An explorative study on the modularization in the automotive industry

Abstract

The substantial benefit of recent assembly modularization in the automotive industry interested many practitioners and researchers since mid-1990s. Despite the short history, various researches have deepened our understanding of auto industry modularization. However, the previous researches have rarely been congruent with the mainstream studies of modularization which has been mainly developed in PC industry. In order for future studies to build more general version of modularization theory, we have to contrast the PC and auto industry; then, we may understand what we are missing in mainstream theory. Studying the largest Korean auto maker, Hyundai-Kia Motor Company, and its largest module supplier, Hyundai MOBIS, this study dug out four findings. Firstly, not like PC industry, we should distinguish the concepts of components, systems, and modules to get clearer view of complex product modularization. Secondly, in automotive industry, assembly modularization and outsourcing facilitated further modularization in other processes and more adoption of assembly modules while PC industry modularization started from product design modularization. Third, not like PC industry, automotive industry had maintained integral architecture for about one century. The long history of integral architecture can be a barrier to the expansion of modularization and outsourcing. Specifically, strategic importance of some components or processes, suppliers’ incapability or OEM’s distrust, and organizational resistance can be the major barrier. Lastly, unlike PC modules, assembly modules of automobiles are very different from each other in their quality focus, the degree of process modularization, and their supplier base. These differences should be seriously taken since they warn careless generalization of findings from the sample of only one or two modules. The findings of this study can be a stepping stone for a general process theory of modularization. Practitioners can find...