The inevitability of change in Chinese and Indian automakers' low cost productive models

Abstract

In emerging economies, social change and fast growth have created new automotive markets and a demand for relatively inexpensive, “modern-enough” cars. Up-and-coming local manufacturers and established companies from the Triad countries are competing for dominance in these vast market segments. The paper examines the productive models developed in this context by two indigenous carmakers, one from China (Geely) and the other from India (Mahindra & Mahindra). A variety of tensions are revealed within the two models, relating in particular to labour policies. Both models seek to combine low wages and a reliance on low-cost supply chains with simplified product architectures. Their stability is fragile, however, with one solution involving employee upskilling to increase productive system efficiency.