The Changing Automotive Chain: Emerging Players and Global Challenges
Lorenza Monaco; Martin Schröder
Aug 21, 2026
#Manufacturing
The global automotive industry has recently returned to centre stage of policy debates, economic analyses and political speculation on the future of manufacturing and trade relations in a rapidly changing geo-economic world. While scholars and commentators were engaged in discussions on mega-trends such as digitalisation and electrification, or on the increasing dominance of China in EV markets and green technologies, the intensification of the US-promoted trade war has shifted the debate towards the need to calculate and anticipate the impact of new tariffs. Within such a turmoil, grasping an overall picture of the global industry and its structure can certainly facilitate an understanding of where the sector stands and where it could potentially go.
In our recent edited volume “Emerging Auto Industries in a World of Global Value Chains – Actors, Policies and Structural Issues” (Palgrave, 2026), we analyse who the new players are, what strategies they have been following in order to promote their automotive sectors, what opportunities and challenges they face while aiming to integrate within the current global automotive chain. The book collects a variety of theoretical arguments and empirical country cases from Eastern Europe, Asia, Africa and Latin America, to ultimately illustrate different trajectories of auto industrialisation and the complexity of industrial development in a world of production shaped by global value chains.
What we show in this book is that despite multiple crises, pressing environmental regulations and uneven benefits accruing through global value chain participation, the automotive industry remains an important bet for many developing countries and emerging economies wishing to industrialise and to promote structural transformation. Overall, the ‘automotive space’ has expanded in developing regions and in the Global South, with many new emerging players and a changing geography of production (Pavlínek, 2025; 2026)[1]. While uncertainties are still high and the sector will still change significantly with the transition to EVs, the industry remains a crucial employer and potential channel of important economic spillovers. Below, we offer some inputs for discussion – highlighting recent developments, key takeaways and future challenges for the industry.
In our recent edited volume “Emerging Auto Industries in a World of Global Value Chains – Actors, Policies and Structural Issues” (Palgrave, 2026), we analyse who the new players are, what strategies they have been following in order to promote their automotive sectors, what opportunities and challenges they face while aiming to integrate within the current global automotive chain. The book collects a variety of theoretical arguments and empirical country cases from Eastern Europe, Asia, Africa and Latin America, to ultimately illustrate different trajectories of auto industrialisation and the complexity of industrial development in a world of production shaped by global value chains.
What we show in this book is that despite multiple crises, pressing environmental regulations and uneven benefits accruing through global value chain participation, the automotive industry remains an important bet for many developing countries and emerging economies wishing to industrialise and to promote structural transformation. Overall, the ‘automotive space’ has expanded in developing regions and in the Global South, with many new emerging players and a changing geography of production (Pavlínek, 2025; 2026)[1]. While uncertainties are still high and the sector will still change significantly with the transition to EVs, the industry remains a crucial employer and potential channel of important economic spillovers. Below, we offer some inputs for discussion – highlighting recent developments, key takeaways and future challenges for the industry.
Increasing share of Developing Countries and the growth of China
In the last two decades, the global automotive industry has certainly been marked by the extraordinary growth of China, dominating EV, battery production and new technologies, but also by an increasing share of developing countries, advancing both as producers and consumers (see fig and table below).
While the increasing participation of developing countries was partly allowed by the standardisation of vehicle production across countries and GVC locations, it still occurred along different lines of specialisation – with higher value added activities and R&D still concentrated in older and more advanced manufacturing sites and labour-intensive production, especially of light-weight components, located in those states with below average wages. On average, however, the divide between capital-intensive and labour-intensive activities has narrowed, especially if we look at developing countries serving as global or regional export platforms, and both production standards and advanced technology adoption are globally more even, at least in large firms / OEMs (Schröder & Monaco, 2026). Further, developing countries’ role in the global automotive industry can be distinguished. Some countries mainly serve as production and export platforms to developed country markets, usually in relatively close geographic proximity (integrated peripheries). Hence, production depends largely on external demand (Central and Eastern Europe, Mexico, Morocco). Other countries are both a production location and market (autonomous protected peripheries). In other words, internal demand determines production volumes (China and India). Finally, some developing countries serve as production and export platforms for regionally integrated markets (macroregional peripheries). Because demand in individual member countries is insufficient to achieve economies of scale in production, regional integration serves as a solution to create additional demand for production (eg. Argentina, Thailand). However, some macroregional peripheries lack sufficient regional level demand to support regional production and export platforms (eg. South Africa).
From an industrial development perspective, despite the uncertainties linked to the demand for EVs (see the ongoing Volkswagen crisis) and more stringent regulations (themselves subject to an uncertain future, given the EU discussions on the Green Deal), many developing countries place high hopes in the potential of the automotive sector to trigger industrialisation, push structural transformation, and generate employment.[1] Within a world manufacturing space shaped by global value chains, however, this raises two important points: 1) what industrial strategies and policy tools to employ, given existing WTO regulations; 2) how to promote GVC integration while maximising local development benefits. As we illustrate in the book, GVC integration can follow multiple trajectories, countries adopt different strategies – and development outcomes can be very diverse.
From an industrial development perspective, despite the uncertainties linked to the demand for EVs (see the ongoing Volkswagen crisis) and more stringent regulations (themselves subject to an uncertain future, given the EU discussions on the Green Deal), many developing countries place high hopes in the potential of the automotive sector to trigger industrialisation, push structural transformation, and generate employment.[1] Within a world manufacturing space shaped by global value chains, however, this raises two important points: 1) what industrial strategies and policy tools to employ, given existing WTO regulations; 2) how to promote GVC integration while maximising local development benefits. As we illustrate in the book, GVC integration can follow multiple trajectories, countries adopt different strategies – and development outcomes can be very diverse.
Emerging Players and GVC Integration
The geography of the global auto industry has significantly diversified compared to the old Triad of big producers. Besides China and India – with China leading the run, new players have emerged on all continents. Our book aims to give a flavour of automotive development in different regions: Eastern Europe, Latin America, Asia, and Africa, shedding light on better- known and still underexplored cases – including, for example, Hungary, Argentina, Vietnam, Morocco and South Africa. These empirical cases support the theoretical arguments discussed in the first part of the book – what emerges is the complexity of industrial development and the variety of factors that can affect GVC-integration.
GVC-integration remains a priority, an ambition, and a developmental goal. But it can lead to multiple outcomes, and cannot succeed without adequate policy support accompanying it.
As cases from Poland and Hungary illustrate (Domański et al, 2026; Gáspár et al, 2026), integration with an industrial core can lead to impressive results – a widening industrial base, increasing export revenues and higher productivity, but these do not necessarily translate into domestic linkages. Foreign-dominated industries, integrated through low wages and low value added activities, can get stuck in mechanisms of technological dependence and find upgrading extremely difficult.
African cases like Morocco and South Africa (Auktor, 2026; Wuttke et al, 2026) highlight instead how policy is necessary but not sufficient: even in the presence of well-designed policies and relatively advanced technologies, a geographically peripheral position can strongly impact production costs and business decisions, making a location less convenient and attractive. By contrast, proximity plays a huge role in investment decisions and can favour the development of new industrial poles even in a relatively short time, like in the case of Morocco.
Finally, cases like Argentina and Thailand (Perez Almansi, 2026; Techakanont and Busser, 2026) reveal the importance of the regional space and of policy guidance. Even specialisation in the same product space (medium pick-up trucks) led to very different outcomes in the two countries, with much higher chances of success in contexts like Thailand, combining a wide and integrated regional market (ASEAN) with well-designed policies, balancing incentives to attract FDI with conditions for the localisation of key technologies.
GVC-integration remains a priority, an ambition, and a developmental goal. But it can lead to multiple outcomes, and cannot succeed without adequate policy support accompanying it.
As cases from Poland and Hungary illustrate (Domański et al, 2026; Gáspár et al, 2026), integration with an industrial core can lead to impressive results – a widening industrial base, increasing export revenues and higher productivity, but these do not necessarily translate into domestic linkages. Foreign-dominated industries, integrated through low wages and low value added activities, can get stuck in mechanisms of technological dependence and find upgrading extremely difficult.
African cases like Morocco and South Africa (Auktor, 2026; Wuttke et al, 2026) highlight instead how policy is necessary but not sufficient: even in the presence of well-designed policies and relatively advanced technologies, a geographically peripheral position can strongly impact production costs and business decisions, making a location less convenient and attractive. By contrast, proximity plays a huge role in investment decisions and can favour the development of new industrial poles even in a relatively short time, like in the case of Morocco.
Finally, cases like Argentina and Thailand (Perez Almansi, 2026; Techakanont and Busser, 2026) reveal the importance of the regional space and of policy guidance. Even specialisation in the same product space (medium pick-up trucks) led to very different outcomes in the two countries, with much higher chances of success in contexts like Thailand, combining a wide and integrated regional market (ASEAN) with well-designed policies, balancing incentives to attract FDI with conditions for the localisation of key technologies.
Transitions and Grand Challenges ahead: what future for Emerging Auto Industries?
Overall, through our book, we intend to offer a global view on an industry in profound transformation. Readers will be guided through the complexity of factors affecting the industrial development process and auto industrialisation – from issues influencing technological change to institutions, from MNC internationalisation strategies to labour regimes. And the comparison of many different country trajectories shows, on the one hand, that GVC integration remains a dominant developmental objective for most emerging economies. On the other hand, that this can take many directions and lead to many different outcomes, carrying both opportunities and risks. Overall, inclusion in GVCs almost always supports initial production volume expansion. It can support growth and diversification of the industrial base such as in Thailand, but it may also result in stagnation in lead firm assigned roles such as in Argentina, South Africa, or Vietnam. Further, GVC integration may lead to structural inequalities, and create imbalances in the local supply chain, for example pushing domestic suppliers to lower tiers where upgrading is significantly more difficult, as the Hungarian case well illustrates. In a way or another, the book highlights how successful integration undeniably depends on balanced and forward-looking policy support. Here, the challenge for emerging economies and late industrialisers is not only to claim the space for industrial policy, but to tailor industrial policy strategies to a context shaped by GVCs. In this regard, rethinking industrial policy must imply reconsidering not only tools, but enabling actors and governance mechanisms (Mazzucato & Monaco, 2024), in a way that addresses forms of uneven specialisation and that puts forward ownership and conditionalities.
The book here does not offer solutions, but reflections. Reflections on what factors can be controlled by policies, and those that cannot. Reflections on strategies to avoid or ideally replicate, on imbalances to possibly address and ingredients that led to successful outcomes. Readers will find discussions on the issue of geographical location, on product specialisation, on the balance of power between different types of firm and institutions, and on the viability of different development strategies.
Ultimately, the book highlights how despite the need to reduce environmental pressure and the necessary changes in mobility patterns, the automotive industry still plays an important developmental role, testified by the number of new players in the global chain and the way many emerging economies are still investing in its expansion. However, the book also stresses how the future of the industry is still largely unwritten. The ongoing electric and digital transitions are profoundly reconfiguring the industry – affecting the geography of production, old technological paradigms and business models. The EV transition alone is radically restructuring the global auto industry, shifting the core towards China, reshaping trade relations, and triggering a new scramble for mineral resources. Digitalisation is transforming products and processes, and inducing higher automation, with related concerns about the future of industrial labour. In addition, the Trump’s administration tariff strategy has opened new terrain of uncertainty, with already visible and still invisible effects – some developing countries fearing economic downsizing, others already diversifying trading partners or establishing new trade agreements (see the recent EU – India agreement).
Transformation is deep, and the future of the industry is still pretty blurred. But one thing is certain – the auto sector still carries development potential and important economic weight for many developing and emerging economies. It must be protected, it is surely not easy to dismiss. And to formulate sustainable industrial strategies and forward-looing development policies, a global vision is strongly necessary. This book hopes to add a useful brick in this direction.
The book here does not offer solutions, but reflections. Reflections on what factors can be controlled by policies, and those that cannot. Reflections on strategies to avoid or ideally replicate, on imbalances to possibly address and ingredients that led to successful outcomes. Readers will find discussions on the issue of geographical location, on product specialisation, on the balance of power between different types of firm and institutions, and on the viability of different development strategies.
Ultimately, the book highlights how despite the need to reduce environmental pressure and the necessary changes in mobility patterns, the automotive industry still plays an important developmental role, testified by the number of new players in the global chain and the way many emerging economies are still investing in its expansion. However, the book also stresses how the future of the industry is still largely unwritten. The ongoing electric and digital transitions are profoundly reconfiguring the industry – affecting the geography of production, old technological paradigms and business models. The EV transition alone is radically restructuring the global auto industry, shifting the core towards China, reshaping trade relations, and triggering a new scramble for mineral resources. Digitalisation is transforming products and processes, and inducing higher automation, with related concerns about the future of industrial labour. In addition, the Trump’s administration tariff strategy has opened new terrain of uncertainty, with already visible and still invisible effects – some developing countries fearing economic downsizing, others already diversifying trading partners or establishing new trade agreements (see the recent EU – India agreement).
Transformation is deep, and the future of the industry is still pretty blurred. But one thing is certain – the auto sector still carries development potential and important economic weight for many developing and emerging economies. It must be protected, it is surely not easy to dismiss. And to formulate sustainable industrial strategies and forward-looing development policies, a global vision is strongly necessary. This book hopes to add a useful brick in this direction.
Notes
[1] Pavlínek highlights the dynamic evolution in the geography of production of the global auto industry, identifying three categories in less developed countries (LDCs): autonomous protected peripheries, integrated peripheries, and macroregional peripheries.
[2] Research conducted for IndustriALL Global Union in 2020 on the automotive industry in Sub Saharan Africa and including Ghana, Ethiopia, Kenya, Nigeria, Namibia, Rwanda, and South Africa showed how all these seven countries, to a different extent, had been trying to formulate targeted policies and to attract investment in the sector. See Monaco et al. (2021), The Auto Industry in Sub Saharan Africa: Investment, Sustainability and Decent Jobs, IndustriALL / FES Report.
References
Auktor, G. (2026). Morocco’s Systematic Approach to Developing an Export-Oriented Automotive Sector. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Macmillan.
Domański, B., Guzik, R., Gwosdz, K. (2026). The Changing Position of Poland’s Automotive Industry in the European Division of Labour. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Macmillan.
Gáspár, T., Natsuda, K., Sass, M. (2026). Supply Chain Linkages in the Hungarian Automotive Industry: Challenges for Industrial Upgrading. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Macmillan.
Mazzucato, M., & Monaco, L. (2024). Rethinking Industrial Strategies and the State: A Global South Perspective. Social Research: An International Quarterly, 91(3), 819-849.
Monaco et al. (2021), The Auto Industry in Sub Saharan Africa: Investment, Sustainability and Decent Jobs - IndustriALL/FES Report, online at http://www.industriall-union.org/automotive.
Monaco, L., Schröder, M. (eds.) (2026), Emerging Auto Industries in a World of Global Value Chains, Palgrave Studies of Internationalization in Emerging Markets, https://doi.org/10.1007/978-3-031-76410-3_19
Pavlínek, P. (2025). Europe’s Auto Industry: Global Production Networks and Spatial Change, Cambridge University Press.
Pavlínek, P. (2026). The development of the automotive industry in less developed countries. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Studies of Internationalization in Emerging Markets. Palgrave Macmillan (pp. 35-52).
Perez Almansi, B. (2026). The Emergence of the Light Commercial Vehicles Production Hub in Argentina. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Macmillan.
Schröder, M., Monaco, L. (2026). Industrial Development in the Age of Global Value Chains: Implications for Emerging Automotive Industries. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Studies of Internationalization in Emerging Markets. Palgrave Macmillan (pp. 15-33).
Techakanont, K., Busser, R. (2026). Thailand: Does Industrial Policy Still Matter in an Era of Transition Toward the Electrification of the Automotive Industry?. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Macmillan.
Wuttke, T., Monaco, L., Anzolin, G. (2026). Production Volumes, Localisation, and Technological Upgrading: South Africa in the Global Automotive Value Chain. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Macmillan.
[1] Pavlínek highlights the dynamic evolution in the geography of production of the global auto industry, identifying three categories in less developed countries (LDCs): autonomous protected peripheries, integrated peripheries, and macroregional peripheries.
[2] Research conducted for IndustriALL Global Union in 2020 on the automotive industry in Sub Saharan Africa and including Ghana, Ethiopia, Kenya, Nigeria, Namibia, Rwanda, and South Africa showed how all these seven countries, to a different extent, had been trying to formulate targeted policies and to attract investment in the sector. See Monaco et al. (2021), The Auto Industry in Sub Saharan Africa: Investment, Sustainability and Decent Jobs, IndustriALL / FES Report.
References
Auktor, G. (2026). Morocco’s Systematic Approach to Developing an Export-Oriented Automotive Sector. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Macmillan.
Domański, B., Guzik, R., Gwosdz, K. (2026). The Changing Position of Poland’s Automotive Industry in the European Division of Labour. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Macmillan.
Gáspár, T., Natsuda, K., Sass, M. (2026). Supply Chain Linkages in the Hungarian Automotive Industry: Challenges for Industrial Upgrading. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Macmillan.
Mazzucato, M., & Monaco, L. (2024). Rethinking Industrial Strategies and the State: A Global South Perspective. Social Research: An International Quarterly, 91(3), 819-849.
Monaco et al. (2021), The Auto Industry in Sub Saharan Africa: Investment, Sustainability and Decent Jobs - IndustriALL/FES Report, online at http://www.industriall-union.org/automotive.
Monaco, L., Schröder, M. (eds.) (2026), Emerging Auto Industries in a World of Global Value Chains, Palgrave Studies of Internationalization in Emerging Markets, https://doi.org/10.1007/978-3-031-76410-3_19
Pavlínek, P. (2025). Europe’s Auto Industry: Global Production Networks and Spatial Change, Cambridge University Press.
Pavlínek, P. (2026). The development of the automotive industry in less developed countries. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Studies of Internationalization in Emerging Markets. Palgrave Macmillan (pp. 35-52).
Perez Almansi, B. (2026). The Emergence of the Light Commercial Vehicles Production Hub in Argentina. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Macmillan.
Schröder, M., Monaco, L. (2026). Industrial Development in the Age of Global Value Chains: Implications for Emerging Automotive Industries. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Studies of Internationalization in Emerging Markets. Palgrave Macmillan (pp. 15-33).
Techakanont, K., Busser, R. (2026). Thailand: Does Industrial Policy Still Matter in an Era of Transition Toward the Electrification of the Automotive Industry?. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Macmillan.
Wuttke, T., Monaco, L., Anzolin, G. (2026). Production Volumes, Localisation, and Technological Upgrading: South Africa in the Global Automotive Value Chain. In: Monaco, L., Schröder, M. (eds) Emerging Auto Industries in a World of Global Value Chains. Palgrave Macmillan.
