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A frenzy of consolidation, much of it subsequently undone, followed. Of course, scale matters in the auto industry. But a deeper understanding of the cost drivers is critical. Honda, for example, is a relatively small car company. This might lead you to conclude that Honda would have a cost disadvantage. But Honda is the world’s largest producer of motorcycles, and overall it is a huge producer of engines. Since engines account for 10 percent of the cost of a car and Honda can share the cost of engine development across its product lines, this scope advantage offsets its overall lack of scale.
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Joan Magretta (Understanding Michael Porter: The Essential Guide to Competition and Strategy)