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The Economist | Markets and makers: Running harder

The Economist

Markets and makers
Running harder
Carmaking can still be highly profitable, but manufacturers have to work at it

FROM A CARMAKER’S point of view, the great thing about emerging markets is that they have so many people and so few cars. Carlos Ghosn, the boss of Renault-Nissan, a Franco-Japanese carmaking alliance, notes that whereas in western Europe the ratio of cars to people is one to two, in China it is still only one to 20 and in India one to 40. Even if these countries eventually settle at, say, just half the car-ownership levels in the rich world, the potential remains immense. A recent study of China’s motor industry by Sanford C. Bernstein, a research firm, found that even though some of the biggest, most congested cities are starting to restrict vehicle ownership, the government is obsessed with roadbuilding and in the rest of the country there is plenty of room for more cars.

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