguar for $2.5 billion, a move that was thought to be as dumb as the United States' purchase of Alaska was in 1867. Like Alaska, Jaguar turned out to be a winner. Ford bought Volvo Car in 1999, and soon will add Land Rover, purchased from BMW.
Ford is bidding for bankrupt Daewoo with the blessing of the Korean government, but the final decision had not been handed down as this was written. Along the way, Ford acquired Aston Martin, the tiny British builder of luxury cars, and Ford increased its stake in Mazda to 34.8 percent, giving it management control of the Japanese company.
Chrysler Corp. had been a major stakeholder in Mitsubishi Motors Corp., but sold its last holdings in 1996.
Across the pond, Daimler-Benz made the boldest move of all when it acquired Chrysler Corp. in 1998. It reduced America's Big 3 to the Big 2, and that name isn't even used in the industry. DaimlerChrysler acquired 34 percent of Mitsubishi and 10 percent of Korea's Hyundai in March of this year.
In 1999, France's Renault bought management control of troubled Nissan Motor. Earlier in the decade, Volkswagen took over Spain's Seat and Skoda AS, the Czech carmaker.Volkswagen owns both Rolls-Royce and Bentley but, in January 2002 Rolls-Royce will revert to BMW ownership.
BMW shared in the activity - but not the prosperity - of the 1990s consolidation wave. It bought the Rover Group in 1996 and lost an estimated $1.5 billion in the process. BMW sold Land Rover to Ford this year and essentially gave Rover Cars away to a British venture capital partnership. But it has kept the Mini brand.Among the major volume carmakers, that leaves only Toyota, Honda, BMW and France's PSA Group on the wholly independent list. Each insists it doesn't want or need a partner.
For years, there have been predictions the world auto industry someday will have fewer than a dozen major players. The activities of the 1990s made those predictions look pretty good.
