Martin Winterkorn, chief of Volkswagen, was asked by Automobilwoche [sub] who will be left standing when the big carmageddon—ooops—consolidation will finally be over. Here are his odds:
In the US, one maker will survive.
In Europe, two will crawl out from under the rubble and soldier on.
In Japan, “a few” will be left over.
In China, Marty sees “a massive concentration.” The Chinese offerings will be reduced to “half of the brands.”
He didn’t name any names. Except when asked about BMW and Daimler, Winterkorn couldn’t bite his tongue hard enough and smugly said: “Doing a parts purchasing co-op won’t be sufficient.”
So the world according to Winterkorn will host (guessing) Ford and VW (of course – who else?). In the Japanese corner, Toyota and a handful of others. And about 40 to 60 Chinese automakers. The number of Chinese Automakers is currently estimated (nobody knows for sure) to be anywhere between 80 and 120.
The situation in China (with the quoted 80-120 makers) seems reminiscent of that in the USA a century or so ago. Will history repeat itself there?! The next hundred years should be quite a ride…..
The chief of VW predicts that VW will survive and that his competitors probably won’t. No one saw that coming.
This is all pointless disasturbation. No one knows how long or how deep this downturn will be so any such predictions are pure speculation.
You’ve seen my guesses in the past. They do vary from week to week, according to the currents in the great sh*tstorm which will be known as the Greater Depression in future history.
Ford. Maybe.
Toyota. Definitely (along with “brethren” Lexus, Daihatsu, Scion, Hino and Subaru)
Volkswagen. Maybe. (Audi, etc, included – also probably Porsche)
Hyundai. Definitely (along with brethren Kia)
Suzuki. Maybe (assuming India and China don’t collapse totally), but possibly only if they merge with another relatively marginal player (Mazda? Mitsubishi? Both?)
Before you think I’m nutzoids with Suzuki – don’t forget how Suzuki-Maruti are #1 in sales in India; how Suzuki is well represented in China and elsewhere in the world, and that the US market is not the “only” important market (tho Suzuki are here and have 50% ownership of a plant in Canada, too)
China? I’m going to guess that they’ll consolidate down to a dozen or so companies.
The US a century ago had many hundreds of automakers–80-120 was probably a nice figure for 1929.
The chief of VW may not be the best source for this kind of info (then again, who is?) but either way I’m seeing a faintly disturbing regularity in car companies’ CEO’s predictions of the automotive landscape to come.
If any American survives, it’ll be Ford. Unless, of course, the government ignores them when/if their condition worsens and instead continues pouring all their cash into GM/Chrysler.
@ menno: I just think you’re nutzoids, period. But maybe in the end you’ll be right – who knows.
I agree with Menno. I’d also add Honda. Motorcyles are a great way to ride out the depression …. In China, I see less than 10. Currently, 14 carmakers have already 90 percent market share. The Chinese goverment already pretty much ordered to reduce those to 10. What will be interesting is what happens to the joint ventures with the carmakers that went under.
And BTW, Winterkorn didn’t expressly say that VW will be amongst the survivors, he didn’t name any names ….
Tesla.
I could see two in Germany, but two in all of Europe? That assumes the French will die as well as the Italians. I really don’t see both PSA and Renault going under.
The BMW and Daimler thing will be interesting to see how it plays out. I don’t see how the two can function as one entity. They sell basically the same cars as the other. I think they will contract and stay separate. Especially if they understand the successful General Motors business model.
The Japanese will probably all be around in the future. Most of their companies have large parents with money in many things. I could see Mitsubishi giving up on the automotive business.
Hyundai will stay. It will be interesting to see how those other Pacific rim manufacturers do, ie. Proton.
Ford will also be interesting to watch. It depends on how the new models do. Ford will be facing a few critical years.
When it’s all over only Morgan will be left standing. Start stocking up on sliding pillar suspension grease.
So they asked the chairman of an auto group a question which allowed him to indulge in fearmongering, snarky commentary, and general snobbery, all without having to provide any specifics he didn’t wish to. How lovely.
Frankly, I don’t see any point in analyzing his answers for likely results. Only his mention of BMW and MB are of any import.
BMW and MB are his natural rivals in the premium car market in europe. So any fear or uncertainty he can toss their way is a plus for him.
Nothing new to see here, please move along…
@ Schmitt
Motorcyles are a great way to ride out the depression
Nicely phrased…ad campaign in a box.
Utter bollocks!
What the frig is Martin Winterkorn burbling on about?!
Only two survivors in Europe?
Does he honestly think France will allow their car companies to fail?
Anyway, France’s car companies have a lot going for them.
Peugeot-Citroen is Europe’s second largest car makers, so they’re effectively in the same position as VW.
Renault have their alliance with Nissan to help them.
FIAT are the only ones who look vulnerable.
Japan will probably have Honda, Toyota and Nissan, but Mitsubishi and Mazda might have problems.
Mazda can’t rely on Ford for help (they’ve had to shield their operations from Ford due to anti-trust fears) and Mitsubishi was doing well when things were OK, but even their figures in peak won’t help them survive in a recession. They’ll have to merge with someone.
As for North America, I hope Ford fail. I (personally) bloody hate the company. I’d rather GM survive and Ford fail. I just wished Chrysler would be the one to survive and GM and Ford fail. But you can’t have everything……
Mitsubishi, the company, does way more than cars. They have plenty of money to wait this thing out. The real question is will they?
I don’t see PSA or Renault-Nissan going away but they might end up being swallowed(or swallowing)other companies.
Think VW-Renault-Nissan-x
Fiat-PSA-Chrysler(Jeep)?-Chery?-Saab?
MBella- they could, but they shouldn’t. Why does Mitsubishi make cars anyway?
Japan will only be Toyota and Suzuki
Honda will survive, but I think will(and should) become an American company.
Two survivors in Europe, Frau Putnick. One in the U.S.
Herr Schmitt,
Firstly, my name is “Puckrik”.
Secondly, even two survivors in Europe, doesn’t make sense. Peugeot-Citroen, Renault, VW/Porsche, BMW and Mercedes-Benz (who are cash rich at the moment) are all in strong positions.
davey49: they could, but they shouldn’t. Why does Mitsubishi make cars anyway?
Maybe, they really don’t have anything close to a class leading product besides the EVO, and you can’t run a company just selling those.
MBella : Maybe, they really don’t have anything close to a class leading product besides the EVO, and you can’t run a company just selling those.
Hmmm, no but they may be able to be a niche player selling only those
Mitsu will probably become a parts company, especially engines, worldwide and have a small, but loyal, domestic market.
I can’t see Honda leaving Japan, they’re too strong in the local markets, especially with anything other than cars. They kept to their knitting and are in vastly better shape than probably any other auto company out there.
Ford should survive, smaller, wiser, profitable; jury’s out on GM and Chrysler is dust in the wind.
China and India will settle out. India has a lot of bad debts to work through. I can see one of their native companies fail, probably TATA. China will have merge mania and what will come out of that will be the dragon that everyone fears. How many, I don’t know but I can’t see more than 5 with a couple just working as domestics.
The Europeans are going to have a shakeup and it’s going to get really ugly. I can see nothing changing for 5 years as they keep dragging things out. The only relief would be mergers and no one has any money right now. C’est la vie!
@Katie: Sorry for misspelling you name. My eyes give up after staring at the screen too long.
As far as what makes sense: I never claimed Winterkorn makes sense at all … just reporting what he said.
Which reminds me: 20 years ago, we were told that there is room for 4 large automakers on the globe. And now we have too many to count in China alone ….
Anyway, annual worldwide sales are projected at somewhere around 50m. There must be production capacity of 100m. Capacity utilization below 80% is usually considered hazardous to the company’s health. 50% capacity utilization worldwide is just nuts.
1 in America is possible.
China I doubt anyone knows.
A few in japan? Toyota, Honda, Nissan. Mitsu can hang on by treating their automotive division like the WNBA. Mazda may or may not, very sketchy there.
2 in Europe is just…..baffling. So Daimlar, Fiat, Renault, Citroen, BMW, VW. He’d expect 4 of those to completely be bought out/disappear?
I’m assuming he does not count the plucky supercar manufacturers who source their engines (Pagani, Lotus, Koenigsegg).
In the USA I can see Studebaker and Fisher Body being the only ones left standing, because we’ll all be driving horse and buggies by the time this whole mess is over. Maybe a few independent Amish and Mennonite manufacturers will rise up and become major players too. They just have to watch out for the cheaper offshore competition from the Indian oxcart manufacturers stealing their market share.
Wow Katie – where did that come from my fellow Brit? Has the sale of Jaguar by Ford suddenly turned you in to a Blue Oval-hater? Either way, your wish will (thankfully) not be granted. Chrysler is toast and frankly the slow, lingering death is painful for everyone – just pull the plug Cerberus.
GM will survive although it does not deserve to. Nothing in either their European or American range does it better than Ford – they just do it with more brands, more cost and more waste – 0h, and more taxpayers money of course.
I do agree with you that the vision of just 2 European manufacturers is ridiculous and misses the point. All the European car-makers are in some way beholden to their respective governments – not one will stand buy and watch their makers go to the wall.
There will be contraction of makers in China. In Europe and the US, most makers will survive. Chrysler, probably won’t make it.
The Outlander is the best thing Mitsubishi does in the consumer car space.
Nikon is a Mitsubishi company. (If I’m to believe Wikipedia)
I’ve always though that Mitsu made most of its money in power generation and electrical equipment.
Good way to go, probably better than cars.
“Which reminds me: 20 years ago, we were told that there is room for 4 large automakers on the globe. And now we have too many to count in China alone ….”
Did we expect the Chinese to have cars 20 years ago?
Winterkorn seems to be a little extreme. On the other hand – the Fiat CEO came up with a similar estimation some time ago, didn’t he?
My estimation:
in the US: Ford
in Europe: VW/Porsche, Daimler, BMW, Fiat/Renault/Peugeot
in Japan: Toyota, Honda
China: who knows. many small ones will die over time
If we talk about the survivors, we have to specify the question. By surviving you mean a manufacturing company or a generic badge slapping will also count? I am sure that at least one company from big three will survive, but in what state? Will it be a Vauxhall type of company, or a real manufacturer? It is not fair calling Saturn a survivor if all it does is rebadges german Opels. So I believe us car manufacturers will go the british way, everything will be sold out and the industry will live on from selling badges. Like they do with Elgin watches, IBM computers and Polaroid cameras today.
None of japanese companies will go south because all of them are diverse in manufacturing practices.Also Europe will survive. Those who do not rebadge, but have a strong domestic engineering base, will always survive, and always had survived before. Unifying, rebadging and consolidating, borrowing and sense-making has always lead to disasters.Strong domestic engineering base is the best panacea for long term durability.Any company that tries to find failure everywhere but in their product, is destined to die…
Yeah, I forgot Honda. Shame on me. They’ll surely survive as one of the few independent auto companies; they learned from their earlier debacles with Isuzu in the US and what used to be known as British Leyland in the UK.
I also suspect that Mitsubishi and Suzuki would make very good permanent merger partners, given their relative strengths would actually benefit one another (i.e. Mitsubishi Bank and Mitsubishi Heavy Industry being “parents” of Mitsubishi Motors, and therefore “in-laws” of a marriage between Mitsubishi and Suzuki; plus Suzuki is very strong, and these two companies already collaborate in autos in some minor markets now).
Suzuki is very strong in kei cars (in Japan) and in the increasingly important Indian market, Suzuki are #1. Mitsubishi has a worldwide following of their Evo high-performance cars.
My thoughts were that the corporate name should be Suzuki-Mitsubishi and the vehicles (including motorcycles and marine engines) should be sold as Suzuki, with the possibility of bringing back the Mitsubishi name at a later date, as an upscale marque with “Debonair” luxury cars. Once the global economy stabilizes and starts to improve, whenever that is… (five years, six?)
Of course, the worldwide dealer networks would be merged in most cases, perhaps retaining two dealer networks in certain countries like Japan, where you might have “Red S Suzuki dealers” (Suzuki) and “Red Three Diamond Suzuki dealers” (ex-Mitsubishi vehicles), with a 3 or so year timeframe to rationalize the car lines and either sell all cars through all dealers (which would simply become Suzuki dealers), or divide the vehicles between the dealers (Toyota do this in Japan with several types of dealers; some are Toyoda, some Toyota, etc.), likewise, this could be the case in Taiwan where there are two distinct lines.
In India, Hindustan could simply license-badge their Mitsubishi cars as Hindustans, and Suzuki-Maruti would have no changes except the freedom to add any ex-Mitsubishi vehicles not mfd. by Hindustan.
In China, the two each partners of Mitsubishi and Suzuki might be wise to all simply merge into one entity or two (if Mitsu and Suzuki merge, the Chinese government will only apparently allow two 50/50 joint ventures with the merged Japanese company, anyway, from what I understand).
Both Mitsubishi and Hyundai—being vertically-integrated companies, will survive!