Asian cars power ahead in 'sustainable value'

Posted: 30 October 2009

Asian car manufacturers are outperforming their North American, and many of their European competitors, in using their economic, environmental and social resources more efficiently, according to the largest- ever study of the sustainability of car manufacturing of 17 of the world's leading car companies.

Key findings from the study show how General Motors' poor financial performance is accompanied by the worst sustainability performance recorded. Other leading manufacturers including Porsche, KIA and Chinese manufacturers are still not producing sufficient sustainability performance data. The report, which covers the period between 1999 and 2007, has been created by researchers at Queen's University Management School in Belfast, alongside colleagues from the Euromed Management School Marseille, and the Institute for Futures Studies and Technology Assessment (IZT) in Berlin.

It reveals the social impacts of car production, including the volume of greenhouse gas emissions from production facilities and the number of work accidents recorded by a company. It also looks at how efficiently car manufacturers used key natural resources compared with their industry peers and how much profit or loss was generated with these resources.

Using the concept of 'sustainable value' the authors of the report have found a way to compare the sustainable sales value of different companies irrespeitive of their size. Sustainable value includes not just the use of economic capital but also environmental and social resources. It claims to be the first value-based method for assessing corporate sustainability performance.

Top ranking

Honda Insight 2009
Honda Insight 2009
Honda Insight 2009
In the report Asian car manufacturers including Toyota, Hyundai, Nissan, Honda, and to a lesser extent, Suzuki have all out-performed their North American competitors. In stark contract to the Asian manufacturers, both North American carmakers Ford and General Motors (GM) lie well into negative territory, with GM showing the most striking downside trend.

There is a mixed picture among European manufacturers. While BMW tops the ranking of all 17 manufacturers in most of the years assessed, other European carmakers PSA (Peugeot, Citroën), Renault, Volkswagen and DaimlerChrysler/Daimler AG only occasionally keep pace with the industry leaders. FIAT Auto consistently falls behind throughout the entire review period.

Professor Frank Figge from Queen's University Management School, one of the authors of the study, said: "Economic crisis, energy crisis, climate crisis and recent global developments have affected the automobile industry like few other sectors. Never before has it been as important for car manufacturers to employ their economic, environmental and social resources wisely - and efficiently.

"However, while issues such as fleet consumption and CO2 emissions have been firmly put on the public agenda, the equally considerable environmental impact of the production phase of car manufacturing has as yet been largely ignored. The survey attempts to close this gap."

The study also shows the improvement potential that a car giant like General Motors has in improving its long-term performance. GM achieved a sustainable value of minus €9.87 billion, in comparison with BMW, which having used all the resources considered necessary to create value doubled its sustainable value to €2.8 billion from 1999 to 2007.

Huge potential

General Motors Hummer range
General Motors Hummer range
General Motors Hummer range.
Ralf Barkemeyer from Queen's University Management School said: "The study shows that in 2005 GM had by far the worst negative Sustainable Value within the industry which is mainly the result of a dramatic profits slump in 2005. But GM's value contributions from carbon dioxide, nitrogen oxide and sodium oxide emissions as well as waste generation are very negative during the period 1999 to 2007. Its sodium oxide value contributions show the worst level of resource efficiency in the entire study.

"The example of several of the other car manufacturers shows that there is a multi-billion euro potential for a company like GM to improve both its environmental and social and its financial performance simultaneously."

But accessing sustainability data for the whole sector remains a problem. Ralf Barkemeyer added: "While Tata could be assessed for the first time in 2007 - and narrowly beats the benchmark in this year - other car manufacturers such as Porsche, KIA or Chinese manufacturers do still not provide sufficient data. Likewise, Daihatsu could not be included in the assessment in the year 2007 due to its insufficient sustainability reporting".

Professor Figge added: "The bottom line is that this study reveals big differences in sustainability performance in automobile manufacturing. This shows that the production process itself bears considerable room for improvement in terms of sustainability performance. We hope car manufacturers and governments worldwide will take note of this important study."

The study and extensive information on the Sustainable Value approach are available at here