<OT> The auto biz...BMW/Honda/Rover/etc.

[Herman Chan <hermanc2@xxxxxxxxxx>]

Mike responded:

> From: "Joseph C. Volpe" <jcfox@domain.elided> An article in the
> Roundel suggested that if BWM merged with anyone, Honda would be the
> most likely candidate They have deep pockets, and there philosophy
> is as close to BMW's as any other car maker.
>
> I disagree with that statement. Honda is, probably, the furthest in
> philosophy from BMW. Mitsubishi is probably the closest, downright
> copying some of BMW lines (new Galant looks almost identical to E34,
> if you ask me). Honda is making hyper-revving 4s with all the
> techno-gizmology they can master. Their attempts to build 6-cylinder
> engines was a mixed bag, save the marvel in the NSX. They like to
> make everything themselves, including struts and transmissions,
> whilst BMW, alone with most other companies, buys everything they
> can on a side.

I disagree with Mike's statement.  Both BMW and Honda are engineering
oriented companies with proud motorsport heritages, primarily engaged in
vehicle manufacturing.  Aside from aping some body lines, Mitsubishi (whose
car operation is but a part of their empire) has little distinction in the
automotive field and no motorsport presence apart from rallying and
Paris-Dakar.  The character of the products each manufacturer offers is
influenced as much by the tax/vehicle laws in their respective countries as
it is by their respective geographies and product market positioning.  You
can't compare oranges to apples, but you can be sure both BMW and Honda
plant the best damn trees and grow that best fruit that they can.

> Generally, I do not see a merger of a German and a Japanese company
> as ever being a symbiotic success. Both are inefficient (although in
> very different ways), both are stubborn in their "our way or else"
> practices, they come from two continents fiercely competing and
> killing each other with import quotes. I just don't see it.

Japanese companies inefficient?  Then why have so many other automotive
companies in the US and Europe adopted Japanese-style just-in-time
manufacturing techniques?  Why is Toyota generally regarded to be among the
best, if not the best at quality mass manufacturing in the industry?  For
an island nation with severely limited natural resources and space,
inefficiency would be stifling.  The Germans, as with their American
counterparts, are hamstrung by powerful labor unions, with short working
hours and high wages.  Quotas are political mechanisms that have little
bearing on the synergy between two companies.  Cultural differences would
probably be the biggest impediment.

> I do, however, think that BMW might not need to merge with anyone.
> Look at their recent acquisitions, Rover, RR. They seem to have some
> cash burning holes in their pockets.

BMW can remain independent as long as its niche clientele is sustained by a
continuing strong economy.  However, if things go sour and people can't
afford to buy fuel-hungry and expensive cars anymore, things could get ugly
without a sugar daddy since BMW has little to fall back on.  Rover was
acquired in large part to help fill that gap, but as we've seen, things
haven't gone as expected.

They made a big mistake in understimating what it would take to bring Rover
up to speed (especially with Honda pulling the rug out from under them) and
now it's an albatross.  Essentially, all they got were the nostalgic
marques, a tired product line of rebadged Hondas, and inefficient, poor
quality and expensive plant capacity in England.  But there seems to be an
anglo-fetish fascination with British marques up in the four-cylinder
tower.  BMW doesn't have the financial reserve (of a GM/Ford/Toyota) to
make many more mistakes like Rover.

The recent press rumors involving unhappiness with Pischetsrieder are
interesting.  The anglo-fetish charge that he has lead could be his
downfall.  Wolfgang Reitzle may yet get the chance to be top dog after
being denied last time after his flirtation with the Porsche chairmanship.

What's really going to be interesting is how DaimlerChrysler will work out.
If they can sucessfully integrate, then they'll be a strong player.

My 0.02
Herman

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