Toyota’s Life after the BRICs

Battlefield ASEAN. For the past few years, all the business talk has been about the BRICs as an emerging market force, powering industrial growth particularly for the world’s car manufacturers. Now, for the first time in a long time, it would appear that the BRICs have lost their lustre, if a recent report published by the renowned and esteemed worldwide consultancy firm Boston Consulting Group (BCG) is to be believed. ASEAN, the juiciest pie of them all. Toyota will probably get the largest piece image:wikipedia The name BRICs refers to the first letter of the four large emerging markets - Brazil, Russia, India and China - a grouping that will account for 20% of global new vehicle sales by 2020. It is these markets that, according to BCG, world automakers need to think beyond if they are to get their share of worldwide growth. "When we look at the Beyond BRIC markets, it is obviously the last frontier for the automotive industry to grow," said BCG’s Senior Partner, Nikolaus Lang, a co-author of the report. "There is no other region, I always say jokingly, except the moon." Of course the BRIC nations will still record significant sales and remain important drivers of the market. However, the study analysed 88 countries outside of the Western and BRIC countries, breaking them down into 4 regions with unrealised potential for manufacturers and suppliers alike. Of the 88 countries studied, Indonesia is seen to be the country with the highest potential, with Thailand coming in at fourth place and Malaysia at tenth. For those of you that are paying attention, you will immediately notice that 3 countries from the ASEAN trading block are in the top 10, and thus the region could well become the battlefield for automakers, which Automology has been predicting for some time now.

In fact, the report does look at 4 distinct emerging market areas, the largest of which would be ASEAN, where an expected 4.6 million new cars will be sold by 2020. The next region will be the emerging Middle East, with the potential for between 4.3 and 5.8 million cars, depending on what Iran does politically in the next few years. The third region is known as the ANDEANS, which covers a number of countries from Chile and Argentina up to Colombia and Venezuela, and may have sales of 2.9 million vehicles per year. The fourth and final emerging region, as described in the report, could well be the North African belt that encompasses Morocco, Algeria, Egypt and Nigeria, which will have sales in the region of 1.2 million vehicles per year. Of course none of the markets mentioned above are completely untapped and the BCG report does in fact point this out. Key to success in these markets will be to have supply chains that can easily span national boundaries along with a well thought out product portfolio that identifies the local requirements. Toyota is probably the company best positioned for the future with a top 5 performance in all of the 4 emerging blocks. Let’s face it, Toyota Motor Corp is the undisputed king in ASEAN where they are known for adapting to specific customer requirements. In Indonesia, they created a new market segment with their Kijang, a low tech, high wheel base MPV, built for affordability; whereas in Malaysia, the market demands midrange, affordable sedans and in Thailand, they go for pickup trucks. If you are wondering about some other key markets and why they do not feature for the purposes of the study, BCG excluded South Korea, Mexico and South Africa, which it deemed mature and well developed car markets, as well as the former Soviet Republics, known as the Commonwealth of Independent States, and sub-Saharan Africa, which it concluded were promising but fragmented.