Japan Could Be Down To Just THREE Car Companies By 2020

Industry News

New tech means more money.

When it comes to automotive mergers, most of the attention has been on FCA and its attempt to court GM. Of course that ended in failure, with FCA CEO Sergio Marchionne recently declaring the entire endeavor over. But in Japan things are heating up, at least according to some industry analysts. Toyota just acquired Daihatsu (remember them?) for $3.2 billion. The reason Daihatsu wanted the merger was in part because it couldn’t afford to keep up with the times, as in new tech and the cash required to develop it.

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“If we want to overcome the upheaval in our business environment and the fierce competition to develop new technologies and emerge stronger than ever before, we must dramatically strengthen our collaboration with Toyota.” That quote was from Daihatsu president Masanori Mitsui and was made at a press conference announcing the Toyota acquisition. It’s this cash-intensive drive for new tech that has people like Jefferies Group LLC analyst Takaki Nakanishi forecasting more mergers among Japan's independent automakers. “Japan has just too many and the resources have been too spread out. It’s a natural trend to consolidate and reduce some of the wasted resources,” Nakanishi told Bloomberg.

Bloomberg notes that once the Daihatsu acquisition is complete, Japan will be down to seven independent car companies: Toyota, Honda, Nissan, Mazda, Mitsubishi, Suzuki and Fuji Heavy. That’s still a lot more than Germany and the US (three apiece). The end result is a forecast of mergers with estimates saying Japan may have three large auto groups by 2020. Now that would be a flurry of major moves but Japanese companies have begun working closer together in recent years. Toyota and Subaru developed the BRZ and FR-S/GT86 jointly. Toyota has also worked with Mazda, turning the new Mazda2 into the Scion iA (RIP). Collaboration between Japan's independent automakers isn’t unheard of.

Neither are foreign alliances. That means you, Nissan. The only question seems to be when these moves will be made and which companies will go where. Unless money starts to grow on trees or people and governments fall out of love with EVs and autonomous cars, something will need to give.

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