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Future demand for new cars in developing countries going beyond GDP and population size.

UMTRI-2008-47

In: Sponsored by: University of Michigan Strategic Worldwide Transportation 2020.

Authors: Michael Sivak, Omer Tsimhoni.

In this study we first modeled the effects of GDP and population size on sales of new cars in 2006 for the following 25 developing countries: Algeria, Argentina, Brazil, China, Chile, Columbia, Egypt, Hungary, India, Indonesia, Iran, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Romania, Russia, South Africa, Thailand, Turkey, Ukraine, Venezuela, and Vietnam. The main results are that while both GDP and population have significant effects on sales of new cars, substantial deviations between projected and actual sales still remain. The countries that exceeded the projected sales include Iran, Russia, Brazil, Malaysia, Romania, India, Pakistan, Venezuela, and South Africa. In other words, for these countries, reliance only on GDP and population size underestimates the actual sales. Using the relationship that was derived from the 2006 data, projected future GDPs and populations, and assuming that the deviations from the 2006 model are systematic and will remain proportionally constant in the medium term, illustrative calculations were then made for sales of new cars in 2014 and 2020. According to these calculations, the countries with the greatest absolute increases in projected sales from 2006 to both 2014 and 2020 are likely to be China, India, Russia, Brazil, Iran, Malaysia, Mexico, Pakistan, South Africa, and Turkey.