MAGIC AND MILLIONS AT MONTEREY (and not all of it cars)

In the 68 years since the very first Pebble Beach Concours d’Elegance, literally millions of people have flocked to California’s Monterey Peninsula every August, to celebrate centuries of the art, design and engineering of the motor car.

The activities on the third Sunday in August on the 18^thhole of the famed Pebble Beach Golf Course have led to the growth of a number of similar events which have grown up around the Concours, simply because of the diverse nature of the world of the automobile.

Most of these events also are now institutionalized into the August calendar and add to the variety and splendor of what is undoubtedly a car enthusiast’s complete delight.

Although the management of the Pebble Beach Concours is somewhat rankled that these events have piggy-backed off the popularity of the Concours, over the years it has learned to co-exist with the ‘upstarts’ who cashed-in.

However, despite the fact that these additional events have now become ‘must see’ attractions, there remains a problem of crowd control. Monterey has become so popular it is almost in danger of being swamped by its own success.

Here’s the calendar for the week preceding the Concours:

Wednesday night: McCall’s Motorworks

This event is staged at the Monterey Jet Center at the southern end of the Monterey Municipal Airport, by Gordon McCall. McCall is a genial, smart, self-made man who made his money from creating a business around car care products. His smart and savvy wife, Molly, works right alongside him managing the major features of each year’s event, ticket sales and promotion.

Above Right: Pebble Beach judge Sam Movisio, Gordon & Molly McCall and JC (very happy to be there)

All the hangars are cleared, and the space fills with cars old and new, often collected under a general theme, plus the latest in private jets and even planes from the US Air Force and the US Navy. It’s a tech-heads delight, but there’s a limit to just how many attendees this large space can comfortably accommodate and tickets usually sell out with 48 hours of going on sale.

Friday: The Quail, A Motorsport Gathering

Quail Lodge resort and golf club is owned by multi-millionaire hotel group owner, and power company chairman, Sir Michael Kadoorie.

A well-known and respected car enthusiast in his own rite with collections all over the world, Sir Michael wanted an event which would become famous not only as a celebration of motor sports over the decades, but also something of a strolling feast for the eyes and appetites.

Gordon McCall (L) and Sir Michael Kadoorie (R)

To envision, and create the event Sir Michael turned to his good friend Gordon McCall, who conjured up probably the most enjoyable of all the Monterey events, with the exception of the Concours.

I guess you could call these two wealthy car enthusiasts, a power couple.

Quail Lodge and Golf Club is part of a huge estate which includes multi-million dollar luxury homes on large bushland lots just off the main road which runs through the beautiful Carmel Valley.

Mariachi band at The Quail

The event is held on one half of the Quail Lodge golf course, and the displays, live music, cars and various libation stations are randomly spread across the carefully manicured lawns. A variety of restaurants and wine makers vie to be chosen to set up their ‘stalls’ which offer a wide range of food and drink to the patrons, at no cost – it’s all part of the ticket price.

But, here’s the rub. When the first event was staged I was responsible for introducing the Bentley marque as a ‘foundation sponsor’ and Gordon McCall told me the secret of the event would be to limit the number of people who could attend – so that there was no pushing and shoving, and the attendees could have a relaxed day among cars, wine, food and fellow enthusiasts. So, to that end, the first event was limited to 2000 attendees.

Such is its popularity, this year the number was increased to 3000, but the individual ticket price is now USD$400. They sell out within 24 hours of going on sale.

The ‘Best in Show’ at this year’s ‘The Quail’ was a 1953 Lancia Aurelia PF200C Spider – a prototype concept car based on the Aurelia B52 chassis but with coachwork by Pinin Farina.

Saturday: The Monterey Historic Races

This was the very first event which co-existed with the Concours, and is held at the Laguna Seca race circuit just a few miles east of Monterey. It has an annual theme, historic marques are featured and the entrants truly ‘race’ their cars. There’s no pampering of delicate old machines, they race flat out for the trophies and ribbons.

Like most race meetings it’s conducted over Saturday and Sunday and for most of its life was run by the very friendly, outgoing and highly-respected ‘creator’ – Steve Earle and his wife Debbie (who have since retired).

The main reason for its existence was that back in 1952, when the first races were organized on the Monterey Peninsula, they were held on the public roads, on what is now called the ’17 Mile Drive’ – a route which is now packed with tourists gazing at multi-million dollar homes, seaviews and luscious golf courses.

That first event was won by a young Phil Hill in a Jaguar XK120 (right).

When the Laguna Seca circuit was created, the Pebble Beach races were moved to this ‘safer’ location.

Saturday: Concorso Italiano

Obviously this is where the Italian car enthusiasts gather.

The event has had its ups and downs over the years, changing owners from its original creators, struggling financially, but it’s eagerly supported by Italian car nuts and is now also an institution.

It celebrates its 33^rdbirthday this year, staged on the beautiful Black Horse Golf Course, to the north of the city, and caters for all of the specific  ‘Italianess’ which is a huge part of the automobile scene, but may not necessarily be featured every year by the other events.

Similar to ‘The Quail’, it’s a strolling experience amongst Ferraris, Lamborghinis, Alfa Romeos, De Tomasos and some of the lesser-known and exotic brands which Italy offered over the centuries.

The 2018 ‘Best in Show’ was a 1951 Alfa Romeo 6C 2500 Super Sport, the last cabriolet 6C ever built.

Sunday: The Pebble Beach Concours d’Elegance

Undoubtedly, it is still the premier event on the Monterey Peninsula and has a unique flavor, Firstly, ALL of the cars which are entered for judging on Sunday must be capable of being driven and there are two road events which entrants can enjoy, which add points to their pointscore tally on Sunday during judging.

One is the Pebble Beach Grand Tour, which starts from Seattle, and finishes in Monterey on the Thursday prior to the Concours.

The other driving event is the ‘Tour de Elegance’, a shorter tour staged on Friday, which utilizes parts of the ’17 Mile Drive’ and ends in the main street of Carmel – which is closed to traffic on Friday morning.

It's an eager public which gathers to look at the cars, for free, as they park up in Carmel-By-Sea.

This ensures that the cars you see on the 18^thhole on Sunday, are not ‘trailer queens’.

They have been fully restored and must run perfectly, to be accepted by the Concours selection committee.

Each year there are featured marques, and in 1992 when I was head of public relations for Jaguar, we were chosen to star; and a few years later when I held the same position at Bentley Motors, we enjoyed the spotlight of fame at ‘PB’. It is was here we launched the Bentley Mulsanne.

I very much value my long-standing connection with the Concours and my friendship with the previous Chair of the event, Glenn Mounger and the current Chair, Sandra Button – both now close friends.

The Pebble Beach Concours has not only become THE event in Monterey, but especially so for the global car industry. It is supported by every major car company, which hosts visitors and corporate guests in their own lavish suites.

In addition, many car companies vie for a place on the ‘Concept Lawn’ where they display future concepts, or classic concept cars from the past.

However, there’s much more to the Pebble Beach Concours than just glamorous cars and glamorous people. It was decided back in 1975 to establish The Pebble Beach Company Foundation, with a mission to provide the youth of the Monterey Peninsula with the building blocks of success, starting with literacy and education. Funds raised by the Concours assist more than 80 local charities.

In 40 years the Pebble Beach Company Foundation has raised more than USD$25 million, and it’s worth noting that many of the events which have grown up around the Concours also contribute to a range of local charities.

The 2018 Pebble Beach crowd - surely a record attendance!

This year 209 vehicles appeared on the field on Sunday; the crowd on the 18^thhole alone was estimated to be in excess of 15,000 (although that number could be much more counting support staff, corporate employees and assistants); and for 2018 the event raised over USD$1.8 million for charity.

The car chosen as ‘Best in Show’ was a 1937 Alfa Romeo 8C 2900 B with a coupe body by Touring of Milan (now called Touring Superleggera of Milan).

(Photo: Kimball Studios)

I first visited the Monterey Peninsula in 1991, and have attended ever since, and along with the Geneva Salon, is the only other annual event that counts on my bucket-list these days.

THE SAD AND SORRY DEMISE OF HOLDEN (Continued)

Holden, the cars, the name and the badge, have been part of the Australian landscape for 70 years. On Monday, August 20, 2018 General Motors flew several of its TOP management men to Australia, to join GM-Holden’s new CEO (the ex-Toyota Australia President) Dave Buttner, to reassure Holden dealers, the employees and the public that GM was not about to abandon Holden, just because it’s going through tough times. It is not planning to change the name to Chevrolet, and instead will attempt to capitalize on its long history in an attempt to arrest Holden’s long, slow slide into oblivion. 

Was this too little, too late?

The big question is: “Where to start?”

First, the focus has to be on the local manufacturing operation, which, ultimately was supported by only ONE vehicle, the Commodore.

From its introduction to the Australian market in 1978 Commodore became an automotive icon, however its importance, both to the market and the company demanded that Commodore always devoured the majority of whatever resources GM-Holden had to play with.

The original four-door sedan spawned a plethora of variants, including a long wheelbase model, which underpinned the station wagon, and later a crew-cab utility, an AWD wagon (Adventra), as well as the upmarket Calais and Statesman premium sedans. Then, in addition, there were all the models built by Holden Special vehicles.

In its heyday, Commodore earned big profits for Holden and its dealers, but the saddest thing about the end of local manufacturing, and the death of the indigenous and iconic Commodore is that the company missed the moment to decide when to kill it off!

Holden employees past and present will abhor that statement, but nonetheless it’s true. Like Ford with the Falcon, GM-Holden tried to sustain Commodore long after its obvious ‘use-by’ date.

Of course Holden supporters will say: “Why would you kill it off? It’s making money.” Yes, but a local manufacturing operation the size of GM-Holden, sustained by only one model line, is impossible to maintain in a country with such a small population, and the growing number of competitive nameplates.

At the moment we have 65 different brands fighting for oxygen in an annual market of around 1.2 million vehicles on average. I’m sure I am right when I say that Blind Freddy could have seen that the golden Commodore bonanza could not last as long as GM-Holden hoped.

However, in an interesting twist, Commodore was still around 20% of total volume in its final months; but most of those were high-profit V8 models, so there was money to be made right up until its death.

The Commodore and Falcon fanboys inside both companies fought to keep their ‘babies’ on life support, thereby diverting resources to support them, to the detriment of any other marketing or product moves the companies might have needed to implement.

Unfortunately, their voices were louder than commonsense.

So, in recent times what have been the opportunities that were missed, or misread?

They are many and varied, and the responsibilities for potential and real disasters can be shared beyond Australia’s shores. GM International, and the local Asia-Pacific Regional Division all played a part in the destruction of the Holden brand.

In no particular order let’s look at some of the issues.

First, the Holden Cruze.

GM-Holden introduced this model just as Toyota’s Corolla was on the way to becoming Australia’s most popular passenger car.

Why was the small Toyota so popular?

Corolla was compact, fuel-efficient, versatile and priced right. Holden did not have a product, which could compete, so it introduced a 1.8L four-door Cruze sedan, which, if GM-Holden had not devoted the majority of its resources to supporting its precious Commodore, could have been promoted as the ideal answer to Corolla.

Cruze was smaller than Commodore, but still capacious. It had a 1.8L fuel-efficient engine like Corolla and enjoyed excellent build quality. It also added important extra numbers on the production line.

Holden simply pushed it out to the dealers using as much promotional resource as it could spare from Commodore, and it failed to hit the mark.

Sure, Cruze was successful, to a degree. But, it could have been much more successful had it been specifically targeted against Corolla – by name, and by size. If you bought a Cruze you ended up with a bigger, more capacious car, not a smaller Japanese hatchback, and if GM-Holden had priced it against Corolla (model-for-model), Cruze would have done much better than it did in the end.

Then we had the Camry competitor – the Holden Epica. This was a classic management disaster.

The Epica was sourced from a ‘cheap’ manufacturing operation, Daewoo in Korea. Although GM deals in US dollars, it was still a relatively cheap car to import.

The trouble was, GM-Holden did not have any spare resources to promote the Epica the way it should have; it was also overpriced and guess what? Despite an excellent powertrain and good build quality, Epica was rubbish to drive and became a nameplate to nowhere.

Just as Epica was bumping along the bottom of the pond, about to fall into a bottomless pit, some bright spark somewhere (USA, Asia-Pacific or Australia) decides that Holden needed to re-arm for its Camry battle by introducing the Holden Malibu, via Chevrolet, and also built in Korea.

Then, same-old, same-old. Not enough resources to do a decent job of pitching it against Camry. That’s because all the big money had to support Commodore.

We should also not forget the many millions of dollars GM-Holden received in subsidies from successive Australian Federal Governments, ostensibly to shore up local manufacturing and guarantee job tenure for its employees.

If you were looking over your shoulder at the date GM should have been thinking about killing off the local Commodore, then the swift rise in popularity of the Toyota Corolla was probably the right time to be planning its demise!

Not everyone is prescient enough to see a trend starting, but at that time SUVs were growing in popularity, and a versatile little car like Corolla was the tip of the iceberg approaching. And soon conventional, large passenger cars like Commodore and Falcon were 'on the nose'.

Then, we have another huge blunder entering from out of left field. GM Europe, the perennial money-losing drag on GM gets the bright idea to increase its revenues by exporting Opels to Australia.

You have to ask, what was the business case that said this would work for GM overall? Bringing the Insignia (below), built on the same platform as the Holden Malibu (Epsilon II); and the successful Holden Astra now replaced by the ‘Opel Astra’ setting up a market battle between internal divisions of the same company!

Apparently the back story is that GM Europe (Opel/Vauxhall) was trying to get German government financial support so it could set up as a stand-alone exporter. It nominated Australia as its first export market, introduced an overpriced Opel Astra with no marketing support and it failed – as did GM Europe’s stand-alone export strategy.

But, that decision must have had some input from GM International in Detroit, and that was a boner. It was plain dumb from the start and the cost to GM, to discount the unsold stock, and reimburse Australian dealers who had shelled out for exclusive Opel facilities was a very expensive mistake.

And now, the Commodore is beginning its death throes, and still GM-Holden decides it will soldier on. Commonsense would have suggested it was time to pull the plug, but there were strong emotions at work in Australia, and a great lack of vision, and financial clarity.

No wonder Mary Barra had the idea of offering Holden to PSA’s Carlos Tavares, when she was stitching up the sale of GM Europe to the French group.

Holden was becoming a millstone, and it was a long time in the making. 

Maybe 2009 was the year GM should have been accelerating the demise of local manufacturing in Australia, and doing the restructuring necessary to emerge as a viable importer of whatever good stuff GM was churning out around the world.

For me, the final nail in the Holden coffin was the truly, truly dumb decision to name the Opel Insignia, the ZB Commodore.

Although senior GM-Holden executives now admit it was a poor decision, those same execs were living inside their ‘Bubble of Excellence’ at the time and thought it was a great move.

Holden Commodore enthusiasts, buyers, and dealers couldn’t handle that one. First, a FWD 2.0L four-cylinder car replacing the fire-breathing RWD V6/V8 sedan; then actually anointing it with the precious Commodore badge when it clearly was nothing like the car it was replacing.

At least, despite Opel’s rapid demise in Australia, the Insignia badge did have some value and market recognition, and using that badge would not have led to Holden spending squillions (or rather, wasting squillions) trying to educate the dealers, the public and the Commodore fans that it ‘really was a Commodore’.

However, over the decades there have been some fabulous highs for Holden, delivered by huge successes from motor racing.

Before the inter-marque rivalry between Holden and Ford which developed into the V8 Supercar Series, a red-hot young racer called Peter Brock brought home glass cabinets full of trophies with a variety of race-bred Monaro coupes and compact Holden Toranas, managed by the redoubtable Harry Firth for the Holden Dealer Team. HDT was a way to get around the fact that GM was a car company that did not participate in motor sport.

After Commodore came along that list of motor racing victories expanded exponentially, with Brock and a number of other talented race drivers taking the chequered flag with successive developments of V8 Commodores which burnished the Holden legend and helped boost the continued success of the Commodore to iconic status.

That’s not to say Ford did not enjoy the limelight of the Winners’ Circle with Falcon, but this story is about Commodore’s contribution to the rise and rise of something that inevitably eroded Holden’s ability to stay at the top of its game.

With every successful series of new model Holdens, starting in 1948 with the FX, Holden wove itself into the fabric of daily life in Australia.

One famous advertising phrase ‘Meat Pies, Kangaroos and Holden Cars’ (admittedly lifted from an equally successful US-created jingle for Chevrolet) came to signify and solidify Holden’s place in the mindset of most Australians.

Sales success and a 56% share of the market at one time began to breed an erosive brand of empirical thinking at GM-Holden’s headquarters in Fisherman’s Bend, Melbourne.

Over the decades following the appearance of the Holden Commodore it was as if the company could do no wrong. The range of profit-making Commodores grew with each successive model generation, and the company also continued to enjoy success in other sectors, with the small Gemini, compact Toranas, and the brilliant Camira.

As GM expanded its Korean operations, in the search for a cheaper manufacturing base, cars from Korea’s Daewoo Motor appeared in Australia with Holden badges, and even a few small European models were added to the mix, to bring in more sales and profits to both the company and its dealers

Unfortunately, this heady success continued to create ever-increasing evidence of empirical thinking and a confidence in itself, which would begin to destroy the company from inside.

I sincerely believe that in the early 2000s, GM-Holden began to represent the worst business practices, which ultimately bring down winners. It indulged in some of the crazy, inconsistent model introductions I’ve referred to earlier – many of which made no sense at all, and added to the complexity of dealers’ stocks, parts and service support, for some models which lasted on the Australian market for just two years or less.

Then, probably the most dangerous of all business practices began to damage GM-Holden’s overall competitiveness, its approach to model pricing.

When you’re the big gun in town you can act with a swagger and a confidence that may not always guarantee continued success and domination, especially as Australia’s GDP growth and revenue inflows grew rapidly thanks to a mining boom, prompting many other carmakers to try their hand in the Australian market. 

GM-Holden acted like it was untouchable. GM-Holden’s pedestal was so high, it could barely recognize the newcomers as being any sort of threat.

Successive CEO’s and the company’s management began to believe it was still ‘Mr 56%’.

Thus, its pricing policies did not reflect the incredible growth of competitors entering the melee that became the cutthroat Australian new car market.

Holdens were always just that bit more expensive than comparable competitors.

Sure, Australia had seen that before, with the growth of Japanese cars in the 60s, but although the Japanese companies executed a slow and steady infiltration of the Australian car buyers’ choices, the Big Two managed to maintain their dominance thanks to decades of ‘just always being there’.

However, from the late 2000s competing carmakers began to find cracks in the market, where GM-Holden, especially, either didn’t have a competitive model, or it was priced a couple of thousand dollars higher. After all, we’re Holden; we’re a big player; we enjoy the complete confidence of the Australian car buying public.

Well, unfortunately that empirical thinking thing began to emerge as an almost simple answer to Holden’s failing competitiveness, and with resources metered out in such a way as to not damage its glorious Commodore’s continued success, the iconic badge began not only to lose its glitter, but also sales.

GM threw more and more of its resources at Commodore, strangling supply of much-needed marketing dollars and sales power to the rest of its car catalogue.

As I said, by 2009, or even maybe five years earlier it must have occurred to ‘someone’ at Fisherman’s Bend, or the Renaissance Center in Detroit, that this rosy patch could not remain in full bloom.

Guess what? It couldn’t, and it didn’t, and the giant gradually toppled off its pedestal, smashing into such tiny pieces that ‘Mr 56%’ has been reduced to ‘Mr 5%’ – sad, but true, and you know what? The saddest thing of all, is it’s entirely of its own making.

There are none so blind, they cannot see. In GM-Holden’s case it was a freight train of considerable size, with a great noise to go with it – how could they miss that coming at them at high speed?

It has been one sad decision after another, and made possible by the policy, or happenstance, of a revolving door of CEOs to run the Down Under Division. And, again, like Ford, GM-Holden struggled to create a successful small car strategy – evidence the failed JVs with Suzuki, Isuzu, Toyota, Daewoo, Opel et al.

It makes me think that Detroit didn’t really pay that much attention to Holden over the decades. It was just this strange indigenous part of the company, which made a car that appeared to be popular with those weird Australians.

That was also apparent in the flow of career-GM execs which came through Holden’s revolving door of CEOs, not understanding anything at all about Holden, or Commodore – that is with the possible exception of Denny Mooney and Mark Reuss.

Then, when it became obvious it was a BIG problem, it was too late.

All the Band-Aids in the world can’t save this company, or rebuild it to anywhere near its former dominance – even with the skills and patience which Dave Buttner (left) will have to invest in the next few years.

He's a good man, and a good operator, but he will be tested.

I hope he’s already negotiated a valuable exit package! 

ALLIANCE ANNULLED?

The much-vaunted joint venture policy (marriage?) between Mercedes-Benz and the Renault-Nissan-Mitsubishi Alliance appears to be over just a few years after Carlos Ghosn and Dieter Zetsche shook hands on the deal in 2014.

It’s not exactly a divorce, maybe just a ‘cooling-off’ decision between the marriage partners. The JV resulted in the construction of a USD$1 billion dollar joint manufacturing factory in Aguascaliente, Mexico, intended to manufacture Mercedes GLA, and its Nissan alternative, the Infiniti Q30 and Q30X hatchbacks.

Now Mercedes-Benz will operate the facility alone, producing its latest A-class model, an attractive four-door sedan.

The new model was unveiled in two locations in 2017, first as an AMG-designed GT concept at the Geneva Salon.

And then as the Concept A sedan, in Shanghai a few months later.

As later photos show, it's a thinly-disguised production model.

If the AMG production version looks anything like the concept, then Mercedes-Benz has backed another winner in the compact car sector.

The sleek, flowing rear end design contrasts sharply with the short, curtailed rear end of the donor A-class.

The A-Class (hatchback and sedan) is built on a new platform, codenamed MFA2. That platform is also due to underpin a new, smaller Mercedes-Benz SUV.

My Nissan insiders said a new premium Infiniti sedan, built on the MFA2 platform, would have been badged Q40, and also that car could even be ‘stretched’ to become a replacement for the ageing Q50.

However, in a statement late last year Carlos Ghosn announced that due to Infiniti’s lack of global sales growth, the Alliance would cease manufacturing the Infiniti clones, because of the high cost of using Mercedes-Benz engineering technology and German-designed manufacturing tooling.

It’s certain that the sales targets set by Infiniti (to justify the JV) were simply too aggressive. However, one of my closest friends in Germany tells me that the truth is that Mercedes-Benz denied Nissan access to the MFA2 platform.

The Carlos Ghosn version, as told to AUTOMOTIVE NEWS is: "The collaboration with Mercedes is going very well," he said. 

"Obviously, because it is a development platform, it will change. So yes, we started with this platform, then we discovered that it isn’t the best, so we change platforms.

"This does not mean that the collaboration stops. Every time we make a change in the project, it doesn’t mean that the project is dead.

"It’s just that we try to optimize as much as possible for the consumer. The collaboration will continue."

Infiniti Q30/30X production at Nissan's Sunderland UK manufacturing facility

However, the end of the JV is likely to financially impact not only the viability of the brand new facility in Aguascaliente; but also Nissan’s large facility in Sunderland, England, where it invested USD$306 million in Mercedes-Benz tooling to built the Infiniti Q30/Q30X.

UK sources tell me that Nissan intends to write-down the complete cost of the investment.

North America is still Infiniti's strongest market, selling a record-breaking 138,293 vehicles in 2016. However, in the rest of the world the brand struggles to survive in the brand-conscious premium market.

The success of Toyota’s Lexus division is also another bone of contention in Nissan’s Yokohama Boardroom, especially impacting investment decisions for any future Infinitis.

Driving the Infiniti brand to bigger volumes in the USA, where it is best known, absorbs huge amounts of incentive dollars to keep sales ‘on the boil’, whilst Toyota has skillfully guided Lexus to be appreciated as comparable to European premium competitors, and achieved far greater prominence worldwide than Infiniti.

Another joint Nissan-Mercedes project that bit the dust a year or so ago was for a potential replacement for Nissan’s ageing 370Z sports coupe/roadster. There had been discussions that perhaps one of the sketches you see below could have been built on a brand new Mercedes-Benz SLK platform, and maybe also built at Aguascaliente, but M-B has now said there will not be a replacement for the SLK.

If Nissan wants to replace the 370Z, it will have to come up with the funding all by itself.

That would be hard to justify. As I reported previously, Nissan’s Planning Manager, Phillipe Klein (right), has said that the Z-car sells into a rapidly-shrinking market segment, and although there are many sports car enthusiasts among the Nissan engineering ranks, the business case for a new Z-car is very weak.

I must also mention that an important element of the JV was for Mercedes-Benz to produce 2.0L petrol engines at its plant in Tennessee, to be used in future Infiniti and Nissan models. That deal continues for the moment.

Again, according to AUTOMOTIVE NEWS, “The setback may also show the limits of Ghosn's consensual approach to economies of scale as head of Renault, Nissan and Mitsubishi, whose 18-year-old alliance is underpinned by significant cross-shareholdings.

“The slow pace of integration has contributed to upheaval at the recently created alliance powertrain division, charged with converging Renault, Nissan and Mitsubishi engineering.”

Also since Carlos Ghosn handed over day-to-day running of Nissan to new CEO Hiroto Saikawa (right) another bump in the road has become more difficult to contend with. There is significant pushback by Nissan and its senior Japanese executives to Renault’s vice-like control of the Japanese carmaker.

Now the French-Japanese relationship is also looking more like a broken marriage, as the Japanese attempt to assert greater control over decisions involving Nissan-Infiniti, despite the success of the Renault-derived, cross-brand CMF platform (Common Module Family).

As I reported in DRIVING & LIFE in October 2016: “As of this year, more than 1.7 million different vehicles in the Alliance's catalogue will be built using CMF. By 2020 more than 70% of Alliance vehicles will use CMF. According to Ghosn, CMF will cut purchasing costs by 30% and cut 40% from overall engineering expenditure.

A major opportunity which may have existed for the Renault-Nissan Alliance was to 'export' the CMF concept beyond its own vehicles - and that's where CMF may have been attractive, even to a giant like Mercedes-Benz, which at present does not widely utilize modular architecture.”

Just as we were getting used to joint ventures of this scale, the rift between the Alliance and Mercedes-Benz reveals that partners with significant differences in their balance sheets may not always be totally compatible.

No one would doubt the quality and excellence of any engineering produced by Mercedes-Benz, but such high quality comes at a price, and it’s obvious that a large scale carmaker like the Renault-Nissan-Mitsubishi Alliance would have difficulty absorbing the high cost of M-B’s contribution, spread across price-sensitive vehicles competing for volume in the highly-volatile mass market.

That situation is even more alarming when it comes to asking Infiniti to accommodate high cost tooling and components, given its relatively low overall volumes, and its virtual invisibility in the broader global market.

The Alliance-Mercedes joint venture may have seemed like a good idea at the time, but when financial reality rears its head, pragmatists like Carlos Ghosn need to intervene to protect the base viability of the Alliance partners.

One of my former European colleagues tells me: "Despite the ‘cooling off’ period, Zetsche and Ghosn remained ‘committed to seeking out economies of scale where they may make good sense."

Sounds to me like a clever Renault PR guy authored that sentence.

It’s a fact the big bag of Euros, stashed under the bed at Mercedes-Benz are more plentiful than Carlos Ghosn’s cash pile, so I think while good intentions remain, we have probably seen the last Infinitis based on Mercedes-Benz platforms.

(Sketches and cartoon by Brendan Akhurst: www.oakwoodart.com.au)