CAR MERGER EFFECT FELT

Press, Volume CVIII, Issue 31676, 11 May 1968, Page 40

CAR MERGER EFFECT FELT

(N.Z.- Press Association)

DUNEDIN, May 10. Several old-estab-lished motor dealer franchises in Dunedin and throughout; New Zealand could be lost or transferred as a result of the merger in Britain in January of two major motor vehicle manufacturers. ' -

The Leyland Motor Corporation merged iktth British Motor Holdings to become as the British Leyland Motor Coropration, Ltd, the second largest motor manufacturer, by sales vglue, outside the United States. It could be months, in some cases years, before the full effect is felt in New Zealand, but from hints in British trade publications there will be a paring of the range of cars offered by the two com-

panies and some rationalising of distribution and servicing. Already changes have been made in some assembly arrangements in New Zealand. Agency Conflict

In the general tightening, several factors could determine the fate of some franchise holders. There may be a direct conflict of interests in agencies held, necessitating transfers or cancellation. Outmoded premises or inadequate servicing facilities may weigh heavily against some firms; few businesses have such a diversity of premises.

Redundancy and the need to streamline distribution may cause the elimination of others, as has occurred in various firms in the past.

Anxious for an efficient home industry, the British Govenment helped to initiate talks on the merger after B.M.H. lost sBm during the last financial year, and Leyland made a net profit of s32m. UJS.-Owned

The only other major car makers in Britain are Ameri-

can controlled—Ford, Vauxhall (General Motors) and the Rootes group (Chrysler)— and are not as sensitive to the Common Market pressure which largely dictated the merger. The new company now has about 52 per cent of the British vehicle market, and the most complete range of vehicles in the world. The combine has found itself with an embarrassment of marques on the market — Austin, Morris, M.G., Riley, Wolseley, Vanden Pies, Jaguar, Daimler, Triumph and Rover. Besides, there is a large range of commercial vehicles, from giant Scammells to Landrovers and Alvis armed vehicles. Where two vehicles are seen to be directly clashing and neither is particularly successful, one will probably be dropped. “We are not in business to make cars or commercial vehicles. We are in business to make money,” Sir Donald Stokes, the chief executive, said after the merger. There are obvious clashes in models in the sports car

range, with such variety as the Sprite, M.G.C., AustinHealey 3000, Jaguar E type. Spitfire, GT6 and TRS. These have been the companies’ best sellers in the United States. Instead of two basic models as produced by Volkswagen, and a Fiat range based on four sizes of components, the British company has dozens of different engines, bodies, and major components. To become economic, one model must be produced in a volume of a quarter of a million a year or more. And to achieve this, drastic rationalisation will be required, affecting first production in the scattered company plants, then sales and service organisations. Smaller Range As some models change only every three to five years, there may be no immediate "axing,” but once started there will be a much smaller range of vehicles and some marques will disappear. There are already signs that “badge engineering" for some B.M.C. models will endsome names are missing from Australian B.M.C. vehicles.