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What will fuel the
auto sector in the next
ten years?
October 2014
Jorge Sicilia
Group BBVA Chief Economist
The future of the auto industry in the next 10
years lies in responding to the new
sociodemographic needs and focusing on ...
Demographics will determine buying patterns
Long-term dynamics
4
Urban population to
double and reach almost
4 billion by ...
The composition of populations are changing
Long-term dynamics
5
G7 China Latin America
Source: UN
Over 50% of the world’s population
will live in urban areas
Long-term dynamics
6
“EAGLEs Economic Outlook. Annual report 2...
By 2025 there will be 37 megacities,
most of them in Asia
Long-term dynamics
7
Source: UN
The “axis” of the world is changing
Long-term dynamics
8
Source: BBVA Research, IMF/WEO
The middle classes are becoming predominant in
emerging countries
Long-term dynamics
9
Source: BBVA Research, World Bank, ...
Car ownership and economic development:
current situation
Long-term dynamics
10
Source: BBVA Research, World Bank, UN
Mexi...
Long-term dynamics
11
f: forecast
Source: BBVA Research
Car ownership and economic development:
in the next 10 years
The current crisis
has hit developed countries hard
Short-term dynamics
13
Source: BBVA Research, IMF, World Bank
80s-90s
...
Each country is exiting the crisis differently
Short-term dynamics
14
Source: BBVA Research, World Bank, IMF and Angus Mad...
15
Trade protectionism unlikely on potential
counterproductive effects (automobile)
Index of the number of production stag...
Findings and lessons from income transition in the
countries
Challenges for the industry
17
Diversification,
sophisticatio...
Keeping younger customers;
increasing older ones
Challenges for the industry
18
Spain: distribution of vehicle-purchasing ...
What do new consumers want?
Challenges for the industry
19
Survey: composition of car purchasers by age group (%, China)
S...
Environmental issues
Challenges for the industry
20
Alternative fuel stations in the US
Source: Alternative Fuels Data Cen...
More than mechanical sophistication
Challenges for the industry
21
Aging: mobility
Technology: the
car as an
intelligent s...
Conclusions
23
Relevance of the automotive sector: competitiveness
Demographics are key to the evolution of the industry
T...
24
In the next 10 years, the industry needs to focus on the
emerging countries, given the expansion of the middle classes
...
BBVA Research
26
A staff of over 100
Emerging
economies
Developed
economies
Financial
systems and
regulation
Global
scenar...
27
Analyze the world’s principal geographic areas and their key economic
activities
Economics
Industries
Geostrategic
Fina...
What will fuel the auto sector in the next ten years?
What will fuel the auto sector in the next ten years?
What will fuel the auto sector in the next ten years?
What will fuel the auto sector in the next ten years?
What will fuel the auto sector in the next ten years?
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What will fuel the auto sector in the next ten years?

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What will fuel the auto sector in the next ten years?



Jorge Sicilia
Group BBVA Chief Economist

Oct 2014


The future of the auto industry in the next 10 years lies in responding to the new sociodemographic needs and focusing on growth in the emerging countries



Demographics will determine buying patterns



As population matures and ages,
young people are no longer predominant


Urban population to double and reach almost 4 billion by 2025, leading global activity


2.5 billion new middle-class between 2000 and 2025, up to 60% of total population


page : 27

Published in: Business
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What will fuel the auto sector in the next ten years?

  1. 1. What will fuel the auto sector in the next ten years? October 2014 Jorge Sicilia Group BBVA Chief Economist
  2. 2. The future of the auto industry in the next 10 years lies in responding to the new sociodemographic needs and focusing on growth in the emerging countries
  3. 3. Demographics will determine buying patterns Long-term dynamics 4 Urban population to double and reach almost 4 billion by 2025, leading global activity As population matures and ages, young people are no longer predominant 2.5 billion new middle-class between 2000 and 2025, up to 60% of total population
  4. 4. The composition of populations are changing Long-term dynamics 5 G7 China Latin America Source: UN
  5. 5. Over 50% of the world’s population will live in urban areas Long-term dynamics 6 “EAGLEs Economic Outlook. Annual report 2013”, March 2013 Source: UN
  6. 6. By 2025 there will be 37 megacities, most of them in Asia Long-term dynamics 7 Source: UN
  7. 7. The “axis” of the world is changing Long-term dynamics 8 Source: BBVA Research, IMF/WEO
  8. 8. The middle classes are becoming predominant in emerging countries Long-term dynamics 9 Source: BBVA Research, World Bank, UN Population (millions) Population (%)
  9. 9. Car ownership and economic development: current situation Long-term dynamics 10 Source: BBVA Research, World Bank, UN Mexico Spain Portugal Colombia Peru Turkey China Carfleetper1,000population) Long-term real PPP-adjusted GDP per capita (thousands)
  10. 10. Long-term dynamics 11 f: forecast Source: BBVA Research Car ownership and economic development: in the next 10 years
  11. 11. The current crisis has hit developed countries hard Short-term dynamics 13 Source: BBVA Research, IMF, World Bank 80s-90s Current crisis Countries below the highest level of income Highest-income countries Long-lived Not ended GDP per capita decrease
  12. 12. Each country is exiting the crisis differently Short-term dynamics 14 Source: BBVA Research, World Bank, IMF and Angus Maddison Economic growth (cyclical comparison) Turkey MexicoUnited States GDPpercapitalevel
  13. 13. 15 Trade protectionism unlikely on potential counterproductive effects (automobile) Index of the number of production stages for transport equipment by country (2009) Source: OECD
  14. 14. Findings and lessons from income transition in the countries Challenges for the industry 17 Diversification, sophistication, complexity, innovation, welfare systems Low income Tertiarisation, manufacturing diversification and sophistication, increasing middle classes, financial deepening Middle income High income Demographics, urbanisation, high investment returns, low wages in basic manufacturing Macro and institutional, social unrest, poverty, basic services, increasing inequality Drivers Risks Factor accumulation moderates, wages rise, need for higher education, technological skills and infrastructure Population aging, fiscal sustainability, increasing inequality, excessive leveragePoverty trap Middle- income trap
  15. 15. Keeping younger customers; increasing older ones Challenges for the industry 18 Spain: distribution of vehicle-purchasing households by age of the head of the family (2013) Source: BBVA Research based on INE
  16. 16. What do new consumers want? Challenges for the industry 19 Survey: composition of car purchasers by age group (%, China) Source: Media reports citing Autohome.com.cn survey
  17. 17. Environmental issues Challenges for the industry 20 Alternative fuel stations in the US Source: Alternative Fuels Data Center (AFDC)
  18. 18. More than mechanical sophistication Challenges for the industry 21 Aging: mobility Technology: the car as an intelligent system Sustainability: alternative fuels Millennials: commting & connectivity
  19. 19. Conclusions 23 Relevance of the automotive sector: competitiveness Demographics are key to the evolution of the industry The expansion of the middle class in emerging countries will result in an explosion in the sector Technology as a environmental challenge
  20. 20. 24 In the next 10 years, the industry needs to focus on the emerging countries, given the expansion of the middle classes and their development into more urban societies; it faces challenges in technology, the environment and changing tastes
  21. 21. BBVA Research 26 A staff of over 100 Emerging economies Developed economies Financial systems and regulation Global scenarios Divided into four main areas: More than 2,000 reports per year www.bbvaresearch.com
  22. 22. 27 Analyze the world’s principal geographic areas and their key economic activities Economics Industries Geostrategic Financial

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