Report highlights international business climate, affect on imports
Each quarter the AASA Overseas Automotive Council (OAC) collects market reports from international directors, providing findings from each director related to their region’s general business climate, current political and economic issues and their impact on imports. Here are the highlights from this quarter’s reports.
Mexico: Mexico has seen a recent slow down due to an unstable exchange rate since late last year, but current signs are showing an upswing once again. With exchange rates improving, politics on the “down low,” and U.S. growth since the beginning of the year with relation to the last two years, now is an opportune time to focus on exporting to Mexico.
Middle East: Saudi Arabia, Kuwait, and the UAE are reasonably steady, with business at or better than last year. Iraq, Lebanon and Jordan, though comparatively smaller, continue to be reasonably stable for business. In markets with serious political issues, however, the affiliations of militant factions could have a large impact on how business might be conducted. If secularism is replaced by Sharia and the new governments are "conservative," it is probable that there will be change. Customers still need the parts, so the stronger customers will continue to buy, perhaps a little more conservatively.
Asia: China just announced 6 percent inflation, which could lead to higher interest rates. The other “tiger” economies: Singapore, Thailand, Malaysia, Taiwan and Hong Kong are growing at strong GDP rates of 4 percent to 7 percent. These countries and China are experiencing rocketing property prices; things feel “good” and people are buying. The market potential for U.S. products remains very strong in Asia due to (a) strong GDP growth in the region and expanding vehicle population; (b) a positive attitude towards the U.S. and its products/brands; and (c) the weak U.S. dollar.
Europe: Countries like Spain, Portugal, Ireland, Greece and now Italy are facing serious financial and economic problems with debt crises. In Germany, on the other hand, business is booming to the extent that there is a shortage of craftsmanship and good workforce. The German automotive industry will have its best and thus record year after World War II (more than 6 million passenger cars will be produced).
While many issues remain, leading to the basic question of the survival of the Euro, free movement across national borders and the transatlantic collective security (all of which are in serious doubts), automotive parts will be needed regardless of turmoil. In the long run, U.S. based companies should continue to pay attention for opportunities in Europe. Products made in the USA and shipped to Europe have become very competitive due to the weak dollar.
South America: Latin America's GDP will grow at a healthy 4.7 percent to 5.0 percent, with Argentina (8.1 percent) and Peru (7.1 percent) leading the way. On the political side, the new government in Peru has shown signs of moderation instead of radicalism as anticipated; some populist measures could be enforced in the form of import quotas or other market limitations that may affect foreign trade dynamics. In Argentina the presidential election does not anticipate major changes. Venezuela's president’s health can become a major issue, since there are no clear plans for his succession, leading to uncertain outcomes. Colombia remains stable and foreign investment continues to be very strong.
The local currencies revaluation against the dollar is showing a logical appetite for imported goods, while exports could (and in fact some are) lose competitiveness. Inflation processes (in Argentina, Brazil and Venezuela) can also affect these markets and slow the recent positive dynamics, particularly in Argentina.
Full reports from the OAC’s International Directors can be found here. I must thank the following team for helping us put this insight together quarterly:
• Mexico: Joe De Santino, JDS Worldwide
• Middle East: Carl Smith, Retired
• South America: Federico Quintero, Quinteros, S.A.
• Europe: Wolfgang Kratz, BWD Automotive
• Asia: Tom Muldowney, International Market Access
Each quarter the AASA Overseas Automotive Council (OAC) collects market reports from international directors, providing findings from each director related to their region’s general business climate, current political and economic issues and their impact on imports. Here are the highlights from this quarter’s reports.
Mexico: Mexico has seen a recent slow down due to an unstable exchange rate since late last year, but current signs are showing an upswing once again. With exchange rates improving, politics on the “down low,” and U.S. growth since the beginning of the year with relation to the last two years, now is an opportune time to focus on exporting to Mexico.
Middle East: Saudi Arabia, Kuwait, and the UAE are reasonably steady, with business at or better than last year. Iraq, Lebanon and Jordan, though comparatively smaller, continue to be reasonably stable for business. In markets with serious political issues, however, the affiliations of militant factions could have a large impact on how business might be conducted. If secularism is replaced by Sharia and the new governments are "conservative," it is probable that there will be change. Customers still need the parts, so the stronger customers will continue to buy, perhaps a little more conservatively.
Asia: China just announced 6 percent inflation, which could lead to higher interest rates. The other “tiger” economies: Singapore, Thailand, Malaysia, Taiwan and Hong Kong are growing at strong GDP rates of 4 percent to 7 percent. These countries and China are experiencing rocketing property prices; things feel “good” and people are buying. The market potential for U.S. products remains very strong in Asia due to (a) strong GDP growth in the region and expanding vehicle population; (b) a positive attitude towards the U.S. and its products/brands; and (c) the weak U.S. dollar.
Europe: Countries like Spain, Portugal, Ireland, Greece and now Italy are facing serious financial and economic problems with debt crises. In Germany, on the other hand, business is booming to the extent that there is a shortage of craftsmanship and good workforce. The German automotive industry will have its best and thus record year after World War II (more than 6 million passenger cars will be produced).
While many issues remain, leading to the basic question of the survival of the Euro, free movement across national borders and the transatlantic collective security (all of which are in serious doubts), automotive parts will be needed regardless of turmoil. In the long run, U.S. based companies should continue to pay attention for opportunities in Europe. Products made in the USA and shipped to Europe have become very competitive due to the weak dollar.
South America: Latin America's GDP will grow at a healthy 4.7 percent to 5.0 percent, with Argentina (8.1 percent) and Peru (7.1 percent) leading the way. On the political side, the new government in Peru has shown signs of moderation instead of radicalism as anticipated; some populist measures could be enforced in the form of import quotas or other market limitations that may affect foreign trade dynamics. In Argentina the presidential election does not anticipate major changes. Venezuela's president’s health can become a major issue, since there are no clear plans for his succession, leading to uncertain outcomes. Colombia remains stable and foreign investment continues to be very strong.
The local currencies revaluation against the dollar is showing a logical appetite for imported goods, while exports could (and in fact some are) lose competitiveness. Inflation processes (in Argentina, Brazil and Venezuela) can also affect these markets and slow the recent positive dynamics, particularly in Argentina.
Full reports from the OAC’s International Directors can be found here. I must thank the following team for helping us put this insight together quarterly:
• Mexico: Joe De Santino, JDS Worldwide
• Middle East: Carl Smith, Retired
• South America: Federico Quintero, Quinteros, S.A.
• Europe: Wolfgang Kratz, BWD Automotive
• Asia: Tom Muldowney, International Market Access
