Emerging Markets Drive Record Global Growth
July 23, 2008
By Michelle Krebs
Despite dismal vehicle sales in the U.S., the world is on track to set yet-another record for vehicle sales in 2008, according to General Motors' forecast.
In total, automakers sold 18.5 million vehicles in the second quarter, up 1.6 percent from 2007, according to GM's tally. The automaker forecasts that total global auto sales will come in at 72 million vehicles for 2008, up 2.5 percent and the seventh-consecutive record. That is, unless the U.S. downturn spills over into global markets.
But global vehicle sales are uneven: up for emerging markets and down for mature developed ones.
Emerging Markets Fuel Growth
In the second quarter, the bulk of industry growth occurred in the so-called BRIC markets - the emerging markets of Brazil, Russia, India and China - which combined had sales of 4.7 million units, up 20 percent, in the second quarter.
BRIC Industry Sales
Country 2Q Sales %change
Brazil 759,000 29%
Russia 920,000 34
India 509,000 13
China 2.5 million 14
TOTAL 4.7 million 20
Source: General Motors
Mature Markets Drag Down Global Sales
The world's three largest markets - the mature developed markets of Western Europe, North American and Japan - saw sales declines in the second quarter. Second-quarter sales for the three regions combined were down 7 percent or 700,000 units.
"Combined, those markets still account for more than half of all global sales," said Mike DiGiovanni, GM's executive director of Global Market & Industry Analysis, in a conference call with analysts and media Wednesday.
DiGiovanni pointed out that vehicle sales in Japan are at the lowest levels since 1982 due to near-record low consumer confidence and an aging population while the U.S. struggles with the triple whammy of skyrocketing gas prices, the housing market and the subprime lending crisis, all of which has caused declining consumer confidence. Western Europe varies by country with Spain and Italy seeing serious declines, Germany experiencing a slight increase in sales and England holding steady.
A Tale of Two Europes
Jonathan Browning, recently transferred from Europe to become GM's vice president of Global Sales, Service and Marketing, said the contrast between Western Europe and Eastern/Central Europe is "a microcosm for the global market."
In the first half, mature, developed Western Europe reported sales off 3 percent; at the same time, sales in Eastern/Central Europe were up 25 percent. Central Europe alone, comprised largely of Russia and the former Soviet markets, had sales up 30 percent for the half.
More of the same is predicted for the future both in Europe and around the world.
Posted by Michelle Krebs at 7:03 AM under Analysis , GM | Comments (1) | digg this | Seed Newsvine
In other words, things are evening out. All market have gas guzzlers, but new markets tend to be more dynamic and fuel-efficient. Thus, the US car market will begin to resemble more closely the market in other places of the world, and vice versa. The Brazilian car market, in particular, is very flexible. Its vehicles are designed to run on various forms of fuel. Will any of these technologies make it to the US? Cars like VW's CrossFox, Ford EcoSport, and Fiat's IDEA Adventure are certainly appealing.
Posted by: bubusdad | July 23, 2008 at 9:29 AM