Automotive manufacturing is a fundamental activity of any large industrial economy, and has formed a foundation for industrial leadership of national economies such as the United States, Japan, Germany, and France. Of the top ten automobile companies by global units sold, four are Japanese (Toyota, Nissan, Honda, Suzuki), two American (General Motors, Ford), two French(PSA, Renault), one German (Volkswagen),and one Korean (Hyundai). Yet by far the largest national location for the production of automobiles is China; in 2009 13.8 million vehicles were produced in China compared with 7.9 million in Japan, 5.7 million in the United States, 5.2 in Germany, 2.5 million in Korea, and 2.0 million in France. Two other BRIC nations, Brazil with 3.2 million units and India with 2.6 million, had greater production than France (as did Spain with 2.2 million) (oica.net).
The automotive industry is a prime example of how multinational companies create value chains across countries as well as tailor their strategies to succeed in different markets. Its contribution to building regional competences and upgrading local production capabilities and innovativeness remains highly important.
Now, China and India are poised to become major players in the global automotive industry. Multinational auto companies have been attracted by low-cost of labor and growing domestic markets. In locating in these developing economies, the MNCs have teamed with indigenous companies in building local skill bases, technology competences, and R&D centers.
Why do automakers go abroad? And in what ways?
Do they have different strategies for different countries? What distinguishes their strategies for developed and developing/emerging countries?
Do global automakers deploy the same business models in the host countries as in their home countries?
How are indigenous firms upgrading their technical skills by working with major auto makers?
What impacts do major automakers have on the economic development of host countries in which they do foreign direct investment?
What types of policies need to be put in place to promote greater knowledge transfer and movements up the value chain by indigenous firms?
In many countries, governments are now taking steps to structure the entrance strategies for global automakers. Of particular importance is a high degree of localization through close cooperation with indigenous component producers, with an emphasis on engaging in technology intensive activities.
theAIRnet research focuses on the development of indigenous manufacturing capability in developing countries such as China, India, and Turkey (which produces over 900,000 vehicles).
theAIRnet is also launching research programs on the aeronautics and high-speed railroad industries