Does the Motor Industry Have a Future?
| Date | 01 March 1982 |
| Published date | 01 March 1982 |
| Pages | 24-25 |
| DOI | https://doi.org/10.1108/eb057241 |
| Author | Bob Crew |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Does the Motor Industry
Have a Future?
by Bob Crew
While the motor vehicle will still be a major consumer
durable by 1990—even though it may have a radicaly
altered design and be powered by alternative fuels—it is
less certain that the familiar manufacturers will still be
around by then when a handful of not more than six giants
could dominate world trade and not one of them British.
According to management consultants Ronald Sewell &
Associates in Bath, who have been conducting an in-
vestigation—directed by Professor Bhaskar—into the
future of the motor industry, 1990 could see the demise of
the British industry altogether and of Japan as a major
world exporter.
The year 1990 could see the demise
of the British motor industry altogether
From an assumption of existing outputs, design
capabilities for world product-ranges to meet anticipated
demand, international outlets and economies of
scale—allowing for an increase of
3-5
per cent in those out-
puts over the next nine years—Bhaskar believes that the
manufacturers most likely to become globally dominant,
with production capabilities worldwide and a total annual
capacity of 6 million or more vehicles are: "General
Motors, Ford, Toyota, Nissan, a Communist Bloc group
centred on Lada and a French group comprising Renault,
PSA-Peugeot-Citroen, AMC, Volvo and others. These
groups together will have an annual capacity of 50 million
vehicles, more than enough for world consumption."
The British, Germans, Italians and Swedes are notably
absent in Bhaskar's crystal ball and he says that there must
be no natural presumption that major motor manufac-
turers—"such as Fiat, VW, Chrysler and BL"—will sur-
vive.
One or two of them might, he says, "but some may
collapse and others merge together to make a seventh inter-
national grouping, which could include Chrysler/Mit-
subishi merging with VS and/or Fiat." Smaller,
prestigious manufacturers—such as Rolls-Royce and
BMW—will, he expects, "carve a specialist niche for
themselves".
These predictions depend, of course, on the potential
winners in the world motor manufacturing race for re-
maining markets, having the resources with which to raise
the investment they need and the continuing increases in
production by the necessary 3-5 per cent per year to
achieve their vital share of anticipated world demand in the
1990s, by which time Bhaskar believes that we could have
seen the demise of Japan as a major world exporter sup-
planted by the Soviet Union and/or South Korea.
Another necessary factor in the rise of major manufac-
turers to worldwide status is their ability to acquire, not
just finance, worldwide outlets for distribution firmly
rooted in every-increasing economies of scale through
world component-supply strategies—hence the likelihood
of American and Japanese biggies succeeding where
British and other weak companies may be destined to fail.
The absence of British Leyland, or any British giant, in the
final world league, does not surprise Bhaskar. "But it is in-
conceivable", he says, that "the French government would
not try to encourage a collaboration, if not a merger, bet-
ween Renault & PSA Peugeot-Citroen. Fierce competition
between the two companies could be extremely expensive
for the French government. There can be little doubt that
the common French national interest will force the two
companies together."
According to Vernier-Palliez, chairman of Renault, the
world's eighth biggest car producer (with 2.4 million
vehicles in 1978): "There are no world cars, only world
components to be sold on a vast scale". British Leyland's
recent decision to link up with Honda confirms that the
British are slowly getting this message. BL are the tenth
biggest in a world league dominated by giants like General
Motors (9.9 millions in 1978), Ford (7.2 millions), Toyota
(3.5 millions) and Chrysler (3.2 millions). The Europeans
were trailing well behind in 1978 with PSA Peugeot-
Citroen (2.7 millions), Volkswagen and Renault (2.4
millions each), Fiat (1.9 millions) and BL-Honda (1.6
millions) pushing hard on the American and Japanese
heels.
Prestigious manufacturers such as
Rolls-Royce and BMW will carve
a specialist niche for themselves
Colin Hill of BL has warned that motor manufacturers
must "hang together or each hang separately". According
to former French industry minister, Sauzay, "Fiat cars will
one day be for sale. The French should take it, if not they
could be encircled by the Americans." But Bhaskar
believes that the French will have too many difficulties get-
ting their own manfuacturers successfully under one um-
brella to be in a position to gobble up Fiat.
While GM and Ford are the only two truly global
multinationals at present, VW and Renault are on their
heels,
operating in two—Europe and North America—of
the world's three major markets, which include Japan.
BL's link with Honda could possibly promote them to the
24 INDUSTRIAL MANAGEMENT + DATA SYSTEMS
To continue reading
Request your trial