The End of the Small Automaker?

nissan-mitsubishi-logos

What if there were no more small automakers?

The automotive world continues to consolidate, and large automakers either push the smaller ones out of the market or swallow them up as part of an expanding empire.

It’s not too hard to imagine a world without small car companies, because they don’t have much of a presence in the United States. Suzuki left the market, Mitsubishi is a small player, and Subaru is only popular in cold climates. A few supercar manufacturers and startups exist to serve a tiny niche, but most of us are never influenced by their success or failure.

Recent news from the Toyota and Nissan camps demonstrates that carmaker consolidation shows no signs of slowing down.

When Mitsubishi was in the midst of its fuel economy scandal in Japan, Nissan swooped in with a major investment to keep the company moving forward. Nissan’s CEO, Carlos Ghosn, has promised massive implications from the deal if regulators approve the acquisition. He said,

This is not a deal where we say, ‘OK, we made the deal, now let’s think what we can do together.’ No. The day we announce the deal, we’re going to tell you exactly what we’re going to do together. And it’s massive. It’s massive between Mitsubishi and Nissan. And also, it may be very significant between Renault and Mitsubishi.

Suddenly, Mitsubishi will have the backing of a major automaker and be able to play on a much bigger stage than it ever could have alone. We’ll post on this blog when Ghosn announces his plans.

Toyota is also on the lookout for expansion.

Toyota is the world’s largest automaker but has struggled with small cars and with succeeding in emerging markets. Suzuki is one of the world’s smaller automakers, but knows all about small cars and selling them in emerging markets.

According to an article at TTAC, Suzuki Chairman Osamu Suzuki approached Toyota CEO Akio Toyoda with a proposal to join forces. Suzuki would benefit from Toyota’s massive knowledge of research and development, while Toyota would get Suzuki’s experience with small cars.

Neither automaker has committed at this point, but both are exploring options of what a partnership might look like. No doubt, both Suzuki and Toyota are watching the Nissan/Mitsubishi deal closely and could follow that announcement with one of their own.

Would you be more likely to buy a Mitsubishi if the car was developed by Nissan?

-tgriffith

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