Posted by: kenwbudd | July 30, 2009

3 Growth Areas for the Automotive Industry

What does the future hold? A Firey Red Ferrari 458 for all?

Millions of people around the world take part in the daily commute. Making their weary way into cities and using automobiles as a means to sustain a better more comfortable life.

That momentum may have slowed in 2008 and 2009, but it hasn’t vanished and can only grow. Recent research conducted by Booz & Company shows that the global customer base for automobiles over the next 10 years falls into three broad categories, based primarily on which countries customers live in.

  1. The rapidly emerging economies (REEs) consist of the so-called BRIC nations (Brazil, Russia, India, and China) and a group of other relatively wealthy developing nations, such as Malaysia, Argentina, Mexico, Turkey, Thailand, Iran, and Indonesia. Millions of families in these countries are making or contemplating the purchase of their first automobile.
  2. The lower-growth economies (compared to the REEs) consist of about 100 nations with relatively impoverished populations and poor economic prospects. However, their political leaders are interested in building up the middle class and see personal mobility as a major stepping stone. These countries may become markets for motorised transportation after 2020.
  3. The mature economies include the established industrialised nations in North America, Europe, and Japan. Population growth and vehicle replacement, rather than economic growth, will determine the market for automobiles there.

These three groups add up to an enormous amount of market potential: Booz & Company estimates suggest that more than 370 million additional vehicles could be sold by 2013 and more than 715 million by 2018, but business models in the auto industry are not currently equipped to capture these increases.

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