A Case Study about the Automotive Industry in China
Abstract: It is widely believed that the enter of multinational automakers and the ownership reforms of native enterprises promoted the development of China’s automotive industry in recent years, but no study has been conducted on it’s productivity. In this study, using micro-data on China’s automakers from 1999 to 2004, we tried to elucidate the characteristics of the development of China’s auto industry.
The problem is, did the productivity of China’s auto industry rise after the arrival of foreign makers and the ownership reforms, which took place in China’s native auto enterprises? In step with China’s rapid economic growth, domestic demand for automobiles increased explosively. In order to satisfy this demand, not only foreign makers but also native automakers promptly increased investment in the industry. If the automotive industry of China grows without improving productivity, development will be hard pressed to continue.
SUVs, luxury cars and high end motorcycles to get more expensive in this year’s budget
In his budget speech, Finance Minister P Chidambaram announced a number of changes in excise duty and import duty structures for a few segments of the market. The biggest hit obviously being the hike on all SUVs which will now attract an excise duty rate of 30 per cent as opposed to 27 per cent previously, except for SUVs bought to be used as taxis. The import duty on fully built cars has also been increased steeply from 75 per cent to 100 per cent while the import duty on motorcycles above 800cc has gone up from 60 per cent to 75 per cent.
Justifying his decision on hiking the excise duty for SUVs, Chidambaram stated that SUVs take up more space and are not as fuel efficient as other vehicles, therefore the subsequent increase. Interestingly, the industry was asking the government to slash the excise duty on SUVs from 27 per cent to 22 per cent, but matters seem to have gone the other way around. SUVs have been one of the fastest growing segments in India and while the auto industry overall has been posting a slowdown, the SUV segment has continued to draw in the numbers…
What is the Toyota Production System?: It is a management philosophy that seeks to optimize the organization to meet customer needs in the shortest time possible, in the highest quality and lowest cost, while increasing security and morale of its employees, involving and integrating not only manufacturing, but all parts of the organization. The Toyota Production System (Toyota Production System – TPS) has been more recently referred to as “Lean Production System.” The production “lean” (the original English, “lean”) is actually a term coined in the late 80′s by researchers IMVP (International Motor Vehicle Program), a research program connected with MIT, to set a production system more efficient, flexible, agile and innovative than mass production, a system able to better address a changing market. In fact, lean manufacturing is a generic term for the Toyota Production System (TPS).
A Bit of History: Origins of the Toyota Production System The TPS was originally developed for manufacturing. So for the perfect understan ding of TPS, is, first and foremost, understand its origins in manufacturing, specifically in the automotive industry. The enthusiasm by the Toyoda family’s auto industry began even earlier in the century after the first trip to the United States Sakichi Toyoda in 1910. However, the birth of Toyota Motor Co. should be even Kiichiro Toyoda, son of the founder Sakichi, which in 1929 was also on a technical visit to the Ford factories in the United States. As a result of this enthusiasm and belief that the automobile industry will soon become the flagship of the industry world wide. Click here to read more…
Forty years ago when Peter Drucker phrased the auto industry as the ‘industry of industries’, little did the carmakers know about outsourcing and technology sharing. Now, when most of the markets are brimming with competition from across the globe, carmakers had no option but to keep their costs low. In this context, Asia first emerged as a manufacturing hub with countries like India, South Korea and China becoming outsourcing destinations.
The Indian context is particularly striking as the country opened its doors to foreign automakers only in 1992. After a little more than a decade, Indian automobile industry stood as a shining example of producing low-cost cars with international quality norms. From Daimler Chrysler to Ford to Hyundai, most of the global carmakers today see India as the global hub of car manufacturing and component outsourcing. Even indigenous carmakers like Tata Motors and Mahindra & Mahindra have made inroads into the global markets. Recently, Tata Motors reached an agreement with MG Rover of Britain to supply 100,000 of its ‘Tata Indica’ to Europe. To refer this case study click here India- An Automobile Hub in the Making