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ANALYSIS: Emerging markets drive OEM profit, volume

By just-auto.com editorial team | 20 May 2008

European vehicle manufacturers are becoming increasingly dependent on emerging markets for profits as well as volume.

According to Morgan Stanley analyst Adam Jonas, speaking at the Automotive News Europe conference in Turin, European manufacturers will become increasingly dependent on countries such as China and Brazil for realising profits.

Jones estimates that more than 60% of Fiat's profit already comes from emerging markets. At Porsche the figure is 40% and at Volkswagen 30%. On average, 26% of European vehicle manufacturers' profits come from emerging markets.

By 2010 this figure will have risen to around 42% with losses being recorded in the dollar zone. Jones said that, as a result, share prices will depend very much on the development of emerging markets.

By 2012 Morgan Stanley is forecasting that more than half of all cars produced globally will be sold in emerging markets, up from 20% in 2001.

European manufacturers are well positioned in emerging markets, said Jones, because they have entry-level vehicles but at the same time they have luxury and premium products, demand for which is also rising in those markets.

By 2012 European manufacturers should have 30% of the market.