Cooperation - An Alternative Form of Globalisation ?

Viewed in some quarters as a reinforcement of the competitive forces which accompany internationalisation, certain analysts affirm that globalisation inevitably leads to a form of concentration that is driven by those mergers and acquisitions which the automobile industry has been continuing to undertake, despite the heretofore unproven long-term efficiency of such moves. Recent events bearing witness to this behaviour include BMW's hiving off of Rover; DaimlerChrysler's troublesome merger; and the problems that Ford has experienced despite (or because of?) its focus on the top-of-the-range segment (Jaguar, Volvo, Land Rover). Are these problems temporary in nature, caused by a de-phasing of producers' varying product range cycles (with some offering products that appear old when compared with their competitors' offerings) - or are they structural manifestations of the hurdles faced in creating rapprochements between firms pursuing diverging profit strategies or industrial models? The issues Robert Boyer and Michel Freyssenet raised during their recent GERPISA colloquium presentation deserves further discussion, although it already clear that the new analysis they offer of the automobile sector's history of mergers and acquisitions provides interpretative keys that can be used to understand current reconfigurations.
 

Certainly a number of M&A succeed in the long run, often after a long period of time has elapsed or else following the outbreak of a crisis situation (GM, Peugeot-Citroën). In fact, although this is more infrequent, some even succeed in the short run, that is, as long as no incompatibility exists between the firms (see Seat's and Skoda's acquisition by VW). Many carmakers are understandably reticent to commit to a M&A's course that may well be just as much a self-fulfilling prophecy as it is a requirement for competitiveness and profitability.
 

Instead of this race to merge, Toyota and PSA Peugeot-Citroën, which have just concluded an alliance to produce a small city car in Europe (see the article by Jean-Jacques Chanaron), offer a strategy that is based on pragmatic and diversified alliances. In the current economic environment, this has been a clear economic and financial success. Toyota has acted quite sensibly, pursuing an alliance policy that is no more than a complement to its fundamental strategy, which is based on internal growth. This strategy should enable Toyota to become by the end of the year the leading Japanese producer in North America, a region where it has invested in a cautious manner (firstly through NUMMI, its joint venture with GM), avoiding the precipitous path that Honda has been following. It should also become leader in Europe, even though Nissan began investing here so much earlier than Toyota did. This is due to the fact that Toyota's Yaris plant in Valenciennes is due to come online over the next few months, and also because of the new unit that the company, together with PSA, will be opening in Poland in the near future. The Toyotian model has demonstrated a remarkable capacity for adaptation (see Takahiro Fujimoto's contribution to this debate). Its specificity seems to preclude any bouts of sudden expansion, restricting the company both to a progressive type of growth and also to alliances that are local in nature.
 

For PSA, the alliance strategy would clearly seem to comprise an alternative that enables the company to resist the general trend whilst maintaining its specificity through an increased number of targeted alliances in Europe. Such alliances are intended to offset the insufficient volumes that result from a standalone type of production. This applies both to the mechanical subsystems that PSA has been making together with Renault (V6 engine, automatic transmission) and Ford (diesel engine) and also to the low-volume vehicle segment in which it has become active (light commercial vehicles and minivans with Fiat, mini urban cars with Toyota). This co-operative approach would appear to be a successful one for PSA, even if its current performances are actually the result of its well advised renewal of its product range. However the success of this product renewal could also be explained by the fact that the firm has not had to use up its resources and talents in managing the difficulties that are inherent to M&A and global strategic alliances - as Renault has had to do with Nissan.
 

An alliance strategy whose purpose is the occupation of new market segments creates new opportunities. If the so-called "P3" project actually materialises (i.e., with Pininfarina and the Portuguese components making industry co-operating to design and manufacture a new hybrid urban vehicle), this will constitute an interesting testing ground for co-operative strategies involving an association of components makers with engineering firms. The growing externalisation of design activities to engineering firms and the development of the major components making groups' integrative capabilities create conditions in which it becomes possible for a vehicle to be assembled by firms other than the established carmakers. However, this latter group's involvement still seems to be necessary, at one point or the other, particularly when there is a need to deal with the issue of motorisation (i.e., whenever independent transmission producers such as ZF or Getrag are present, to large extent the engine still remains the carmakers' exclusive domain, unless the emergence of alternative propulsion modes leads to the appearance of new actors). Moreover, carmakers may also still need to be involved in retail and maintenance activities (the selling of automobiles in large retail outlets has not yet replaced the need for dealership networks, particularly in Europe).
 

If we remember the attempts to rescue the Rover brand also included getting components makers (not to mention employees) involved in new projects, it is clear that the co-operation option is being mainly explored in an effort to resist both current mergermania as well as the development of global oligopolies, particularly in Europe.