BRIC’s export significance
Compare this KPMG survey to last year’s and you’ll find that executives believe BRIC nations will be exporting significant volumes of cars fairly soon. The amount considered significant varies per country.
1). China – 11% of executives believe that China will export 2 million vehicles within one to two years, but 47% believe it will be done in three to five years.
2). India – 22% of executives believe that India will export 1 million vehicles this year, up from 2% believing it would be achieved last year.
3). Russia – 36% of executives believe Russia will export 1 million vehicles within three to five years, up from 31% last year.
4). Brazil – 37% of executives believe Brazil will export 2 million vehicles in three to five years.
Those aren’t home-run percentages, but it’s clear that people entrenched in the automotive business believe the day is fast approaching when BRIC nations will be competing globally. If that doesn’t have domestic investors a bit worried, this next paragraph will.
Restrictions increase
Naturally, as the BRIC nations begin to ramp up production quality and quantity of exports, they’ll be defending their home turf as well. Executives polled believe regulations that include import and export duties, government interventions, and market entry barriers will increase for companies trying to export to BRIC nations. Let’s take a look at the top two areas of interest, China and India, and see what is expected to rise the most.
Source: KPMG automotive survey
Bottom line
Import/export duties are predicted to increase the most, and that could play a large role for domestic companies trying to maintain higher margins. There will be ways, such as Ford’s joint ventures in China, to minimize costs. However, it’s clear that it will be more difficult to sell vehicles internationally due to increased competition and restrictions on importing and exporting. Investors will need to keep an eye on international expansion to see which companies are poised for success using different strategies. Volkswagen is making vehicles in China with its specific consumers’ tastes in mind, and the strategy appears to be working well. Ford will be focusing on selling platforms with similar features globally, making it efficient. The bottom line is that the competitors in the automotive industry markets will be changing quickly — make sure you don’t get left behind.
The article Autos’ Success Hinges on Growth Abroad originally appeared on Fool.com and is written by Daniel Miller.
Fool contributor Daniel Miller owns shares of Ford. Follow Daniel on Twitter. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.
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