BRUSSELS - The planned megamerger of Chrysler Corp. and Daimler-Benz AG, with its potential to lead the automotive world in profit, could inspire an accelerated wave of alliances and acquisitions in the industry.
At the very least, analysts say, it will force corporate planners to speed up globalization and cost cutting.
The planned merger renews questions about several European manufacturers, particularly those whose products have barely crossed national and continental borders, such as France's PSA Group and Renault SA.
And it again raises doubts about independent specialists, such as Sweden's Volvo.
European makers are the most vulnerable to competition from the new DaimlerChrysler AG powerhouse. The six volume makers in Europe have feared for some time that not all will survive into the next decade.
'The change they feared after the millennium looks to be coming earlier,' said Arthur Maher, an analyst with J.D. Power LMC in London.
Philippe Houchois, analyst at DRI Europe, said it's been clear for some time that the global market cannot support the specialist that survives only by charging a premium.
Nearly all the specialists already have been taken over by larger automakers. The remaining independents, such as Volvo and Porsche, are in Europe. Both companies are doing well financially.
NICHE ISN'T ENOUGH
Consumer pressure on pricing has reached to the luxury makes. 'Even BMW believed it could no longer be a niche player,' Houchois said, referring to BMW's 1994 purchase of the Rover Group.
Although Volvo management reiterated last week that the company will remain independent, analysts are skeptical.
'Volvo is the next player that is most vulnerable,' Houchois said. 'It cannot achieve the cost savings from sharing components and platforms on a big scale.'
The industry's consolidation is also a reaction to slower growth in the mature markets of North America, Europe and Japan. Longer term, the biggest growth will be in Southeast Asia, South America and Eastern Europe. Analysts expect companies with exposure only in the mature markets to seek partners that are in the developing markets.
MORE ACTION LIKELY
The creation of DaimlerChrysler is likely to accelerate General Motors' attempts to acquire a larger piece of Daewoo, and could even prompt Ford Motor Co. to increase its stake in Kia, analysts said. GM and Ford have been talking to the Korean firms to try to take advantage of lower prices of both products and companies caused by the Asian crisis, they said.
The merger may have less immediate impact on the Japanese industry. The major Japanese automakers are lean and already global, analysts said.
The Japanese are likely to be affected in the longer term, said Professor Garel Rhys, an automotive specialist at the Cardiff Business School in Cardiff, Wales, in the United Kingdom. 'The profitability of the (DaimlerChrysler) operation could be No. 1 in the world,' Rhys said. 'This will affect everyone.'
But ultimately, the merger of Chrysler and Daimler-Benz is just another example of what has been happening in the automotive industry since it began.
'When you have only the bigger firms left, mergers become mega,' said Rhys. 'This is the first megamerger, but not the last by any means.'