Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!





Should Smaller Japanese Merge - Subaru, Mitsubishi, Suzuki, Isuzu

24

Comments

  • In the merged four:

    Subaru can assume the role of the upscale brand. = Something like Mercedes but more value for money.

    Misubishi: Can be their performance brand: Like BMW. They can complement Subaru.

    Suzuki: Can be their economy brand = Like Volkswagen.

    Isuzu: Can be truck and SUV specialist like GMC.
  • LOL! Actually they will not have much overlap with GM and Ford as their customers will come from other Japanese brands.
  • When it comes to the financial situation, GM is certainly no better than Mitsu. Actually, the GM can no longer afford to buy the smaller Japanese even if they want to. The same can be said for Ford or DCX, period.
  • logic1logic1 Posts: 2,433
    Actually, the GM can no longer afford to buy the smaller Japanese even if they want to

    GM has about 25 Billion in cash reserves.

    How much do you suppose Mitsubishi is worth? I dare say not more than around 5 billion.

    Heck, GM and Suzuki bought Daewoo's auto operations for just around 1 billion.
  • logic1logic1 Posts: 2,433
    Subaru: Sold by GM
    Mitsu: Sold by DC
    Suzuki: GM reduces stake to 10%
    Isuzu: GM reducs stake to 10%.


    Where are you getting these figures?

    First, Subaru was and always has been a part of Fuji. GM owned around a 12% stake in Subaru. It sold the stake to Toyota. Toyota has now, I understand, increased its stake in Subaru and made some other partnership arrangements with Fuji.

    GM's stake in Suzuki is closer to 20%. Far as I know, GM has not made any changes with Suzuki lately.

    GM sold the majority of its stake in Isuzu several years ago. I believe the percent GM owns now is less than 8%.
  • And GM's debt totaled more than US$300 billion as of last year. :P
  • Mixing troubled brands doesn't seem like much of a plan to me. I'm mean the whole Nash, Hudson, Studebaker, Packard merger plan turned out so well for all invovled.
  • varmintvarmint Posts: 6,326
    IIRC, Toyota only purchased a portion of the stake GM held in FHI. I believe it was 8 of the 12 percent. Toyota could not purchase more because of anti trust laws in Japan.

    Furthermore, it is commonly held that Toyota had no real interest in FHI's Subaru car line. Toyota wants the battery technology owned by FHI (for hybrids) and probably wanted the extra production capacity at SIA. (Subaru has been losing money trying to run the Indiana plant at half capacity since Isuzu left.)
  • varmintvarmint Posts: 6,326
    Exactly.

    A good merger is one where the products of the two companies do not compete with one another directly. Mitsubishi, Subaru, and Suzuki are all car manufacturers priced for the mainstream buyers. Only Isuzu offers something different.

    A merger where products compete is only going to work if it's not a merger at all. Rather, it's a take-over. But none of the four have anywhere near enough financial strength to take over the others.

    And why would anyone want to buy Isuzu or Mitsubishi? That's like paying good money for a hole where you can throw away more money.
  • nippononlynippononly SF Bay AreaPosts: 12,669
    a merger between these four might just be the most expensive way to lock four auto companies in a death grip that I have ever heard of!

    Suzuki is actually a fairly strong company on the global stage - it just doesn't do things well that Americans like, which is why it is struggling here. Kei-class (600cc) and compact cars are its specialty, as well as mini-trucks. It has a strong presence in many places outside Japan with the Swift, a car they probably wouldn't dare try to sell here despite rumors to the contrary.

    Subaru is still basically coasting on the success of its '01 line-up five years later, still the Outback/AWD company despite incursions into the AWD range by so many other companies, while it struggles to find an identity for itself.

    Isuzu is basically a truck company, and Mitsu is historically the biggest seller of all, now fallen HARD because of all the corporate scandals in Japan and weak product.

    Where in the middle of all that mess do we find the core elements of a successful merged company?

    I doubt any of these companies are even in a position to merge - Mitsu is only quasi-independent, Subaru is a subsidiary of Fuji Heavy and is partly owned by Toyota, and Suzuki and Isuzu are ?????

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • I think the executives of all these four companies will have to sit down "together" and think this through.

    Platform sharing is not a bad idea among these 4 companies. And they can also pool their financial resources and engineering skills.

    Infact, the small four could buy back GM's stake and as well as other outsiders and thereby the decision making process will be in their own hands rather than meddling by DC or GM.

    But you might be right there is probability that it might not work.

    But in auto Industry you have to take "calculated risks".

    Remember NISSAN 7 years ago, there was only a 50:50 chance for survival according to Ghosn. And they succeeded in turning things around. They could have failed too.
  • There are plenty of examples where products of companies did not compete and yet the merger/buyout failed.

    BMW-Rover is classic example. There was hardly an overlap between BMW's high end sedans and Rover's mass market cars. BMW was also not making any SUVs at that time (back in 1997) and Land Rover was the perfect choice.

    You cannot say BMW did not have good managers or lacked engineering depth or did not hav the money. Everything was there. According to Peichestrider, it was a match made in heaven.

    BUT, it did not work.

    Daimler-mitsubishi saga also speaks the same thing, although in this case I think DC spread out too thin and the big chrysler mess was also pulling them down.
  • The Nash Studbaker Hudson era was different. It was just bad management and lack of good product. Besides, even after combining they were very tiny niche brands.

    Mitsubishi has a decent line up of sedans, SUVs and even a truck.

    Suzuki is big in small "mini" type cars and compact sedans.

    Subaru can bring hybrid technology, AWD, quality control experience to the merged company.
  • You have very good point there. I mentioned these core elements before but I can write again.

    The four brands will complement each other.

    Subaru: Upscale Japanese models, Mercedes like. Emphasize safety, luxury, and little bit of performance.

    Mitubishi: "Mainly" Performance oriented, like BMW. Eclipse, Evo, lancer etc.

    Suzuki: Mainly economy no frills brand. Like Volkswagen in a way, but not exactly.

    Isuzu: Truck/SUV specialist.

    In fact I am shocked they did not try to look at the possibility of merger before. They can at the very least "EXPLORE" it.
  • nippononlynippononly SF Bay AreaPosts: 12,669
    Eh?

    "Subaru: Upscale Japanese models, Mercedes like. Emphasize safety, luxury, and little bit of performance."

    Check out the interior of a Subaru sometimes - the Mercedes of Japan? It is so far off this mark it is not funny. Precious little luxury, performance is decent in some models. Safety? Stability control is only available on models over $30K! In Japan, Honda is leading the way in safety engineering right now.

    Mitsubishi - performance? They have the porky Eclipse (3600 pounds for the V-6, what were they thinking?) and that's about it among the ordinary models. Yes they have the Evo, no there is not anything sporty about the rest of the Lancers.

    I am not here to shoot anyone's ideas down, yet I find myself doing it anyway. These four would bring nothing to the table but a mess.

    Subaru is trying to figure out how to increase sales from here. The Baja is bust, the Tribeca is not doing what they hoped.

    Mitsubishi has lost its entire Japanese audience - some of those Mitsu officials went to jail, you know. The product line is awash in an ocean of mediocrity.

    Suzuki and Isuzu are like scalpels - they perform one narrowly defined task very well - they are not enough to complement this group very much. So we have two companies excelling in one tiny thing and doing decently, and two full-line (almost) manufacturers struggling to maintain market share (losing global share in recent times, in both cases) as they try to figure out what they could possibly do to attain a significant upturn in sales.

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • Subaru executives want it to move upscale gradually. Thats why they released Tribeca, which has not been received well. But thats due to styling not the interior.

    The interior is very upscale, not like mercedes, far from it, but nevertheless for its price its good quality.

    I am not comparing Subaru with mercedes, I am giving a parallel.

    Also you might be right in being so pessimistic, but we never know.

    I think significant upturn can happen if they come out out nice designs and products. Pooling their resources will give them more muscle.
  • varmintvarmint Posts: 6,326
    It would also mean pooling debt. In order to accomplish a merger, they would have to spend billions in terms of legal fees alone. Then there's the costs of management restructuring, plant closing, and redesigning product so they don't compete with one another. And none of them have that kind of cash.

    Four wrongs don't make a right and all that...
  • socala4socala4 Posts: 2,427
    It would also mean pooling debt. In order to accomplish a merger, they would have to spend billions in terms of legal fees alone. Then there's the costs of management restructuring, plant closing, and redesigning product so they don't compete with one another. And none of them have that kind of cash.

    Four wrongs don't make a right and all that...


    Good, succinct analysis. Without products that could increase market share and revenues, there would really be no point, otherwise it's all cost and no benefit.

    That, and automakers often team up on specific projects. If two of these makers wanted to get together for a specific car, they could simply form a specific-purpose JV and be done with it. A merger would be akin to getting married when all that may be desirable is a quick fling...
  • It was just bad management and lack of good product. Besides, even after combining they were very tiny niche brands.

    Wrong.

    As this really isn't the place for this arguement, I will just suggest you look into where these 4 companies where at the beginning of the 50's.
  • rockyleerockylee Posts: 14,011
    Yeah I gotta agree, merging 4 failers isn't going to make a right. I think they need to try to convince one of the big players to take them on.

    Rocky
This discussion has been closed.