A lack of technological foresight and changing economic conditions may bring dramatic consolidation to the auto industry in the next 15 to 20 years. Industry analyst Adam Jonas at Morgan Stanley believes that the number of major automakers could go from around 30 today to as few as 6 in that time. However, a catastrophe is avoidable.

Jonas' argument is that the world has more automakers than it can sustain. He contends that too many of them are more focused on next year's models than attempting to adapt to technological change. Without looking forward, they won't survive.

Tesla might be the lighthouse leading automakers away from the rocks. While still quite small, it has disrupted the status quo and shown that there's more than one way to prepare for new innovations. "With proper execution, Detroit may thank Tesla Motors for being that stiff board in the back of the head right when they needed it," said Jonas to The Detroit News.

This isn't the first time there has been such doom and gloom about the industry. During the financial crisis, there were similar forecasts, but in most cases governments helped support weakened automakers. According to The Detroit News, there's been some consolidation among parts suppliers, but not as much as originally predicted. If Jonas' theory is correct, it could mean not only a huge shakeup in the industry, but a massive change in the world economy given how many jobs are connected to building cars.


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  • 41 Comments
      mahalo5000
      • 8 Months Ago
      More than thirty years ago, early in my ad agency career, I traveled to Detroit once a week for my automotive account. Heard the very same predictions about being down to 5 manufacturers worldwide at some point in the not-so-distant future. The value of history is often lost on the young...understandably.
        Christian Gani
        • 8 Months Ago
        @mahalo5000
        I completely agree...in fact, I actually think there's more of a chance that new "startup" brands will emerge given the advancements in production and technology that have changed the landscape of vehicle building recently. Tesla can't be the only one to get it right.
        The Mercers
        • 8 Months Ago
        @mahalo5000
        As another industry dinosaur (sorry!), I completely agree. Leaving aside the fact that investment bankers would profit immensely from consolidation, through the M&A fees, this "only X OEMs will be left" prediction has been around for decades. And it is always supported by assertions as opposed to facts. Here is a fact: the share of global light vehicle production held by the top ten OEMs in 1990 was 82%... and in 2013 76%. Some consolidation! We've been DEconsolidating. Yes Chrysler and Fiat merged but Ford and Mazda separated, yes Saab went out of business but Chery and Geely came in, etc. I don't know what the "right" number of global OEMs will be eventually, but I bet it shifts over time. And any argument that bases consolidation on scale economies must explain why the LARGEST OEM ever, GM, went broke; and why of the other very largest OEMs one spreads its volume across many brands (VW) quite successfully, and one concentrates its volume in very few brands (Toyota), quite successfully. In my view grand theorizing about the consolidation trend, or lack thereof, is less explanatory about what actually happens than deep study of the individual OEMs. Thus endeth the rant!
        The Mercers
        • 8 Months Ago
        @mahalo5000
        As another industry dinosaur (sorry!), I completely agree. Leaving aside the fact that investment bankers would profit immensely from consolidation, through the M&A fees, this "only X OEMs will be left" prediction has been around for decades. And it is always supported by assertions as opposed to facts. Here is a fact: the share of global light vehicle production held by the top ten OEMs in 1990 was 82%... and in 2013 76%. Some consolidation! We've been DEconsolidating. Yes Chrysler and Fiat merged but Ford and Mazda separated, yes Saab went out of business but Chery and Geely came in, etc. I don't know what the "right" number of global OEMs will be eventually, but I bet it shifts over time. And any argument that bases consolidation on scale economies must explain why the LARGEST OEM ever, GM, went broke; and why of the other very largest OEMs one spreads its volume across many brands (VW) quite successfully, and one concentrates its volume in very few brands (Toyota), quite successfully. In my view grand theorizing about the consolidation trend, or lack thereof, is less explanatory about what actually happens than deep study of the individual OEMs. Thus endeth the rant!
      Sir Duke
      • 8 Months Ago
      To: Adam Jonas; Here is my great prediction: within the next 15 - 20 years, we will have sunny days, rainy days and snowy days. Top that. I have been following the auto industry since the mid-60s, also read my first book back then too. There hasn't been a decade where there wasn't the sort of activity that you are "PREDICTING". Mergers, acquisitions, consolidation, bankruptcies, platform sharing, model sharing etc. The auto industry is an incestuous business, innovations are either copied/pirated, licensed, legislated, or outright sold. Before your next prognostication, here an assignment. Study the history of the following: GM - Cadillac, Chevrolet, Buick, Saturn, Hummer, Oldsmobile, Pontiac, Saab Ford - Lincoln Motors, Mercury, Aston Martin, Volvo, Jaguar Chrysler: Plymouth, Dodge, Ram, Jeep, Rootes: Sunbeam, Hillman, Triumph American Motors Willy's Packard Dusenberg Nash Volkswagen Auto Group: Auto Union - Audi, Porsche, Lamborghini, Bentley etc. Datsun Nissan British Leyland: Bedford, Woolsley, Austin, Morris Tata: Jaguar, Rover, Range Rover These are just the ones that springs to mind.
      mountainhawk04
      • 8 Months Ago
      Dear Autoblog: any article citing 'analyst' or 'economist' should accompany disclaimers to their devious ways. These shills have the worst track record and get paid the $$$ to fleece the sheeple.
      Sir Duke
      • 8 Months Ago
      To: Adam Jonas; Blood is also red, and grass is green. I have been following the auto industry since the mid-60s, also read my first book back then too. There hasn't been a decade where there wasn't the sort of activity that you are "PREDICTING". Mergers, acquisitions, consolidation, platform sharing, model sharing etc. The auto industry is an incestuous business, innovations are either copied/pirated, licensed, legislated, or outright sold. Before your next prognostication, here an assignment. Study the history of the following: GM - Cadillac, Chevrolet, Buick, Saturn, Hummer, Oldsmobile, Pontiac, Saab Ford - Lincoln Motors, Mercury, Aston Martin, Volvo, Jaguar Chrysler: Plymouth, Dodge, Ram, Jeep, Rootes: Sunbeam, Hillman, Triumph American Motors Willy's Packard Dusenberg Nash Volkswagen Auto Group: Auto Union - Audi, Porsche, Lamborghini, Bentley etc. Datsun Nissan British Leyland: Bedford, Woolsley, Austin, Morris Tata: Jaguar, Rover, Range Rover These are just the ones that springs to mind.
      rcavaretti
      • 8 Months Ago
      No, just the typical (more) mergers and lots of platform/power train sharing. Maybe a 'new' company (in name only) formed by consolidating. Pretty status quo if yours ask me.
      Wills
      • 8 Months Ago
      As an engineer for one of Detroit's big 3... I can't disagree that Tesla has brought new life to the industry... however I find it offensive that anyone could think we don't look further than one or two years down the line... Product roadmaps span decades... as do our teams working on innovative new technologies.
      Bryan Rex
      • 8 Months Ago
      Who is morgan stanley? I predict hes wrong, write an article about that autoblog!
      Jeff Gilleran
      • 8 Months Ago
      The underlying problem might have more to do with low paying jobs, and high taxes. Innovation is fine if you have the market to sustain customer purchasing power. That power has been declining for years, with a weak middle class, and growing lower class. The economy health is the power that drives industry, and has been for a very long time. So ditch the lobbyists, create more term limits, and ditch all the scumbag politicians that think running the country on tax payer money is a right, not a privilege.
        Jan William Bayus
        • 8 Months Ago
        @Jeff Gilleran
        You seem to spend a lot of time NOT reading about economics. During the American "heyday" corporate taxes exceeded 90% yet the country did a pretty good job of developing an infrastructure and allowed the corporate world to innovate AND both sides of the capitalist model benefitted. Unions were negotiating good contracts, health care was free, pensions were funded and corporate profits were fine. The result was exactly as Henry Ford expected. If you pay your workers, the will spend their pay not things other people make. The problem really is the world market. It is only good for the capital providers and oligarchs running the sweat shop economies of the world.
          Jeff Gilleran
          • 8 Months Ago
          @Jan William Bayus
          For some reason, AB site didn't let me reply yesterday. Yes, there is the underlying problem of outsourcing. Been going on since 2001. The Chinese economy is now ingrained in the US model because we borrowed so much money to fund our manufacturing industry which was dropped into the toilet by greedy businesses here that wanted to find a way to make a quick buck, while wiping out long term profits due to unforeseen changes in the very same market. Things are changing somewhat now, but only because the fast growing Chinese model is no longer growing quickly, and prices are increasing. So with that, we still have a problem with our own Economy because its not our own anymore (as you mentioned) and things need to change. As more companies lose interest in making that quick buck outsourcing, the internal model of the US economy will improve. My answer I gave prior was a final solution to a much bigger issue right now. I also needed to mention that part of the problem is also the people at the top with the money, and I don't believe trickle down theory is worth crap. So.. how do you get the people at the top to loosen their purse strings to feed themselves long term? After all, the shrimp feed the whale. That is equally the issue here.
      Speedieone
      • 8 Months Ago
      I think the article following this one about BMW designing subways cars says it all. Google is trying to make the autonomous car an inevitable future and people are riding public transit (especially trains) more. I agree that Tesla has shaken up the auto industry but I think it is their company store sales model that is having the biggest impact. Todays generation likes the Apple sales model, yet the US dealer networks are fighting in every state to preserve their dinosuar method of selling cars. Does anyone know of anybody who likes going to a dealer to buy a car? There is change coming but I believe it is more social than tecnological. Tesla is still a car, it runs on roads and gets stuck in traffic just like the gas burner sitting next to it.
      driver1439
      • 8 Months Ago
      I call BULLSHIT.........he has no idea what he is talking about. First off Musk will sale Tesla to the first company who offers him a boat load of cash. As for the rest you can not predict how this industry will go that far out.....
        mawhalen53
        • 8 Months Ago
        @driver1439
        Why do you think Elon is going to sell the company?
          Moreno636
          • 8 Months Ago
          @mawhalen53
          Cuz he is a moron. Musk is not going to sell the company he built...for what purpose??
      Chunky
      • 8 Months Ago
      I wonder whats more expensive; this guy or calling in a psychic hotline. Really?!? Are you going to tell me that money is a concern in my life also? Did he ever consider dozens of electric startups will swoop in to attempt to full the gaps left by the dying auto industry dinosaurs? And how about those suppliers? Some of them now have the technologies to build cars themselves, and probably have better ties to tech industries. They have been pushing for better technologies for years only to be lowballed by the big 3. And what about that secret project google is working on?
        kontroll
        • 8 Months Ago
        @Chunky
        big 3...are you kidding ? there is no worse company than toyota when it comes to ignoring technology, cutting cost and speweing out cheap garbage. You are a very mislead person not by the big 3 (as you put it )but by the garbage manufacturers coming out of asia
          404 not found
          • 8 Months Ago
          @kontroll
          kontroll, see this is where you are 100% wrong...
          Chunky
          • 8 Months Ago
          @kontroll
          Are you forgetting the Prius? Whether you like it or not, that car set forth a pattern of fuel efficient vehicles and cause the big 3 to rush out their own hybrid products. GM only released the Volt under threat of bankruptcy, Ford only invest in its proven cash cows, and Chrysler has only warmed up its lineup. All of them refuse to acknowledge the threat of Tesla. While the Japanese companies lack innovative products in the US market, at the very least they have innovative side projects to carry them through the next few decades. The fact that you missed, is that none of this attempt to solve major mobility issues globally. Traffic, connectivity, efficiency, and sustainability; They all skim the surface to please marketing strategies, but noone admits there is any problem.
      AGSHOP
      • 8 Months Ago
      in 20 years only GM/FORD/Chrysler/Honda/Toyota/BMW/Benz/Audi/vw/Lambo/Ferrari/Fiat/hyundai/kia/nissan will be alive
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