Business World

Wednesday 26 July 2017

Carmaker alliance likely to spark global consolidation

AN alliance between Daimler, the group behind Mercedes-Benz, and Renault-Nissan could herald a gear-shift in consolidation of the global motor industry, according to KPMG.

The carmakers have agreed to take symbolic stakes of 3.1pc in each other and, more importantly, to work together to develop new cars, including electric vehicles -- a trend that the consultancy said others will have to follow.

Under the alliance, Daimler will try to improve the performance of its struggling Smart brand, which has been overtaken in the wave of new low-emission small car models -- the industry's growth sector.

Daimler will collaborate with Renault to share technology and manufacturing between its Smart two-seater and a new four-seater and Renault's Twingo model. The companies also want to develop all-electric versions of the vehicles, which could have an effect on Nissan manufacturing in the UK.

Not only is Nissan leading the way in the electric car market, being the first to mass-produce with its Leaf all-electric vehicle, its Sunderland base has been named as the European manufacturing centre for the lithium-ion batteries that power electric cars.

Competitive

According to a new report from KPMG, environmental regulation and chronic over-capacity in a highly competitive industry will prompt tie-ups similar to the Daimler/Renault-Nissan alliance.

The report, 'The Transformation of the Automotive Industry: the Environmental Regulation Effect', said that demands on manufacturers to reduce the carbon dioxide emissions of their vehicles will cause more and more carmakers to team up and share the burden of investment in low-carbon and electric technology.

"It is the shape of things to come, but also going back to where we were, say, 15 years ago, when the largest car manufacturers were looking for alliances," Marc Summers, director of KPMG's automotive consultancy, said.

"It is all about sharing the burden of the development of small cars and electric vehicles. All manufacturers have to balance the investment they need to make in technological innovation to keep their companies moving forward with the cash restraints of today's market and with a consumer who does not want to pay for that investment."

Irish Independent

Promoted articles

Also in Business