Carmaker marriages – for better or for worse

By ALASTAIR SLOANE

Who owns who in the car industry these days? French company Renault's proposed buyout of bankrupt Korean Samsung Motor the other day is the latest of many mergers and takeovers in the past three years.

Carmakers have for years been building millions more cars than they could sell, which sent them running to banks to borrow to stay in business. Notables here were Japanese companies Nissan and Mitsubishi, which owed billions.

But mergers and buyouts can mean lower production costs, access to more markets, shared platforms and technology, a broader product range, and collaboration on safety and clean-air concerns.

Germany's Daimler-Benz and America's Chrysler Corp started the mixed marriages when they joined forces to become the world's fifth largest carmaker.

When DaimlerChrysler bought 35 per cent of Mitsubishi last month it moved to third place with 10.4 per cent of the world market, behind General Motors' 14.9 and Ford's 12.4.

In the past 12 months General Motors has bought Sweden's Saab outright, and got a stake of about 20 per cent stake in Subaru and Fiat. GM also has a long-standing alliance with small-car specialist Suzuki. It worked on development with Daewoo, but that alliance folded in the early 90s.

Ford has had a controlling interest in Mazda for many years, sharing platforms and development costs, but it has been a rocky marriage.

Ford bought Jaguar 10 years ago and since then has picked up Volvo, Aston Martin and high-performance engine developer Cosworth.

Ford expects to buy four-wheel-drive specialists Land-Rover and Range Rover from BMW on Friday.

Volkswagen, the world's fourth-largest carmaker with 8.9 per cent of international sales, owns Audi, Seat, Skoda, Bentley, Bugatti and Lamborghini.

Renault bought 35 per cent of Nissan last year, an alliance which moved the two into fifth place with 8 per cent of the market.

Toyota is sixth with 7.7 per cent. It owns Daihatsu and - along with Honda, in seventh place with 4.6 per cent - is the only remaining independent Japanese carmaker. Both companies have huge technical and engineering resources and are likely to stay independent. Toyota once had $6 billion in cash in a New York bank.

Sharing eighth place are Fiat and Peugeot with 3.9 per cent of the world sales. BMW is ninth with 2.2 per cent, followed by the ever-expanding Koreans, Hyundai with 1.9 and Daewoo with 1.8. Other carmakers make up the remaining 19 per cent.

But mixed marriages don't always work. The most disastrous divorce so far is BMW's split from Rover, which it bought in 1994.

In six years Rover cost its German parent billions of dollars. BMW pulled out of the union last month and agreed to sell Rover to the British investment group Alchemy Partners and Land-Rover/Range Rover to Ford.

Both sales are expected to be approved on Friday.

Alchemy will close down Rover cars and concentrate on building lightweight, super-duper MG sportscars.

By the end of next month more than 19,000 employees at Rover and its suppliers will be out of work. The plant at Longbridge, near Oxford, which builds the executive Rover 75, will be hardest hit.

In the past three weeks, work on an estate version of the 75 has been halted and output on the 75 sedan has been cut from 1750 to 750 cars a week.

Suppliers believe production on the sedan will soon stop and that the estate won't even get off the ground.

Last year, 58,000 Rover 75 sedans were built but only 25,000 were sold.

The last-minute rescue plan for Rover, put forward by the carmaker's former boss John Towers, was rejected by the British Government last weekend as unworkable.