Auto marriage on the anvil- Ford & Daewoo Motors - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Auto marriage on the anvil- Ford & Daewoo Motors

Jun 30, 2000

Ford Motor Company has emerged as an exclusive bidder for Daewoo Motors. There have been many contenders for the ailing Korean major Daewoo Motors, as it is strapped with high debt, declining volumes and low productivity. This acquisition as and when it happens will have many implications on India's automobile sector. Assuming that it has taken place, Ford's tie-up with Daewoo Motors will lead to consolidation in the passenger car segment. Ford's presence in the Indian car market is through its successful brand the "Ikon" (in a joint venture with the M&M group) which has done well in the mid size segment. On the other hand Daewoo's "Matiz" has done well in the small car segment. The joint efforts would enable them to have an important presence in the both the small car as well as the mid sized segments.

The combined entity reported a sales volume figure of 48,240 units in FY2000, though this is much lower than the market leader Maruti who sells close to 0.4 m units annually. However their combined efforts could result in better volumes in the current year as they would have a joint marketing, distribution, export strategy which would lead to economies of scale. The combined entity would have a large production capacity of 0.25 m units annually. In their distribution strategy for example Daewoo's plants which are located in the North and Ford's which is located in the South would result in economies of scale as transportation costs could be reduced.

General Motors (US) and Fiat (Italy) have announced an alliance that has resulted in a cross holding between the two companies. While GM will have a 20% stake in Fiat, the latter will own 5% of the GM. GM also has a right of first offer to buy the remaining 80% if Fiat were to decide to offload the stake. This could lead to GM (India) and Fiat (India) consolidate their operations.

This global consolidation will lead to a shake up in the Indian passenger car market. In an industry which is saddled with over capacity and steep competition, the key to survival will be consolidation. Economies of scale in manufacturing, marketing, distribution are the answer for better performance in future. This will lead to many such combined ventures in the Indian passenger car market in future.

Equitymaster requests your view! Post a comment on "Auto marriage on the anvil- Ford & Daewoo Motors". Click here!

  

More Views on News

India's Top EV Stocks: Generating Returns for Investors? (Views On News)

Dec 8, 2021

We look at the top EV stocks from each space and the returns they are generating for investors.

Massive Surge in the Shares of Tata Motors Today. Key Factors Favouring the Rally (Views On News)

Oct 13, 2021

Tata Motors zooms 23% after report of TPG investing Rs 75 bn in EV arm.

India's Edge in Electric Vehicle Stocks podcast (Views On News)

Sep 9, 2021

India has a huge advantage in using climate friendly EV batteries.

4 Ways to Play the EV Opportunity (Views On News)

Sep 6, 2021

The EV disruption is happening faster than you think. Here's how you can ride the Indian EV megatrend.

Semiconductors Are Big News. Here's What You Should Know... (Views On News)

Jul 27, 2021

The global semiconductor chip shortage is likely to continue till 2022 before it eases gradually.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

6 Penny Stocks that Rallied 1,000%+ in One Year (Views On News)

Dec 6, 2021

These penny stocks shed their penny status by surging 1,000% or more in the last one year.

The Biggest Winners and Losers in India's Transition to Electric Vehicles (Profit Hunter)

Nov 26, 2021

How India's EV transition could be a major headwind for the incumbents.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE AUTO


Dec 9, 2021 03:37 PM

S&P BSE AUTO 5-YR ANALYSIS

COMPARE COMPANY

MARKET STATS