Automakers Bank on BRICS and Mortar

The future of the auto industry is made of BRICS, so global manufacturers increasingly are getting serious about making and selling their vehicles all over the developing world.

And some are defining BRICS — as in Brazil, Russia, India, and China, which have been "acronymed" into a sort of representation of promising, emergent national markets — more broadly, to include Africa and Southeast Asian nations.

Frustrated by the slow-growing domestic economy, a strong yen, and a problematic North American market, for example, Toyota has decided to build an engine factory in Brazil to cater to increasing demand in the world's fourth-largest auto market, as noted by Automotive News Europe (and Japan's NHK, above). General Motors and Ford have been players in Brazil for many years, and now increasingly Toyota and Nissan are expanding there.

Toyota CEO Akio Toyoda just visited Brasilia to share the news of the new plant in Sao Paulo, part of the company's bigger plan to obtain half its sales from emerging markets by 2015. Car sales in Latin America alone are expected to double for the whole industry this year over 2005, to nearly 6 million vehicles, according to IHS Automotive.

Meanwhile, Renault-Nissan plans to build Africa's largest car assembly plant in any automaker's biggest bet yet that consumers in the rapidly developing continent are ready to give up public transportation and used cars in favor of that traditional marker of a maturing economy, the individual automobile, the magazine says.

Renault, of course, is widely exposed to the deteriorating auto market and economies of Europe, where its market share fell to 8.5 percent in the first half of this year from 9.5 percent a year earlier. Korean brands Hyundai and Kia, in addition to European and U.S.-based competitors, have been chipping away at Renault's franchise on its home turf.

Starting next decade, Renault executives see the potential for growth of the auto market in Africa to mirror that of Latin America. This year, Africans are expected to buy only about 1 million vehicles, with more than half of those sales in South Africa alone. That's a ratio of about 1 car sold for every 1,000 people in Africa versus 15 in South America.

"Renault's strategy of getting" into Africa first, said Neil King, auto analyst at Euromonitor International Ltd., "is a very sound one."