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April 13, 2010

FORECAST: Brazil now fourth; 6m units by 2015

Roland Berger, 72, president and founder of the German consulting company, was in Brazil in mid-March, to present his market growth forecasts. And he predicted, as also forecast by other analysts, that Brazil this year will become the world's fourth largest new vehicle market, ahead of Germany. Ford CEO Alan Mulally, in Brazil last week, is just as confident. He was here last week to increase previously announced investments from US$2.2bn to $2.4bn for the period 2011 through 2015.

Roland Berger, 72, president and founder of the German consulting company, was in Brazil in mid-March, to present his market growth forecasts. And he predicted, as also forecast by other analysts, that Brazil this year will become the world’s fourth largest new vehicle market, ahead of Germany. Ford CEO Alan Mulally, in Brazil last week, is just as confident. He was here last week to increase previously announced investments from US$2.2bn to $2.4bn for the period 2011 through 2015.

Ford said the investment was the largest single amount it had invested in its Brazilian operations during a five-year window in its 91-year history in the country. The increased spend also takes Ford’s investment in South America to $3bn through 2015.

Mulally also confirmed that Ford’s Brazilian engineering team will be responsible for the new EcoSport based on the redesigned new Fiesta architecture. The redesigned compact SUV will be produced here from 2012, for both domestic and export markets.

Mulally said “for the first time in history of the 91-year old Brazilian subsidiary a vehicle fully developed by its own  engineering will be manufactured in four other countries”.

He did not say where, but sources told just-auto that the US, Germany, India and China are being considered.

Ford already builds sedan and hatchback versions of the Fiesta in China and its Indian unit turns out sedans based on previous-generation Fiesta architecture and has just launched a new Figo model which is essentially and updated previous generation European Fiesta hatchback. Meanwhile, the new Fiesta, built in Mexico, will go on sale in North America, and here in Brazil, later this year.

In just 10 years, Brazil has climbed from 10th to fourth largest global auto market. First quarter registrations reached a record 788,000 units, 18% up on 2009’s. Some industry observers are already predicting that the 3.4m-unit forecast for this year may be exceeded.

Berger, however, thinks Brazil needs to become more competitive if it aspires to become a global automotive power. He cited infrastructure problems, high taxes and bureaucracy which make it difficult for Brazilian automakers’ exports to compete with vehicles from other countries, thus leading to an excessive dependence on the domestic market.

He advised: “Unite and implement an urgent work plan to improve competitiveness.”

And then he announced his firm’s most optimistic Brazilian forecast ever, estimating potential domestic sales of close to 6m units (both light and heavy vehicles) by around 2015.

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