(Adds fund manager, executive comments, show news, background)
* PSA-Opel deal creates Europe's No.2 carmaker
* VW sees technology shifts more important for industry
* Toyota says investment in hybrids paying off
* Ford says tariff-free Brexit deal key for UK workforce
By Agnieszka Flak and Andreas Cremer
GENEVA, March 7 The auto industry is facing
seismic changes with the rise of electric vehicles, automated
driving and car sharing set to eclipse even big mergers such as
PSA's purchase of Opel, executives at the Geneva auto show said.
Peugeot maker PSA Group said on Monday it had
agreed to buy loss-making Opel from General Motors,
creating Europe's second-biggest carmaker behind Volkswagen
and sparking speculation of more consolidation.
However, some auto executives gathering in Geneva said the
deal was unlikely to alter the landscape on its own, with
changing consumer habits and new rivals in Silicon Valley and
China all likely to have a much bigger impact on carmakers.
"My feeling is that the industry as a whole and brand
positioning will change in the next 10 or 15 years, and that
comes in addition to traditional consolidation," said Herbert
Diess, head of Volkswagen's (VW) passenger car division.
"We are really in a transitionary phase for the industry.
There are new competitors on the horizon like Tesla or Chinese
ventures," Diess told reporters, adding that he did not expect a
wave of Opel-style mergers.
Volkswagen (VW) is investing billions of euros in electric
vehicles, automated driving and new mobility services, in part
as it tries to recover from a costly emissions test cheating
scandal that has hit demand for diesel vehicles.
The company, which is also cutting costs, is unveiling a
fully self-driving concept car at the Geneva show.
Karl Schlicht, head of European sales at Japan's Toyota
, also played down the impact of the PSA-Opel deal,
which brings together carmakers with a heavy focus on diesel and
low-margin fleet vehicles.
"We ran a counter strategy in Europe which may not look as
successful for some past years because our volumes were a bit
lower, but in terms of where we want to end up, it's turning out
to be a good strategy," he said, referring to Toyota's
investment in hybrid vehicles.
Toyota forecasts its European sales will rise 5 percent this
year while the market is expected to grow just 1 percent amid
uncertainty over German and French elections and Britain's
departure from the European Union.
BMW boss Harald Krueger, however, said the cost of
investments in new technologies could spur deals among smaller
'NO SURVIVAL OF THE FATTEST'
Some industry analysts also say an enlarged PSA could
actually ease the pressure on rivals if CEO Carlos Tavares uses
similar methods to turn a profit at Opel that worked at PSA.
In the three years since Tavares took the helm at PSA, its
existing brands - Peugeot, Citroen and DS - have significantly
increased pricing relative to benchmarked rivals, sometimes at
the expense of sales.
A similar approach at Opel, which has been among the
region's most aggressive discounters, could give the entire
European mass-market car industry some breathing space.
"The deal could then ease price pressures, lead to a
stabilisation, or even a recovery," said Michele Pedroni, fund
manager at SYZ Asset Management in Geneva.
GM and PSA have shared production of commercial vans and
developed common vehicle platforms for years, and the Opel
Crossland X and the Citroen C-Aircross concept SUV on show in
Geneva are a sign of the new projects and synergies they hope to
achieve as one company.
Stefan Bratzel of the Center of Automotive Management in
Germany said the potential improvement in profitability at
PSA-Opel posed a bigger challenge to rivals than its sheer size.
"There is no survival of the fattest," he said. "Just
because you're big, you do not win the game."
Some analysts say Fiat Chrysler Automobiles (FCA),
which has less than 7 percent of the European market compared
with PSA-Opel's more than 16 percent, could be among the most
pressured, with its high debts and costly plants in Italy.
"Being a mid-sized player in Europe and not particularly
profitable in the region leaves them quite vulnerable," said
Felipe Munoz, an automotive analyst at JATO. "They are too
expensive to be bought by one of the big guys, and they are not
in a position to grow unless they find a partner."
FCA boss Sergio Marchionne has long advocated mergers to
share the cost of cleaner and more technologically advanced
cars, but his attempt to woo GM was rebuffed and with the U.S.
firm now leaving Europe that option seems even less likely.
Marchionne said on Tuesday that FCA did not need a merger,
but he wouldn't rule one out and said he could approach GM again
if it was the right thing to do.
He also said the PSA-Opel deal might over time encourage VW
to consider a tie-up with his own company, although one industry
investment banker told Reuters that was unlikely as VW focuses
on its transformation following the dieselgate scandal.
Ford, another mid-sized player in Europe, highlighted
the importance of keeping costs down.
European boss Jim Farley told Reuters it was "really, really
important" for the future of its more than 14,000 workers in
Britain that the country strikes a tariff-free trade deal when
it leaves the European Union.
(Additional reporting by Laurence Frost, Costas Pitas and
Edward Taylor; writing by Mark Potter; editing by Jason Neely
and David Clarke)