By DPA
Frankfurt : Booming demand in emerging economies has set off a gold-rush among the world’s carmakers, desperate not to miss out on the large profits that beckon.
By contrast with the industrialized world, where concerns like emission standards, safety and luxury are paramount, in countries like India and China, cost is the key factor.
Demand is exploding here, as it is in Brazil, Russia, Indonesia, the Middle East, Turkey, Iran and parts of Africa, with turnover as much as doubling in some markets in recent years.
The big international carmakers are racing to set up manufacturing facilities in the emerging countries and to develop suitable models.
China remains the main target. Foreign manufacturers dominate here, producing two-thirds of the vehicles sold in a market set to grow this year by 16 to 20 percent to between 4.8 and 5.0 million private cars.
In the first half alone, the number of private cars sold soared 26 percent.
Market leader is German manufacturer Volkswagen, which has a market share of 17 percent, with the Jetta as its most successful model. Chinese car buyers bought 184,000 of this model last year.
Japanese maker Toyota is not far behind, increasing its sales by 77 percent in the first half of this year to 212,000 cars.
Honda is aiming at introducing a special brand for China, while Chrysler has plans to make cars in alliance with the Chinese carmaker Chery.
Demand has grown strongly in India, rising since 2001 by more than 15 percent a year to around 1,4 million cars last year. By 2015, the aim is to sell 3 million cars into the Indian market.
Carlos Ghosn, the charismatic chief executive of Renault and Nissan, is an enthusiastic proponent of the drive into the developing economies.
“Between 1999 and 2006, the world market grew by 20 percent. In the most saturated markets of Western Europe, the United States and Japan, growth is zero,” Ghosn said at the Frankfurt motor show.
Noting that demand had virtually doubled in other countries over the period, he said: “The markets are growing in emerging countries.
“If you don’t go there, you can forget about having any sustainable hope for the future.”
On problem is that even Renault’s low-cost car, the Logan, with a price ticket of between $5,000 and $7,000 is still too expensive for many potential buyers in emerging countries
The company is thus planning a $3,000 car, but the question remains whether it is possible to make money with a model as cheap as this.
Ghosn believes it can be done. “But we still don’t know how one does it,” he said.
What is clear is that any 3,000-dollar car will have to be developed from the ground up. Everything – materials, motors, and transmission systems – will have to be re-thought.
Suppliers are also seeing new opportunities here. Sector leader Bosch predicts that demand for parts for low-cost cars will soar in the years ahead.
In the process the suppliers will gain new expertise in cost cutting in their hard-fought traditional markets in Western Europe and the US.
For example, Continental director Karl-Thomas Neumann expects 20 percent of the company’s products could go to low-cost cars in the near future.
He insists, however, that safety and comfort standards should not be compromised.
The former General Motors subsidiary Delphi believes that demand for safety and luxury extras will rise in the emerging economies with the passage of time.
There are already indications of this. In the first half of this year, Toyota sold 12,000 of its luxury Lexus model in China, almost as many as in the whole of last year.