Autoblog: Morgan Stanley predicts radical auto industry consolidation


I’m not entirely sure what to think of this. For one thing, the auto industry is already quite consolidated, with the vast majority of volume in most markets controlled by five or so companies (GM, Toyota, VAG, Fiat, Renault-Nissan). Also, based on the rate of expansion (i.e. slow) of the auto industry, I wouldn’t anticipate huge buildouts of capital that can become distressed in the future…between that and the fact that most auto giants are publicly held, there doesn’t seem to be incentive for further consolidation beyond market norms.

I also heartily disagree with the contention that Tesla will be disruptive to manufacturers. The Roadster was built mostly under contract by Lotus, and the Model S is manufactured in an old GM facility…there’s nothing Tesla does vis a vis building cars that is remotely interesting. Their battery tech may make them a critical supplier as electric cars become more popular, but disruptive? I doubt it. The Model S is a sexy electric car, but the cars driving continued consideration of evolving drivetrains are probably the Leaf and the Volt, both made by industry giants and both easier sells (read: cheaper) than the Model S. Remember that though the Model S is competitive feature-wise with cars like the BMW 5-series, its fit and finish have been criticized, making it an also-ran once the hype runs out (unless of course improvements are made).

The author may be confusing Tesla’s disruption in sales with a disruption in manufacturing. Tesla’s push on direct sales may put pressure on the dealership model, but ultimately that is something that incumbent automakers will not only adapt to, but benefit from.


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