Cars after Financialisation: A Case Study in Financial Under-Performance, Constraints and Consequences

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Abstract
This paper presents data on the financial results achieved in the 1990s by 12 major car assemblers from the USA, Europe and Japan. While some assemblers have defensible records of share price appreciation, their return on capital employed is generally mediocre and well below the level that US and UK stock markets require. This under-performance reflects ubiquitous product market constraints and, specifically, spreading direct competition, which leaves many assemblers precariously dependent on the few segments where indirect competition prevails and where profits are divided between two or three incumbents. Financial under-performance persists into the 2000s because a variety of conditions, including family control and national differences in the valuation of car companies, inhibit a global restructuring that would raise profitability. Insofar as financial under-performance by assemblers has major consequences, the end result is to increase the messy and unresolved character of present day capitalism.

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