To counter the growth stagnation in mature markets, car makers have decided to invest in new countries

With the demand for cars and other light-duty engines constantly evolving, automotive manufacturers must re-think their global growth strategy.

According to PWC, mature markets like Western Europe are already showing signs of stagnation in car sales volume.

Therefore, OEMs (Original Equipment Manufacturers) may have to cut capacity in these markets to increase their presence in alternative, yet promising markets (like Mexico, which auto inputs increase from month to month). Indeed, with competition among automobile producers remaining fierce, all the industry players are looking for new opportunities to increase the number of vehicles sold.

Manufacturers seem to have found a solid answer to the growth question in emerging markets all around the world. The BRICs (Brazil, Russia, India and China) as well as Argentina, countries in Central and Eastern Europe, Turkey as well as other countries in Asia such as Thailand have seen the emergence of a stronger effort on the part of the auto industry to meet local demand. Researcher should also be aware of countries' political state as it can have a deep influence on sales (e.g. Russian political instability led to drops in sales in the beginning of 2015)

Although investing in these countries could be a strategically sound decision, it often requires intense planning in order to best adapt both the product and the marketing to the local culture.

This section will not present the detailed characteristics of every emerging market, but will rather introduce a brief overview of the two countries which are widely considered to hold the most promising opportunities for car makers in the future: China and India.

However, if you are interested in more diverse sources of information about emerging markets, Reportlinker offers a large variety of documents related to the topic.

China: The World’s Biggest Auto Market

Experts agree that China is one of the most interesting and difficult markets in the world for the automotive business with large corporations involved in the market such as Wangxiang Group who owns the California-based automotive company Fisker.

According to The Wall Street Journal, 19.7 million passenger cars were sold in 2014, and this number is expected to grow up to 21.3 million this year. To show the relative importance of the Chinese market for car manufacturers in the West, IHS consultants estimated that, in 2013, profits from China accounted for 59% of Volkswagen AG’s net profit, 45% of BMW AG net profit and 37% of General Motors Co net profit. Even other non traditional car makers such as the Swedish company Volvo AB (with their XC90 SUV Excellence) have decided to invest in China partly due to the fact that the chinese market represents a great potential for future connected cars.

India: Home of Future Leaders

The automotive business in India did not suffer as much as others during the global financial crisis. According to Ernst & Young, the country did not try to implement incentives to boost sales. Instead, sales rebounded naturally, and the economy was able to refocus on growth management.

Even though the number of passenger cars sold in 2013 did not exceed 1.8 million, this low volume is explained by the dominance of two-wheelers in the Indian automotive business (13.5 million units sold between January and October 2014).

The country is also home of some leading companies in their specific areas of the industry such as REVA (electric vehicles) and TATA (ultra-low-cost vehicles).

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