By June 2009, Ford Motor CompallY was thc only rcmaining lllel1lber of Detroit's

"Eig Three" to have e, .:uped bankrllptcy. ' hryslcr had filed for Chapter 11
protection on April.30; General Motors had. followed Oll June I. Fr C:hicf finan.:ial
Offlcer, Lnvis ooth, the eight rnOllihs sinee his appointl1lent in November 2008
bad involved unremitting preSSLlre. T hc fillancial crisis that follwed the eollapsc of
Lehrnan rothers in September 200S had engulfed the cntire U.S. automobile SVelor.
By the time PresiJent Ohama took office in Januar}' 2009, U.S. auto sales werv half
of those a year previollsl y, T his fell I in clellland WJS llnprcceJented in the inclustry's
history. Frd reported a $14.7 billion loss fr 200S; a ,'esuJt of which was the
elimination f stckholders' equity.J
C,<\51: 4 FOIW !\ N ]) Tm: WOI1.Ul AUl'OM013ILl, INDUSTHY 47
TALE 4.1 Ford o[ I.S. sal c's <lIld ils OWIi hn :l ll cial nc 'd,
Forecast U.S. auto sal es
Ford' s estimat d
(million units)
additional fin ncing
2009 2010 2011 requirement ($ billion)
GOi" dech ne oi 3%; recesslon 11. 0 12.5 14.0 9
throughoul 2009
More 5 verc slu ll'l p persiS llil ( illto 2010 10.5 11.0 1 .. 0 13
SoU/ ce. l orcl Mol<) 1LOllilldilY, Busine' 5 f'l iln Slihl lilie<! 10 l he Se il.;I e Bclllki!19 (urTimit t 'e, [,)pc,ynlJ r 2. 2008.
Boorh's :lrrellrioll lud, hy .lulle 2009, shifred from sho rr-terlll sllrviv <l[ ro thc
IOll ger renn fi n<lllci:11 ollrlouk for hlrd_ Th e evidcllce tl l:lt Fo rd held sllbmirted ro rh e
Se Il:lte lhllking COIllIlli tt ec in l) cce l1lher 200il had es tim,ltcc! the co mpallY's
nllancmg needs o n the b;lSis of "cllrrenr-r:ltes" anel "worst-r;ltes" [;J'Owth sccllJrios
(S ee Tahle 4.1 ). Si nce rh ell rhe wor ld econllillY had st:1bili l ed :lncl sOl1l e forecasters
were predicting th;}[ the lJ .S. economy wOldd hegin growing agJill in 2U I O. Fm the
wo r' ld ,1U to illdustry, governmellt incellrives 101' scr:1pping (lId cars illl d pLl rchasillg
new, fu el-eff-ici ent 11l00ki s had dune llluch ru srahili ze demand- csrecia lly in Eur ope.
FOl'd 's resliit s for rhe I-irsr qLL:lIter- o( 20()';) showed SigllS oE improveillent: clc- spirc: a
conrillLlillg Ldl in its $1.4 Ililli ull luss (or the lju,l rter was nllrch th a n
the loss in each of t he previol1s twu qllan ers.
As the Slllll't-tr:rlll thrc,lt uf illsolvency receclecl, ooth tllrned increasingly roFurd's
lunger ter lll fin<lncialollrlook . In !)ecelllber 2008, Booth had forecast th,lt Ford would
break t>I'ell in 201 I . l"'ord's cost-rec! lIcti on Ill eaSlIrt'S h:ld alreddy begull ro be3r fruic
it sC<1ned irs l' est rLIcruring long beforl' ( ;M anel Chr ys [er. Dur-iug 2009 it wODld sec
the henents of its pla m closlIrcs, its ea dy switch tCl smaller, more fll el- el nciellt cars :1lld
rhe sale of its [()ss-llwkillg J,lguar, LlI1d lZuver alld ASl'Un lVbrrill sLl bsidiaries.
However, Booth recogni zed th:1l Ford 's return 1'0 prohtability wOlild depend not
oll lyon irs own eHorts, bur also UPOIl the st ale o f the :llitomobile illdustry ill :1 POSl
recessionary world. Whil t:' the shorr-te l'll1 oll[\ook oe lhe industry improvecl ()Ver the
later p,lrr of 2009, the long-te rm out look becal11e more ,1 1,1r1lllng.
!\ooth ha d raken cumlur[ in rhe flCt thar Ford's stro nger operariun;ll and nn:lI1ci:li
performance wo ulcl ::lll o\v ir w emergc ,1S one 01 tl1( ' survivors o f the crisi s wilde
weaker cOlilperirurs L1ilecl. A simd::n view was raken hy Dailllier enz's CEO who
predi cled tkH 2009 would he ,1 "Darwillian ycar" fot' rhe :lLlto inclusrry. Yc t, l)y JUl1e
2009, l here was litrle evidell ce o !' C01l1pnilive se lecrioll:
[I]nsrt' acl ()f natural selccrio!l, Slllllethill g else h:1ppellcd: gove rtl1l1ellts :lI' oull d
rh e world, fr OIll Cl l1 :ld:l :l1ld Br:lI.iI ro Russ iJ :l1ld Sourh Korea, srepptd iIl wirh
prodigious :lnlOUIltS of c:lsh ro kecp Clr plants open alld asscl11bly lines rlllllling.
All luld, have hell enlnl fr()1ll we il ill t' Xl,ess ()f $ lUO hili ion ur
direet bad-out funds or indire..:t swte :lid, such as scrapp:lge schemes, sill ce
gillhal s,ll es collapsecl last Octuher--in 11lll1li 1l ,1 1 terms, t he higg,cst eve r sllllr-r
tnlll inrerve iltiu!1 ill IIl:lllufacrurillg.
All rhis mune)' has preserveJ Jllhs ill Clr lll;llcing, sriJl rh e lin chplil 01 nun y
illl[uslrial econol11i c,_ gut the money 11 :1$ :ll su 1)ITVl:lltcd a shake- nur
In J n indllsrry rhat h:1S [(mg had too m:lllY [1 mclIIce rs_ C0l1s11lral1ts :H Pwc.:
48 CASE 4 Form AND TlII[ WOI:lLO AUTOMOBILIi; I NIWSTI\Y
estirnate the inclustry has the capacity to builcl86 lllillion units this year, allllost
a [l'cuicl-and 31 million more than thc 55 million vehieles that it will seil.
"\X1hat appeared to be a L1niqu e opporwnity to acldress the illJustry's biggest
issue-excess capacity- has bee n misscd," says lVlicll;tel Tynd;tll, an aJlalyst
with N o mura. Ln furope not a single [llaJlt has elosed permanently, thanks to
bail-oHts.
"The shape of tbe inciustl'Y looks Oll! but the same, excepl Ihat governll1ents
have tippccl lots of mone)' in anJ prcvl, nted Dan-villian selection," says i\1ax
Warburtol1, anal)'st at Sanforel ernstein. "It has bce n a goocl reminder of wllat
this ineiustl'Y is: a governll1cnt-sllPP(JI'led job creation ,clle me."
Long-term observers of the ldustr)' point OLlt [hai it has never operatecl on
the pure frec -Illarket principles. Governll1ellts llave always intervened in bare!
tirnes. Thc status of many carl11akers as national champions is bolsterecl by
dynasti c famiI)' owners at about half the big proelucers, who often ran k
contil1uity alld control abovc sharehokler value. Both th ey and governl1lents
form a big obsta..-le to consolidatiol1.
2
The thought of an industIy Slructure that was barely ellangecl fWIll that oE the past
elccade was profoundl)' depressing to Booth: between 1990 and 2008 thc world's
five biggest auto makcrs (GM, Toyota, Ford, Dail1ller- ;hrys!er anel Volksw:lgen) had
earned on average net margin of 1.1%; theit return on ill ves ted capital had been far
below their cost of e'i,ital and togetlwr they had destroyed bilJions in shareholder
value. However, en'n in the absence of consolidation among existing auto make rs,
it was elear that the st ru cture of the induslry was far fwm remaining statie. The
s hifting of detnand 11'0111 the mature illdllstrial nalions to thc growing markets of
Asia, Fast ern " more ancl Latin Arnerica was aecompa lli ed by thc emergence of new
cornpetitors from these same regions. At ,1 l1Jore fundamental level, the cOll1bined
for ces of techno log)' alld el1virol1mental COllcerns were reclirectillg the inelustry's
evolutionary path. Forel planned to introeluce all-electric co mmercial vans in 2010
and all-elect/' ic automobiles in 2011..1
The Evolution of Market Dem.and
During the 1880s, thc first intc rnal-coll1bustion powereJ vehicles \-VL're proeluced lt1
Ellrope- notably by rottlieb DaimJer anel Karl Benz in Germany. )' the turn of the
century hundreds of small eompanies wcce proclucing autOmobil es both in El.lr ope
anel in America. The sLlbsequent l20 years saw the industry developing a t different
rates in different parts of the world. Th . U.S. market saw its fastest rates of growth
during 1910-28 anel then after the SL'conci World War. Since the l11id - 1960s, the
combined output o f autos and trncks was broadl)' stabk-despite cyeliea!
fluctuations (sl'e Figure 4.1). Western Europe and Japan also expe riencccl tnaturing
of theil' markets with production peakil1g in 1989- 90, [11 aU the aeivaneeel indllstrial
cOllntries, the tendency fl' cars to last longer createcl a dowllward trend in the
el e l11ami [UI' motor vehicl es weil before the 200H recl'ssiol1 (see Figure 4.2).
As a res ult, the automobile produce rs lookeel incrclsingly to the Ilewly
industrializing countrics for marker opportunili es. During the 1<:I 80s and 1990s,
-------------- -----------------
-- (ASE 4 FORD AND THE WORLD AUTOMOBfLE INDUSTHV 49
FIG URE 4. 1 trS J\1oll).. v.:hidt: prll dllni oll,
14,000,000
12,000,000
r
10,000,000
I
8,000,000
'
6,000,000
c
4,000,000
r
2,000,000
7
o
V
1/
1/
/
1/
/ .n{j.
/trJ 0 Lr
r
Ci
/"
r.
1
-
-e-
/"
rr,-
I
-


Passenger Vehicles 0 Trucks and Buses I
FIGURE 4.2 Mcdi,lO of OHS in Ihe
10
9
8 -1---------------------------
7
Q)
g'6
c
'"
5
""[J
Q)
4
E
3
2
o I I I i 1 i i , i I I , i I I , I I I i I I i i , i I I I I I
year
')ource R 1 Polk & Co
newly industrializing cOUllrric> such as Korea , JVlalaysia, Thailand, Turkey, :llld
Argentina offered fhe best growth prospeClS. Dllring 2000 t o 2009, the BRIe
counrries (Brazil, Russia, India, and (:hina) were thc world's primary growth
ma rkels. As a result, the world production of cars and trucks continued to grow
(see Figure 4 .3) .
'fhe Evolution 01' Automohile
T hc early years of thL' industry were characterized by considerable llncert31nty over
the des ign and technology of Lhe mororuJ", E;]r1y carri'lgc'; " were
precisely rhat-they followecl design k 'ltures nl l'" is tinl:\ horse-drawn ;]nd
bllggies.
50 CASE 4 FORD AND T[JE: WORLlJ AUTOMOB I LF; INIJUSTRY
FIGURE 4.3 Wor lc.l 1I1010 r vehicl c producti oll , 19S0- 200S
S
60.0%
50 .0%
60
E
. ~
c: 40.0% 0
::J
50 ~
0 (J)
(J)
'" c
40 30.0% "0
'" .Q
C
'"
co
U
I
30
"0
c:
f-

'"
20 (Jl '"
~
10.0%
0.0%
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ * ~ ~ ~ ~ ~ ~ ~ ~ ~ & & ~
~ ~ ~ 0 ~ ~ 0 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
World Total -- US & Canada as % 01 Total I
[:Jrly motorcars demonstrated a bewildering variety of technol ogies. DlIring the
early years, thc internal-col11bllstiol1 engine vieel with the s rca m engine and eel ectie
motors. [Ilternal cOlllb ustion c ngines lea tured a wide va ri ety oE cy linder
conngurat iolls. Tra nsmission sys tems, stcc ring systems and brakes alt displayeJ a
remarkable var iety of technologies and designs.
Over the )'ears, techll ologies anel designs teIllIed to cOllverge ;lS cOll1petiti oll
rclcgated man)' o ll c -promising designs to the scrapheap oE history. IIJe Ford Model
T represented tbe first "dominant design" iu autolllobil e, -lhe technology aud design
features o f the I\1odel T set a standard for other manufacturers to imitate. Cunvergence
of technologies and designs continued throughout the tvventieth century. During tbe
1920s, all manufacturers aclopted cndosed, all-st eel bocli es. The onal cl el':1des of tbe
twentieth eentury saw the el imination of lllost d istinctively different designs: the VW
Beetle wi th its rear, air-cooleJ engine, the Citroen 2-CV and Its idiosyncrati c braki ng
anel suspension system, Daf wi th its "Variomarie" transmission, allel rhe two-srroke
engi nes favored hy some Sov iet- bloc Illanufacturcrs. Engin's became more silllilar:
typically four cylinelers <lr rangcd in line, with V-6 anel V-8 configuratiolls for larger
cars. Frollt-whee! drive became sta lldard o n sma ller cars; suspension, stC'cring, braking
systems and body shapes beeallle more similar. T chnoJogical progress W:1.'i
increl11enta l: innova ti ons prJll1;:Jrily in volved new applications oE elccrronics, Ilew
materials and new safety features. The main advances were ll1ulti-valve cylindcrs,
tfaction control sys tems, all -whee! drive. e!ectro nic fue! injection, variable suspensions,
intefcoo1ed turbos, satc: llite navigati o n systems . co llision-avoidance Lldar ami
intelligent monitoring systems.
Despite less differc:ntiation betwl'C,1 mallllfacturers, new product segme nts have
continued to appear. New vehicle types include a nllillber of "crossovcrs" such as
luxury SUVs and "mini-SUVs. "
- <I FOIW AN)) T im WOI1LIJ AUTOMOBIL!': I NIll JSTlty 51
Convngence also occ llrrecl across COll ll rrles. T he sa me marker S("grnenls lc'ldni ro
emerg(' in differenr cOll l1lries. Ihe lluJor difk rell ces herhCl' ll COllll lTies were in rhe
sizes o{ rhe variolls segmenrs. ThllS, in tht U.S., rhe "rn id-sizl '" fami ly se(l all was rhe
segmenr, wirh rhe Ilumb Accord anel ToyorJ ClIllry the leadi ng Jl1od els. In
I: urope ;lnd As ia, fami ly CHS ("slIhcCll11 paCls ") formed rhe IJrgest J1l:1rkc ' l
segmen t. Yer ["ur J II rhe ell1ph ,lsis hy lll;JnufJcturers on globa l models, distillcrive
IlJ(i ona l difFerences persisr. For ex,l Jl1ple, dllrillg 2000-8 light trucks (pickllpS and
SUV., ) olltsold p,lssenger ca rs in rhe U.S. In Japan, micl'ocJrs, such as [he Suzl.Iki
Cerv o, h,lve grabbell ,lso;b o f the (ura l CJr marker.
This tl'('nd toward design convergence ,Illd slowing of tec llll ologica l ch:lngl' W,IS
illl nrllplcci by olle Illaj m rechnologiell developl1lent. In 1997 borh royora ami Audi
illtmdllced llIass- prodlicrion hybrid lOO years afll" l'orsche
IIJd developed rhe hyhrid c lr in wh ich :In inrernal combllstion engine powered
,111 elect ric motor. l\y 200LJ, hyhrids ,1Ccolllllnl fo r \ 2
1
YrJ of rhe Jlp:lncsc Illar ker and
,\% ()f the ll.S. nl Jrker. SeveLll Ill olj or allromobile IllJIlUfactllr'.. rs, illcluding GM,
Daimler, Mirslillishi, ,ltl d Sliba rll, plal1ned tu bUllch ali dccrric cars in the I,Hter p.lIt
of 200LJ thr ough ru 20 10, once more revi siring the ea rl y years 01 the ;llIro indllsrr)'
in 1900, 28
1
)'-h of ;111 <llltolllClhil es produced in rhe l 1. S. werc Zlll l'lecrri c.
Tlw "Evolution 01' 1't'chnology
/\r rhe hc:: gi llning of rhe tWl"nl ic:: 111 cenl llry, car manllF.lcture, like C<l ITi Jge-lll aJci ng,
a cLlft illduslr)'. Ca rs wne hllilr ro order according tu in div idll ,11 cus tol1l er, '
preierences speeificJllons. In Flirope anti No rrh AIllCI'icl there wert' hundrcds
of prodllcing C,lrs, lew wirh JllnllJ I pr oduc(' ion exceeding 1000
vehicles. Wllell He nr y I:orll !leg:li1 prodliCtioll in 1':>03, he used J similJr
appro<\ ch-even for earl)' vlTsi ons of hi s IV!udel T. Il is visi on of ;l n JlfurdJble,
rnassprodllced :llItClnlObile depended on rh e developm\;: nr of Illore precise
11lJchille rools tku wOli ld l)lTlllir inrerchangeallie p,lrrs, y 19 J3, he had overcome
rhe technie<d eh,llienges 0[" his new sysre m of prodll crio ll . ,ompollents we re
prod ll ced eirher in harches 01" conrillllOLl sly allel WlTe rhen on nlOving
il sselllbly lines hy st' llli-skilled wllrke rs. Thc prodllclivity gains werc eno rmolls. In
19 i 2 it rook 2.3 Inan-l1 o lll'S ro assemhlc il i\l odel T; just 14 rn onrhs lare r ir rook
o nly fom, The resldring (a ll in rh e priee of clrs openet! up a neW eL1 of p(lpulilr
IllOrorillg.
"Fordislll" was rhe Ilrsr lllajor revolurion in prucess tcchllology; Toyota' s " Ieilll
prodllction" was rhe seco nd. T hc systc m was developecl by To)'ol<l in posrwar JJpJll
ar J time when sho rrages of key Illarerials encollragcd extrcme parsimon)' Jmi
of inventories Jlld Key elements oE the system were srari stical
pruccss cOlltrol, Jusr-ill-rilll e sc hcduling, quality circles, teamwork am! flexible
prtldllction (mon: lkm one 1ll(l(ld manufactll red on a single production line). Ce ntral
ro r!le )lew nlilnufacruring was the rransirio n from 5rJtic conceprs of dllciency
oprilll i7,il tion towards co lltinuous illlprovc lll C'nr ro whi ch ncry employn; conrribured.
During lll(' 19805 Jnd lLJLJOs all rhe world 's car manufacrurers redesignecl t heir
1ll:lllll fac wring proctSses to incorporare ,lsptCrS of To)'ot;l's le<ln prodllcrioll.
t:\-v pron'5S techno logies redllced the extenr uf sGlle ecollornies in assellJbly.
Optimal manllbcwring effici ncy oncc reqllired gian t assembly plants wit h ourpllts
()f;11 Ieas l 4() () ()O() lInirs .1 Y<;; ;H, f\ fr c.: r 19L)() , IllnSr lKW asstrnh l)' !,I :l ll rs 11 ;1l1 eapaci ti es
52 Ci\SF. 4 f"UfiOi\ i I1 TIIEW(lI!l.l ) <\lITOMOHILl '; IN III JsTIl Y
of betweel1 150000 ami .lUO UOO IlililS per <lllllllIl!. Scale ecolloillies il! c0I11{10l! ellts
aud slihassClllhlics werc Illllch mure irnportallt. The (llillilllllill crhcient Slille fur <111
engillc plant was arulilld I Illillioll lIllil's ;lIlllldly.
Scale ecullo/Dics wne Ln' Ii10re important ill new prduct de vclo plll cllt: buge
develo pmellt costs Ilccded tu be ,1111ortized (lI'er hrge lllllllbers of vehieles.
Increasi llg design cOll\p!cxity, the applicarioil of elect rolli cs, aJld llew s,lfet)' alld
cllVir0l1111clltal stalldards C<lli sed dI e cost of developin!-( ilCW lllOdel s ro ri se stceply.
y the 1990s lhe cost o!' creatillg an elltircly new, m<l ss-productioll p<lSScllge r car
fWIll drawiug bO<lrcl l'o procllictioll lille W,lS in excess of S1.5 billion. b'ord 's
MOlld eo/Colltour- its first clltirely glob,1I Illotlcl- laullChed in 1994 cost ,1 r(llal uf
$6 billion (illcludill g toulillg costs).
SIllaller Illallllfacturers co uld slIrvive olli)' hy ,lVuidillg lllcse 1l1<lssivc prodllct
deve lopmellt costs. Olle \\',IV W,lS to <lVllid Ilew 11lodel challges . POOl' [() its
aequisitill by Ford, J;lguar's twollludels, the XJ6 <md XJS, were a l l l l ( ) ~ ; t lwo deC<lc! cs
old.l he till Y Ivlorgan car COlllpallY has ll1,ltk rh e S<11l1e nlOdd sincc the l;Jtc 1930s.
The alternative was tu license desi,t;lls frolll LlI'gcr Illanufactllrcrs. ThIIS, Tof<ls of
Turkey built Fiar-desigll t.' d ClrS. Pr otoll of tVLlhysia builr Mitsubishi -designeel cars.
Manni of India prodllced SlizlIki -clesigued ca rs.
Thc cost f l1ew prodllct devcloplll eilt Ila s becn lhe Ill alor drin'r of Illergers ami
aCl[llisiri om in rh e imlustry, [((l\lomies frolll sharing developlll el1 r COS Is also
ellcollraged illLreased eol! ,lllOratioll ami jniut ve lltllres. 111 2009, the aU[()llwhile
illclllsrry was ;J globalnetw01'k of coll,lhorative JITdllgelil ellts. 'fliese illclllded joint
venture ptJllts, recbnol ogv alliJnccs , eOlTll)()llelll supply ag:'ccll]('nls ,l ud joillt
marketing Jgreemellts. III elllcrging lll<ll!<.er countries, IIlOSt new auto plallts were
)oinr Vel1tllres betwccn loeal <lnll ovcrscas cOlllp<lllics. Figure 4.4 shows Ford's
alliances witb other autolllobile prodllcers.
During the 1990s, IlCW produCl d '\' lopllleilt elllerged as the criti e 11 organizatioll<ll
capabihty differc!lli :ltillg lar lllclllufalt11l'l'rS, i)esigllilJg, elevelopi!lg ,1I1d [lutti!lg i!lw
pr oclu crioll a c0ll1l1letely llew autolllohile was a bugely cOlllpl ex process illvol villg
every fUlletioll of thc f-i rlll , ur tu 30()0 ellgilleers, colLlhol',Hioll wirh se vual hlilldl' ed
sllpplins alld IIp tu fiv e years from drawing hoard to marker Llilfleh. The ICIlll-h<lsed
appro,lCh ro llew produer developlllC'IH plll in rlace by Toyota <llld ' -\(lIllI'1 heC<1 111e
models for ztll the major llWIlLIfactlirers. The l'Cs ldt was <l sigllificanr redllctioll ill
prod uct dcvelo pme llt ri lllt'.
Attc1l1pts tu luwer procluct clcvelopmcnt losts {(1 clI sed arOllnd rhrcc cOllcepts.
first, ll1oc! ubr designs: the disaggregation or the vehiclc illto <l 1l11111her of ,e par,He
subasse lllblies. Secolld, "vi n ual rrotoryping": rhc use of 3D CUIllplitu grapllics Ln
des ign allel rest protutypes . I'hil' d, t he deve lo(1lTlellt o f shared pl ;l tfo r1l1s fur llllliliplc
mod els. A "pl atform" cOlTlprised a vl'hiclc's architectllre including its t! OO ql :lll,
suspcnsioll system alld layollr of powert raill <lIlel major CUlllpOllellts. FrOIll 2000 tu
2009 there was an imrorranr trend tow;ll'ds hllilding Illlliriplc Illoel Is Oll a single
platform in ureler to expj()jt scal e ecollollli cs alld to facilitatc new product
developmcllt. For eX:l 11lplc, Forcl' s c: J pht[(11'1l1 is lI sed for the Ford Focus, the
lvlazda J, the Ford C-lll<1X, ami the Volvo S40 ,lnd G50. In ellgillt'S, j:ord lllol'l'li tu
thr ee ellgillc fal11ilies: V- P./V-IO, V-(, :1lld [-4 (foul' ill-linc cylinders). T he [-4 cll)',itlc
has ()Ver 100 variations; ir has <lll aIlIlLI ;J I volllille of I. S millioll ;l11d is huilt ar Ihrec
- CASI; 4 FOHD AN]) THE won Lll AI ITOMUlll LC: 1 ' !l USTlt\' S:l
FIGURE 4.4 I lVii" ptlu:r 'lulomakers
BMW
Supplies of parts to one
anolher. Ford Malaysia
assembles BMW cars.
Collaboration on
TOYOTA
Patent cross-licensing
CHONGOING
CHRYSLER
CHANGAN Joinl research into
Joint venture to
emissions and electric
assemble Ford
vehicle technology
DAIMLER
Joint research
into fuel cells
FI AT
Iveco Ford Truck Ud
is a UK truck-making
joint venture
TA TA
Purchase of Jaguar
& Land Rover linked 10
cooperation on technology
and components
PEUGEOT
Partnering in
diesel engine
Equity stake cut to 13%.
Shared technology,
designs & components.
Several JVs.
FIRST AUTO WORKS
A joint venture with Volvo to
produce engi nes in China
GENERAL MOTORS
Joint venture 10 produce
transmissions
Joint venture to
produce components
in India
different pbnrs-one in N o rrh Aill er ica, o ne in Fllrope ,lnd o ne in ,Japan.
Allt o!notiue News l' xp l:1i: lc d: "Tlle idea is ro sh:lre syste ms in 8f cas rlur customers
cm'r see and kcl, ;] nd differe nti ,lte rh e brands in a re" s they c ln. "
Thc Manufadlln'I'S
Tll e Jlujol' autoill o bile nl<lllllfacmrers ,He sllown in Taille 4 .2. 'fhe of rh e
leading pr o ducers werc dOlllinat ed hy U.S., Jap;lll ese, all d E\lrope,1 Il cll!l1panies ;
outside of thes e cOlill tri es ollty }--[Yllnda i of Korel was :1Jnong th l:' leading
m'1I111fa Crllrers. 1\11 rhe lll ajor manufaetllrcrs ;] re trlultinariollJ I: b o rh CM alld r o rJ
l1rodu ce mo re Clrs olHs id e th e LJ. " Ihall within ir; HOJl(b prodllces more Accords in
tlt e U. '. than in j:lP::lIl. As :1 res llir so me COllnlries-norabl y Canacb, Sp,n, ami the
UK- .1re signinclIll Juto- pn)Lili cing cOlll1rries withollt having a ny signific3nt
dOI1l es tic auro compa llies. Ove r rhe P :1S[ rwo dec lcl es the indust ry has cO!1solidJted
rhrollgh me rgers ;.lOd aeqlli s il'iol1 s (see T:lill e 4.3). The finail cial probl e ms of Japanese
KorC3n al!to co mpan ies clilring rhe Jare .I 990s acce lerarcd th is process . As ;]
reslIlr, U. S. and Fllropean ca rllukcrs aCClllircd s ignifi ca nr propo rtions of the J:1pan ese
;)!\l! I"Cl r C: ;11l lll!fP Th\;' lin:ll1ci;!I c ri s is o f 2008-9 resll ired in l.i t d e
conso!ida tion : Fiar's aeClllisirion of Chryskr was the only 1l1 3Jo r merger. In bet, d1e
54 CASrc 4 POIl D AND nm WOl1Lll AI ITUMOBILI': INDlI ST IW -
TAl TABLE 4.2 Thc world's IcnJing alllo 1ll,lIl1lfnClIHcr<,
Year Production ('0005 of autos and commercial vehicles)
2009
2009
1992 1996 2000 2002 2004 2005 2007
GM U.S. 6764 81 76 8114 8326 922 1 9200* 9350
2009
Toyota Japan 4249 4794 5897 6626 7674 7974* 8534
2009
Volkswagen Germany 3286 3977 106 5017 4785 5243* 6268
2008
Ford U.S. 5742 6611 7206 6729 672 1 68 18* 6248
2008
DaimlerChrysler Germany 2782 4082 4666 4456 45 51 4829* 4635
Hyundai
a
S Korea 874 1402 2488 2642 2283 2534 3987
2005
Honda Ja pan 1762 2021 2469 2 88 3 141 3391" 391
2005
Peugeot Franee 2437 1975 2879 3262 3078 3375 3457
Japan 2963 27 12 2698 27 19 3226 3569* 3431
2002
Fiat Ita ly 1800 2639 2191 1776 1708* 2679
2000
Renault
b
Franee 1929 1755 2515 2329 2490 2533* 2669
200
Suzuki Japan 888 1387 1434 1704 2392 2630 2596
2000
BMW Germany 5 8 641 835 1091 1255 1328* 1542
2000
Mitsubi shi Japan 1599 14 2 1613 1821 1334 1381 141 2
1999
Mazda Japan 1248 984 972 1044 1104 11 49* 1287
1999
Daihatsu Japan 610 691 n.a. n.a. 870 909 856
1999
AvtoVAZ Russia 674 562 756 703 727 732 736
1998
FAW China n.a. n.a. n.a. n.a. n.a. n.a. 6 1
1998
Tata India n.a. n.a. n.a. n.a. n.a. n.a. 588
1998
FUJi (Subaru) Japan 648 525 581 542 555 571 585
1998
ISU2U Japan 473 462 572 437 578 642 532
1998
1997
n a. - nol Cl vcll iabie.
19 7
*Sil les data.
1 9E
" Includlng Kia.
1996
b iJ Kluding Dacia and Samsung.
1995
SOll rce. Ward's Automotive Yeal book
1 95
1994
1991
main o utcome was fur Lher fr:1gmelltari o n (e,g, l, M's at telllpts to scl l its Saab ami 1990
Ope l subs idiari es), In the llI ea lltime, allumber o f d omes tica lly fo ll seu 1990
mall ufacturc rs- especially frOlll C hina allJ lndia- were building agiobai presc[[ ce. 1 87
1987
1 86
Olltsollrcing and thf" Role 01' Suppliers
OU!c:
H e nry Ford's system of lllass product ion was sll pporreJ by heavy baekwa rd
integrati on. At Ford 's gi a nt River Rouge plant, iron ore en tercd at one end, Model
Ts elllcrged at the other. Ford even o wned rubber plantations in the Arnazoll basin.
T he trend of the past 30 years has been towards increasing outsourc ing of mate rial s,
components, and sc': vices in orde r to :l c hieve lower costs and inereased t1exibdity,
At the end of the 19905 GM and Ford both SPUI1 off theil' comp onent
manllfacturing businesses as separate compani es : l )elphi alld Visrcon, respectively.
Relatiol1ships with sll pp liers also ehallged. The J apa llese model of dose,
5
icles)
CASl,4 Fo rm ,,\ ;\1 1) 'I'l llcWOllLD AUTO 'lORILE: I N IH ISTHY 55
Year Acquirel Target Notes
2007
)*
93'10
I'
85 4
62 ) 8
k
6248
*
4035
398 7
3912
3457
3431
2679
r 69
25%
1542
1 12
128 7
85
736
691
588
585
5 2
2009
20()C)
2009
2 09
2008
2008
2005
200
2002
2000
2000
2000
2000
1999
1999
1999
1998
1998
199H
Fl98
1998
1:, 97
I 97
1996
1996
1995
190':,
l CJ 4
199 1
1990
1990
1987
1987
1986
Volbwac,JPrl
Fia t (I tal y)
VolkswaClen
Bd JlnO u tnnlOlI ve Ill dLhtl)' C rp.
I la (I nd ia)
SAle Molol Group (China)
l\JanJ il l C] Automobile (China)
TClvota
GM (U S)
Rpnault (FIal 10::)
GM (US )
Dallll iel lhryslt'r (Gennany)
DaimlerChrysler (Germany)
Renal ll t (I-ri1 nce)
Ford (Ll S)
Fo rd (US)
Daim1 1 enz (Germany)
VW (G el'm a11Y)
Hyundai (So1 1t h Korea)
Daewoo (Solltli Korea)
[')aewoo (Sou 111 Korea)
Pro tOll (MalaY<;ICl)
BMW
Daewoo (South Korea)
Daewoo (South Korea)
hat (ltaly)
Ford (U S)
Da woo (S. Kore,))
VW (cl PI'many)
(3M (U S)
Ford (U S)
Fort! (US )
Cl lrysler (lJ S.)
VW (Gel rnd ny)
Suzuki
Ch rysl er
PO l sr lw
IUJ lan M otor; Cilang feng M ot nl
laguM Ca r,>, Lal ld Rov r (UK )
Nanpng Automobi le
Rover (U.K)
I UJI Heavy Indu'>Lries
Daewoo (South Korea)
'>Cl msung Motor<; (Soll th Korca)
Fiat (I U y)
Hyundai (South KOl ca)
Mlt subi shi M otors (Japan)
NI<; an (Japan)
Volvo (Sweden)
La nfl Rover (UK)
Chr)! I r (US)
Rolls ROYLl:' Motors (U K )
Kia (5 Kore )
5 anqyonq M otor (Soul h Koreil )
Isu ng Motor (South Korea)
Lotus (U K)
Ruver (I J K,)
1" ,) 0 (Poland)
I ubli n (Pol dnd)
FC;M (Polanu)
Mazda (Japan)
OI1C1tJRodae (Romani a)
koda (Czeeh Repuhlie)
Saab Scandia (Sweden)
Jag uar (UK)
AstOll al' ti n (U K)
I dnl hmghl il l (ltaly)
Seat (Spatn)
ACl1 ulles 20% stake
Merger aCJ reed
Acq ll ired f rolll raid
, Ale now owns both MG
allel ROll t '1
AU.j uir co d 8,7%
from G
L12 "/o 01equll y acqulle r
70% of equit acqul l'ed
2 .J% of equi ty aC'lllli' d
10% 01equity .Jcquircd
34% ul equity aCClulred
38.6% of equity acql ill l:! d
Acrt uires ca r onl
Acqul l eJ from BMW
8191] sI ClLl lo merger evel
ACClulreci fl om Vickel 5 pie
50% 01 equlty acqulied
SoU/ ce: new J-'dper I" pa ns.
co llahorative long-rlln relati ol1ships wlth thell' "first-ti er" supp liers has dispbeecl
rhe U.S. model of cOl1tracr-hased , arm's-Iengrh l'eL1ti onships. llnited Sutes' .md
El.lrOpe.ln <1l1 tornakers now have lang-term rel ari onships wirh ,1 br SIllaller \1Urnber
of slippli ers. ,\s th e le<lding cOmp Oll ellt snppliers have gained
to r I >( hllo logica l dc:ve10l'rne ll l- espcciall y in sop histi ca rcJ
sul u,sel\1blles such as rr ::\I1 srnissi o ll s, br.,king systems, elecrrical anJ elecrrni c
56 CASr,4 FOTW ANO nI WOTlLD AUTOMOBILE INIlUSTlty - --
TABLE 4 .4 Jh:VCllllCS anJ protil;lbililY 0 1' the bi f,\ ges l ;lIllolJl uli vc IlIll\Hlfl Clll

Revenues ($ bill ion)
ROA (%)
1994 2000 2008 2008
Roberl Bosch (Germany) 19.6 29.1 58.5 1.7
Denso Corp. (J apan) 11 18.2 40.3 6.7
Johnson Controls (US) 7.1 17.2 35. 9 0.6
Aisin Seiki (JapalI) 7.3 8 .9 271 4
1
1
Magna International (Canada) 10.5 23.7 0.1
Delphi Automotive (US ) 29,1 18.1 n.a.
Eatoll (US) 4.4 8.3 15.4 6.6
Lear Corp (US) 3. 1 14. 1 13.6 (10)
Valeo SA (France) 3.8 8 .9 11 .4 (32)
Visteon (U S) 1<,).5 9.5 1.2
Dana (US) 5.5 12.1 8.7 n.a.
n.a. = noi available.
Source. Company financial statements, Forbe<;
equipmellt' lhey have also grown in size allel global reach. Boseh, Denso, JO!Jll SOll
Controls anel Delphi are a[rnost as big as some oE the larger <lutomobi[e companies
(see 'l:1hic 4.4).
QU{St. fOI' Cost Redu('(ioll
Incrcasing cornpetition in the industry has intensifled the quest fm eost reductioll
among automobile manufacturers. Cost-reduction Il1casures havc inclucled :
Worldwide outsourcing. Olltsourcing has grown from individual componenls
to major subassemblies (such as engines anel steering syslems) to comrlete
cars as has been Iloted above. In addition, auto firms have dcve! opecl original
equipment manufactlller slIPP[y auangel11enlS amongst tbcmse!ves : Chery of
China and HYllndai produce cars for Chr)'sler, which are sold und,'" tbe
Dodge badge in North AmLTica.
TAl
Just-in-time scheduling, which bas radicall)' reducecl levels of inventor)' and
work-in-progrcss.
Shifting manufacturing 10 lower-cost locations. VW's North American
producti ol1 is bascd in 1\1cxico and it moved production frolll German)'
to the Czech Repub[i c, Spain, and HungarYi Japanese companies have
Narl
movcd more and mo re production to lower cost locations in Soutbcast
Sout
Asia; Mercedes and l:Hvl\Xf cleve[oped gree nfie[d plants in the deep sOllth
Euro
Mi d(
of the U.S.
Japil
Q Collaboration. Forcl' s alliances (see Figure 4.4) are typical of tbe joint
Soul
technolog)' and product development among automobile companies i!ltcnded
to sha re costs.
50ult
CASI;; <I FOrW AND ,[,[I E WOllLD AUTOMOBILE INDl ISTRY $7
Despire consranr dfo rrs <11 lowering rhe nlJj or were 11113ble to
achieve rhe L1nir cosrs of ups[;lrr producers in China, lndi :l, and oth er low labor cost
counrri es . Tara Morors' [aunch of Ib N . .\!lo model in 2009 undcrlinecJ rhe challenges
Ll ced by rhe global majors. T II <' ' ::m o was <1 four- seat er, 623cc city CJr, wllich
Jchievcs :llIll OS t 70 l1liles per ga llon of gaso line. Howeve r, whJ r gained the atrenrion
of all rhe world's ,1Il rornakers was irs price: at 1 15000 rupecs ($2420) ir W:1S rhe
wor ld 's clleapesr new car.
Exccss Call<lcj(y
The greatesr srnIcrmal probl em of the indusrry was excc:..>s capaciry. Ever since the
ca rly 198 0s, the growrh of proJucri on capaciry had olilstripped rhe growrh in rhe
de llland for cars. Imporr resrricti oll s held l'xacer bated rhc problelll. During the 19805
all d ea rly 19';! ()s, Nfl rrh Americall producti on cap:lcit)' grew sll bstJnriall y JS a res ulr
of J'lp:lnese cOl1lpanies hllilLling gre ellfi eld "rransplants." The op porruniri es
prese nted b)' rhe growl h of private Il1ororing in Lastern Eurupe, Asia and I .:Hin
All1erica during rhe 1')905 reslilted in a rush by all rhe world' s leading alltorn<1kers
(" 0 build new planrs iu these cOllnrri es. FlIrrher bi g addirions ro worlci pr od ucri on
capaciry resulred fr oll1 rhe exp;l1lsion of rhe Kore:1n car indust ry durillg 1992-7.
Even where demamI was growing bsrest-slich as China, where sal es grew Jnllllally
hy almos t 5()(Yh hetween 2002 ami 200H- growth of caraciry oursrripped growth in
demal1l1. Ar rhc hegil1ning of 20()9, CSM Worldwide estirn<Hed global exccss
capaciry ar 34 lllillion lInirs (se T able 4.5).
I ooking ahead, ir appeared as rhough ca paciry reJucri ons hy Ford, GJ\! ami a fe w
orher compani cs would be more rhan offser hy [he !lew rhar wOlllci bcgin
prodllction cJming 2007- 9. These incllideJ rhree new Toyota pbnrs (one in lnclia,
two in China), two new I londa plams in Nonlr AmericJ, Hyundai planrs in rhe
CI. ceh lZt' publi c and U.S., PSA in Siovaki a, and ar leas r a dozen ar her new pbnrs in
China allel India.
I nfcrnationaI izatioll
Ac<.: essing growing fllar kers , exploirillg sca le eco nomie s in purchJs ing,
tec hn olog)', alld new pr odllCl develo!,lllenr were [he !11 ain drivers o f internarion;ll
TAilLE 4.5 AlIIOnl ohi k prodllcllol1 ( ,'paci l)" !O()l)
Production capacity Production Excess apacity
(millions of units (millions of units (millions 01 units
per year) per year) per year)
NOllh Ameri ca
South Ameri ca
EUl ope
Mldcll e East alld Afri ca
Japan and Korea
South Asiil
S, urce . (' SM Woildwi de.
173
27 .3
2. 5
17 3
8.3
10.1
3.7
17.8
1.7
13.9
"1. 7
7.2
1.8
9 5
0.8
3.4
3.6
58 4 FOfUJ ANIJ nm WORLD AUTOMOBILE I ll USTHY
e xpansion. Althollgh Fore! ami G neral Moto rs began interndtional expansion
back in the 1920s, untd the 1970s the wodd ,lllto industry was made 111' of fairly
sep:uate national markets where ('ach national marke t was dOL11inated by
inelige nous producers. Each of the large r national markets was supplied prilllarily
by domestic pro eluction and manufacturers tenclecl to be market kaders.
1l1lernati o nalizatioll has l11eant that, whde there are now far fewer allwl11akers in
the world as a whole, concentration has d eclined in most nCltiollClI markets. ;:or
exal11ple, in 1970 the "Big Thrcc" (G M, I'ord, and Chrysler) held dose t o iL'iq!c)
of the V.S . market, VW ancl Da imler Benz dominated the market in Gcrmany, as
diel Fiat in 1taly, Br itish Leylancl (bte r Rover) in the U.K., Seat in Spain, ami
Renault, Peugeot, anel Ci troen in France. lnternationalization meant that all the
worlel's leacling manufacturers we re competi ng in most of the cOlll1tries of the
wo rld. As a result, the market dOl11inance of 10 :d finns was undennined (sec
Table 4 .6).
The rise of new markets anel the quest fm low production costs has rcsulted in
maj o r shifts in global distribution of prodllCtiol1 (see TabIes 4 .7 ami 4.8) . etweell
TABLE 4.6 Alll01llol!ilc mrll kl" in i"Jividlial cOlilltr ics (O/ll)
1988 2006 1988 2006
U.S. U.K.
GM 36. 3 23 .5 rord 26.3 18.5
Ford
Da imlerChrysler
Toyota
Honda
2 17
113
6.9
6.2
16.7
10.8
13.9
8.8
GM (Vauxhall)
Pcugeot
VW
BMW/ Rover
13.7
8.7
n.a .
15.0
12.7
10.0
12 .9
4.6
France
Renault
Peugeot
VW
29. 1
34.2
9.2
24.8
28.2
11 .6
Japan
Toyota
Ni ssan
Honda
43 .9
23 .2
10.8
40.4
14.0
12. 2
Ford 7.1 6.0 Suzuki n.a. 12. 1
Italy
Fi at
VW
59 .9
117
28 .5
10.8
Korea
Hyu ndai
Kia
55 .9
25.0
50.0
23 .3
Ford 3.7 7.8 Daewoo 19.1 10.0
Pcugeol
Renaul t
n.a.
7.1
9.6
6.4
Germany
VW/ A udi
GM (Opel )
Ford
28.3
16.1
10.1
27.8
9.7
8.0
M ercedes 9.2 113
n.a. = not avai la ble.
Sourn:>s. Japan f.\utomobde Manu(actll rers Association; Korean Automobil e Manufacturers AssoCiation;
A K. BIndei (ed.), Ward 's Automotive Yearbook, 2. 009, Wards COlllllluni cations, Southfield MI , 2009.
CASE 4 FonD ND Tim WOHL!) AUTOMOBILE Il'\DlJSTRY 59
TABLE 4..7 Wurld 1110101' vdli ch: production by cUlIIHr i emd n:giollS
(perccnt;lgc (I r woriJ rotal )
1960 1989 1994 2000 2005 2008
us 2.0 23. 8 24.5 22.2 20.0 18.6
Western Europe 38.0 31 .7 31 .2 29.9 28.4 20.7
C ntral and E h lrope 2.0 4.8 4.3 4.6 54 9. 5
Japan 1.0 1 .2 21.2 17.7 17.0 1 .7
Korea 1.8 LI. 6 5.0 5.3 5.5
Other 7.0 19.7 14.4 20.6 24.0 29. 0
Total units (milliolls) 12.8 49.5 50.0 57.4 66.8 69.4
SOUrtf: A K. Binder (ed), WanJ' s Automotive Yearbook, 2009, Wards Commurl ications, Sout hfield MI,
2000.
l
l
90 and 2008, hina, Korea, razil and Inc!ia established themselves Jmong rhe
world's leac!ing l11otor-vehicle prodllcers as a res ult of rapidly growing domestic
markers ancl low proclllcti otl costs. Ncver thdess, the continuec! leadership oi
C ermany, J :t ran and the U.S., llespire their high costs, pointecl to the power of
agglomeration effects in maintaining the competitiveness of long-cstablished
production centers.
TABLE 4. 8 '('op- L'l ClHJll t r i cs, _OOS (thOII'.;alllh. 0] cars;
exd ud
1987 1990 1995 2000 2005 2008
Jnpan 7891 9948 7 64 8363 9017 9916
China na. Il.a. 356 620 3118 6341
Germany 4604 4805 4360 5132 5350 5532
US 7099 6077 b338 5542 4321 3777
Brazil 789 663 1312 1348 2009 2561
Korea 793 987 1893 1881 2195 2436
France 3052 3295 3051 2883 3113 2144
Spain 1403 1679 '1959 2445 2098 2014
India n.a. Il. d . n a. 541 999 1507
Russ la * 1329 1260 834 967 1288 1469
U.K. 11 43 1296 1532 1641 1596 1448
Mexico 266 346 710 11 30 846 1217
Canada 810 1072 1 39 1551 1356 11 95
Poland 301 256 260 533 527 840
Italy 170 1 1874 1422 1442 726 659
u.\ S.R. in 1987 dllr1 19 O.
SOl/tees Japan Aut omobil e Associat ion; Korean Automobi le M nufacturers
A K Bindei (ce.!), Wal d' Aul OlT1o tlv Yt:!dl lJook 2009, W,uds QllI nlulli
Soulhfield MI, 2009.
GO CASE 4 FOHD A D THE WORLO AUTOMUBIL/<: INOUSTRY - -
TABLE 4. 9 Huurly () l1l pcnmli o ll fr lI1ul o l' vcl1 idc (U.S.$ per 11 0m ,
incl ud ing hendil')
1975 1984 1994 1998 2002 2004 2006
Germany 7.89 11. 92 34.74 34 .65 32 .2 0 44.05 45.93
US o 9. 55 19.02 27.00 27. 2 1 32.35 3.95 35 .12
U.K. 4 .12 7.44 15. 99 20.07 21.1 1 29.40 29. 95
France 5.10 8.20 18. 81 18.50 18.73 26 .34 29.41
Japan 3.56 7.90 2
c
1 22.55 24.22 27 .38 27.84
Spain 5.35 15 .37 153 4 15. 11 21. 55 24.18
Korea 0.45 1.74 7.81 7. 31 12.22 15.82 19.04
Italy 5.1 6 8.00 16. 29 16.44 15.67 21.74 18.62
Mexico 2.94 2.55 2.99 2.2 1 3.68 3.50 3.73
Source . U.S. Depart ment of Labor, Bureau ur La bor Stati sti ..s
As he reVlslted his financial forecasts for the neXl planning periocl, ooth realized
that Ford's ability to generate profit would depend nut just upon the recovery of
demand in the worle! automobile market but also llpon how compctition wOlltcl
affect the kineI s of profit margin that the inelustry woule! be earning over t he next
foul' years. What would happen in tenl1S of mcrgers, capacity rationali zation, alld
'l1try by emerging market manl1facturers into world markers wOllld clearly have a
major impact on the overall margins that the inclllstry would carn. As of June 2009,
there was little evidcnce that the structural anticipated by many industry
insiders were matnializillg. In particular, there was no evidence that recession anel
sca le economies werc pushing the industry towarels radical consolidation. Despite
the widely held belief that the minimum efficient scale for a full-Jine automobile
producer was five million units some of the industry's most succcssful
companies- such as MW, Suzuki. and Tata Motor- had output hr below
this threshold. Mcanwhde, General Motors and Ford with output weil in excess of
five million units anllually wen: struggling for survival.
Booth also rccgnized that, despitl' the appearance of the industry becoming
ossified by government support for existing carmakers, there was also the
potential for radical change. The cOl11bination of environmenta l concerns anJ
technol ogical change might lead to a number of diffnent scenarios. With global
warming accelerating, government regulation and COnSU!lH: r pn.'krences seerned
likely to accclerate th e shift frol11 large ro small cars and hasten the obsolescence
of the internal combustion engine. Tbe transiti on to clectric vehicJes would offn
opportunities for a range of new entrants into the ind ust ry-particularl)f those
cornpames with well-developcd capabilities [11 electrical engll1eerIng.
Environmental concerns-particularly rising urban congestion- might al so res ult
in a dramatic decline in private transportation in favor of public transporration,
TAB 1
GM
Fo/cl
Chrysl,
Dair nl,
TUYOle
VVV
Hand,
rat
Nis ar
IJeugE.
R Il ill
BMW
Mi t u
Hyun'
Mazd
" I\nnl
b Daill
or possibly private lTlotOring based upon short-term rental rather than ca r
ownership.
n.a. =
SOU" '
CASI, 4 "OIeD A"ID TIl E: WOR LD All TOMOTlllY I ' llT IST l l Y 61
ooth W;lS p:uri clIlJrJy cogniz,lnt oE rhc llldli stry's I'I'opensiry ro rer;1 ill ollrmoued
ass urnprions concerning the automobile nu r ket aod Its economi c clri ve r' - Illdeed,
rhis was ;1 pnnlJry reason wh y rhe Dcrroit "Bi g Three" werc In sllch a elire
predl GllTlcnt. These deepl y entrenched ;lss umpri o ns incJudl'J: the beli ef thar scaJe
economil'S we re the primary dri vers o E cOll1peritiveness, rh;ll Ilwre W:JS no viable
:liternative tu rhe llHcrn:li COlTlbus li on cll glll e, t hat effici cllcy reqllired o (kring a Eull
r:lIlge of models, rh <l t blp; C;lrs wert' lllor e profirJblc thall sm;liJ C Jr S, ;:lIld dur
consll rners alwJYs prefc: rrcd more-ln ll'rlll ,) of alld JCCl'ssories- to k ss. Reccnr
events held cOllfounded ITl ;JnY of these assumpti ons. Convenrional noti ons abollt the
artractiveness of dlfferenr prodllct segments ;lppe;lred to he brc;lklng down: S0111e (I (
rhe most popular-- and profir;lble-nev\' proci uct launclws h<1d beL:ll sll1a[J cars: rhe
BMW Mini anJ Fi <t r Cinquecento in p<t rti clIlar. The gloh:ll success of rhe
Prius anel I lollda lnsigllr r oinred ro ellviro nlll enul awareness <lmong conSUlTl el''i
ev -' 11 in tbe absc ll cc of govenllnenr illduce illents. Ncw appro;) cll l's ro product
developlllcnL- includillg vil'wal prorot yplng, modular desigll and coll aborauve
design ami ckvelopmellt-h;lVe rhe pOlcnri al co l)Verturn convenri onal rebrionships
between selle and COl11p n iliVeness. Tl1\' effi ciency-bJsed loglc of mass prodllction IS
:dso lwing chalknged by ll ew developllll'nrS in fl eXible rnallllfactu ring aud incr-cased
opporruIlltics COI Cll Srollliz<1lI0I1. Part of the a ppeal of rhe I"M\XT l'v1illl <tnJ har
Cinquecento has hee n t heir v; ISI potenll:ll for cll stumization.
'rALE 4.10 COlllp.II1 Y .,ales ($ hillion )
1980-4
a
1985-9
a
1990-4
il
1995 9
01
2000-4
a
2005 2006 2007 2008
GM 68 110 128 169 186 193 207 181 149
Ford 42 77 96 149 166 177 160 172 146
Chrysler 13 28 58 n.a. 60 Il.a
lJ
Da imler 12 34 59 71 166 177 200 146 135
Toyota 18 42 E2 107 125 173 179 20J 265
WJ 16 28 48 64 96 113 138 lGU 160
I tonda 8 18 35 62 80 84 'lLI 12 1
FI t 18 2/ 42 SO '}9
55 68.4 86.1 83.7
16 26
r, 1
57 58 81 89 109 91
Pelloeot 13 19 28 35 58 67 89 77
Renault 15 31 31 37 44 47 55 60 53
BMW 5 10 21 34 4"; 55 65 82
Mllsu bishi 12 14 7,} 32 27 20 41 4 61
Hyunddi Mol or n.a. l'.a. Il.d. 18 38 58 8 7L1
M Lda n.a . 12 LI 18 19 25 25 28 35
, 1\1111 LI al average.
b Dalmler 2000 6.
11 .3. - not availdL1lc.
. (l I/lU! COrlll'dilY li'killclal HO(1vcr<,
fi2 CM m4 l'lmJ) I\ND T []E WliHLIl INIH.ISfIlY
'fABLE 4.11 { .. "lIlp.... } plOfahdi l y ( r <:1II 1"II Oll Lqlli l }" "/ (,)
1980 4
c1
t985-9
a
I 990-4
a
1995-9" 2000-4 2005 2006 2007 2008
GMb 114 11 .8 3.2 27. 5 117 nc. nc. n.c. 11.C.
Ford 04 21.8 5.9 3 54 (77) 18.8 Il .C. (482) n.c.
Chrysler 66.5 20.8 2.0 24.5 n.a. n.a. n.a .
Dai ml er 24.3 18.3 6.9 22.1 7.7 8.0 9.5 13 .1 5.5
Toyota 12.6 10.6 6. 1 6.8 10. 1 13.6 12.6 12.9 (50)
'IIN 1.6 6.3 (04) 111 6.8 4.7 7. 130 13. 4
Honda 18.1 11 .8 5.3 15.1 13.2 11.9 113 111 1.3
Fi at 10.9 18.7 6.il 7.6 (24 2) 3.5 16.0 28.3 23. 3
Nissan 10.3 LU 3.6 (0.1) 29.3 17.2 13. 0 13.7 (89)
Peugeot (152) 36.7 12.'1 3.0 134 n.a. n.a. 5.8 (38)
Renault (1 524) 51.1 9.1 11 .0 14.7 17.6 14.2 12.7 3.2
BMW 14. 8 104 9.7 (40) 154 13.2 14 <:, 11.8 127
Mitsubishi 10.0 7.9 4.8 (5 3) ( 11 3.3) (13 17) 3.7 112 (2 57)
Hyundai Motor n.a. n.a. n.a. 44 10.6 n.a. 10.7 12.5 11.0
Mazda n. a. 4 .8 5.0 6.3 (342) 17. 1 4.9 120 15.8
a Annual avel dl)e.
l, GM made a net 1055 01 $2 billl n Ifl 2006. $39 billi on In 2007 anu $31 bn. in 2008.
n,a. = not il ail able.
n.c. = not calculable (shareholders' eqll i ty negative).
Source COll1pany fi nanCli.l 1 statements; Hoovers.
Notes
Furd' s stockhu ldc rs' equit )' was nega tive $ 17 . .'\ hillioll used 10 transport goods . T hc problem is ehae, ill ehe
at the end oE 20UR . U.S., spo rt-lHilirr vc hi eles 'l lid pick-up trucks used
2 " US Ca r Indll slry : ack 0 0 thc ROrt d, " Final/cial prilllarily for personal transportaeion are d assc" as light
Ti/ll es. J une 17,2009. tru cks. Irlcall y we wOlllci [0 ddinc the aut olli obile
3 Fo rd MotOl .ompany, Ilu siness Plan Sli hmitred [() the indllscry as l o mpri sing aU lO lll o bilcs and li ght Iru cks
Senat<, Banki ng Cornmill ce, Dc,,:clllber 2, 2008 , p. 1b. (valls, pick-up Ir ucks, SUVs, passe nger vans), i. c .
.. Note thai d iffe ren t staristi ca l :1 l1 thoriei cs appl )' <'Xdll dill g hcavy trucb ,md Lrrgc buses. H"wcve r, Inost
de finiti ons of ' 3I1eumobil e." The basic distincei un is o f t hc st:uiseics we II S aggr egare all to" w bilcs and <111
berwccil allt ('l I1l('ll>iks (('l r "passe nger Glrs") uscd to (OllIIlH: r L iJl ve hi dcs.
t ra nspore people ami cutll lll crcial ve hi elt:s ("CllI cks ")