Over the past 20 years, we have seen how global economies have become increasingly connected thanks to globalization. This trend has resulted in trade agreements and increased migration, which in turn have encouraged closer integration between the world’s economies. The automotive industry has been one of the major winners of this trend.
Despite the benefits, new challenges are emerging that undo the progress made so far. As China becomes a real competitor to Western dominance, we are heading towards an inevitable confrontation between these two blocs. Among the achievements of globalization, trade is perhaps the most exposed to this new reality. And it’s already starting to impact the new cars we see on the roads.
One World, One Product?
We are starting to see more and more cars for specific markets, as opposed to a global standard. Just as before the 1990s, different regions and different markets are starting to become more independent in terms of product and supply chain. Indeed, the latter was another reason for favoring localization: sourcing locally to produce locally manufactured cars.
Toyota, the world’s largest automaker by sales volume, was a good example of global autos. The Corolla and RAV4 are virtually identical in all regions, even though they are manufactured in different locations. They are the best example of a successful global car. However, we are seeing new localized products that are not available everywhere.
For example, in addition to the Yaris models available in Europe and Asia, Toyota has just presented the new Yaris Cross for emerging markets, much larger than the one available in Europe. The brand also rebadges select Suzuki cars for its lineup in India, Africa, and the Middle East.
Citroën’s C-Cubed plan is another example of the growing localization. It is a strategy that involves the development, production, and sale of cars designed for emerging markets, more precisely for India and South America. Hence the introduction of a different Citroën C3 and, more recently, the Citroën C3 Aircross. These cars use different platforms from their European siblings and are cheaper to produce.
Hyundai is also introducing more localized cars. The small crossover Exter, the counterpart of the Hyundai Casper, will soon be launched in India. Brazil has its own version of the i20 with the HB20. In both cases, localization is the answer to the changed income conditions of consumers. This is more or less the case with the Fiat Panda for Europe and the Mobi for South America.
The South American Case
Due to income gaps, regulations, or simply differences in taste between markets, there are many other cases of localization. The most famous is the Toyota Tacoma for North America and its Hilux counterpart for the rest of the world.
Nissan still sells the fourth generation of the Micra in Latin America where it’s called the March, while the latest-gen model is available in Europe. It is the same case with the Renault Captur; the first generation still fights in the Latin American B-SUV segment, with the latest model available in Europe. Suzuki offers two different Altos depending on whether you are in India or Japan. The Volkswagen Tiguan, available in Europe and China, was replaced by the cheaper Taos in most Latin American markets.
The author of the article, Felipe Munoz, is an Automotive Industry Specialist at JATO Dynamics.
