By on October 23, 2013

Not business as usual_1

Emerging markets have been a big theme at TTAC for the past few years, with our coverage going beyond the cursory articles on automotive developments in the BRIC countries. Our articles on places like North Africa and Indonesia aren’t always the most popular, but we keep an eye on them for a very important reason. These countries are the final frontier for growth in the automotive sector.

Boston Consulting Group released a report that urges auto makers to look beyond the BRICs, to a group of 88 countries that contain roughly 40 percent of the world’s population. Collectively, annual growth of 6 percent is expected, below India’s 10 percent, but on par with China and outpacing both Brazil and Russia.

Rather than cover all 88 nations, BCG identified the “Future 15” countries where car sales are expected to show strong increases in sales (Iran, Turkey, Saudi Arabia, the Ukraine, Indonesia, South Korea, Thailand, Malaysia, Taiwan, Mexico, Argentina, Colombia, Chile, South Africa and Algeria), as well as four regional areas that will serve not only as sales hot spots, but also as future locations for assembly plants, R&D and sourcing. Not surprisingly, these are based in North Africa, the ASEAN region, the Middle East and the Andean region in South America.

The need for specific regional strategies is a key theme in the report, with BCG devoting plenty of space to the need for product, financing and sourcing solutions that are best adapted to regional characteristics. Among their examples are the importance of offering a vehicle with a low tax burden in the Middle East, a tailor-made financing plan for Latin American consumers from Chevrolet and Renault’s North African assembly efforts for its Dacia brand.

One of the more interesting examples highlighted by the report was that of the ASEAN countries. Toyota is overwhelmingly dominant in Indonesia, its biggest market, and one possible reason is because of its ability to build products at an appropriate price-point that strongly resonate with local buyers. A side by side comparison between the Japanese market Sienta MPV and the Indonesian Avanza shows how this is done.

On the surface, the two seem indistinguishable, but under the skin, they are vastly different cars. The Sienta rides on a platform shared with the Yaris, while the Avanza uses a rugged, body-on-frame rear-drive layout with increased ground clearance, to handle Indonesia’s rougher roads and frequent flooding. Its powertrain and interior are much less advanced, and the Avanza has fewer creature comforts. But it’s built to a price, costing as much as $5,000 less than a Sienta, a fact that’s reflected in the slab-sided body panels, which are easier and cheaper to stamp. This kind of specialization is what’s allowed Toyota to capture 90 percent of Indonesia’s market, giving them an enormous head start in what is expected to be the next big place to sell cars.

ASEAN is not the only region where Toyota enjoys the top spot. The auto maker is leading slightly in volume in the Middle East, though second-place Kia is essentially equal in terms of market share. Chevrolet is regarded as the leader in the Andean belt, while Renault and Dacia are tops in North Africa. While Korean OEMs also have a strong showing, both Renault and Peugeot are strong in the Middle East and Africa, even as their efforts falter in Europe.

The common thread with all of this is an emerging middle class in regions where that notion did not exist. With prosperity on the rise, they are eager to attain greater mobility and freedom though an automobile of their own. Along with personal transportation comes the possibility of good jobs in assembly plants, sales and after-sales, logistics and other related industries. Renault and Dacia have begun to look to North Africa as a regional hub not only for the African market, but for the Middle East and even Europe. Nissan’s Datsun brand is one of the first to explicit target the “Beyond BRIC” countries, with stated aims to expand into Indonesia and Africa in the near future.

Get the latest TTAC e-Newsletter!

16 Comments on “Beyond The BRICs...”

  • avatar

    What is it with the gigantic ugly headlights on tiny cars?

  • avatar

    “…a group of 88 countries that contain roughly 40 percent of the world’s population.” Problem is that 40% has about 4.2% of the wealth, really.

    I noticed the Sienta looks like a cross between a Mini and an original Twingo.

    I also disagree on the expectation to see big growth in South Korea. South Korea has small, attainable Korean cars already – and there are plenty of them. People in cities have small cars, and also access to excellent public transport, which is faster than driving to common destinations. There isn’t some big lower-emerging-middle class about to buy a bunch of cars. I know because I lived there, and owned a car (Daewoo Lanos).

    “…slab-sided body panels, which are easier and cheaper to stamp.”
    The Range Rover should cost $5000 less than a Rav-4 by this train of thought, lol.

    • 0 avatar

      Re: South Korea – apparently, imported cars have been gaining ground recently (

      • 0 avatar

        I’d like to read that, but they make you have a subscription. Closed the “sign up now” box and the article went away.

        But on the subject of imported cars, they’re taxed so heavily that only really wealthy people tend to get them. That being said, you can bring over mostly whatever you want if you can pay the tax. Saw a couple of JDM Skylines. Couple of Land Rovers (they have dealers), and once when I was driving about in the country, a 94-95 Park Avenue – which put me in awe. American cars are their least favorite import. I would see one Town Car in my part of town, so blacked out couldn’t tell who was driving. Oh and ran across a Maybach 62 parked outside a convenience store, on the sidewalk. Sometimes they’ll personally rebadge their Daewoo as a Vauxhall, or change the badge to Chevy. Or change their Hyundai Bongo van to a Mercedes.

        But by far the least popular import is American. Followed by Japanese. Then British. German cars are fairly popular, and I saw lots of B-Classes, and S-Classes. This trend will continue in small numbers as younger people get their paychecks and turn away from the “home cars,” and the idea that “Japan is the enemy” put into their heads by their grandparents.

        But they better advertise to men, because women don’t make those kinds of decisions – ever.

    • 0 avatar

      I was surprised to see a new Mustang, Taurus, and 300 when I was in Seoul last year. I was wondering if they might belong to US Army personnel.

  • avatar
    Big Al from Oz

    The countries listed cover a wide range of development.

    Toyota is a a very popular vehicle in SE Asia. I do know in Malaysia Toyota are considered a good quality vehicle and Honda has the reputation that we give to prestige vehicles.

    Indonesia has massive potential for a market. It has nearly the population of the US with only 36 vehicles per 1 000 compared to the US’s about 750 vehicles per 1 000.

    Over the past 20 years these regions have been on the up economically. There have been a couple of hiccups.

    People should realise that the middle class in most of these countries is rising at a very fast rate and their are many people buying cars for the first time in their lives.

    This is managed correctly could be a boon for the West.

  • avatar

    Great primer on the Future 15 – makes me wonder exactly what GM’s finance work in South America is exactly. Also makes me wonder how Toyota’s quick-build factories (detailed here on TTAC a while back are playing into their ASEAN success. I actually don’t know how that factory plan has played out if at all, really.

  • avatar
    Athos Nobile

    Iran has a solid manufacturing and R&D base in place already. They were producing nearly 1M cars last time I checked (long time ago).

  • avatar

    There are those who would have you spell BRICs as BRICS – mostly the South African government. However, all is not well for the car manufacturing industry in the lower-case ‘s’ in BRICs. BMW has stopped “all future plans” to expand in South Africa after a four-week strike caused a huge drop in production and profits.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • fourthreezee: Word
  • fourthreezee: This. Until there is some next-level battery chemistry breakthrough (like LIon was) these electric...
  • Scoutdude: Yes there are free chargers, several in my general area. Unsurprisingly their chargers have some of the...
  • dal20402: The costs will be covered the same way as any other marketing effort.
  • dal20402: I’m planning to buy some kind of stickshift toy, probably around mid- to late 2023. New cars in this...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Jo Borras
  • Mark Baruth
  • Ronnie Schreiber