NEW YORK -- It’s been common for years to hear that emerging markets will power global growth in auto sales.
Global automakers have jostled to position themselves for that growth, particularly in the much-touted BRIC markets -- Brazil, Russia, India and China.
But that growth formula has been looking a little less solid lately. Tension with Russia over the annexation of Crimea, with the prospect of stiffer trade sanctions, has rattled automakers’ confidence.
Slow-moving market reforms in India have dampened enthusiasm for that massive market. At the Geneva auto show in March, Fiat-Chrysler CEO Sergio Marchionne bemoaned the disappointing performance of the Indian auto industry and questioned whether it would fulfill its potential anytime soon.
And then there’s China. At the NADA/J.D. Power Automotive Forum here, Nariman Behravesh, chief economist for consultancy IHS Automotive, said the rapid growth of debt in China is alarming. Typically, that kind of increase is followed by a financial crisis or a period of slow growth, Behravesh said.
Any slowdown in Chinese growth would ripple throughout Asia and affect automakers that are making money in China today, Behravesh added.
The upshot for emerging markets, he said, is that “a return to the boom years of the 2000s is unlikely.” That’s not to say the emerging automotive markets won’t eventually take hold.
But growth will be slower and bumpier than in the past decade -- unwelcome news, indeed, for automakers who have become accustomed to bulking up their bottom line with healthy profits from China.