German Automobile Industry

Topics: Automotive industry, Porsche, Volkswagen Group Pages: 12 (3058 words) Published: December 11, 2013
Abstract
The main content of the essay concerns the German automobile industry. Combining with Porter’s diamond theory, the competitiveness of this sector is analyzed in detail. The essay is divided into two sections. In section one there is a brief outline for the German automobile industry regarding diverse factors in production, employment, export and innovation. In section two, the specific analyses for the German automobile manufacturing in terms of determinants of the diamond theory is illustrated explicitly. Furthermore, it is imperative to explain the European economic background concerning policy, market, labor force, technology and infrastructure. Finally, the influence of cultural function is illuminated with respect to the German vehicle industry.

Section One
As a key manufacturing industry in the twentieth century, the automobile industry has seen its competitiveness distinctly. Dicken (2007, p.278) mentions that the significance of this industry not only embodies in the scale but also the correlation of other industries and fields, such as oil consumption and related employment.

The European automobile industry grew rapidly compared to their counterparts in the United States and Japan. According to Altshuler et al. (1984, p. viii) France, Italy, Japan, the United Kingdom, the United States, and West Germany occupied three-fourths of the auto production in the world and two-thirds of the vehicle sales. In addition, the production rate is 30 percent which is ahead of Japan and the United States during 21st century (Layan and Lung 2004, in Julien 2008, p.70). In 2003, the European automobile market increased by 0.4 per and reached a value of $267.8 billion (Datamonitor, 2004).

Among European countries Germany was the largest manufacturer of automobiles in 2003 (EIU, 2005), with market reaching a value of $54.02 billion (Datamonitor, 2004). The famous German companies BMW, Daimler Chrysler and Volkswagen stand for the world's standard and quality of vehicles. In addition, Volkswagen holds the largest market share in this industry, accounting for about 0.2 per cent of the European market value (Datemonitor, 2004). Moreover, the turnover of the German automobile industry is €226bn. and an export surplus of €80bn (ACEA, 2010).

Indicators of Competitiveness

Production
The automobile production is a chief component of the German economy (EIU, 2005). According to the figures of VDA (2010), the production of German vehicles was 6.0 million in 2008 and 5.2 million in 2009, which stood the first place among other European countries.

The figure (SMMT 2005, in Dicken 2007, p.305) above illustrates the pattern of European automobile production. It is evident that Germany held the considerable position in this industry.

Employment
The German automobile industry is a crucial contributor in employment. According to the data from ACEA (2010), around 1.4 million people work in the automotive sectors or relevant sections. Additionally, the workforce has experienced an upward trend over the past decade.

Export
Germany addresses the abroad market constantly. The rate of export of light and heavy commercial vehicles increased by 4.2 per cent and 11 per cent respectively (EIU, 2005). In 2009, the rate reached to 68.8 per cent (VDA, 2010). Compared to Japan, which concentrated in business with the United States, Germany altered its interests to North America (Dicken, 2007, p. 301). The massive success has been achieved in the automobile export (Herber and Eva Vega, 2000).

Innovation
The chief factor concerning innovation caters to the auto industrial advancement in Germany. This manufacturer provides the leading innovative technology for environment protection in terms of air quality, noise reduction and recycling, etc. As reported by ACEA (2010), the research expenditure is over the average of the EU’s, accounting for 2.5 per cent in Germany, whereas 2 per cent of GDP in the whole of...

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