Ford's chief economist, Ellen Hughes-Cromwick, believes that the coming decade will see a major shift in the auto and truck market worldwide. Speaking at the UBS Automotive Economics (Conference) today, Hughes-Cromwick forecast growth in revenue and unit sales for the global auto industry, accompanied by a major shift in markets. Details after the jump.
After stagnating from 2000 through 2002, global vehicle sales (including trucks) ramped up at an average 5.2 percent annual rate in 2003-2004, as emerging markets such as China began to take off. For 2005, worldwide vehicle sales are forecast to hit 62 million, showing and estimated 1.6 percent growth year-over-year, despite the negative effect of rising oil prices.
The first major market shift is the growing dominance of new, emerging markets for unit sales. Fast-growing markets include China, India, Thailand, Poland, Russia, Mexico, Malaysia, Chile, and South Africa.
By region, North America remains the unit sales leader at 33 percent of the world market, with Western Europe accounting for 29 percent of sales, Japan 10 percent, and the rest of the world 28%. Collectively, so-called ?emerging markets? accounted for 29 percent of vehicle sales in 2004, but this is forecast to climb rapidly to 41 percent by 2014.
While unit sales growth is slowing in mature markets, the second key market shift is the steady migration of mature markets to higher priced ?premium? brands and more feature-rich vehicles. In the U.S., premium brands accounted for 10.5 percent of the market in 2005, up from 7.3 percent in 1990, while the average sale price climbed from $16,274 to $28,745 in the same period.
This is good news for upmarket brands like BMW, Porsche, Lexus and Mercedes, whose sales successes this year should continue as mature markets expect much more out of their cars than just transportation. As mature market tastes become more sophisticated, they could well become more varied, supporting small volume, specialty models targeting more narrowly-defined niche markets. If so, Asian automakers are well-positioned to grow market share, with their proven ability to rapidly roll out new models and features in response to shifting market preferences.
With volume shifting to emerging markets, we should see the auto parts industry continue to shift out of North America and Europe, closer to its growing markets in less-developed countries. With a lower GDP per capita, and a different regulatory environment, emerging markets will be dominated by low-cost and low-margin vehicles - polar opposites of the cars that will sell in mature markets.
It?s going to be interesting.