Emerging Markets Not Always Promised Land For Autonomous Growth

For the world’s carmakers, emerging markets are always on their maps – after all, they have the best potential for growth.

This situation won’t change with the coming of autonomy; such countries will remain battlefields for competition. That’s because there is plenty of interest on the consumer side in those parts of the world. Toyota, for one, believes that consumers in emerging markets are just as eager to get behind the wheel of a technologically advanced car as their counterparts in more established markets. “We believe that advanced technology is not only for ‘emerged’ or matured markets but also for emerging countries,” said a company spokesman.

Ford would doubtless agree. Earlier this decade, the giant carmaker pledged that it would devote $5Bn in capital to developing a family of vehicles designed specifically for emerging markets. There are indications that this approach is working; in its most recent fiscal year, Ford booked its first profit in a decade for its operations in India, a notoriously challenging auto market for automakers to crack.

One big reason why India and its brethren are daunting is, quite simply, money. Emerging markets typically have far less of it than more advanced economies. For example, Bangladesh’s current gross domestic product per capita was just over $1,733 for 2018; Canada’s came in at $48,466.

With advanced auto technology, and ultimately self-driving operation, money matters. According to Jeremy Carlson, principal analyst-autonomous driving at research firm IHS Markit the increasing sophistication of assisted and, eventually, self-driving solutions “brings significant cost meaning optional status plus relatively high option prices which, in turn, will often limit initial availability to premium brands or flagship vehicles before steadily moving down market”. This, added Carlson, “will constrain initial availability and any eventual installation of the automated and autonomous driving technologies in emerging markets and that also applies to today’s driver assistance features which are already widely available in established automotive markets.”

Packing such features into a commercially attractive car at a commercially attractive price can be a difficult task even in the world’s richest markets. In places where earnings power is much weaker, it can approach the impossible. This is compounded by the issue of trust. One report from international vehicle safety organization Global NCAP found that millions of new vehicles going to the world’s lower-income markets did not meet basic crash protection standards. The organization has claimed several vehicles from household name brands produced for emerging markets such as India and Africa pose real threats to passenger safety in the event of an accident.

Carmakers are, at least, aware of their battered reputation for care in emerging markets. Some say that they are conscientious enough not to engage in that kind of skimp-and-profit safety negligence. “One of our most basic stances is to make sure we comply with any laws and regulations in each market where we sell vehicles,” said the Toyota spokesperson. “On top of that, we work to ensure sufficient quality in terms of our vehicles’ basic performance, which is important for our customers’ safety and peace of mind.”

Infrastructure challenges

Another major factor that will affect sales in emerging markets is one the automakers can’t really control – the state of a country’s infrastructure. Highly assisted solutions require complimentary road, signage, etc. technology in order to operate. China’s government isn’t aiming to roll out intelligent highways in their country in order to make some cool science-fiction scenery – it’s part of a concentrated attempt to aid upper-level assisted and autonomous operation.

On top of that, a country’s traffic regime needs a certain level of, dare we say, “emerged markets-level” organization and order. “From ADAS to automated to autonomous, the vehicle is responsible for doing more on its own and is, therefore, more reliant on its ability to understand its surroundings and predict the actions of other road users and navigate different driving scenarios,” said Carlson. “If these emerging markets don’t have clearly marked lanes or if there is chaotic and mixed traffic, it’s that much more difficult for the automated systems to do their job with confidence.”

As if these problems weren’t enough of a headache, in certain extreme cases carmakers might also run into serious resistance from lawmakers and other influential figures. In 2017, India’s transport minister Nitin Gadkari stated that his country would ban autonomous vehicles because the government will “not allow any technology that takes away jobs”. Perhaps demand for such vehicles in the country will rise high enough to eclipse these concerns yet it does pose the broader question we will all have to face over how far we allow automation to take over roles currently filled by humans?

Budget, infrastructure, official resistance… emerging markets have never been particularly easy to attack for carmakers and they’ll remain so. It’s tough to shave costs and at the same time maintain acceptable standards of safety, all the while dealing with a myriad of obstacles and roadblocks.


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