The global automobile industry

This chapter explains how today’s dominant automakers achieved their oligopolistic power, with only ten companies controlling over 75 percent of global production. Moreover, it delineates the technological and economic reasons for continued industrial concentration in this increasingly competitive industry. Further it asserts that the leading automakers from developed countries are not the only ones involved in M&A. Ambitious cash-rich lower-tier automakers from the developing countries are also using acquisitions as a means of not only acquiring market share but also much needed branding, distribution, technical and marketing capabilities which would have taken them decades to develop. More importantly, it explains how these powerful forces (in the form of a cascade effect) result in increasing industrial concentration even among their assigned suppliers, who have effectively become their ‘lieutenants’ in the global automotive value chain. The global automobile industry is highly concentrated at the automaker level, with around ten to 12 companies dominating the global automotive industry. This chapter explains how dominant automakers achieved their oligopolistic power, with only ten companies controlling over 75 percent of global production. It describes the technological and economic reasons for continued industrial concentration in this increasingly competitive industry. The chapter shows that the leading automakers from developed countries are not the only ones involved in mergers and acquisitions. Ambitious cash-rich lower-tier automakers from the developing countries are also using acquisitions as a means of not only acquiring market share but also much needed branding, distribution, technical and marketing capabilities which would have taken them decades to develop. The chapter explains how the powerful forces result in increasing industrial concentration even among their assigned suppliers, who have effectively become their 'lieutenants' in the global automotive value chain.