In 2011 the sales growth of light vehicles remained positive, with sales up 2.9%.
Being the sixth largest producer of light vehicles and one of the fastest growing economies in the world, Brazil has been showing some signs of cooling down recently. High local costs and the strong currency have slowed exports. In the automotive industry this has contributed to the growing market share of imported finished vehicles at the expense of locally-assembled ones.
But the prospects for the economy to gain momentum in 2012 and extend into 2013 are good. The country is expecting a new cycle of investments in the auto industry, amounting to USD 100 billion over 25 years. The tally includes expenditure on manufacturing units, expansions, new products and technologies.
The Brazilian government also recently raised the import tax to 30 percent in order to limit vehicle imports, in particular from Mexico. These two factors will contribute to the growth of local manufacturing. Newcomers, especially Chinese firms, are challenging the market with new production sites as well as increased imports.
Brazilian vehicle exports are expected to grow steadily, building on the supported, and protected, local manufacturing’s increasing ability to serve the neighbouring countries.
Brazil is, by far, the largest construction market in South America, spearheaded by a drive for new infrastructure. Preparations for the World Cup in 2014 and Olympic Games in 2016, combined with Brazil's growing oil sector, are driving a forecasted USD 195 billion construction spend by 2020.
The market will remain healthy even after the excitement of the games has subsided, with construction spending growing by 8 percent per year. Opportunities for construction equipment manufacturers will come from mining operations, infrastructure work, energy projects, including thermo- and hydro-electric plants and wind turbines, from shipyards and upgrades to petrochemical plants, as well as from affordable housing projects run by the government.
Faced with this opportunity, all key foreign manufacturers, including the Chinese, are investing heavily in Greenfield plants or capacity expansions. In the last two months alone, investments of USD 1.3 billion have been announced by construction machinery companies in Brazil. The expanded production base will cover the domestic market, but also, increasingly, demand from other Mercosur countries.
Growth in Brazil
In 2011, the sales growth of light vehicles cooled considerably but remained positive, with sales up 2.9% year-over-year to 3.426 million units. The economical conditions - a low unemployment rate, a solid credit market, 25% growth in middle-class consumers over the past few years - are favourable for a resumption of economic growth and, in particular, light vehicle sales. The government is launching several measures to stimulate the economy including tax cuts for key industries and additional credit lines.
WWL in Brazil
Services: Supply chain management, Terminal Services, Inland Distribution, Technical Services, Ocean Transportation
Key customers: Caterpillar, Komatsu, Volvo, CNH, John Deere, AGCO, Scania, Mercedes Benz, Dynapac, VW, Fiat, Honda