World automakers need to look to their teamwork

World automakers need to look to their teamwork

DETROIT, Michigan (AFP): When John Devine joined the world's largest automaker as chief financial officer in December, he cheerfully predicted that General Motors Corp. would be one of the few survivors in a consolidating industry.

"I think we're seeing an enormous change in this automotive business around the world," said Devine, who spent all but one year of his 33-year career at GM rival Ford Motor Co., before joining GM.

"There's going to be an enormous separation, a sort-out of the business. At the end of that time, there's going to be a few winners and lots of losers."

Over the past decade six super-groups have emerged as the dominant players in the global auto industry, according to Michael Robinet, director of global forecasting at CSM Worldwide in Northville, Michigan.

The Big Six -- US titans General Motors Corp., and Ford Motor Co., Japan's Toyota Motor Corp, Germany's Volkswagen AG and DaimlerChrysler AG, and France's Renault -- have buttressed their position by swallowing up smaller competitors and forging strategic alliances.

The rest of the industry, Robinet says, can be divided among loners -- such as Japan's Honda, Germany's BMW and Porsche, and France's Peugeot-Citroen, which appear strong enough to retain their independence -- and problem children, such as Korea's ailing Daewoo and Russia's Lada.

While auto sales hit a 17.4 million-vehicle American record in the year 2000, sales and profits skidded so sharply toward the end of the year that auto companies started slashing production and have yet to stop.

Automakers also are hitting the brakes on European production, and analysts say the most lucrative, highest-volume consumer markets on both continents and Asia have stopped growing.

That means that to cut costs and continue growing, the strong auto companies must continue eating the weak, either by gobbling problem children whole or nipping off the best pieces.

Just as important as any further consolidation is the way in which these operators manage their acquisitions and partnerships, say industry analysts.

Ford has successfully maintained and even polished the distinctive images and products of its acquisitions while sharing chassis, parts, engineering and production methods across continents.

"Ford in particular has done a great job with the automakers that it's acquired," said Greg Salchow, industry analyst with Roney et Co. brokerage house in Detroit.

"Being part of a large corporation, with its purchasing power and engineering capabilities is really a good thing for a lot of these lower-volume, niche manufacturers."

GM is slowly but surely sucking its Japanese and European lines into its generic corporate blender.

"GM just kind of lumps them all together," said Scott Upham, analyst with Providata Automotive in Ann Arbor, Michigan. "As a whole, GM tends to want to pull everything into its center."

But DaimlerChrysler, industry analysts say, has kept the Chrysler Group entirely separate from Mercedes-Benz, ignoring opportunities to share engineering, best-practice production techniques or parts the consumer does not see.

Ford has "bit the bullet, changed some of its production systems, doing a relatively good job of platform-sharing," Robinet said. "Ford is going to weather this downturn better than GM and (Daimler)Chrysler."