Soaring costs likely to spark more alliances
Auto executives see GM-PSA deal as a sign of the new global order
Carlos Ghosn: Industry "forces are leading to more consolidation."
GENEVA -- Carlos Ghosn says the need to invest in new technology and operate on a global scale will keep pushing companies into alliances like the one announced recently by General Motors and PSA Peugeot Citroen.
"You are going to see more of it," said the Renault-Nissan CEO, adding that "nobody can afford today not to be present in geographical zones, nobody can afford not to have technologies -- electric cars, fuel cells, hybrids, or downsized turbo engines -- no one can afford that. And this requires more and more investment that nobody can do."
Most executives at the Geneva auto show this month echoed Ghosn's comments, saying that the need to share development costs would drive them into deals with rivals.
Stefan Jacoby: Volvo is looking for a partner.
Volvo CEO Stefan Jacoby, for instance, said the company is looking for a partner to develop a small-car architecture to replace the V40 compact, which debuted in Geneva. The next generation won't be out for six or seven years, he said, but Volvo no longer has access to former parent Ford Motor Co.'s platforms.
"For the successor model, since we are not anymore using Ford technology, we are looking for somebody who could provide this," Jacoby said.
Ghosn said the General Motors-PSA alliance clearly took its cue from his own companies' link-up.
"What you are seeing here is exactly what we have been seeing for so many years that started with Renault-Nissan, because the forces at work in the industry are the same and have been accelerating," he said. "And these forces are leading to more consolidation."
Fiat-Chrysler CEO Sergio Marchionne criticized what he sees as the lack of corporate integration between GM and PSA.
"We are happy of not being in GM's shoes," he said.
But Marchionne said alliances are pragmatic: "I am interested in talking with anyone who is interested in sharing investments. The not-invented-here syndrome [leads] to disproportionate waste of capital."
Elsewhere, Yoshi Inaba, president of Toyota's North American operations, told Reuters that the economic pressure on automakers globally only continues to grow.
He said there will be more deals like the GM-Peugeot alliance: "The global market is pushing automakers to do a much better job and therefore pushing to align or cooperate or work together as a common goal. I don't think this GM-Peugeot thing is the end of it."
The cost of adding technology to meet tougher fuel economy and emissions standards will drive cooperation, says Mark James, director of Lotus Engineering.
"Engineering has gotten more complex, more expensive in the past decade," James said. "So you will see more platform sharing, more engine sharing among the major manufacturers."
Other automakers were less interested in alliances.
"Unlike the alliances and mergers which other automakers are doing, we will autonomously go on our Hyundai Way," said Hyundai Motor Group CEO Chung Mong-Koo.
"We are not interested in takeovers or mergers," he added.
Speaking at a reception in Geneva, Ford CEO Alan Mulally said Ford plans to sit out any wave of alliances.
"Our focus is going to remain on further integrating Ford worldwide," Mulally said.
"We have all the assets that we need worldwide."
Jason Stein, Luca Ciferri and Reuters contributed to this report
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