BRAZIL: BRICs to build 37% by 2016

By Fernando Calmon | 16 December 2010

A report by PricewaterhouseCoopers (PwC) presented at Brazilian automakers association Anfavea’s year end press conference confirmed the sustained growth of world auto industry led by China, Brazil, India and, with smaller numbers, Russia, at least until 2016.

Global output surely will not grow 10% every year, like in 2010, but Brazil will help in redrawing the global production distribution map.

In 2016 the four BRIC countries will account for 37% of total, forecast production of 93m cars and light commercials compared with Europe’s 20%, North America’s 15%, and other countries’ 27% (including Japan, South Korea and Thailand).

PwC said “government interventions will interfere with the future of the global industry, thus impacting on where vehicles will be manufactured, what kind of vehicles will be made, on the supplying infrastructure and on the nature of investments in research and development”.

It is still unclear how the Brazilian government will look at new ways. The energy matrix for transport, especially in respect of light vehicles, presents alternatives not found – at competitive prices – anywhere on the planet.

This scenario makes difficult a policy of distribution of non-returnable incentives in the country and leads to more questions than answers.

The consultancy admitted that the growing efficiency of present internal combustion engines would resist the advance of electric or hybrid vehicles in the near future.

For PwC Brazil official Marcelo Cioffi, restructuring and alliances will keep pace with current trends while global expansion will represent an even greater challenge.

His presentation was complemented by his colleague Thomas McGuckin via conference call from China.

McGuckin estimates that, by 2016, production of light vehicles by the Asian giant will total nothing short of 22.5m units yearly.

He said premium models currently account for just 3.6% market share in China versus 15% in Europe and 13% in the US.

“However, importing quickly overcame the production of premium models in China itself between 2006 and 2010. Yet the market is marching towards 1m of these cars per year in a short time span”, he added.

This will favour the largest producers of this kind of automobile that are concentrated in western Europe.

He also said the Chinese domestic market is fragmented and quite complicated by the profusion of joint ventures and local brands.

Yet he warned about the so-called China SOEs – state-owned enterprises – currently heavily supported by central and provincial governments, and likely to gain market share.