US Automakers Research Articles

Lithium producers show interest in the US

Strong demand for lithium, used to make batteries for electric vehicles, is increasing interest in extracting the mineral within the US. The lithium price index of the consulting firm Benchmark Mineral Intelligence is up about 240% since the beginning of the year. In November, the Chilean lithium chemical maker SQM reported that profits from its lithium business more than doubled during the first 9 months of 2021 compared with the same period in 2020. The company expects lithium prices to be even higher in the fourth quarter. “These results were driven by considerably higher sales volumes and prices,” SQM CEO Ricardo Ramos said on a conference call. “Demand in lithium markets is exceeding our previous expectations.” The US gets most of its lithium from South America, where it is produced cheaply by pumping lithium-rich brines into large ponds and letting them evaporate. Some US automakers want a domestic source to

What's Next for VEBAs? The Impact of Declining Employer-Provided Health Care Coverage and the Affordable Care Act

A voluntary employee beneficiary association or VEBA, is a U.S. tax-exempt organization set up to pay for employee health and welfare benefits. The 2007 establishment of a stand-alone VEBA trust funded by the Big Three US automakers and managed by the UAW seemed to mark a defining moment for employer-provided retiree health care benefits. After years of declining employer-provided medical benefits, the VEBA trust seemed to offer an innovative structure to maintain these promises while moving the liability off of the employer's balance sheet. Nevertheless, the 2008 financial crisis and government-assisted bailouts of GM and Chrysler immediately tested the stand-alone VEBA structure. Additionally, the passage of the Affordable Care Act is expected to accelerate the decline of employer-provided retiree health care benefits. With retirees able to receive medical coverage through the Affordable Care Act's health care exchanges, the number of VEBA plans has already begun to decline. VEBAs will still serve a purpose as a tax-advantaged benefit funding mechanism and will be important for companies in financial distress looking to reduce the level and uncertainty of their significant benefit liabilities.

지엠의 글로벌 전략 변화는 성공적이었는가? : 2018년 한국지엠 군산공장폐쇄를 중심으로

One possible way to understand the situation of GM Korea's which received ₩810 billion from the Korean government in 2018, is to know how GM has managed its global strategy and to evaluate whether the strategy has produced good results. We looked at the failure of ‘World Car’ strategy, M&A strategy and the failure of it, and the rise of Korea GM. We saw that GM’s trial of selling Opel after GM’s bankruptcy and the strategic reduction of GM Korea’s production ability as a result of the reversal of the decision. As a result of such failures, GM had to sell Europe GM and had come to close the Gunsan factory in Korea. We can summarize the GM’s new strategy as follows. In the North American market, low oil prices and high tariffs are favorable for light commercial vehicles. The second strategy is to raise relatively high profits through cheap cars in the Chinese market. All other markets are virtually withdrawn or passive. From this point of view, GM Korea’s production capacity is not important, and the 2018 ROK-US FTA renegotiation has also contributed to this strategic goal. As a result of the renegotiation, first, GM defended the US market from Korean auto-makers, because Korean automobile companies that have developed pickup trucks for the US market will not be able to sell them to the US market till 2040. The second is that the US auto-makers can export to Korea 50,000 units per brand per year without being regulated by Korea, so GM can sell cars as much as that of have been sold in Korea. According to the contract which was agreed between GM and Peugeot, GM will be able to enter the European market again from the beginning of August 2020. Looking at the above, the goal of GM want to get through GM Korea is expected as follows. First, improve cash flow by securing subsidies from Korean government. Second, they will close one or more factories including Gunsan factory. Third, GM Korea will lower its cost structure through labor negotiations. Fourth, maintain the research manpower until 2020 and carry out model changes to be put into European market after summer 2020. Finally, by 2020, it will hire a new worker at the time of entry into production and will try to re-enter the European market with significantly lowered labor cost. In other words, at least until 2020, it is expected that GM Korea will reorganize its company as a research-centered organization and maintain its production capacity minimum. So, it is necessary to impose certain legal obligations on the management of multinational corporations in Korea. In other words, it is necessary to make a law to force the intellectual property right made by the investment of a corporation in Korea to belong to a Korean subsidiary.

Safer or cheaper? Traffic safety, vehicle choices and the effect of new corporate average fuel economy standards

The new Corporate Average Fuel Economy (CAFE) Standards increase fuel economy to 54.5 MPG by model year 2025 and determine fuel economy targets based on vehicle sizes. This paper examines the effect of the new CAFE standards on consumer choices and composition of vehicle sales, accounting for the impact of traffic safety. We first formulate and estimate a mixed logit model of consumer demand using micro-level data. Two measures of traffic safety, consumers’ safety concerns and traffic fatalities, are included and interacted with two vehicle characteristics that matter most for traffic safety: weight and size. Further, we conduct simulations of three extreme firm responses to assess the potential impact of the new CAFE standards: lightweighting, paying CAFE fines, and size increase. Simulation results suggest that the sales impact will fall almost entirely on the SUV and light truck segments and on US automakers that use lightweighting. Moreover, consumers in states with more traffic fatalities are the most responsive, shifting away from passenger cars. In addition, the new CAFE standards could result in an increase of 8.1 percent in the share of SUV and light trucks, which will cause as many as 347 more equivalent fatalities on roads each year.

Analysis of corporate average fuel economy regulation compliance scenarios inclusive of plug in hybrid vehicles

The US Corporate Average Fuel Economy (CAFE) standards regulate the fleet fuel economy of automakers that manufacture and sell automobiles in the US. CAFE standards will increase by 24% (for the passenger car fleet) – 35% (for the light-truck fleet) over the period 2011–2025 leading to a renewed interest in the role that advanced technologies will play in enabling CAFE compliance. This study compares the effects of 2 designs of plug in hybrid electric (PHEV) to estimate the cost of CAFE compliance with PHEVs as a component of the domestic passenger car fleet and as a component of the domestic light truck fleet. Results show that for many of the US automakers and for a variety of incremental cost scenarios, the introduction of PHEVs into the vehicle fleet reduces the costs of CAFE compliance relative to baseline scenarios. Overall, results show that PHEVs can contribute to a reduction in the costs of CAFE compliance for domestic automakers and should be more thoroughly considered in near-term regulatory and industrial analyses of CAFE compliance strategies.

From Road to Lab to Math

Today, in the midst of economic crisis, senior executives at US automakers and influential industry analysts frequently reflect on the progression that safety testing has taken from the crude trials done on the road, to controlled laboratory experiments, and to today's complex math-based simulation models. They use stories of this seemingly linear and natural sequence to justify further investment in simulation technologies. The analysis presented in this paper shows that change in the structures of automakers' organizations co-evolved with regulations specifying who was at fault in vehicle impacts, how vehicles should be built to withstand the force of an impact, and how testing should be done to assure that vehicles met those requirements. Changes in the regulatory environment were bolstered by new theories about crash test dynamics and changing technologies with which to test those theories. Thus, as new technological and regulatory innovations co-evolved with innovations in organizational structuring, ideas about how to best conduct crash tests shifted and catalyzed new cycles of technological, regulatory, and organizational innovation. However, this co-evolutionary story tells us that the move from road to lab to math was not natural or linear as today's managerial rhetoric would have us believe. Rather, the logic of math-based simulation was the result of technological, regulatory and organizational changes that created an industry-wide ideology that supported the move toward math while making it appear natural within the shifting structure of the industry.

The North American automotive value chain: Canada's role and prospects

This paper deals with the North American automotive value chain and analyses the prospects for Canadian automotive sector upgrading. The size and importance of the automotive industry in Canada's Ontario Province is a legacy of its historic ties to the 'Big 3' US automakers and its proximity to the traditional heartland of the US industry in Michigan. Canada continues to have marginally lower operating costs than the USA and a strong industrial culture that attracts investment. But Mexico's integration into the North American production system, the rise of new centres of automotive production in the southern USA and rapidly growing flow of automotive parts from China to North America have begun to erode this advantage. Because the North American market is saturated, consisting mainly of sales of replacement vehicles, locational shifts in production and employment within North America are essentially 'zero-sum games'. If the market share of the Big 3 continues to fall and the southward shift of the industry within the USA is maintained, the sustainability of the Canadian industry could be undermined. The paper concludes with a set of policy recommendations for Canada to maintain its comparative advantage in the industry.

Supplier integration: an international comparison of supplier and automaker experiences

Selling off, closing down, or outsourcing, are common but risky strategies for automakers' component plants, as the experience at General Motors (GM) shows. A similar situation at Volkswagen (VW) was the trigger for the present analysis. A revisit of classical studies about lean production shows that supplier relations, not outsourcing, are decisive for superior performance. Toyota outsources little and Japanese automaker-supplier relations are strategically segmented between partner- and arm's length suppliers. In contrast, US automakers have outsourced much and relations got worse. This is one of the reasons of their ongoing crisis. Methods of strategic analysis such as the resource-based view are useful for balancing vertical integration and strategic outsourcing in different settings. Automakers in Germany such as BMW, Audi and VW are currently developing supplier segmentation strategies mostly from the procurement function perspective. Research and the turnaround for internal supplier management at VW indicate that a more general perspective should be applied. Organisational structures are relevant today, but also purpose, processes and people. The challenge is not to sacrifice sustainable supplier relations in favour of short term wins during the global downturn.

The US auto industry: historical background, trade policies, and new challenges

The US trade policy contributed to the Big Three US automakers completely dominating the US and World auto markets. Today, the Big Three no longer overwhelming dominate their major competitors. Foreign 'transplants' have built major production facilities on US soil, while simultaneously the Big Three are investing heavily in production facilities in foreign lands. To further complicate the identification of industry players, US auto firms are joint venturing with foreign competitors in a variety of locations. This paper explores how trade policies may have impacted many of the changes in this industry.

Rethinking competition in the world auto market: cultural determinants, strategic implications and game rules

PurposeThis paper examines how ingrained differences in heritage, social and business culture predispose American, Japanese and European automakers to plan and act in different ways, with long‐range consequences – both successful and unsuccessful – of their strategies and actions. To secure its twenty‐first century competitive position, each automaker must understand its cultural proclivities, strengths and weaknesses – as well as those of its competitors – to develop proactive strategies around a set of common industry game rules.Design/methodology, approachThe paper distills the author's observations from serving automakers of all nationalities over a 20‐year consulting career. Findings – US original equipment manufacturers' (OEMs') cultures are characterized by the “tyranny of Net Present Value” (NPV), whose manifestations and short‐term focus have eroded once‐commanding industry positions. The primacy of the collective, frugality, resourcefulness and the long‐term perspective are values that predispose the Japanese automakers to continue growing in importance. Volume European automakers' cultures and higher‐cost work practices – mirroring the continent's work‐life balance and socialist principles – make them vulnerable, particularly in China, where they lag behind in comprehending the market, tailoring their products and working along bi‐cultural lines.Practical implicationsThe paper presents arguments and context for the US automakers' need for a new culture that better balances NPV considerations and the long‐term strategic view. The volume Europeans will have to make work rule and cultural changes to stay cost‐ and productivity‐competitive, as well as work more effectively in the important China market.Originality/valueThe paper provides unique, holistic but succinct cultural‐based perspectives and insights for struggling automakers to understand and improve their positions.

Experiments in technology forcing: comparing the regulatory processes of US automobile safety and emissions regulations

Technology forcing is a strategy where a regulator mandates a standard that cannot be met with existing technology to internalise external costs associated with the production and/or use of a product. We argue that the implementation process for these policies has a pronounced effect on how regulations affect the development and diffusion of new technologies. To examine this proposition, we look at two case studies of technology forcing policies targeting US automakers: The 1969 Department of Transportation airbag mandate and the 1970 Clean Air Act emissions requirements for new vehicles by 1975. The results of these two mandates were quite different. EPA successfully forced the adoption of catalytic converters, while airbags did not become compulsory for nearly 20 years. We demonstrate that these results did not stem from differences in complexity or costs of adopting the technologies, but instead were a product of political and regulatory variables that influenced the implementation process.

Demand and cost impacts of the 2 mm technology program in the US motor-vehicle market

We assess the impact on demand and producers’ costs of a new technology implemented in the US auto industry, the 2 mm program. This is a fascinating case partially because of the unique collaboration among public agencies and a consortium of manufacturers and universities. Using a type of hedonic price model for demand, we show that the new technology was responsible for a short-lived increase in demand for vehicles produced by US automakers at increased producers’ costs. Firms that refused to participate in the consortium attained smaller net gains implementing the technology independently. Overall, our approach differs from that of previous analysts in that we (1) separate demand from supply, (2) employ a comprehensive vehicle database, spanning 1981–1998 data, including data on virtually all vehicle models sold in the USA, as well as data on plants’ and producers’ technology characteristics, and (3) rely on sales and production data rather than plant data. Also, we quantify the cost of not participating in the consortium.

Involving suppliers in concurrent engineering: learning from Japan in US auto

The Japanese supplier management system is considered a benchmark for providing high quality products with short lead times, achieved through close integration between manufacturers and suppliers in the early stages of product development. US automakers have been reengineering their product development systems along the lines of the Japanese model and outsourcing an increasing level of vehicle content and design responsibility to their supply bases. The purpose of this paper is to report on the evolving models for supplier involvement in concurrent engineering in US auto, through interviews conducted from 1998-1999. Case examples illustrate that the US auto companies have been evolving the Japanese model, including higher levels of outsourcing of modules and systems. Yet, OEM policies and practices have not evolved to a point needed to support the great responsibility being shunted onto suppliers. The auto case identifies a variety of models of supplier integration in concurrent engineering and the necessary infrastructure for effectiveness.

Metamorphosis in the auto industry

Globally the automotive industry is transforming itself. During this period of uncertainty and discontinuity, entirely new ways of doing business are emerging. Three trends stand out. Together, they represent a convergence of progressive thinking from the major players. Trend #1: The manufacturer’s changing relationship with its customers. Increasingly customers are being given the opportunity to customize their purchase, while the automakers are becoming more adroit at understanding which customers create the most value for them. The customer’s demand for speed of delivery plus the automaker’s desire to make only cars that customers want (so they won’t be stuck with inventories that must be sold at discount), have resulted in shrinking the “order to delivery” cycle. Another dimension is the fact that cars are evolving into electric appliances. Today, 22 percent of a car is electronic content. In ten years, that will be 40 percent. Connectivity will promote extended relationships with auto owners fostering a greater customer‐centric focus. Trend #2: New partnerships with suppliers. US automakers are becoming more like their Japanese and European competitors: they strive for cooperation and are purchasing entire subassemblies (such as doors or power trains) from suppliers. This is leading to radically new infrastructure to support design, procurement and logistical processes. By connecting with suppliers and sharing demand data, quality and responsiveness are improving and costs are being reduced.

Keiretsu and relationship-specific investment: implications for market-opening trade policy

This paper considers the implications of relationship-specific investment within keiretsu for policies aimed at opening the Japanese market for intermediate goods, such as auto-parts. Both VIEs applied to parts and VERs restricting Japanese exports of autos cause the keiretsu to import a wider range of parts, but of a relatively unimportant type, such as seat covers. Since keiretsu investment and output fall, the total value of US parts exports may actually fall. For a given value of these exports, a VIE is less costly for US consumers and Japanese producers, but a VER is preferred by US automakers.

Public-private technology R&D partnerships: lessons from US partnership for a new generation of vehicles

Government-industry R&D partnerships can play an important role in advancing the public interest. A widely cited example is the Partnership for a New Generation of Vehicles (PNGV). It was launched in 1993 by the Clinton Administration and three US automakers, with the goal of advancing the development of energy efficient vehicles. It has come to be seen as a model, and in many ways it is: it is proceeding according to schedule; it increased the profile of advanced technology opportunities; and it led to better working relationships between the federal government and automakers. It also indirectly led to technology advancement—by inspiring more aggressive investments by European and Japanese automakers that, in turn, through a boomerang effect, inspired US automakers to do likewise. It is a success in the sense that both sets of partners are pleased. But has it served the public interest? Has it led to the best investment of government R&D funds and has it accelerated the commercialization of socially beneficial technologies? The answers to these latter questions are still uncertain.

Reducing CO2 Emissions: Turn Down the Heat, Crank Up Efficiency

Kudos indeed to the “three US automakers—DaimlerChrysler, Ford, and General Motors” for producing prototype hybrid electric–gas cars that emit less carbon dioxide. It might have made a more complete article if the authors had also mentioned two non-US automakers that are already in full production with such vehicles. The Honda Insight and Toyota Prius have been available to consumers in Japan for more than three years and in North America and Europe for several months.© 2001 American Institute of Physics.

Modeling future automobiles: the role of industry and government

The Partnership for a New Generation of Vehicles (PNGV) is a joint project of the “big three” US automakers and seven US government agencies. The goal of the partnership is to develop a mid‐sized car with a fuel economy of 3 liter/100km. The US Department of Energy is supporting the development of two computer codes for modeling future automobiles. PNGV and similar government/industry partnerships elsewhere in the world, some of them formed in response to PNGV, are bringing major changes – perhaps a revolution – in automobiles. The 30 years of experience by the electromagnetics modeling community may be able to contribute to this process of change.

Challenges for fuel cells in transport applications

The US Department of Energy (DOE) and the US automotive industry are working cooperatively under the auspices of the Partnership for a New Generation of Vehicles (PNGV) to develop a six-passenger automobile that can achieve up to 80 miles/gal. These partners are continuing to invest heavily in research and development of polymer electrolyte membrane (PEM) fuel cells as a clean and efficient alternative technology for transport applications. In the past few years, US automakers have made significant advances in fuel cell technology and have announced plans to put fuel cell vehicles on the market by 2004. DOE is working with industry suppliers to address some of the biggest remaining challenges, which include fuel processing and lowering the cost of fuel cell systems. The refueling infrastructure necessary to support fuel cell vehicles presents additional unresolved issues. This paper provides a status report on the PNGV program and provides an overview of the technical accomplishments and future plans of the DOE Fuel Cells for Transportation Program.

EDI performance in the automotive supply chain

This paper presents the results of a questionnaire survey to automobile first-tier suppliers in the US. We address the effects of Electronic Data Interchange (EDI) on the automotive supply chain, specifically addressing first and second-tier suppliers. We also examine the reasons for suppliers not using EDI. Our analyses show: (1) the size of a firm does not affect the degree of EDI integration, (2) firms with high corporate performance have a high level of EDI integration, (3) firms with high corporate performance have a high level of information sharing with suppliers, and finally (4) US automakers are directing first-tier suppliers to use EDI, yet first-tier suppliers have not been able to enforce its use by their suppliers.