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The car industry is acting like a hormone-crazed high schooler!

Posted by Hootan Mahallati | April 23, 2009 | In bmw chrysler fiat founder's thoughts gm mercedes-benz news opel porsche vw

Yes, yes, I know you know that things have not been going, shall we say, ‘that well’ for the car industry of late. Given the downturn, it is inevitable to see major shifts in the center of power among the big corporations. But two recent pieces of news really demonstrate just how bizarre the car industry has become. Tell me I am not alone when I think that the below would make for one heck of a corporate thriller celebrity gossip rag, replete with courtships, breakups, back-stabbing and unpredictable behavior:

VW gets weak - Porsche buys VW - Porsche gets weak - VW buys Porsche!
Volkswagen, which is poised to surpass Toyota as the number 1 global car company in sales, is preparing to take over Porsche after Porsche announced that it is 9B Euros in debt. What makes this story so fascinating is that not too long ago, the news headlines were filled with the story of Porsche's bid for a VW takeover. See, Porsche was flush with cash from its great run of selling Cayennes, Boxsters and Caymans, not to mention the evergreen 911 range.

Porsche has been trying to take full control of VW, in what was called typically German incestuous corporate practices by the press. VW had suffered through cost-control issues and battles with the German unions, battering its stick price to such a degree that Porsche could not resist sweeping up a majority of share. But now that consumers are leaning more toward economical and cheap cars, VW is roaring once again while I’ll-buy-one-once-I’m-filthy-rich Porsche cars are not flying off the lots as fast as they once did

GM ignores Chrysler - FIAT takes Chrysler on date - GM abandons Opel - FIAT forgets Chrysler, goes after Opel
This is pretty much what has happened in the past couple of months. Remember when Chrysler wanted to merge with GM and GM refused? That is when FIAT, a company that was as good as dead a few years ago, a company that had previously entered into an alliance with GM to survive, then paid GM $2B to get out of the alliance, came in to announce a takeover of Chrysler. However, that deal has been dragging for months, partially due to the government’s involvement in Detroit post the bailout payouts.

In the meantime, in an effort just to survive, GM has been trying to get rid of several brands, Opel being the biggest deal of all as it is a major force in Europe. Well now, there are reports that FIAT wants to take over Opel, spelling almost certain death for the fate of the FIAT-Chrysler deal.

Should they do it?
I think that the VW-Porsche deals makes sense. The two companies share DNA (VW Group Chairman of the Supervisory Board Ferdinand Piech is Ferdinand Porsche’s grandson and partially owns Porsche AG) and have collaborated deeply and successfully before, most famously with the Cayenne-Touareg co-development. It will get messy though, as VW also owns Audi and Lamborghini among others, whose R8 and Gallardo respectively compete with the Porsche 911.

As for the FIAT-Opel deal, I see doom and gloom. So much energy has to be put into mergers and taking advantage of ‘economies of scale’ through badge-engineering and platform sharing that usually, one of the merged entities’ product lineup ends up suffering. FIAT has just turned itself around through a few good products, and Opel has shown some life in the old bones with the new, beautiful and widely-praised Insignia. However, the two companies’ recent good form is fickle and any slip of focus, like a merger, will land them near death’s door once again. Something tells me though that the lessons of BMW-Rover, Mercedes-Chrysler and FIAT-GM will be ignored.

I would love to hear your thoughts, please leave your comments below.

[Source(s): Autocar and Autonews]

2 Comment(s)

John Baronian | posted 1 year, 3 months ago

On a side note but dealing with both Porsche and hormone oozing teens and preteens -- I noticed an increased interest in cars by my 12yr old daughter, lets call her M. of Forest Hills Queens. She is totally into the Twilight series of tween vampire books and movies. Apparently one of the lead characters has a yellow Porsche 911. Anyways... M is all about this car now and told me she wants one... On a trip to Baltimore (in our '97 Ford Escort station wagon) she was looking all over I95 to see a 911.

Will I get her one? Good luck kid! However, I must say she is reasonable and when she saw the Ford Festiva mailing I received in the mail after supporting one of my social networking buddies, M looked at the Festiva and said, "That looks cool. If I can't get the 911, the shiny green Festiva will be fine!" (all tongue in cheek mind you)

Now if VW will come out with a $15K Porsche (call it the 9 and 3/4s) I say, "Game on!"

Hootan Mahallati | posted 1 year, 3 months ago

John, M. has good taste! This is how brands get burned on people's minds, and why car companies create marketing campaigns targeting teenagers. Once you get a "thing" for a car as a kid, you're always going to associate great memories with it. Happened to me with BMW, when I fell in love with a 2002 as a kid. Still a BMW guy.

But indeed, as you try to lower her taste price-range, you could employ this site: http://fiestamovement.com/

Maybe this site could help too: http://www.carsforgirls.com/