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Future demand for new cars in developing countries: Going beyond GDP and population size
Sivak, Michael; Tsimhoni, O.
Sivak, Michael; Tsimhoni, O.
2008-09
Abstract: 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.