Sustainability in Car Companies

Sustainability in Car Companies

Environmental Sustainability initiatives and innovations give car manufacturers a global competitive edge if the consumer can tie a direct benefit (saving fuel and the associated cost or tax benefit) to buying a car from this manufacturer. As seen with the Pruis, most define a "green" car as one that creates low emissions and low fuel consumption; however there is more to a sustainable car/car manufacturer than producing cars with those attributes. The environmental impact of the production process, including the recycling of ELV's; however, is less important to the consumer than fuel mileages when making a purchasing decision, or else a BMW would be the best selling car.

One sustainability indicator is the acceptance of a car manufacturer into one of the Dow Jones Sustainability Indexes (DJSI). The Dow Jones Sustainability Indexes were launched in 1999 to track the financial performance of its member companies worldwide. Member companies are social, economic, and environmental leaders in their industry. Whether a company will be included into the indexes depends on Sustainable Asset Management (SAM) Research's assessment of the measures a company takes in regards to sustainability. Once a company is accepted as a member to a Sustainability Index it is ranked among the other companies of the same industry by using a scoring system. A sustainability performance review is conducted annually to ensure continuous commitment to sustainability. The Global Super Sector Leader 2009/2010 for the automobile industry (AUT) is Bayrische Motorenwerke AG (BMW) for the fifth consecutive year (Dow Jones Indexes, n.d.). BMW has been a member of DJSI since it was launched in 1999 (BMW, 2007).

The research Sustainable Value in Automobile Manufacturing conducted by Euromed Management School, Queen's University Belfast, and the IZT (Institute for Future Studies and Technology Assessment) conducted in 2009 revealed that Asian car manufacturing companies are using their economic, environmental, and social resources more efficiently; therefore outperforming their American and several of their European competitors (Hahn et al., 2009). The study looked at the sustainability performance of the 17 largest global auto manufacturers between the years of 1999 and 2007. It takes into account the impact of production on society, greenhouse gas emissions of the production plant and product, and the number of work accidents in the company. According to the study "GM achieved a sustainable value of minus €9.87 billion, in comparison with BMW, which having used all the resources efficiently doubled its sustainable value to €2.8 billion from 1999 to 2007" (Hahn et al., 2009).

Rankings of car manufacturers by year according to "Sustainable Value in Automobile Manufacturing" study

1999 2000 2001 2002 2003 2004 2005 2006 2007

BMW Group 1 1 1 1 2 1 1 2 1

Daihatsu 10 9 8 14 10 12 10 n/a n/a

DaimlerChrysler* 2 6 11 7 8 7 7 6 3

FIAT Auto 13 13 15 16 16 15 15 12 15

Ford 5 4 12 13 11 10 13 14 14

General Motors 9 11 14 15 15 14 16 15 16

Honda 4 3 4 5 6 5 3 4 4

Hyundai n/a n/a 3 4 5 8 6 7 7

Isuzu 14 12 9 11 3 3 5 3 5

Mitsubishi 12 14 10 10 14 16 14 13 8

Nissan n/a n/a n/a 3 4 4 4 5 10

PSA 11 10 7 9 9 11 9 11 12

Renault 7 8 13 12 12 6 12 9 13

Suzuki 6 5 6 8 7 9 8 8 11

Tata n/a n/a n/a n/a n/a n/a n/a n/a 9

Toyota 3 2 2 2 1 2 2 1 2

Volkswagen 8 7 5 6 13 13 11 10 6

(* DaimlerChrysler is replaced by Daimler AG in the year 2007)

General Motors, Ford and Fiat are continuously on the bottom of the ratings, whereas BMW and Toyota almost consistently have a high rating for their sustainability performance.

Another sustainability aspect to a car manufacturer is the fuel efficiency of its cars. There are numerous technologies to achieve more fuel efficiency and fewer emissions. The most widely known form of powering a car fuel efficiently is with the hybrid engine. The basic form of the hybrid engine was invented in the early 20th Century from Dr. Ferdinand Porsche (Cho, 2004). Car engineers in the United States also developed similar hybrid engines around the same time but there was no demand for hybrid vehicles as they could not compete with the more powerful gasoline engines (Newberry, 2001). As gasoline prices increase along with the awareness of the impact that gasoline engines have on our environment, the interest in hybrid engines revived almost 100 years after the first hybrid engine was built. Toyota and Honda launched their hybrid vehicles, Prius and Insight in 1997 in Japan. The Insight came to the US in 1999 followed by the Prius in 2000. The demand especially for the Prius and its hybrid-synergy drive was so overwhelming that waiting for almost one year was normal. Prius is currently the most popular hybrid in the U.S., selling well above Kelley Bluebook value due to its high demand (Spector, 2008). Honda and Toyota had the "first mover" advantage in regards to the hybrid engine powered vehicles. Some of their vehicles have 45 miles per gallon (mpg) or more, which is significantly better mpg than comparative models from their U.S. competition (ex. GM's Chevrolet Malibu hybrid (27mpg) (Spector, 2008)). In order to find a bigger fuel efficient hybrid vehicle, one needs to look to Detroit. The US Environmental Protection Agency classified the Ford Escape Hybrid with a city mpg of 34 the most fuel efficient Sport Utility Vehicle (FuelEconomy, 2010). The most efficient standard pickup trucks (according to the same survey) are the Chevrolet Silverado 15 Hybrid, and the GMC Sierra 15 Hybrid (21 mpg, city). Luxury cars come in hybrid versions, also. For example, the Lexus HS 250h, gets 35 mpg, and the Mercedes-Benz S400 gets 21 mpg (White, 2009).

Clean Diesel Technology