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BIG IS BEAUTIFUL
Page 5
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• Several years ago, Commercial Motor was told that by the mid-1990s there would be only three — possibly four — major truck manufacturers left in Europe. This superleague would take more than 80% of all EC commercial vehicle sales and call the shots on price. Small, low-scale nut and bolt assembly manufacturers would be left to operate on a domestic basis, feeding on the scraps left by the giant multi-nationals.
It seemed like pie-in-the-sky, big brother conspiracy nonsense at the time. But with the news that Volvo and Renault are teaming up this week, the theory gets more plausible. Taking a 45% stake in each other's truck and bus operations will change nothing overnight. It will not have the immediate impact of the Leyland Daf merger, the uniting of Iveco and Ford or the GM Bedford withdrawal, but it could have interesting long-term implications.
What will happen to Renault's loss-making Mack subsidiary in the United States where Volvo runs the much more successful White truck factories? Will common truck lines emerge with identical chassis, but different badges? The so-called "club of four" cab built by Renault in Lyon for Daf, MAN and, of course, Volvo is living proof that reduced costs result from shared purchasing and development costs. Finally, what will it mean for you, the truck-buying customer?
European Commissioner Sir Leon Brittan is right to be worried about dwindling competition between the superleague truck producers. But why single out this deal? The horse bolted many years ago. In 1960 there were 11 independent truck manufacturers in France, 12 in West Germany and a massive 21 in Britain. Where and when did they all disappear? Who worried then?
Volvo boss Pehr Gyllenhammar calls the deal an "alliance" offering such things as "synergies ... integrity ... increased efficiency ... and critical mass." More profits too, I'm sure, and the ability to fight on equal terms with the likes of Daimler-Benz. Life at the bottom of the superleague could become intensely uncomfortable. Cor Baan of Leyland Daf said at the end of last year that he wanted the Anglo-Dutch manufacturer to expand again through acquisition as soon as posible. He likes the idea of buying an American manufacturer. The US truck market is vast and Western Europe offers fewer and fewer options. Both Steyr and Pegaso slipped through Leyland Daf's fingers at the last minute.
It seems that everyone agrees, for the time being at least, that big is beautiful once again.