THE SPIN: Asians flex their auto-buying horsepower

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Honda Civic Honda Civic

R.L. Polk & Co., the automotive information powerhouse, predicts that 2009 could be a watershed year for automakers: Polk predicts that Asian manufacturers are likely to capture 47 percent of U.S. market share, compared to 44 percent for American automakers and 9 percent for European brands.

But did you realize Asian consumers will be driving a healthy chunk of those Asian and European sales?

Unless you’re connected to the auto or advertising industries, you might not realize the significance Asian Americans have on some auto brands.

Still, Asian auto-buying clout shouldn’t come as a surprise. Asians had the highest median household income — $66,103 — of any ethnic group in 2007, according to the U.S. Census Bureau. The median household income for all households? $50,740.

And a 2007 study by the University of Georgia’s Selig Center for Economic Growth projected that Asian Americans would wield $670 billion in buying power by 2012. Of course, how on-target that will be remains to be seen, given the economic calamities of the last 18 months. What is certain is that 2012 isn’t really that far down the road.

What cars are hits with Asians? For the lowdown, I turned to Lonnie Miller, who directs analysis for R.L. Polk & Co. The privately held company’s data on new, personal-use auto and light-truck U.S. registrations are “the real deal” to the auto and advertising industries as well as other analysts.

Polk’s data confirms what many may already have concluded: Asian Americans flock to Asian-branded autos. In 2008, eight out of 10 new vehicles bought by Asians had Toyota, Lexus, Honda, Acura, Nissan, Infiniti, Mazda, Mitsubishi, Subaru, Suzuki, Hyundai or Kia nameplates.

Still, 20 percent chose not to follow the pack. They were pretty much evenly split: 10.3 percent popped for a domestic brand, while 9.2 percent slid behind the wheel of a European make.

That three-pointed Mercedes-Benz star still packs plenty of cachet. Of all private Mercedes registered in 2008, 12.2 percent wound up with Asian Americans. BMW trailed closely with 10.4 percent.

Mercedes-Benz E550Mercedes-Benz E550

Mercedes and BMW are fortunate that, unlike a Gucci bag or Rolex watch, SL63s and M3s can’t be counterfeited.

The big dogs with Asians are Honda and Toyota. Polk reports that just those two brands (and not counting their Lexus or Acura upscale divisions) commanded 51.6 percent of the Asian-American retail market between January and November 2008. That compares to 28.2 percent for the two brands’ market share overall (less Asians) market share in the U.S.

Toyota RAV4Toyota RAV4

Put another way, without Asian American purchases, Toyota and Honda would have sold roughly 10 percent fewer cars in the U.S. In sales and tax revenue, that, boys and girls, isn’t chump change in any period, let alone in abysmal 2008.

How about some hard numbers? Asian Americans bought about 161,969 new Toyota, Lexus and Scion vehicles and about 118,045 Honda and Acuras in calendar year 2008.

Interestingly, for the first quarter of 2009 (the most recent data readily available), the domestic brands increased Asian American share over calendar year 2008 to 12.3 percent, while the Asian brands’ percentage dropped to 78.3. European brands saw a slight uptick, to 9.5 percent.

Of course, it’s not always about how we differ but how alike we are. Polk’s research shows that when it comes to Nissan, Lexus and Hyundai, Asian market share is about the same (14.8 percent) as the overall U.S. share (12.8 percent).

What keeps Asian Americans loyal to Toyota, Nissan and the other top-selling Asian brands? The same thing that drives most buyers, regardless of ethnicity: quality and reputation.

Nissan Versa

Nissan Versa

Polk sees long-term growth for the worldwide automotive market coming from the emerging markets of Latin America; Central and Eastern Europe; Africa and the fast-growing Asia-Pacific/Middle Eastern region (excluding the developed market of Japan).

Starting in 2015, Polk expects more light vehicles will be sold in the aggregated emerging markets than in the combined “saturated” markets of the United States, Canada, Western Europe and Japan.

“We see China and India as key drivers of growth, as vehicles become attainable for an increasing percentage of these countries’ huge consumer populations,” said Uwe Biastoch, director of global forecasting at Polk. “Like Tata Motors with the recent launch of the low-cost Nano in India, manufacturers that innovate and produce market-specific products will be successful in emerging markets.”

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Jeff Yip’s reports on new vehicles, car care, motorsports and the automotive aftermarket have appeared in such diverse publications as the Los Angeles Times, New York Times, San Jose Mercury News, Houston Chronicle, Tire Business, Musclecar Enthusiast and Modified Mustang. Have a question or comment? Reach him at newswiz@gmail.com

About the Author

Look under the hood and you'd discover that Jeff’s lifelong interest and passion in all things automotive was practically genetically encoded. An award-winning journalist, he served on the staff of the San Jose Mercury News and the Los Angeles Times. Today he contributes to many news outlets. Jeff is a graduate of Cal State Long Beach and earned his master's degree at Ohio State University, where he was a Kiplinger fellow.