An elusive model – diversified quality production and the transformation of the German automobile industry

Abstract

The main argument in this article is that there is no one production system that characterizes the German model and that has provided a long-lasting, stable solution to the problems of the German automobile industry, in particular the high cost structure. A core element of the German model debate is the concept of diversified quality production (DQP). In the 1980s the German car-makers followed the DQP orientation of diversifying product range, aiming at non-price competitive market segments and organizing production on the basis of skilled labour. These strategies, however, had hidden structural problems which became apparent during the crisis in the early 1990s. This forced the companies to develop new strategies that were only partially complementary with DQP and had their own inherent problems. The dynamics of change in the automobile industry have not been adequately reflected in the debate on national models.

Keywords:

• German model
• Automotive industry
• Production systems
• Skilled labour
• Varieties of capitalism

Notes

The remaining difference was explained by changes in product quality (2%), improved lean manufacturing and overhead reduction (5%) and purchasing and design simplification initiatives, enabling a reduction in intermediate input per vehicle (3.5%) (McKinsey Global Institute 2002: 11).