Amid the parent group’s intention of selling the whole business, Matra Automobile was facing the following challenges (in the order of importance): 1.
Organisational Structure not Fit for Purpose
The 21st century automobile production has shifted to focus on two elements: “Platforms” and “Modules” . As such, the subcontracted assembly operations, which Matra was highly successful, would be significantly reduced. In addition, automobile engineering was shifted towards specialised smaller companies, unlike the size of Matra. As a result, Matra would need thorough organisational restructuring to re-align its corporate functionalities, which would be a lengthy, costly process. 2.
“Accidental Success” not Sustainable Profitability
Matra’s hugely successful 1990s was largely due to the ground-breaking Espace model and its alliance with Renault. However, the monospace minivans market was in declining together with the sales figures of Espace . In addition, Matra’s Avantimes did not have the first-mover advantage as Espace had in the past. The future of another innovation model, m72, was far from certain. Furthermore, the Renault-Matra alliance experienced increased difficulties. Matra’s heavy reliance on partnership with big automobile companies could be proven costly in the long term. 3.
Lack of Systematic Corporate Strategy & Market Positioning Matra had a rather confused history of evolvement from a successful racing team to a substandard passenger car developer, until it hit the “jackpot” with the Espace success in partnership with Renault. At the group level, Lagardere planned to focus on its core businesses of media, publishing, hi-tech etc. Matra’s automobile business only typically contributed less than 10% of the group’s net after tax earnings . Additionally, Lagardere family’s leadership had strategically withdrawn Matra from motor racing right after it peaked. It might apply the same logic to sell the business once-and-for-all, after...
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