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The Big Picture: Prepare for big changes

At the start of this century we had five or six major carmakers after a period of brisk acquisition activity; lots of analysts confidently said that was it – the stage was set for the future of the industry.

That was a little premature. Already some have divorced (DaimlerChrysler/Mitsubishi), others are on the verge of parting ways (Ford/PAG brands) and new players are emerging from China, India and Russia.

The car industry is set for unprecedented change – change that will, for the first time, not be driven by the traditional stalwarts.

So what of Ford? The Blue Oval needs the General Motors/Renault-Nissan tie-up to happen because it has sent GM’s share price rocketing. If it doesn’t take place and GM’s share price slumps, the General could be staring at Chapter 11.

Ford could not compete with a post-Chapter 11 GM; one that would have its costs written off and health care commitments renegotiated. GM would finally be in a position to compete with the Japanese and Korean carmakers.

Ford would be facing its own Chapter 11 and that means a real shake-up – one that would see the Ford family, which holds 40% of shares, relinquish control. But it would mean a leaner organization.

And it needs to be. The Chinese carmakers – masters of efficiency - have global aspirations, though realistically there’s only a handful that have the means to achieve it. Their counterparts in India are also looking to burst out of their homeland.

Both will seek to emulate the Japanese and Koreans, only at greater speed.

There is a third country whose carmakers are already stepping into new markets – Russia. With GAZ’s acquisition of LDV, the Russians have put themselves on the European stage and rumours abound of their interest in Jaguar. Their policy is acquisitive growth and they have the funds through state ownership to do it.

Forget about consolidation, we are on the brink of the biggest shake-up in the motor industry: winners have yet to be decided.

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