1996 to 2005
Richard Johnson looks back at a decade dominated by minivans, mergers and powerful men
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Ten years ago it was a vastly different European auto industry.
It was a simpler time and a simpler business before the rush of mergers and acquisitions and before the Renault Scenic.
When we launched Automotive News Europe in February 1996, the six full-line car producers operated more or less within the bounds of four product categories: supermini, lower medium, upper medium and full-sized.
There was a sprinkling of coupes and convertibles, the occasional station wagon and a couple of US-sized minivans, which were ill-suited for European roads. There were no compact minivans or crossovers, hardly any SUVs and only a few A-cars, known now at Automotive News Europe as minicars.
I don’t think the term “segment buster” had been coined.
But it all began to change about a month after our debut.
In March 1996, on the last press day of the Geneva auto show, Renault quietly rolled the Scenic onto its stand.
It was the shy star of the show.
Indeed, many in the Geneva press corps left the Palexpo without ever taking notice. Yet the Scenic would soon transform the industry. It had nifty, new one-box packaging, great design and command seating.
Sales exploded.
Renault, a ward of the French government, not only survived, it thrived. Ultimately it was robust enough to take control of Nissan (surely the upset of the decade) and give full expression to the talents of one Carlos Ghosn.
Within three years small minivans were running everywhere in Europe – good ones, too, like Opel’s seven-seat Zafira, Citroen’s pretty Xsara Picasso and the innovative, though ugly, Fiat Multipla.
The Volkswagen Passat/Ford Mondeo upper-medium segment began to shrink, as did the VW Golf class of cars.
Fragmentation was the new buzzword. Product planning became a puzzle. Companies slow to react, such as Ford and Volkswagen, lost market share.
French renaissance
The 10 years of Automotive News Europe were mostly glory years for the French. The previous 10 were anything but.
The consensus the day we started publishing was that either PSA/Peugeot-Citroen or Renault would fall by the wayside or that the two would have to merge to survive.
As for me, I had figured out what was wrong with the French. Their CEOs simply didn’t have the right stuff.
Renault’s Louis Schweitzer and PSA’s Jean-Martin Folz came from a small clique of elitists. They began their careers in high government posts. Unlike engineers such as Fiat’s Paolo Cantarella or VW’s Ferdinand Piëch, the French CEOs didn’t know a great deal about automobiles.
I was wrong.
The fluency and directness of Schweitzer and Folz helped them communicate precisely and that was key to their successes.
They functioned like philosopher-kings.
The French succeeded with two Italian inventions – design and the common-rail diesel engine. But most importantly, PSA and Renault came out of the recession of the early 1990s with a changed focus.
They couldn’t afford to go global, so they went local – and listened more closely to their customers. They picked up the market share that Ford and General Motors lost in Europe.
Going global at any cost seemed like one of the worst ideas of the mid-1990s.
Some companies centralized their far-flung empires to create one-stop global management.
Ford 2000 was the most famous example. Ford Europe was dismantled in the name of Ford 2000 and it needed several years to recover.
Merger mania
Consolidation was the other way to go global.
On May 6, 1998, we woke up to news that Daimler-Benz would merge with Chrysler. The details would be laid out that day at a press conference a couple of miles from our London office.
We hurried over and sat dumbstruck as Chrysler’s Bob Eaton and Daimler-Benz’s Jürgen Schrempp explained the “merger of equals.”
Merger mania had begun.
Speaking at the Automotive News Europe Congress that summer, Louis Schweitzer teased us with the news that Renault was courting an Asian partner.
It turned out to be Nissan.
When Schrempp later decided not to buy the troubled Japanese automaker, Schweitzer pounced.
Meanwhile, Ford bought Volvo Car and GM eventually acquired a stake in Fiat Auto, mostly because it feared Ford or DaimlerChrysler would get there first. DaimlerChrysler, later peeved that it had passed on Nissan, bought a big stake in Mitsubishi Motors.
Larger-than-life executives powered the consolidation craze – Schrempp above all. Renault would not have a controlling stake in Nissan had Neutron Jürgen not put the Japanese company in play. He backed off, but in the meantime increased Nissan’s sense of urgency.
Cultural chasm
Consolidating companies was tricky. Not everything was what it seemed at DaimlerChrysler. Indeed Automotive News Europe first shone a light on the vast cultural chasm that separated Germans and Americans inside the new global giant.
Former staff reporter Dorothee Ostle heard the first rumblings, wrote the stories and the rest was hysteria.
BMW was in the midst of a growing crisis: how to manage the Rover group, the British carmaker it had acquired in 1994.
Rover had become a burden. Even a culture as robust as BMW’s could not handle it. The crisis cost BMW several top
executives, including CEO Bernd Pischetsrieder and No. 2 man Wolfgang Reitzle.
DaimlerChrysler’s cultural wars and the mess at Rover appeared to signal the end of the consolidation craze. Even some of the Swedes at Volvo complained about being manhandled by Ford’s system.
Mitsubishi turned into a financial black hole for DaimlerChrysler and the partnership between Fiat and GM was dissolved last year.
Schrempp’s reputation took a hit and Jacques Nasser, the industry’s other flamboyant consolidator, lost his CEO job at Ford.
During the decade of ANE the independent companies, PSA, Honda, Toyota, Porsche and BMW (once rid of Rover), did best of all.
Richard Johnson served as editor of Automotive News Europe from its launch 10 years ago until August 2003. He is now managing editor of ANE’s sister publication Automotive News in Detroit.
A few good men
But in the 7 1/2 years since DaimlerChrysler was born, history has begun to revisit the era of consolidation.
Renault’s handling of Nissan was masterful.
Daimler and Chrysler finally stopped bickering, and when Mercedes-Benz slipped a little, Chrysler came on strong. That made the idea of combining the two companies to balance out their good and bad times look positively inspired.
Even the remnant of BMW’s ownership of Rover – Mini – turned into a great success.
So what do we conclude?
Schweitzer told us in a 1999 interview that Renault would have never bought Nissan if there had been no Ghosn to send to Tokyo.
DaimlerChrysler was a botched job until Dieter Zetsche went to Auburn Hills.
PSA was transformed by Folz, a non-car guy and former sugar executive.
What were the lessons of the last 10 years?
Go global? Stay local?
Merge and acquire? Remain independent?
The answer is: All of the above.
And above all get the right guy.
You can reach Richard Johnson at rjohnson@crain.com.
