Since the landing of the first Chinese-made vehicle in 2008, the Changhe M100, the Brazilian market has been reasonably receptive but the mood has changed with time.
Initially, the new brands’ lack of tradition and history in Brazil was offset by really competitive prices and fully-trimmed models with all features contemporary consumers prize.
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But difficulties once the new Inovar-Auto automotive regime imposed protectionist rules and induced importers of complete vehicles to become local manufacturers. Yet even before the new regime, which took too long to be implemented and regulated, the two best known Chinese brands, JAC and Chery, had signalled intent to build plants in Brazil.
To the end of last December, JAC had sold about 61,000 units in Brazil since 2011. Chery, which had arrived two years earlier, topped 48,000. Both automakers’ tallies were well below those originally planned, caused by increasing import costs, fiercer competition and a certain selectivity trend notable recently amongst Brazilian buyers. However, this did not stop more Chinese brands from settling in as full importers, like Geely (this year) and Zotye (soon).
Chery has just inaugurated its 150,000-unit plant in Jacareí (São Paulo state), although the actual start of production isn’t due until the end of the year. This move alone – perhaps seen by buyers as a vote of confidence by Chery in Brazil – has boosted sales in the last months (to 10,000 units in 2014 to the end of August). Total spend in Brazil will reach BRL1.2bn/US$550m and will include an engine plant plus technical and design centre on the assembly plant site.
Plans include exports to the rest of Latin America, an ever more difficult task for those facing the mammoth ‘Brazilian cost” of building and shipping vehicles. Despite delayed construction – now affecting JAC in Camaçari (Bahia state) as well – Chery is leading in the race to expand its dealer network to match the increased local availability of factory-fresh cars.
The automaker has also refocused its range for this market. It starts with the Celer compact hatchback and saloon, followed by the soon-to-be-redesigned QQ subcompact (May 2015) and the (early 2016) successor to the current Tiggo compact SUV. Prices for each range from BRL32,000/$14,200, BRL24,000/$10,700 and BRL52,000/$23,100, respectively.
Chery and JAC each hope to nab a 3% share of the Brazilian light vehicle market by 2018, but this seem a too-ambitious goal in a country where 60 brands now vie for customer attention.
