Fleet News

Consolidation will continue

THE pressure to maximise shareholder returns will see continuing consolidation among motor manufacturers. In the long-term, six or seven car makers will emerge to lead the field, according to Steven Utting, corporate finance partner at PricewaterhouseCoopers, at the Fleet Show 2000 forum, 'Impact on consolidation on the contract hire market'.

'It's been difficult to make profits in the climate of change of change that will accelerate,' he said. There will be the further consolidation. 'Research and development costs, high capital investment costs and the fact that manufacturers are not making enough returns to shareholders means changes will take place,' Utting said.

The returns car makers are making is 25% less than returns that other industry sectors achieve. Financial services in the motoring sector, for example, make an average of 17.5% return on their capital, which means manufacturers will increasingly move into this area. The companies most likely to be part of the 'vehicle grand owners' are GM, Ford, Renault/Nissan, Volkswagen, DaimlerChrysler/Mitsubishi and Honda.

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