A Car Next to Every Hut

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A Car Next to Every Hut

The traditional auto industry has reached a dead end as it tries to sell bigger and more expensive cars to an increasingly affluent society. For some brands, such as Lexus, BMW, and Mercedes, that may be a viable strategy. But the recent auto industry woes — typified by the performance of Ford, GM, and Chrysler — suggest that it’s not going to work for mainstream manufacturers, including Honda, Volkswagen, and Hyundai, just to name a few. Even Toyota may have to rethink its strategy.

The fact is, the high-end market has matured into a cycle of decreasing returns and shrinking margins.

But as far back as 2003, the Trends editors identified a vast and virtually untapped market that only a few companies recognized. Even most of those who recognized it regarded it as unreachable. That market is the world’s “second and third billion” people.

The people who we’ll call the “top one billion” are in the soon-to-be saturated market that can loosely be termed middle class or above. In addition to 300 million North Americans and 300 million Europeans, this includes about 100 million Indians, 150 million Latin Americans, 150 million Chinese, and another 200 million people in other Asian nations.

The total actually comes out to about 1.2 billion individuals living in households with easy access to automobiles. These households either own or could reasonably aspire to own a $10,000 automobile, either now or in the coming decade. Optimistically, that number could rise as high as 2 billion by 2020. Every automaker in the world is fighting for a share of that market.

However, the Trends editors argue that, by 2020, another 2 billion people will live in households that could aspire to own an automobile if it was priced at $2,500 or below. More significantly, those consumers are the ones who will purchase the bulk of the mid-priced vehicles in the two decades between 2020 and 2040.

In the 20th century, the automobile dramatically transformed the economy, lifestyle, and values of America and Europe. Today, it is doing the same for Koreans, Taiwanese, Brazilians, and Mexicans. It has the potential to do the same for Indians, Filipinos, Pakistanis, Chinese, and many others. The positive implications for their quality of life are enormous.

North America, Japan, and Europe have entered the post-industrial Internet era. Therefore, we tend to focus on the negative effects of automobiles and their infrastructure, such as air pollution, traffic jams, auto accidents, and noise. We forget the lack of freedom involved in going everywhere on foot, using horse carts, or relying on very limited and overcrowded public transportation...

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