The Position and Behaviour of Smaller Firms in the Motor Industry

In the British and European motor industry there co‐exist firms which differ widely in size. Given the existence of economies of scale the smaller firms are faced with the problem of survival; more precisely, of being able to charge a premium price to offset higher unit costs. After confirming the existence of scale economies this paper looks at the corporate strategies of smaller firms, but first it is necessary to clarify what we mean by “smaller firms”. In any market for any good where economies of scale exist in its production, firms smaller than the optimum could, if no non‐scale problems exist, be at a cost and, with competition, a profit disadvantage. However, in the motor industry the term “smaller” covers various types of operation.