The Automotive Industry in Emerging Economies: A Comparison of Korea, Brazil, China and India

摘要

The automotive industry in Korea, Brazil, China and India is currently going throughimpressive growth. Governments have played a key role in the evolution of the industry in allthese countries. The Korean industry has made the most significant progress, and is nowexporting cars to developed markets. It is the only country that invested in R&D for productdevelopment, retained management control in joint ventures with multinational companies(MNCs), and had ambitious export targets. The industry in Brazil is controlled entirely byMNCs. Although this has led to growth and adoption of lean production, indigenous productdevelopment is lacking. Tariff barriers have come down, forcing domestic production tobecome more market responsive. Fluctuating tariffs and taxes, and cyclical demand havecharacterized the industry. Indian industry is experiencing a revolution with rapid growth andthe entry of 9 MNCs and plans for 3 more to enter in the next two years. The Chinese industryis also growing very rapidly although it is still highly fragmented. Passenger cars are only15% of total vehicle production in China. Demand in Brazil, India and China is highly pricesensitive and growth is led by the demand for a small car. Higher taxes on mid and large sizecars give the small car a big price advantage. Import duties for components imply that thesupplier base in these countries needs to develop fast. The supplier industry could become abottleneck for growth.