Summary
As emerging market consumers grow their incomes, and as their countries grow their road infrastructure, the automotive companies will be there to provide vehicles. With very high populations in China, India, and Russia without vehicles, the markets are ripe for offering vehicles to those who have the income to purchase at all price points.
Analysis
Vehicle sales growth in China, India, and Russia are a matter of income growth, infrastructure development, and most importantly ratios.
With the pseudo capitalist economies - State or otherwise - of China and Russia, and the burgeoning upper,and upper middle class in India, the number of people who now have the dollars to purchase their first car or to purchase their first luxury car will continue to grow. Even with the global economy rather cool, there are enough people still earning a wage, accumulating wealth, and having confidence in their future in China, India, and Russia that vehicles sales in those countries remain relatively strong compared to the US or Western Europe.
In addition, it is also a factor of infrastructure development. Just as the development and growth of paved infrastructure, bridges, and high speed freeways lead to explosive vehicle sales in the United States and in Europe, the same will happen in India, China, and Russia. At this point, as little as 30% of all roadways in India have any sort of infrastructure foundation material. In other words, it is still a country made up of primarily dirt pathways. And China is not vastly different, although ahead of India in this regard.
But perhaps the biggest factor for OEM's marketing in India, China, and Russia is ratio. In most of Western Europe and in the United States, the number of vehicles per 1000 people in in the range of 400 to 880. On the higher end are countries such as the United States, Germany, and Great Britian. These are mature markets, with primarily a replacement vehicle market. Russia by comparison, will not reach 300 vehicles per 1000 people until sometime around 2015 at the earliest. China and India both have less than 50 passenger vehicles per 1000 people. For any company, that produces, markets, and sells any product this is a huge as-of-yet untapped market. And the OEM's definitely want to be there to take advantage of these simple laws of proportional mathematics. These three countries are not only replacement markets, but new untapped markets.
With adequate income growth distributed across the population in any of these three markets, the population size will drive these ownership ratios even higher. The potential is huge. China is a market of 1.33 billion. India is a market of 1.15 billion. So OEM's must be in a position to offer what those countries demand. And the market, at least as perceived right now, will be equally significant for premium vehicles like Bentley, Rolls Royce, Mercedes, Ferrari, and Jaguar as it will for mass market producers like Ford, Toyota, and Hyundai. People are enjoying income growth at all levels.
The United States and Western Europe will continue to be important markets that will influence styling, technology, safety, and luxury. But their is room for the influences of others in shaping the world product or the product for the domestic market. Certain OEM's already produce longer wheel-base versions of popular sedans for the Chinese market. Buick is a status symbol in much of China, so it meets luxury criteria for the Chinese buyer.
Populations demanding their first car, their first refrigerator, their first televison, and then the subsequent replacements is positive for those who manufacturer those durable goods. It is very positive. And their is room to service the tastes of those markets while still providing products that meet the very defined requirements and tastes of the North American and European markets.
