As a group, the term BRIC refers to the related economies of Brazil, Russia, India and China – an acronym coined by Jim O'Neill of Goldman Sachs back in 2001. Goldman Sachs argues that these countries are developing so rapidly that by 2050 their combined economies could eclipse the world's current richest countries. Together they account for more than a quarter of the world's land area and more than 40 percent of its population.
China already is the world's largest automobile producer, with India hot on its heels. In the U.S., we haven't seen much from Brazil and Russia. The Volkswagen Fox was the last Brazilian-made car on U.S. roads, imported from 1987 to 1993 as an inexpensive option amid rising costs of Volkswagen's other offerings.
Outside of that budget-conscious car, Brazil is home to production facilities for some of the world's largest automakers. General Motors, Ford, Fiat and Nissan/Renault all have significant plants in Brazil – making it the world's sixth largest vehicle producer. A combination of tax breaks, easier loan terms, and low interest rates have jump-started domestic demand for Brazilian cars this year. Brazil also can play the fuel card. Since most Brazilian vehicles run on "flex fuel," an ethanol or sugar cane derived alcohol fuel called alcool, U.S. automakers could look here for help in meeting strict CAFE standards.Thousands of miles away, Russia, even with its existing auto manufacturing infrastructure in a shambles that has not recovered since the break up of the Soviet Union, is a contender. After the dissolution of the Soviet Union, Russia was stuck producing antiquated poorly made cars like Lada, which bravely exported its cars to Europe and Canada where owners inevitably waited to see if the body would corrode before the drive train blew up. Today, a trimmed down Russian car industry is ripe for expansion, making strides by partnering with European and Asian manufacturers and banking on the Russian government's possible $21-billion investment.
India and China will be neck and neck in the race to the U.S. finish line. Despite several false starts, India's Mahindra is primed to bring pick ups to 400 U.S. dealers. We'll see whether our market embraces a $20,000 mid-size turbo diesel pick up. China's edge is in entry level economy cars, a market segment that launched most of the imported car makers stake in the U.S. from Volkswagen to Kia. China's major stumbling block is its inability to pass safety crash tests, but with Geely buying Volvo, that problem may be quickly resolved. Brazil is next in line, hard at work leveraging world partnerships with existing major manufacturers and low assembly labor costs to produce competitively priced entry level B segments.
So what should collision repairers expect from the BRIC? Entry level vehicles will hit the West Coast and Southwest first. Depending on their dealer network, the lack of a parts network infrastructure could cause a collision part shortage. History has taught us that parts stock and delivery are keys to a successful vehicle brand entry. Just ask former Sterling and Daihatsu dealers.
Daihatsu has a great worldwide reputation as a premium Japanese car, but they are a forgotten footnote in the U.S. because of parts availability issues. Sterling, a North American division of the U.K.'s Rover in collaboration with Honda in the late 1980s and early 1990s, also met its demise due to parts issues. Dealers I spoke with at the time said anything Honda assembled was reliable while anything that Rover produced broke, with no replacement parts available.
A lack of reputation will quickly depreciate these new entrants, much like the original Hyundai Excel or Kia Sephia with their dismal resale values. These newbies may be nothing but headaches for repairers because they will be more likely to total, and if they are repairable, you may tie up a bay waiting on parts. Remember this when one of those new brands asks if you want to become their collision repair partner.
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