Multinational Carmakers Regional Strategies

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Reference

Freyssenet M., Lung, Y., Multinational Carmakers’ Regional Strategies, in Carrillo J., Lung Y., van Tulder R., Cars, carriers of regionalism?, London, New York: Palgrave, 2004, pp 42-56. Digital publication: freyssenet.com, 2007, 200 Ko, ISSN 7116-0941.

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Abstract

The automobile sector is often presented as the archetypal global industry. In this view, the car business is one of the main drivers behind the homogenisation of the world, both because of firms' internationalisation strategies (mergers-acquisitions, establishment of facilities in emerging countries, world cars, international division of labour, etc.) and also as a result of the social practices such firms enact via their organisation of work and at the lifestyle (automobile civilisation) level. The present article is an attempt to deconstruct a representation that neglects the heterogeneity of firms and spaces; the great diversity of the strategies being pursued; and the inherent contradictions of the competitive process. Without purporting to analyse carmakers' internationalisation strategies in their entirety (cf., Freyssenet, Shimizu, Volpato forthcoming; Jetin, 2001), it delves into issues relating to those regionalisation strategies that carmakers are most likely to follow in their attempts to rebuild at a regional (supranational) level a modicum of coherency between productive systems and automobile markets - coherencies that no longer necessarily materialise at the national level that had once (during the post-war boom years) been the arena within which they could regulate themselves.

To apprehend the dynamics of regional integration, emphasis is placed on actors' (the firms') strategies and their close interaction with certain political and institutional elements (Boyer, 1999). In the current historical context, "regionalisation" is construed as a structuring of the world-space into various regions that are distinct both from the globalisation (homogenisation) process and from earlier and partial/parallel "regional integration" processes. The present paper does not use an institutional definition of regional integration (c.f., chapter 2 by Denis Audet and Rob van Tulder), rather it sees the regional integration process as one component of an automobile firm’s spatial management strategy. The two aspects (institutional/strategic) clearly interact with one another: firms' strategies respond and/or are involved in the development of an institutional compromise between sovereign States, and inter-governmental agreements can sometimes cause firms to make new choices.

The first section of the present paper reviews the fundamental elements involved in analysing profit strategies and productive models in an attempt to specify the issues at stake, as well as the way in which such strategies and models participate in carmakers' forms of internationalisation. This analytical matrix (Boyer, Freyssenet, 2000b) will be applied in the following sections. The second section provides a historical perspective, reminding the reader of the greater or lesser extent to which carmakers have been involved in the partial regional integration processes that ran from the 1960s until the advent of the new globalisation events that were so intimately associated with the 1990s. Lastly, the final section of the article is an attempt to analyse the regionalisation process in its contemporary form, seen as an ongoing process which involves a rebuilding of spaces of regulation - and as one that is diametrically opposed to the phenomenon of globalisation.

Although a logic of production (economies of scale) has induced automobile manufacturers to extend their area of commercialisation on a global scale, it is in their articulation with a market, their getting into sync with a demand, that they have incorporated the regional tier as a level at which they can achieve a certain coherency. Except for the two extremes of the scale (bottom of the range/prestige automobiles), there are limits to the homogenisation of global demand, and the failure of Ford's attempt to integrate its activities globally shows that automobile firms should be looking for more appropriate strategies – and above all, for models or innovative forms of organisation that are better adapted to a particular regional space. It is not at all certain that the real challenge is to be the first to globalise - mono-regional strategies (such as the one that PSA has pursued), bi-regional, multi-regional, even trans-regional strategies, all can be relevant at a certain time, and in a given space. Is it possible to devise a productive model that allows for a combination of all of these strategies (mono-regional for certain products; multi-regional for partially overlapping market segments; global for homogenous segments)? A certain number of carmakers seem to be looking in this direction - starting with Ford, where this approach has been broken down into light trucks in the US; Focus-type world platforms for high-volume models; and the Premier Automotive group for deluxe marques. Others having started down this road include Toyota (mini city cars in Japan; Corolla/Prisma in their regional variants; and the Lexus group) or Volkswagen. To function, internationalisation strategies must incorporate a regional level; and develop enterprise government compromises that enable firms to operate in this type of combinatory register whilst avoiding the incompatibilities and incoherencies that have so often been a source of tension in the past.

Content

1. Growth modes, profit strategies and productive models
1.1. Volume strategy and Fordian model
1.2. Volume and diversity strategy and Sloanian model
1.3. A quality strategy that is still looking for a productive model
1.4. Permanent cost reduction strategy and Toyotian model
1.5. Innovation and flexibility strategy and Hondian model

2. Automobile firms: drivers of regional integration?
3.1. Regional integration as a means for creating a production system that is compatible with a given market’s demand for automobiles
2.2.The automobile industry as an active participant in regional integration processes
2.2.1. Free trade in North America
2.2.2. European integration
2.2.3. Regional integration has not been the rule everywhere
2.2.4. The peri-central regional integration
2. 3. Factors driving the regional integration processes

3. Internationalisation in a new century: between globalisation and regionalisation
3.1. Two scenarios
3.2. Globalisation at the core of strategic extremes: "volume" vs. "quality"
3.3. The Sloanian model: between globalisation and multi-regionalisation
3.4. The difficulties associated with a strategy of trans-regionalisation
3.5. The progressive internationalisation of the Hondian and Toyotian models: has glocalisation been a success?

Conclusion

Key words

Automobile, Automobile industry, car makers, merger, take-over, alliance, enterprises separation, internal growth, external growth, globalization, regionalization, internationalization, multinational companies, national growth modes, profit strategy, productive models, innovation, flexibility, business history, theory of firms, regional integration, free trade

Concerned disciplines

Economics, Management, Geography, History, Political Science, Sociology.

Writing context

Contribution
to personal questioning
to scientific reflexion of research laboratory or network
to national and international scientific debate
to diffusion of scientific results
to implementation of scientific results

References, commentaries, critics

Curent relevance

See also

Possible purchase websites

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Dates of page updating

2007.09.01

Date of the on lining of the downloadable text

2007.09.01 : Freyssenet M., Lung, Y., “Multinational Carmakers’ Regional Strategies”, in Carrillo J., Lung Y., van Tulder R., Cars, carriers of regionalism?, London, New York: Palgrave, 2004, pp 42-56. Digital publication: freyssenet.com, 2007, 200 Ko, ISSN 7116-0941.

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