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China, India drive record car sales: Developing countries shift into high gear, pushing global numbers to 44.5 million
John Saunders, Friday's Globe and mail, 31 Dec 2004

More cars were sold on the planet in 2004 than ever before as would-be motorists in countries such as China and India began to drive global auto industry growth, a Bank of Nova Scotia economist says.

Developing countries shift into high gear, pushing global numbers to 44.5 million

In a report issued yesterday, Carlos Gomes estimates that worldwide sales hit 44.45 million vehicles this year, about 3 per cent above the 2003 level, despite flattening sales in North America and Western Europe.

China became the fourth-largest market, passing France and Italy, and will probably be No. 2 -- ahead of Germany and Japan and behind only the United States -- by the end of the decade, he says.

After a 71-per-cent growth spurt in 2003, Chinese auto sales probably rose another 15 per cent or more in 2004 to about 2.3 million vehicles.

India overtook China as the fastest-growing market, with an estimated 29-per-cent jump to about 900,000, the report says.

In an interview, Mr. Gomes said that while markets in car-clogged developed countries remain big, they are no longer engines of growth.

"It is very much the developing world that's going to lead the auto industry forward, and in particular the two growth drivers will be China and India."

Both have rapid economic growth and huge, nearly car-free populations, he said.

"I mean, we're talking about China growing eight, nine per cent [annually] in recent years and continuing to grow somewhere between seven and eight per cent for the next little while, and India not far behind at around six per cent. . . . What tends to happen in countries with
rising incomes is that the rate of vehicle ownership rises alongside the income level.

"When we look at China and India, vehicle ownership rates are still very, very low compared with the rest of the world. For example, in India there are only about 10 vehicles for every thousand people, and in China it's about 19 for every thousand. Compare that with a level close to 580, which is the case here in Canada."

India's population, at 1.05 billion, is second only to China's and growing faster, the report says. Even without an increase in the ownership rate, Indian vehicles sales "must continue to advance by 20 per cent per annum just to keep up with population growth," it says.

Other developing countries show strength too. In Mexico, auto sales jumped 10 per cent this year to pass one million for the first time, the report says. In South America, business is coming back, with sales in Brazil, the biggest market, rising about 14 per cent to 1.34 million, second only to a 1997 peak of 1.36 million, it says.

In the United States, sales increased by less than 1 per cent to 16.7 million (the first U.S. gain since 2000) and are expected to be "largely flat" in 2005, while Canadian sales fell about 4 per cent to 1.53 million as record oil prices dimmed buyer enthusiasm, it says.

In Western Europe, sales reached about 14.5 million, up from a five-year low of 14.2 million in 2003. The continent's hopes for future growth rest with the newer and poorer European Union member countries, Mr. Gomes added.

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