General Motors, Volkswagen and Ford, the biggest car makers in Brazil, are promoting low-cost models at a show this week in Sao Paulo, where falling interest rates are prompting consumers to buy their first cars.
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Bloomberg News noted that GM is investing $US240m to start producing a new small car in Brazil, part of an effort to boost sales in the country and offset a slowdown in exports. The company is introducing the new Prisma model at Sao Paulo’s 24th biennial international motor show and will start selling it this month, spokesman Pedro Luiz Dias told the news agency.
“Brazil’s auto industry is increasingly shifting the focus to economy cars,” Giancarlo Pereira, an economics professor at the University of Sao Paulo who studies the automobile industry, told Bloomberg News. “That’s what it has a knack for and that’s what consumers want.”
The report said new vehicle registrations in Brazil, Latin America’s largest economy, climbed 10% in September from a year earlier after the central bank lowered the overnight lending rate to the lowest in at least two decades, making financing for new cars more attractive. Policy makers have reduced the rate by 5.5 percentage points over the past year to 14.25% in August.
Growing demand for so-called economy cars in Brazil will help automakers boost domestic sales in coming years, Pereira reportedly said.
GM’s new car is “designed for new professionals getting into the market, which we believe is the new niche,” Dias told Bloomberg in an interview in Sao Paulo.
The report noted that declining interest rates are also encouraging Brazilians to replace their conventional cars with flexible-fuel vehicles that can run on ethanol, which costs less than petrol in Brazil.
Volkswagen said it will build two new models at its biggest plant in Brazil after workers agreed last month to a plan to cut labour costs, Bloomberg News said. The automaker said last month management approved production of the new models at the company’s plant in Sao Bernardo do Campo, Brazil, in 2008 and 2009. The company didn’t disclose the amount of the investment at the plant.
PSA Peugeot Citroen plans to nearly double its market share in Brazil with the introduction of new models in the country by 2010. Peugeot forecasts its market share may rise to 10% in 2010 from 5.6% today, Pierre-Michel Fauconnier, the company’s general director in Brazil, reportedly said in an interview in Sao Paulo in June.
Bloomberg News said Les Echos reported last week, without citing sources, that Renault plans to inject EUR300m ($US376.3m) to expand production in Brazil and boost distribution to reach 107,000 cars a year.
