Foreign Direct Investment in Latin America and the Caribbean 2017

Foreign Direct Investment in Latin America and the Caribbean • 2017
Chapter II
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As a result of the geographical restructuring of production and business consolidation,
global production is currently concentrated in a few companies. Some 50 manufacturers
from a dozen countries generate 99% of global production, with about 30% generated
by the international production network of Japanese manufacturers. Further behind are
firms from Germany (16%), the United States (16%), China (13%) and the Republic
of Korea (9%).
In 2015, the top five manufacturers were responsible for 46% of world production;
and the top 10 accounted for 72%. Between 2000 and 2015, apart from the arrival of
the Korean company Hyundai and ownership changes in Chrysler, the key changes
were the evolution shown by the largest manufacturers grouped by country of origin.
While the United States firms, General Motors and Ford, which had led the industry
at the start of the 2000 decade, experienced a rapid loss of world production share,
Asian manufacturers, mainly Japanese (Toyota, Nissan and Honda) and those from the
Republic of Korea (Hyundai), substantially improved their global position. Over the past
15 years, the combined market share of General Motors and Ford has dropped from
27% to 15%, whereas the four largest Asian manufacturers (Toyota, Hyundai, Nissan
and Honda) boosted their share of global production from 23% to 31%. European
firms display conflicting trends: while Volkswagen (and to a lesser extent Bayerische
Motoren Werke (BMW)) increased their share of world production (from 9% to 11%),
the PSA Group and Renault slipped back (from 9% to 7%). This could change following
the PSA Group’s takeover of Opel, bringing the French manufacturers in line with the
German trend.
Although the ten largest manufacturers have maintained their importance, new
players have started to appear and challenge them, most notably Chinese firms (see
Box II.2). While the top 10 manufacturers’ share of total global production shrank from
80% to 72% between 2000 and 2015, the production of own brands —not counting joint
ventures with other international manufacturers— of the largest Chinese automotive
companies in the world market increased from 1% to 13% over the same period.
Moreover, while there were just four Chinese firms among the 41 largest vehicle
manufacturers in 2000, by 2015 there were 21 in the top 50.
Despite the long-term slowdown projected for mature markets, competition in the
automotive industry is increasingly intense, with a larger number of manufacturers and
an unprecedented and growing number of models launched on the market. Between
2000 and 2015, the number of manufacturers grew from 89 to 97, while the number of
models increased from 1,544 to 2,306. While introducing new models on the market
has become easier, thanks to the adoption of global modular platforms as discussed
below, manufacturers face the new operational complexities of managing an ever-more
extensive product portfolio (IHS Markit, 2015) (see annex table II.A1.9).
In this complex and competitive landscape, an extensive network of relationships
has emerged among the major manufacturers (see table II.1). The corresponding links
currently include cross-shareholdings, the establishment of joint ventures and alliances
for collaboration in the technological field, and for the sharing of production or marketing
platforms. Although European and Japanese manufacturers are particularly active in
collaborating with their peers of the same origin, these relationships are not limited
to geographical proximity and there are many that bring together large companies
from different continents (for example, the partnership between Nissan, Renault and
Mitsubishi Motors).
The largest manufacturers have succeeded in maintaining their leadership positions
through an international relocation strategy based on an extensive network of alliances
with some of their peers to support a broad and flexible production base that makes it
possible to supply a wide range of products to increasingly segmented markets. The
Global production
is concentrated in just
a few firms. In 2015,
the top five
manufacturers were
responsible for 46%
of world production.