{"id":18415,"date":"2010-01-21T13:24:09","date_gmt":"2010-01-21T18:24:09","guid":{"rendered":"https:\/\/www.thedetroitbureau.com\/?p=18415"},"modified":"2010-01-21T13:25:08","modified_gmt":"2010-01-21T18:25:08","slug":"building-brics-the-four-markets-that-could-soon-dominate-the-automotive-world","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2010\/01\/building-brics-the-four-markets-that-could-soon-dominate-the-automotive-world\/","title":{"rendered":"Building BRICs: The Four Markets That Could Soon Dominate the Automotive World"},"content":{"rendered":"
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Nano-nano, as Mork might say, these days. The $3,000 Tata Nano is an example of the challenges faced by makers trying to succeed in the BRIC markets.<\/figcaption><\/figure>\n

They may still be considered \u201cemerging\u201d markets, but China alone hs already laid claim to being the world\u2019s largest automotive market and, according to a new report, just the four so-called \u201cBRIC\u201d countries alone will soon account for a full one of every three global car sales.<\/p>\n

Competing in Brazil, Russia, India and China won\u2019t be easy, warns the study, by he Boston Consulting Group, but carmakers and suppliers who try to survive in only the major industrialized markets will find it increasingly difficult to survive.<\/p>\n

\u201cThis is a radical shift,\u201d said Xavier Mosquet, head of BCG\u2019s Detroit-based automotive practice.\u00a0 \u201cBy 2014, one-third of the world (demand) will be in those four markets.\u201d<\/p>\n

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In 2007, those four countries generate sales of 15 million passenger cars.\u00a0 The number srged to 19 million last year, even as the developed markets of North America, Europe and Japan saw sales tumble.\u00a0 By 2014, the BCG study anticipates BRIC volumes will rise to a collective 25 million, while the industrialized markets will barely recover to pre-crisis levels of around 55 million.<\/p>\n

So, while there are barriers to entry, Mosquet stressed that manufacturers have to find a way to compete in the four booming countries \u2013 and a number of \u00a0other potentially powerful automotive markets, such as Iran and Indonesia, sometimes referred to as the BRIC+5 or BRIC+7.<\/p>\n

\u201cFor those who still ask if you can avoid China, you can\u2019t,\u201d Mosquet said he tells clients.<\/p>\n

But the study reveals that simply selling your products in the BRIC \u2013 whether cars or car parts \u2013 isn\u2019t necessarily enough to ensure a strong, competitive position, Mosquet cautioned.\u00a0 In fact, it will require an approach that runs counter to the current Conventional Wisdom, which holds that manufacturers need to develop so-called \u201cglobal\u201d vehicles.<\/p>\n

There\u2019s a place for those, Mosquet suggested, but he emphasized that, \u201cPlayers who are more local\u2026will benefit\u201d by being able to target the very specific needs of the individual BRIC countries.\u00a0 The market in India, though nearly as large as China, for example, is very different, and a product well-targeted to the subcontinent, said Mosquet, is the new Tata Nano, part of an emerging class of stripped-down microcars that are priced in the $3,000 to $4,000 range.<\/p>\n

\u201cThere is no (single) BRIC car,\u201d noted BCG\u2019s Munich-based Nikolus Lang.\u00a0 Meanwhile, he said the days are over when Western makers can ship an outdated product to the BRIC \u2013 as Volkswagen did with its \u201880s-era Santana \u2013 and hope to compete.\u00a0 While consumers in countries like China and India may not be able to spend as much as Western motorists, they nonetheless expect modern products.<\/p>\n

Past history isn\u2019t a guarantee of continued success, aid Lang.\u00a0 Russia is a good example, having seen its sales crash to barely half their peak in 2009, and expected only to reach its prior record of 3 million vehicles by 2014.\u00a0 Brazil, meanwhile, has had wide swings, over recent decades, prompting some industry wags to declare that it\u2019s, \u201cthe automotive market of the future, and always will be.\u201d<\/p>\n

But BCG\u2019s forecast predicts that all four markets will grow for the foreseeable future, even if China can\u2019t maintain the torrid, 42% gains of 2009, which were encouraged by hefty incentives from a government hoping to avoid the downturn in Western markets.<\/p>\n

As part of the 3-year study, the Boston Consulting Group examined the practices and performance of 50 major companies operating in the BRIC, including 20 automakers.\u00a0 Of that group, it found only two that truly have understood the challenges and adopted business practices likely to ensure them success: Volkswagen and General Motors.<\/p>\n

And the payoff, said Lang, is that, \u201cThose companies have achieved\u2026really huge market share.\u201d\u00a0 VW and GM, for example, are locked in an ongoing battle for the number on spot in China.<\/p>\n

On the supplier side, two automotive partsmakers, Germany\u2019s Bosch, and the American Delphi, have generated similar success.\u00a0 That might seem surprising, the BCG analysts acknowledged, particularly considering that Detroit-based Delphi only recently emerged from torturous 4-year bankruptcy reorganization.\u00a0 But as part of that process, the supplier has developed a significant local engineering and design presence in the BRIC, while shifting focus on traditional, low-margin parts to high-reward components, with an emphasis on electronics.<\/p>\n

While the BCG study looked out only until 2014, there\u2019s little doubt that the BRIC markets will continue growing well into the future, asserted Mosquet.\u00a0 He noted that in the U.S., there\u2019s about 1.2 cars on the road for every licensed driver.\u00a0 In China, it\u2019s measured in the cars per hundred drivers.\u00a0 So, even if the increasingly prosperous nation where to reach a point where there was a vehicle for just every other driver, that would create demand for about 300 million more automobiles than are on the road today.\u00a0 It\u2019s just a question of how fast they\u2019ll be added to the Chinese fleet.<\/p>\n","protected":false},"excerpt":{"rendered":"

They may still be considered \u201cemerging\u201d markets, but China alone hs already laid claim to being the world\u2019s largest automotive market and, according to a new report, just the four so-called \u201cBRIC\u201d countries alone will soon account for a full one of every three global car sales. How to succeed? TheDetroitBureau.com takes a look and reports on four companies that are already making it happen.<\/p>\n","protected":false},"author":2,"featured_media":18144,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[8],"tags":[],"make":[],"post-state":[],"category_old":[151],"acf":[],"_links":{"self":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/18415"}],"collection":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/comments?post=18415"}],"version-history":[{"count":0,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/18415\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media\/18144"}],"wp:attachment":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media?parent=18415"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/categories?post=18415"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/tags?post=18415"},{"taxonomy":"make","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/make?post=18415"},{"taxonomy":"post-state","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/post-state?post=18415"},{"taxonomy":"category_old","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/category_old?post=18415"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}