'Emerging markets' have biggest share of auto sales

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A new world order in global automotive sales is taking shape as the combined share of the so-called "emerging" markets has surpassed economically mature regions, a trend led largely by growth in China, according to a recent report by market research firm JD Power and Associates.

Light vehicle sales in emerging markets last year comprised 51 percent of global sales, and the portion is expected to increase steadily to 60 percent in 2015, the report said.

Mature markets in United States, Western Europe and Japan will only return to pre-recession sales levels by 2015, and during that period they will be overshadowed by exponential growth in China, India, Brazil and Russia, said John Humphrey, senior vice-president of automotive operations at JD Power and Associates.

"With China at the forefront, emerging markets will continue to be the primary source of growth for the sector going forward," he said.

According to JD Power, sales in China in 2015 are projected to total 29 million units, followed by the US with just 16.5 million units.

The firm estimates that global light vehicle sales will increase from 77 million units this year to 103 million units in 2015, and to 125 million units by 2020, when Brazil, Russia, India, China are together expected to sell 57.7 million light vehicles, accounting for 46 percent of the global total.

Since those countries also have high potential for exports, their combined production should account for an even greater percentage of global output in 2020, JD Power said.

But the shift in global auto sales will be a major obstacle to efforts in controlling or reducing emissions from internal combustion engines - developing countries may be less inclined or capable of keeping pace with global norms in emission reduction, the report said.

In addition, buyers in emerging markets are more price-sensitive, which favors sales of the traditional internal combustion engine vehicles, the report said.

In average hybrid-electric or battery electric vehicles cost $11,000 more than conventional automobiles. Buyers in developing markets are unlikely to tolerate the price premium, it explained.

"Although some governments are taking steps to reduce auto-related carbon emissions, the sheer volume of vehicles being added to the global fleet over the next decade will largely negate these efforts," Humphrey said.

"The global growth pattern points to vehicle carbon emissions and overall air quality getting worse before they get better, " he added.

The JD Power report also noted that global shift in growth toward emerging markets has significant implications for the world's automakers, who will need to reassess their global strategic priorities and reallocate resources to meet the new market paradigm.

New investments in vehicle production will be shifted to emerging markets, particularly in Asia, which will also drive investment in automotive tooling and component manufacturing, the report said.

Global vehicle design and engineering operations will also be developed more extensively from Asia to better serve local market tastes.

More global sourcing decisions will also be made in Asia, as the region will account for the greatest concentration of production and sales, it said.

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