Global Automotive Industry Research Articles

Getting to global: An evolutionary perspective of brand expansion in international markets

The globalization of brands is an evolutionary process that is determined by environmental and firm-level factors, including a brand's position in the firm's global brand architecture. A framework is developed incorporating aspects of environmental uncertainty, mimetic behavior, and experiential learning as they relate to the globalization of brands. Global brand architecture is introduced as an important strategic consideration of a brand's position and stage of internationalization. The hypotheses are tested within the context of the global automotive industry, employing an event history analysis with time-varying covariates. The results reveal complex effects with respect to the role of market attractiveness, experiential learning, and mimetic behavior in globalization patterns. Overall, this study suggests that firms can accelerate the process of creating global brands if they enter the three major continents in the early stages of international expansion.

Developments in automotive plastics

Mike and Pam Brady report from the Society of Plastics Engineers (SPE)'s third annual Automotive Engineering Plastics Conference (AutoEPCON), entitled Design, Materials, Processing, & Use of Engineering Plastics for the Global Automotive Industry.

Supply chains and locational adjustment in the global automotive industry

This paper helps to set the scene for this special issue on automotive restructuring and policy responses. It starts by providing a brief introduction to the different inventory and supply-chain management approaches dominant within the industry at different stages of its evolution, before moving on to outline the spatial implications of these different approaches. The paper then presents a transactions–costs conceptual framework for analysing key features of the auto manufacturing and supply-chain system, using a taxonomy approach. The paper concludes by highlighting the spatial and policy implications for the auto industry which arise from such a transactions–costs analysis. Interestingly, the logic of both a transactions–costs approach and a consideration of knowledge spillovers both point towards the increasing spatial concentration of higher value-added activities. This may have a number of policy implications in terms of the industrial, technology and regional policies required to support and sustain such higher value-added activities. This is also consistent with the view that globalization leads to greater spatial dispersion, as the latter tends to be dominated by lower value-adding activities, with the core locations progressively moving towards higher value-adding activities. Overall, the opposing positive and negative impacts on regional ‘winners’ and ‘losers’ will be more greatly amplified than would previously have been the case. As such, regions benefiting from the immigration of integrated supply-chain networks will tend to maintain their advantageous position in the industry over time. On the downside, regions which lose such supply-chain systems, as seen over the last two decades in many regions in the US, UK and Australia, face a challenging situation, with very limited prospects for redeveloping such systems via policy initiatives.

Staying alive in the global automotive industry: what can developing economies learn from South Africa about linking into global automotive value chains?

The insertion of the South African automotive industry into the global mainstream of vehicle manufacturing highlights a number of valuable analytical lessons for developing country automotive economies. The global value chains that dominate the automotive industry have fostered substantial upgrading within the South African automotive industry but pervasive international trends also limit the opportunities for value addition and more substantial increases in vehicle output. Key trends in this regard relate to tightening market conditions in the developed economies into which South African vehicle producers and automotive component manufacturers supply, excess global production capacity and the emergence of new low cost production locations principally in Asia. The benefits to the South African automotive industry of engaging in global value chains are clear but the long term sustainability and development of the industry remain in question. The importance of industrial policy in shaping any national indus...

Value chains, networks and clusters: reframing the global automotive industry

In this article, we apply global value chain (GVC) analysis to recent trends in the global automotive industry, with special attention paid to the case of North America. We use the three main elements of the GVC framework—firm-level chain governance, power and institutions—to highlight some of the defining characteristics of this important industry. First, national political institutions create pressure for local content, which drives production close to end markets, where it tends to be organized nationally or regionally. Second, in terms of GVC governance, rising product complexity combined with low codifiability and a paucity of industry-level standards has driven buyer–supplier linkages toward the relational form, a governance mode that is more compatible with Japanese than American supplier relations. The outsourcing boom of the 1990s exacerbated this situation. As work shifted to the supply base, lead firms and suppliers were forced to develop relational linkages to support the exchange of complex uncodified information and tacit knowledge. Finally, the small number of hugely powerful lead firms that drive the automotive industry helps to explain why it has been so difficult to develop and set the industry-level standards that could underpin a more loosely articulated spatial architecture. This case study underlines the need for an open, scalable approach to the study of global industries.

Factors Influencing Brand Launch in a Global Marketplace

The purpose of this study is to explore the factors that influence the launch of brands into new markets in a global environment. Although multiple streams of literature exist with respect to the entry of brands into new markets and the diffusion of new brands within and across markets, the process of launching products and brands globally over time has received relatively limited attention. To address this issue, this study incorporates multiple indicators of activities that can contribute to experiential learning relevant for launching brands in a global marketplace. Market uncertainty and experiential learning provide a conceptual foundation for the development of relevant hypotheses, which are tested in the context of the global automotive industry from 1981 to 2004. A discrete time event history analysis with time‐varying independent variables is employed to estimate the effects of the independent variables on the probability of a brand being launched in a specific market. The global brand launch observations are extracted from a proprietary dataset containing the global dispersion of automotive brands including 22 countries of origin and 42 countries of brand entry. The sample yields 50,572 spells, derived from 99 companies, 173 brands, and 700 market entries. The results of this study contribute to the literature in a variety of ways. Market attractiveness positively influences the propensity of a brand to be launched into a new market. This supports the idea that potential demand conditions are an important managerial consideration in product introduction decisions. The results reveal significant effects with respect to the role of psychic distance and experiential learning. Brands are reluctant to launch into countries that are culturally and economically less similar to the home market. Yet firms tend to place a lower degree of emphasis on factors of cultural distance when launching brands into larger markets, and global experience enables companies to overcome the uncertainties associated with launching brands into international markets that are economically distant. The results also suggest that companies are more likely to introduce additional brands in markets where they already have a presence. Overall, global dispersion and geographic scope, coupled with local market knowledge facilitate the launch of brands globally. From a managerial perspective, this study suggests companies should focus on acquiring both local and global experience to facilitate the launch of products and brands in the global marketplace.

Product quality as a determinant of product innovation: an empirical analysis of the global automotive industry

Manufacturing firms innovate to satisfy consumer demand, increase market share, increase profits, and thereby remain competitive in the global market. Theoretically, potential determinants of innovation have been systematically totalled to confirm the internal and external sources of innovation capability. This study aims to clarify the relationship between product quality and product innovation. Considering the patenting activities and product quality of global vehicle manufacturers, regression analyses demonstrate that automakers actively engage in product innovation if they produce high-quality products. Furthermore, this investigation also indicates that automakers of different nationalities will generate significantly different levels of product innovations, namely: Asian automakers issued more patents than their European and US competitors. This study indicates that product quality determines product innovation.

The overseas entry patterns of Japanese automobile assemblers, 1960 2000: globalisation of manufacturing capacity and the role of strategic contingency

This paper explores the world-wide overseas entry patterns of the Japanese automobile industry for the period between 1960 and 2000. One widely accepted view of the entry patterns of Japanese automobile and component part manufacturers is that they can be explained within the context of 'firm specific' advantages and the globalisation strategies of lean producers. However, this paper proposes that strategic contingency might also be important, in the sense that the overseas location decisions of Japan's main assemblers are interdependent and conditioned by relations of oligopolistic rivalry. This hypothesis is tested using data on the successive entry decisions of Japanese assemblers and suppliers around the world over a 40 year time frame. The results indicate the extent to which oligopolistic interdependence between actors is a prevailing influence within the global automotive industry.

The future of the Asian auto industry: regional integration, alternative designs, and Chinese leadership

This paper provides a critical analysis of the key drivers behind the future of the automotive industry in Asia. It argues that three changes will condition the evolution of the Asian auto sector. First, the Asian region will rapidly progress towards an integrated market and, as a whole, will play a central role in the global automotive industry. Second, alternative vehicle designs specific to the emerging Asian markets can be expected to emerge and form a second tier market. Political and economic advantages exist for the bodies of these vehicles being of fiber-composite resin materials instead of the steel of traditional vehicles. Finally, China will increasingly play a leadership role in the region, driving the regional economic integration process and establishing itself as critical base and destination for automakers and suppliers. The paper also addresses the evolving regional division of labor in Asia and how differences across countries, automakers, and suppliers may play a role in the emerging context.

The Global Automotive Industry Value Chain: What Prospects for Upgrading by Developing Countries

The paper opens by mapping the changes in the global auto industry in the 1990s, showing how the rapid growth in sales and production between 1990 and 1997 came largely from the emerging markets rather than the Triad regions (North America, the European Union and Japan). However, for some of these markets the downturn that followed was substantial and prolonged. The emergence of regional production systems resulted in regional integration. This created opportunities for industrial upgrading in developing countries with links to one of the Triad regions, where a major part of production still takes place. The paper then describes how the relationship between assemblers and suppliers has changed. There is a growing preference for using the same suppliers in different locations (follow sourcing), which limits the possibilities for component supplying by local producers in developing countries. However, opportunities in second-tier sourcing, where a global reach is not required, do exist. The paper shows that developing countries can increase the possibility of integration into the global value chains of transnational automotive companies by opening up their domestic markets. It concludes with emphasizing the importance of fostering networks of small firms in developing countries as a means of entering new markets.

Internet-enabled supply chain integration: Prospects and challenges for the South African automotive industry

The impetus for supply chain integration (SCI) in the global automotive industry is being driven by the Internet. The article critically explores the potential of the Internet to optimise and streamline the complex supply chains found in the South African automotive industry. The Internet's potential to create seamless, collaborative supply networks could provide the local automotive industry with a distinctive competitive advantage in its pursuit of an 'outward orientation' and 'global connectedness' after a lengthy period of trade isolation and government protection. The findings, however, reveal that domestic automotive firms are generally not using the Internet for substantive interbusiness trade and advanced SCI. By not making the transition to Internet-enabled SCI, South African automotive firms may be placing themselves at risk of becoming less competitive in the globally interconnected market, which will impact on both their current market positions and long-term viability.

Advancing automotive technology

The next five years will be extremely crucial to the global automotive industry. In facing many challenges, not least continuing over capacity, most manufacturers are looking for ways to bring back the customer, boost brands, and so improve shareholder value, profitability and market share. The answer, apparently, is technology. Automotive executives now deem technology as the key to future profitability and expect to usher in a wave of technological advancements.

TDI Based Automotive Seating: Solutions for Enhancing Foam Durability

Improving the comfort and durability properties of automotive seating is an increasingly important issue within the global automotive seating industry. The technology for enhancing the comfort properties of polyurethane foams is one of the major needs of seating foam manufacturers and seat producers, whose focus is both foam density reduction and overall weight reduction of car seats. Shell Chemicals has therefore embarked on a fundamental program, focusing on the foam formulation durability relation of TDI-based foam grades. The study consists of a thorough investigation of the influence of independent formulation variables such as raw materials composition, water level and ancillary chemicals levels on foam processing and durability performance. A statistics driven experimental approach (central composite and full factorial designs) helped to increase the predictive power of the outcome, concerning overall mechanical foam properties and comfort performance in particular.

Modular assembly strategy in international automotive manufacturing

Modular assembly is expected to revolutionise the global automotive industry. Instead of the leading makers assembling automobiles, suppliers will assemble vehicles for them. Most of the leading manufacturers are building modular facilities. Many of them are already in operation. This article explains how modular manufacturing works. It examines how modular assembly fits into the international manufacturing strategies of leading automobile producers. The benefits and risks to automobile companies and their suppliers are reviewed.

A resource-based analysis of sustainable competitive advantage in a global environment

The extant business literature on global competitive advantage has been dominated by a contingency-based approach, which advocates the attainment of fit between the firm's strategy, structures and processes and its competitive conditions. However, most support for this view has been anecdotal and rigorous empirical evidence has been lacking. This study adopts a more voluntaristic stance, and integrates perspectives from international business and strategic management to propose a resource-based model of global sustainable competitive advantage (GSCA). A series of hypotheses are presented on the nature of global resources and on the relationships between these resources and sustained superior performance. The model is tested on a sample of firms in the global automotive components industry with promising results. Conclusions are drawn and the implications for research and practice are outlined.

Platforms: engineering panacea, marketing disaster?

For the global automotive industry, platforms are the panacea of the 1990s, the perfect way to combine economies of scale, globalisation, multi-branding, and rapid rates of new product introduction. This paper explores the production and marketing logic of platform strategies within multi-brand constellations. The production logic of platforms is demonstrated together with the implications for steel supply. However, attention is also drawn to the potential problems with platform strategies.

Marketing Cooperation in Automotive Strategic Alliances

ABSTRACT The increasing numbers of strategic alliances formed in many industries have been noted and discussed since the 1980s. This paper describes and analyzes change and stability in the patterns of cooperation that occurred within the global automotive industry during the period 1991–1995, with a particular focus on marketing and distribution cooperation. The geographical reach of marketing alliances is analyzed. The scope of the cooperation that occurs within inter-company alliances with marketing contents is also discussed, and the effect of participation in marketing alliances on individual actors is addressed. Using structural network methods, two measures of centrality are used and compared in order to determine the most central actors. The consequences of maintaining positions with different degrees of centrality in the alliance networks are discussed. The use of longitudinal data allows for analyses of the dynamic, changing nature of marketing alliances in the broader context of other forms of cooperation.

Alternative fuels: Challenges and opportunities for the global automotive industry

The second largest revolution in global automotive manufacturing is currently under way: the race to develop environmentally clean, cost-effective, yet user-friendly automobiles. Despite being the world's largest automobile producer, the United States is currently not ranked within the top 10 countries in the development of alternativefueled vehicles worldwide. Bold government decisions and a unified industrial strategy seem to be the key components of success as demonstrated by Brazil, the EC countries, New Zealand, Japan and Canada. This essay stems from an article that was first published in-house by the U.S. International Trade Commission in July 1993.