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BERA - Business & Economics Research Advisor - A Quarterly Guide to Business & Economics Topics

Issue 2: Fall 2004 : The Automotive Industry

Modern Automobile Manufacturing

While the automobile is a commonly used product, it is an extremely complex and technologically sophisticated one. Manufacturing new cars requires state-of-the-art technological methods and processes. In addition, supplier industries of the automotive manufacturing industry, such as steel and other parts as well as electronic instrumentation, are vital in providing the necessary supplies and components for assembling motor vehicles.

To improve product quality and efficiency in production, automakers invest a large amount of time and money into developing and improving the manufacturing process, and rely heavily on research and technological innovation. Over the last 75 years, significant technological development has taken place, changing and reinventing how motor vehicles are produced.

Technology has increasingly altered the manufacturing process for motor vehicles. While cars are produced at faster rates, automakers must continue to balance increased productivity and efficiency with quality and innovation. Modern technologies used in advancing manufacturing for the automotive industry include:

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Table of Contents

Automotive History
Global Automobile Industry
    North American Market
    European Market
    East Asian Market
Automobile Manufacturing
Company Research
Industry News and Analysis
Electronic Resources

  • Programmable machines and tools;
  • Near-Net Castry;
  • High speed data communication and data management;
  • Supercomputing;
  • Virtual manufacturing and complex visualization techniques;
  • Advanced forging techniques.1

Over the last 25 years, automation technology has become an essential part of automobile assembly plants. A typical assembly plant uses several hundred robots to build and paint the vehicle frame. 2 While robotic technology continues to grow in assembly plants, the technology does have limitations, especially in performing more delicate tasks. The advent of Intelligent Assist Devices, in particular Cobots (Collaboratiave robots), aided in reducing ergonomic concerns, while also improving safety, quality and productivity. Cobots, developed by Northwestern University and General Motors Corporation, are designed to work in collaboration with human operators to move objects and perform physically demanding tasks on vehicle assembly lines.

Automobile manufacturing firms compete based on a set of established commercial practices which are conveyed in business and industrial engineering literature.3 These practices make up the process of automobile manufacturing, which are depicted in the following list of elements:

Elements of Automobile Manufacturing
CostTechnology and Process
Durability Workforce and Organization
Product DevelopmentLogistics and Supply Chain
Process Development Research and Engineering

In looking at trends in global automobile manufacturing, Japanese automakers have been leaders in stream-lined manufacturing process systems. These methods have been adopted by manufacturing plants worldwide. These efforts were pursued in order to increase productivity and product quality. U.S. and European automakers initially showed considerable gaps in manufacturing plant productivity, however the gap in productivity with Japanese automakers' assembly plants have been narrowed substantially in the last several years.

Research on Modern Automobile Manufacturing

Akella, Prasad, and Peshkin, Michael. Cobots for the Automobile Assembly Line. IEEE International Conference on Robotics and Automation 1999.
This paper describes the broad design principles for human-machine interaction in industrial settings. The creation and use of Cobots (Collaborative robots), were designed for assisting assembly line workers. The paper indicates that commercial use of these technologies in industrial settings are currently underway.
Fine, Charles H., and St. Claire, Richard. The U.S. Automobile Manufacturing Industry. Meeting the Challenge: U.S. Industry Faces the 21st Century. Washington, D.C.: U.S. Department of Commerce Office of Technology Policy, 1996.
This report on the U.S. automobile manufacturing industry concentrates on the Big 3 firms (General Motors, Ford, DaimlerChrysler) and discusses the condition of the industry, product and production strategies, the importance of the supply chain, distribution and retailing, conclusions, and possible future directions.
Landham, Ralf. The Future of the Automobile Industry: Challenge and Concepts for the 21st Century. Warrendale, PA: Society of Automotive Engineers, 2001.
LC Call Number: HD9710.A2 Z8513
LC Catalog Record: 00045810
This updated edition examines issues currently facing the automotive industry. Fifteen contributions from consultants and other automotive industry professionals discuss factors such as emerging markets, globalization, technological innovation, environmental demands, and e-business, as well as offer approaches for meeting these challenges. Synopsis by Book News, Inc.
Maxton, Graeme P. Time for a Model Change: Re-engineering the Global Automobile Industry. New York: Cambridge University Press, 2004.
LC Call Number: HD9710.A2 M3863 2004 (in process as of November 2004)
LC Catalog Record: 2004045634
Table of Contents
Publisher Description
This work examines the automotive industry, making recommendations for change and improved industry performance.
Van Biesebroeck, Johannes. Measuring Productivity Dynamics with Endogenous Choice of Technology and Capacity Utilization: An Application to Automobile Assembly. Center for Economic Studies Working Paper. Washington, D.C.: Center for Economic Studies, U.S. Census Bureau, 2000.
This study examines North American and Japanese automobile assembly plants comparing production processes by utilizing a model that allows for heterogeneity in technology and productivity.
Van Biesebroeck, Johannes. "The Effect of Technology Choice on Automobile Assembly Plant Productivity." The Economic and Social Review, Vol. 33, No. 1, Spring, 2002.
This Paper examines the effects of technology on U.S. assembly plants productivity from 1963 to 1996, and evaluates the determinants off aggregate productivity growth.

Automobile Technology & Innovation

The product life-cycle for automobiles continues to shorten due to competitive market pressures. Competitive market forces have caused automakers to dramatically redesign car models every four to five years.4

New technological developments have led to unique and innovative designs for future automobiles. Automobile manufacturers use the development of new technologies to enhance performance capability, as well as to create innovative designs. Alternative fuel technologies, such as electric hybrids and fuel cell cars, have received considerable attention, and demonstrate attempts to design vehicles that are more energy efficient and greatly reduce engine propulsion reliance upon fossil fuels.

Electric Powered Vehicles

The movement towards electric powered vehicles began as a result of the 1973 Oil Embargo, in which efforts were made to utilize electric battery technology to power engine propulsion. However, problems and limitations regarding driving range, speed and a very small market, all led to automakers GM, Ford, Honda and Toyota discontinuing their electric vehicle programs during the late 1990's.

Hybrid Powered Vehicles

Hybrid vehicles combine two or more sources of power, which are able to operate using a rechargeable battery and gasoline. Production of gas-electric hybrids signifies the first significant move away from total reliance on the internal-combustion engine in nearly a century.5

Hybrid vehicles are highly fuel efficient and presents the first major step toward fuel cell vehicles, according to industry specialists. Japanese automaker Toyota, is one of the auto industries leaders in hybrid vehicle research and production with its Prius model. General Motors, also involved in producing hybrid vehicles, will be introducing and mass producing its hybrid model by 2007.6 Most major automakers plan to introduce hybrid vehicles to the market within the next five years.

Fuel Cell Vehicles

Another automobile technology that is presently viewed as the latest catalyst in future automobile technology, is fuel cell powered vehicles, in particular hydrogen fuel cell powered engines. Fuel cell systems operate by compressing hydrogen made from natural gas and gasoline, which is then converted to hydrogen by on-board systems. 7

Automakers and suppliers worldwide are investing substantially in the development of fuel cell systems. General Motors (GM), Ford and DaimlerChrysler have invested billions of dollars in a collaborative project to develop hydrogen fuel cell technology. GM is perhaps the most active in investing, as well as researching and developing fuel cell technology. However, many industry specialists indicate that fuel cell technology will not be available on the commercial market until the next 10 to 15 years.

There are, however, problems associated with hydrogen fuel systems which consist of:

  • Fuel cell vehicles will be more expensive
  • Fuel cell cars will require a new infrastructure for vehicle manufacturing and maintenance
  • Developing a system for producing and distributing hydrogen fuel

Many uncertainties remain regarding the development and use of hydrogen fuel cell technology, as well as addressing the major question on how to create a viable infrastructure that supports the use of fuel cell vehicles.

Advanced Product Design and Vehicle Operating Systems

Modern automobiles are increasingly relying upon more advanced electronics, computer, and wireless communication systems to assist drivers and enhance safety. These technologies replace mechanical systems that power, steer and brake the vehicle. Most vehicles have several computers, with high-end models having a half dozen or more that control functions, which range from shifting gears to operating GPS navigational systems.8

GM has introduced the Autonomy concept model, which uses hydrogen fuel cell technology that powers electric motors in each wheel. The vehicle uses a chassis and replaceable body, allowing greater flexibility and freedom in designing the interior. Internally, the vehicle operates without pedals or dashboard, using sophisticated computer and electronic systems to operate the vehicle.

Voice activation is another technology being developed for use in future vehicles. Voice activation systems are expected to operate internal climate controls, open doors, and respond to navigational request by the driver.

The next step in automobile electronic and communications technology is vehicle sensor technology. Sensor technologies use radar or laser technology to control systems that detect vehicles in front which then automatically slow down the vehicle. Companies are using sensor technology to serve as collision-avoidance systems that operate and control vehicle safety systems and on-board equipment.

Research on Automobile Technology & Innovation

Automobile, Wikipedia Online Encyclopedia
This website provides an general overview discussing the automobile. The contents includes the History, Innovation; Regulations and Safety; Renewable energy; Major subsystems; Related articles; and automobile images.
Borroni-Bird, Christopher E. "Vehicle of Change." Scientific American, October 2002, Vol. 287 Issue 4.
Discusses hydrogen fuel cell cars, and advantages of hydrogen fuel cell systems; Implications of hydrogen fuel cells for personal transportation and for the automotive industry business model; and discusses the new GM Autonomy design concept, and explains how the vehicle operates using fuel cell and other advanced technologies.
Fairley, Peter. "Hybrids' Rising Sun." Technology Review, April 2004.
This article examines the development and production of hybrid vehicles, primarily looking at Toyota's pioneering efforts in being the leading industry producer hybrid cars with its Prius model. The article also discusses efforts by made by GM and other U.S. automakers to produce hybrid vehicles.
Fuel Cell Vehicles, Auto Alliance Driving Innovation, Alliance of Automobile Manufactures.
This website provides information on how fuel cell systems work, and how the technology will be used to operate vehicle engines. The site also includes research studies on fuel cell technology systems and fuel cell vehicles.
Jerome, Marty. "Smart Cars.", April 2001.
This article discusses the latest advances in automobile technologies consisting of the increased use in computer technology in vehicles, digital and wireless communication systems, and advanced digital controlled vehicle operating systems.
Landmann, Ralf. The Future of the Automotive Industry: Challenges and Concepts for the 21st Century. Warrensdale, PA: Society of Automotive Engineers, 2001.
LC Call Number: HD9710.A2 Z8513 2001
LC Catalog Record: 00045810
This publication examines issues currently facing the automotive industry. Fifteen contributions from consultants and other automotive industry professionals discuss factors such as emerging markets, globalization, technological innovation, environmental demands e-business, and approaches for meeting these challenges. Synopsis by Book News, Inc.
Sage, Lee A. Winning the Innovation Race: Lessons from the Automotive Industry's Best Companies. New York: Wiley, 2000.
LC Call Number: TL240 .S246 2000.
LC Catalog Record: 99048040
Table of Contents
Publisher Description
Contributor biographical information
A comprehensive book that describes the process for innovation that takes place in industrial organizations and how successful companies manage to sustain innovation through effective management. Most of these practices are drawn from the automotive supply industry. Review by Books In Print.
"Concept Vehicles", 21st Century Science & Technology Directory
Science & technology portal, which includes a directory on concept vehicle, as well as other automobile technology links.
Weiss, Malcolm A., and Heywood, John B. Comparative Assessment of Fuel Cell Cars. Massachusetts Institute of Technology, Laboratory for Energy and the Environment, 2003-001 RP.
This study examines advances in fuel cell technology and analyzes the use of competitive fuel cell vehicles with present day vehicles driven by internal combustion engines.


1. Fine, Charles H., Lafrance, John C. and Hillebrand, Don. "Meeting the Challenge: U.S. Industry Faces the 21st Century." The U.S. Manufacturing Industry, December 1996. Washington, D.C.: U.S. Dept. of Commerce Office of Technology Policy, p. 44.
2. "Robotics and Machine Perception. Cobots: A New Generation of Assembly Tools for the Line Worker." SPIEWeb OE Reports, May 1997.
3. Automotive Supply Chain: Global Trends and Asian Perspectives. Manila: Asian Development Bank, January 2002, p. 36.
4. Industry and Trade Summary: Motor Vehicles. U.S. ITC Publication 3545, September 2002. Washington, D.C.: U.S. International Trade Commission, p. 37. 1.2.
5. Farley, Peter. "Hybrids' Rising Sun." Technology Review, April 2004, p. 36.
6. Ibid, p. 36.
7. Weiss, Malcom A., and Heywood, John B. Comparative Assessment of Fuel Cell Cars, February 2003. Cambridge, MA: Massachusetts Institute of Technology Laboratory for Energy and the Environment, p. 1.
8. Jerome, Marty. "Smart Cars." LookSmart, website.
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