Car makers find a new gear outside western Europe

Full-throttle expansion into Asia and Latin America is making up for slow growth in established markets. David Bowen reports

A YEAR AGO, not a single Ford Fiesta had been sold in Argentina. Now, it is the country's best-selling car.

Europe's volume car companies are for the first time making a serious attempt to sell outside their own region. While luxury and sports-car makers have always played the world stage, and there are plenty of local assembly plants in developing countries, manufacturers have, until recently, been unwilling or incapable of selling directly from the west.

Now car makers are launching an assault on fast-growing markets in Asia and Latin America, as well as the newly opened territories of Central Europe. Ford's sales ouside western Europe have more than doubled this year, Rover's are up by 40 per cent, and General Motors' by 20 per cent.

The car companies say these new sales are part of a strategic decision to internationalise. Under the Ford 2000 programme, for example, different regions are given worldwide responsibility for different types of car, and have been told to sell them where they can. "In the old days we would try to export cars if we had units left over; now we are going for a competitive share wherever," a spokesman says. GM set up an international marketing organisation in Zurich a year ago, and Rover says its chief strategic goal is to become a fully international company.

But the strategy shift has been helped along by external factors. Market liberalisation in many developing countries has meant imports are no longer blocked by impossible tariffs. And, says Nigel Griffiths of the consultancy DRI/ McGraw-Hill, "the European recession of 1992-3 started manufacturers thinking about how they could sell their extra cars." The new strategy has saved several companies' bacon this year. The European car market has grown more slowly than was expected: production rose by 4 per cent while sales went up by only 1 per cent. In the past this would have led to short-time working or layoffs; this year external sales have mopped up much of the excess.

By the end of this year, Ford will have sold 106,000 European-built cars outside western Europe, compared with fewer than 50,000 in 1994. The best seller has been the Fiesta, whose exports rose by almost six times to 54,000, thanks to launches in Latin America, Central Europe (including parts of the former Yugoslavia) and even Egypt.

Although Fiestas are built in three countries, including the UK, most of these cars come from Ford's Spanish factory. Dagenham - now under threat of industrial action - is the lead plant for the new Fiesta, whereas the exports are of the old model, which is still being built in Spain.

A Spanish plant is also the chief beneficiary of General Motors' export sales effort. This year GM will sell about 250,000 European-built cars elsewhere, 50,000 more than last year. The Spanish-built Corsa has driven the increase, especially in Japan, where sales have jumped from 19,000 to more than 30,000, and Australia, where they have gone from 7,000 to 12,000.

Direct benefit to Britain comes from Rover's efforts. It will sell 100,000 cars - about a fifth of its production - outside Europe this year. Half of these will come from the highly successful Land Rover, which has always sold worldwide, but the car division's exports are now rising rapidly. It has not yet re-entered the US market, where its attempt to sell the 800 model in the mid-Eighties ended in disaster, but is pushing hard elsewhere.

Rover is the fourth biggest car importer in Japan, after Mercedes, BMW and Volkswagen. The Mini sells astonishingly well - 6,000 this year - and the 600 model, which is based on a Honda, is also moving briskly. The rest of Rover's non-European sales are scattered across a range of countries, including Israel, Poland and Brazil, and Asian markets including Malaysia and Taiwan.

Rover believes its new 200 and 400 models will sell even better. "There are markets where people want smaller but more luxurious cars," a spokesman says. He expects production to rise by 50,000 during next year, and that half of these extra cars will be sold outside Europe.

Direct exports will always be held back by the switch to local manufacturing when volumes are sufficient. Ford is starting to manufacture the Fiesta in Brazil next year and in India in 1997, and the Fiat Tipo, which was the best-selling imported car in Brazil last year, will soon be manufactured there. Even Rover is moving into overseas production: the venerable Maestro is now built in Bulgaria.

But the long-run reduction in tariffs, agreed by the Uruguay Round of the General Agreement on Tariffs and Trade, will make direct exports increasingly attractive. Kneejerk duty increases such as those made by Brazil earlier this year in reaction to a weakening economy should in theory become a thing of the past.