That's one of the key findings in a report released by The Boston Consulting Group. BCG projects that the group of Beyond BRIC markets highlighted in the report will generate 6-percent annual growth in sales from now through 2020, growing four times as fast as the established Triad markets (which BCG defines as the U.S. and Canada, Europe, Japan, and Australia and New Zealand). By 2020, the Beyond BRIC markets will account for one-fifth of global new-vehicle sales.
Companies need to take a unique approach to winning this "last frontier." "None of the Beyond BRIC auto markets on their own can generate sales volumes comparable to that of a single BRIC market.
Companies must think in terms of regional clusters rather than individual markets in order to seize this opportunity," says Nikolaus S. Lang, a senior partner and coauthor of the report, which is titled "Beyond BRIC: Winning the Rising Auto Markets."
Four Clusters of Opportunity
In the report, Lang and his coauthors identify four clusters of opportunity for OEMs and suppliers based on an analysis of 88 Beyond BRIC markets:
-- The ASEAN Nations. This cluster includes many of the members of the Association of Southeast Asian Nations such as Indonesia, Malaysia and Thailand. It is projected to have annual new-vehicle sales of 4.6 million by 2020, making it larger than the projected Russian market of 4.4 million.
-- The Emerging Mideast. This cluster -- which includes Iran, Saudi Arabia and Turkey -- will boast up to 5.8 million new-vehicle sales in 2020, overtaking Brazil's projected 5.2 million.
-- The Andeans. This cluster -- which includes Argentina, Chile, and Colombia -- has 2.9 million new-vehicle sales projected for 2020, making it nearly the size of the German market (at 3.6 million).
-- The North African Belt. This cluster -- which includes Algeria, Egypt and Morocco -- is projected to have 1.2 million new-vehicle sales by 2020. Although it will remain comparatively small, this region is a potential site for promising localization by OEMs -- and the gate to Africa.
"These regional clusters should be on the growth list of every OEM and supplier with ambitions to be a truly global player," said Thomas Dauner, a senior partner and coauthor of the report.
Getting It Right
Winning in these clusters will be challenging. Each of them differs significantly in market size and development trends, in local capabilities and localization opportunities, as well as in customer preferences. The report takes an in-depth look at the challenges and prospects of each cluster, assessing key areas such as product design and R&D, sourcing and production, and sales, after-sales, and financing.
To succeed in the Beyond BRIC markets, companies must reckon with local and regional complexities and adjust business models, according to BCG. They must identify the right product portfolios to cater to diverse customer needs, establish supply chain and production operations that span market boundaries, and drive excellence throughout their dealer networks.
It's Time to Act
The report concludes that few automotive companies have yet managed to dominate these last-frontier markets. This leaves plenty of opportunity for those companies with the right ambitions and approach. "Although many OEMs have been successful in one regional cluster, very few have achieved a dominant position across all or even the majority of the clusters. Agile companies will learn from these Beyond BRIC champions and carve out their own path for winning the last frontier," Lang says.