Emerging markets remain full of woes for global carmakers image

General Motors recently announced it opted to close a plant it owned in Indonesia, highlighting the fact that global automakers need to reshape the timing and scope of investments in emerging markets.

Once seen as the new growth threshold after the traditional regions – America, Europe and China – would reach saturation, the emerging markets proved to be far slower than the engines of growth forecasted by experts, analysts and executives alike. Global powerhouses divested billions into Brazil, Russia, India and other developing markets over the past few years alone. And some of them prove entirely the other way around today: profit surges last year at Ford, GM, Toyota or South Korea’s Hyundai and Kia were capped by sale losses in Brazil, Russia, India and other markets.

Ford had to incur an $800 million one-time charge due to Venezuela’s volatile currency. GM had to write off $194 million of the value of its assets in Russia and also lowered production. Toyota saw deliveries down 11 percent in the latest quarter in Asia, mostly due to lower sales in Thailand and Indonesia. India comes after a two-year slump that hit massive investments in the country made by Ford and Renault-Nissan. Fiat Chrysler Automobiles NV even postponed the Jeep brand launch in India from 2013 to the third quarter of the year.

Nevertheless, industry executives believe the emerging markets will eventually reach the proposed status in the long run, as global sales will benefit from their growing population and increased incomes. IHS predicts deliveries in countries such as India, Brazil and Russia could jump 40 percent to more than 12 million units by 2020.

Via Reuters