Feature Story

BUSINESS: AUTOMOTIVE BEDFELLOWS

by Bob Hagin

November 1, 1996

There was a time several decades ago when a Ford was built by Ford, a Mercedes was built by Mercedes and a Toyota was made by Toyota. If they (or other companies) wanted to penetrate the market in another country, they simply entered it by setting up a distribution system, offered dealerships to indigenous businessmen and they were in. Those of us who were around in the '50s remember Volkswagen's success by adhering to this classic formula.

But today, automakers that may be locked in marketing combat in their home areas often join together in an emerging country to build vehicles to fit local needs or to capitalize on each other's strengths. These are a few automotive joint ventures that have developed during the past year:

DANA BUILDS ROLLING CHASSIS FOR CHRYSLER - Dana Corp. is a huge manufacturing conglomerate that hot-rodders and truckers will recognize as the maker of Dana differentials and transmissions. It was recently announced that Dana will produce complete rolling pickup chassis' ready for the addition of bodies and engines. Dana's partner in the operation is reported to be Chrysler and the product will be a version of the Dodge Dakota pickup put together in a $315 million plant Chrysler is building in Brazil. The Dana Dakotas will be sold only in South American countries.

TOYOTA AND TIANJIN BUILD ENGINES TO INSTALL IN DAIHATSUS - You may recall that the Japanese Daihatsu Charade made a brief appearance here in '88 and '89. It flopped (too small, company too weak, etc.) but it has enjoyed success in other countries. Recently Toyota announced that it will go into a joint venture with Tianjin Automobile Industrial (Group) Co. (a giant Chinese manufacturing organization) to make 1.3 liter engines to be installed Tianjin-assembled Charades. Both Toyota and Tianjin are building new plants in a Chinese coastal city to build not only engines but driveline parts as well.

GENERAL MOTORS AND RENAULT JOIN IN VAN PROJECT- I'm sure many of your remember the ill-fated adventures of Renault in America starting with the 4CV of the '50s and ending with the passing of the Renault- built Eagles of the early '90s. Renault has wisely stayed in Europe for the most part since then and has recently announced that it's going to start building light commercial vans in an alliance with General Motors of Europe. Some Renault vans are already being sold in South America with Chevy logos on their hoods but the new one will be all-new and sold in Europe as Renaults by Renault dealers and as Opels and Vauxhalls as well. Opel is GM of Germany while Vauxhall is GM in England. Both compete in Europe and Britain with Renault in the passenger car field.

GENERAL MOTORS AND FIAT GO INTO RUSSIA TOGETHER - Finland's Valmet Automotive Oy and AutoVAZ of Russia are in the process of convincing GM Europe and Fiat of Italy to build production plants in St. Petersburg. Valmet is already building Saab convertibles and Lada Samaras (a kind of homely clone of the cheapest small Fiat) in its Finnish plant and wants to get in on the projected consumer boom in Russia. AutoVAZ is in tough financial straights as are all Russian industries and needs outside help and money.

HONDA AND NISSAN PUT PEUGEOT AND ROVER DIESELS IN THEIR CARS - In Europe, the diesel engine is making a comeback among buyers of family cars and both Nissan and Honda find themselves hard-pressed to keep up with the demand. As a result, Nissan is planning to buy 1.5 liter diesel engines to put into its British-built Micra sedan while Honda Civics there will be offered with Rover-built small diesels next year. It's a first for the Civic which has never before been offered with a diesel powerplant. The Rover/Honda tie-in is a natural: the Land Rover Discovery is sold in Japan as the Honda Crossroad and the star-crossed Sterling that was sold in the U.S. in the late '80s was a Rover powered by a Honda Accord engine. Unfortunately, the Sterling displayed the worst of both worlds and failed miserably here.

FORD/MAHINDRA CO-PRODUCE ESCORTS AND FIESTAS IN INDIA - India is emerging as a manufacturing power and its Mahindra Ltd. (it specializes in sports/utility vehicles for the Asian market) is in the last stages of building a plant to produce Indian-built Ford Escorts and Fiestas. Mahindra Ford India Ltd. is a 50/50 ownership deal with Ford and the Dearborn giant plans to produce other larger passenger cars in India as well. Peugeot and Nissan together own a small piece of the Mahindra pie as well.

The international auto business has produced some strange bedfellows lately and it seems to be spreading. Next time you buy a new car, you might be surprised at who really built it.