PSA Visits the Auto Assemblers: Feedback

It has been a bumpy ride for automakers this year, what with threats of deteriorating US trade relations, an increasingly bleak outlook for China’s economy plus rising US interest rates; combining to not only hurt domestic auto demand, but negatively affecting emerging markets’ economies and their currencies.
Automakers do not seem overly fazed by these developments. Their main concern is how to position themselves in a vastly changing environment, by identifying and implementing strategies that can secure their future survival. For large automakers – such as Toyota (7203 JP), and increasingly, Nissan (7201 JP) and Honda (7267 JP) – this means both making strategic investments and entering into new alliances, if they are to become top players in the fields of new tech and mobility services. For the smaller automakers, the first step has been to find a partner who can be of help to them during this transition phase, with Subaru (7270 JP), Suzuki (7269 JP) and Mazda (7261 JP) relying on Toyota for support, and Mitsubishi Motors [MMC] (7211 JP) looking to Nissan. As a second step, the smaller players have realised that they must ration their operations on both a regional and on a product basis: for instance, Suzuki and (partly) Subaru have removed China from their coverage; neither is able to serve this market adequately, as resources need to be concentrated on their respective cash cows of India and the US. MMC remains focused on PHEVs, rather than venturing into hybrids or EVs. Mazda is relying on Skyactiv as its trump card and is increasingly leaning on Toyota for everything else. We are encouraged to see that automakers are making these conscious choices, which we believe are necessary to improve the long-term prospects of an industry deemed to be ‘old-fashioned’.