Over the past 20 years, we have witnessed the increasing connection of global economies through globalization. This has led to trade agreements and increased migration, which has in turn encouraged closer integration among the world’s economies. The automotive industry has been one of the major beneficiaries of this trend.
However, along with the benefits, new challenges are emerging that are undoing 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 has already started to impact the new cars we see on the roads.
One World, One Product?
We are starting to see an increase in cars specifically designed for certain markets, as opposed to a global standard. Just like before the 1990s, different regions and markets are becoming more independent in terms of product and supply chain. In fact, localization is being favored to source locally and produce locally manufactured cars.
For instance, Toyota, the world’s largest automaker by sales volume, used to be a good example of global autos. The Corolla and RAV4, manufactured in different locations, were virtually identical in all regions. They were the best examples of successful global cars. However, we are now witnessing the introduction of new localized products that are not available everywhere.
Take Toyota’s Yaris as an example. Apart from the Yaris models available in Europe and Asia, Toyota has recently introduced the new Yaris Cross for emerging markets, which is 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 growing localization. It is a strategy that involves the development, production, and sale of cars designed for emerging markets, specifically for India and South America. This has led to the introduction of a different Citroën C3 and recently, the Citroën C3 Aircross. These cars use different platforms from their European counterparts and are cheaper to produce.
Hyundai is also adopting more localized approaches. The small crossover Exter, also known as 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 response to the changing income conditions of consumers. This can also be seen 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 example is the Toyota Tacoma for North America and its counterpart, the Hilux, for the rest of the world.
Nissan still sells the fourth generation of the Micra in Latin America, where it is called the March, while the latest-generation model is available in Europe. A similar case can be seen with the Renault Captur; the first generation is still popular in the Latin American B-SUV segment, while the latest model is 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, has been 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.
