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Analysis

Where do automotive MNCs establish their subsidiaries?

The world’s leading automotive manufacturing and supply companies operate an average of 107.5 subsidiaries each. We reveal the global hotspots for these operations.


Automotive manufacturing and supply multinationals are far less likely to establish subsidiaries in North America than the average multinational company, according to analysis of GlobalData’s exclusively compiled subsidiary database.

Companies establish subsidiaries for a variety of reasons: they can allow them to expand into profitable new markets, to increase revenue and to diversify their holdings to better manage risk. As a vital component of a company’s expansion plans, the establishment of a subsidiary can offer insights into investment trends, with our database allowing you to see these investment patterns on a wider, sector level.

Investment Monitor’s multinational company database contains information on 2,188 of the world’s top multinational companies (MNCs) by revenue. Of these MNCs, 48 are in the automotive manufacturing and supply industry, representing 2.2% of the companies in our database.

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These automotive manufacturing and supply companies are less likely than average to establish subsidiaries in North America (16.6% versus 27.8%) and are more likely to establish them in Asia-Pacific (31.6% versus 21.4%).

Overall, the 48 automotive manufacturing and supply MNCs in our database operate 5,159 subsidiaries. This comes to an average of 107.5 subsidiaries per company, compared with an average of 99 for the entire database of 2,188 companies. It should be noted, however, that the number of subsidiaries is by no means evenly distributed within the sector. The most common number of subsidiaries for an MNC in the sector (the mode) is 34, while the median comes in at 47, indicating that the simple average is skewed heavily by the bigger parent companies.

conitnental-mnc-subsidiary
Continental, manufacturer of BMW, has the highest number of global subsidiaries among automotive MNCs. (Photo by Sean Gallup/Getty Images)

Germany-based Continental has the largest number of subsidiaries among the automotive manufacturing and supply sector MNCs within our database with 468. This means it ranks in 87th place across our entire database when measured by the total number of subsidiaries.

Continental subsidiaries are distributed across the world, with 46.2% of the total located in western Europe, the highest for any region. Some 89 of Continental’s subsidiaries are located in its home country of Germany, while China was the second most popular destination with 37.

After Continental, Daimler had the second-largest number of subsidiaries within the automotive manufacturing and supply industry MNCs in the database with 448, while Tesla was third with 367 and Michelin was fourth with 358.

Overall, 1,425 of the subsidiaries owned by the automotive manufacturing and supply MNCs in the database were located in the same country as the parent company was headquartered. This meant that MNCs in the sector were less likely than average to have a preference for domestic subsidiaries at 27.6%, with the figure for the entire database standing at 45.7%.

Methodology

GlobalData has compiled a list of top MNCs based on revenue. Any top companies that did not have a subsidiary were removed from the list. The latest company annual reports (2019 and 2020, where available) and websites were analysed for a total of 2,188 companies. For a subsidiary to be included, the parent company had to have a majority ownership/control in the subsidiary. Affiliates, associates, joint operations and joint ventures were included as long as the ownership criteria was met. Subsidiary information was captured at a country level. Country names were standardised. In total, 216,898 subsidiaries were captured.

This article originally appeared in Just Auto.

Georges is a data visualisation developer on GlobalData Media's data journalism team.

Patrick Scott is head of data journalism at GlobalData Media.