In our new research we analyzed the automotive industries in today’s developing nations. The motorization of the emerging markets is expected to increase the growth rate in annual auto sales from the 2.7 percent experienced over the past decade to an average of 4.6 percent over the next twenty years. Using the latest demographic and economic data available, the authors estimated the growth in motor vehicle registrations and sales for passenger cars and light trucks for 43 countries over 2010-2030. The authors found two particularly important statistical relationships:
- 90 percent of the variation in vehicle ownership between nations is explained by differences in per capita incomes.
- As per capita income approaches $3,000, vehicle ownership propensity in a nation begins accelerating and continues rising until peaking at approximately $8,000.
The emerging markets will eclipse the rich, developed markets in global vehicle sales by 2020, driven by a combination of strong growth in population and per capita incomes that are entering their “sweet spot” for vehicle purchases.
- By 2030, there will be a new Big Three: China, the U.S. and India. These three nations are projected to account for over one-half of vehicle registrations and approximately 60 percent of global vehicle sales.
- The BRIC economies are projected to account for four of the top six markets in vehicle sales by 2030.
- For the automakers, the end of the rainbow will be in Asia and Brazil. China’s auto sales will slow considerably from the pace of last decade but continue growing over the next twenty years.
- In 2020, China is projected to become the world largest market for motor vehicle sales, surpassing the United States (permanently as opposed to temporarily surpassing). By 2030, China’s annual sales are expected to reach 39 million, or 28 percent of global sales.
- India’s motor vehicle market will be powered by both rapid increases in population and per capita income, giving it the fastest growing market for motor vehicle sales over the next two decades. By 2030, India will have 215 million vehicles on its roads, (almost as many as the U.S. did in 2000).
- Brazil’s annual vehicles sales are expected to reach 4.4 and 6.5 million by 2020 and 2030, respectively. By 2030 it will be the fourth largest market for sales, selling 50 percent more vehicles than Japan.
For the first time since its birth a century ago, the auto industry will reverse its secular decline in sales. Over the next 20 years, the industry will sell approximately as many motor vehicles as it sold during its entire history.
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