Anfavea, Brazil’s national car manufacturers’ association, has announced that its 25 members will invest $US4.9bn this year, mostly to increase capacity.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
This increase will focus on eliminating bottlenecks and boosting productivity in existing plants rather than building new manufacturing sites. In the past 15 years, total yearly investment has never exceeded the $2.5bn a year spent in 1998.
“This is the beginning of an historical expansion of our industry because the market continues to grow in an amazing way”, Anfavea president Jackson Schneider told just-auto.
In the two first months of the year, Brazilians bought 416,000 units, a 39% increase year on year. Production in the first two months – 506,000 units – was 24% higher than last year’s January-February output.
Total production over the last 12 months passed the 3m mark for the first time. Export values climbed 16% to $1.62bn thanks to higher unit prices.
Plans until 2010 will see OEMs and suppliers together invest around $20bn, according to Schneider.
That will boost the current 3.5m annual capacity to at least 4.5m, as well as speeding up the design and launching of new models. However, the federal government has set a target of 5m yearly by 2011.
Business optimism remains high because of previous dampened demand, a greater volume of financed vehicles (with generous, up to 96-month terms available), a recovery of buying power, and GDP expansion (5.5% last year, based on initial estimates).
The industry expects to launch 60 new models in 2008, imported vehicles included.
Curiously, there are no signs of overpricing or surcharging, which was common in previous boom periods here. The low, now-tamed inflation is a major reason for this – in the past, being on a waiting list for a new car meant facing inexorable price hikes.
Automotive business profitability in Brazil has also soared. Fiat is the only automaker to publish results ? the others are not obliged to under local laws – in 2007 it reported net profit of almost $1bn, twice the 2006 result.
Other car manufacturers are also doing well. According to Brazil’s Central Bank, they sent parent companies abroad $2.7bn in profits and dividends last year, up 107% on a year earlier.
A small fraction of this was due to the appreciation of the Brazilian real against the US dollar – over 20%.
Fernando Calmon
