Fiat Chrysler calls for mergers across the industry

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Fiat Chrysler Auto-mobiles (FCA) have renewed their call for more merging within the global automotive industry. In a recent report, it was stated that core components such as transmissions and engines should be shared between manufacturers to move the industry forward into the future.

Written by an anonymous author, the report states that research and development expenditure by firms has spiralled upwards, with around £87bn being spent in 2014. This number is only expected to rise over the next couple of years as car manufacturers invest in upgrading safety features, incorporating autonomous technology and making vehicles more energy efficient. Additionally, the automotive industry is compare to other industries with large development budgets, in most cases automotive businesses have to invest in products with lower profit margins, which raises costs even further.

The concern noted in the FCA report is that 45-50% of the budget for development is invested in components and technologies that aren’t actually distinguishable from each other to the customer. It then goes on to say that car makers should abandon traditional approaches and work together on major research and development, transmissions, sharing platforms and product integration. This approach would be similar to the methods used in mobile phone production, where similar software and processors are used across various brands.

If this approach was adopted in the industry, automotive brands would still be separate entities and they would still concentrate on individual branding and design, but it’s thought that by collaborating on technological development, there will be many benefits for all parties. However, it is likely that it would take a long time for the process to actually take place.

It will be interesting to see how well other manufacturers take to this idea, as it does have the potential to do great things for the future and significantly reduce costs of development, allowing finances to be focused in other areas. However, it will be a few years before we see any progression. When it comes to motor trade jobs, the industry is sure to continue offering many great opportunities, whatever takes place.