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Three Great Transformations in the Automotive Industry

Nov 21 - 2023


In the over 100 year history of automotive development, the world automotive industry has undergone three significant transformations.

1. First transformation: mass production of cars on assembly lines in the United States

Before the emergence of T-cars, cars were luxury goods produced for a few people. In 1908, the first Ford Model T in the history of automotive development to be assembled on a production line was born in the United States. The Ford Model T changed its previous carriage style design, coupled with innovative and improved functional configurations, making it the best personal urban transportation vehicle at the time. automotive industry supply In its first year of launch, it sold 19000 units.

2. Second Transformation: Diversification of European Automotive Products

During World War II, the automotive industry in various European countries had to provide services for military supplies, producing military vehicles and equipment. After the war, with the recovery of the economy and the strengthening of government support, the European automotive industry developed rapidly. In 1960, the annual production of automobiles reached 2.055 million units, with an average annual growth rate of 21%.

In fact, before World War II, Europeans had already begun to have objections to the dominance of American cars. However, due to the inability of European car companies to produce cars in large quantities at that time, the cost and price of cars could not be reduced,automotive industry services and they were unable to compete with American car companies. So, Europeans competed with American car companies with innovative automotive products, such as front wheel drive, rear wheel drive, load-bearing body, micro fuel-efficient vehicles, and the advantage of adapting to different road conditions and national preferences. In this way, Europe has undergone a transformation from a single automotive product to a diversified one. In response to the weaknesses of single, bulky, and high fuel consumption in the United States, Europe has developed a variety of new models. For example, the magical Beetle, the globally popular MINI, and the lightweight and elegant Ferrari have all made their debut.

3. Third Transformation: Japan's Lean Production Method

The Japanese automobile industry started relatively late, with Toyota Motor Company, the largest automobile company in Japan, and Nissan Motor Company, the second largest automobile company, both founded in 1933. Since the 1960s, the production of economy cars in Japan has been increasing year by year. From 1960 to 1966, Japan's per capita gross domestic product increased from $500 to $1000, creating conditions for the popularization of automobiles. Japanese car companies promptly launched high-quality and affordable cars, with prices dropping by 30% to 50% compared to the mid-1950s,automotive industry solution leading to a wave of widespread adoption in Japan. Japan referred to 1966 as the first year of popularizing private cars.

At the same time, several automobile companies represented by Toyota have applied two new management mechanisms, "Total Quality Management" and "Timing Production System", to automobile production. The former requires workers to take on more responsibility and prioritize product quality. The latter requires good technical services and the implementation of lean production methods. The two are closely combined and complement each other, promoting the rapid development of Japan's automotive industry. In 1973, Japan's automobile exports reached 2 million units, reached 4 million units in 1977, and surged to 6 million units in 1980. Japan has achieved rapid growth in both domestic sales and exports of automobiles, creating a miracle in the development of the world's automotive industry. Becoming the third center for the development of the automotive industry in the world, following the United States and Europe, has shifted the world's automotive industry center from Europe to Japan.