The Brazilian market finally leveled off and started recovery in 2017. A better year had been forecast in December 2016 after a consecutive four year slump in sales finally bottomed out with sales down almost 50% compared with the record year 2012 in which 3.8m cars and commercial vehicles were sold (both light and heavy). Brazil dropped from fourth to eighth largest world market.
Last year was important because production recovered at a fast pace thanks to exports that in turn brought industry jobs back. A record 762,000 units were shipped abroad (up 46.5% on 2016) and earned the country US$12bn. As fewer heavy vehicles were exported, the record was for volume, not value.
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At home, in 2017 2,24m vehicles were sold, a 9.2% recovery. By last month, average daily sales had peaked at 10,663 units with just 31 days’ inventory, a clear indication of good sailing ahead.
In 2018, despite political and economic uncertainties, the rise in domestic sales and exports should be even stronger.
This is even a rare year in which forecasts converge. Fenabrave (the dealers’ lobby group) and Anfavea (industry advocate) predict 11.8% and 11.7% rises respectively for the autos and light and heavy commercials domestic market.
Other pundits expect up to 15% growth this year.
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By GlobalDataAnfavea forecasts 2018 production of 3.055m units (up 13.2%) with 800,000 of those for export (up 5%) and a domestic market of 2.502m units.
Import sales are expected to rise 35% due to the end of the Inovar-Auto regime last 31 December. That had added 30% excise tax to any model selling more than 4,000 units a year unless sourced from Argentina or Mexico (with which Brazil has a free trade agreement).
A new guideline programme for the industry, called Rota (Route) 2030, is a long term plan intended to incentivise local research and development, and set new fuel economy and emissions efficiency goals for both locally made and imported models. Official announcement has been postponed to February.
This package of measures will be fundamental for sustainable growth and predictability. If approved under the long-discussed terms, it is possible that, by 2022, Brazil could see a return to 2012 volumes after 10 lost years.
The Brazilian auto industry has faced four large market crises (this one included) since foundation in 1956.
Many new models are expected this year, including vehicles produced in Argentina and Mexico, and elsewhere.
Some 30 updated or redesigned models will include the new local VW Virtus (January), Fiat Cronos (February), Toyota Yaris, Citroën Cactus; the imported Ford Mustang, Audi A8, BMW X2, VW Tiguan Allspace and Jetta (both from Mexico), Kia Stonic, Volvo XC40, Jaguar E-Pace, Honda CR-V, Jeep Wrangler and Renault Alaskan (from Argentina). The VW Golf, Ford Ka, Chevrolet Spin and Honda City will all be updated.
