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Look who's driving world auto sales now

Emerging-market drivers now buy the majority of the world's cars. The BRIC nations lead the charge that will boost auto sales for new and established automakers.

By Staff writer / May 23, 2011

Guests visited the Shanghai International Auto Show on April 21. Automakers expect China – and many other emerging-market nations – to drive world auto sales as growth slows in Western markets.

Eugene Hoshiko/AP/File

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Gas prices that hover near $4 a gallon may have Americans questioning their love affair with their cars. But in the rest of the world, millions of upwardly mobile people are just beginning to feel four-wheeled "first love."

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Whether it's a Muscovite driving a Chevy Niva or a resident of Mumbai purchasing her first Tata Nano, the demand for cars is skyrocketing. It took a century for the world to get to 500 million passenger vehicles on the roads. In the next 20 years that number is expected to double to 1 billion, according to a recent report from J.D. Power and Associates.

The demand will come largely from the so-called emerging markets, led by Brazil, Russia, India, and China. Already last year, for the first time ever, consumers in those nations bought more than half of the autos and light trucks sold in the world. Except for the United States and Canada, Chevrolet's top 10 markets last year were all emerging nations.

That growth abroad has ramifications for American consumers. In the near term, it means more auto exports for US and other established automakers. Thus, styling in the future may be driven by consumers in those nations, rather than by the tastes and preferences of US drivers. In the long term, Americans may be choosing between a General Motors and a Chinese-made Geely.

There's still "a fairly big gap" between South Korea, the latest country to storm the US market, "and whoever the next big player might be," says Bill Visnic, analyst and senior editor at Edmunds.com, an online auto research hub based in Santa Monica, Calif. But "China in particular has a really strong emphasis on improving their automobile manufacturing capabilities."

The focus on China's auto industry is particularly intense because of its market potential. In 2009, China passed the US to become the world's biggest auto market. By 2020, car sales in that Asian giant are expected to be double those in the US.

That represents a huge opportunity for established automakers. While GM has been interring brands in North America (R.I.P. Oldsmobile, Pontiac, Geo, Hummer, and Saturn), it's been creating new ones in China, including Jiefang, a truck brand, and Wuling commercial vehicles, which join familiar nameplates such as Chevrolet, Cadillac, and Buick. Volkswagen's stated goal of becoming the world's largest automaker by 2018 depends heavily on its success in these emerging markets, especially China.

China is hardly the only story. India's Tata Motors has made a bold move to upgrade Indian commuters from their bicycles and motor scooters into low-cost cars designed and made domestically. The Tata Nano, a basic minicar that sells for about $3,000, has had a rocky debut, including a few that have burst into flames.

The Nano "has had quality problems, they've had legal problems ... they've had a number of things go wrong," says Alan Baum, principal of Baum & Associates in West Bloomfield, Mich., a market research firm specializing in the auto industry. "But [Tata] will get it right. [It's] a global company that is up to world standards."

In Russia, well-known global brands are coming in to form joint ventures with Russian companies or going it alone, Mr. Baum says. "They've kind of left in the dust the Russian companies" such as Lada, which he calls "not quite ready for prime time." Chevrolet sold 116,233 vehicles in Russia last year, up from 104,398 in 2009. The Chevrolet Niva is one of the most popular foreign models there.

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