Title: How are manufacturers adjusting to declining demand for internal combustion engine vehicles? Changes to the footprint of engine production and sourcing patterns

Authors: Thomas H. Klier; James M. Rubenstein

Addresses: Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, IL 60604, USA ' Department of Geography, Miami University, Oxford, OH 45056, USA

Abstract: This paper examines how vehicle manufacturers are adjusting to a world of shrinking volumes of internal combustion engines (ICE). We find evidence of a significant reduction in the variety of engines offered in ICE vehicles between 2016 and 2023. When we compare the footprint and sourcing patterns of engines for vehicles assembled in North America, we find no material change between 2016 and 2023 in the number of engine plants or vehicle assembly plants producing ICE vehicles. However, carmakers are using their reduced engine offerings to simplify the spatial connections between their engine plants and their assembly plants.

Keywords: engine souring; industry geography; declining ICE production.

DOI: 10.1504/IJATM.2026.154709

International Journal of Automotive Technology and Management, 2026 Vol.26 No.1, pp.1 - 17

Received: 24 Feb 2025
Accepted: 11 Jul 2025
Published online: 10 Jul 2026 *

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