The automotive industry is a highly globalized and technology-intensive sector. Its complex supply chains, extensive market demand, collaborative R&D efforts, and multinational operating strategies make it difficult to develop entirely within a single country. From day one, modern automotive enterprises have been closely intertwined with the global market. The main image in this article is from VinFast's official website, showcasing its modern campus. VinFast, a Vietnamese automotive company founded in 2017, has already expanded its sales network to North America and Europe.
Complex Global Supply Chain
Automobile manufacturing involves a vast array of components and intricate production processes that rely on a global supply chain:
- Component Supply: Manufacturing a car requires thousands of different parts, including engines, transmissions, electronic components, and tires. These components come from suppliers all over the world. For example, Bosch from Germany, Delphi from the USA, and Denso from Japan are renowned automotive parts suppliers.
- Production Division: To reduce costs and increase efficiency, automakers typically establish production bases in multiple countries. For instance, engines might be produced in Germany, car bodies in Mexico, and final assembly completed in the USA. This global division of production makes the supply chain more complex and international.
Extensive Market Demand
As a key consumer product, the demand for automobiles spans the globe:
- Diverse Markets: Different regions have significantly different demands for cars. Developed markets like the USA, Germany, and Japan have high demand for premium and luxury models, while emerging markets like China, India, and Brazil show more demand for economical and fuel-efficient vehicles.
- Market Expansion: To increase market share and sales revenue, automakers must enter and penetrate global markets. For example, Tesla established a factory in China to produce the Model 3, Toyota introduced several SUVs and hybrid models in the USA and Europe, and BYD set up a plant in Mexico.
Collaborative R&D
Technological innovation in the automotive industry requires global collaboration and sharing of R&D resources:
- International Cooperation: Automakers collaborate with global technology companies, universities, and research institutions to advance cutting-edge technologies like autonomous driving, electric vehicles, and connected cars. For example, Toyota collaborates with Stanford University in the USA to develop autonomous driving technology, and BMW partners with Israel's Mobileye to develop advanced driver-assistance systems.
- R&D Centers: Many automakers establish R&D centers around the world to access diverse talent and innovative resources. For instance, Ford has R&D centers in China, Germany, and the USA focused on developing smart and new energy technologies.
Multinational Operating Strategies
To cope with global market competition and achieve long-term growth, automakers formulate diverse multinational operating strategies:
- Localized Production: Setting up production bases in target markets can reduce tariffs and transportation costs, and improve market responsiveness. For example, Toyota has production bases in North America, Europe, and several Asian countries.
- Localized Marketing: Developing differentiated marketing strategies based on the cultural and consumer habits of different markets. For instance, Volkswagen launched models specifically designed for Chinese consumers and increased brand awareness through localized advertising and marketing activities.
- Global Brand Building: Establishing an international brand image through proactive global market layout. For example, luxury brands like BMW, Mercedes-Benz, and Audi enhance their global brand influence by sponsoring international sports events and cultural activities. Recently, Lynk & Co's team secured the top three spots in the TCR World Tour, significantly boosting the brand's global recognition.
Image source: LINK&CO official site
Yes, the automotive industry is highly globalized and intrinsically connected to translation services. Translation services support automotive companies in various business areas, including:
Technical Document Translation
- Technical Manuals and Repair Guides: Automakers need to translate complex technical manuals and repair guides into multiple languages to ensure that technicians and maintenance personnel worldwide can correctly understand and execute operations.
- R&D Materials: Automotive R&D involves a vast amount of technical materials and research papers that need to be communicated among global R&D teams. Translation services ensure accurate information transfer.
User Manuals and Instructions
- Vehicle User Manuals: To help consumers properly use and maintain their vehicles, automakers need to translate user manuals into multiple languages, especially for export markets.
- Safety and Operating Guides: Accurate translation of safety and operating guides is essential to prevent accidents due to misunderstandings.
Marketing and Advertising Materials
- Market Promotion: Automotive advertisements, brochures, website content, and social media marketing require localized translation to attract consumers in different global markets.
- Brand Image: Professional translation ensures that brand information and marketing strategies are consistent and effective across different cultural contexts.
Legal and Compliance Documents
- Compliance Documents: Entering different national markets requires the translation of various compliance documents to ensure adherence to local laws and regulations.
- Patents and Contracts: Precise translation of patent documents and international trade contracts is necessary to protect the legal rights of the company.
Image source: BYD official site
Trade Barriers in the Automotive Industry
Trade barriers in the automotive industry take various forms, posing challenges to manufacturers and market entrants. Here are some forms of trade barriers and related cases:
Tariffs
On May 14, the US government announced an increase in import tariffs on Chinese electric vehicles from 25% to 100%. It's a recent example of trade barriers targeting the automotive industry. This move effectively cut off many Chinese EV manufacturers from exporting their vehicles to the US. However, trade isn't limited to whole vehicle exports, many companies are deeply integrated into upstream and downstream supply chains. India also imposes high tariffs on electric vehicles.
Anti-Subsidy Measures
The EU initiated an anti-subsidy investigation into Chinese electric vehicles, accusing the Chinese government of providing unfair subsidies to the EV sector. This could lead to the imposition of anti-subsidy tariffs on Chinese EVs, affecting their competitiveness in the EU market. Relevant measures may be announced after the EU elections and could reflect on tariffs. After EU elections, EU announced higher tarriffs of up to 38% on Chinese EVs.
Additionally, other forms of barriers include quotas and local production requirements. As mentioned earlier, India has introduced policies that offer tariff reductions in exchange for local production, attracting global automakers, including Tesla, to set up factories in India.
In conclusion, the automotive industry is highly globalized and deeply intertwined with translation services, which provide critical support in various business areas. Through global market expansion and localized strategies, the industry can diversify risks, optimize resource allocation, and enhance brand influence and market competitiveness amidst increasing trade barriers.