How important is the automotive industry in OECD countries? Insights from supply and use tables
By Catherine La Rosa-Elkaim (catherine.larosa-elkaim@oecd.org) and Bram Edens (bram.edens@oecd.org), OECD Statistics & Data Directorate, National Accounts Division
Supply and use tables (SUTs) are an integral part of the national accounts. The supply table traces the origin of products (i.e., goods and services) detailing by which industries they have been produced, or whether they have been imported. The use table describes their destination, for example, being used as an intermediate input in the production of other goods and services (broken down by the same industries as in the supply table), consumed by households or government in the form of final consumption, used for investment purposes, or exported.
The breakdowns follow internationally harmonised classifications: the International Standard Industrial Classification (ISIC) and the European statistical classification of products by activity (CPA). This harmonisation enables meaningful cross-country comparisons.
While SUTs are used primarily for national accounts compilation – feeding into estimates of total production, investment, final consumption expenditure, remuneration of employees, profits, and derived indicators such as GDP – they also serve as standalone statistics. They provide a wealth of information about the structure of economies, the set-up of production arrangements, the interconnectedness of economic sectors, and their connection to the rest of the world. The OECD collects SUTs from more than 60 countries, including its members.
This article aims to highlight the richness contained within SUTs by profiling the automotive industry, which stands out due to its reliance on extensive supply chains, looking at issues such as the relative importance of the automotive industry in countries, the extent to which the industry is driving exports and is dependent on imports, and the impacts of trade and transport margins as well as taxes and subsidies on product prices.
Defining the automotive industry
The automotive industry (Division 29 of ISIC Rev. 4) includes the manufacturing of motor vehicles, trailers and semi-trailers, as well as various parts and accessories. It excludes the production of agricultural or military vehicles, manufacture of tyres or batteries, as well as repair or maintenance of motor vehicles, which are classified in different industries.
The importance of the automotive industry
From the supply table, we can derive the size of the automotive industry in terms of domestic output. In absolute terms, the largest manufacturers among OECD countries are the United States, Japan, and Germany. However, looking at the share of total output, Eastern Europe leads, with the Slovak Republic (13.5%), Czechia (9.3%), and Hungary (8.4%) having the highest shares in 2021 (Figure 1). In terms of share of value added, the top three is formed by Mexico (4.3%), Germany (4.1%), and Czechia (4.1%).
Moving on from the industry-level view, SUTs facilitate the analysis of the production and use of products related to the automotive industry. For example, from the use table, we can derive the share of motor vehicles, trailers and semi-trailers (product category CPA 29) in total exports. Again, the Eastern European countries form the top three, with about 20% or more of their exports consisting of motor vehicles, trailers and semi-trailers, illustrating the relative importance of products predominantly produced by companies in the automotive industry. This product-level analysis may be relevant for policy purposes, for example, assessing the vulnerability of specific industries to changes in trade tariffs.
Highly different production structures
The production structure of the automotive industry differs significantly across countries. These differences can be observed by comparing the products used as input in the production process (i.e., intermediate consumption).
In some countries, the automotive industry shows a high level of intermediate consumption of its own main product: “motor vehicles, trailers and semi-trailers” (Figure 3). This category includes not only finished motor vehicles, trailers and semi-trailers, but also engines, bodies (coachwork) and components such as electrical and electronic equipment or seats. A high level of intermediate consumption of its own product may therefore indicate a production chain that involves many separate entities and/or specialises in car assembly. This is typical for countries such as the Slovak Republic, Canada, Belgium, Czechia, and Portugal.
By contrast, some countries rely more heavily on basic inputs such as rubber and plastic products, basic metals, fabricated metal products, machinery and equipment, and computer electronics and optical products, i.e. outputs of other industries. This is indicative of a more integrated industrial process, i.e., entities taking care of (the largest part of) car manufacture themselves, characteristic of countries like the United Kingdom and Italy.
Import dependency of the automotive industry
The ratio of imports to intermediate consumption provides a useful indication of how dependent an economy is on imports relative to domestic supply as input for its production process. For this analysis, it is relevant to look at the more detailed breakdown of the Use table at basic prices into a Domestic Use table, capturing the use of domestically produced goods and services, and an Import Use table, reflecting the use of imported goods and services.
In 2020, the Hungarian and Belgian automotive industries imported more than 80% of their intermediate consumption, while the United States imported less than 25% (Figure 4).
Trade and transport margins
Household consumption of motor vehicles, trailers and semi-trailers consists primarily of vehicles. SUTs provide insight into how much of the vehicle expenses by households consist of the value of the vehicle, and how much is due to taxes and/or subsidies, and trade and transport margins. These elements can be calculated by comparing the purchasers’ price (i.e., the price paid by the buyer) with the basic price (i.e., the price received by the producer). Trade margins represent the markup added by wholesalers or retailers when reselling a good, while transport margins are the transportation charges explicitly invoiced for the delivery.
Figure 5 reveals striking differences in trade and transport margins across countries, ranging from less than 5% in Chile to more than 35% in Sweden . This may be explained by several factors: the portfolio of car brands being purchased, the existence of domestic car plants, the level of competition between retailers and amongst wholesalers. Also the level of taxes/subsidies levied on the purchase differs significantly between countries, ranging from 5% in Latvia to 39% in Finland.
Conclusion
The automotive industry plays an important role in several OECD economies. The SUTs reveal not only differences in the size and structure across countries, but also varying degrees of dependency on imports and exports, and the impact of trade and transport margins as well as taxes and subsidies on product prices paid by households. As a result, countries will face different challenges and opportunities in the current economic climate.