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About this book

Analysing developments in digital technologies and institutional changes, this book provides an overview of the current frenetic state of transformation within the global automobile industry. An ongoing transition brought about by the relocation of marketing, design and production centres to emerging economies, and experimentation with new mobility systems such as electrical, autonomous vehicles, this process poses the question as to how original equipment manufacturers (OEMs) and newcomers can remain competitive and ensure sustainability. With contributions from specialists in the automobile sector, this collection examines the shifts in power and geographical location occurring in the industry, and outlines the key role that public policy has in generating innovation in entrepreneurial states. Offering useful insights into the challenges facing emerging economies in their attempts to grow within the automobile industry, this book will provide valuable reading for those researching internationalization and emerging markets, business strategy and more specifically, the automotive industry.

Table of Contents


1. Introduction: Changing Geographies and Frontiers of the Automotive Industry

The automotive industry (AI) shaped the industrial contours of the global economy in the twentieth century and continues to be a key player in the current vast socio-technical transition spurred by the digital revolution and the search for new mobility systems. While these processes evolve, there is a growing expectation that electrical and autonomous vehicles along with business and labor models based on online platforms and interconnected systems will come to transform the whole AI as we know it.
Alex Covarrubias V., Sigfrido M. Ramírez Perez

Developed Countries: Old Geographies and New Frontiers


2. Overview of the U.S. Automobile Industry

As recently as 1950, more than one-half of the world’s vehicles were registered in the United States, and more than three-fourths of the world’s vehicles were produced in the United States. Early in the twenty-first century, the United States is no longer the world’s leading producer of vehicles, but it continues to be home to the largest number of them by far.
This chapter provides an overview of the U.S. auto industry. We start by discussing the major disruptive forces currently facing the industry. In the second and third sections, we focus on the market for vehicles as well as different aspects of the production of vehicles. Section four briefly discusses the role of the government. We conclude with providing a brief outlook for the industry.
Thomas Klier, James Rubenstein

3. Canada’s Automotive Industry: Recession, Restructuring, and Future Prospects

After several decades of growth, Canada’s automotive industry reached peak levels of production and employment in 1999. The growth of the automotive industry in Canada was the result of innovative trade policies, labor cost, and productivity advantages vis-à-vis the US, and favorable currency exchange rates. However, these competitive advantages diminished, production and employment contracted, and Canada’s automotive industry underwent significant restructuring.
This chapter examines the restructuring of Canada’s automotive industry in the twenty-first century in the context of Canada’s shifting role in the global automotive industry. More specifically, the chapter examines changes in the industry structure, international trade, employment relations, and public policies implemented by the governments to support the industry. The chapter concludes with a discussion of the future prospects for Canada’s automotive industry.
Brendan Sweeney

4. The 2015 Volkswagen ‘Diesel-Gate’ and Its Impact on German Carmakers

For many years, the Volkswagen consortium cheated governmental authorities, customers and the public by promising that their Diesel cars had very low emissions whereas these were actually much higher. This chapter discusses the questions if Volkswagen was affected by the Diesel-Gate since 2015 in terms of sales and how this continuing cheating could be explained in terms of organization theory. First, the development of sales, shares, employment and production after 2015 will be analysed concluding that at, a global level, there was an astonishing stability. Second, the main reasons for this continuity of ‘business as usual’ will be studied for Volkswagen and other carmakers who also manipulated their Diesel engines. Finally, the chapter tries to explain management’s acting and reasons.
Ludger Pries, Nils Wäcken

5. Searching for Industrial Policy: The Long Decline of the French Automotive Industry

Starting from the second half of the 2000s the French automotive industry has fallen into a spiral of decline. This chapter analyses the main causes of this prolonged crisis as well as the main policy responses to it. It shows that most of the ad-hoc measures taken during the crisis to prevent the collapse of the industry have proven successful. However, the attempts to address the structural causes of the decline and restore the long-term competitiveness of the French automotive industry had failed to produce positive results. Further, it discusses the future prospects for the French automotive industry at the light of two ongoing major transformations: the shift towards electro-mobility mainly driven by new post-“Dieselgate” (emission scandal) European Union regulations; and the long-term transition towards autonomous driving pushed by the entry of companies from Silicon Valley.
Tommaso Pardi

6. Britain’s Car Industry: Policies, Positioning, and Perspectives

The British car industry is distinguished by high levels of foreign ownership, an export-oriented production sector, and an import-oriented domestic market. It faces two major challenges: the struggle to achieve sustainability and looming Brexit. A new industrial strategy for Britain has also identified new forms of automobility, exploiting digital technologies and the potentials for autonomous and connected engine technologies, as key issues for national industrial strategy. This chapter explores these facets of the industry in the context of the spatial, technological and policy positioning of the sector.
Dan Coffey, Carole Thornley

7. The Italian Automotive Industry: Between Old and New Development Factors

The Italian automotive industry highlights particular characteristics compared to other countries. In Italy, there is only one important assembler, Fiat Chrysler Automobiles, which is one of the most important European automotive supply chain, characterised by a clear predominance of SMEs (Small Medium Enterprises) that were once dependent on the national producer.
The last decade has marked important changes in this historical condition. First was the internationalisation process of Fiat Chrysler Automobiles. Second, the economic and financial crisis has generated strong repercussions on the automotive industry, which, since 2008, has recorded a sharp decline in car production, especially in Italy.
Based on this ever-changing scenario, this chapter analyses the restructuring process of the Italian automotive supply chain and which development factors have changed over time.
Giuseppe Giulio Calabrese

8. The Japanese Automotive Industry Since 2000: Causes and Impacts of Growth Disparities

Heim offers a much-needed overview of the recent evolutions of the Japanese automotive industry. The analysis sheds light on the polarization of the Japanese auto supply chain since the 2000s. While Japan’s auto industry is still central in the Asian production network, the growth disparities triggered by the economic recession of the 1990s and 2000s have resulted in a less balanced redistribution of the sources of profit. This caused the population of the smallest firms to decline, and, in turn, the industrial compromise that fostered specific work incentives, strong ties, and a well-balanced division of labour in the supply chain to be reshaped. This also affects the product mix between internal combustion engines and alternative powertrains, which is tied to transport and energy policies.
Stéphane Heim

Making It to the Top: Failing from the Top


9. Catch-up to Lead in Korea’s Automobile Industry

The dynamics of Korea’s technological learning since the 1960s transformed itself from “catch up to lead”. Hyundai Motor, founded in 1967 with its affiliated firm Kia Motor, shows the typical example of a rapid catch-up to lead as it has joined the top five global automobile makers in 2009. This chapter aims to answer the question: What are the major factors of the rapid catch-up in Korea’s automobile industry? The government policy, corporate strategy, demand, entrepreneurs, MNC’s involvement, knowledge base, and the bases of the parts industry are important factors. Hyundai and Kia have met another challenge to be competitive in future vehicles. This research could give meaningful implications on how to develop the automobile industry as a stepping stone to the industrialization of the nation.
young-suk Hyun

10. Who Killed the Australian Automotive Industry: The Employers, Government or Trade Unions?

The decision by the three multinational automotive manufacturers—Ford, General Motors and Toyota—to cease production in Australia followed a long period of decline in the local industry. This paper examines the factors potentially contributing to these decisions including reductions in government assistance to the industry, the volatility in exchange rates, global strategic decisions by the parent companies to shift production to expanding markets in Asia, and the role of industrial relations and trade unions. Despite the attention given in public discourse to industrial relations arrangements in supposedly hastening the demise of local automotive manufacturing, we find that this factor made no identifiable difference to the final decisions of the parent companies in Tokyo and Detroit to cease production in Australia, which can be attributed to an unfavourable conjuncture of factors. The paper concludes by considering possible options for retaining some aspects of automotive manufacturing in Australia in the future.
Stephen Clibborn, Russell D. Lansbury, Chris F. Wright

Emergent Countries: New Geographies Struggling for Trespassing Frontiers


11. The Automotive Industry in China: Past and Present

This chapter traces the emergence, expansion and diversification of the automotive industry in China through the lens of changing industrial policy priorities, exploring the implications for innovation and employment relations. Limitations of a joint-venture-centred model in developing domestic brands and NEVs have induced recent policy shifts in favour of private domestic manufacturers, increasing the pressure on global OEMs to innovate. At the same time, and despite increasing labour cost, employment relations continue to be characterised by segmented labour markets, precarious employment and conflicts. While China’s push for NEV development has ripple effects on global markets and the innovative capacity of the industry as a whole, a break with established labour practices is unlikely.
Frido Wenten

12. The Indian Automobile Industry: Technology Enablers Preparing for the Future

India is now the fourth largest auto market, and the authors analyse how its position hinges upon established domestic firms and original equipment manufacturers and a strong market in terms of both the domestic demand and exports. Against this backdrop, the study examines how the adoption of emerging technologies among the companies is facilitating the Indian automobile industry to grow and remain competitive. To this end, the authors discuss the enablers of changing competitive landscape in the industry and analyse the Indian government’s strategies and policies to facilitate the navigation on it of domestic players.
Biswajit Nag, Debdeep De

13. The Boom of the Mexican Automotive Industry: From NAFTA to USMCA

After half a century of attracting foreign direct investment (FDI) flows and becoming one of the three hotspots in the global automotive industry, Mexico has been unable to advance in upgrading and catching-up, other than in processes—not in terms of products and even less so in design. Furthermore, it does not have its own industry and largely depends on cheap labor to preserve its competitiveness. In comparison with the Asian entrepreneurial state, what we have referred to as the Mexican syndrome, represents the unintentional effects of being inundated by global value chains (GVCs) and FDI flows.
Alex Covarrubias V.

14. The New Geography of the Automobile Industry: Trends and Challenges in Brazil

Brazil has become one of the core locations of the automobile industry. In 2015, Brazil was among the world’s ten largest producers of automobiles and among the largest automobile markets, despite its decline in the last two years due to an internal economic crisis. This discussion paper intends to present an overview of the Brazilian automotive industry, emphasizing national public policies.
The Brazilian automotive industry evolved over the past 60 years through four clearly defined steps, from importer to local producer with a limited degree of autonomy in local projects. In fact, undergoing these steps has been related to market importance and attractiveness, government influence through regulations and the development of the “global” strategy of the main manufacturers.
Roberto Marx, Adriana Marotti de Mello, Felipe Ferreira de Lara

15. Automotive Industry Dynamics in Central Europe

The authors shed light on the development and the current position of Central Europe in the European automotive production networks in the context of industrial upgrading and territorial embeddedness of transnational corporations, with particular emphasis on Poland. Special attention is given to the emergence of non-production functions, especially research and development centers and design capabilities. In addition, the role of local (domestic) producers is explored. Prospects and determinants for further development and upgrading of the automotive sector in Central Europe are discussed, including the ability of domestic suppliers to build a stronger position in the value chain and the functional upgrading of foreign subsidiaries.
Robert Guzik, Bolesław Domański, Krzysztof Gwosdz

Institutional Constraints on Upgrading: The Case of Vocational Education and Training Systems


16. Skills on Wheels: Raising Industry Involvement in Vocational Training in the Czech Republic, Slovakia and Hungary

The industrial renaissance in East Central Europe and the spectacular success of its automotive sector has been largely driven by foreign investment. Foreign firms import capital, technology, and even supplier networks; this leaves labour as the only locally produced resource and the most directly available “lever” for the host governments to ensure their countries’ long-term competitiveness. Yet so far, their success has been limited, if one is to judge by the growing alarm over labour shortages in the region. This chapter argues that part of the reason for the slow adjustment of the region’s skill systems has been the lack of commitment on the part of employers to commit to institutionalised involvement in vocational training. Instead, what we see is the emergence of policy experiments at various levels of governance. This chapter documents some of these policy experiments in Slovakia, Hungary and the Czech Republic, in order to outline some of the more successful practices as well as to identify potential areas of conflict in the ongoing transformation of the regional vocational training systems.
Vera Šćepanović

17. Finding Skills: Strategies of Local Auto Parts Supplier Firms in Mexico and Turkey

This chapter investigates how the local auto parts suppliers in Mexico and Turkey find production workers with necessary skills, namely their “skilling strategies”, which include their recruitment and training practices. The chapter discusses how the institutional arrangements in Mexico and Turkey affect suppliers’ strategies to find workers with necessary skills. In this regard, it investigates the public vocational education and training (VET) systems, labour market regulations, as well as other regulations and arrangements that affect firms’ training and recruitment practices. The research in this chapter is based on in-depth interview data with eight auto parts suppliers in Mexico and Turkey, as well as interviews with various stakeholders of the VET system and the automotive industry in August 2014–November 2015 in the two countries. The chapter shows that the national institutional arrangements in fact have substantial impact on firms’ training and recruitment decisions.
Merve Sancak



18. Wrapping Up: The New Geographies and Frontiers of the AI have Arrived. Who is Taking the Lead?

We crafted this book to offer a fresh and comprehensive account of the far-reaching transformations experienced by the automotive industry (AI). We called for studies and frameworks that better help us to decode the nature and internal logic of such transformations along with the reconfiguration of the industry’s geographical, technological, organizational and institutional footprints. The 18 country cases analysed allow us to find out a set of common tendencies across national frontiers, coloured by the embedded nature of players, government institutions and local market environments. In what follows, we reflect on these findings around five thematic issues, namely changing geographies (relocating production centres, displacing markets and product cycle revitalization), actors’ strategies (power geometries and struggles for the industry leadership), industrial relations systems (wages and labour relations), industry transitions and government policies.
Alex Covarrubias V., Sigfrido M. Ramírez Perez


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