In 2008, Fiat's boss Sergio Marchionne said that there isn't much that the auto industry can do to survive but to endure a severe consolidation. He even went as far as to say that there couldn't be and there shouldn't be more than six big car manufacturers. Of course, he was dismissed at the time as an alarmist and bad news bear. But was he really?

Fact: There are far too many car manufacturers crowding the shrinking consumer pool. Fact: Costs of manufacturing cars are outrageous. Fact: The economic environment for car manufacturers is going to get exponentially worse as the demand for fuel-efficient cars rises, as governments around the world impose stringent carbon-dioxide emission controls, and as fastidious customers ask for cheaper, better looking and better performing cars.

When a market becomes so crowded, one way to remain competitive and increase one's market share is to become bigger. Fiat saw an opportunity to do just that when the company first completed a transatlantic deal with Chrysler and it is next targeting Opel, which is a bankrupt German subsidiary of General Motors. If and when this three-way combo pans out, the new entity would become one of the world's largest manufacturers, producing over six million cars a year, or as much as Volkswagen and just behind Toyota. For comparison purposes, without Chrysler and Opel, Fiat manufactures about 2.2 million cars a year.

Granted, Fiat merging with Chrysler and Opel is far from establishing a trend. So was Marchionne's prediction last year about the industry's outlook wrong after all? As always, there is no straightforward answer. The industry has little choice but to consolidate through mergers. However, these mergers are not likely to sprout like mushrooms after the rain. And, if and when they occur, merger combinations may come as quite a surprise.

First, there is much national pride involved in car manufacturing. And, second, it is not as if there are "for sale" signs all over the place in spite of ghastly declines in sales. Excluding "Volvo," owned by Ford, and "Saab," owned by GM, which are niche brands that could easily disappear without too many tears shed for them, the big ones still standing -- Ford, Toyota, Honda, Volkswagen, Daimler, BMW and some others -- have been pretty vocal about their ability to survive the recession on their own. Still, they have to be at least worried.

For example, Daimler, the manufacturer of the famed "Mercedes-Benz," reported a loss of $2.05 billion for the first quarter of 2009, after losing about the same amount the previous quarter, too. Car sales declined by 27%, prompting Daimler to call for a brutal 2009. Recently, Daimler needed to raise capital and it did so to sell a stake in the company to an Abu Dhabi fund. And Daimler's takeover protection measure, its poison pill in the form of a 22.5% stake in EADS, which is the European aerospace conglomerate that owns Airbus, has become too expensive. So, in a way, Daimler could be sporting a huge bull's eye on its back.