2014 MANAGEMENT BRIEFING SEMINARS

The global market beckons, but where?

GM's Mustafa Mohatarem on India, Indonesia and the Middle East: "If you’re trying to forecast where to go, that’s where I’d start."

Photo credit: Greg Horvath
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TRAVERSE CITY, Mich. -- The auto industry will have to side-step social unrest and political obstacles to take advantage of a coming decade of overseas growth opportunity, says GM’s chief economist.

That includes risky markets in Africa, economic troubles in Argentina and political uncertainty in Russia and Venezuela, warns GM chief economist Mustafa Mohatarem.

Forecasters believe that consumers around the world are on track to buy 100 million new vehicles a year by the end of this decade -- up from about 85 million last year.

But figuring out where those additional 15 million sales are waiting is a tough guess, Mohatarem told an audience today at the 2014 Management Briefing Seminars. 

China delivered more than 60 percent of the global growth of the past decade, he points out. And China sales will continue to grow for global automakers as Chinese household income rises.

“But pollution and congestion will be what slows down growth in China,” he said.

Mohatarem predicted that sales growth will occur most easily in markets where the population is high and the density of vehicles per household is low. The three most obvious countries of that description, he said, are India, Indonesia and the Middle East.

“If you’re trying to forecast where to go, that’s where I’d start,” Mahatarem told the industry audience. “We continue to look at them,” he added of GM, “even with all the problems you have there.”

India currently reports 26 vehicles for every 1,000 people, compared to 198 per 1,000 in Brazil and 322 in Russia, according to GM’s calculations.

He said that the governments of some large countries, including Russia, India and Brazil, could open up larger auto sales by making policy changes on trade and regulations.

African nations including Ghana, Kenya and Nigeria also meet the criteria of large populations and low vehicle density, he added, although there will be financial risks for automakers who attempt to set up shop there for the first time.

You can reach Lindsay Chappell at lchappell@crain.com.


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