Foreign Direct Investment in Latin America and the Caribbean 2017

94 Chapter II Economic Commission for Latin America and the Caribbean (ECLAC)
Box II.1 (concluded)
Although the crisis hit all vehicle manufacturers, it was felt much less intensely by
foreign manufacturers with operations in the United States. In general, Japanese and German
companies had lower fixed costs and a more balanced product range aligned with consumer
needs. In fact, they sold more passenger cars than light sport utility vehicles (SUVs), light
trucks and pick-up vehicles.
Many analysts disapproved of the measures adopted by the government, arguing that
Chrysler would go bankrupt even with a bailout, and that Ford really did not need one. The
main impact of the rescue was job savings at General Motors. Nonetheless, the economic
recession forced this firm to cut production and employment, despite the bailout. Moreover,
as the economic situation improved, the Japanese manufacturers Toyota Motor and Honda
continued to invest and create new jobs in the United States.
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
The upshot of this dynamic is automotive production currently concentrated in
a triad formed by North America, the European Union and certain Asian countries.
This represents a deconcentration with respect to the traditional predominance
of the United States, but also the creation of an oligopoly of countries, with few
significant entrants.
2. Stability among the dominant enterprise group
Although there has been a major shift in global production towards emerging
economies, the firms that have pursued this strategy are the same as have
dominated the industry over the last few decades (see figure II.5). Between 2000
and 2015, four of the top five vehicle manufacturers have remained at the apex of
the industry. Japan’s Toyota Motor, Germany’s Volkswagen, and General Motors
and Ford of the United States have been able to defend their leading positions.
In contrast the United-States-based Chrysler, currently part of Italy’s Fiat Chrysler
Automobiles (FCA), which was hit by the 2008 financial crisis and has undergone
multiple changes of ownership, slipped several rungs. In contrast, the South Korean
group Hyundai Motor emerged as the world’s third largest vehicle producer in 2015
(see figure II.5 and annex table II.A1.3).
Early in the 2000 decade, manufacturers in the United States, Europe and Japan
each accounted for around 30% of world production. Fifteen years later, while
the European and Japanese manufacturers had maintained their share, those of
the United States had dwindled to around 16%. In the same period, however, the
manufacturers of China, India and the Republic of Korea increased their weight in
the global automotive industry. Particularly significant has been the performance of
Chinese firms, which expanded from a 1% share of global vehicle production in 2000
to one of 13% in 2015. To access the market, overcome protectionist measures and
take advantage of State support, the leading international manufacturers started
operations in China in partnership with local enterprises, with a commitment to
share technology. Although Chinese production is essentially for the domestic
market, the leading firms also have started to export (see box II.2).
Historically, vehicle manufacturers have made and sold a large proportion
of their production in their country of origin. More recently however, transport
costs, exchange-rate risks, trade barriers, the saturation of domestic markets and
favourable growth prospects in certain emerging markets have sharply reduced this