Modern Global Automobile Industry

Today, the modern global automotive industry encompasses the principal manufacturers, General Motors, Ford, Toyota, Honda, Volkswagen, and DaimlerChrylser, all of which operate in a global competitive marketplace. It is suggested that the globalization of the automotive industry, has greatly accelerated during the last half of the 1990's due to the construction of important overseas facilities and establishment of mergers between giant multinational automakers.

Industry specialists indicate that the origins in the expansion of foreign commerce in the automobile industry, date back to the technology transfer of Ford Motor Company's mass-production model from the U.S. to Western Europe and Japan following both World Wars I and II. The advancements in industrialization led to significant increases in the growth and production of the Japanese and German markets, in particular. The second important trend in industrial globalization was the export of fuel efficient cars from Japan to the U.S. as a result of the oil embargo from 1973 to 1974.

Increasing global trade has enabled the growth in world commercial distribution systems, which has also expanded global competition amongst the automobile manufacturers. Japanese automakers in particular, have instituted innovative production methods by modifying the U.S. manufacturing model, as well as adapting and utilizing technology to enhance production and increase product competition.

There are a number of trends that can be identified by examining the global automotive market, which can be divided into the following factors:

Global Market Dynamics - The world's largest automobile manufacturers continue to invest into production facilities in emerging markets in order to reduce production costs. These emerging markets include Latin America, China, Malaysia and other markets in Southeast Asia.

Establishment of Global Alliances - U.S. automakers, "The Big Three" (GM, Ford and Chrysler) have merged with, and in some cases established commercial strategic partnerships with other European and Japanese automobile manufacturers. Some mergers, such as the Chrysler Daimler-Benz merger, was initiated by the European automaker in a strategy to strengthen its position in the U.S. market. Overall, there has been a trend by the world automakers to expand in overseas markets.

Industry Consolidation - Increasing global competition amongst the global manufacturers and positioning within foreign markets has divided the world's automakers into three tiers, the first tier being GM, Ford, Toyota, Honda and Volkswagen, and the two remaining tier manufacturers attempting to consolidate or merge with other lower tier automakers to compete with the first tier companies.

1st Tier Company Mergers - Volkswagen-Lamborgini; BMW-Rolls Royce
2nd Tier Company Mergers - Chrysler-Mercedes Benz; Renault-Nissan-Fiat
3rd Tier Company Mergers - Mazda-Mitsubishi; Kia-Volvo

This section presents literature that examines three major automotive markets in North America, Europe and East Asia. This material is intended to provide a thorough examination of industry trends, structure, and the effects of global market dynamics of the automotive industry within each region, as well as their interrelationships, followed by literature researching the East Asian automotive market.