The Future of the Automotive Industry: Dangerous Challenges or New Life for a Saturated Market?

34 Pages Posted: 26 Mar 2021

See all articles by Annamaria Simonazzi

Annamaria Simonazzi

Sapienza University of Rome

Jorge Carreto Sanginés

Universidad Nacional Autonoma de Mexico

Margherita Russo

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Dipartimento di Economia Marco Biagi di Modena

Date Written: November 24, 2020

Abstract

The automotive industry is undergoing a radical transformation. New social, technological, environmental and geopolitical challenges are redefining the characteristics of a saturated market, opening new scenarios while offering opportunities for the entry of new players. These challenges are bound to trigger reorganization of the global value chain between old and new suppliers and car makers and their suppliers, affecting the distribution of employment, the regionalization of production and the dynamic evolution of the comparative ad-vantage of nations.
In this paper we address the issue of the reorganization of global value chains in the face of these challenges. The analysis will compare the relative position of core and peripheries in the North-American and European macro-regions, focusing on Mexico, which represents a significant case study for analysis of the impact of the digital transformation on the domestic value chain in an “integrated periphery”, and of trade agreements on the location policies of big multinationals. The dependency of the Mexican automotive industry on the strategic decisions of global players is considered a factor of great vulnerability, especially in a context of rapid change in the patterns of consumption, technologies and international trade agreements.
For Mexico, as for European producers in the integrated and semi-peripheries, the main challenge in the near future will be posed by the radical transformation the industry is going through in electrical and autonomous-driving vehicles, which sees regions and players outside the traditional automotive clusters in the lead. The transformations taking place are bound to change the global structure of automotive production. The rise of new competitors from the emerging economies and would-be entrants from other sectors, competing in mastering the new digital and software technologies, threatens the established structure of the industry.
The pandemic has led to a spectacular acceleration in the process of change, while heightening uncertainty about future developments. This is why the governments of leading countries are joining in the race, wielding carrots and sticks in support of their industries and in the endeavor to encourage risk-taking and investment in research and innovation, step up e-vehicle production while providing for the necessary infrastructures, and guarantee their companies a place in the new industry.

Keywords: automotive industry, global production networks, integrated peripheries, Mexico, decarboni-zation, digital transformation

JEL Classification: L620; F230; F630; O330; O380.

Suggested Citation

Simonazzi, Annamaria and Sanginés, Jorge and Russo, Margherita, The Future of the Automotive Industry: Dangerous Challenges or New Life for a Saturated Market? (November 24, 2020). Institute for New Economic Thinking Working Paper Series No. 141
https://doi.org/10.36687/inetwp141, Available at SSRN: https://ssrn.com/abstract=3812788

Annamaria Simonazzi (Contact Author)

Sapienza University of Rome ( email )

Via Eudossiana, 18, I-00184, R
Italy

Jorge Sanginés

Universidad Nacional Autonoma de Mexico ( email )

México

Margherita Russo

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Dipartimento di Economia Marco Biagi di Modena ( email )

Viale Berengario 51
Modena, Modena 41121
Italy

HOME PAGE: http://personale.unimore.it/AddressBook/Home/mrusso

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