Then and Now: How and Where has the Car Industry Grown?

By Lewis on 15th July 2019 - View Comments

When you’re talking about the car industry, there are definitely some major players. America, Japan, the UK…but how has the car industry been growing – or shrinking – across the world?

With global vehicle production increasing by a whopping 157% between 2000 and 2018, Quotezone has examined the total motor production output from the top 14 countries between that period and analysed how their share on the global market has changed over the years.

The car market itself has remained quite stable in terms of overall production, but you can see from these GIFS that there have been huge shifts in power within the car industry. Let’s look at how it’s impacted specific countries…

America

The States is known for its muscle cars, and they’ve been selling rather a lot of them between 2000 and 2018. The early 2000’s saw them share plaudits with Japan for high car production levels, and in the period this report was studying, they accounted for 14% of car production.

However, they have seen a major drop in production due to one factor – China. Its explosion onto the scene has dealt everyone a blow, but America has arguably suffered the worst; its market share was 22% in 2000, and only stands at 12% today.

China

Across the entire period of the study, China produced 19% of the world’s cars. That begs the question: why has China turned into such a massive motoring superpower in the last 18 years?
To answer that, you have to go back to before 2000. After spending 3 billion dollars on imported vehicles in 1985, the country was faced with a severe trade deficit – much more was going into China than was being shipped out. To combat this, the Chinese government imposed a ban on imported vehicles that same year. This might not have been good for the rest of the world, but it had a big benefit for Chinese car makers. Deals were struck with companies like Volkswagen that allowed passenger vehicles to be produced in China, boosting local output.

Further advancements came in 2001, when China became part of the World Trade Organisation. This opened up China to more international trade, and by extension, forced companies within China to up their efficiency.

The Chinese car industry even managed to weather the storm of the 2008 financial crisis – when Europe and North America were struggling, China was making its way up the food chain. And the statistics show this – between 2008 and 2009 China went from producing 13% of the world’s cars to 22%.

Even in the last decade, China has been making more strides – in 2008, the government implemented a strategy to focus more on research, development and increasing production capacity. To the surprise of no one, it worked wonders – with production capacity growing by 48% in just one year.

Germany

Germany might have had a big part to play in China’s rise to power in the 1980’s, but the study finds that they haven’t been doing so well more recently.

In 2000, Germany was manufacturing a healthy 12% of cars, but by 2018 this had almost halved. Germany’s market share has also dropped from 9% to 6%.

China has, of course, caused this to an extent, but there’s also a factor you might not expect – Brexit.
“But they’re not leaving the EU!”, you’re probably thinking.
This is true. However, the declining interest in the UK importing from European countries has been shown by Deloitte to have a major potential impact. Amongst other things, there would be a slump in sales – with 255,000 fewer cars being sold as a result of a hard Brexit.

Brexit would also directly endanger German jobs, with 18,000 of the 60,000 jobs in German manufacturing at risk.

Britain

So, what of us here in Britain? Well, as the second GIF in this article shows, in the last 18 years we’ve never risen above 3% (and even that figure was from the very early 2000’s). We, like most other countries, were hit hard by the 2008 financial crisis – but overall, our 3% of
production amounts to 24.3 vehicles produced for every member of the population.

Our car industry is undoubtedly being affected by Brexit: just last June, Toyota’s Derbyshire plant lost the contract to make the Avensis, and more generally, the UK’s automotive production fell by 9.5% between 2017 and 2018; bad news, considering that the Society of
Motor Manufacturers and Traders (SMMT) had predicted record vehicle production levels in this period.

The Toyota Avensis

And with Honda set to depart the UK in 2021 – doing away with 3500 jobs in the process – rates of production could fall even more. From 2012 to 2016 Honda produced, on average, 135,693 cars in the UK. Quotezone has worked out that their departure could bring the UK’s
total global market share to just 1.59% in 2021.
It all makes for some sobering reading, but if you look beyond the numbers you’ll see that it’s not all doom and gloom.

China has put aside a lot of resources to promote and create UK factories – with Norfolk getting a state-of-the-art Lotus HQ, and research and development in the UK for their cars likely to continue. Jaguar Land Rover also have plans to create a new battery assembly centre for electric cars in Warwickshire. Perhaps Business Secretary Greg Clark was right to emphasise Britain’s “unrivalled business environment “ in a 2016 letter to former Nissan CEO Carlos Ghosn.

The General Picture, and Some New Faces

A lot can change in 18 years – and as we’ve seen, no country’s fortunes have been stable. Even Japan, who once accounted for 13% of global production, faced a steady decline to only 10% by 2015.
Most notably, there was a relatively big downturn in global car production in 2018, with it decreasing by 6%. None of the 14 leading countries increased their production levels this year either; possible reasons for this include new European emissions laws, which we’ve discussed before on this blog, and associated changes to the manufacturing process.

Overall, it’s the big three – Japan, China and the USA – that have largely dominated proceedings from 2000-2018. But we’d suggest keeping an eye on newcomers like India and South Korea: they may have only accounted for 5% and 4% of all car production in 2018, but emerging manufacturing facilities and company takeovers make them countries to watch as the car industry continues to change.

What are your thoughts on the growth of the car industry over the last 18 years? Where do you think the numbers will be in the future? Let us know in the comments section below!

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