The “Financialized” Structure of Automobile Corporations in the 2000s

• DOI: https://doi.org/10.13169/worlrevipoliecon.4.3.0387
• Pages: 387-409
• Published date: 01 October 2013
• Date: 01 October 2013
• Author: Roberto Alexandre Zanchetta Borghi,Fernando Sarti,Marcos Antonio Macedo Cintra
• Subject Matter: automobile corporations,financial structure,“financialization”

W R  P E V. 4 N. 3 F 2013

THE “FINANCIALIZED” STRUCTURE OF

AUTOMOBILE CORPORATIONS IN THE 2000s

Roberto Alexandre Zanchetta Borghi, Fernando Sarti,

and Marcos Antonio Macedo Cintra

Abstract: Important changes in the economic system, both in productive and f‌inancial

dimensions, have been observed since the 1970s, pointing to a growing capital mobility and

a stronger presence of f‌inance within the logic of non-f‌inancial corporations. This article aims

to analyze this increasing role of f‌inance in the dynamics of automobile companies. Data

from annual f‌inancial statements of selected carmakers (Daimler, Fiat, Ford, General Motors,

Honda, Hyundai, Toyota and Volkswagen) between 2000 and 2009 are considered, in order

to verify the occurrence of a “f‌inancialization” movement in this industry. From the analysis,

a clear movement towards a more “f‌inancialized” pattern of the carmakers’ structure could

be observed, although there were notable differences among groups according to corporate

dependence upon activities from the f‌inancial segment and the degree of exposure of their

f‌inancial structures.

Key words: automobile corporations; f‌inancial structure; “f‌inancialization”

Roberto Alexandre Zanchetta Borghi (left), PhD Candidate in development studies at the

University of Cambridge, United Kingdom, and MA in Economics at the State University

of Campinas (Unicamp), Brazil. Email: razb2@cam.ac.uk

Fernando Sarti (centre), Professor and Director, Institute of Economics, State University of

Campinas (Unicamp), Brazil. Email: fersarti@eco.unicamp.br

Marcos Antonio Macedo Cintra (right), Secretariat for Strategic Affairs, Institute for

Applied Economic Research (IPEA), Brazil. Email: marcos.cintra@ipea.gov.br

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388 ROBERTO ALEXANDRE ZANCHETTA BORGHI et al.

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Introduction

Signicant changes in the economic system, both in productive and nancial

dimensions, have been occurring since the 1970s and the 1980s. Productive

modications involve a combination of different processes, such as the intensi-

cation of production internationalization and trade, a more intense competition

at global level, and an increasing integration of productive structures of national

economies. Financial changes are related to the interaction of three phenomena,

which are the expressive expansion of international nancial ows, a ercer

competition in the capital markets and a higher integration of international

nancial systems.1 These movements are reected in the adoption of a wide

variety of nancial management strategies by non-nancial corporations through

the constant monitoring of net cash ows, merger and acquisition operations

(M&A) and the use of mechanisms, such as derivatives, to hedge against or prot

from interest and exchange rate uctuations (Chesnais 1994, 1996; Gonçalves

et al. 1999).

According to Belluzzo (2005: 228, authors’ translation), the global economy

after the end of the Bretton Woods regime in the 1970s was characterized by three

movements: “the nancial and foreign exchange liberalization; the changes in the

competition pattern; the modication in the institutional rules governing trade and

investment.” The rst movement represented an expansion of liberalization and

deregulation processes of nancial and foreign exchange markets both at national

and international levels. This resulted in an intensication of the “nancializa-

tion” process of the economy2 through a higher degree of nancial asset ows and

stocks in the composition of private income and wealth.

As Coutinho and Belluzzo (1998: 138, authors’ translation) state, economic

agents “began to subordinate their spending, investment and saving decisions to

their expectations of the pace of their nancial enrichment.” This process was

reinforced by the development of even more complex nancial innovations, such

as securitization and derivatives operations, and by the surge of new agents, such

as institutional investors (e.g. mutual funds, insurance companies and pension

funds).3 If, on the one hand, all these phenomena made high speculative and

patrimonial gains possible, on the other hand, they made the system much more

unstable and subject to systemic risks, given the high leverage degree and asset

price volatility4 (Tavares and Belluzzo 2002: 153).

The second movement, related to the changes in the global competition strategy

of large corporations, was characterized by a relocation of productive facilities and

a capital concentration and centralization, both reected in growing foreign direct

investment ows (FDI), especially of M&A operations. The strategy for creating

global productive networks contributed to changes in investment and trade

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