In the automotive industry, technical necessity, political sensitivities and market variation have kept final vehicle assembly, and by extension much of parts production, close to end markets. Powerful lead firm s and industry associations, large-scale employment and relatively high rates of unionisation, and the iconic status of motor vehicles in the minds of consumers (and policy-makers) in many countries increase the political clout of the automotive industry. So even where import tariffs and local content rules are not present or are scheduled to de cline under WTO rules, foreign assemblers have chosen to ‘voluntarily’ restrict exports and set up local production to forestall political backlash. As a result, regional and national production structures remain surprisingly strong and coherent in comparison to other volume good producing industries where global sourcing of parts and materials is the norm and worldwide demand for finished goods can be met from a handful of giant production clusters. As a result, political pressures go a long way toward explaining patterns of direct investment in the automotive industry.
The economic geography of the automotive industry is playing out differently in different segments of the value chain. We see the concentration of design engineering in existing clusters, dispersal of some concep tual design to gain access to ‘lead users’ regional integration of production, and global sourcing for some categories of parts. In all instances, however, it is automakers that drive location patterns; the influence that lead firms have on the economic geography of the industry is rooted in their enormous buying