Top automakers and suppliers are eyeing each other in a new way following last week's two blockbuster consolidation deals.
On Thursday, Ford Motor Co. agreed to buy Sweden's Volvo Car Corp. for $6.45 billion, and TRW Inc. announced plans to acquire Britain's LucasVarity PLC for $7 billion.
Several of the top automakers, particularly DaimlerChrysler, Ford and Volkswagen have cash to spend and still are looking for bargains. But Volvo may have been the last easy choice: It is profitable and well managed.
Now, Honda and BMW are considered the most attractive candidates, but neither is in dire need of a partner. Nissan, Mitsubishi, PSA Peugeot, Renault and Fiat have more immediate needs, but each carries baggage.
Among the big suppliers, the price of a consolidation reached a staggering, record level, as TRW outbid Federal-Mogul Corp. for LucasVarity. But there will be more deals. UT Automotive is on the block, and Tenneco Automotive could go there. Indeed, Federal-Mogul has made no secret of its desire for growth and could come back with a stronger bid for LucasVarity.
Said Scott Merlis, auto industry analyst and managing director of Wasserstein Perella Securities Inc.: 'You wonder if the Japanese (companies) will be forced to be more open now.'