Local assembly units in the motor components industry

Abstract

This paper explores the conditions under which motor component manufacturers may choose to supply car assembly plants through decentralised production in local assembly units (LAUs). The analysis is based on a case study of the decision to supply motor exhausts through an LAU where demand from the OEM company is sequenced. The case suggests that local assembly may result in significant efficiency gains. However, most of these gains flow to the OEM company, while most of the costs of local assembly flow to the component supplier. This finding emphasises the importance of trust and collaboration within supplier relationships, but suggests that significant possibilities for opportunistic recontracting may exist after the establishment of the LAU. Both supplier and OEM company should consider these possibilities when making the initial investment decision.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 29 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.