Driving Through Bric Markets Essay

2112 Words Nov 18th, 2012 9 Pages
Driving Through BRIC Markets Lessons for Indian Car Manufacturers
December 2011 www.deloitte.com\in

ons for Indian Car Manufacturers

Contents
Executive Summary Introduction Overview Brazil Russia India China Conclusion Appendix Sources Contacts 4 6 7 10 15 19 24 29 31 33 34

Executive Summary
The BRIC block has emerged as the economic power house of growth for the automotive industry through the last decade. What started as an exploration of new/extra markets for car sales in the early 90s has gone on to become the mainstream market of the new millennium. Supported by attractive macro-economic factors such as growing economic activity, urbanization, rising household incomes, developing credit markets and very low car density,
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Going forward, these markets are expected to actively accommodate more players for the same share. 4. Hatchbacks have a 60% market share in Brazil and India unlike China and Russia where sedans or SUVs dominate. The domination of relatively low household income groups (of category $3,000 $10,000) in India coupled with the government's inclination to promote small cars through special tax measureshave resulted in hatchbacks becoming thepreferred choice amongst a majority of consumers. Road ahead will be characterised by transitions to higher household incomes that could result in surging demand forrelatively larger/pricier cars or second cars in India, in addition to the sustained demand for smaller cars. 5. The inflection points observed in car sales and identified by the higher growth in sales than the increase in prices (inflation rate) were: − In India the sales started picking up from 2002 when the per capita disposable income was $399 in nominal terms/$1381 in Purchasing Power Parity (PPP) terms. For Brazil & China, sales started picking up since 2004 when per capita incomes were $2320(nominal)/$5260(PPP) and $698 (nominal)/$1691 (PPP) respectively. Since then car sales have not been majorly affected by rise/decline in parameters such as inflation, interest rates and fuel prices. 6. In Brazil and Russia,household income groups with income > $5000 were the key drivers of

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