DETROIT - Automakers will continue to consolidate because global companies may need to sell as many as 10 million vehicles annually to thrive, said Jac Nasser, president of Ford Automotive Operations.
The high cost of competition will force the creation of mega-manufacturers, Nasser said in an interview with Automotive News last week.
'The cost of doing business is going to continue to escalate,' Nasser said.
Meanwhile, Rick Wagoner, president of General Motors' North American Operations, said that large size has advantages - and challenges.
GM has long pursued a strategy of many brands, geographic diversity and sufficient size to afford major investments in new technology.
But, he said, 'Execution is the game. Whether it's doing a product program or promotional strategy or something as big as this (merger), how do you execute it? It's going to take a lot of work to make it happen.'
Under Chairman Jack Smith in the 1990s, GM has struggled to integrate its sprawling, decentralized global operations.
Chrysler Corp. and Daimler-Benz AG face the additional task of merging their corporate cultures, he added.
Nasser said high sales volume spells advantage as the need to invest grows.
'The virtue of volume and the virtue of being able to spread research and investment costs are going to become more and more a factor,' Nasser said. 'That is going to continue to be a push for fewer and fewer unique and separate boardrooms, (although) the marques may still exist.'
While strong players may need to sell as many as 10 million units annually, niche players may be those producing a million vehicles, he said.
The proposed DaimlerChrysler AG would have annual sales of 4 million, behind General Motors, Ford Motor Co., Toyota Motor Corp. and Volkswagen AG. In 1997, GM's global sales totaled 8.8 million; Ford's reached 6.9 million.
'I don't think bigger is necessarily better,' Nasser said. 'However, to be better, it helps to be bigger in the type of industry that we are in. But you can be bigger and not better.'
Said Nasser of the DC merger: 'We were not surprised.'
News Editor Charles Child contributed to this report