With all the novelties that are taking place in the automotive world and with the decrease in profit margins due to the need for investments in new technologies (electric cars, autonomous, etc …) it is logical and normal that the companies try to collaborate with each other to share the enormous costs of the new developments they must address. And that’s what most of them are doing.
Periodically some announce new agreements and others announce the end of agreements signed in the past. And all this is normal, as each one tries to see how to survive in a very competitive future.
One of the latest news broadcasts is that of the collaboration agreement signed between General Motors (GM) and Honda to work together in the North American market. They will collaborate in the development of battery-powered vehicles and autonomous cars.
It is always good news to see that two competing companies are able to join forces to survive in their market.
And there are others that have done the same, such as the collaboration between Ford and Volkswagen, that of Fiat Chrysler and PSA Peugeot, and others that will continue to come.
As I said before, it is a survival issue. With all the changes that are taking place in this market, no company is sure of its future, and even the largest can fall from their pedestal.
In the world of aeronautics there are only two companies (Boeing and Airbus) that dominate the world market, despite China’s efforts to gain a foothold.
Tens of millions are manufactured in the automotive world each year and there are many powerful companies, but we can see how the number of them has decreased in recent years. And that concentration will continue to happen.
Who will stay and how, remains to be seen.
New start-ups with new ideas are constantly appearing but it is not easy for them to become consolidated. To consolidate, they have to stay in the market for many years and generate profits to be able to develop themselves, since a lot of money is required to tackle new car developments, and investors run out of patience to make more investments when they don’t see results.
The Tesla “phenomenon” is something very special and it remains to be seen whether it will consolidate.
The “old” car companies like GM and Honda have to reinvent themselves to stay where they already are, and by collaborating with each other they minimize their costs. We’ll see how it goes.