Why Ghosn, Marchionne agree and disagree on consolidation

Renault-Nissan CEO Carlos Ghosn and Fiat Chrysler boss Sergio Marchionne both say automakers will face increasing pressure to consolidate, but Ghosn has a very different view on how this will happen than his rival.

"If you think consolidation is A buys B then you are going to be wrong," Ghosn said on the sidelines of the Tokyo auto show earlier this week. That is "1950s" thinking that will not work, he said.

Marchionne is calling for large-scale consolidation in the global auto industry to share development costs and has openly pursued a merger with a reluctant General Motors.

Ghosn says Renault and Nissan "have participated in consolidation for 16 years" but he does not believe in mergers because of the success he has had with the Renault-Nissan alliance and the Renault-Nissan-Daimler industrial partnership.

However, Ghosn expects more automaker consolidation in the future and he gave three reasons why.

1. Slowing global sales. “We used to grow globally at 5 percent to 6 percent a year. This year we will be lucky to get to 1.5 percent growth. Next year, maybe 1 percent. Who knows what is going to happen in 2017?" He said that if China's sales slowdown continues there would be a lot of pressure on European and U.S. automakers dependent on the Chinese market. "What is the solution? Consolidation," he said.

2. The massive cost of keeping up with key trends such as autonomous cars, connected cars and zero emissions. "You can't do everything if you are a relatively small or a midsize automaker," Ghosn said.

3. The threat from technology companies such as Google and Apple that are focusing on solutions for self-driving and connectivity. "This makes me say what I have always said -- we are in a trend toward [more] consolidation but the consolidation will take different shapes."

You can reach Douglas A. Bolduc at dbolduc@crain.com -- Follow Douglas A. on Twitter: BolducANE2014

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