Automotive Parts Demand Restructuring in the Global South
KOTRA: "Significant Market Structure Changes in 40 Countries"
Four Market Types Classified by Purchasing Power, Growth Potential, and Market Size
Brazil and Saudi Arabia Emerge as Core Markets
Indonesia Focuses on Electronic Components, Malaysia on Precision Engine Parts
An analysis has found that the demand structure for automotive parts is rapidly being reorganized, particularly in the Global South. The report diagnoses that, due to increased uncertainty in existing markets caused by U.S.-imposed tariffs and changes in supply chains, companies now face a greater need to diversify their export destinations.
On November 25, the Korea Trade-Investment Promotion Agency (KOTRA) released the report "Global South Automotive Parts Market Entry Strategies," which categorizes the automotive parts markets of 40 Global South countries based on purchasing power, growth potential, and market size. The report also identifies promising product categories and entry strategies for seven key countries: India, Brazil, Saudi Arabia, the United Arab Emirates (UAE), Malaysia, Indonesia, and the Philippines.
KOTRA analyzed 40 countries among the UN G77 nations for which automotive and parts statistics are available, dividing the markets into four groups. Group I, which includes Brazil, Saudi Arabia, and Egypt, was classified as a core market with both high purchasing power and strong growth potential. The report suggests that in these markets, it is important to build brand recognition with premium products and to develop products that reflect regional demand.
Group II, which includes Indonesia and Malaysia, was identified as a mature market with high purchasing power but slowing growth. The report highlights the need to analyze local supply chain structures and to focus on product differentiation. Group III, which includes India and Nigeria, was assessed as having low purchasing power but high growth potential, requiring an early market entry strategy. Group IV, including Pakistan and Kenya, was identified as a market where demand is expected to expand in the mid- to long-term, emphasizing a phased entry strategy centered on entry-level products with price competitiveness.
KOTRA also presented promising product categories and entry strategies for the seven key countries, reflecting recent trends in trade agreements, automotive sales structures, and supply chain reorganization.
In Indonesia, demand for electronic components is rising with the spread of electric vehicles, making integration with local parts suppliers a key factor. In Malaysia, the precision-machined engine parts sector is promising, and the report suggests that high-tech joint ventures could be an effective approach. In the Philippines, demand is concentrated on commercial vehicle parts, and leveraging free trade agreements (FTAs) is seen as an effective way to access the market.
Saudi Arabia is a steady market for maintenance and repair parts, and the report recommends establishing local production bases by utilizing government policies to foster the manufacturing sector as a mid- to long-term strategy. In the UAE, the focus should be on the aftermarket, while in Brazil, advanced driver assistance systems (ADAS) and electric vehicle thermal management parts are considered promising sectors. In India, demand for electronic components, transmissions, and electric vehicle batteries is rapidly increasing, so the report suggests considering local production.
Lee Heesang, Executive Vice President and Head of Economic Security and Trade Cooperation at KOTRA, stated, "As U.S.-imposed tariffs, geopolitical bloc formation, and supply chain reorganization accelerate, the strategic value of the Global South is growing. It is now essential to adopt market entry strategies tailored to the market structure and demand stage of each country, and KOTRA will continue to support efforts to diversify export markets."
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