Merge Overkill: Will Toyota Succeed Where GM Failed? Photo:
Tim O'Brien | Jul, 02 2008 | 4 Comments

While other kids followed sports teams and celebrity gossip, I watched the automotive industry like a hawk. I don't know why, I just did. And as such, the late 90s were more exciting than the Olympics, World Cup and last twelve Superbowls combined. It seemed like every other day there would be some news of one automaker taking over another by gobbling up its stock shares.

Companies went on epic shopping sprees like they had one week to live. You could almost imagine Ford raising a "Mission Accomplished" banner on the deck of an aircraft carrier after buying Jaguar, Land Rover, Aston Martin, Mazda and Volvo. You could practically hear the boots marching into Poland as VW snapped up SEAT, Skoda, Bentley, Lamborghini, and Bugatti.

Daimler bought Chrysler, which bought Mitsubishi, which bought Hyundai, which bought Kia. Even Renault got into the act and took on Nissan. Experts began to predict that sometime into the next millennium, there'd be only 3 automakers left in the entire world.

Japanese automakers weren't fairing too well thanks to the Asian financial crisis of the 90s. Even the few that could remain healthy - just Honda and Toyota, actually - seemed destined to be left behind by the global merging free-for-all that was taking place, leaving them as bit players in future of mega-manufacturers that could leverage enormous economies of scale.

One of the more depressing takeovers was when General Motors purchased a 20 percent stake in Subaru in 1999. "Shared platforms" had rapidly become the buzzword of choice and GM was known for badge engineering its best Yank tanks into oblivion. I'd always had a soft spot for Fuji Heavy Industries' quirky, turbocharged boxers with AWD, and desperately wanted to avoid seeing them diluted, kinda like what the General done did to Saab.


My worst fears were realized when GM announced the Saab 9-2X, a posh Impreza with a Swedish nose job. I was sure Chevy, Pontiac, Opel and possibly Vauxhall versions would soon follow. I began to divest my meager collection of Subaru memorabilia.

But then, miracle of miracles, I was proven wrong. GM simply sat on its FHI shares for six years and then sold them all off in 2005. Toyota was waiting in the wings and took 8.7 percent right away. And as you've heard, last week the Big T increased its stake to 16.16 percent.

By all accounts, Toyota is on track to become the next GM. But then why am I not afraid that Subaru will once again get absorbed into an industrial juggernaut? Because Toyota has managed to create distinct, separate brands that are more than simply affixing the logo of one onto the body of another.

They've done an incredible job with Lexus, catapulting it from a figment of a marketer's imagination to world-class luxury marque in less than 20 years. In the US, they also have the ultra-hip Scion youth brand, which managed to capitalize on the customization-crazy kids that will put sway bars and $2000 worth of rims on a 103hp box.

Let's not forget Toyota's wholly owned JDM brands, either, which it quietly purchased at home while other automakers were globe-trotting. Daihatsu is synonymous with kei cars, an industry unto itself, and Hino specializes in commercial trucks and buses. The lineups are clearly defined and do not consist of duplicates in the same market.

Most of all though, I'm absolutely bonkers about the idea of an AE86 successor. It keeps me awake at night. Toyota desperately needs an injection of sport into its lineup, and if it needs to bogart Subaru's 2.5L boxer to accomplish that, then so be it. The latest reports say that the Toyota and Subaru versions will not be sold in the same market. Remember that, GM.

As for the high flying world of mergers and acquisitions, what I and most car enthusiasts want to see is diversity, plain and simple. Automakers, don't be condescending. We're smart enough to know that a Ford Escape is the same as a Mercury Mariner and Mazda Tribute. Give us a reason to buy one car over another and you won't have to resort to buying other brands to win customers.

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