The globalized automotive industry
This review was carried out to give an overview of the vast automotive industry. The automobile industry in the 21st century is filled with competition, innovations and new strategies (operational strategies, functional strategies, manufacturing strategies etc) which differentiate it from all other leading industries. The collaborations and joint ventures have played an important role in the development of the automobile industry which is further divided into two parts i.e.: (1) the production of parts, and (2) the final assembling. This research also shows how the recession has affected the automotive industry globally and its impact on the Indian automotive industry (the Maruti Suzuki case).
Keywords: automobile, automotive, recession, integration, globalization
Introduction and features
The automotive industry is distinctive because of its extremely concentrated firm Structure: a small number of giant companies exert an extraordinary amount of power over smaller firms. Eleven lead firms from three countries, Japan, Germany and the USA, dominate production in the main markets. Global vehicle production has more than doubled since 1975, from 33 to nearly 73 million in 2007. The opening of new markets in China and India has helped to drive the pace of growth. Extremely concentrated firm structure in the industry creates high barriers to entry and limits the upgrading prospects for smaller firms. A new vehicle design typically requires more than 30,000 engineering hours, takes 3–5 years to complete and needs several billion dollars of up-front investment. While seven countries accounted for about 80% of world production in 1975, 11 countries accounted for the same share in 2005.World vehicle production grew at an annual average rate of around 2% in the period 1975-1990, rising to around 3% in 1990-2010. Low rates of motorisation and huge populations resulted in a surge of new investment in China and India, where market growth – and, accordingly, production – has been increasing very rapidly. In this context, the ability to increase or maintain their share of global automotive production since the entry of China and India in 1990-2010 can be seen as a real success for some countries. Volume of automobile sector has increased over the years. North America is dominating the market with 26 per cent share in the world market followed by West Europe with 25 per cent share. This also reveals that the North American market has shown the minimum growth. Nevertheless growth will remain respectable considering the vast size of this market. A second distinctive feature specific to the automotive industry is that final vehicle assembly. Market saturation, high levels of motorisation and the tendency for automakers to ‘build where they sell’ have also encouraged the dispersion of final assembly, which now takes place in many more countries, than it did 30 years ago. This has created the need for close collaborations, which has raised the costs for suppliers that serve multiple customers and concentrates most design work into a few geographic clusters, typically near the headquarters of lead firms.
The work of vehicle design and development continues to be concentrated in, or near, the headquarters of lead firms. Because centrally designed vehicles are tailored to local markets and parts are manufactured in multiple regions to the degree possible, design activities and buyer–supplier relationships typically span multiple production regions. This has resulted in local, national and regional value chains in the automotive industry being ‘nested’ within the global organisational structures and business relationships of the largest firms. From a geographic point of view, the world automotive industry is in the midst of a profound transition. Since the mid-1980s, it has, like many other industries, been shifting from...
References: * www.scribd.com/.../Globalization-of-Indian-Automobile-Industry-co
* www.markedbyteachers.com/.../fa-a-a-impact-on-au... - United Kingdom
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