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

stevekilburn

Mitsubishi is in big trouble and slowely crawling its way back. Subaru is not doing all that well either. Isuzu has been a disaster. Suzuki is doing well for a couple of years but its future is uncertain. As individual companies they are too tiny to make a difference. Should they merge, consolidate to make a difference?

rockylee

I think they should merge with General Motors. They could share platforms and keep R&D costs down. I would love to see some of what GM has learned and what they've learned passed between each other. Hell Sabaru could help Saab out with it's AWD future and Mitsubishi could be a great segment for GM to get into the entry level market. Isuzu, could become a test market for diesel cars in the U.S. and Suzuki needs to make pocket rockets just like their state of the art motorcycles. My opinion, even though it's perhaps a wrong opinion. I just see some positives of a merge with a big corporation like GM who is also hurting and could use the R&D and diverse platforms of these manufactors. Isuzu is already owned by GM and yes needs some $$$$ pumped into them.

Rocky

stevekilburn

GM has already offloaded Subaru. It has its own huge healthcare and legacy problems. Besides GM is not good at dealing with insular Japanese Culture as its dealing with Subaru have shown.

In fact rumors suggest that after Subaru GM wants to unload Isuzu as well.

The US big 2, Ford and GM have lot on their hands already. Besides Ford has Mazda.

rockylee

Ok I can agree with that. I however would like Mitsubishi to stay alive. Perhaps DC could buy them ????

Rocky

stevekilburn

Mitsubishi Motors sold its first vehicle in the U.S. in 1981, and began building cars here in 1988 at its
manufacturing facility in Normal, Illinois. In 2002 Mitsubishi reached its peak selling 345,111 cars and trucks and in the process gained 2.1% market share.

But after that it has been a perilious freefall. Several Senior executives have left. Daimler has offloaded its stake (except in Fuso truck unit) and Mitsubishi is beset with problems.

stevekilburn

DC could not make it happen. It had 37% share at one point. Now its zero.

rockylee

So basically they are dead.

Oh well, perhaps someone will step up and buy them ???? Maybe Toyota or Honda ???

Rocky

stevekilburn

1982 5260
1983 41994
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1986 84418
1987 119816
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1990 99630*
1991 190801
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1993 168202
1994 201004
1995 198059
1996 187126
1997 189163
1998 190515
1999 261254
2000 314417
2001 322393
2002 345111 market share 2.1% peak.
2003 256809
2004 161609
2005 123995 market share 0.73%. DISASTER.

rockylee

Well they really haven't had any desirable gotta have vehicles in years. Mitsubishi has kinda gotten bland.

Rocky

P.S. I guess except for the Eclipse which isn't a runaway bride winner

socala4

Unlike GM and Ford, both Toyota and Honda have avoided acquisition strategies. Aside from buying these smaller firms to keep at bay, I can't see why either company would bother changing that strategy just to acquire some minor brands with little or no potential. If VW wasn't having its own woes, I could see it attempting to eventually make a play for Subaru -- it has also been buying up smaller brands, and Subaru and VW have some similar appeal in North America -- but it's probably too cash-strapped at the moment to chase down new acquisitions.

stevekilburn

You are right aquisitions of these smaller Japanese quartet, either one or more is risky. Infact,

Subaru: Sold by GM
Mitsu: Sold by DC
Suzuki: GM reduces stake to 10%
Isuzu: GM reducs stake to 10%.

Its better that the four should merge together.

rockylee

How about BMW ????? They perhaps could use another project to add some flavor and market share. Who owns BMW ????? I though Ford had a stake at one time into BMW in the early part of Y2K. Do they still ??????

Rocky

rockylee

I was actually pissed at GM for off loading Saburu. They have a niche that GM doesn't have at the momment and that's how to build turbo cars with good handling w/ AWD. Saab is yet to convince me they can do it without charging a arm and a leg.

Rocky

stevekilburn

1968 332
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1992 104803
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1995 100407
1996 120748
1997 133783
1998 147813
1999 156806
2000 172216
2001 185944

rockylee

GM's best merger would be to acquire BMW. However I have more confidence if BMW would call the shots.

Rocky

rockylee

Perhaps you are right they all need to merge. Who do you put in charge ?????

Rocky

stevekilburn

2002: 180020
2003: 186819
2004: 187402
2005: 196002 (Best year ever, but still very vulnerbale due to just 1.2% market share)

stevekilburn

They should either choose someone competent within the ranks of Subaru, Mitsu, Suzuki and Isuzu, or hire some bright talent from outside these four companies.

Subaru + Mitsubishi + Isuzu + Suzuki = Consolidated Company with market share of more than 5% would be a good idea.

It will allow them to share platforms, share parts-bin, share manufacturing and marketing budgets etc etc.

rockylee

well 2005 is a strong year for a niche company. If GM didn't have these finacial woes perhaps they would of kept Saburu around. Subaru knows AWD and turbo boxter engines and is probably the best out of the bunch at knowing what customers like. They just have never had the finacial resources to take risks to make themselves grow into a solid company like BMW or Porsche.

Rocky

rockylee

Well hire the V.P. of Honda or Toyota since all are Japanese company's. I'm sure one of them would be willing to take on the job and use what they've learned at their successful company's and apply it to the merged. For the Big 3 sakes I guess I hope they flounder like the Titanic. :P

Rocky

stevekilburn

Merger of these four will provide them with more financial resources and economies of scale.

They will pool their resources together to make better products.

stevekilburn

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.

stevekilburn

LOL! Actually they will not have much overlap with GM and Ford as their customers will come from other Japanese brands.

kankokuonly

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.

logic1

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.

logic1

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%.

kankokuonly

And GM's debt totaled more than US$300 billion as of last year. :P

ubbermotor

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.

varmint

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.)

varmint

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.

nippononly

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 ?????

stevekilburn

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.

stevekilburn

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.

stevekilburn

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.

stevekilburn

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.

nippononly

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.

stevekilburn

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.

varmint

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...

socala4

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...

ubbermotor

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.

rockylee

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

varmint

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.

nippononly

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.

socala4

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.

bumpy

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.

logic1

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.

varmint

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.

harrychezt

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.

rockylee

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

prosa

It's strange, but I can see Subaru and BMW doing very well together in some sort of partnership.

stevekilburn

Actually BMW and Honda would be a better prospect. Besides this discussion is about merger of

(Subaru + Mitsu + Isuzu + Suzuki) = Single company.