Automobile Presentation

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The sudden global financial crisis in 2008 changed the rela bw states and automobile firms. Every major automobile producing country invested massive funds to try to save their industries. Several gov applied “cash for clunkers” (đổi xe cũ) – change the relationship be gov and producers: the industry is supervision by the gov.

Because of the transnationally integrated nature, a producer may operate in many countries, so action by one gov had massive impact for other gov.

- Environmental regulation

The state is also heavily involved through environmental and vehicle safety policies, which include design, technology and materials used in cars, which will affect to their cost

- Corporate strategy in automobile industry

- Concentrate and consolidation

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The automobile industry is now dominated by a small number is transnational producers. The dominance of the US Big Three has been destroyed by the rise of Toyota Japan and Volkswagen Germany.

The consolidation of large number of automobile producers into a much smaller number of larger TNCs (Transnational corporations) is the result the waves of merger and acquisition. It also occurred in the components industries as leading companied have tried to develop position as global suppliers.

In recent years, there have been abt 100 new alliances in the automobile industry per year. The majority of these are manufacturing joint ventures indicating the high degree of globalization in the sector.

- Changing relationships bw automobile assemblers and component manufacturers

With the increasing pressure by assemblers to delivery quickly, low-cost and raise the quality of component => results: massive decline in the number of supplier companies.

Lead to risks: Increasing price and Low quality components (in 2010 Toyota recalled several million cars due to the faulty components)

Face to that situation, the supply system is becoming more functionally segmented. Suppliers have been driven to consolidate and to take on enhanced roles. Therefore, the balance of power bw assemblers and the mega-suppliers depend on its business.

- Contrasting transnationalization strategies of the major automobile producers

The US big two

GM and Ford dominated the world automobile industry for years. Both GM and Ford’s transnational strategies were concerned.

These early transnational ventures were triggered by the existence of protective barriers around major national markets as well as by the high cost of transporting assembled automobiles from the US

Their transnational activities had broadly similar geography. The biggest single different is GM’s massive involvement in China, where Ford is weak.

Japanese producers

Japanese companies joint into league table without any actual overseas production. However, the transnationality of the Japanese producers changed dramatically during the 1980s, as a result of a combination of political pressures in the US and Europe, and the increased need to be inside major markets.

Toyota, Nissan and Honda are 3 leading Japanese producers, which all focus develop on the US market. They now far more transnationalized than either Ford or GM

European producers

The major European automobile producers are strongly Eurocentric in their production geographies (see the figure)

Korean, Indian and Chinese producers

Although the Korean gov made an enormous relative advantage, by 1997, there were only 5 Korean automobile producers. Today, there is just one- Hyundai, the others being victims by the financial crisis in 1997

Hyundai developed by its close technological and marketing relationship w US and Japanese firms.

The Indian company – Tata. As a result of its acquisition of Jaguar Land Rover in 2008, it now produces more cars outside India than domestically. Also, introducing the new Nano small car will help to expand its international markets

Chinese firms have made little impact outside China.

- Regionalizing production networks in the automobile industry

Europe

Europe has the most complex automobile production network in the world

Two political economic transformations during the 1990s dramatically reshaped the region’s automobile industry: the complete of the Single Market in 1992 and the opening up of Eastern Europe

Indeed, automobile producers are building new plants in Eastern Europe. At the same time, substantial components production is also shifting towards the East.

North America

The political have effected strongly on automobile’s geographical structure.

By the early 1970s, the US-Canadian automobile industry was fully integrated as result of the 1965 Automobile Pact

The 1994 North American Free Trade Agreement (NAFTA) had even more far-reaching implications for the automobile industry because it incorporated the Mexican auto industry with its vastly lower production costs

In North America, before the 1980s, it was totally dominated by the US producers. But from the mid-1980s, there were 3 majors markets of automobile production: Canada, The US and Mexico.

East Asia

The situation is different: the region remains primarily a series of individual national markets, some of them very heavily protected against automobile imports.

Automobile production in East Asia is dominated by Japan, following are Korea and China. Not surprisingly that region’s automobile production is dominated by Japanese firms

Western automobile firms see Thailand as potentially a base for serving the whole South East Asia. They also want to enter the world’s biggest market: China. However, the Chinese gov has imposed specific entry restrictions, such as limit access for foreign firms,