Ford aims to boost car exports from Brazil by as much as 20% this year and reverse eight years of losses in South America, the company’s regional president told Bloomberg News on Tuesday.
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Citing Ford South America president Richard Canny, Bloomberg said Ford was pinning its hopes on the re-designed Fiesta and the new EcoSport sport utility vehicle made at a $US1.9 billion plant in Brazil’s Bahia state.
Last year, Ford sold $100 million of Fiestas outside Brazil from the Bahia plant, helping lift exports 20% to $530 million, and expects to export $160 million in cars this year from the plant, Bloomberg noted.
South America generated $296 million, or 30%, of Ford losses and just 1% of the company’s worldwide revenue last year, Bloomberg said.
The news agency said that Ford’s competitors, such as Volkswagen, are also trying to boost exports after five years of falling or stagnant sales in Brazil. Last year, car sales fell 6.8% to 1.49 million units and factories ran at 60% capacity, as an economic slump and the highest interest rates in 3-1/2 years stifled demand, Bloomberg News added.
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By GlobalData“The country and the region doesn’t supply the demand their plants need,” Booz Allen & Hamilton Inc. car industry analyst David Wong in Sao Paulo told Bloomberg. “Exports are a way out.”
Bloomberg noted that Ford managed to boost sales in Brazil 18.6% to 147,610 units last year, because of the popularity of the new Fiesta, increased marketing and a new dealer network.
Though the company’s share of the Brazilian car market rose to 9.9% from 7.7% in 2001, Volkswagen sells more than 2 1/2 times as many vehicles in the country as Ford, Bloomberg News said.
Wong told Bloomberg News that Ford would have trouble re-starting idle factory lines without exporting cars to the US, a market that consumes almost 17 million cars and light trucks per year.
Ford recently dropped efforts to export from Brazil to the US because the cost of complying with safety regulations was too high, Canny told Bloomberg.
Canny also told Bloomberg that he is focusing on opening new markets for cars made in Brazil while Ford plans to join rivals in lobbying Brazilian President Luiz Inacio Lula da Silva to reach duty-free car export agreements with South Africa, Colombia, Ecuador and Venezuela.
According to Bloomberg News, Brazil and Mexico’s agreement to phase out car duties helped fuel a surge in exports in 2002. Last year, 61% of almost 54,000 units sold outside of Brazil were shipped to Mexico.
