Brazil Autos Report Q3 2012

Published : May 2012
No. of Pages : 79

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Early indications would suggest that 2012 will be a difficult year for the Brazilian auto sector, as a combination of higher auto import taxes and revised regulations combine to depress demand.
New vehicle sales in Brazil in Q112 struggled to match Q111 levels, declining by 0.8% year-on-year (yo- y), to 818,364 units, according to estimates from Brazil’s National Association of Motor Vehicle Manufacturers (Anfavea). We believe the contraction was the result of a slew of recent regulatory changes in the autos industry, and we have now revised down our 2012 sales forecast from the 6% y-o-y growth we had previously expected to growth of nearly 4% y-o-y. We are now also more cautious about growth in 2013, on the back of restrictions in vehicle imports and the inability of the domestic production segment to meet local demand.
Estimates from Anfavea suggest that the contraction in sales witnessed over Q112 was broad-based, albeit marginally, across vehicle segments. All vehicle segments (with the exception of buses) posted lower sales, with the truck segment contracting by almost 5% y-o-y, to 37,632 units. In terms of carmakers, key industry players such as Volkswagen (VW), General Motors Company (GM), Ford Motor and PSA Peugeot Citroën reported significant drops in sales as a result of the government's renewed push towards promoting local production. Some of these carmakers rely on imports from Argentine to meet Brazilian demand, and we believe that Brazil's reversal on auto imports from 'automatic licensing' to 'non-automatic licensing' in 2011 has had an impact on demand.
Acting in support of new car demand over 2012 will be the 14% increase in the minimum wage (which came into effect in January 2012) as well as further monetary easing, recent measures to relax regulatory requirements for private sector lenders and the consequently uninterrupted demand and supply of credit (See Industry Forecast Scenario - Sales section below).
We expect the impact of these regulatory trends aimed at promoting local production to become yet more visible in 2013. Industry players, such as GM, have complained that the sudden changes in the regulatory framework for autos trade between Brazil and its major trading partners have given companies little time to adjust their production strategies. Others, including BMW, have expressed caution about going ahead with planned projects in the country. All of this will lead Brazil to a situation where production will fail to cater to domestic demand, despite the government's intention to boost local manufacturing. We forecast autos production to grow at a lacklustre rate of under 4% y-o-y, to 3.89mn units, shy of market demand of 3.98mn units, during 2013.
In 2011, Italy’s Fiat regained its market leading position in the Brazilian passenger cars segment, despite a 2.4% y-o-y decline in its sales. However, its 22.5% market share was closely followed by Volkswagen, which occupied 22.3% of the market. There is also significant competition from US-based General Motors Company, which controlled a fifth of the market. Together, the three companies controlled close to two-thirds of the market in 2011.

Executive Summary . 5
SWOT Analysis 6
Brazil Autos Industry SWOT .. 6
Brazil Political SWOT 6
Brazil Economic SWOT . 7
Brazil Business Environment SWOT .. 7
Global Autos Update: End Of First Quarter Brings Both Positive And Negative Revisions As Key Trends ... 8
Table: Passenger Car Sales (Units), Jan-March 2012 ... 8
Regional Overview . 12
Incentives Will Do Little To Reverse Decline In Competitiveness . 12
Industry Risk/Reward Ratings .. 17
Table: BMI Risk/Reward Ratings For Autos Industry In Americas .. 20
Macroeconomic Forecast . 21
Industry Forecast Scenario .. 26
Sales . 26
Table: Brazil Autos Sales By Segment – Historical Data And Forecasts 26
Production ... 29
Table: Brazil Autos Production By Segment – Historical Data And Forecasts ... 29
Trade 30
Table: Brazil Autos Trade – Historical Data And Forecasts ... 30
Economic Contribution 34
Table: Brazil Autos Economic Contribution .. 34
Industry News .. 34
Passenger Cars .. 36
Table: Brazil Passenger Car Segment – Historical Data And Forecasts . 36
Table: Brazil – Passenger Car Sales 2010-2011 . 37
New Investments ... 39
Table: Brazil – Passenger Car Production, 2009-2010 ... 40
Growth In Alternative Fuels. 42
Blaming The Government 42
Company News . 44
Commercial Vehicles . 47
Table: Brazil Commercial Vehicle Segment – Historical Data And Forecasts 47
Segment Trends 48
New Investments .. 51
Company News 53
Alternative Fuel Segment . 53
Key Players .. 55
Light Commercial Vehicles ... 56
Table: Brazil – Light Commercial Vehicle Sales.. 56
Heavy Commercial Vehicles . 57
Table: Brazil – Heavy Commercial Vehicle Sales 57
Buses And Coaches ... 58
Table: Brazil – Bus Sales (Units), 2009-2011 .. 58
Motorcycles 59
Table: Brazil Commercial Vehicle Segment – Historical Data And Forecasts 59
Segment Overview 59
Company News . 60
Table: Brazil Motorcycle Production (Units), 2010-2011 62
Table: Brazil Motorcycle Market (Units), 2010-2011 .. 62
Segment Developments . 63
Suppliers 65
Table: Brazil Automotive Parts Segment: Leading Names ... 66
Investments ... 67
Segment Developments . 68
Company Monitor .. 70
GM's Investments To Help Correct Regional Deficiencies 70
Company Profiles .. 72
General Motors Company (GM) .. 72
Fiat .. 74
Volkswagen (VW) . 75
Honda Motor ... 76
BMI Methodology ... 77
How We Generate Our Industry Forecasts .. 77
Sources 78Table: Passenger Car Sales (Units), Jan-March 2012 . 8

Table: BMI Risk/Reward Ratings For Autos Industry In Americas . 20

Table: Brazil Autos Sales By Segment – Historical Data And Forecasts . 26

Table: Brazil Autos Production By Segment – Historical Data And Forecasts . 29

Table: Brazil Autos Trade – Historical Data And Forecasts . 30

Table: Brazil Autos Economic Contribution . 34

Table: Brazil Passenger Car Segment – Historical Data And Forecasts . 36

Table: Brazil – Passenger Car Sales 2010-2011 . 37

Table: Brazil – Passenger Car Production, 2009-2010 . 40

Table: Brazil Commercial Vehicle Segment – Historical Data And Forecasts . 47

Table: Brazil – Light Commercial Vehicle Sales. 56

Table: Brazil – Heavy Commercial Vehicle Sales . 57

Table: Brazil – Bus Sales (Units), 2009-2011 . 58

Table: Brazil Commercial Vehicle Segment – Historical Data And Forecasts . 59

Table: Brazil Motorcycle Production (Units), 2010-2011 . 62

Table: Brazil Motorcycle Market (Units), 2010-2011 . 62

Table: Brazil Automotive Parts Segment: Leading Names . 66

Brazil Autos Report Q3 2012

Published By: Business Monitor International

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