By on January 11, 2015


Conventional wisdom holds that consolidation among auto makers is inevitable. But this chart from IHS Automotive tells a different story.

As time has passed, the market share of the 10 largest auto makers has slipped. IHS projects that by the end of the decade, they will account for just 70 percent of sales. No one auto maker is poised to make any gains from 2012 to 2020. At best, certain OEMs like Volkswagen, Renault Nissan, Honda and Suzuki will remain flat. So, who is making up the other 30 percent?

(H/T Glenn Mercer, industry veteran, TTAC reader and former owner of a Zanardi NSX)

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35 Comments on “Chart Of The Day: Is Consolidation Inevitable?...”

  • avatar

    On a similar note, should large automakers consolidate their own low volume brands by cross selling them at the same dealer?
    I say YES! They should be able to figure out “the dealership experience” if that is all that it boils down to. Then the automaker can adjust model volumes without killing the brand.
    Here are a few examples:
    * Dodge – Fiat
    * Chrysler – Alfa Romeo
    * Toyota – Scion
    * Honda – Acura
    * Nissan – Infinity
    * BMW – Mini
    * Mercedes – Smart

    • 0 avatar

      Any OEM with more than 3 brands is wasting resources. Toyota was smart, Lexus for premium, Toyota for Mainstream. they could have made Scion a Dacia like brand, but screwed that up.

      • 0 avatar
        heavy handle

        Toyota has just 3 dealership networks in the US (not counting forklifts), but they have multiple competing dealership networks in Japan.

      • 0 avatar

        Scion would be a better success if it wasn’t kept hostage by the existing dealership network by placing its “stores” into dealerships. This was recipy for disaster because Toyota dealerships do everything they can to sabotage Scion “stores”.

    • 0 avatar

      I’d love to go to a “quirky car store” which sold all of the non-mainstream brands.

      Put it next to a coffee shop and a bookstore, and make sure the customer-facing staff is prepared to deal with the public, and you have a fun new retail concept!

      Will it move the metal? Hell if I know, I build and maintain computer clusters for a living. But I’d be foot traffic there!

    • 0 avatar

      I’m not sure why figuring out that “dealership experience” seems to be so difficult. I’ve looked at Scions at a few Toyota dealers over the past decade, and the walk-in-the-door experience has consistently felt like trying to order a Whopper at McDonalds (“Oh, let me go see if I can find a Scion person…”) The worst, though, was a certain Southern California combined VW and Audi dealership. We were legitimately interested in shopping cars from both brands. The VW and Audi portions were completely connected internally and externally, had shared service bays, and shared the same dealer brand (and presumably owner). Crossing between the two sides, however, was like Checkpoint Charlie without the guns. There was no help or “warm hand-off” moving between them, which would have gone a long way towards establishing a positive feeling for both.

    • 0 avatar

      If you take away the “upscale” treatement of the Acura dealer (vs. the “you’re dog meat” at our local Honda shop), you would be left with absolutely NO reasons to buy an Acura.

    • 0 avatar

      Here in Oklahoma City/Edmond, MINI and BMW are already consolidated at the same dealership. They also just put our first Maserati dealership in the building that previously sold Hummers, and it is shared with Land Rover. The Fiat studio was previously standalone, but just had Alfa Romeo added to it, and it seems to deal primarily in pre-owned cars. I have no idea who sells Smart; it might be the Mercedes-Benz/Volvo/Jaguar dealership. Infiniti and Acura sell in enough volume to warrant their own establishments, honestly.

      • 0 avatar

        The Smart lot is indeed at Mercedes-Benz of Oklahoma City, along with Volvos and Jags. And I never did figure out one aspect of Bob Moore’s multi-dealerships: Infiniti and Porsche/Audi have separate showrooms, but seem to share service departments and telephone banks.

  • avatar

    The graph needs better labeling in order to understand from the outset what in the heck the point is.

  • avatar

    Consolidation would have been moving along nicely had GM and Chrysler been capped in the head and dismembered via a proper bankruptcy.
    Car firms have a good deal of political protection. Mergers and / or hostile take-overs will be very tough.

    • 0 avatar

      Agree, and it isn’t good. Better to have loathed, loved and lost, like we did with Chrysler’s give-away to Fiat, than to remain in a loveless and sexless relationship like we currently enjoy with diseased, deceased and resurrected GM.

  • avatar

    “So, who is making up the other 30 percent?”

    One could assume that would be the likes of Mercedes, BMW, Subaru/Fuji, Proton, Tata and the gamut of small Asian and Russian brands like Volvo, BYD, Avtovaz, Gaz, etc.

    Currently, I believe the better number to be closer to 28%, globally.

  • avatar

    I don’t know if there will be much consolidation among the big players, but I can definitely see brand consolidation coming. In the last decade we’ve seen Pontiac, Saturn, Saab, Plymouth, Mercury, etc. disappear.

    This points to how important brands are, and how much of a drag they can be on a company when not properly nurtured. Brands like Lancia, Volvo, Alfa, SEAT, Scion, Jaguar, Mitsubishi and FIAT are struggling – Lancia is probably in the worst position of those, and Volvo runs a major risk of becoming another niche brand unable to stand on its own. SEAT has seen a resurgence due to the new Leon, but they risk being a one-trick-pony. Frankly, I’m of the impression that were it not for EU labor laws VW would have already shutdown the division. As is, they’re using Seat factories to build Audi Q3s because they’re capacity limited everywhere else.

    I think that there are some serious long term vulnerabilities for Mercedes in particular, and BMW to a lesser extent. They cannot push their brands much lower than they currently are or risk completely destroying their premium brand reputation and pricing power. As I recall reading years ago about Jaguar: What manor lord wants to drive a brand that his maid can afford to purchase?

    Merc is so double-edged: they give us the glorious new S, the very impressive C, then dump a turd like the CLA on the market. Granted, they’re moving CLAs like hot cakes, so maybe the play here is to reinforce how good they are at the truly premium end and bolster the volume with mediocre, but passable product like CLA in the hopes that the two kinda-sorta-maybe balance out in the grand brand scheme of things.

    • 0 avatar

      ” then dump a turd like the CLA on the market”

      It’s all about wannabee Mercedes buyers; people who can’t afford a real Mercedes and allow themselves to get lulled into believing that the CLA is on par with the S, E and C-class.

    • 0 avatar

      Mercedes makes everything from garbage trucks to the S-class. Doesn’t seem to be a problem in the rest of the world. BMW could re-badge a Corolla, and it would not bother me a bit, I’m still buying an M235i. I buy the car, not the brand.

      • 0 avatar

        You’re not being totally honest, it’s the brand that attracted you in the first place then within the brand you choose the car that best suited your needs/wants/budget

        • 0 avatar

          Absolutely untrue. I would have bought my wagon if it had a Wartburg badge.

          Had Saab not taken a dirt-nap, I might very well still be driving my ’08 9-3SC. I’ve owned more Saabs than BMWs. More Volvos and Peugeots too. At the moment, BMW happens to have the product I like the best. But that was not necessarily true in the past, and may not be true in the future. The fact that I am above all else a die-hard manual transmission driver makes them very appealing to me currently. And they still sell a station wagon, though not with a manual any more. BMW makes a broad array of vehicles I have absolutely zero interest in, and one car currently I like enough to buy. Four years ago the 328i wagon had very little competition, and today neither does the 2-series.

          This time around, I actually came *this close* to ordering a Porsche Cayman, and might just do it 3-4 years from now when the time comes again. But I spent too much money on house renovations to swing the added wedge this year.

    • 0 avatar

      If MB is moving CLAs like hot cakes, it means the market has decided it’s a car worth buying, that it meets the needs of a great many people. Which means it’s not a turd.

      I haven’t seen or driven this car, so I can’t offer my own view of its merits/demerits. But I also never presume that my taste is the market’s taste.

      I did test-drive a C-class a little over a year ago, and was quite impressed with it, compared to its predecessors.

      I do agree with you that there will be pressure within companies to consolidate brand offerings, especially where there is little to distinguish one brand from another (e.g., Dodge/Plymouth, Ford/Mercury). Limited marketing resources can be more effectively deployed to support 1 brand rather than 2 or 3.

  • avatar

    The top ten don’t really tell the story. The pressure to consolidate comes up from the smaller players becoming increasingly uncompetitive as the market globalizes, which presumably encourages them to either merge or else partner together.

    An example of this is the joint BMW-Toyota sports cars. They work on them together because costs such as platform development make it prohibitive for each company to develop them independently, so they share some resources that help to reduce total development costs for each of them.

    As time goes on, it will probably be harder for the minor companies to keep up. They will need to get married or get eaten.

    • 0 avatar

      Particularly in Japan, No way Japan should have more than three carmakers.

      • 0 avatar

        Mazda would be totally screwed if forced to join with Honda, Toyota, or Nissan.

        Honda and Toyota would suck all of the fun out, and Nissan doesn’t seem to be doing so hot at the developing new models thing.

        • 0 avatar

          “Fun” is sure doing Mazda sales a lot of good right now.

          • 0 avatar

            Well if you want to take that outlook on things, then yes, Mazda would be making more money if they sold incredibly boring cars for people who only drive because they have to.

            But then they might as well not even exist, so…

          • 0 avatar

            All roads lead to beancounters and economies of scale. Or extinction, I guess.

          • 0 avatar

            Mazda could conceivably be a good fit for BMW. Those niches overlap, and BMW could use a budget brand aside from a low-volume niche such as MINI.

            Economies of scale are the issue, of course. Let’s just hope that they don’t create some behemoth with diseconomies of scale ala the old General Motors.

          • 0 avatar

            I have no personal interest in “driver’s cars” but BMW/Mazda is an intriguing marketing idea. Mazda’s healthy and innovative, it’s just little.

          • 0 avatar

            Assuming that the breakup with VW is finalized, the real prize in the near term is Suzuki. Not sure who would be a good suitor for it, but gaining that kind of foothold in India would make it a home run (or whatever the equivalent is in cricket.) Perhaps Fiat would be a better partner?

            Further down the road, Honda might be a fine prize. But I suspect that they’ll stay independent for awhile.

  • avatar

    Consolidation is 1 way, but i think there is another way too, that´s cooperation, JV for specific regions or specific model segments and so on. Big players have better options, Marchionne, Ghosn and other guys they all say the same thing, you need volume, 6-8millions to have global platforms and so on, they are just what 7 global automakers in this volume so others need to cooperate to be proffitable and minimize costs, after all look at various automakers, competitors and have JV plants all over the world, Toyota-BMW, Toyota-PSA, PSA-Mitsubishi, GM-Renault, Renault-Nissan with Daimler and so on, everybody is competing with everybody, trying to steal market share and than you check from other angle and you see they have JV plants producing the same car just with different badge, but 99% identical…

  • avatar

    Who is making up the other 30%? Is this a serious question?

    The table, such as it is, misses Mazda, Subaru, Mitsubishi,, Volvo, JLR, Lada, let alone Mercedes and BMW, not to mention a plethora of Chinese makers, including the Wuling van which gets counted twice by everyone – sorry, bad joke.

    Nobody’s going to take over Honda – they’re too disorganized to suit the beancounters of a possible buyer. They never do the same thing twice in factory design. It’s all improvisation. And too much rework at line end, according to the new book “Driving Honda”, which itself is far worse than anything Honda has made. A lot of drivel, just a few insights.

  • avatar

    Having worked in M&A for 3 decades, there was traditionally the school of thought that “bigger is better” in capital-intensive or marketing-dominated industries. A great many industries experienced the “Coke bottle effect” – the big got bigger, new niche entrants came in at the bottom, and the middle players got squeezed out.

    These latter didn’t have the resources to compete with the “bigs”, weren’t nimble enough to compete with the tinies (and couldn’t survive on niche markets), so they typically got swallowed by the bigs. Not always a happy result for the acquiror.

    Having said that, you always need to look at the overall size/complexity of the market, and the point at which economies of scale start to diminish/disappear

    The auto industry is very large on a global scale, but also very local – due to both regulatory issues and market preferences.

    One also has to look at the difficulty of combining companies that have different corporate cultures. This is often overlooked, but critical to the success of a deal.

    So, a combination of Ford and GM wouldn’t make the combined company more competitive – most likely, the reverse would happen.

    A combination of any of the top 5 or 6 with any of the next 5 or 6 is also likely to be value-destructive.

    When companies of a similar size are combined, the usual result is civil war between the 2 cultures, and significant value destruction.

    What is most likely to succeed is the combination of a large player with a much smaller player – but only if the large player is very disciplined about recognizing and nurturing the strategic attributes of the acquired business. Believe it or not, this rarely happens.

    The auto business, in my opinion, is large enough that most of the current top 10 or so can sustain themselves. Pch presents Suzuki as the major target opportunity, which may well be so. The car business, though, is part of a larger organization that is family-controlled, afaik. This often means that the family will watch it be destroyed in the market before they will sell.

    As always, time will tell.

  • avatar

    I take it these are global projections since PSA and Suzuki are listed?

    I’ll assume they are, as much as I agree a consolidation is inevitable you won’t see one until one or more of the players gains a decisive upper hand in market share vs the others. Now if some sort of major geopolitical event occurs in a specific region where an automaker is strongest (so Hyundai in Korea, Suzuki in India etc), their position may weaken enough to allow for a corporate takeover by one of the stronger parties.

    “So, who is making up the other 30 percent”

    I suppose smaller niche brands which have either gone global but fail to make the list (Volvo) or are regional only brands in high population areas (Proton in Malaysia and Indonesia)

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