A New Global Auto Industry?

This paper brings together a number of robust trade models to shed some light on the likely evolution of the global automotive industry. Vertical product differentiation, intra‐industry trade and fragmentation of production leading to international outsourcing are important features of the existing global automotive sector. The global automotive sector will most likely experience groundbreaking changes over the coming decades. The sector is confronted with a multidimensional technological revolution spurred by radical product innovation, shifts in customer demand and government incentives. A dominant driver will be growing public concern about climate change. China and India might well become leading players by 2050, if not earlier.