Table Of ContentAutomotive Global Value Chain
Today, some suppliers have grown increasingly powerful and in certain cases,
earn revenues that rival or even exceed that of their automaker clients. In the pre-
globalisation period, automakers wielded absolute power over their significantly
smaller suppliers. This book reveals the upending of this relationship, with the
gradual shift in the balance of power from automakers to their suppliers in this
era of globalisation.
The book examines how suppliers in the global tyres, seats, constant velocity
joints (hereafter ‘CVJs’), braking systems and automotive semiconductor indus-
tries have evolved into powerful oligopolies through a mix of acquisition and
organic growth strategies. It also highlights how joint ventures could be strate-
gically deployed as springboards to acquisition, as they enable firms to familiar-
ise themselves with their partners’ markets and operations. Moreover, the book
analyses the disruption stirred by the entry of well-resourced technology titans
into this industry and their inevitable clash with the traditional incumbents.
This book is an invaluable reference for anyone interested in learning more
about the automakers’ and now their suppliers’ relentless quest to create market-
dominating intelligent driving systems.
Wilson Kia Onn Wong completed his PhD at the Centre of Development Stud-
ies, University of Cambridge, under the supervision of Professor Peter Nolan,
who holds the Chong Hua Chair in Chinese Development. His PhD research
focused on the factors driving the formation of oligopolies in the global auto-
motive components industry, specifically in the tyres, car seats, constant velocity
joints, braking systems and automotive semiconductor subsectors. Moreover, his
research interests span both quantitative and qualitative studies, with particular
emphasis on the empirical analysis of the impact of corporate takeovers on acquir-
ers’ stock returns and the economic history of the rise of key automotive manu-
facturers and their suppliers over the last five decades.
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71 Automotive Global Value Chain
The Rise of Mega Suppliers
Wilson Kia Onn Wong
Automotive Global
Value Chain
The Rise of Mega Suppliers
Wilson Kia Onn Wong
First published 2018
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa
business
© 2018 Wilson Kia Onn Wong
The right of Wilson Kia Onn Wong to be identified as author of this
work has been asserted by him in accordance with sections 77 and 78
of the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic, mechanical,
or other means, now known or hereafter invented, including
photocopying and recording, or in any information storage or retrieval
system, without permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks
or registered trademarks, and are used only for identification and
explanation without intent to infringe.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Wong, Wilson Kia Onn, author
Title: Automotive global value chain : the rise of mega suppliers /
by Wilson Kia Onn Wong.
Description: Abingdon, Oxon ; New York, NY : Routledge, 2018. |
Series: Routledge advances in management and business studies ; 71 |
Includes bibliographical references and index.
Identifiers: LCCN 2017015839 | ISBN 9781138237049 (hardback) |
ISBN 9781315300993 (ebook)
Subjects: LCSH: Automobile supplies industry.
Classification: LCC HD9710.3.A2 W66 2018 | DDC 338.8/
876292—dc23
LC record available at https://lccn.loc.gov/2017015839
ISBN: 978-1-138-23704-9 (hbk)
ISBN: 978-1-315-30099-3 (ebk)
Typeset in Galliard
by Apex CoVantage, LLC
Contents
List of figures vi
List of tables vii
Foreword viii
1 Introduction 1
2 The global automobile industry 13
3 The global tyres sector 30
4 The global automotive seats industry 87
5 The global CVJs industry 130
6 The global braking systems industry 163
7 The global automotive semiconductor business 202
8 Comparative analysis of the five components subsectors 263
9 Conclusion and further research 276
Index 287
Figures
3.1 Bridgestone’s 2015 annual revenues 35
3.2 Bridgestone’s 2015 revenues by region 35
3.3 Michelin’s 2015 annual revenues 44
3.4 Michelin’s 2015 annual revenues 44
3.5 Michelin’s 2015 revenues by region 45
3.6 Goodyear’s 2015 annual revenues 53
3.7 Goodyear’s annual revenues by region 54
3.8 Natural rubber suppliers by 2015 revenues 67
4.1 JCI’s 2015 annual revenues 91
4.2 JCI’s 2015 automotive experience by region 93
4.3 Lear’s 2015 annual revenues 99
4.4 Lear’s 2015 annual revenues by region 100
4.5 Faurecia’s 2015 annual revenues 107
4.6 Faurecia’s 2015 revenues by region 107
5.1 GKN’s 2015 annual revenues 133
5.2 GKN’s 2015 driveline revenues 134
5.3 GKN’s 2015 revenues by region 135
5.4 NTN’s fiscal year 2015 revenues 145
5.5 NTN’s fiscal year 2015 revenues by region 146
6.1 Continental’s 2015 annual revenues 167
6.2 Continental’s 2015 revenues by region 168
6.3 Bosch’s 2015 annual revenues 173
6.4 Bosch’s 2015 revenues by region 174
6.5 ZF’s 2015 annual revenues 180
6.6 ZF’s 2015 revenues by region 181
7.1 NXP’s 2015 annual revenues 208
7.2 Infineon’s 2015 annual revenues 215
7.3 Infineon’s 2015 revenues by region 216
7.4 Renesas’ fiscal year 2015 revenues 222
7.5 Renesas’ fiscal year 2015 revenues by region 223
7.6 STM’s 2015 annual revenues 230
7.7 STM’s 2015 revenues by region 231
Tables
1.1 2015 market shares of leading oligopolists across
the five subsectors 4
2.1 Top ten automakers in terms of global production: 1998 14
2.2 Top ten automakers in terms of global production: 2015 15
2.3 Comparison of leading automakers’ R&D expenditure
against emerging market players’ 21
3.1 Goodyear’s net income (loss) 2001–2015 55
3.2 Sri Trang increased investment in seven subsidiaries 68
5.1 GKN’s 2015 sales by customer 136
7.1 Renasas’ net income (loss) 2010–2015 224
Foreword
Since the 1980s the global business system has gone through a revolutionary
transformation. The automobile industry has been at the forefront of this pro-
cess. A dramatic process of cross-border mergers and acquisitions has contributed
to high-speed industrial consolidation of the leading ‘system integrator’ firms
in both the passenger vehicle and the closely related commercial vehicle sector.
A handful of firms now control almost the entire global vehicle market. The
market in the high-income countries is stagnant. Vehicle ownership in develop-
ing countries is far behind that in the developed countries. In the decades ahead
almost all of the growth in vehicle markets will take place in the developing coun-
tries. A small group of companies with their headquarters in the high-income
countries are poised to take advantage of this huge and fast-growing market.
Alongside the greatly increased level of industrial consolidation among the
‘system integrator’ firms, pressure from these firms has stimulated a revolution-
ary transformation of the entire supply chain. Through their vast procurement
spending the system integrator firms have forced a comprehensive transforma-
tion of the industrial structure of the huge supply chain of this industry. Intense
pressure from the system integrator firms has forced their leading suppliers to
build just-in-time global supply chains, invest heavily in research and develop-
ment, and place pressure on their own supply chains to lower costs. Every part
of the supply chain of global vehicles has now become controlled by a handful of
giant sub-system integrator firms. Ferocious oligopolistic competition has driven
unprecedentedly rapid technological change across the entire supply chain of this
vast industry.
The automobile industry is entering another era of revolutionary change, which
is being driven by the penetration of the vehicle industry by information technol-
ogy. Traditional assemblers and manufacturers in the vehicle supply chain face
potentially severe competition from leading firms in the information technology
hardware and software industry. The nature of the relationship between informa-
tion technology and traditional manufacturers is still in its infancy. It remains to
be seen whether the relationship will be one of deep cooperation or ferocious
competition. The way in which this relationship evolves will be at the heart of
institutional and technological change in this massive industry in the years ahead.
Foreword ix
Wilson Wong’s research offers great insight into this process. Few scholars
have penetrated so deeply into the texture of this revolutionary transformation
of a hugely important part of the global business system. His path-breaking
research deep in the supply chain of this industry will assist scholars and business
practitioners to understand better not only the revolutionary transformation of
recent decades but also helps to deepen their understanding of the even more
revolutionary changes that lie ahead. His unique in-depth research into the sup-
ply chain of this immensely important industry will form a key text for scholars
and business practitioners attempting to understand better the evolution of this
industry in its transition from traditional manufacturing to a new world in which
information technology is deeply embedded within every vehicle and each vehicle
is directly connected to the material world around it.
Peter Nolan
Chong Hua Professor of Chinese Development,
Director,
Centre of Development Studies,
University of Cambridge.
