Monday, 29 May 2017

Like a BRIC Through a Tissue Ceiling

I recall reading not long back that the BRIC nations (Brazil, Russia, India and China) were the future of the car industry. I was skeptical as it's hard to predict the weather tomorrow, let alone this sort of thing. So how are the BRIC nations going?

Brazil: It's now on a real downer. Latin economies are like the movement of a yo-yo, up and down quickly. Brazil have really fallen away and it will be back, but such inconsistency is hard on car makers who have to adjust production volumes accordingly.

Russia: Not long ago predicted to be the biggest market in Europe, it's in a mess thanks in part to the Ukraine issue. It simply doesn't have a strong enough economy to be as big as some thought and the political situation has added to it. No one could anticipate the unsettled situation here now but the Russian car market was over rated by many.

Small is big in India
India: This is a very populous nation and it will grow numerically in car sales, despite a slowing down now. However, India will be - for the forseeable future - dominated by low cost cars. That will limit its value as a so called important future market.

China: It's boomed for years and longer than I thought it would. To me it was always going to reach a peak and either settle or retrench anytime.

Car sales will also be at the mercy of Chinese government policy and who knows where that will go? I am surprised the government hasn't been more interventionist than it has. So how can it be relied upon? Big money is being made by those who have invested heavily but car makers with too many eggs in the China basket will probably soon be releasing profit downgrade warnings.

Summary: Predicting anything is a sure way to end up with egg on your face. Even what I have written here is obviously fallible. However, the brick is crashing through a tissue ceiling and is experiencing no resistance. Of course, a hyperbole, but it proves that car makers that spread their sales as far as they can minimise the risks. They can gain on the swing when they lose on the roundabout.

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