Last Updated Apr 20, 2010 1:22 PM EDT
So far, the global auto industry is concentrating on the extreme ends of the pricing spectrum. At the low end there are tiny and inexpensive cars like the Tata Nano. At the high end, the German luxury makers and Buick from General Motors are leading the charge in China. Many Chinese owners are chauffeured around in what seem like relatively small cars to us, like the BMW 5 Series or the Mercedes-Benz E-Class.
In other words, as much as auto sales have grown in developing markets, we haven't seen anything yet, compared to a future when wealth and auto ownership become more democratic.
In about five short years, China will pass the United States as the biggest-selling national market for automobiles, seemingly for good. Other developing economies, like Brazil, Russia and India are also closing on mature car markets like North America, Western Europe and Japan.
That lesson isn't lost on the world's automakers, as the "BRIC" countries (Brazil, Russia, India and China) are where the action is, in terms of auto industry investment, including new factories.
China already overtook the United States in auto sales by more than 1 million units in 2009 (see chart: China is the blue line, North America is the red line), but that's as much because of the slowdown in U.S. sales as the increase in China. U.S. auto sales fell 21 percent to about 10.4 million in 2009, according to AutoData.
In a report presented at its annual shareholder meeting last week, German automaker Daimler (DAI) noted that auto sales fell for the second year in a row in Western Europe, Japan and the United States in 2009, but grew in China and Brazil.
According to IHS Global Insight, Brazil is moving up to pass Germany to become the world's No. 4 automotive market.
The U.S. market is expected to rebound in the coming years, and it will probably pass China again around 2011, according to Nariman Behravesh, chief economist for IHS Global Insight. However, China will outstrip the United States again, probably for good, by 2015 or 2016, he said.
"China will be (selling) close to 25 million by 2021, while North America will be around 20 million," Behravesh said in a conference to kick off the 2010 New York auto show earlier this month.
"About 2016 ... China will overtake us and keep on overtaking us on a sustained basis," he said.
In the long run, there are only so many more cars an American or a Western European household can buy. In contrast, according to China expert and auto industry consultant Michael Dunne of Dunne & Co., Hong Kong, an estimated 80 percent of China's customers are buying their family's first car. That leaves a lot more room to grow.
Chart: IHS Global Insight