At the moment, the future of the automotive industry is a blurry road. And as governmental norms become more stringent, the word ‘partnership’ is beginning to enter conversations.
The industry is sailing past the time when companies used to look at each other as rivals. Today, the debate includes the benefit of merging. A fine example of that would be Fiat Chrysler Automobiles. What was once seen as an “impending failure,” has expanded into a bustling success.
The partnership has not only helped them to create success in their geographical markets but also bring about notable changes in the way consumers and rivals see them. As a result, the merger has now resulted in a multinational corporation that is spread across 140 countries.
While Fiat and Chrysler didn’t take long to find common ground and operate in harmony, the same might not be the case with other companies. However, on the other hand, there are numerous ways in which such arrangements can benefit everyone in the long run.
FCA is a shining example of what is possible, and how dealers and consumers stand to benefit.
Preventing An Automaker to Permanently Shut Down
The economic recession in 2008 and 2009 sent many domestic companies into a tailspin. Ford joined forces with Tata and Chrysler’s eventual partnership with Fiat saved both the companies from financial ruin. The absence of such partnerships would have potentially led to the failure of two American auto-titans, adversely impacting related dealers and diminishing the car buying options for consumers.
New Opportunities for Innovations
Diversity is the foundation for innovation, and such partnerships always bring about new ideas that benefit dealers and car buyers. For instance, the alliance between Renault Nissan and Mitsubishi has let the three companies tap into each other’s zero-emission hybrid technologies. The alliance was the world’s leading electric vehicle manufacturer in 2017 and has contributed significantly in the global push for New Energy Vehicles.
Pricing Can Change For the Better
In most cases, a merger could lead to better pricing. For instance, the partnership between Nissan and Mitsubishi let the former leverage the latter’s use of more affordable raw materials.
The partnership between Nissan and Mitsubishi let the former leverage the latter’s use of more affordable raw materials.
Potential savings on the construction of cars could be passed down to dealers and consumers. It is likely that one of the companies in the merger is better at specific processes than the others, which can lead to better prices in the long run.
Who is partnering?
Many companies realise the benefits of joining forces. The Renault-Nissan alliance now includes Mitsubishi, and Fiat and Chrysler have also blended operations. However, in recent times, the landscape has been shifting toward concentrated partnerships in one area or process. For example, Honda and General Motors recently signed a fuel-cell partnership.
Both the companies have committed to mass produce a hydrogen system that will make its way into its lineup by 2020. A similar example is a partnership between FCA and Waymo, who along with BMW, Intel and Delphi are joining forces to further innovate autonomous vehicles. These partnerships are allowing automakers to leverage the talents of other manufacturers to add variety and innovative ideas to their brands.
How Partnerships May Evolve
As mentioned earlier, the industry is moving on from corporate-style takeovers and mergers to micro-partnerships that cover a single topic or issue. Such partnerships are often formed to figure out how to bring innovative technologies like autonomous driving, alternative fuel sources, and connected car features to the masses.
More of these arrangements can be seen in the future as manufacturers commit to tapping into more of these technologies. However, one thing is for sure; automakers understand the benefits of partnering and aligning with other automakers. While many have had adverse outcomes, FCA is a shining example of what is possible, and how dealers and consumers stand to benefit.