India, China, Mexico, Brazil and eastern European countries will soon emerge as ?new Detroits? in the global automotive industry on the back of low costs of labour and rising customer base, a report by Deloitte?s Global Manufacturing Industry Group said.
According to the report, ?A new era: Accelerating towards 2020-an automotive industry transformed?, high-cost exporting countries will witness domestic capacity dipping and vehicle production migrating to low-cost centers across India and China and other locations in the regional trade zones of North American Free Trade Agreement and the European Union.
?While cost of labour in the emerging markets continues to be a fraction of that in the developed world, there is a growing demand from these countries. To take advantage of the increasing population in emerging markets, original equipment manufacturers (OEMs) will continue to shift more of their production to be closer to their biggest source of new customers,? Kumar Kandaswami, senior director, Deloitte, said.
It is estimated that Greater China and South America will represent more than 50% of growth in global light vehicle production, which is pegged at over 70 million units worldwide by 2015.
Consequently, by 2020, fewer cars will be imported from outside a trade zone (e.g. from Korea to the US or from Japan to the European Union). Even the cars with foreign labels will be manufactured regionally, the report said.
India has the lowest cost of labour in the world at $1 per hour followed by China ($2 per hour), Mexico ($3 per hour), eastern Europe ($4 per hour) and Brazil ($5 per hour).
According to Deloitte, the consumer trend in India would be guided by factors such as price, fuel economy and life cycle of vehicles. ?The Indian economy is shifting towards low-cost cars and we could see some big jumps in the so-called Nano segment. While, India will remain a huge entry-level car market, there will also be more demand for luxury segment cars from the middle class,? Kandaswami said.