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Analysis of the relevance of China’s development for main European automotive manufacturing countries

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Abstract

This article examines the impact of China’s growth on the main EU automotive manufacturing countries during the last decade. We study to what extent China represents a significant final destination market and a major partner inside EU automakers’ international value chain, through the analysis of final and intermediate products trade flows, value added trade flows as well as intra-industry trade shares. The research evidences that, in a critical context characterised by stagnation in developed economies, Germany has attained a sharp increase in exports of domestic value added to the Chinese car market. On the contrary, the other EU countries have not succeeded in their attempt to build a stable industrial relation with China regarding the automotive sector.

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Fig. 1

Source: EUROSTAT (COMEXT) and own calculations

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Notes

  1. In this section the automotive sector is defined following the classification utilized by the WTO and the European Commission (European Commission 2014; WTO 2014b), including final products (SITC 781, 782, 783) and automotive parts and pieces (SITC 784, 7132, and 7783). See Table 12 for a detailed classification. Following the NACE classification, the NACE 34 code is normally employed to analyze the sector (European Commission 2009).

  2. The Japanese carmaker Nissan is by far the UK’s biggest producer by volume, with 502,000 cars in 2013. British brands Jaguar Land Rover (340,000 cars in 2013) and MINI (175,000) stand in the second and fourth positions. The Indian group Tata Motors owns jaguar, while the German BMW Group owns MINI. Toyota and Honda are the other main producers located in the UK.

  3. SITC 78439 “Other parts and accessories” has been eliminated, because it includes a wide variety of different articles and could have distorted the ITT analysis.

  4. In 2011 the US experienced a deficit of 5300 million $ in automotive trade with China because of a 5300 million $ surplus in vehicles and a deficit of 10,500 million $ in parts and pieces (See United States Department of Commerce, USDOC).

  5. Volvo Cars was taken over by the Chinese Geely Holding Group in October 2009. The new company, Geely Sweden AB, has reported positive financial results in recent years, with a growing volume of sales in the Chinese market (Volvo Cars 2014).

  6. According to 2012 figures, the top three investors in R&D in the automotive sector were headquartered in Germany (Coffin 2013): VW ($11.7 billion), Daimler ($7.4 billion) and BMW ($5.2 billion). Next in the ranking appear PSA ($2.7 billion), Renault ($2.5 billion) and Fiat ($2.4 billion).

  7. The joint venture was founded in 1985 and during the first 5 years of its operation, the firm used the remodelled Shanghai Tractor and Automobile Corporation (STAC) manufacturing facilities, an old factory with a labour-intensive assembly line that had an annual production capacity of 5000 vehicles (Posth 2006).

  8. At present China is the second-largest market after France of Peugeot Citroën, even if the initial experience with Guangzhou Peugeot Automobile Company in 1985–1996 was not successful (Fernández and Shengjun 2007).

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Authors and Affiliations

  1. Department of Applied Economics I, University of the Basque Country UPV/EHU, San Sebastian, Spain

    Andoni Maiza

  2. Department of Applied Economics V, University of the Basque Country UPV/EHU, Bilbao, Spain

    Ricardo Bustillo

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  1. Andoni Maiza
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Correspondence to Andoni Maiza.

Appendix

Appendix

See Tables 8, 9, 10, 11 and 12.

Table 8 Employment and production in automotive sector, 2008–2013.
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Table 9 World production and share by leading manufacturers, 2014.
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Table 10 Shares of 2011 sales and production in home country (%).
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Table 11 Passenger-car sales in China by brand and car marker, 2014.
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Table 12 Automotive sector.
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Maiza, A., Bustillo, R. Analysis of the relevance of China’s development for main European automotive manufacturing countries. Econ Polit Ind 45, 403–424 (2018). https://doi.org/10.1007/s40812-018-0095-z

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