Driving off with your rivals?

Could collaborating with your competitors to address specific threats in your industry work? Some car manufacturers seem to think so. Sarah Healey Pearce thinks around the issue.
 
Recently, the motor industry has seen competing companies joining forces to collaborate on how to address the significant technological changes predicted in their industry. The continuing development of electric vehicles, driverless vehicles and schemes such as car rental/borrowing could transform the way we view car ownership in the not too distant future, and will undoubtedly impact traditional motor manufacturers. The cost of R&D and further developing these new technologies will run into billions and the risk of getting it wrong could be huge.
 
I suspect that these developments form a large part of the reason for the collaborations: BMW and Daimler, Ford and VW, Tesla and Daimler to name a few, and while they are collaborating on certain projects, they will still remain competitors in many areas.
 
It’s a really interesting idea – joining forces with your competitors to address industry threats – and one that we don’t often see in the smaller business field due to natural and justified concerns about confidentiality and competitive advantage. But with the way technology is affecting so many industries, perhaps this could be a way forward for some? It would need to be thought about carefully with the correct documentation in place at the start, but it might just enable businesses to mitigate risk and move into new markets.
 
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Sarah Healey Pearce is a Director in our Corporate Finance and Business Advisory teams, regularly advising clients on transactions. To get in touch with her please call 0330 058 6559
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