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Buying power of Hispanics set to soar

November 23, 2010
Spending by U.S. Hispanics will grow more than 9 percent a year on average to 2020, outpacing the 6 percent rate of all residents, a recent study found. That would boost the Latino share of the U.S. market to 13 percent, up from 7.3 percent in 2000. Some companies early to see the potential are cashing in. For example, Blockbuster Inc. last November set aside swathes of shelf space in nearly 1,000 of its stores for videos dubbed in Spanish, and 20th Century Fox this month released "Chasing Papi," its first movie aimed at Latinos. In the automotive industry, sales of Ford brand cars and light trucks to the Hispanic market grew 40 percent in the past five years. After the company started using Mexican actress Salma Hayek to market its Lincoln brand last year, Hispanic purchases of Lincoln Navigators grew 12 percent, while sales to non-Hispanics were flat, Ford reported. For Honda Motor Co.'s American arm, Latino purchases increased to 8.4 percent of all vehicles sold last year from about 7 percent five years ago. For some businesses, Latino buyers will be practically the only source of expansion in an otherwise bleak market, predicted the Global Insight study, which was sponsored by Spanish-language TV network Telemundo. Over the next 10 years, for instance, the study forecasts sales of new cars and light trucks to Hispanics to increase 5.4 percent a year, more than triple the 1.4 percent annual growth of sales to non-Hispanics. Two factors are driving Hispanic spending growth. The first is an expanding Hispanic population driven by both a higher-than-average birth rate and immigration. The other is that Hispanic household incomes are starting to catch up to national averages. The report estimates that Hispanic household incomes should grow from 77 percent of the national average in 2000 to 82 percent by 2020. Related research by The Selig Center for Economic Growth at the University of Georgia says Hispanics in five years will account for 9.4 percent of the nation's disposable income, up from 5.2 percent in 1990.