The global economic crisis and collapse in vehicle sales could lead to an overdue shake-out of the international motor industry, say analysts.
Ten years ago, when Daimler-Benz bought Chrysler, pundits predicted the deal would herald an era of consolidation through takeovers and mergers. Some suggested there could be no more than eight major automakers when the process was complete.
In the event, it didn't happen as expected. Nissan and Renault may have fitted the model through their international alliance but most companies preferred joint ventures in which they had shared research, technology, design and components sourcing. Several companies are building vehicles for themselves and competitors.
WHAT IT MEANS
 US industry in disarray after senate blocks bailout package
Japan not immune to the worldwide problems
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Underpinned by the sales explosion in China, India and some other developing markets, the resultant cost savings have allowed the formula to work for a few years. But was this merely a stay of execution? With the market in freefall, automakers begging for government support around the world, and no-one expecting recovery soon, pressure is once again mounting for further consolidation.
"This business is going to be completely different. It cannot continue as it did in the past" - FIAT'S SERGIO MARCHIONNE
The situation in the US, where General Motors (GM), Ford and Chrysler face possible bankruptcy, may be garnering most of the headlines - especially in the wake of the US senate's vote on Thursday to block a US$14bn bailout of the companies. But the problems are everywhere.
Fiat group CEO Sergio Marchionne says a combination of falling sales and rising losses could result in only six high-volume motor companies surviving the bloodbath.
He told Automotive News Europe this week: "By the time we finish with this in the next 24 months, as far as mass producers are concerned, we're going to end up with one American house; one German one of size; one French-Japanese, maybe with an extension in the US; one in Japan; one in China and one potential European player."
Marchionne says: "This business is going to be completely different. It cannot continue as it did in the past. Independence in this business is no longer sustainable."
Hundreds of components manufacturers are also expected to go out of business, or be swallowed up by rivals.
To survive, motor companies must build at least 5,5m vehicles annually, Marchionne says. The bigger the company, the better the economies of scale in buying parts and spreading costs of research & development and assembly.
Only five companies meet his 5,5m baseline: Toyota, GM, Volkswagen (VW), Ford and Renault-Nissan.
Size alone, clearly, does not guarantee survival. Of these five, GM and Ford are begging for taxpayer money in the US, and VW has asked the German government to guarantee loans made by its banking and financial services arms.
BMW, whose CEO Norbert Reithofer says the industry is undergoing its worst crisis in 60 years, is said to be contemplating a similar appeal. The German luxury-car company is considered one of the most vulnerable European automakers to possible takeover if the recession proves long term. Others at risk include Fiat and Peugeot-Citroën.
Some analysts suggest that, depending on what happens in the US, the European operations of Ford and GM could also become targets. GM subsidiary Opel has asked the German government for à1bn in guarantees should GM go bankrupt.
Chancellor Angela Merkel has promised a reply before Christmas to the various appeals for aid.
Who will lead possible mergers and acquisition activity is open to question. Toyota, whose market capitalisation (as of last week) at $105,6bn dwarfed GM's $1,8bn, is in no rush to spend its money. The Japanese company, frequently held up by US politicians as an example of how US companies should operate, is not immune to the market crash and has been forced to change its vehicle manufacturing mix and reduce sales expectations.
China may also not be the safety net some automakers expect. Sources say Ford and GM have both approached China about buying assets.
Chinese companies have already bought several established foreign brands but even their domestic market is suffering.
The Chang'an motor company, whose listed parent has a manufacturing joint venture with Ford and Mazda, is suggested as a possible buyer of the Ford-owned Volvo brand.
Analysts, however, say Chinese companies may feel their limited exposure to the global auto market makes them unqualified to transform struggling foreign brands.
Automotive News quotes a Chang'an executive: "Chinese automakers will become global players some day but we are not strong enough now to make major overseas acquisitions and turn distressed assets around."
However, the Dongfeng motor group, which has joint ventures in China with Nissan, Honda, Kia and Peugeot-Citroën, is said to be watching the situation in the US to see if there are assets to be picked up there.
Rick Wagoner - GM plans product streamlining
GM CEO Rick Wagoner, who has agreed to a salary of $1 in 2009, says the company plans a major streamlining of brands, dealers, employees and debt. The restructuring plan presented to the US congress will result in GM concentrating US resources on Chevrolet, Cadillac, Buick and GMC.
Opel/Vauxhall will remain a key brand in Europe and other existing markets. Hummer is already for sale. Saab will also be sold, Saturn sold or closed, and Pontiac shrunk to a low-volume niche brand.
The company will close plants and cut the number of US dealers from 6 450 to 4 700 - still twice the number of Toyota, which sells as many vehicles.
Last week the house of representatives approved an immediate $14bn bail out for the US auto industry.
However, the rescue package is now in doubt after it was blocked by the US senate.
The US Big Three's problems stem partly from slow response to consumer demands. But they are also victims of their own longevity. GM directly employs nearly 100 000 people in the US (this will shrink to about 70 000 through the restructuring), 500 000 pensioners and 1m health-care dependants. Toyota, by comparison, has 240 US pensioners.
But, like the rest of the world, they are also prisoners of the vehicle market crash. Historic costs mean they have less flexibility to react.
Vehicle sales across the world are in trouble. In SA, sales were down 21% in the year to November and motor companies have announced extended holiday factory shutdowns to reduce stock. The same is happening in Europe. French car sales fell 14% in November, as did factory output. The longer Christmas shutdown could reduce December-January output by as much as 25% compared with a year ago. A leading French economist calls the situation "disastrous".
Renault plans to shed 6 000 jobs and a €26bn government aid package includes steps to help the motor industry.
The German motor industry faces its worst sales year since German reunification in 1989. The main Mercedes-Benz plant in Germany, at Sindelfingen, will work reduced hours until at least the second half of April. European sales are expected to drop another 12% in 2009.
In the US, sales are down 16% this year and are expected to drop another 10% in 2009. That would make it the worst year since 1982. Economists say the global slump could continue until at least 2011.
However bad it gets for the industry, not everyone is convinced that mergers are the answer. British academic Garel Rhys, a professor of motor industry economics, was quoted last week as saying: "Two drowning men do not make a good swimmer."
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