One of the major themes that we believe will drive much of the global economy over the coming years is the rise in potential growth from emerging market (EM) consumers. Given EM’s youthful demographics and the potential for their low per capita incomes to catch up with those of the developed world, the ramifications of this trend could be quite large.

The Growth of Automobile Ownership

A major good often cited as a prime beneficiary of moves up the income ladder is the automobile. Current ownership of automobiles in emerging market countries is low compared to most developed countries, implying large growth potential.

Figure 1: Motor Vehicles (per 1,000 people)

Contrasting BRIC Ownership with U.S. – China has less than one-tenth the per capita automobile ownership of the United States or Japan, while India’s automobile penetration is a further two-thirds lower. China and India are the two largest countries by population, indicating a substantial market as their per capita ownership converges with that of the developed world. Brazil and Russia still have roughly one-third of the car ownership of the United States.

The EM consumer has driven much of the economic growth in EM since 20001, and many are expecting this trend to accelerate as income levels rise. This growth potential can be displayed through estimated vehicle sales provided by the Boston Consulting Group.

Figure 2: 2020 Estimated Vehicle Sales (Millions)

2020 Estimated Vehicle Sales (Millions)