Research On The Impaction Of The Car Vertical Integration On Performance

China’s automotive industry has become a pillar industry of the national economy, butthe situation still presents “big but not strong”.The automobile developed countries usedthe strategy of vertical integration to enhance performance and competitiveness.This paperwill research on the impaction of the car vertical integration on Performance. according tothe analysis of the automobile industry,we find that implementation of vertical integrationcan reduce transaction costs,cut down the uncertainty of production and sales, enhancemarket power, strengthen technological innovation, improve the business performance.automotive companies took conglomerates,mergers and acquisitions, alliances toimplement vertical integration,These modes have achieved some success.This paperConstructs a theoretical model to explain the two ways that vertical integration improveperformance. Firstly,Enterprise vertical integration can increase R&D investment,It willbring higher quality and production efficiency, ultimately,the profit will increase.Secondly,enterprise can increase market power by repelling effect,ultimately, enterprisecan enhance the competitiveness and acquire monopoly profits.Based on the theoreticalmodel， this paper uses Chinese automotive company listed the2003-2012paneldata,pulling in control variables such as market concentration rate, company scale,thecapital structure,ratio of expenses on Operation,The core components,then establishingmodels of performance, efficiency,market to analysis the result.Regression results showthat the vertical integration of automobile industry can improve performance.