Morgan Stanley: Dramatic Consolidation Coming to Auto Industry
David Shepardson - Detroit News Washington Bureau
Washington— An auto industry analyst thinks the world’s nearly 30 major automakers will see dramatic consolidation — and about a half dozen will remain.
Morgan Stanley auto analyst Adam Jonas said in a research note Tuesday that the U.S. auto industry needs a dramatic change in thinking, spurred on by electric vehicle maker Tesla Motors Inc.
“We believe the radically changing landscape......................
Tesla does not want to be purchased, and I can't think of anything more hazardous to Tesla than being purchased by GM or Ford, two companies with an absolutely terrible track record managing non-integrated assets.
I'm coming to the conclusion that despite the immense diversity of badges and nameplates, most cars are really just the same. To most consumers they look the same, drive the same, get the same mileage, have the same features, space, specs, quality etc. The differences are so minor now that is just comes down to marketing and incentives. The mass-market has effectively commoditized the automobile on a global scale and I think carmakers that are in that space (like Ford) will need to find ways to breakthrough, otherwise they will only see growth in business efficiency.
from what I keep hearing, Tesla is much more than a car manufacturer - practically everything BUT a car manufacturer:
-- tech company
-- carbon credit reseller
-- electric infrastructure designer, builder, adminsitrator
-- vaporware ponzi scheme
-- umbrella corp. for other high tech startups
-- think tank
who just HAPPENS to build a (One) vehicle.
&
if a Real auto mfg bought them, their house-of-cards™ would likely fall apart.
So, imho, tho it has NOTHING to do with the consolidations the article imagines;
Tesla's principal meaning is in showing how higher-than-mainstream car Brands need to get their act in gear and begin aggressively SWITCHing ALL their models to variously electrified versions
From the perspective of consolidation, there are a few options.
The first question to ask, is does the Mainstream/Luxury model work? IE, GM with Chevy/Cadillac, Ford/Lincoln, Chrysler/Maserati, VW/Audi, and such? Or does it make more sense to have truly separate companies for mainstream and luxury?
I'm of the opinion, beyond parts-sharing agreements, that luxury and mainstream cannot exist at the same company. VW is the exception that proves the rule, but it's never been executed effectively anywhere else since the paradigm changed in the 1970's.
The closest thing to an effective execution has been Toyota/Lexus, but Lexus isn't really a true luxury brand.
1. Car companies seem to be really good at one market but not both (either mainstream or luxury).
2. Luxury car brands that have been independent for most of their existence have better track records than brands that are owned by companies that have mainstream brands.
3. The VW brand isn't doing well in certain countries, but their luxury brands are.
4. Luxury brands are complex and require special attention.
5. The mainstream/luxury model is only used in the automotive industry.
It's looking like wescoent (and Mulally and Henry Ford) is right about the mainstream/luxury model.
^ maybe they just need a head-guy** with a split personality
** frequent peeve of mine
"companies" are to an extent "Fictitious"
it's the *people* in the companies that actually DO things, think things, feel things
edit
the little linky blue squares in the wescoent quotes weren't adapted to FIN
so here are the links post #9 post #22
&
for perspective
Their goal is reducing competition through mergers & acquisition. That's where they make the big bucks. Give the MorganStanley types enough leverage, and we'd be down to one car company making boring "people movers" sold at sky high prices.
so
this could be (partially) MorganStanley trying to drum-up business for themselves :poke smilie:
edit: and he prolly has a big stake in Tesla!
^ maybe they just need a head-guy** with a split personality
** frequent peeve of mine
"companies" are to an extent "Fictitious"
it's the *people* in the companies that actually DO things, think things, feel things
He's looking at it from a financial perspective, though. He's hinting that it's an unsustainable business model, but I wish he would've been a little more elaborate, though.
Another thing I forgot point out:
VW has owned their luxury brands for only a short period of time. What if their luxury brands start to go downhill like Detroit's did? The mainstream/luxury model worked for Ford and GM for only a few or more decades, and that was before their luxury brands started sharing mainstream components......economies of scale.
VW has owned their luxury brands for only a short period of time. What if their luxury brands start to go downhill like Detroit's did? The mainstream/luxury model worked for Ford and GM for only a few or more decades, and that was before their luxury brands started sharing mainstream components......economies of scale.
I most of his comments he was just opining, on a personal level.
--------------------------
The thing that I thought peculiar about the article/story/commentary, nobody has brought up yet (here or the 57 pages on GMI)
Is that the auto industry is going to be forced to consolidate because of a relative new/niche upstart. If anything, that would lead you to a conclusion that we could double the number of companies in the same number of years. Sure not everyone has Elon Musk money, but how much of his own is he really using?
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