The Automotive Industry in Emerging Economies: A Comparison of Korea, Brazil, China and India
Author(s)Sastry, Trilochan; Mukherjee, Avinandan
The automotive industry in Korea, Brazil, China and India is currently going through impressive growth. Governments have played a key role in the evolution of the industry in all these countries. The Korean industry has made the most significant progress, and is now exporting cars to developed markets. It is the only country that invested in R&D for product development, retained management control in joint ventures with multinational companies (MNCs), and had ambitious export targets. The industry in Brazil is controlled entirely by MNCs. Although this has led to growth and adoption of lean production, indigenous product development is lacking. Tariff barriers have come down, forcing domestic production to become more market responsive. Fluctuating tariffs and taxes, and cyclical demand have characterized the industry. Indian industry is experiencing a revolution with rapid growth and the entry of 9 MNCs and plans for 3 more to enter in the next two years. The Chinese industry is also growing very rapidly although it is still highly fragmented. Passenger cars are only 15% of total vehicle production in China. Demand in Brazil, India and China is highly price sensitive and growth is led by the demand for a small car. Higher taxes on mid and large size cars give the small car a big price advantage. Import duties for components imply that the supplier base in these countries needs to develop fast. The supplier industry could become a bottleneck for growth.
Korea, automotive industry, India, emerging economies, China, Brazil