4.2. Catch-Up Index (Technical Efficiency)
The Malmquist productivity index has the components which are used in performance measurement, such as changes in technical, technological, and total factor productivity. The authors present results of efficiency change. The technical effective changes of the DMUs are expressed through the catch-up index shown in the
Table 4 and
Figure 3.
Catch-up index, with scores >1 and <1, respectively, indicates the progress and regress in technical efficiency of DMUs. Technical efficiency of DMUs tended to decrease in the period 2016–2017 and increase in the 2017–2018 period. The average catch-up = 1.009403 (>1) reflects that the majority (13 DMUs: D1, 2, 5, 7, 8, 9, 11, 13, 14, 15,,17, 19, and 20) achieved technical efficiency in the total research period (2015–2018). D17 (Suzuki) achieved the best and the most stable technical performance, while D3 (Chang’an Auto) had the lowest and the least-stable efficiency performance on average.
During the 2015–2016 period, 12 of the 20 DMUs achieved technical efficiency, with the catch-up index greater than 1. The DMU that had the highest technical efficiency was D8 (General Motors), with a value of 1.203. Meanwhile, D3 had the lowest technical efficiency, at 0.779774180
It is noticeable that, during the period of 2016–2017, most of the DMUs did not achieve progressive technical efficiency (D1, 3, 6, 11, 17, and 18), with catch-up scores greater than 1. D19 (Toyota) was the least-efficient automobile manufacturer in this period, with a score of 0.692. D3 (Chang’an Auto) had an impressive improvement in technical efficiency, being the least-effective producer during the previous period and then becoming the most technically efficient producer in this period.
After the low performance from the previous period, the automakers showed significant improvement in technical efficiency in the next period, 2017–2018. Results show that there are only five out of 20 companies (D1, 3, 6, 11, and 18) that have catch-up values less than 1. Being the worst-performing manufacturer in the previous period, D19 (Toyota) had shown improvement and became the most technically efficient manufacturer in this period, with a catch-up value of 1.47. Surprisingly, D3 (Chang’an Auto) failed to maintain high efficiency and suffered a serious decline in technical efficiency, with a catch-up value of only 0.4478, while the other competitors were above 0.9.
In the list of 20 DMUs, four of them are from China, six from Japan, six from Europe, two from America, one from Korea, and one from India. Among the four Chinese carmakers (D1-BAIC, D3-Chang’an Auto, D5-Dongfeng, and D16-SAIC), the authors noticed, in
Figure 4 below, that Dongfeng and SAIC showed improvement in technical efficiency, while Chang’an Auto and BAIC regressed in regard to efficiency change.
After a decline in technical efficiency during the period of 2016–2017, except for Mazda (D11), the remaining five Japanese automakers had a clear improvement, as seen in
Figure 5, below. Toyota (D19) showed the most noticeable improvement, by going from being the least-effective manufacturer to becoming superior compared to other competitors.
Like Japanese automakers, European carmakers also tended to improve their performances after the previous decline. Only one automaker, Fiat Chrysler (D6), showed a degradation in technical efficiency, as seen in
Figure 6.
Figure 7, below, shows the remaining four manufacturers, Ford, General Motor (from the US), Hyundai (from Korea), and Tata Motors (from India) exhibiting less-significant changes in technical efficiencies.
Despite being less effective than its rival, General Motors (D8), in previous periods, Ford (D7) showed improvement in technical efficiency and even surpassed its rival during the 2017–2018 period. The Korean automaker Hyundai (D10) improved its technical efficiency, and the Indian automaker Tata Motors (D18) showed a regress, despite achieving good performance in the previous 2016–2017 period.
4.3. Frontier-Shift Index (Technological Change)
The frontier-shift index is applied to measure the efficiency frontiers of DMUs between two periods.
Table 5 shows that the technological efficiency of automobile manufacturers increased in the period 2016–2017 and decreased in the period of 2017–2018.
Except for D20, the remaining all of the manufacturers (19 out of 20) failed to achieve technological progress in the first period of 2015–2016. However, in the next period (2016–2017), manufacturers made efforts in innovating technology and achieving good results. However, they were not able to maintain this progress in the next period (2017–2018), as all of their frontier-shift indicators were lower than 1, even lower than the 2015–2016 period. This shows that the frontier-shift efficiencies of manufacturers seriously fell down during this period. Due to the low value of technological efficiencies in the periods 2015–2016 and 2017–2018, except for Chang’an Auto (D3) and Daimler AG (D4), the average technological efficiency during the total research period (2015–2018) did not result in a progressive score.
It can be observed in
Figure 8 that the automobile manufacturers did not achieve technological progress during the period of 2015–2016. Only D20 (Volkswagen) obtained a frontier-shift index greater than 1, indicating that the development in technology and innovation of the global auto industry have not improved very well and have many limitations. After a period of poor technological performance 2015–2016, manufacturers opted to invest in technology innovation and achieved technological efficiency in the period 2016–2017, especially D1, D3, D5, D7, D10, D11, D15, and D17. However, because technology development has been so fast and developing, manufacturers failed to maintain progress and even severely declined in the next period.
Figure 9, below, shows the frontier-shift scores of automobile manufacturers in the period of 2017–2018. During this period, the manufacturers with low efficiencies (F < 0.6) were Dongfeng, Chang’an Auto, BAIC (manufacturers from China), and Suzuki (Japan). Manufacturers such as Renault, Mazda, Tata Motors, Ford, and Nissan also had a low performance (F < 0.7). BMW, General Motors, Volkswagen, Hyundai, and Fiat Chrysler had better technological efficiency than the rest, with F > 0.8. Thus, it can be seen that, in this period, manufacturers from Asia, especially China, had a more serious decline in technological efficiency than European and American automobile manufacturers. The simultaneous decline in technological efficiency of all 20 automobile manufacturers shows a close correlation with the decline in global automobile production in this period of 2017–2018.
In terms of technological efficiency, it can be seen that the automakers show a common trend, increasing in the second phase and declining in the remaining two periods, showing that no manufacturer performed a stable technological efficiency or took any lead in the race to technology development and innovation. It only shows that the technology playground in the global automotive industry is highly competitive and holds so much potential for all manufacturers.
4.4. Malmquist Productivity Index (MPI)
MPI is one very valuable component in evaluating the performance of global automobile manufacturers. It measures the change in total factor productivity of DMUs at a certain interval periods and is the product of catch-up index (technical efficiency) and frontier-shift (technological change).
As shown in
Table 6 and
Figure 10, the average Malmquist index of DMUs less than 1 (0.9632678) indicates a regression in the total productivity growth of the DMUs. The total performance of most DMUs increased in the period 2016–2017 and significantly decreased in the 2017–2018 period.
In the period of 2015–2016, most of the DMUs performed inefficiently, with the MPI less than 1, only five automakers, namely General Motors (G.M.), Nissan, Suzuki, Toyota, and Volkswagen, achieved progress in total factor productivity.
After performing low efficiency in the 2015–2016 period, car producers improved their productivity and got a good performance. This can be seen by the positive MPI values of DMUs in the next period, 2016–2017. Only D19 (Toyota) did not achieve an efficient performance during this period, with an MPI of 0.7989.
However, the manufacturers could not maintain this progressive performance for the next period, 2017–2018. The productivity scores of automakers even declined very badly, having an average value of only 0.762. The lowest index of 0.2536 belongs to D3 (Chang’an Auto), meaning that it was the least-efficient producer at this period. The two occasional outstanding automakers that achieved a good performance in this period were D8 (General Motors) and D19 (Toyota), with the MPI equal to 1.0383 and 1.0416, respectively.
Although DMUs had a great improvement and performance in the period 2016–2017, the performance in the other two periods were poor (especially in the 2017–2018 period), resulting in 14 out of 20 DMUs having a low-efficiency performance during the research period of 2015–2018 (total average MPI less than 1). Among 20 automotive manufacturers, General Motors is the automaker that had the most stable performance in all stages (all MPI values were greater than 1). Despite the inefficient performance in the 2017–2018 period, Volkswagen is still the best-performing automaker in the total research period, with an average MPI value of 1.037. Volkswagen is followed by Honda, BAIC, General Motor, Suzuki, and Chang’an Auto. In contrast, Mitsubishi and Tata Motors were the worst-performing automakers, with the lowest average MPI values.
Figure 11 presents the total factor productivity change of Asian automakers over the research period, 2015–2018. In the figure, there is a big difference in the performance between the Asian manufacturers. Chinese manufacturers have the biggest fluctuation in performance. Among four Chinese automakers, namely D1 (BAIC), D3 (Chang’an Auto), D5 (Dongfeng), and D16 (SAIC), SAIC was more stable compared to others in terms of performance; the remaining automakers showed big fluctuations, with performances that increased rapidly but fell drastically afterward. It can be recognized that Chinese car manufacturers have still not improved the stability in production efficiency and are still struggling to stabilize their production performance.
For Japanese automakers, Toyota (D19) is the manufacturer with the best breakthrough from the least-efficient manufacturer in the second phase to become the only manufacturer to achieve progressive performance in the 2017–2018 period. Honda (D9) shows a stable performance compared to other Japanese companies and other Asian manufacturers. In contrast, Mazda (D11) and Suzuki (D17) need more stability in performance. The other two Asian car producers, Korea’s Hyundai (D10) and India’s Tata Motors (D18), do not have a stable performance, especially in the 2017–2018 period. The Indian automobile manufacturers demonstrated very poor performance during the 2017–2018 period, lagging behind the three Chinese automobile manufacturers.
As gleaned in
Figure 12, there is no significant difference in total factor productivity between the European and American automobile manufacturers. Thus, it can be seen that the performance of European and American manufacturers does not have major fluctuations compared to Asian manufacturers. During the first phase (2015–2016), only Volkswagen (D20) and General Motors (D8) achieved the total factor productivity, while Ford (D7) was the least-efficient producer during this period. Like the Asian companies, European–American automobile manufacturers showed increasing growth in the year 2016–2017. All of the eight European–American manufacturers achieved total factor productivity in this period. Unfortunately, only General Motors was able to maintain this good performance up to the next period, 2017–2018. It is also noticeable that the most unstable manufacturer in terms of performance is Renault (D15). This is due to the automaker’s progress on the second-phase performance but fell sharply in the final stage. In contrast to Renault, General Motor is the most stable producer in terms of performance; even when other manufacturers declined in performance, it not only maintained, but also increased, in its performance.
In general, Honda is the only Asian automaker with the best performance, while Volkswagen and General Motors are from Europe–America. Asian automobile manufacturers, especially Chinese automakers, have made breakthrough performances during the 2016–2017 period, in terms of productivity. However, since the productivity efficiencies are not stable, they lost the race in the next period, 2017–2018. Thus, Asian manufacturers—China in particular—need to stabilize their production performance, in order to compete with European manufacturers. Based on the technical, as well as the technology, growth trend of the 20 automobile manufacturers, it can be seen that they still have not balanced the technical efficiency and technological efficiency. Typically, in the period of 2016–2017, when they improved technological change, the technical efficiency regressed. Moreover, the manufacturers were able to improve their technical efficiency, but they were faced with challenges in the technological-innovation aspects, during the period of 2017–2018. Therefore, improving production performance is about making a balance between technical efficiency and technological change; and these two aspects can be developed simultaneously