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Vehicle ownership compared to GNI

A further refinement to the analysis of vehicle ownership – and therefore to assist in assessing market potential - is to compare vehicle ownership densities with income per capita base on the PPP (Purchasing Power Parity) series for the year 2006, denominated in $US obtaining, as shown in the graph.  This provides a simple — but dramatic — comparison of these two major factors for a selection of the most important auto industry markets.  The graph incorporates several levels of refinement, the result of which indicates the massive potential still existing for motor vehicles on a global basis.

The purpose of using GNI, measured in PPP terms, is to reflect more accurately conditions prevailing in each country. For example, of the countries shown in the graph, Switzerland has the highest per capita income when measured in constant GNI, but is well below the USA on the adjusted PPP measure. The graph depicts clearly the gulf between ownership levels in the DVCs — particularly India and China — compared with the MDCs. It also shows a clear limit on ownership levels, of between 500 and 600 vehicles per 1,000 population in the majority of the countries in the developed world, with the notable exception of the USA and, to a lesser extent, New Zealand.

As can be seen, ownership density has a distinct but limited connection to per capita income, once an individual vehicle market reaches maturity and saturation levels of ownership relating to each market, are reached, as the relative locations of, for example, Switzerland and New Zealand show.

The major factors governing ownership levels in the European countries are the relationships between population density, vehicle parc size, landmass, the density of the road network and the availability of high efficiency, locally available, mass transport systems.

The very high ownership density in the USA relates to the vast landmass available, a huge road network and the distances between major cities. Mass transit systems in the USA are generally localised. But it is the comparison between the developed and developing world that has the greatest bearing on the future of the industry.

World average ownership versus GNI locates at 125 vehicles per 1,000 population, and US$ 9,100. India and China are well below these levels, even on the PPP measure, and Brazil and Mexico close to the world average on the linear trend line. As the developing nations start to move up the trend lines, the rate of growth currently existing in global vehicle demand will continue to rise, although the economic climate since the credit crunch and stock market crash in 2008/9 may well have delayed increases in some parts of the world for two or three years.

A simple calculation will suffice to place some perspective on growth potential: to allow just China and India to increase their ownership densities to the current DVC average of 55 vehicles per 1,000 population, which is itself only one-half of the world average, would require a vehicle parc of almost 141 million vehicles for these two countries alone. This is more than double the existing parc in China and India in 2008, almost double the size of the Japanese vehicle parc and circa 60% of the entire current W European parc!

Although, in theory, there would appear to be now limit on the future size of the vehicle parc, other variable, such as poverty, must be factored into the calculations for the industry, such as poverty, which is just one of the considerations taken into account in our forecasts.