Inherent risks of production internationalisation strategies in the automobile industry Online publication date: Fri, 27-Oct-2006
by Peter R. Knittig, Shinji Shimizu, Robert J. Ballon
International Journal of Value Chain Management (IJVCM), Vol. 1, No. 2, 2006
Abstract: This paper evaluates the production internationalisation strategies of major automobile manufacturers in recent years and reveals the potential risks of the increased internationalisation trends for the future of the automobile industry. At the outset, the current and future internationalisation strategies of the major carmakers are examined. This evaluation reveals that the major automobile manufacturers are increasingly shifting production to lower-cost countries in Asia, Eastern Europe, and South America. Despite the unmistakable advantages, these internationalisation strategies are not without hazards. In fact, the concentration of production in lower-cost countries may lead to the declining competitiveness of car industries in developed countries. In turn, the increased reliance on lower-cost countries is dangerous because of political and market uncertainties and exchange rate instabilities. Negative developments in these areas have the potential to seriously damage the global automobile industry in the long term.
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