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Old 02-24-2016, 10:57 AM   #1
XDCX
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Default Some experts predict Japanese OEMs will consolidate to three OEMs by 2020

While FCA's Marchionne has been the one making headlines about the need for OEM consolidation, news reports have suggested that the Japanese OEMs will need to consolidate too - some experts are predicting that only two or three Japanese OEMs will remain by 2020.

For a full report from Bloomberg - click here

News concerning the possibility of consolidation among the Japanese OEMs was fueled by Toyota's recent purchase of fellow car maker Daihatsu.

It is believed Toyota bought the remaining portion of Daihatsu that they did not already own because Daihatsu knew they lacked the necessary capital to compete in the future. The theory among some experts is that the other small Japanese OEMs will be acquired for the same reason.

I wonder what a potential buy-out would mean for the dealers in the U.S. who are currently selling Mazda, Subaru or Mitsubishi vehicles?
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Old 02-24-2016, 01:14 PM   #2
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I think the end game for the three smaller Japanese OEMs could end in tears for the dealers, but you never know.

Mazda offers a strong, if a bit quirky product that seems to go OK in the retail space. However, sales volume isn't all that great -- I recently read an article that mentioned the annual sales of the Honda Civic are greater than the entire Mazda line over an entire year.

Subaru is in a similar spot to Mazda... the AWD play is big in the northeast and midwest. I think they would be a good partner for partnering with one of the other Japanese OEMs -- but we will see.

Mitsubishi is in the most precarious position of all. Declining market share here in the US and Canada, but big popularity in developing markets, and no competitive midsize offering (although the Lancer got a slight refresh for 2016). In a way I wouldn't mind seeing Chrysler tie up with Mitsubishi again. Although Mitsus small cars aren't stellar, even a mediocre car lineup in better than what FCA has planned for the future with the cutting of Dart and 200. I also think that Mitsubishi would be the most cost effective for a buyout, be it by a fellow Japanese OEM or someone else.
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Old 02-25-2016, 08:57 AM   #3
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Quote:
Originally Posted by mryan55 View Post
I think the end game for the three smaller Japanese OEMs could end in tears for the dealers, but you never know.

Mazda offers a strong, if a bit quirky product that seems to go OK in the retail space. However, sales volume isn't all that great -- I recently read an article that mentioned the annual sales of the Honda Civic are greater than the entire Mazda line over an entire year.

Subaru is in a similar spot to Mazda... the AWD play is big in the northeast and midwest. I think they would be a good partner for partnering with one of the other Japanese OEMs -- but we will see.

Mitsubishi is in the most precarious position of all. Declining market share here in the US and Canada, but big popularity in developing markets, and no competitive midsize offering (although the Lancer got a slight refresh for 2016). In a way I wouldn't mind seeing Chrysler tie up with Mitsubishi again. Although Mitsus small cars aren't stellar, even a mediocre car lineup in better than what FCA has planned for the future with the cutting of Dart and 200. I also think that Mitsubishi would be the most cost effective for a buyout, be it by a fellow Japanese OEM or someone else.
Thanks for the post - I appreciate your insight.

In some ways I wonder if a Chinese or Indian OEM would ever want to purchase one of the smaller Japanese OEMs and move their operations to their home country. I've read that because of labor issues and currency valuation that building vehicles in Japan is no longer as attractive as it used to be. It would be a bit ironic if the Japanese OEMs had to endure some of the same pressures they inflicted on the U.S. OEMs in the 70s and 80s.

Concerning Mitsubishi, I'm somewhat surprised they're still selling cars in North America. When I first read rumors that they were going to either close or sell-off their assembly plant in Normal, IL I figured that was the beginning of the end.

But I was wrong.... Mitsubishi has closed their plant in Normal, IL and as I understand it the plant is sitting idle without any current prospects of being reopened.
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Old 02-25-2016, 10:38 AM   #4
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candidly, why would any profit oriented manufacturer want to go into a uaw controlled plant in Illinois??
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Old 02-25-2016, 01:19 PM   #5
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Quote:
Originally Posted by XDCX View Post
Thanks for the post - I appreciate your insight.

In some ways I wonder if a Chinese or Indian OEM would ever want to purchase one of the smaller Japanese OEMs and move their operations to their home country. I've read that because of labor issues and currency valuation that building vehicles in Japan is no longer as attractive as it used to be. It would be a bit ironic if the Japanese OEMs had to endure some of the same pressures they inflicted on the U.S. OEMs in the 70s and 80s.

Concerning Mitsubishi, I'm somewhat surprised they're still selling cars in North America. When I first read rumors that they were going to either close or sell-off their assembly plant in Normal, IL I figured that was the beginning of the end.

But I was wrong.... Mitsubishi has closed their plant in Normal, IL and as I understand it the plant is sitting idle without any current prospects of being reopened.
I think Mitsubishi is in the most precarious of the smaller OEMs, and I certainly think there is a chance that they retreat from the US market at some point, but they have recently refreshed most of the products and the Mirage has been a reasonable seller in the US so far (not a huge margin car, but oh well). The dealer count is still reasonable, so that could be a bright spot if they are to be an acquisition target. In fact, Mitsu has a pretty comprehensive product lineup in many parts of the word -- and quite a large number of dealers as well.

I also think that Mitsu could be purchased by a Chinese or Indian firm and survive. Mitusbishi already has production in Thailand, so they have a pretty wide production base outside of Japan... at least before their Belgian and US plants closed over the last 10 years or so.
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Old 03-01-2016, 09:22 AM   #6
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Default Suzuki has more Cash than Nissan, Mazda or Mitsubishi...

Here's a chart from the Bloomberg article I thought was interesting:




I often think of Suzuki as a small player - most likely due to their low profile and then retreat from the U.S. market. It's interesting to see that Suzuki actually has more cash on hand than Nissan, Subaru, Mazda or Mitsubishi.
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Old 03-02-2016, 06:22 AM   #7
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I wonder if that statistic has anything to do with Renault owning 46%+ of Nissan?
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Old 03-02-2016, 07:28 AM   #8
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Quote:
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I wonder if that statistic has anything to do with Renault owning 46%+ of Nissan?
That's a good question.

Based on R&D spending Nissan is a bigger player than Suzuki so maybe that would be true of their cash position too were it not for the Nissan/Renault partnership.

I remember back in the days before the DaimlerChrysler merger that Chrysler was flush with cash and that stockpile of cash slowly started to move across the Atlantic after Daimler's "merger of equals."
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Old 03-02-2016, 08:26 AM   #9
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Quote:
Originally Posted by mryan55 View Post
I think the end game for the three smaller Japanese OEMs could end in tears for the dealers, but you never know.

Subaru is in a similar spot to Mazda... the AWD play is big in the northeast and midwest. I think they would be a good partner for partnering with one of the other Japanese OEMs -- but we will see.
Toyota and Subaru already have a development partnership, the Subaru BRZ and Toyota/Scion FR-S being the 1st fruit of that venture.
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Old 03-14-2016, 11:02 AM   #10
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Toyota and Subaru already have a development partnership, the Subaru BRZ and Toyota/Scion FR-S being the 1st fruit of that venture.
I really liked the BRZ and the FR-S when they first came out and I'm surprised I don't see more of them on the road.

Back when they were released I was reading a Dodge SRT-4 forum and some of the members were thinking about getting a BRZ as a replacement for their aging SRT-4 but were waiting for a version with increased performance. To my limited knowledge, neither Subaru or Toyota ever offered a more powerful version of the car since it was introduced.

Concerning Toyota and Subaru, it would make since for Subaru to sell out to Toyota if the day comes when they cannot compete on their own. Toyota seems to be in an acquisition mode and Subaru could probably be easily incorporated into their existing corporate structure.
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