Two key reasons why automotive sales in BRIC should be on your radar
Welcome to a series of blog posts about the global automotive market based on a paper that I recently worked on with a set of colleagues that discusses important strategic questions for automotive business planners. For those of you interested in the BRIC countries (Brazil, Russia, India and China), this blog focuses on the question, "Will BRIC countries continue to drive organic growth in the automotive industry?"
Why? Of the 38 percent jump Polk expects to see for global light vehicle sales between 2012 and 2020, the BRIC countries will generate 63.4 percent of the overall growth. Put another way, BRIC will feed nearly two-thirds of the nearly 28 million unit light vehicle forecast that planet Earth should realize over the next eight years. That's another 17.8 million cars and light trucks you should expect to see sold in these four nations.
Earlier this month, Audi recently reported they exceeded their Indian auto sales goals and had a banner November. Wealth, infrastructure and hot products seem to be working together in that country.
Outside of this being a nice fact and figure supporting Polk's automotive forecast, this is relevant for two primary reasons:
- Follow the money. OEMs and Original Equipment Suppliers (OESs) with operations in emerging markets, such as BRIC, are better positioned to benefit from growing demand. As global brands continue to expand into nations with increasing buying power, revenues will rise for these firms.
- Realize production efficiencies. The globalization of vehicle design presents opportunities for automotive aftermarket suppliers who can take advantage of future vehicle repair business with fewer parts fitting more vehicles across multiple countries.
While domestic brands from China and India are trying to successfully export into more mature western nations, don't neglect the upside of these countries growing domestically within their own boundaries. I think that 17.8 million units for BRIC over the next 8 years is non-trivial. Do you?
Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (12.10.2012)
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