Two months ago, Fiat CEO Sergio Marchionne, said, in an interview with Automotive News Europe, that volume carmakers could only survive if they produced at least 5.5 million cars a year that share common vehicle architectures.
Since then, there are growing indications that Marchionnes consolidation scenario is becoming reality.
Despite the short-term pain, consolidation will help secure the long-term future of the industry.
With car sales likely to be depressed for years, the industrys current business model is up for review. To survive, carmakers will have to become fewer in number and bigger in size. And those that will prosper are the ones that will be most efficient.
Marchionne made the first move in the big consolidation of 2009 when he announced in late January that Fiat will take an initial 35 percent stake in Chrysler.The Italian carmaker will have an option to take majority control at a later date.
More global mergers, acquisitions or tie-ups likely are in the works.
Rumors that Fiat and Frances PSA/Peugeot-Citroen are discussing a merger of their automotive operations keep surfacing.
Market insiders assume that premium-car maker BMW is looking for a partner. There is speculation, denied by Mitsubishi, that PSA will take a shareholding in that Japanese carmaker.
And some of the big Chinese carmakers are said to be interested in Volvo.
In coming years, the global automotive landscape will change radically as carmakers join hands to achieve the scale needed to survive.
There is absolutely no doubt we will see consolidation, Renault-Nissan CEO Carlos Ghosn said last week.
According to a Reuters report from Riyadh, Ghosn said he expects global new-car sales to fall to 55 million this year from 63 million in 2008 and 69 million in 2007. Thats a level we havent seen for years. If true, sales roughly equal to the annual output of 45 production plants will have disappeared in the course of two years.
Like analyst John Wormald said a few years ago: Its time for a model change.
In the new world, the global efficiency drive will move into higher gear. New automaker alliances will better spread production and sales geographically. And combinations of carmakers will redefine the concept of platform sharing as they get more mileage -- and more vehicles -- out of existing technology.
Consolidation is a painful process. Many workers will lose their jobs. Proud and independent companies with a long tradition will be no more.
But at the end of the process, the global industry will be more efficient and better able to weather whatever storms are still to come.
A Fiat-Chrysler alliance, if it happens, is only the beginning. But it could be a very good start.