From a global business perspective, the near-term outlook for the BRICS is challenging at best. In Brazil, the real is down, growth is down, and vehicle sales are down. Perhaps the only areas of growth are inflation, interest rates and anti-Rousseff street protests.
We’ve heard several times over the last year that the end of Russia’s severe downturn may be in sight, but when a slowdown in decline is seen as a positive, things really are bad. Vehicle sales were down 35% in the seven months to July compared to the same period in 2014, affecting OEM operations outside Russia, from GM’s German-built, Russia-bound exports, to Mitsubishi’s Russia-bound shipments from Normal, Illinois – this was cited as one of the contributing factors to Mitsubishi finally deciding to close its US factory.
Within Russia, OEMs have already made many of the necessary production cuts, with remaining tweaks to local operations now relating to lower-key operations. News that Toyota will end Land Cruiser CKD assembly in Vladivostok is less surprising than reports that Toyota remains on target to fill its 100,000 upa plant at St Petersburg, where the Camry will be joined in 2016 by the RAV4.
In Brazil, the real is down, growth is down, and vehicle sales are down. Perhaps the only areas of growth are inflation, interest rates and anti-Rousseff street protests
India’s in transition, but OEMs are clearly positive about the market: GM is investing US$1bn, VW is planning a low(er)-cost model for the Indian market, and FCA will add Jeep production in 2017.
The state of the yuan remains the number one topic for anyone doing business with or in China; that’s followed closely by the state of the economy in general, and the market for new cars and trucks in particular. As previously noted, Ford has appointed a new China sales executive, and Hyundai and Kia have reportedly made similar moves in an effort to revitalise falling local sales.
Of immediate concern to OEMs shipping cars to China is the devastation caused by the chemical warehouse explosion at the Port of Tianjin, which killed at least 114 people and injured 700. Tianjin handles over 40% of cars imported into China, and in addition to the disruption to Ro-Ro landings, which have been rerouted to other ports, over 10,000 new vehicles parked at the port were destroyed or damaged by the fire.
The BRICS may present challenges in the near-term, but continue to carry long-term potential. And they aren’t sitting still – the Silk Road could turn into a highly lucrative project, development of the BRICS Bank is well under way, and there’s talk of a BRICS free trade zone
Even in South Africa, a relatively small yet strategic automotive market, the mining and farming sectors are in trouble, raising alarms for the country’s CV sector in particular.
These are significant global markets; the BRICS may present challenges in the near-term, but continue to carry long-term potential. And they aren’t sitting still – the Silk Road could turn into a highly lucrative project, development of the BRICS Bank is well under way, and there’s talk of a BRICS free trade zone.
With OEMs keen to invest in emerging markets, and in need of new locations to target in the face of BRICS uncertainties, maybe attention will gradually turn to one of the largest underdeveloped automotive markets – Africa.
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Martin Kahl is Editor, Automotive World
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