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WESTLAKE VILLAGE, Calif. — The June slowdown in new-vehicle retail sales in the United States coupled with increasing uncertainty within the European market prompted J.D. Power and Associates to consider where automakers can find other global areas of growth.

While analysts conceded that recovery in established markets may be flagging, they believe sales growth in emerging markets — particularly Brazil, Russia, India and China — will become increasingly important to sustaining global recovery.

Turns out the single country that has one of the world's largest populations could be the key.

During the second half of this year, J.D. Power projects China will grow its lead as the world's largest vehicle market. The firm made this assertion even though it knows sales in the country have slowed to a low double-digit rate of growth in 2010. That slowdown came after growth that averaged 50 percent in 2009.

"The center of the automotive universe is shifting quite rapidly away from the established markets of North America and Europe," declared John Humphrey, senior vice president of global automotive operations at J.D. Power. 

J.D. Power thinks 2010 sales in North America should come in at 14.2 million units, which would represent 12-percent increase from 2009. However it's still 25 percent below 2007 levels.

Despite slowing growth between May and June, analysts reminded the industry that new-vehicle retail sales in the U.S. have improved. On a year-over-year comparison, they stated the seasonally adjusted annual rate (SAAR) stood at 11.0 million units in June, up from 9.7 million units in June of last year.

J.D. Power indicated U.S. retail sales are projected to total 11.8 million units for 2010, which would translate into a 13-percent jump from 2009.

"However, due to the increasing likelihood of a slower recovery, there remains the possibility that final sales totals for 2010 could come in 200,000 units below current projections," J.D. Power conceded.

"Despite this projected year-over-year improvement, sales are still down by 25 percent from pre-recessionary levels," the firm added.

Elsewhere in North America, J.D. Power's forecast for Mexico calls for the largest year-over-year gain — a 14-percent increase in 2010 compared with 2009. Nonetheless the country's new-vehicle sales are forecasted to come in at 860,000 units, a figure well below the market's peak of 1.1 million units in 2007.

Turning north to Canada, J.D. Power believes the country has managed to escape heavy negative impact from the recession. It's projecting a 5-percent year-over-year new light-vehicle sales increase for this year.

Moving across the Atlantic to Europe, J.D. Power has forecasted a 2010 new-vehicle sales decline of 5 percent from 2009, dropping the total to 17.2 million units. Analysts think the European market is being swayed by "payback from robust scrappage programs and various countries' debt crises that have derailed recovery."

Specific countries feeling the brunt of the sales decline are Germany (down 20 percent) the United Kingdom (off by 7 percent) and Italy (down by 5 percent).

In contrast to the outlook for Europe, J.D. Power thinks new-vehicle sales in Japan appear more promising. Analysts computed a forecast that included an 11-percent gain in 2010 from last year's performance

Sales in Japan are projected to come in at 5 million units this year, but J.D. Power hesitated when mentioning that total still is a fraction of the once-powerful market's peak sales of nearly 8 million units in 1990.

"It is the Asia Pacific automotive market that is turning into the global powerhouse," Humphrey declared.

"Sales in the region are forecasted to grow by 16 percent year over year, to end 2010 at 27.9 million units. China is doing the heavy lifting, even though there are signs that growth in the China market is slowing slightly," he continued.

The emerging markets — Brazil, Russia, India and China that J.D. Power clustered together with the acronym BRIC — each are on their way to sizeable advances.

J.D. Power concedes the projected 20 percent growth for China this year might seem low, considering that during its peak growth period sales rates once approached triple-digit figures. However, Humphrey determined sales volume is still projected to reach 15.6 million units for 2010.

"This would once again position China as the world's largest vehicle market with sales more than 3 million units higher than that of the U.S," he pointed out.

While China new-vehicle sales should account for more than the rest of the BRIC markets combined, J.D. Power mentioned the other key emerging economies are helping to sustain the global automotive recovery.

Brazil, which has been experiencing solid economic growth, is projected to reach sales of 3.3 million units in 2010, according to J.D. Power. That would calculate into an increase of 8 percent from 2009. 

J.D. Power believes India is currently experiencing production growth at a rate similar to that experienced by Brazil one decade ago. The firm made this contention because numerous manufacturers established themselves alone or as part of joint ventures.

"While there are still significant infrastructural and political challenges that may prevent India from experiencing the same sort of explosive growth seen in China, it has the potential for high rates of growth in the coming years," Humphrey said.

He added that new-vehicle sales volume in India is projected to reach 2.5 million units this year, a 19 percent increase from 2009.

Although new-vehicle sales in Russia declined by one-half in 2009 to end the year at just 1.5 million units, J.D. Power thinks the market is showing signs of modest recovery. It's projected sales to reach 1.6 million this year.

However, analysts caution that new-vehicle sales in Russia will likely not achieve the peak levels seen in 2008 until 2014.

"Deterioration in consumer confidence on the heels of a significant rate of GDP decline, combined with tightening credit, led to a massive decline in the Russia automotive market," explained Jeff Schuster, executive director of global forecasting at J.D. Power.

"Although it remains the most fragile and tenuous economy of the four BRIC nations, Russia has a distinct advantage over the other emerging markets — deep reserves of oil that fuel its economy in better years," Schuster continued.

"In contrast, China and Brazil, in particular, remain vulnerable to global fuel uncertainties and are continuing efforts to turn to alternative energy sources, notably in their transportation bases," he added.

Global Alternative Powertrain Vehicle Sales

Moving on from a country-by-country discussion, J.D. Power declared that the global hybrid market is quickly transitioning from niche to mainstream

Analysts computed global hybrid-vehicle sales could reach 910,000 units this year, which would represent a year-over-year increase of 25 percent.

In 2015, J.D. Power stated hybrid vehicles are expected to come in at 2.3 million units and to comprise 4 percent of global light-vehicle sales.

"In the second half of 2010, several manufacturers will launch new battery-electric models across the globe, such as the Nissan LEAF and Ford Transit Connect, as well as plug-in electric models, such as the Chevrolet Volt," J.D. Power highlighted.

"The launch of these models is expected to double sales of electric-powered vehicles to 24,000 units worldwide in 2010," the firm continued. "In 2015, sales of electric vehicles are expected to total 500,000 units globally."