It’s all about takeovers and rumours galore
As we enter the summer months, with Great Britain’s exit from the EU looking parlous and some carmakers looking perilous, Iain Robertson contemplates the two biggest potential collaborations and airs concerns in a broader automotive vein.
Mitsubishi woes: As a brand, Mitsubishi Motors has suffered a number of setbacks in its several decades of existence and persistent rumours of a fresh relationship being sought by Renault, part of the oft-troubled Renault-Nissan-Mitsubishi strategic alliance, suggests that all might not be well. The Renault-Nissan aspect, which was founded in 1999 and supplemented by the inclusion of Mitsubishi in 2016, following a controlling stake acquired by Nissan, which made it an equal partner, has always challenged critical appraisal.
To Mitsubishi fans, it was perceived as a positive route to the marque’s ongoing survival. Yet, the most recent shenanigans that led to the arrest and imprisonment of the Alliance’s chairman and CEO, Carlos Ghosn, in November 2018, has reared some of the former hidden but always strongly rumoured upsets that exist within it.
In the period leading up to the formation of the Alliance, it was considered amazing that a smallish carmaker, like Renault, even with its French government financial support, could even entertain a takeover of the significantly larger world player, Nissan. However, the Japanese car firm’s problems were myriad (it was close to bankruptcy in 1999), with a large number of its main board members being linked by familial connections but having zero experience of running a major volume car producer.
An unnatural imbalance existed between the two firms but Renault was perceived as the major stakeholder, even though Nissan made significantly more vehicles and had the potential to create greater profits. While very little came of the inside power struggles, Nissan has always felt miffed about its status. Even though both firms have gained from their sometimes-strange relationship, Mr Ghosn’s leadership strength seemed to be the glue that held them together. His subsequent sacking, as a result of ‘financial misdeeds’, from both controlling roles with Nissan and Mitsubishi was followed by his removal from Renault’s main board, much to the annoyance of French President, Emmanuel Macron, whom is understood to know nothing about Ghosn’s reported issues and, having invested 1.23bn Euros in his government’s support of Renault, wanted to place further demands on the Alliance.
While it is suggested that ‘all is well’ within the Alliance, Renault has been involved recently in talks with the troubled FCA Group (Fiat-Chrysler Automotive). When Italian Fiat and American Chrysler forged their working relationship in 2014, it was a major venture designed to save both companies, following Fiat’s acquisition of 20% of Chrysler’s stock in 2009, when the US firm was emerging from a bankruptcy reorganisation.
While the proposed merger between these two relative giants will create the third largest carmaker in the world, behind Toyota and the even larger VW Group, it does place into question the value of Mitsubishi to the Alliance. As FCA owns Jeep, which is the most iconic manufacturer of 4×4 vehicles, and Renault-Nissan is already one of the world leaders in EV technology, Mitsubishi can appear to be a ‘poor relation’. If there is one aspect that the Alliance does not need it is a weak partner.
There is unlikely to be a conclusion to these talks for at least a year but a lot can happen in that period. I am not alone in hoping that Mitsubishi can continue to make its presence felt both within and outside the strategic Alliance. After all, its barrelling about of the past few years (including ownership by DaimlerChrysler in that ill-fated deal) has really done it no good at all.
JLR’s wounds won’t heal: Having posted £4bn losses earlier this year, which led to its Indian-based owner, Tata Motors, reflecting the same figure in its overall losses for 2018-2019, Jaguar-Land-Rover seems to have attracted a swooping PSA Group that is keen to asset strip the sometime British carmaker. If anything, this is a far more worrying issue for the entire motor industry.
Remember, it was just over three years ago that PSA, the Gallic company that owns Peugeot, Citroen and DS brands (at the time) was knocking on death’s door itself. Senior board member, Bernard Peugeot, headed for China and held intense meetings with its Sino-partner, Dongfeng Motors Group. Following the sale of several billion PSA shares to its Chinese partner, PSA found itself in a strong enough financial position to make a £1.9bn bid for both Vauxhall and Opel (at the time owned by US giant, General Motors) and its related finance operation.
To be frank, I believed it to be a ‘dirty deal’, with PSA ridiculing the former GM charges for ‘unprofitable trading’ and a ‘poor model mix’, accusations that could have been levelled equally at itself. PSA barged in and commenced making an array of major changes, including big staff reductions. Yet, within just two years of the ‘new’ relationship for the enlarged PSA Group, it would seem that Vauxhall-Opel is back in profit (for the first time in several years), which makes the French company look like an automotive saviour.
JLR has not exactly helped itself in recent years, unless you count inordinate and virtually unjustifiable spending on people and squandering by management of resources, all without paying attention to changing market forces. Those same forces led to a downturn in its Chinese market, where it was investing much time and money, by around 50%; enough to cripple many firms. JLR had concentrated enormous effort on its fossil-fuelled cars, with little of the much-vaunted EV developments promised when Tata first acquired the conjoined companies. More fool JLR.
It is understandable that Tata would prefer to see a moderate ROI and a sell-off is certainly on the cards. However, with Chinese carmakers under serious fire for the potential flooding of western car markets with unproven and possibly ‘dangerous’ motorcars, they are now using their immense spending power to buy heavily into both European and US-based manufacturers, seemingly without restraint. PSA is Chinese funded and China wants to become THE world leader in automotive terms. The next few months are going to be torrid and President Trump’s trading restrictions against China may prove to be his undoing too.
Motor Industry Snippets
EV charging posts
For the first time in the development of the Electric Vehicle scene, even though it still constitutes just less than one per cent of the total UK New Car Registrations figure, the total number of charging locations installed in the UK (8,471) outnumbers conventional fuel stations (8,400). While not denying an EV future, bear in mind that each (or most) of these recharging points is likely to be occupied for at least 30 minutes with the majority of ‘refills’ (conventional refuelling takes mere minutes). Some current EV operators are known to even plug-in first thing in the day, unplugging later in the day for a return commute. The infrastructure and usage rules still need to expand and grow respectively.
UK vehicle production plummets
For the eleventh month in succession, vehicle production figures have declined in the UK. In fact, the numbers for April were 44.5% down for the year-on-year reckoning. A combination of factors is being blamed, including slowing demand in key markets such as China, Europe and North America. A spokesman for the Society of Motor Manufacturers and Traders pointed the finger inevitably at delays in Britain’s extraction from the EU, as factory shutdowns that were scheduled to mitigate against the uncertainty of a March 29th deadline took effect.
BMW moves to front-wheel drive
Do not panic. Fans of BMW’s long-held rear-wheel drive status will continue to have their wishes fulfilled in all models from 3-Series up. The 2-Series (MPV) launched around five years ago introduced front-wheel drive technology to the Bavarian car giant, which was adamant in its antipathy, while the development of the BMW Mini has compounded its efforts and provides a platform for the all-new 1-Series range. The new car is roomier than ever and ingenious electronics ensure that the new models handle both neutrally and forgivingly.
Ford to lose 7,000 staff worldwide
Despite no longer manufacturing cars and vans in the UK, Ford Dagenham is still the home to a joint venture engine production facility with PSA Group and employs around 12,000 personnel at its Dunton (Essex) engineering headquarters and other centres in UK. It has been noticed that retiring staff are not being replaced by the company, as it continues to manage the decline in sales of conventional cars and has set an annual savings target of £471m, en-route to saving around £4.7bn by the end of next year. It is suggested that Ford Motor Company needs to shed around 550 people in the UK, with the balance of job losses coming from other plants and offices elsewhere in the world. The US-built Edge SUV has been axed from the firm’s UK model range.
Mitsubishi concludes its Badminton sponsorship
Equestrian fans will be disappointed to hear that Mitsubishi Motors in the UK, from its Cirencester HQ, has ceased its sponsorship of the prestigious Badminton Horse Trials. For 28 years, one of the longest surviving promotional tie-ups in the UK, the Japanese car importer has become synonymous with the important date in the eventing calendar. Mitsubishi will concentrate on its support of both the Gloucestershire team and the England RFU in future.