The structure of world vehicle markets – which countries will make it and which will not

In chapters 1 and 2, we showed that the automobile industry is large and important. It has a significant role to play in economies, accounting for 10 per cent of a developed nation's GDP. We know too that the global market is mature and that the growth in places like China and India is unlikely to make up for the stagnation and decline elsewhere. These conclusions raise several questions. First, we look at the countries that are trying to develop an auto industry, that see the importance it has and the kudos it brings, and ask which ones will actually make it. Many are trying to become large, scale-intensive manufacturers of cars and trucks. Which will succeed? Conversely, which countries with a major role to play in the industry today will see their influence wane? Second, how much of a role do trade agreements have to play? If markets are completely open and there is plenty of capacity in the industry already (and there is), then demand in many emerging markets can be satisfied with imports. So how open will they be?

The automotive industries in different countries are not equal. Some are massive and scale-intensive, others are emerging and protected, and some are little more than jobbing shops, making cars from kits using substandard local parts and pretending to their governments that they are serious scale-driven competitors in this tough global business.