Relative efficiency and quality of global automobile companies

Abstract

We investigate global automobile companies to determine whether quality and productivity are associated with profitability and increased market share. From multiple tests, evidence suggests that 1) the firms fall into three groups: Toyota and Honda excel in all categories and are in the high performing group; Audi, GM, Mazda, BMW, and Nissan are in a moderate performing group while Daimler/Chrysler, Ford, Mitsubishi and Volkswagen are in a relatively low performing group; 2) that firms with high (low) quality, on average, have higher (lower) profitability and higher (lower) increases in market share for the sample period. Implications for managers of manufacturing firms with a consumer market presence is that firms that pursue product quality and value to their customers should benefit by improved financial performance.