The characteristics and the role of modularity in the automotive business

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Modularity is discussed in a broad sense, beyond proximity and physical production. The paper proposes a strategic view of the process, by considering modularity as an attempt to reduce the capital employed by assemblers to set up a plant, to share the risk of the business with first tier suppliers, and to reshape the boundaries of the companies by a type of relationship assembler – suppliers characterized by a special service relation in order to cope with the productive vulnerability inherent in a low inventory system. The evolution of modular plants in Brazil – a key country in the matter – is discussed from the modular consortium of the VW Resende plant to the newest passenger car plants set in the industrial condominiums system, particularly the GM Gravatai. The last section focuses on modularity and design activities and location, discussing the possibilities for decentralized design activities. Finally, some research questions are proposed. © 2001 Inderscience Enterprises Ltd.