Mergers and Buyouts, What does it mean to Parts Guys?

[Richard]

With all the mergers and buying going on between Car Manufacters, what does it mean to us as Parts Managers? Does it mean that maybe someday my local Ford dearler will be able to get me Mazda, Jaguar, and Rover parts? And where does it end? With 3 or 4 Super Manufacters? Where will that leave a Single or Dual line GM, Ford or Chyrsler store? Just want to see what others think.

[sallen1]

Richard,

Good question that points to history...

What Ford is doing is basically the same thing done in the early 1900's by Durant, et. al. building General Motors from a bunch of independant auto companies. Times were different, of course, as what we identify as the 'franchised dealership' didn't surface untill the late 1920's. Today, any GM dealer can order/sell any GM part, whether its for Cadillac, Pontiac, etc.

The big difference is that in the 21st century most manufacturers have matured distribution systems. Ford has one that's different than Volvo, Jaguar, Land Rover, etc. and while the same faced GM in the last century, the number of dealers/distribution points are orders of magnitude greater today.

Perhaps Ford dealers will be able to order/sell all the name-plates owned now by Ford.

In my opinion, it won't happen for quite a while, Ford is still trying to figure where 'headquarters' should be and what task should be tackled first (parts doesn't seem important right now, this is bad news).

As for the parts people at the individual dealerships, there will be opportunity to have more product to sell (the good news).

scott

[Gary J. Naples]

Hi Richard,

I'm not sure if you are referring to trade between manufacturers like, for example, Covisint, or if you mean one manufacturer acquiring part or all of another manufacturer as is the case with Daimler/Chrysler. So I'll address each.

First, let's look at Covisint and other mergers like it. In my opinion this is simply a logical industry move facilitated by technological advancement (in general terms, e-commerce.) Probably the greatest benefit of Covisint will be higher efficiency between suppliers, and suppliers and manufacturers. All tiers of the supply chain will be better linked together. This efficiency in the supply chain should result in a reduction of production costs and improved reaction to consumer demand. I don't see any impact to the parts manager of a dealership from these types of mergers and alliances. On the other hand, for a company directly involved in the supply chain the ability to adapt can be the difference between life and death of that particular company.

Mergers and acquisitions between vehicle manufacturers themselves have been going on for years and are nothing new. The Daimler/Chrysler merger is probably the most notable only because Daimler Benz a foreign manufacturer acquired one of the "Big Three" American automakers. Anyway, where these mergers and acquisitions occured even when parts of one manufacturer were used to build the vehicle of another the parts were still marketed under the specific name plate. For example, when G.M. modeled the Nova after the Toyota Corolla, even though the Nova used Toyota parts, replacement parts for the Nova were still obtained through G.M. The point I'm trying to make is this: Even if the same part is used between two completely different manufacturers it would make more sense to increase the market potential of the part by supplying it through the individual manufacturer. Consequently, in the future as is now, I think the only time you'll see a manufacturer offer a part common among different name plates or marks is in the case of, for instance, G.M. models (between Chevrolet, Buick, etc.) or Ford models (Ford, L.M.) Suffice it to say, I'don't think you'll see Chrysler intentionally selling M.B. parts or M.B. intentionally selling Chrysler parts.

As for super manufacturers, I guess you mean only 3 or 4 manufacturers, in the world, building cars. By the mergers that you hear about, it would seem that things are headed that way. But, I don't think that will be the case. Quite the contrary. My guess is we'll probably see more auto manufacturers grow out of the emerging markets particularly the Asian markets, especially as technology drives down production costs.

The effects on single and dual line dealerships will be hard to say. As always, it will depend on brand and marketability of the product.

Gary J. Naples