1997 Reports

International automobile production: How will firms compete in the 21st century?

Keller, Maryann

This paper discusses recent developments in the automobile industry with respect to
competitive advantage, particularly as these relate to capacity expansion at an unprecedented rate. Worldwide vehicle production ability is growing today more rapidly than it has in the last 20
or 30 years, and this has interesting implications for the world’s auto makers. Clearly most
automobile manufacturers are very optimistic about the willingness of consumers to buy up this
capacity. While environmental issues exist, they are not being factored into investment decisions
about increases in car production capacity. At present, the world has the capability of producing 15
to 20 million more vehicles than it is currently buying (approximately 56 million passenger cars and
light trucks annually).