Vehicle ownership per person across developing nations such as China and Russia has been growing at a fast pace due to rise in income per capita. Even though it creates an opportunity for the global automotive players to tap into the emerging markets, the growth comes at a cost, says GlobalData, a leading data and analytics company.
In developed nations such as Luxembourg and Switzerland, vehicle ownership per person is very high and has broadly remained unchanged between 2000 and 2018, as the per capita income of these nations has not exhibited significant growth.
On the contrary, gross domestic product (GDP) per capita in the developing nations such as China and Russia has been growing at a fast pace, resulting in the growth of vehicle ownership between 2000 and 2018.
Arnab Nath, Economic Research Analyst at GlobalData, comments: “Vehicle ownership per capita in advanced economies is exhibiting a flat trend, whereas in developing nations there is a steeply rising trend.”
Vehicle ownership penetration reaching peak in developed nations
GDP per capita in Luxembourg, Switzerland and Norway grew at compound annual growth rates (CAGR) of 2.79%, 2.81% and 2.62%, respectively between 2000 and 2018, and vehicle ownership per 1,000 population grew at a moderate pace of 0.48%, 0.58% and 1.31%, respectively during the same period.
GlobalData forecasts the vehicle ownership rates to grow at slower CAGRs of 0.24% (Luxembourg), 0.37% (Switzerland) and 0.91% (Norway) between 2019 and 2022.
Emerging markets growing at fast pace
Between 2000 and 2018, GDP per capita in China, India and Russia grew by 10.75%, 7.93% and 7.64%, respectively, whereas vehicles per 1,000 people grew at 15.4%, 8.2% and 5.09%, respectively.
GlobalData forecasts vehicle ownership rates to grow at CAGRs of 10.67% (China), 7.47% (India) and 2.51% (Russia) between 2019 and 2022, much faster pace than developed nations.
Towards a greener future
Nath concludes: “Increase in vehicle ownership in major cities across developing nations has consequences in the form of increasing level of CO2 emissions, increase in traffic related morbidity and mortality rates, and rise in hours spent in traffic congestion.
“Governments, especially in the developing nations, have to take judicious measures to tactfully handle the issue of rising pollution by emphasizing more on the usage of non-fossil fuel vehicles.
“With rising demand for vehicles in the developing nations, the governments have to devise policies and provide incentives to encourage investment in the development of electric and battery cars.”