The global automotive industry faces the most influential changes since the revolutionary introduction of mass production a century ago. Latecomer firms from Asia are challenging the western incumbents. They can change the rules of the game in the industry by leapfrogging several steps in their development process. This study seeks to contribute to the discussion of latecomer firms by gaining insights into the catch up processes of five automotive companies in the passenger car segment, namely BYD (PRC), Chery (PRC), Geely (PRC), Tata Motors (India) and Mahindra & Mahindra (India). Based on learning theories and the core processes of car manufacturers, the author develops a catch up framework in order to compare automotive latecomers. The Korean manufacturer Hyundai serves as an example for a successful catch up, and provides a contextual framing for catch up processes in the automotive sector. An analysis of empirical data provides evidence for the evaluation of the catch up status of the five challenger firms. The author emphasizes the influence of institutional settings in China and India and the role of business groups that can act as facilitators for the catch up process. Finally, the study clusters the catch up strategies of the five observed companies in order to compare their approach. Auszug aus dem Text Text sample: Chapter 4.3.1, Capability area I: Developing automobiles: Following Helfat and Raubitschek (2000, p. 961) products serve as indicators for the resources, capabilities and knowledge a company possesses. Therefore, the author analyzed the product sequencing of the five ALCFs since their establishment in order to assess their development capabilities. Special attention was given to similarities and differences between models of the ALCFs and competitors' models (see Exhibit 12). Also external support during the development
process was analyzed (e.g. by service firms or suppliers). Another field being examined was the ability to develop powertrain technologies in-house (see Exhibit 12). Since their market entry in the passenger car segment, which was between 1991 and 2002, four ALCFs have passed the first learning layer in the area of developing automobiles (see Figure 10). BYD is the youngest among the observed companies as it entered the automobile business in 2002, which partially explains why the company is still in the first learning layer. None of the ALCFs is assembling knocked down kits of other OEMs anymore; however, knocked down assembly and imitation played an important role initially. Chery started with assembling an almost exact copy of the Seat Toledo in 1999 receiving a lot of assistance from suppliers that also delivered to VW, which was producing other models on the same platform. Geely copied FAW's Xiali when they started in 1997 and BYD assembled models from Honda and Toyota, respectively (see Exhibit 12). Chinese manufacturers all relied on blind imitation at the beginning of their catch up in the sense that they produced more or less exact copies of competitors' products. However, meanwhile Chery and Geely moved from blind imitation to an emulation approach of learning. At the beginning their cars were copied almost completely. In the case of the Chery QQ even the doors of the copied car (Chevrolet Spark/Daewoo Matiz) fitted into Chery's model (China Daily, 2004). Since then, their mode changed from copying one discrete model to developing models that show analogies to three or more competitor models and ones that were inspired by the design of a few competitor brands. BYD is an exception as the company's car design is by now still copied from one or two competitor models. With respect to powertrain development, BYD up to now shows no core
competency in conventional combustion engines as almost all powertrain components are licensed from Mitsubishi. This observation indicates that BYD is still in the first learning layer of this capability area (see Exhibit 12). The case of Chery is different. It developed a set of engines in a joint venture with Austrian AVL and partnered with Italian design companies Bertone and Pininfarina to develop independent car designs (Acteco Engine Co. Ltd, 2006; CarDesign News.com, 2010; Illustration of Chinese Car, 2010d, 2011a). Geely developed first engines also by receiving massive help from European partners. However, the majority of Geely's models still rely on licensed technology from e.g. Mitsubishi (powertrain) or Daewoo (exterior design) (see Exhibit 12). Leapfrogging to accelerate the catch up process is possible for Chinese manufacturers. Evidence for its appearance can be found in the engine joint venture between Chery and AVL. Here the outspoken target to develop a set of up-to date engines illustrates an example of path-skipping leapfrogging. In contrast to the Chinese manufacturers Tata Motors started without relying on blind imitation and instead emulated using their basic knowledge derived from commercial vehicle (CV) operations and own R&D centers (Bruche, 2010, pp. 8-9). Mahindra started assembling the Ford Escort under license and quickly moved to develop own cars (Smiejczak, 2011, p. 18). Like Tata Motors, Mahindra used its extensive knowledge in commercial vehicle production that the company had built over more than five decades (Bruche, 2010, p. 8). Although Mahindra received massive assistance from companies such as Bosch, Lear or Vieston throughout the development of their Scorpio (2002) and Xylo (2009) models, the company possesses advanced development capabilities in respect to SUVs and CVs (Khanna, Lal, & Manocaran, 2005). The
acquisition of SsangYong Motors from Korea might enhance this capability even further. However, in terms of small car development, Mahindra has only reached a basic capability level as it is not producing any small car except assembling the Dacia Logan in a joint venture with Renault (Carmayohi.in, 2011). The findings indicate that the company is still in the second learning layer but possess the potential to quickly enter the third one. The acquisition of Kinetic Motors and a serious interest in the Swedish car manufacturer Saab provide evidence that Mahindra is not willing to focus on the SUV niche (Handelsblatt, 2012b; Mukherjee, 2010). Although Tata Motors collaborated with partners from developed countries such as Concept Group International Ltd. (UK) and I.DE.A. Institute (I) , the company is already in the third learning layer regarding car development capabilities. Their design capabilities seem to be more advanced and their powertrain knowledge is much more exhaustive than those of the Chinese companies (see also Bruche, 2010, pp. 8-9). However, Tata Motors is not as innovative in this capability area as MNCs such as Toyota or VW. Even the acquisition of Jaguar Land Rover (JLR) will not immediately push Tata Motor's development capabilities to an innovative level. That is because JLR sources these powertrain components from the former parent company Ford and has thereby only minor innovation potential (John, Punithavathi, & Syed, 2008, p. 6). Moreover, JLR has by now no Hybrid model in its lineup, which would provide evidence for its innovative capabilities in this area (Autoblog.com, 2011b). Developing sophisticated powertrain architecture for the luxury cars of JLR will be one of the challenges for Tata Motors (The Economic Times Online, 2010). Similarly, Volvo Cars which was acquired by Geely in 2010 is supplied by Ford with engines
and transmissions (Caradvice.com, 2010). However, Volvo possesses a certain powertrain know-how that seems to be innovative as the company up to now still delivers Diesel engines to Ford for the company's European models and has partnered with German Siemens to develop electric vehicles (MotorwayAmerica.com, 2010; Siemens AG, 2011; Volvo Car Corporation, 2011a, 2011b). Absorbing and integrating Volvo's knowledge in order to leapfrog in the catch up process regarding development capabilities represents a major challenge to Geely. Biographische Informationen Daniel Wäldchen was born in Salzgitter, Germany in 1985. He completed his studies at the Ostfalia University of Applied Sciences (Wolfsburg) and the Berlin School of Economics and Law with a Master's degree in International Business and Consulting. He gained several years of practical experience in the automotive industry which has always been in the focus of his interest. Currently the author is writing a Ph.D. thesis at the Bundeswehr University Munich.