AUTOMOTIVE PRODUCTION: PRODUCT VARIETY AND HOW EMERGING ECONOMIES CAN AVOID PROBLEMS OF INDUSTRIALISED COUNTRIES SCHAFFER Jens, SCHLEICH Heinrich Department of Automation Technology, Leuphana University, Lueneburg, Germany SCAVARDA Luiz Felipe Industrial Engineering Department, Pontifical Catholic University of Rio de Janeiro, Rio de Janeiro, Brazil PARRY Glenn University of Bath, School of management, Bath, United Kingdom Introduction Among the top ten multinational enterprises half are automotive manufacturers (Linder, 2004). This is the reason why the automotive industry faces a number of global challenges including satisfying the needs of different customers and markets under varying boundary conditions. Offering a product to different markets leads to an increase in product variety as different markets require different versions of a product regarding usability, functionality or even just customers preferences and taste. Expectations regarding choice available to the customer vary significantly between different markets. Therefore manufacturing vehicles or vehicle components for global markets in a limited number of production facilities can result in variant driven complexity of the production process. While in the past vehicle manufacturers offered unique models with low variety of attributes available and long life cycles (e.g. the Model Ford T, VW Beatle), manufacturing organizations must now provide much greater product variety to remain competitive (Chakravarty and Balakrishnan, 2001). As a result of providing different levels of variety organizations can serve consumer needs better by closely matching customer preferences to products offered (Benjaafar et al., 2004; Klapper, 2005). However, these organizations face increased manufacturing complexity. Within this context, the paper’s goal is to analyze the theory behind manufacturing complexity as a result of product variety and the main implications for the automotive industry’s supply chain. This analysis includes results of empirical research on the level of product variety available in established and emerging markets and the development of a complexity cost model as an instrument to determine the cost associated with offering variety – called complexity cost. The paper is divided into 6 main sections. The second section presents a literature review regarding product variety and variant driven complexity. The third section compares available product variety in