The global auto industry is built on competition, but it also espouses collaboration. Manufacturers may prefer to do it alone, but managers know that it often takes two or more car companies to make some projects a reality. The consolidation that some believed would result in fewer manufacturers is not happening. Instead, automakers have created alliances with the goal to sharing costs, building new products and strengthening balance sheets. Let’s take a look at five hot auto alliances and what they provide to companies and consumers alike.
Renault-Nissan Alliance — The most well-known hook up is French automaker Renault with Japanese car manufacturer Nissan. In 1999, Renault bought a stake in Nissan and Nissan bought a slightly smaller stake in Renault. This arrangement has come because Carlos Ghosn, the CEO of both companies has bridged the cultural divide to make the alliance work. These companies remain independent, but share car platforms, powertrains and manufacturing facilities as needed.
Fiat-Chrysler Alliance — In 2009 with Chrysler facing a likely shut down, Fiat chairman Sergio Marchionne stepped in to rescue the American car manufacturer. Unlike Daimler, which bought Chrysler out in 1998 and sold it off nine years later, Marchionne understands the American persona and has made changes that have helped Chrysler not only survive, but thrive. Arguably, Chrysler is in better shape today than Fiat is with Chrysler benefitting from Fiat platforms to build hot new cars such as the Dodge Dart. Fiat is currently embroiled in a European market that is in a recession and dogged with overcapacity issues.
GM-Isuzu — At one time, GM held a 49 percent stake in Isuzu, a small Japanese manufacturer with a penchant for making excellent diesel engines. GM’s truck engines have benefited from this alliance as has its Opel unit in Europe. The upside for Isuzu is that it still is an independent company even as smaller manufacturers fade away or get absorbed by global manufacturers.
Hyundai-Kia — Hyundai has a 38 percent stake in Kia and both companies comprise the Hyundai Kia Automotive Group. Kia was bankrupt and in danger of going out of business in the late 1990s when Hyundai stepped in. Hyundai has turned a competitor into an ally, with both companies sharing platforms, powertrains and manufacturing capacity as needed. Together, the two companies are now the fourth largest car manufacturer in the world by volume.
Toyota-Tesla — By the numbers, the Toyota and Tesla Motors hook up is small change. However, Toyota has a stake in the American EV maker and is also benefiting from Tesla technology. The Toyota RAV4 EV has a lithium-ion battery system developed by Tesla and Tesla has the money to compete in market dominated by Goliaths.
There are many other alliances at work in the world including GM-Peugeot, Ford-Toyota, Ford-GM and an assortment of Chinese manufacturers allied with western and Asian car companies. Some alliances are temporary while others are forged at the foundation and are likely to last for years on end, alliances of necessity and of strategic planning.