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Creating the forecast

The levels of demand for new vehicles contained in this series of market profiles are calculated on a country-by-country basis, taking into account the various factors outlined in the chart below.  Each of these factors (and others) is built into the market profile for each country, with the outcome being very different, depending on the stage each country has reached in its market profile.

Although the level of national (GNI) and personal income at the disposal of the population is one of the prime movers in vehicle demand and within that, how the income is dispersed among the population, it is not necessarily the most important. GNI and personal income are of crucial importance in the developing world, where, so powerful is the desire to own a motor vehicle, that those in the population able to do so will expend a surprising amount of personal income to attain vehicle ownership, providing finance is available, vehicles are reasonably affordable and a functioning used vehicle market exists.

In contrast, in many developed markets, the proportion of national and personal income necessary to purchase and own a motor vehicle is declining rapidly as the point has been reached where the rate of growth in personal incomes has vastly outstripped the rate of growth in motorisation, as these markets are mature and approaching saturation levels of ownership. In this case, the replacement cycle is much more important than absolute levels of income.

These considerations, and many more, are taken into account when looking at forward demand across the world and are included in the demand-forecasting model in the chart, which is applied to each country.

For example, ‘levels of saturation and motorisation’ and ‘position in replacement cycle’ have quite a different effect on future demand in a developed country compared with a developing country, than, say, ‘stage in infrastructure development’ and ‘product affordability.’

Generally, most of the factors are well understood in developed economies, where legislation, import taxes, import quotas and custom duties are all converging, as, indeed, are currencies. It is possible to apply these profiles to the developing world, to provide a sound basis for calculating market development. Also, generally government policies, both domestic and international, are much more stable and converging further, through the development of trading blocs. There is little doubt that trading blocs will become more of a feature of the industry in future, as will membership of the World Trade Organisation (WTO).

Of equal importance is the rapidly changing structure of the industry around the globe, as mergers, take-overs and joint ventures reduce the ownership of the manufacturing industry to six or seven global giants, with the need for each of the major international players to develop their presence throughout all of the major countries/regions of the world, if they are to maintain their presence on the world stage.