From Europe to the US Japan and onto China: The evolution of the automobile industry


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From Europe to the US Japan and onto China: The evolution of the automobile industry

  1. 1. From Europe, to the US, Japan, and onto China:The evolution of the automobile___________________________________________________________________________________________Prof. Dr. Murray Hunter 546 2012Hunter, Murray; From Europe, to the US, Japan, and onto China: The evolution of the automobile;, Hamburg, Deutschland, 2012; online im Internet unter; Stand*:
  2. 2. From Europe, to the US, Japan, and onto China: The evolution of the automobile Murray Hunter The pre-automobile era Even though the railways existed in Britain, Europe, and America by the late 1880s, mostroad transport was still undertaken by house and carriage. There were over three million horsesin Britain and ten times that many in America which had to be breed, fed, cared for, andhoused. A large amount of farmland was devoted to producing hay and oats for horse feed andit was becoming an expensive exercise to maintain a house and carriage. The industry wasreaching the limits to its potential growth by 1900. The automobile was not invented by any one individual and was developed from acombination of other inventions and incremental innovations over time to create what weknow as the automobile today. One of the first forms of self-propelled automobiles was Cugnot’s steam wagon in 1771discussed earlier in the steam engine section. This was followed in Britain by William Murdoch’ssteam carriage in 1784 and Richard Trevithick’s full size steam vehicle in 1801. However theBritish Parliament passed the Locomotive Act (1865) that required any self-propelled vehicleson roads to be preceded by a man on foot with a red flag and blowing a horn, effectivelydiscouraging much more development of the automobile in Britain, where attention wasshifted back to the steam engine. The automobile evolved through incremental invention Outside Britain there were a number of various vehicles built, some having useful featuresthat would be incorporated into later versions of the automobile. For example Ivan Kulibin inRussia developed a steam carriage in 1791 that incorporated a flywheel, brake, gearbox, andbearings. In 1805 Oliver Evens, an American developed a self-propelled vehicle that was also anamphibious vehicle. In 1815 Josef Buzek from Prague, from what is now known as the CzechRepublic built an oil fired steam car that could run further than other steam vehicles developeduntil that date due to its more efficient fuel. In 1830s there were also a number of electric carsdeveloped including Anyos Jedlik’s model car powered by his electric motor in 1928, ThomasDavenport’s model electric car in 1834, Stratingh and Becker’s small electric car in 1835, RobertDavidson’s electric car in 1838 that ran on tracks, a forerunner to an electric tram, and RobertAnderson’s electric carriage in 1839.
  3. 3. However steam and electricity were not practical power sources for an automobile, and theabsence of a suitable power source hindered commercial development. Likewise the ride onthese early vehicles was very rough due to the wheels being fabricated out of wood or iron. Asofter material that could take some shock out of the road was necessary. These problems hadto be solved before any commercial vehicle could be invented. One of the very early concepts of a combustion engine was a water pump driven bygunpowder in the 17th Century to pump water for the Versailles Palace gardens developed byChristiaan Huygens. Shortly after, a number of piston engines utilizing gas were developed. In1807 a Swiss engineer François Isaac de Rivaz developed an internal combustion engine drivenby a hydrogen and oxygen mixture, ignited by an induced spark based on Alessandro Volta’sconcept of propulsion using air and hydrogen in a pistol to propel a cork from the end of thebarrel from 1790s. Over the years a number of improvements to the combustion engine were made by SadiCarnot, Samuel Morey, William Bernett, Eugenio Barsanti and Felice Matteucci, and PietroBenini. The development of an efficient combustion engine was hindered by the absence ofpetroleum as a fuel which was just appearing in the later part of the 19th century. Around 1860 the Belgian Etienne Lenoir developed a gas fueled electrically ignited internalcombustion engine that utilized cylinders, pistons connected to rods and a flywheel where thegas basically took the place of steam, as in the Watt steam engines. The engine wascommercially produced and used extensively to drive stationary machinery. Although theLenoir engine attracted much publicity, it was not suitable for a moving vehicle but inspiredothers to refine and develop upon the basic design. One of these people was Nikolaus August Otto who thought that running the engine on gaswas impractical and imagined an engine running on the vapour of petrol mixed with air.Together with a friend Michael Zons who had a workshop, they built a small engine that ran onalcohol and applied for a patent that stipulated an engine that would propel vehiclesserviceably along a country road1. The patent application was turned down on the basis thatthe engine was too close to others, so Otto and Zons continued to development until theycreated a four-stroke cycle engine. That year Otto formally joined Zons in his machine shop andwent across to London to see if anybody else was offering any similar types of engines. Hefound that nobody else had anything like it. Otto had a number of ideas to make the engine more efficient but was starting to run out ofmoney. He eventually met up with a young engineer Eugene Langen from a wealthy family whobecame a partner and bankrolled Otto, forming N.A. Otto & Company, engine builders. Afterselling a few engines they found that in their present form the engine was not too saleable andspent the next three years experimenting until they created an engine with a vertical cylinderand piston connected to a cog wheel that went up and down. They presented it at the Great
  4. 4. Exhibition in Paris during 1867. It just so happened that one of Otto’s old acquaintancesProfessor Franz Reuleaux of Berlin University was on the judging committee and insisted Otto’sengine be directly compared to the Lenoir engines on display. The judges found that the Ottoengine used only one third the fuel used by the Lenoir engine and Otto and Langen won thegold medal personally presented to them by Napoleon III. After the exhibition sales increaseddramatically and by 1871 they had licensed production of the engine to Crossley Brothers ofManchester and were making profits. The company continued to grow and took on some newpartners and was renamed Deutz-AG-Gasmotorenfabrik. Gottlieb Daimler was interested in building an automobile from an early age. He showedhimself to be a very skilled craftsman during his apprenticeship at a gunsmith workshop andwas awarded a place at the School for Advanced Training in Stuttgart where he studied at nightwhile working during the day. Daimler later moved to Strasbourg where he worked on steamlocomotives and built railway cars, becoming foreman at the age of 22. He was given leave tostudy at the Stuttgart Polytechnic Institute and completed the four year course in two years.Daimler then spent some time in Paris and Britain where he toured and worked at a number ofengineering works. He also attended the 1862 Great Exhibition in London. Upon his return toGermany Daimler spent a few years working at the Bruderhaus Factory producing machines forpaper mills, farms, and weighbridges. During his time at Bruderhaus, Daimler met WilhelmMayback with whom he developed a very close relationship. Maybach was a very creativedraughtsman who was later to follow Daimler from job to job. Daimler was approached by Langen in 1872 to work for Deutz which was expanding theirproduction of the Otto engine. Daimler persuaded Langen to also take on Mayback as chiefdesigner for the company. They both spent about ten years at Deutz, with Daimler leaving toset up his own company in Cannstatt from the compensation he got from Otto for his work onthe patents. Maybach soon joined him and they set out to produce a petrol engine that had anefficient and quick starting ignition and a power-to-weight ratio that would be suited for anautomobile. By 1885 they had produced a one horsepower engine with some improvementsover the Otto engine including a carburetor to mix fuel with the air for better combustion.Daimler fixed an engine to a bicycle and created the first powered motorcycle. Daimler alsobought a carriage he bought from Stuttgart and mounted the engine onto it as a “present to hiswife”. Quite independently Karl Friedrich Benz was also working on a petrol engine. Benz was borninto a relatively poor family but was able to get a good education where he studied locomotiveengineering at university. During these years Benz had a dream of building a self-propelledhorseless carriage. Benz started his first business a machine shop and supplier of constructionmaterials in 1871 with a partner August Ritter. The company ran into financial trouble and Benzfiancée Bertha Ringer bought out Ritter with money from her dowry. After further poor
  5. 5. business performance the firm got into further financial trouble where Benz admitted a newpartner and lost control of the company. In 1883 Benz left the company and bought into abicycle repair shop in Mannheim with Max Rose and Friedrich Wilhelm Eβlinger. Benz soon left and went into the engine building business and formed Benz & Cie RheinscheGasmotoren-Fabrik. The business went well producing engines for a growing market and thisgave Benz the opportunity to focus his attention on building an automobile. Benz developed anautomobile primarily based on bicycle technology. It was powered by a four-stroke engine Benzhad designed, sitting between the rear wheels with the power being transmitted throughchains to the rear axle. Benz patented his automobile in 1886 calling it the Benz PatentedMotorwagen. This first model had plenty of room for improvement and Benz over successiveyears created new versions that ironed out faults in the previous model. Although his inventionhad plenty of attention, there was actually little interest in purchasing the vehicle. Most of thesales were in France through Benz’s agent Emile Roger, who was already building Benz enginesunder license there. There were still a number of problems. Gasoline at the time was only sold by pharmacies asa cleaning fluid, and the automobile still lacked power to climb small hills and the brakes wererough. The automobile could not go in reverse. An important event in the history of Benz wasthe story of Bertha Benz in 1888 using the car to travel from Mannheim to Pforzheim to visither mother, a round trip of some 212 km. During the trip she apparently made some technicalimprovements to the automobile which included putting leather brake linings on the brakes tohelp with downhill braking and recommended to her husband to add another gear to theengine so it could go up hills better. By 1895 the Benz factory had sold more than 135 cars and was known as one of the mostimportant manufacturer of automobiles2. Now Germany had three manufacturers of petrolengines. The early bicycles and automobiles used wooden or iron rims for tyres which had no shockabsorbing properties. However for the tyre to be invented, a pliable material that could be usedin its construction was required. Charles Goodyear heard about the properties of gum elastic3and went to see J. Haskins, the manager of Roxbury Rubber Company in New York. Goodyearfound that the rubber used to make products disintegrated over time rendering them useless.He started working with Indian rubber by heating it and adding different materials in attemptsto get the stickiness out of the material. Goodyear thought that he found the solution using anacidic material to cure the latex and built up a business manufacturing life preservers, rubbershoes, and other rubber based products. Due to the crash of 1837, Goodyear became pennilessand it was only the financial support given to him by J. Haskins who he knew at Roxbury RubberCompany that saved him. Goodyear continued to experiment to improve the curing process. In
  6. 6. 1838 Goodyear met with Nathaniel Hayward who had been using sulphur to dry rubber.Goodyear found that when rubber was heated with sulphur, the rubber cured perfectly–heating sulphur with rubber created vulcanized rubber, named after the Greek god of fire. It isdebated today whether Goodyear found the solution by pure luck or through carefulapplication and observation. Goodyear made the discovery in 1839 but only patented it in 1844after he enhanced and fine tuned the process. Vulcanized rubber could be utilized to makemany products of which automobile tyres was one of them. Robert William Thomson was born in Stonehaven, Scotland and moved to America at theage of 14 where he was apprenticed to a merchant. Two years later he returned to Scotlandteaching himself chemistry, electricity, and astronomy. Robert’s father built him a workshopwhere he improved upon his mother’s washing mangle so wet linen could be passed through,designed a ribbon saw, made a working model of an elliptic steam engine, and a number ofother inventions. He set up his own railway consulting company, while he designed and built apneumatic tyre for horse carriages. The tyre consisted of a hollow India rubber and canvas tubeinflated with air enclosed in a strong leather casing of leather and bolted to the wheel. Thewheels formed a cushion of air upon the road or track they ran on which greatly improved thecomfort of travel and reducing the noise. One set of tyres lasted for more than 1,200 miles.Thomson patented the tyre in France in 1846 and in America in 1847. Thomson’s invention basically went unnoticed and forty years and forgotten. A Scottishveterinary surgeon John Boyd Dunlop came up with the idea again as a way to improve thesuspension of carriages. Dunlop had worked with sheets of rubber at his surgery and first madea pneumatic tyre for his son’s tricycle from wrapping the sheet into a hollow lined with linenthat he blew up with his son’s football pump. After finding that bicycles with pneumatic tyreswere much faster than existing tyres at the time, the bicycle fraternity in Ireland switched overto them and in 1889 Dunlop formed a company with Harvey du Cros, President of the IrishCyclists Association. On filing a patent application, Dunlop’s claim to novelty was invalidated byThomson’s prior patent. Other aspects of the tyre were patented and Dunlop assigned hispatent over to Harvey du Cros and du Cros formed the Dunlop Rubber Company of whichDunlop had no interest. Dunlop had reinvented the pneumatic tyre, unlike in Thomson’s time,at a crucial time in the development of road transport. At about the same time Dunlop was producing tyres in Ireland, Edouard and André Michelinin France were running a rubber factory in France. The company produced rubber balls andinvented rubber brake pads for horse-drawn carriages. There are a number of stories abouthow the Michelin brothers started making tyres but one story tells of how the Grand Pierreasked for help at the Michelin workshop to repair one of his pneumatic tyres on the bicycle4.According to this story the tyre was glued to the wheel rim and it took hours to remove it andall night for the glue to dry after it was repaired. Edouard saw the need to have pneumatic tyres
  7. 7. that could be easily removed from wheel rims for repairs. From 1891 the Michelin brothersbegan manufacturing tyres where France became the number one tyre maker in the world untilthe end of the century. A number of companies ventured into automobile manufacturing in Europe and theautomobile started replacing the bicycle and horse and carriage. After lobbying Britishrestrictions on automobiles were lifted and the industry flourished. Motor buses and trucksbegan appearing changing public and goods transport. With the petroleum industry establishedin the United States and large distances to travel the automobile very quickly became popularwith the likes of Charles and Frank Duryea forming the Duryea Motor Company, Ransom E Oldsforming the Olds Motor Vehicle Company, and the eventual formation of the Ford MotorCompany that was going to take automobiles onto a new plain in the new Millennium. The transition to Chinese dominance The decade saw the rise of the fourth generation of modern automobile manufacturers, thefirst being the US automakers, then the Japanese emergence in the 1960s and 70s, and thenthe Korean emergence during the 1990s. The fourth Generation consists of Indianmanufacturers like Tata Motors and a number of newly created Chinese manufacturers whichinclude BYD, Lifan, Chang’an (Chana), Geely, Cheri, Hafei, Great Wall, Jianghuai (JAC), Roewe,Martin and a number of others. Tata Motors is part of the Tata Group, the largest privately owned conglomerate in India.Tata began operations in 1945 building locomotives and then in 1954 commencedmanufacturing commercial vehicles as a joint venture with Daimler-Benz. Tata entered thepassenger car market in 1991 launching the Tata Sierra and a number of other models. In 1998Tata launched the Indica, the first fully indigenous car built in India which was a great successand now exported to South Africa, the United Kingdom, and Italy. The company acquiredDaewoo truck manufacturing operation in 2004, a controlling interest in Aragonese (withinSpain) Hispano Carrocera in 2005, formed a joint venture with Marcopolo in Brazil in 2007,acquired British Jaguar land Rover in 2008 and took an 80% stake in Trilix of Italy in 2010. In2008 Tata launched the Nano, a car priced around USD $2,000 so that more people could affordto purchase an automobile in India. Tata is experimenting with electric cars and compressed airengines. Today Tata has an extremely strong customer based on the Sub-continent and exportsto 26 countries with manufacturing plants in the UK, Korea, Spain, Thailand, South Africa, andArgentina. Under franchise Tata cars are also assembled in Russia, Ukraine, Kenya, Bangladesh,and Senegal. China’s auto industry began in the 1950s under the guidance of the Chinese CommunistParty Central Committee, with technical assistance from the Soviet Union. From the 1980s to
  8. 8. 2000 all of the China’s leading automakers were joint ventures with foreign automobilecompanies. Output was tightly controlled with most production focused on commercialvehicles. As China prospered, vehicle ownership has increased dramatically, where productionincreased from one million automobiles in 2000 to almost 14 million vehicles in 20095, makingChina the largest automobile manufacturer in the world6. Many of the local companies that commenced operations after the 1990s were owned bythe Defense Ministry, Chang’an Motors, Changhe, Hufei Motors, or provincial authorities,Brilliance China Auto, Cherry Auto, and Chang Feng Automotive. A few private companies BYDAuto, Greely Automotive and Great Wall Motors also started up. On the whole Chineseautomakers lack the efficiency and quality, but still produce cars much cheaper thanmanufacturers in other countries. R&D is still low at present with some companies takinginspiration from international models. The state owned Cherry Automobile Co. Ltd. is thelargest independent domestic vehicle manufacturer and will be privatized soon. Some of theother major domestic manufacturers First Automobile Works Group Corporation (FAW), Greely,SAIC, and Dong Feng have built their cars upon platforms provided from internationalautomakers while the rest have been the result been built from knowledge gained throughreengineering or just outright copying7. Some firms like SAIC and Nanjing Automobile Groupacquired MC Rover to access technology and there is a tendency for domestic companies toacquire international brands rather than build them8. The Chinese Government is encouragingdomestic automakers to merge so that three or four main domestic players exist in theindustry9. Due to the economic downturn of 2008 Chinese Automakers had been able toacquire struggling part manufacturers such as the Greely purchase of the Australian DrivetrainSystems International (DSI). Chinese companies are working on developing electric cars. However costs are still too highfor the average Chinese consumer, and there are still many practical problems as most Chineselive in apartments and access to power supplies may be difficult. Nevertheless China is thelargest producer of electric cars in the world. One company committed to the development ofelectric cars is BYD, a Shenzhen based company founded by entrepreneur Wang Chuanfu in1995 when he was 29 years old10. By 2005 BYD was the largest manufacturer of batteries in theworld for mobile phones, iPods, digital cameras, and other electronic goods. While he still eatsin the company canteen and lives in the company housing block, Wang Chuanfu is nowconsidered one of the richest people in China11. Warren Buffet is an investor in BYD. As we can see the invention of the automobile was built upon a number of foregoing piecesof new knowledge and inventions in various domains that filled in the missing links that makethe invention possible. Until every aspect of knowledge and sub-component exists that isrequired for the invention to take form, it cannot take form. For example an automobile is acompilation of numerous previous inventions that enable the form of an automobile to exist.
  9. 9. Without the ideas of steel, rubber, fuel, concepts of compression and combustion, electronics,tires, braking systems, new alloys, hydraulic systems, road rules and carriageways, theautomobile cannot exist (see Figure 1). Automobile Chassis Engine Tires Control & Braking System Environment management Systems Rubber Suspension Fuel Electronics Alloys Road Rules systems Compression Chemical Hydraulics Roads & Steel Microprocessors & Processes Carriageways Combustion Plantations Figure 1. The hierarchy of inventions that make the invention of the automobile possible12 The creation of inventions that become incorporated into what we call the automobile wasand still is a continuous process, making incremental improvements to the whole idea andconcept. New composite polymer materials and plastics make lighter frames without sacrificingstrength, new engine power enhancing systems like turbochargers and fuel injection systemscontribute to the enhancement of car performance. The automobile is a system of ideas andalso forms part of other idea systems like transport and city planning, etc. Any new technology like the automobile brings with it a number of new opportunities inaddition to the original intended purpose of the technology. The advent of the automobileindustry enabled the formation and development of many specialized service businesses, andsatellite suppliers of car parts for production. The automobile has led to automobile servicestations, parts manufacturers, paint manufacturers, steel suppliers, logistic transport providers,and automobile dealers, as well as the invention of seat beats and other safety equipment. Thedevelopment of cities like Detroit in the 1950s was driven by the auto industry. The automobile also radically changed the way societies existed. Auto manufacturingclusters are also a feature in the development of a nation, as we have seen in Britain, Europe,the US, Australia, Japan, Korea, Malaysia, and of late India and China - rising, stagnating, andeventually declining. Some of these early industries may grow out of factor advantages such as
  10. 10. low cost labour, as did the Japanese consumer product manufacturing during the 1950s and1960s. However to maintain any industry in the long term, a new basis of competitiveadvantage should be developed on the production and/or market sides, i.e., new technologies,design superiority, the development of enhanced logistical chains, or the targeting of specialmarket segments like the Japanese did with small automobiles, etc. Now we are again witnessing a change in the guard of this industry towards China. 1 Diesel, E., Goldbeck, G., & Schildberger, F. (1960). From Engines to Autos: Five pioneers in enginedevelopment and their contributions to the auto industry, Chicago, Henry Regnery Company2 Weightman, G. (2007). The Industrial Revolutionaries: The making of the modern world, 1776-1914, New York, Grove Press, P. 320. 3 Natural rubber derived from latex.4 Lottman, H.R. (2003). The Michelin Men Driving and Empire, London, I.B. Tauris.5 See: Motoring Ahead: More Cars are Sold in China than in America, The Economist, 23rd October 2009,, (accessed 16th February 2011).6 Marr, K. (2009). As Detroit Crumbles, China Emerges as Auto Epicenter, The Washington Post, 18th May, dyn/content/article/2009/05/17/AR2009051702269.html, (accessed 15th February 2011).7 Tang, R. (2009). The Rise of China’s Auto Industry and its Impact on the U.S. Motor Vehicle Industry, Washington D.C., Congressional Research Service, P. 13,, (accessed 15th February 2011).8 Jian, Y. (2009). Chinese Car Companies Resort to Buying Brands Rather Than Creating Them, Advertising Age, 15th July,, (accessed 16th February 2011). 9 Tang, R. (2009), P. 14.10 Wang Chuanfu: Building electric dreams in China,, 20th April 2009,, (accessed 14th February 2011). 11 See: 12 Hunter, M. (2012), Opportunity, Strategy, & Entrepreneurship: A Meta-Theory, Vol. 1., New York, NovaScience Publishers, P. 53.