Car maker mergers not a silver bullet

Moves by automotive giants Volkswagen and Peugeot to create superbrands through mergers with Porsche and Mitsubishi respectively will fail to reignite the struggling car industry, branding experts have warned.

Porsche 911

In the past week, Volkswagen Group completed an agreement to take a 49.9% stake in Porsche, clearing the way for the two brands to form an integrated company, and PSA Peugeot Citroën confirmed it is looking to buy a stake in Japanese manufacturer Mitsubishi Motors.

Brand specialists say the move is not dissimilar to the mergers commonly seen in the airline industry, but caution that expectations for increased custom through greater brand equity are not certain.

Thomas Winterburn, a principal at Engineers Club, says: “These moves will certainly help the brands to extend their presence overseas and into different model ranges. In times of uncertainty, they will also save costs. But, if the brands are hoping to see a boost in interest purely down to their size and heritage, they couldn’t be more wrong. It will take a lot more than mergers activity to bring the spark back on new car sales.”

According to the Society of Motor Manufacturers and Traders, UK car sales rose by 57.6% in November compared with a year earlier, due in part to the Government-backed scrappage scheme. So far this year, 1.84 million cars have been sold in the UK, 8.8% lower than at the same point last year.

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