Daimler Renault-Nissan in 2010

Published: 26 April 2010

Earlier this month Daimler hopped into bed with Renault-Nissan in the latest marriage in an industry seeking new ways to do business. Will the Euro-Japanese cooperation herald a new wave of mergers, acquisitions and partnerships? Consolidatory deals have been a part of car manufacturing since day one and the timing seems apt for more of the same.

Fiat chief executive Sergio Marchionne predicts further deals. He famously champions scale and predicts only the largest car makers who join forces to reduce costs can survive. 'Next will be the French,' he recently told reporters in Rome.

So which car makers are on the prowl?

Everyone's looking for partners at the moment. We're all familiar with the argument: cars have become so complex - burgeoning electronics, ever-tightening CO2 rules and safety regulations galore - only by joining forces can manufacturers drive down their cost base.

The world's biggest car makers look secure for the time being. Toyota, GM and Ford have just about weathered the financial crisis - by hook and by crook - and each have scale on their side. But standing still in this business will see profitability go backwards. All three are still smarting from recent losses and will surely collaborate further; the Blue Oval already works with Fiat, Toyota with PSA on their smallest cars.

Companies looking exposed at the moment include BMW and Honda, two of the biggest car makers operating independently without the safety net of larger owners. PSA could strike a larger deal - as it recently investigated with Mitsubishi, another flaky-looking loner - but in the meantime seems hellbent on doing individual strategic deals with all comers (it already cooperates with BMW, Mitsubishi, Toyota, you name it).

And don't rule out further predatory deals by China's burgeoning car makers. The ink is still damp on Geely's contract to buy Volvo from Ford and the rate at which Chinese brands are improving makes me certain it's only a matter of time before they become serious business partners outside their domestic marketplace.

Why sharing is the way forwards

'Collaboration is the future,' Spyker owner and new Saab boss Victor Muller recently told me. That obviously suits his strategy, as Saab desperately needs a tech partner. But his argument resonates. He says that even adding 100,000 engines to a 1m-unit business forms an attractive business case to even the biggest players in the auto industry. It's more factory utilisation, more shifts, more hours per worker.

He's convinced that the expensive new technologies such as hybrid systems and electrification can only happen by collaboration. Looks like tomorrow's models are going to share even more beneath their bespoke bodywork - character is slowly being ironed out of our homogenised cars.

Why Daimler tied the knot with Renault-Nissan

Daimler and Renault-Nissan's cooperation is the result of talks that focused on small cars, but blossomed into a larger cooperation of convenience. The three partners will cooperate on shared small-car platforms initially, borrowing common engines and building jointly developed vans. The next Twingo and Smart Fortwo will be twinned - the first of many cooperations in the years ahead.

Carlos Ghosn set the ball rolling with the Renault-Nissan alliance and is slowly adding further pieces to his international jigsaw. He's adamant that holding all the pieces is the key to winning in this game.

By Tim Pollard

Editorial director of CAR's digital publishing arm. Motoring news magnet

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