History suggests that car companies and brands coming together is a tricky area, to say the least. The theory may look compelling. Yes, collaborative efforts can yield big savings for participants – in areas like product development, back-office distribution operations and parts procurement. But car companies are not producing commodity products with simple to measure inputs and outputs. There’s huge engineering complexity involved in developing things like ‘vehicle architectures’ (or as some of us still say, platforms), engines, interiors – look, it’s a long list. And then there’s politics. ‘Politics’ can mean board level tensions or corporate approaches and cultures that clash all the way down the line, from boardroom to final assembly.
There are interesting examples around of partnerships that have worked and partnerships that haven’t. Renault and Nissan is an interesting one on the positive side. Carlos Ghosn has been the glue. He came in when Nissan was on its knees in the late 1990s and worked out a way forward that saved Nissan and maintained its independence. The alliance between the two has worked well, with big procurement savings and shared platforms, shared manufacturing facilities – but with Renault and Nissan brands retaining distinct identities. There are boundaries. Is a full merger necessary? It’s a debatable one. Some investment banks think that is the next logical step, but I would guess there are plenty of people in both companies who would resist that.
On the negative side, the failed DaimlerChrysler project probably stands out as a case study in how not to do things. By the time Jurgen Schrempp started to let the cat out of the bag over the supposed ‘merger of equals’ it was already clear that there were big divisions inside the merged company on top of a severe clash of cultures and the steady erosion of shareholder value. That’s a messy story.
Last week we heard that Daimler (Mercedes-Benz) will be helping Nissan’s luxury Infiniti brand with a compact car platform. Dieter Zetsche and Carlos Ghosn are probably at least able to get cooperation between the two makers off on a sound political footing. They know each other well. Selective cooperation between the two doesn’t come with political baggage on either side. Intentions are clear. The fact that Zetsche is happy for Mercedes to cooperate with another luxury brand is something of a surprise though; it certainly suggests that the strategic alliance between Daimler and Renault-Nissan is on track to be a fairly deep one.
On the other hand, Volkswagen and Suzuki‘s nascent cooperation seems to have hit a decidedly rocky patch. Now then, Volkswagen is an ambitious giant eyeing the global number one spot. It’s an undoubted gorilla in the automotive jungle and perhaps thinks of Suzuki as, well, a rather junior strategic partner. Even if that is so, it’s a bilateral relationship that requires some sensitive handling. Clumsy is a word that springs to mind. One to watch.