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

2

Comments

  • 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: 12,692
    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 Wyoming, MichiganPosts: 13,989
    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
  • varmintvarmint Posts: 6,326
    The big 3? Right now, we're plagued with too much production capacity, large volumes of debt, products that Americans don't want to buy, and a reputation for being inferior. What we need to do is to put ourselves deeper in debt buying up little companies who also have extra capacity, large amounts of debt, products that Americans don't want, and a reputation for being inferior.

    Toyota? Yeah, they need "help" from other companies. The only reason for Toyota to buy Mitsubishi or Isuzu is to administer a mercy killing. They already have what they want from FHI. And Suzuki isn't doing anything they can't do on their own.
  • nippononlynippononly SF Bay AreaPosts: 12,692
    is not going to be interested in Suzuki when it already has Daihatsu. Isuzu, maybe, for diesels, but I heard there was already a partnership in the works for diesels.

    Honda isn't big enough (even though it is a big seller in the States, it is really a fairly small car company in Japan) to contemplate taking on acquisitions or partnerships in this group.

    And Nissan is already merged with Renault, with the French calling the shots. I can't imagine they are going to have much interest.

    Chrysler is controlled and owned by the Germans, who just divested themselves of Mitsubishi. Clearly, they will not be doing anything. Ditto GM, which just divested itself of Subaru and spent a ton of money avoiding being lumbered with Fiat. No way. And Ford is struggling with the billions of dollars it is already losing on its foreign acquisitions, namely Jag and Land Rover.

    These four will have to struggle on alone, and I suspect that one or more will dissolve away to nothing in the next decade or two. Best bet for that outcome: Isuzu.

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

  • socala4socala4 Posts: 2,427
    Except for your betting on Isuzu, I concur with your assessment -- very nicely done.

    My money would go on Subaru, it does a very good job of serving a niche market for reliable AWD cars at a reasonable price, and has a performance winner with the sport versions of its sedans. If it had the cash to buy it, I'd bet on VW being the best corporate master for this brand, but VW is hurting too much under the weight of mediocre sales, reliability concerns and the budget busting failure of the Phaeton to possibly consider this.
  • bumpybumpy Posts: 4,435
    These four will have to struggle on alone, and I suspect that one or more will dissolve away to nothing in the next decade or two. Best bet for that outcome: Isuzu.

    I don't know about that. Isuzu is all but extinct in the US, but is doing fine elsewhere. In a lot of ways, they're the diesel/truck version of Honda. Isuzu, Suzuki, and Subaru have good enough niches to survive as smallish builders if they can avoid the pitfall of trying to be everything to everyone.

    Mitsubishi is the tricky question: if they can successfully establish themselves as the straight-electric/performance-hybrid marque, they may survive. If they try to continue as a "regular" automaker, their days are numbered.
  • logic1logic1 Posts: 2,433
    It would also mean pooling debt.

    Mitsu has debt problems. Isuzu might, don't know. Suzuki is famous for running a very tight ship. It is a solvent company. It is very competitive in its market. It just happens Suzuki's market does not have a big North America following.

    As said above, Subaru is part of Fuji Heavy Industries. Fuji is a very solvent company. Not sure why it bothers with cars, as it does not seem too interested in them. But it is not saddled with debt.

    In order to accomplish a merger, they would have to spend billions in terms of legal fees alone.

    A Japanese merger is not going to be cheap, but it is not going to cost like a US merger.

    My objection to the merger is that Suzuki is doing just fine, Subaru is part of one of the world's largest companies, and Isuzu and Mitsu do not seem to have much to offer anyone else.
  • varmintvarmint Posts: 6,326
    Yes, I agree. Suzuki probably should not be included in such a blanket statement. Also, Subaru's financial condition really wouldn't be all that bad if it hadn't been for a bad break up with Isuzu.

    I do not agree with your picture of FHI, though. Everything I've ever read (one example) suggests the automotive branch of FHI wears the pants in that family.

    There are quite a few companies with the name "Fuji" in the title. They are not necessarily parts of FHI.
  • yeah, they are ok, and in fact, they are about the only company making some money for GM right now, besides GM-DAT, of course, and Suzuki has a part ownership in that.

    Suzuki has been here since 1985, and they hit their highest sales numbers ever, over 84,000(?) saels, and they said that was good. If they have not "failed" with lower numbers over 20 years, and doing well overseas, maybe USA sales are "just gravy", then, for them, otherwise, they would have went the way of Diahatsu,Renault, and others, that were once in USA.

    who knows? they may even break that illusive 100,000 units sales.

    Anyhow, they are ok, but their dealerships are awful :sick:

    I like the eclipse. That is all.
    I read a rumor that a Chinese maker was looking at buying into(or all?) of Mitsubishi.
    Just think, a 25K eclipse(now) could be 18K! How many 263HP V6's, 0-60 of 5.5 seconds, @18K msrp, would fly off of the lots? Even at 20K.

    At that price ya could afford the gas/26MPG only for the V6.

    I do not know, though. If they went an sold only specialty cars, liek the Eclipse, the Lancer EVO, and that electric hyrbid stuff for a car or two....they have a slight chance.

    As one person here siad, if they try to be a regular dealer, they could fail.

    Subaru used to have the AWD cars market almost completly to themselves. Not any more.
    And they are overpriced.
    If they fold, I won't lose sleep.

    Isuzu? Tey were big in 1988.
    I had an isuzu _iMark, that was rebadged as a Chevy Spectrum. Good for about 14 months. Nice car. After that....forget it.

    They should have folded years ago. they tried a 10/120K warranty, and it failed. They now has 7/75K?
    What's that about?
    They should have left years ago.

    Maybe Mitsu should just sell a 3 and 5 door(stretched) version of Eclipse, and lancers? :confuse:
    Sell them 2-3K less(for Eclipse) than now. Do like Suzuki. Can survive on 75,000+ units sold per year, or else.
  • rockyleerockylee Wyoming, MichiganPosts: 13,989
    Mitsubishi is the tricky question: if they can successfully establish themselves as the straight-electric/performance-hybrid marque, they may survive. If they try to continue as a "regular" automaker, their days are numbered.

    Bumpy isn't Mitsubishi getting Japanese government help to stay afloat ????

    Rocky
  • prosaprosa Posts: 280
    It's strange, but I can see Subaru and BMW doing very well together in some sort of partnership.
  • Actually BMW and Honda would be a better prospect. Besides this discussion is about merger of

    (Subaru + Mitsu + Isuzu + Suzuki) = Single company.
  • I dont think they need govt help. The combined Japanese company of small 4 can borrow money from independent financial institutions
  • I dont think they should aim low. All four should aim at at least 1-2% of market share in US so they compete with other big asian players like Toyota and to some extent Hyundai.
  • I dont think it will be billions in legal fees. That would be a world record.

    It could be a few millions. Which is affordable.

    Every troubled automaker does debt consolidation. So I dont see that as a problem.

    I think they just have to put their mind to it and just do it. They have to be a little bold like us Americans and go with the idea with strong passion.
  • Cash is never a problem. The financial markets are awash with dollars. They can just borrow whatever is necessary and then get the ball rolling.

    And hire a good manager who can manage the merged small-4 with vision and energy.
  • I think marriage is the best way. It will provide stability in the long term. The merged-4 should focus on a product led recovery. Product is always what have to focus on

    The costs of closing plants, redesigning etc etc are just part of the process to fix the problem. So what you are stating as problems in the way of merger are actually exactly the things they will do after merger which will be good.
  • bumpybumpy Posts: 4,435
    isn't Mitsubishi getting Japanese government help to stay afloat ????

    Sorta. They've had a series of cushy loans from various Japanese banks, which in that economy constitutes thirdhand government assistance. Even so, that's not going to save Mitsubishi's export markets by itself, and they're not a big enough player at home to survive in the same shape without them for long.
  • rshollandrsholland Posts: 19,675
    If Subaru, Suzuki, Mitsubishi and Izusu were to merge, there would have to be a radical realignment and axing of products, so that whatever products were produced, none would step on the toes of other products.

    Here's what I would propose, using that scenario:

    • Subaru to concentrate on mid-size and larger cars; anything over 2000cc.

    • Subaru and Suzuki colaborate on cars under 2000cc.

    • Mitsubishi to drop their all car lines, as they would compete with the Subarus and Suzukis.

    • Izusu and Mitsubishi concentrate on trucks and SUVs (large and small), and diesel engine development.

    ____________________________________________________

    Do I think it might be a good idea? Possibly.

    Do I think it will happen? Very unlikely, at least not until the powers that be realize that it would be in everyone's interest to do so.

    The BIG question is: what would each company being willing to give up to make it work?

    • Would Mitsubishi and Suzuki be willing to drop their car lines? I doubt it.

    • Would Subaru be willing to drop their sub-2 litre cars? I doubt it.

    • Would Subaru being willing to share their boxer engine and AWD technology with other members of the group? I doubt it.

    • Would Subaru be willing to drop boxer engines, if it would benefit the group? Never happen.

    • Would all of these manufacturers be willing to concentrate on very narrow product segments for the betterment of the whole organization? Very unlikely.

    I think there will be too much in-fighting and pushing of individual agendas for this to work. I can only see it happening as a last ditch effort among all those companies mentioned.

    Finally, who would run this group? Somebody from FHI (or any of the othe groups)? Do you think that would sit well with the others? Someone mentioned a takeover earlier, and I think that would be the only way to pull this off (so that there's it's "clear" as to who is in charge), but who among this group has the resources to do that?

    Bob
  • harrycheztharrychezt Posts: 405
    After rethinking it over, I concur, agree, etc..
    Mitsubishi does have a few nice cars, like EVO and Eclipse.
    Suzuki sales are still rising to record levels, for them.
    They are ahead of Mitsubishi, actually!
    Overseas, I think Suzuki sells more vehicles than Mazda and BMW, even(I once read).
    If current levels of sales keep going on at Suzuki(plus, they have an SX4 or something coming out in fall, small suv-car thing) they could finally break that 100,000 units sold barrier(in a year).
    That would be cool. Next year, I read on future models, there will be a Sporty Sedan(no name yet) and a sporty Reno coming out(in 07?).
    A Reno with say maybe even 142 HP(like Cobalt? GM and Suzuki are partners, GM has about 20% stake in Suzuki) and 34MPG would help.
    If they drop this 155HP I-4 that is currently in the Aerio(read it will go away, for this upcoming SX4?) into the Reno, and keep MSRP (loaded up) under 18K.... I would be Very interested, indeed!
    Subaru? I still think due to more companies using AWD(Dodge Caliber, Suzuki Aerio sedan/wagon, and the upcoming Jeep Compass,etc), they are losing gorund due to others copying the idea of awd cars.
    Still not 100% sure about them.
    Isuzu? I may see one at the autoshow in a few weeks, the newer trucks.
    I owned an Isuzu I-Mark, rebadged as a Chevy Spectrum , from Aug of 87-to june of 90. Nice car for about 14 months, then after that, brakes needed replaced at 14K miles(mainly highway), master cylinder at 13K, and it got worse from there.

    Mitsu could sell cars here and make money, and it seems Suzuki has a new found popularity, since sales are higher than back in 1988,(or 05, even) when they were at a previous high point.

    I agree, if they are going to try for sales, go for the moon! Act like they are trying to hit 1 million sales, and maybe they will gain more customers?
  • I started this discussion as a purely hypothetical one more than a month ago. But I cannot believe the recent developments:

    It is simply amazing.

    GM has recently sold almost its entire stake in Suzuki and just yesterday the news is that it is negotiating with Mitsubishi to sell its stake in Isuzu.

    Now the merger of small-4 is a real possibility.
  • Who could have forseen in their wildest imagination that this merger would be possible and that GM would readily divest itself from these overseas colonial posessions in such as short span.

    But the most important challenge is to figure out whether the small-4 really have the vision to put this merger into place and give toyota some strong competition.
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