The recently announced takeover of Britain's Rover Group by Germany's BMW is goading the big European auto giants to team up in some way in the next few years, whether through mergers or strategic alliances. The Rover deal makes BMW more of a threat, doubling its European market share to 6.4%. Added pressure comes from inroads made by Japanese rivals. London-based consultant Karl Ludvigsen says Europe's biggest producers must each boost their shares to 20% to 25%, up from 10% to 16% now, to remain strong global competitors. Hence, new couplings will be necessary.

Fiat, financially weak and overdependent on the Italian market, seems the ideal merger candidate. France's Renault, whose planned linkup with Sweden's Volvo just died, is talking with Fiat on a joint venture for component production. Some speculate marriage is possible once Renault is privatized this year or next. Analysts say medium-sized Volvo can't survive without a merger. A possibility: Mitsubishi, already in a joint venture in a Dutch auto plant. Money-losing Porsche insists it will stay independent, but it may merge with Volkswagen, which has developed a station wagon with its fellow German carmaker.


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